POS 8C 1 pos8ca12019_sierraincome.htm REGISTRATION STATEMENT

FILE NO. 333-228216

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 2019

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_____________________

FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
S
Pre-Effective Amendment No. £
Post
-Effective Amendment No. S 1
(Check appropriate box or boxes)

_____________________

SIERRA INCOME CORPORATION

(Exact Name of Registrant as Specified in Charter)

_____________________

280 Park Ave, 6th Floor East
New York, NY 10017
(Address of Principal Executive Offices)

(212) 759-0777
(Area Code and Telephone Number)

Seth Taube
Chief Executive Officer
280 Park Ave, 6th Floor East
New York, NY 10017
(Name and Address of Agent for Service)

_____________________

Copy to:

Steven B. Boehm, Esq.
Payam Siadatpour, Esq.
Eversheds Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, D.C. 20001
-3980

 

David M. Leahy, Esq.
David C. Mahaffey, Esq.
Sullivan & Worcester LLP
1666 K Street, NW
Washington, D.C. 20006
-1264

 

Terrence Shen, Esq.
George M. Silfen, Esq.
Kramer Levin Naftalis &
Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

 

Michael B. Tumas, Esq.
Roxanne L. Houtman, Esq.
Potter Anderson &
Corroon LLP
1313 North Market Street,
6
th Floor
Wilmington, DE 19801

_____________________

(APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING) As Soon As Practicable After the Effective Date of this Registration Statement

 

CALCULATION OF THE REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933:

TITLE OF SECURITIES BEING REGISTERED(1)

 

AMOUNT
BEING
REGISTERED

 

PROPOSED
MAXIMUM
OFFERING
PRICE PER
UNIT

 

PROPOSED
MAXIMUM
AGGREGATE
OFFERING
PRICE

 

AMOUNT OF
REGISTRATION
FEE

Common Stock, $0.001 par value
per share

 

56,951,783 shares

 

Not applicable

 

$

531,687,679

(2)

 

$

64,440.55

(2)

____________

(1)      This Registration Statement relates to securities of the Registrant issuable to holders of common stock (the “MCC Common Stock”), par value $0.001 per share, of Medley Capital Corporation, a Delaware corporation (“MCC”), and holders of Class A Common Stock (“MDLY Class A Common Stock”), par value $0.01 per share, Medley Management Inc. (“MDLY”). The Registrant previously registered 56,951,863 shares on the Registration Statement initially filed on November 6, 2018, none of which were issued to holders of the MCC Common Stock and MDLY Class A Common Stock. This Post-Effective Amendment on the Registration Statement relates to 51,716,967 shares of the securities of the Registrant issuable to holders of MCC Common Stock and MDLY Class A Common Stock. As a result, no filing fee is required to be paid herewith.

(2)      Pursuant to Rule 457(f), the registration fee was computed on the basis of the net asset value per share of the Registrant, determined as of the latest practicable date.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY — SUBJECT TO COMPLETION — DATED AUGUST 29, 2019

[        ], 2019

MERGERS PROPOSED — YOUR VOTE IS VERY IMPORTANT

Dear Stockholder:

I am writing to you on behalf of the board of directors (the “Sierra Board”) of Sierra Income Corporation (“Sierra) to ask for your vote to approve a series of transactions that will result in Sierra becoming a publicly traded, internally managed business development company (“BDC”) with a wholly owned registered investment adviser subsidiary. These transactions are referred to collectively as the “Mergers” (as defined below). In addition to Sierra, the other parties to the Mergers include Medley Capital Corporation (“MCC”), a publicly traded BDC, and Medley Management Inc. (“MDLY”), a publicly traded asset management firm. MDLY is the parent company of both MCC’s and Sierra’s investment adviser, and the same portfolio management team and officers are responsible for both MCC’s and Sierra’s operations.

We previously sent you a joint proxy statement/prospectus, that was first mailed on December 21, 2018, in connection with the solicitation of proxies for the approval of (i) the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”), pursuant to which MCC would merge with and into Sierra, with Sierra continuing as the surviving company, and (ii) the Agreement and Plan of Merger, dated as of August 9, 2018, by and among MDLY, Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), and Sierra (the “MDLY Merger Agreement”), pursuant to which MDLY would merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger. As described more fully herein, the MCC Merger Agreement and MDLY Merger Agreement were amended and restated on July 29, 2019, and we are seeking your approval of such amended merger agreements.

Subject to the terms and conditions of the various agreements related to the Mergers that are described in the accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”), the Mergers will effectuate the following:

•        MCC would, on the terms and subject to the conditions set forth in the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2018, by and between MCC and Sierra (the “Amended MCC Merger Agreement”), merge with and into Sierra, with Sierra continuing as the surviving company in the merger (the “MCC Merger”). 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 converted into the right to receive (i) 0.68 shares of common stock, par value $0.001 per share, of Sierra (“Sierra Common Stock”) if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection with the consolidated actions pending in the Court of Chancery of the State of Delaware (the “Court of Chancery”) under caption of In re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM (the “MCC Stockholder Action” and such fees and expenses, the “Plaintiff Attorney Fees”) are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra Common Stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra Common Stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra Common Stock in the event that the Plaintiff Attorney Fees are not determined prior to the MCC Merger closing; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock.

 

MCC Merger Consideration (per share of MCC Common Stock)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $                as of June 30, 2019 and assuming an exchange ratio of 0.67)

 

$

 

Total

 

$

 

•        In connection with the MCC Stockholder Action, on July 29, 2019, the defendant parties (other than Sierra), on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd., on behalf of themselves and a class of similarly situated stockholders of MCC, on the other hand, entered into a Stipulation of

 

Settlement (the “Settlement”). The Settlement provides that, among other things, the defendant parties to the Settlement (other than MDLY) shall deposit $17 million in cash and shall deposit or cause to be deposited $30 million of Sierra Common Stock (the “Settlement Shares” and, collectively, with the cash, the “Settlement Amount”), to a settlement fund that shall be formed immediately after, but on the same date as, the closing of the MCC Merger, which shall be distributed to eligible class members who hold such MCC Common Stock as of the closing of the MCC Merger. The Settlement Amount will be released from escrow and distributed to eligible class members following the completion of the MCC Merger.

 

Settlement Fund (per share of MCC Common Stock held by eligible class members)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $               as of June 30, 2019)

 

$

 

Cash

 

$

 

Total

 

$

 

•        MDLY would, on the terms and subject to the conditions set forth in the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among MDLY, Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), and Sierra (the “Amended MDLY Merger Agreement”), merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger (the “MDLY Merger” and together with the MCC Merger, the “Mergers”). In the MDLY Merger, each share of Class A common stock, par value $0.01 per share, of MDLY (“MDLY Class A Common Stock”), issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A Common Stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”) and any Dissenting Shares (as defined in the Amended MDLY Merger Agreement) held, immediately prior to the MDLY Merger effective time, by any person other than a Unitholder (as defined below), will be converted into the right to receive (i) 0.2668 shares of Sierra Common Stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A Common Stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and any Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by a holder of the issued and outstanding limited liability company interests of Medley LLC (the “Medley LLC Units” and, holders of the Medley LLC Units, including any person who holds one or more Medley LLC Units at any time on or after July 29, 2019 and prior to the MDLY Merger effective time, the “Unitholders”) will be converted into the right to receive (i) 0.2072 shares of Sierra Common Stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.66 per share. Each share of Class B common stock, par value $0.01 per share, of MDLY, issued and outstanding immediately prior to the MDLY Merger effective time, other than any Dissenting Shares, will be canceled without consideration therefor.

 

MDLY Merger Consideration (per share of MDLY Class A Common Stock other than those held by the Unitholders)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $               as of June 30, 2019)

 

$

 

Cash from Sierra

 

$

2.96

Total

 

$

If the Mergers are consummated, the investment portfolios of Sierra and MCC would be combined and Sierra would continue as the surviving company with Merger Sub as its wholly owned registered investment adviser (the “Combined Company”). Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not conditioned upon the consummation of the MCC Merger. If the MDLY Merger is consummated and the MCC Merger is not consummated, the investment portfolios of Sierra and MCC would not be combined and Sierra would continue with Merger Sub, the surviving company in the MDLY Merger, as its wholly owned registered investment adviser (the “Sierra/MDLY Company”).

Your vote is extremely important. At a special meeting (the “Sierra Special Meeting”) of the stockholders of Sierra (“Sierra Stockholders”), Sierra Stockholders will be asked to vote on: (i) the approval of the MCC Merger; (ii) the approval of the MDLY Merger; (iii) the issuance of the Settlement Shares and the shares of Sierra Common Stock to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger

 

Agreement at a price below its then current net asset value (“NAV”) per share, if applicable; (iv) the adoption of the Sierra Income Corporation 2018 Omnibus Incentive Plan (the “Sierra Incentive Plan”); (v) the adoption of amendments to Sierra’s charter; (vi) the approval of an investment advisory agreement by and between the Combined Company or the Sierra/MDLY Company, as applicable, and MCC Advisors LLC, its wholly owned registered investment adviser; and (vii) the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons. In order to complete the Mergers or the MDLY Merger, as applicable, Sierra Stockholders are required to vote on these proposals.

Sierra urges you to promptly fill out, sign, date and mail the enclosed proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the Sierra Special Meeting. Instructions are shown on the proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder. If you have any questions about the foregoing proposals or need assistance voting your shares, please call Alliance Advisors LLC, which is assisting Sierra with the solicitation of proxies, toll-free at (833) 814-9451.

The Sierra Board established a special committee comprised solely of its independent directors (the “Sierra Special Committee”), which was assisted by an independent financial advisor, for the purpose of assessing the merits of the proposals to be presented at the Sierra Special Meeting. Based upon the recommendation of the Sierra Special Committee, the Sierra Board unanimously recommends that the Sierra Stockholders vote:

•        “FOR” the approval of the MCC Merger;

•        “FOR” the approval of the MDLY Merger;

•        “FOR” the issuance of the Settlement Shares and the shares of Sierra Common Stock to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement at a price below its then current NAV per share, if applicable;

•        “FOR” the adoption of the Sierra Incentive Plan;

•        “FOR” the adoption of each amendment to Sierra’s charter included in the Amended Joint Proxy Statement/Prospectus;

•        “FOR” the approval of an investment advisory agreement by and between the Combined Company or the Sierra/MDLY Company, as applicable, and MCC Advisors LLC, its wholly owned registered investment adviser; and

•        “FOR” the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons.

The accompanying Amended Joint Proxy Statement/Prospectus describes the Sierra Special Meeting, the MCC special meeting, and the MDLY special meeting, as well as the MCC Merger, the MDLY Merger, the Amended MCC Merger Agreement, the Amended MDLY Merger Agreement, the other documents related to the MCC Merger, the MDLY Merger and related transactions and other related matters that Sierra believes a Sierra Stockholder ought to consider before voting on the proposals described herein and should be retained for future reference. Please carefully read this entire document. You also can obtain information about Sierra, MCC and MDLY from documents that each has filed with the SEC. See “Where You Can Find More Information” for instructions on how to obtain such information.

 

Sincerely,

   

Seth Taube

Chairman of the Board of Directors and
Chief Executive Officer

 

The SEC has not approved or disapproved the Sierra Common Stock to be issued under the Amended Joint Proxy Statement/Prospectus or determined if the Amended Joint Proxy Statement/Prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

The date of the Amended Joint Proxy Statement/Prospectus is [        ], 2019 and it is first being mailed or otherwise delivered to Sierra Stockholders on or about [        ], 2019.

Sierra Income Corporation

280 Park Avenue, 6th Floor East

New York, New York 10017

(212) 759-0777

In addition, if you have questions about the foregoing proposals or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Alliance Advisors LLC, Sierra’s proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.

Alliance Advisors LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

(833) 814-9451

 

Sierra Income Corporation
280 Park Ave, 6th Floor East
New York, NY 10017
__________________________

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[        ], 2019

To the Stockholders of Sierra Income Corporation:

Notice is hereby given that Sierra Income Corporation, a Maryland corporation (“Sierra”), will hold a Special Meeting of the stockholders of Sierra (the “Sierra Special Meeting”), on [        ], 2019 at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036 for the following purposes:

1.      To consider and vote upon a proposal to approve the merger of Medley Capital Corporation (“MCC”) with and into Sierra, with Sierra as the surviving company in the merger (the “MCC Merger”), pursuant to an Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between Sierra and MCC (the “Amended MCC Merger Agreement”);

2.      To consider and vote upon a proposal to approve the merger of Medley Management Inc. (“MDLY”) with and into Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), with Merger Sub as the surviving company in the merger (the “MDLY Merger”), pursuant to an Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among MDLY, Sierra and Merger Sub (the “Amended MDLY Merger Agreement”);

3.      To consider and vote upon a proposal to approve the issuance of the Settlement Shares and the shares of Sierra common stock (“Sierra Common Stock”) to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement at a price below its then current NAV per share, if applicable;

4.      To consider and vote upon a proposal to adopt the Sierra Income Corporation 2018 Omnibus Incentive Plan (the “Sierra Incentive Plan”);

5.      To consider and vote upon proposals to adopt amendments to Sierra’s charter set forth in the accompanying Amended Joint Proxy Statement/Prospectus (the “Sierra Charter Amendments”);

6.      To consider and vote upon a proposal to approve an investment advisory agreement by and between the Combined Company or the Sierra/MDLY Company, as applicable, and MCC Advisors LLC, its wholly owned registered investment adviser; and

7.      To consider and vote upon a proposal to approve the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons.

Only the holders of record of shares of Sierra Common Stock at the close of business on [        ], 2019 will be entitled to receive notice of and vote at the Sierra Special Meeting.

It is important that all Sierra stockholders participate in the affairs of Sierra, regardless of the number of shares owned. Accordingly, Sierra urges you to promptly fill out, sign, date and mail the enclosed WHITE proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the Sierra Special Meeting. Instructions are shown on the proxy card.

You have the option to revoke the proxy at any time prior to the meeting or to vote your shares in person if you attend the Sierra Special Meeting and are the record owner of the shares.

 

Based upon the recommendation of a special committee of the Sierra board of directors (the “Sierra Board”), the Sierra Board has unanimously approved the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement, including the transactions contemplated thereunder, declared the MCC Merger and the MDLY Merger, upon the terms and subject to the conditions and limitations set forth in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement, to be advisable, and unanimously recommends that Sierra Stockholders vote “FOR” the approval of the MCC Merger, “FOR” the approval of the MDLY Merger, “FOR” the issuance of the Settlement Shares and the shares of Sierra Common Stock to be issued pursuant each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement at a price below its then current net asset value per share, if applicable, “FOR” the adoption of the Sierra Incentive Plan, “FOR” the adoption of the Sierra Charter Amendments, “FOR” the approval of an investment advisory agreement by and between the Combined Company or the Sierra/MDLY Company, as applicable, and MCC Advisors LLC, its wholly owned registered investment adviser; and “FOR” the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons.

 

By Order of the Board of Directors,

   

Richard T. Allorto, Jr.
Secretary

New York, New York

[        ], 2019

 

YOUR VOTE IS IMPORTANT!

SIERRA URGES YOU TO PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY CARD OR AUTHORIZE YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET AS SOON AS POSSIBLE EVEN IF YOU PLAN TO ATTEND THE SIERRA SPECIAL MEETING. INSTRUCTIONS ARE SHOWN ON THE PROXY CARD. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder.

The accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”) provides a description of the Amended MCC Merger Agreement, including the transactions contemplated thereby, the Amended MDLY Merger Agreement, including the transactions contemplated thereby, and the matters to be considered at the Sierra Special Meeting. Sierra urges you to read the Amended Joint Proxy Statement/Prospectus and its appendices carefully and in their entirety. If you have any questions concerning the Amended MCC Merger Agreement, including the transactions contemplated thereby, the Amended MDLY Merger Agreement, including the transactions contemplated thereby, or the matters to be considered at the Sierra Special Meeting or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need help voting your shares, please contact Sierra’s proxy solicitor:

Alliance Advisors LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

(833) 814-9451

 

Dear Stockholder:

I am writing to you on behalf of the board of directors (the “MCC Board”) of Medley Capital Corporation (“MCC”) to ask for your vote to approve the adoption of an Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between MCC and Sierra Income Corporation (“Sierra”), pursuant to which MCC would merge with and into Sierra, with Sierra continuing as the surviving company in the merger (the “MCC Merger”). MCC is an affiliate of Sierra, as the investment managers of both Sierra and MCC are controlled (directly or indirectly) by Medley Management Inc. (“MDLY”), a publicly traded asset management firm. In addition, the closing of the MCC Merger is conditioned upon MDLY merging with and into Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), with Merger Sub as the surviving company in the merger (the “MDLY Merger”). We refer to the MDLY Merger and the MCC Merger collectively as, the “Mergers” (as defined below), and Sierra and Merger Sub, as the surviving companies in the Mergers, as the “Combined Company” (as defined below).

We previously sent you a joint proxy statement/prospectus, that was first mailed on December 21, 2018, in connection with the solicitation of proxies for the approval of (i) the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”), pursuant to which MCC would merge with and into Sierra, with Sierra continuing as the surviving company, and (ii) the Agreement and Plan of Merger, dated as of August 9, 2018, by and among MDLY, Merger Sub and Sierra (the “MDLY Merger Agreement”), pursuant to which MDLY would merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger. As described more fully herein, the MCC Merger Agreement and MDLY Merger Agreement were amended and restated on July 29, 2019, and we are seeking your approval of such amended merger agreements.

Subject to the terms and conditions of the various agreements related to the Mergers that are described in the accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”), the Mergers will effectuate the following:

•        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 converted into the right to receive (i) 0.68 shares of common stock, par value $0.001 per share, of Sierra (“Sierra Common Stock”) if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection with the consolidated actions pending in the Court of Chancery of the State of Delaware (the “Court of Chancery”) under caption of In re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM (the “MCC Stockholder Action” and such fees and expenses, the “Plaintiff Attorney Fees”) are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra Common Stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra Common Stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra Common Stock in the event that the Plaintiff Attorney Fees are not determined prior to the MCC Merger closing; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock.

 

MCC Merger Consideration (per share of MCC Common Stock)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019 and assuming an exchange ratio of 0.67)

 

$

 

Total

 

$

 

•        In connection with the MCC Stockholder Action, on July 29, 2019, the defendant parties (other than Sierra), on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd., on behalf of themselves and a class of similarly situated stockholders of MCC, on the other hand, entered into a Stipulation of Settlement (the “Settlement”). The Settlement provides that, among other things, the defendant parties to the Settlement (other than MDLY) shall deposit $17 million in cash and shall deposit or cause to be deposited $30 million of Sierra Common Stock (the “Settlement Shares” and, collectively with the cash, the

 

Settlement Amount”), to a settlement fund that shall be formed immediately after, but on the same date as, the closing of the MCC Merger, which shall be distributed to eligible class members who hold such MCC Common Stock as of the closing of the MCC Merger. The Settlement Amount will be released from escrow and distributed to eligible class members following the completion of the MCC Merger.

 

Settlement Fund (per share of MCC Common Stock held by eligible class members)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $           as of June 30, 2019)

 

$

 

Cash

 

$

 

Total

 

$

 

•        MDLY would, on the terms and subject to the conditions set forth in the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among MDLY, Merger Sub, and Sierra (the “Amended MDLY Merger Agreement”), merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger (the “MDLY Merger” and together with the MCC Merger, the “Mergers”). In the MDLY Merger, each share of Class A common stock, par value $0.01 per share, of MDLY (“MDLY Class A Common Stock”), issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A Common Stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”) and any Dissenting Shares (as defined in the Amended MDLY Merger Agreement) held, immediately prior to the MDLY Merger effective time, by any person other than a Unitholder (as defined below), will be converted into the right to receive (i) 0.2668 shares of Sierra Common Stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A Common Stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and any Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by a holder of the issued and outstanding limited liability company interests of Medley LLC (the “Medley LLC Units” and, holders of the Medley LLC Units, including any person who holds one or more Medley LLC Units at any time on or after July 29, 2019 and prior to the MDLY Merger effective time, the “Unitholders”) will be converted into the right to receive (i) 0.2072 shares of Sierra Common Stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.66 per share. Each share of Class B common stock, par value $0.01 per share, of MDLY, issued and outstanding immediately prior to the MDLY Merger effective time, other than any Dissenting Shares, will be canceled without consideration therefor.

 

MDLY Merger Consideration (per share of MDLY Class A Common Stock other than those held by the Unitholders)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019)

 

$

 

Cash from Sierra

 

$

2.96

Total

 

$

If the Mergers are consummated, the investment portfolios of Sierra and MCC would be combined and Sierra would continue as the surviving company with Merger Sub as its wholly owned registered investment adviser (the “Combined Company”). Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not conditioned upon the consummation of the MCC Merger. If the MDLY Merger is consummated and the MCC Merger is not consummated, the investment portfolios of Sierra and MCC would not be combined and Sierra would continue with Merger Sub, the surviving company in the MDLY Merger, as its wholly owned registered investment adviser (the “Sierra/MDLY Company”).

Your vote is extremely important. At a special meeting of MCC (the “MCC Special Meeting”), MCC Stockholders will be asked to vote on: (i) the approval of the adoption of the Amended MCC Merger Agreement; and (ii) the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons. In order to complete the MCC Merger, MCC Stockholders are required to vote on the proposal to approve the adoption of the Amended MCC Merger Agreement.

 

MCC urges you to promptly fill out, sign, date and mail the enclosed proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the MCC Special Meeting. Instructions are shown on the proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder. If you have any questions about the foregoing proposals or need assistance voting your shares, please call Alliance Advisors LLC, which is assisting MCC with the solicitation of proxies, toll-free at (833) 814-9451.

The MCC Board established a special committee comprised solely of its independent directors (the “MCC Special Committee”), which was assisted by an independent financial advisor and independent legal counsel, for the purpose of assessing the merits of the proposals to be presented at the MCC Special Meeting. Based upon the recommendation of the MCC Special Committee, the MCC Board unanimously recommends that the MCC Stockholders vote:

•        “FOR” the approval of the adoption of the Amended MCC Merger Agreement; and

•        “FOR” the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

The accompanying Amended Joint Proxy Statement/Prospectus describes the MCC Special Meeting, the Sierra special meeting, and the MDLY special meeting, as well as the MCC Merger, the MDLY Merger, the Amended MCC Merger Agreement, the Amended MDLY Merger Agreement, the other documents related to the MCC Merger, the MDLY Merger and related transactions and other related matters that MCC believes a MCC Stockholder ought to consider before voting on the proposals described herein and should be retained for future reference. Please carefully read this entire document. You also can obtain information about MCC, Sierra, and MDLY from documents that each has filed with the SEC. See “Where You Can Find More Information” for instructions on how to obtain such information.

 

Sincerely,

   

Brook Taube
Chairman of the Board of Directors and
Chief Executive Officer

The SEC has not approved or disapproved the Sierra Common Stock to be issued under the Amended Joint Proxy Statement/Prospectus or determined if the Amended Joint Proxy Statement/Prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

The date of the Amended Joint Proxy Statement/Prospectus is [        ], 2019 and it is first being mailed or otherwise delivered to MCC Stockholders on or about [        ], 2019.

Medley Capital Corporation
280 Park Avenue, 6th Floor East
New York, New York 10017
(212) 759-0777

In addition, if you have questions about the foregoing proposals or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Alliance Advisors LLC, MCC’s proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.

Alliance Advisors LLC
200 Broadacres Drive, 3rd Floor
Bloomfield, New Jersey 07003
(833) 814-9451

 

Medley Capital Corporation
280 Park Ave, 6th Floor East
New York, NY 10017
__________________________

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[        ], 2019

To the Stockholders of Medley Capital Corporation:

Notice is hereby given that Medley Capital Corporation, a Delaware corporation, (“MCC”), will hold a Special Meeting of the stockholders of MCC (the “MCC Special Meeting”), on [        ], 2019 at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036 for the following purposes:

1.      To consider and vote upon a proposal to approve the adoption of the Amended and Restated Agreement and Plan of Merger (the “Amended MCC Merger Agreement”), dated as of July 29, 2019, by and between MCC and Sierra Income Corporation (“Sierra”), pursuant to which MCC will merge with and into Sierra, with Sierra continuing as the surviving company in the merger.

2.      To consider and vote upon a proposal to approve the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

Only the holders of record of shares of MCC common stock at the close of business on [        ], 2019 will be entitled to receive notice of and vote at the MCC Special Meeting.

It is important that all MCC stockholders participate in the affairs of MCC, regardless of the number of shares owned. Accordingly, MCC urges you to promptly fill out, sign, date and mail the enclosed WHITE proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the MCC Special Meeting. Instructions are shown on the proxy card.

You have the option to revoke the proxy at any time prior to the meeting or to vote your shares in person if you attend the MCC Special Meeting and are the record owner of the shares.

Based upon the recommendation of a special committee of the MCC board of directors (the “MCC Board”), the MCC Board has unanimously, (i) determined that the Amended MCC Merger Agreement and the transactions contemplated thereby, including, without limitation, the MCC Merger, are advisable and fair to, and in the best interests of, MCC and the MCC Stockholders, (ii) approved and declared advisable the Amended MCC Merger Agreement and the transactions contemplated thereby, including, without limitation the MCC Merger, (iii) resolved to submit the Amended MCC Merger Agreement to the MCC Stockholders for its adoption, and (iv) recommended that the MCC Stockholders approve the adoption of the Amended MCC Merger Agreement, and unanimously recommends that MCC Stockholders vote “FOR” the approval of the adoption of the Amended MCC Merger Agreement, and “FOR” the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

 

By Order of the Board of Directors,

   

Richard T. Allorto, Jr.
Secretary

New York, New York

[        ], 2019

 

YOUR VOTE IS IMPORTANT!

MCC URGES YOU TO PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY CARD OR AUTHORIZE YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET AS SOON AS POSSIBLE EVEN IF YOU PLAN TO ATTEND THE MCC SPECIAL MEETING. INSTRUCTIONS ARE SHOWN ON THE PROXY CARD. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder.

The accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”) provides a description of the Amended MCC Merger Agreement, including the transactions contemplated thereby, and the matters to be considered at the MCC Special Meeting. MCC urges you to read the Amended Joint Proxy Statement/Prospectus and its appendices carefully and in their entirety. If you have any questions concerning the Amended MCC Merger Agreement, including the transactions contemplated thereby, or the matters to be considered at the MCC Special Meeting or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need help voting your shares, please contact MCC’s proxy solicitor:

Alliance Advisors LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

(833) 814-9451

 

Dear Stockholder:

I am writing to you on behalf of the board of directors (the “MDLY Board”) of Medley Management Inc. (“MDLY”) to ask for your vote to approve the adoption of an Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement”), by and among MDLY, Sierra Income Corporation (“Sierra”), and Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), pursuant to which MDLY will merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger (the “MDLY Merger”). The approval of the adoption of the Amended MDLY Merger Agreement by MDLY stockholders (the “MDLY Stockholders”) is assured. In addition, Medley Capital Corporation (“MCC”) would, on the terms and subject to the conditions set forth in the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between MCC and Sierra (the “Amended MCC Merger Agreement”), merge with and into Sierra, with Sierra continuing as the surviving company in the merger (the “MCC Merger”). Pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not conditioned upon the consummation of the MCC Merger. We refer to the MDLY Merger and the MCC Merger, collectively, as the “Mergers,” and Sierra and Merger Sub, as the surviving companies in the Mergers, as the “Combined Company” (as defined below).

We previously sent you a joint proxy statement/prospectus, that was first mailed on December 21, 2018, in connection with the solicitation of proxies for the approval of (i) the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”), pursuant to which MCC would merge with and into Sierra, with Sierra continuing as the surviving company, and (ii) the Agreement and Plan of Merger, dated as of August 9, 2018, by and among MDLY, Merger Sub and Sierra (the “MDLY Merger Agreement”), pursuant to which MDLY would merge with and into Merger Sub, with Merger Sub continuing as the surviving company in the merger. As described more fully herein, the MCC Merger Agreement and MDLY Merger Agreement were amended and restated on July 29, 2019, and we are seeking your approval of such amended merger agreements.

Subject to the terms and conditions of the various agreements related to the Mergers that are described in the accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”), the Mergers will effectuate the following:

•        In the MDLY Merger, each share of Class A Common Stock, par value $0.01 per share, of MDLY (“MDLY Class A Common Stock”) issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A Common Stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”) and any Dissenting Shares (as defined in the Amended MDLY Merger Agreement) held, immediately prior to the MDLY Merger effective time, by any person other than a Unitholder (as defined below), will be converted into the right to receive (i) 0.2668 shares of Sierra common stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A Common Stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and any Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by a holder of the issued and outstanding limited liability company interests of Medley LLC (the “Medley LLC Units” and, holders of the Medley LLC Units, including any person who holds one or more Medley LLC Units at any time on or after July 29, 2019 and prior to the MDLY Merger effective time, the “Unitholders”) will be converted into the right to receive (i) 0.2072 shares of Sierra Common Stock; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.66 per share. Each share of Class B Common Stock, par value $0.01 per share, of MDLY, issued and outstanding immediately prior to the MDLY Merger effective time, other than any Dissenting Shares, will be canceled without consideration therefor.

 

MDLY Merger Consideration (per share of MDLY Class A Common Stock other than those held by the Unitholders)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019)

 

$

 

Cash from Sierra

 

$

2.96

Total

 

$

•        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 converted into the right to receive (i) 0.68 shares of common stock, par value

 

$0.001 per share, of Sierra (“Sierra Common Stock”) if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection with the consolidated actions pending in the Court of Chancery of the State of Delaware (the “Court of Chancery”) under caption of In re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM (the “MCC Stockholder Action” and such fees and expenses, the “Plaintiff Attorney Fees”) are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra Common Stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra Common Stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra Common Stock in the event that the Plaintiff Attorney Fees are not determined prior to the MCC Merger closing; provided that cash will be paid in lieu of fractional shares of Sierra Common Stock.

 

MCC Merger Consideration (per share of MCC Common Stock)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019 and assuming an exchange ratio of 0.67)

 

$

 

Total

 

$

 

•        In connection with the MCC Stockholder Action, on July 29, 2019, the defendant parties (other than Sierra), on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd., on behalf of themselves and a class of similarly situated stockholders of MCC, on the other hand, entered into a Stipulation of Settlement (the “Settlement”). The Settlement provides that, among other things, the defendant parties to the Settlement (other than MDLY) shall deposit $17 million in cash and shall deposit or cause to be deposited $30 million of Sierra Common Stock (the “Settlement Shares” and, collectively with the cash, the “Settlement Amount”), to a settlement fund that shall be formed immediately after, but on the same date as, the closing of the MCC Merger, which shall be distributed to eligible class members who hold such MCC Common Stock as of the closing of the MCC Merger. The Settlement Amount will be released from escrow and distributed to eligible class members following the completion of the MCC Merger.

 

Settlement Fund (per share of MCC Common Stock held by eligible class members)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019)

 

$

 

Cash

 

$

 

Total

 

$

 

If the Mergers are consummated, the investment portfolios of Sierra and MCC would be combined and Sierra and Merger Sub would continue as the surviving company with Merger Sub as its wholly owned registered investment adviser (the “Combined Company”). Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not conditioned upon the consummation of the MCC Merger. If the MDLY Merger is consummated and the MCC Merger is not consummated, the investment portfolios of Sierra and MCC would not be combined and Sierra would continue with Merger Sub, the surviving company in the MDLY Merger, as its wholly owned registered investment adviser (the “Sierra/MDLY Company”).

Your vote is extremely important. At a special meeting of MDLY Stockholders (the “MDLY Special Meeting”), MDLY Stockholders will be asked to vote on: (i) the approval of the adoption of the Amended MDLY Merger Agreement; and (ii) the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons. In order to complete the Mergers or the MDLY Merger, as applicable, MDLY Stockholders are required to vote on the proposal to approve the adoption of the Amended MDLY Merger Agreement.

 

MDLY urges you to promptly fill out, sign, date and mail the enclosed proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the MDLY Special Meeting. Instructions are shown on the proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder. If you have any questions about the foregoing proposals or need assistance voting your shares, please call Innisfree M&A Incorporated, which is assisting MDLY with the solicitation of proxies, toll-free at (888) 750-5834.

The MDLY Board established a special committee comprised solely of its independent directors (the “MDLY Special Committee”), which was assisted by an independent financial advisor and independent legal counsel, for the purpose of assessing the merits of the proposals to be presented at the MDLY Special Meeting. Based upon the recommendation of the MDLY Special Committee, the MDLY Board unanimously recommends that the MDLY Stockholders vote:

•        “FOR” the approval of the adoption of the Amended MDLY Merger Agreement; and

•        “FOR” the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons.

The accompanying Amended Joint Proxy Statement/Prospectus describes the MDLY Special Meeting, the Sierra special meeting, and the MCC special meeting, as well as the MCC Merger, the MDLY Merger, the Amended MCC Merger Agreement, the Amended MDLY Merger Agreement, the other documents related to the MCC Merger, the MDLY Merger and related transactions and other related matters that MDLY believes a MDLY Stockholder ought to consider before voting on the proposals described herein and should be retained for future reference. Please carefully read this entire document. You also can obtain information about MDLY, Sierra, and MCC from documents that each has filed with the SEC. See “Where You Can Find More Information” for instructions on how to obtain such information.

 

Sincerely,

   

Brook Taube

Co-Chairman of the Board of Directors and
Co-Chief Executive Officer

The SEC has not approved or disapproved the Sierra Common Stock to be issued under the Amended Joint Proxy Statement/Prospectus or determined if it is accurate or adequate. Any representation to the contrary is a criminal offense.

The date of the Amended Joint Proxy Statement/Prospectus is [        ], 2019 and it is first being mailed or otherwise delivered to MDLY Stockholders on or about [        ], 2019.

Medley Management Inc.

280 Park Avenue, 6th Floor East

New York, New York 10017

(212) 759-0777

In addition, if you have questions about the foregoing proposals or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Innisfree M&A Incorporated, MDLY’s proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.

Innisfree M&A Incorporated

501 Madison Avenue, 20th floor

New York, New York

(888) 750-5834

 

Medley Management Inc.
280 Park Ave, 6th Floor East
New York, NY 10017
__________________________

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[        ], 2019

To the Stockholders of Medley Management Inc.:

Notice is hereby given that Medley Management Inc., a Delaware corporation (“MDLY”), will hold a Special Meeting of the Stockholders of MDLY(the “MDLY Special Meeting”), on [        ], 2019 at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036 for the following purposes:

1.      To consider and vote upon a proposal to approve the adoption of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement), by and among MDLY, Sierra Income Corporation (“Sierra”), and Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), pursuant to which MDLY will merge with and into Merger Sub, with Merger Sub as the surviving company in the merger.

2.      To consider and vote upon a proposal to approve the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons.

Only the holders of record of shares of MDLY Common Stock at the close of business on [        ], 2019 will be entitled to receive notice of and vote at the MDLY Special Meeting.

It is important that all MDLY stockholders participate in the affairs of MDLY, regardless of the number of shares owned. Accordingly, MDLY urges you to promptly fill out, sign, date and mail the enclosed WHITE proxy card or authorize your proxy by telephone or through the Internet as soon as possible even if you plan to attend the MDLY Special Meeting. Instructions are shown on the proxy card.

You have the option to revoke the proxy at any time prior to the meeting or to vote your shares in person if you attend the MDLY Special Meeting and are the record owner of the shares.

Based upon the recommendation of a special committee of the MDLY board of directors (the “MDLY Board”), the MDLY Board has unanimously, (i) determined that the Amended MDLY Merger Agreement and the transactions contemplated thereby, including, without limitation, the MDLY Merger, are advisable and fair to, and in the best interests of, MDLY and the MDLY Stockholders, (ii) approved and declared advisable the Amended MDLY Merger Agreement and the transactions contemplated thereby, including, without limitation the MDLY Merger, (iii) resolved to submit the Amended MDLY Merger Agreement to the MDLY Stockholders for its adoption, and (iv) recommended that the MDLY Stockholders approve the adoption of the Amended MDLY Merger Agreement, and unanimously recommends that MDLY Stockholders vote “FOR” the approval of the adoption of the Amended MDLY Merger Agreement, and “FOR” the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons.

 

By Order of the Board of Directors,

   

John D. Fredericks
Secretary

New York, New York

[        ], 2019

 

YOUR VOTE IS IMPORTANT!

MDLY URGES YOU TO PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY CARD OR AUTHORIZE YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET AS SOON AS POSSIBLE EVEN IF YOU PLAN TO ATTEND THE MDLY SPECIAL MEETING. INSTRUCTIONS ARE SHOWN ON THE PROXY CARD. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such record holder.

The accompanying amended joint proxy statement/prospectus (the “Amended Joint Proxy Statement/Prospectus”) provides a description of the Amended MDLY Merger Agreement, including the transactions contemplated thereby, and the matters to be considered at the MDLY Special Meeting. MDLY urges you to read the Amended Joint Proxy Statement/Prospectus and its appendices carefully and in their entirety. If you have any questions concerning the Amended MDLY Merger Agreement, including the transactions contemplated thereby, or the matters to be considered at the MDLY Special Meeting or the Amended Joint Proxy Statement/Prospectus, would like additional copies of the Amended Joint Proxy Statement/Prospectus or need help voting your shares, please contact MDLY’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th floor

New York, New York

(888) 750-5834

 

TABLE OF CONTENTS

 

Page

TABLE OF CONTENTS

 

i

ABOUT THIS DOCUMENT

 

1

QUESTIONS & ANSWERS ABOUT THE SIERRA SPECIAL MEETING, THE MCC SPECIAL MEETING, THE MDLY SPECIAL MEETING, THE MERGERS, AND RELATED MATTERS

 

7

SUMMARY

 

27

COMPARATIVE FEES AND EXPENSES

 

64

SPECIAL FACTORS

 

69

General Description of the Mergers

 

69

Overview of the Background of the Mergers

 

71

Management’s Conflicts of Interests and Role in the Mergers

 

71

Phase 1 — Background of the Mergers

 

73

Phase 1 — Reasons for the Mergers

 

99

Recommendation of the Sierra Board and the Sierra Special Committee — Phase 1 Approval

 

109

Recommendation of the MCC Board and the MCC Special Committee — Phase 1 Approval

 

109

Recommendation of the MDLY Board and the MDLY Special Committee — Phase 1 Approval

 

109

Phase 2 — Background of the Mergers

 

110

Phase 2 — Reasons for the Mergers

 

143

Recommendation of the Sierra Board and the Sierra Special Committee — Phase 2 Approval

 

155

Recommendation of the MCC Board and the MCC Special Committee — Phase 2 Approval

 

155

Recommendation of the MDLY Board and the MDLY Special Committee — Phase 2 Approval

 

155

Opinion of Financial Advisor to the Sierra Special Committee

 

156

Opinion of Financial Advisor to the MCC Special Committee

 

166

Opinion of Financial Advisor to the MDLY Special Committee

 

178

Financing of the Mergers

 

191

Unaudited Prospective Financial Information

 

191

Management of the Combined Company or the Sierra/MDLY Company

 

198

Listing of Sierra Common Stock and Delisting of MCC Common Stock and MDLY Class A
Common Stock

 

198

RISK FACTORS

 

199

Risks Relating to the Mergers

 

199

Risks Relating to the Combined Company if Both of the Mergers are Consummated

 

208

Risks Relating to the Sierra/MDLY Company if the MDLY Merger is Consummated and the MCC Merger is Not Consummated

 

213

Risks Relating to Sierra

 

217

Risks Relating to MCC

 

248

Risks Relating to MDLY

 

272

SELECTED FINANCIAL AND OTHER DATA OF SIERRA

 

301

SELECTED FINANCIAL AND OTHER DATA OF MCC

 

303

SELECTED FINANCIAL AND OTHER DATA OF MDLY

 

306

UNAUDITED SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA

 

309

UNAUDITED PRO FORMA CONSOLIDATED PER SHARE DATA

 

310

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

311

THE SIERRA SPECIAL MEETING

 

313

THE MCC SPECIAL MEETING

 

320

THE MDLY SPECIAL MEETING

 

324

DESCRIPTION OF THE AMENDED MCC MERGER AGREEMENT

 

329

Explanatory Note Regarding the Amended MCC Merger Agreement

 

329

The MCC Merger

 

329

Merger Consideration

 

330

i

TABLE OF CONTENTS

(continued)

 

Page

Payment of Settlement Amount

 

330

Sierra Charter and Bylaws

 

331

Officers and Directors of the Surviving Company

 

331

Closing of the MCC Merger

 

331

Delivery of MCC Merger Consideration

 

332

Representations and Warranties

 

333

Covenants Relating to the Conduct of the Business

 

335

Additional Covenants

 

338

Go-Shop Period

 

346

Transaction Expenses

 

346

Conditions to the MCC Merger

 

347

Termination of the Amended MCC Merger Agreement

 

349

Termination Fees

 

350

Effect of Termination

 

351

Remedies; Specific Performance

 

351

Amendment and Waiver

 

352

Governing Law; Jurisdiction

 

352

DESCRIPTION OF THE AMENDED MDLY MERGER AGREEMENT

 

353

Explanatory Note Regarding the Amended MDLY Merger Agreement

 

353

The MDLY Merger

 

353

Merger Consideration

 

354

Appraisal Rights

 

355

Sierra Charter and Bylaws

 

355

Officers and Directors of the Surviving Company

 

356

Closing of the MDLY Merger

 

356

Delivery of MDLY Merger Consideration

 

356

Representations and Warranties

 

358

Covenants Relating to the Conduct of the Business

 

360

Additional Covenants

 

363

Transaction Expenses

 

371

Conditions to the MDLY Merger

 

371

Termination of the Amended MDLY Merger Agreement

 

373

Termination Fees

 

374

Effect of Termination

 

375

Remedies; Specific Performance

 

375

Amendment and Waiver

 

376

Governing Law; Jurisdiction

 

376

Other Agreements

 

376

ACCOUNTING TREATMENT

 

378

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

 

379

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

392

CAPITALIZATION

 

427

SIERRA PROPOSAL # 1: APPROVAL OF THE MCC MERGER

 

429

SIERRA PROPOSAL #2: APPROVAL OF THE MDLY MERGER

 

430

SIERRA PROPOSAL #3: ISSUANCE OF THE SETTLEMENT SHARES AND THE SHARES OF SIERRA COMMON STOCK TO BE ISSUED PURSUANT TO EACH OF THE AMENDED MCC MERGER AGREEMENT AND THE AMENDED MDLY MERGER AGREEMENT AT A PRICE BELOW ITS THEN CURRENT NAV PER SHARE, IF APPLICABLE

 

431

SIERRA PROPOSAL #4: THE ADOPTION OF THE SIERRA INCENTIVE PLAN

 

433

SIERRA PROPOSAL #5: ADOPTION OF SIERRA CHARTER AMENDMENTS

 

441

ii

TABLE OF CONTENTS

(continued)

 

Page

SIERRA PROPOSAL #6: APPROVAL OF THE NEW SIERRA INVESTMENT ADVISORY AGREEMENT

 

453

SIERRA PROPOSAL #7: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE

 

460

MCC PROPOSAL #1: APPROVAL OF THE ADOPTION OF THE AMENDED MCC MERGER AGREEMENT

 

461

MCC PROPOSAL #2: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE

 

462

MDLY PROPOSAL #1: APPROVAL OF THE ADOPTION OF THE AMENDED MDLY MERGER AGREEMENT

 

463

MDLY PROPOSAL #2: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE

 

464

MARKET PRICE, DIVIDEND AND DISTRIBUTION INFORMATION

 

465

BUSINESS OF SIERRA

 

471

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SIERRA

 

496

SENIOR SECURITIES OF SIERRA

 

519

PORTFOLIO COMPANIES OF SIERRA

 

521

MANAGEMENT OF SIERRA

 

537

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF SIERRA

 

545

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SIERRA COMMON STOCK

 

549

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS OF SIERRA

 

551

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON SIERRA ACCOUNTING AND FINANCIAL DISCLOSURE

 

552

BUSINESS OF MCC

 

553

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MCC

 

582

SENIOR SECURITIES OF MCC

 

610

PORTFOLIO COMPANIES OF MCC

 

612

MANAGEMENT OF MCC

 

624

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF MCC

 

634

CONTROL PERSONS AND PRINCIPAL HOLDERS OF MCC COMMON STOCK

 

635

MCC COMMON STOCK PERFORMANCE GRAPH

 

638

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS OF MCC

 

639

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON MCC ACCOUNTING AND FINANCIAL DISCLOSURE

 

640

BUSINESS OF MDLY

 

641

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MDLY

 

656

MANAGEMENT OF MDLY

 

688

EXECUTIVE COMPENSATION OF MDLY

 

696

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF MDLY

 

701

CONTROL PERSONS AND PRINCIPAL HOLDERS OF MDLY

 

706

MDLY CLASS A COMMON STOCK PERFORMANCE GRAPH

 

708

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK OF MDLY

 

709

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON MDLY ACCOUNTING AND FINANCIAL DISCLOSURE

 

712

DESCRIPTION OF SIERRA’S CAPITAL STOCK

 

713

DESCRIPTION OF MCC’S CAPITAL STOCK

 

722

DESCRIPTION OF MDLY’S CAPITAL STOCK

 

724

SIERRA DISTRIBUTION REINVESTMENT PLAN

 

730

MCC DIVIDEND REINVESTMENT PLAN

 

732

COMPARISON OF STOCKHOLDER RIGHTS

 

734

iii

TABLE OF CONTENTS

(continued)

 

Page

REGULATORY APPROVALS REQUIRED FOR THE MERGERS

 

762

Request for SEC Exemptive Relief

 

762

The HSR Act

 

762

INFORMATION ABOUT THE COMBINED COMPANY

 

763

Operational Plans of the Combined Company

 

763

Management

 

763

Investment Advisory Agreement

 

769

INFORMATION ABOUT THE SIERRA/MDLY COMPANY

 

776

Operational Plans of the Sierra/MDLY Company

 

776

Management

 

777

Investment Advisory Agreement

 

782

EXECUTIVE COMPENSATION OF THE COMBINED COMPANY OR THE SIERRA/MDLY COMPANY, AS APPLICABLE

 

789

REGULATION OF THE COMBINED COMPANY OR THE SIERRA/MDLY COMPANY, AS APPLICABLE

 

798

CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT AND REGISTRAR OF SIERRA

 

803

CUSTODIAN AND TRANSFER AGENT OF MCC

 

803

TRANSFER AGENT AND REGISTRAR OF MDLY

 

803

BROKERAGE ALLOCATION AND OTHER PRACTICES

 

804

LEGAL MATTERS

 

805

EXPERTS

 

805

APPRAISAL RIGHTS OF MDLY STOCKHOLDERS

 

806

OTHER MATTERS

 

811

STOCKHOLDER NOMINATIONS AND PROPOSALS FOR THE 2019 ANNUAL MEETING

 

812

STOCKHOLDERS SHARING AN ADDRESS

 

815

WHERE YOU CAN FIND MORE INFORMATION

 

816

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

F-1

PART C

 

C-1

Appendix A — Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between Medley Capital Corporation and Sierra Income Corporation

 

A-1

Appendix B — Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among Medley Management Inc., Sierra Income Corporation and Sierra Management, Inc.

 

B-1

Appendix C — Opinion of Broadhaven Capital Partners

 

C-1

Appendix D — Opinion of Sandler O’Neill & Partners, L.P.

 

D-1

Appendix E — Opinion of Barclays Capital Inc.

 

E-1

Appendix F — Sierra Income Corporation 2018 Omnibus Incentive Plan

 

F-1

Appendix G — Third Articles of Amendment and Restatement of Sierra Income Corporation

 

G-1

Appendix H — Articles of Amendment to the Third Articles of Amendment and Restatement of Sierra Income Corporation

 

H-1

Appendix I — Amended and Restated Bylaws of Sierra Income Corporation

 

I-1

Appendix J — New Sierra Investment Advisory Agreement

 

J-1

Appendix K — Section 262 of the DGCL

 

K-1

Appendix L — Code of Business Conduct and Ethics of Sierra Income Corporation

 

L-1

iv

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form N-14 filed with the SEC by Sierra (File No. 333-228216), constitutes a prospectus of Sierra under Section 5 of the Securities Act with respect to the shares Sierra Common Stock to be issued to the MCC Stockholders and the MDLY Stockholders in connection with the Mergers.

This document also constitutes a joint proxy statement of Sierra, MCC, and MDLY under Section 14(a) of the Exchange Act. It also constitutes a notice of meeting with respect to the Sierra Special Meeting, the MCC Special Meeting and the MDLY Special Meeting.

At the Sierra Special Meeting, Sierra Stockholders will be asked to vote on (1) the approval of the MCC Merger; (2) the approval of the MDLY Merger; (3) the issuance of the Settlement Shares and the shares of Sierra Common Stock to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement at a price below its then current NAV per share, if applicable; (4) the adoption of the Sierra Incentive Plan; (5) the adoption of the Sierra Charter Amendments; (6) the approval of the New Sierra Investment Advisory Agreement; and (7) the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons.

At the MCC Special Meeting, MCC Stockholders will be asked to vote on (1) the approval of the adoption of the Amended MCC Merger Agreement and (2) the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

At the MDLY Special Meeting, MDLY Stockholders will be asked to vote on (1) the approval of the adoption of the Amended MDLY Merger Agreement and (2) the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons. Information about each of the Sierra Special Meeting, MCC Special Meeting, MDLY Special Meeting, and the Mergers is contained in this document.

You should rely only on the information contained in this document. No one has been authorized to provide you with information that is different from that contained in this document. This document is dated [        ], 2019. You should not assume that the information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to Sierra Stockholders, MCC Stockholders, or MDLY Stockholders nor the issuance by Sierra of the Settlement Shares and the Sierra Common Stock to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Except where the context otherwise indicates, information contained in this document regarding Sierra has been provided by Sierra, information contained in this document regarding MCC has been provided by MCC, and information contained in this document regarding MDLY has been provided by MDLY.

When used in this document, unless otherwise indicated in this document or the context otherwise requires:

•        “Advisers Act” refers to the Investment Advisers Act of 1940, as amended;

•        “Amended Joint Proxy Statement/Prospectus” refers, collectively, to the proxy statements of Sierra, MCC and MDLY and the related prospectus of Sierra with respect to the Mergers and related matters, including the issuance of shares of Sierra Common Stock, that was first mailed or otherwise delivered to the Sierra Stockholders, the MCC Stockholders, and the MDLY Stockholders on or about [            ], 2019, which amends and restates the Joint Proxy Statement/Prospectus and which forms part of the Registration Statement on Form N-14 (File No. 333-228216) filed by Sierra with the SEC.

•        “Amended MCC Merger Agreement” refers to that certain Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between MCC and Sierra;

•        “Amended MDLY Merger Agreement” refers to that certain Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among MDLY, Sierra, and Merger Sub;

1

•        “BDC” refers to a business development company;

•        “Code” refers to the Internal Revenue Code of 1986, as amended;

•        “Combined Company” refers to Sierra, including Merger Sub, its wholly owned subsidiary, following the consummation of the Mergers;

•        “Combined Company Board” refers to the board of directors of the Combined Company;

•        “Combined Company Common Stock” refers to common stock, par value $0.001 per share, of Sierra, which will be listed on the NYSE and is expected to be listed on the TASE, with such listings expected to be effective as of the closing date of the Mergers;

•        “Combined Company Stockholders” refers to the holders of the Combined Company Common Stock;

•        “Companies” refers, collectively, to Sierra, MCC, and MDLY;

•        “Delaware Court of Chancery” refers to the Court of Chancery of the State of Delaware;

•        “Delaware Decision” refers to the Memorandum Opinion issued on March 11, 2019 and revised on March 22, 2019 by the Delaware Court of Chancery in connection with the MCC Stockholder Action;

•        “DGCL” refers to the General Corporation Law of the State of Delaware;

•        “DOJ” refers to the Antitrust Division of the U.S. Department of Justice;

•        “Eligible Class Members” refers to the class members who hold shares of MCC Common Stock at the MCC Merger Closing and therefore are entitled to receive a portion of the MCC Merger Consideration. For the avoidance of doubt, the Eligible Class Members exclude all Excluded Stockholders. Excluded Stockholders are stipulating defendants, their immediate family, Sierra and any person, firm, trust, corporation, joint venture, partnership, foundation or other entity related to or affiliated with any of the stipulating defendants, members of their immediate families or Sierra (as such terms are defined in the Settlement);

•        “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

•        “Exchange Agreement” refers to that certain Exchange Agreement, dated as of September 23, 2014, among MDLY, Medley LLC and the Medley LLC Unitholders;

•        “Excluded MCC Shares” refers to shares of MCC Common Stock owned by MCC, Sierra, or any wholly owned subsidiary of MCC or Sierra;

•        “Excluded MDLY Shares” refers to shares of MDLY Class A Common Stock held by MDLY, Sierra or their respective wholly owned subsidiaries;

•        “FTC” refers to the U.S. Federal Trade Commission;

•        “HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, amended;

•        “Investment Company Act” refers to the Investment Company Act of 1940, as amended;

•        “IRS” refers to the U.S. Internal Revenue Service;

•        “Joint Proxy Statement/Prospectus” refers, collectively, to the respective proxy statements of Sierra, MCC and MDLY and the related prospectus of Sierra that was first mailed or otherwise delivered to the Sierra Stockholders, the MCC Stockholders, and the MDLY Stockholders on or about December 21, 2018 with respect to the Mergers and the shares of Sierra Common Stock to be issued in connection with the Mergers, all of which form part of the Registration Statement on Form N-14 (File No. 333- 228216) filed by Sierra with the SEC.

2

•        “Management” refers to the senior professionals of Medley Advisors, consisting of Brook Taube, Seth Taube, Richard T. Allorto, Jr., John D. Fredericks, Samuel Anderson, and Christopher Taube;

•        “MCC” refers to Medley Capital Corporation, a publicly traded BDC;

•        “MCC Administration Agreement” refers to that certain Administration Agreement, dated as of November 3, 2014, by and between MCC and MCC Advisors;

•        “MCC Advisors” refers to MCC Advisors LLC, MCC’s investment adviser;

•        “MCC Board” refers to the board of directors of MCC. From January 26, 2018 through March 18, 2019, the MCC Board was comprised of Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, John E. Mack, and Mark Lerdal. From March 18, 2019 through April 14, 2019, the MCC Board was comprised of Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg and Karin Hirtler-Garvey. Since April 15, 2019, the MCC Board has been comprised of Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, David A. Lorber, and Lowell W. Robinson;

•        “MCC Bylaws” refers to the Bylaws of MCC;

•        “MCC Certificate” refers to the Certificate of Incorporation of MCC;

•        “MCC Common Stock” refers to common stock, par value $0.001 per share of MCC;

•        “MCC Investment Management Agreement” refers to that certain Amended and Restated Investment Management Agreement by and between MCC and MCC Advisors, dated January 19, 2014;

•        “MCC Merger” refers to the merger of MCC with and into Sierra, with Sierra continuing as the surviving company in such merger, as contemplated by the MCC Merger Agreement or the Amended MCC Merger Agreement, as applicable;

•        “MCC Merger Agreement” refers to that certain Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra;

•        “MCC Merger Closing” refers to the closing of the MCC Merger;

•        “MCC Merger Closing Date” refers to the date on which the MCC Merger Closing occurs;

•        “MCC Merger Effective Time” refers to the time at which the MCC Merger becomes effective, which shall be set forth in the certificate of merger to be filed with the Secretary of State of the State of Delaware and articles of merger are filed with the State Department of Assessments and Taxation for the State of Maryland;

•        “MCC Record Date” refers to the record date for determination of the MCC Stockholders of record entitled to vote at the MCC Special Meeting, which is the close of business on [        ], 2019;

•        “MCC Special Committee” refers to the special committee of the MCC Board, compromised solely of independent directors of MCC. From January 26, 2018 through March 18, 2019, the MCC Special Committee was comprised of Arthur S. Ainsberg, Karin Hirtler-Garvey, John E. Mack, and Mark Lerdal. From March 18, 2019 through April 14, 2019, the MCC Special Committee was comprised of Arthur S. Ainsberg and Karin Hirtler-Garvey. Since April 15, 2019, the MCC Special Committee has been comprised of Arthur S. Ainsberg, Karin Hirtler-Garvey, David A. Lorber, and Lowell W. Robinson;

•        “MCC Special Meeting” refers to the special meeting of MCC Stockholders to which this Amended Joint Proxy Statement/Prospectus relates;

•        “MCC Stockholders” refers to the holders of MCC Common Stock;

•        “MCC Stockholder Action” refers to the consolidated actions pending in the Delaware Court of Chancery under caption of In re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM;

•        “MDLY” refers to Medley Management Inc., a publicly traded asset management firm, which is controlled by Medley Group LLC, an entity wholly owned by Management;

3

•        “MDLY Incentive Plan” refers to the Medley Management Inc. 2014 Omnibus Incentive Plan;

•        “MDLY Board” refers to the board of directors of MDLY;

•        “MDLY Bylaws” refers to the Amended and Restated Bylaws of MDLY;

•        “MDLY Certificate” refers to the Amended and Restated Certificate of Incorporation of MDLY;

•        “MDLY Class A Common Stock” refers to Class A Common Stock, par value $0.01 per share, of MDLY;

•        “MDLY Class B Common Stock” refers to Class B Common Stock, par value $0.01 per share, of MDLY;

•        “MDLY Common Stock” refers, collectively, to MDLY Class A Common Stock and MDLY Class B Common Stock;

•        “MDLY Merger” refers to the merger of MDLY with and into Merger Sub, with Merger Sub continuing as the surviving company, as contemplated by the MDLY Merger Agreement or the Amended MDLY Merger Agreement, as applicable;

•        “MDLY Merger Agreement” refers to that certain Agreement and Plan of Merger, dated as of August 9, 2018, by and among MDLY, Sierra, and Merger Sub;

•        “MDLY Merger Closing” refers to the closing of the MDLY Merger;

•        “MDLY Merger Closing Date” refers to the date on which the MDLY Merger Closing occurs;

•        “MDLY Merger Effective Time” refers to the time at which the MDLY Merger becomes effective, which shall be set forth in the certificate of merger to be filed with the Secretary of State of the State of Delaware;

•        “MDLY Record Date” refers to the record date for determination of the MDLY Stockholders of record entitled to vote at the MDLY Special Meeting, which is the close of business on [        ], 2019;

•        “MDLY RSUs” refers to the outstanding restricted stock units of MDLY not previously forfeited under the MDLY Incentive Plan;

•        “MDLY Special Committee” refers to the special committee of the MDLY Board, comprised solely of independent directors of MDLY: James E. Eaton, Jeffrey T. Leeds, and Guy Rounsaville, Jr.;

•        “MDLY Special Meeting” refers to special meeting of MDLY Stockholders to which this Amended Joint Proxy Statement/Prospectus relates;

•        “MDLY Stockholders” refers to the holders of MDLY Common Stock;

•        “Medley” refers, collectively, to the activities and operations of Medley Capital LLC, Medley LLC, MDLY, Medley Group LLC, and associated investment funds and their respective affiliates;

•        “Medley Advisors” refers to Medley LLC and its subsidiaries;

•        “Medley Affiliates” refers to SIC Advisors, MCC Advisors, Medley LLC, Medley Group LLC, Seth Taube, and Brook Taube;

•        “Medley LLC” refers to Medley LLC, excluding its subsidiaries;

•        “Medley LLC Restricted Units” refers to the restricted Medley LLC Unit outstanding and not previously forfeited;

•        “Medley LLC Units” refers to the limited liability company units of Medley LLC;

•        “Medley LLC Unitholders” refers to the holders of Medley LLC Units, including any person who holds one or more Medley LLC Units at any time on or after July 29, 2019 and prior to the MDLY Merger Effective Time;

•        “Merger Sub” refers to Sierra Management, Inc., a wholly owned subsidiary of Sierra;

4

•        “Merger Sub Bylaws” refers to the Bylaws of Merger Sub;

•        “Merger Sub Certificate” refers to the Certificate of Incorporation of Merger Sub;

•        “Merger Sub Common Stock” refers to common stock, par value $0.001 per share, of Merger Sub;

•        “Mergers” refers, collectively, to the MCC Merger and the MDLY Merger;

•        “MGCL” refers to the Maryland General Corporation Law;

•        “NAV” refers to net asset value;

•        “New Sierra Investment Advisory Agreement” refers to the investment advisory agreement by and between the Combined Company or the Sierra/MDLY Company, as applicable, and its wholly owned registered investment adviser, MCC Advisors, to be entered into upon the closing of the Mergers or the MDLY Merger, as applicable, assuming that the MDLY Merger is consummated and the MCC Merger is not consummated;

•        “Non-Vesting Medley Restricted Units” refers to certain recently granted restricted Medley LLC Units held by members of Medley LLC;

•        “NYSE” refers to the New York Stock Exchange;

•        “Plaintiff Attorney Fees” refers to the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection the MCC Stockholder Action;

•        “RIC” refers to a regulated investment company;

•        “Sarbanes-Oxley Act” refers to the Sarbanes-Oxley Act of 2002, as amended;

•        “SBIC Subsidiary” refers to Medley SBIC, LP;

•        “SEC” refers to the U.S. Securities and Exchange Commission;

•        “Securities Act” refers to the Securities Act of 1933, as amended;

•        “Settlement” refers to the Stipulation of Settlement entered into by and among MDLY, MCC, Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MCC Advisors, Medley LLC and Medley Group LLC, on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd., on behalf of themselves and a class of similarly situated stockholders of MCC, on the other hand, on July 29, 2019 and, as amended on August 8, 2019;

•        “SIC Advisors” refers to SIC Advisors LLC, Sierra’s investment adviser;

•        “Sierra” refers to Sierra Income Corporation, a non-traded BDC;

•        “Sierra Administration Agreement” refers to the Administration Agreement by and between Sierra and Medley Capital LLC, dated as of April 5, 2012;

•        “Sierra Board” refers to the board of directors of Sierra;

•        “Sierra Bylaws” refers to Bylaws of Sierra;

•        “Sierra Charter” refers to the Second Articles of Amendment and Restatement of Sierra, as supplemented and amended by those certain Articles Supplementary, which were accepted for record by the State of Department of Assessments and Taxation for the State of Maryland on October 5, 2015;

•        “Sierra Charter Amendments” refers, collectively, to the Third Articles of Amendment and Restatement of Sierra and the Articles of Amendment to the Third Articles of Amendment and Restatement of Sierra;

•        “Sierra Common Stock” refers to common stock, par value $0.001 per share, of Sierra;

•        “Sierra Incentive Plan” refers to the Sierra Income Corporation 2018 Equity Omnibus Plan;

5

•        “Sierra Investment Advisory Agreement” refers to the Investment Advisory Agreement by and between Sierra and SIC Advisors, dated April 5, 2012;

•        “Sierra/MDLY Company” refers to Sierra, including Merger Sub, its wholly owned subsidiary, assuming the MDLY Merger is consummated and the MCC Merger is not consummated;

•        “Sierra/MDLY Company Common Stock” refers to common stock, par value $0.001 per share, of Sierra, which will be listed on the NYSE, with such listing expected to be effective as of the closing date of the MDLY Merger, assuming that the MDLY Merger is consummated and the MCC Merger is not consummated;

•        “Sierra/MDLY Company Board” refers to the board of directors of the Sierra/MDLY Company;

•        “Sierra/MDLY Company Stockholders” refers to the holders of the Sierra/MDLY Company Common Stock;

•        “Sierra Record Date” refers to the record date for determination of the Sierra Stockholders of record entitled to vote at the Sierra Special Meeting, which is the close of business on [        ], 2019;

•        “Sierra RSU” refers to restricted stock units to be issued under the Sierra Incentive Plan;

•        “Sierra Special Committee” refers to the special committee of the Sierra Board, compromised solely of independent directors of Sierra: Oliver T. Kane, Valerie Lancaster-Beal, and Stephen R. Byers;

•        “Sierra Special Meeting” refers to the special meeting of Sierra Stockholders to which this Amended Joint Proxy Statement/Prospectus relates;

•        “Sierra Stockholders” refers to the holders of Sierra Common Stock;

•        “TASE” refers to the Tel Aviv Stock Exchange;

•        “Tax Receivable Agreement” refers to that certain Tax Receivable Agreement, dated as of September 23, 2014, among MDLY and the Medley LLC Unitholders (other than MDLY);

•        “Tax Receivable Termination Agreement” refers to that certain Amended and Restated Termination Waiver and Lockup Agreement attached to the Amended MDLY Merger Agreement as Exhibit A; and

•        “Term Sheet” refers to the term sheet (which became terminable on May 15, 2019) setting forth certain terms to be memorialized in a mutually agreeable settlement stipulation subject to approval by the Delaware Court of Chancery in connection with the MCC Stockholder Action, dated April 15, 2019, among Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MCC, MCC Advisors, Medley LLC, and Medley Group LLC, on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd, on behalf of itself and a class of similarly situated stockholders of MCC, on the other hand;

•        “Vesting Medley Restricted Units” refers to restricted Medley LLC Units outstanding and not previously forfeited (other than the Non-Vesting Medley Restricted Units).

6

QUESTIONS & ANSWERS ABOUT THE SIERRA SPECIAL MEETING, THE MCC SPECIAL
MEETING, THE MDLY SPECIAL MEETING, THE MERGERS, AND RELATED MATTERS

The following are some questions that you may have regarding the Sierra Special Meeting, the MCC Special Meeting, the MDLY Special Meeting, the Mergers and the proposals being considered at those meetings, along with brief answers to those questions. Unless the context indicates that the Q&A pertains only to the MDLY Merger, the Q&A below is with respect to both the MCC Merger and the MDLY Merger. The questions and answers below highlight only selected information from this Amended Joint Proxy Statement/Prospectus. They do not contain all of the information that may be important to you. You should carefully read this entire Amended Joint Proxy Statement/Prospectus to fully understand the Amended MCC Merger Agreement, the Amended MDLY Merger Agreement, the Mergers, the Sierra Incentive Plan, the proposed Sierra Charter Amendments, the New Sierra Investment Advisory Agreement, and related matters, and the voting procedures for the Sierra Special Meeting, the MCC Special Meeting, and the MDLY Special Meeting.

Q:     Why am I receiving this Amended Joint Proxy Statement/Prospectus?

A:     The Mergers are dependent upon the satisfaction of certain conditions, including but not limited to, the approval of the Mergers by the Sierra Stockholders, the approval of the MCC Merger by the MCC Stockholders, and the approval of the MDLY Merger by the MDLY Stockholders. Sierra, MCC and MDLY are sending this Amended Joint Proxy Statement/Prospectus to their respective stockholders to help them decide how to vote their shares of Sierra Common Stock, MCC Common Stock, and MDLY Common Stock at the Sierra Special Meeting, the MCC Special Meeting, and the MDLY Special Meeting, respectively.

Q:     What will happen in the Mergers?

A:     Pursuant to the Amended MCC Merger Agreement, MCC will, on the terms and subject to the conditions set forth in the Amended MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving company in the MCC Merger. Pursuant to the Amended MDLY Merger Agreement, MDLY will, on the terms and subject to the conditions set forth in the Amended MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the MDLY Merger. Prior to the MDLY Merger Effective Time, all outstanding Medley LLC Units (other than those held by MDLY and other than the Non-Vesting Medley Restricted Units) will be converted into MDLY Class A Common Stock and, in connection with the MDLY Merger, Non-Vesting Medley Restricted Units will be converted into Sierra RSUs such that, in the MDLY Merger, Sierra will acquire 100% of the outstanding equity of MDLY and Merger Sub will continue its existence as a wholly owned subsidiary of Sierra. As a result of the Mergers, assuming both the MDLY Merger and the MCC Merger are consummated, the investment portfolios of Sierra and MCC will be combined and the investment management function relating to the operation of the Combined Company will be internalized. See “— What will the Combined Company look like following the completion of the Mergers?” (page 19 of this Amended Joint Proxy Statement/Prospectus). If the MDLY Merger is consummated and the MCC Merger is not consummated, the investment portfolios of MCC and Sierra would not be combined; however, the investment management function relating to the operation of the Sierra/MDLY Company in the MDLY Merger would be internalized. See “—If the MDLY Merger is consummated and the MCC Merger is not consummated, what will the Sierra/MDLY Company look like? (page 20 of this Amended Joint Proxy Statement/Prospectus).

Q:     Is the MCC Merger conditioned upon the completion of the MDLY Merger?

A:     Yes. The consummation of the MDLY Merger is a condition to closing of the MCC Merger.

Q:     Is the MDLY Merger conditioned upon the completion and the MCC Merger?

A:      No. The MDLY Merger can be consummated with or without the consummation of the MCC Merger.

Q:     Why is the Sierra Special Committee recommending the consummation of the MDLY Merger even if the MCC Merger is not consummated?

A:     The Sierra Special Committee is recommending that Sierra Stockholders approve the consummation of the MDLY Merger even if the MCC Merger is not consummated, recognizing that certain of the potential benefits of the Mergers might be achieved if the MDLY Merger is consummated and the MCC Merger is not consummated. These benefits include (1) the potential for achieving operational efficiencies and synergies; (2) the public listing of the Sierra/MDLY Company Common Stock will provide liquidity for the Sierra

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Stockholders, and the market for the shares Sierra/MDLY Company Common Stock is expected to potentially be superior to what would be expected if Sierra merely listed the Sierra Common Stock; (3) the MDLY Merger will result in the internalization of management of the Sierra/MDLY Company, providing for greater control by the Sierra/MDLY Company Board and closer alignment of interests of Management and the Sierra/MDLY Company Stockholders; and (4) the MDLY Merger is expected to be accretive to Sierra’s net investment income and return on equity. See “Special Factors — Reasons for the Mergers — Sierra’s Reasons for the Mergers — Phase 2 Approval.”

Q:     Why did the parties terminate the solicitation of proxies to approve the MCC Merger Agreement and the MDLY Merger Agreement and then enter into the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement?

A:     Following the announcement of the proposed Mergers, on February 11, 2019, the MCC Stockholder Action was commenced in the Delaware Court of Chancery by FrontFour. The complaint alleged that MCC’s directors at that time breached their fiduciary duties to MCC Stockholders in connection with the MCC Merger and that MDLY, Sierra, MCC Advisors, Medley Group LLC, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. On March 11, 2019, following a two-day trial, the Delaware Court of Chancery issued the Delaware Decision denying FrontFour’s requests to (i) permanently enjoin the MCC Merger and (ii) require MCC to conduct a “shopping process” for MCC on terms proposed in its complaint. The Delaware Court of Chancery held that MCC’s directors breached their fiduciary duties in entering into the MCC Merger Agreement, but that FrontFour had failed to prove that Sierra aided or abetted those breaches of fiduciary duties. However, in the Delaware Decision, the Delaware Court of Chancery ordered MCC to issue corrective disclosures consistent with the Delaware Decision and enjoined a vote of MCC Stockholders on the proposed MCC Merger until certain disclosures have been made and MCC Stockholders have had the opportunity to assimilate such information. On April 15, 2019, certain parties to the MCC Stockholder Action reached agreement on the principal terms of a settlement of the MCC Stockholder Action, as reflected in the Term Sheet. The Settlement provides for the settlement of all claims that were or could have been brought against the Medley Parties in the MCC Stockholder Action. Under the Settlement, MCC agreed to seek the agreement and/or consent of Sierra to effect certain amendments to (i) the MCC Merger Agreement and (ii) the MDLY Merger Agreement, which have been reflected in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. The Settlement also provides for, if the MCC Merger is consummated, the creation of the Settlement Fund, consisting of $17 million in cash and $30 million of Sierra Common Stock, with the number of shares of Sierra Common Stock to be calculated using the pro forma NAV reported in this Amended Joint Proxy Statement/Prospectus, which will be distributed to the Eligible Class Members. For a more detailed discussion of the reasons that the parties entered into the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement, see “Special Factors — Phase 2 — Background of the Mergers”).

Q:     What will the MCC Stockholders and the MDLY Stockholders receive in the MCC Merger and the MDLY Merger, respectively?

A:     MCC: In the MCC Merger, each share of MCC Common Stock issued and outstanding immediately prior to the MCC Merger Effective Time (other than the Excluded MCC Shares) will be converted into the right to receive: (i) 0.68 shares of Sierra Common Stock if the Plaintiff Attorney Fees are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra Common Stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra Common Stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra Common Stock in the event that the Plaintiff Attorney Fees are not determined prior to the MCC Merger Closing (collectively, the “MCC Merger Shares” and, such ratio, the “MCC Exchange Ratio”); provided that cash will be paid in lieu of fractional shares of Sierra Common Stock. The MCC Merger Shares and such cash payable in lieu of fractional shares of Sierra Common Stock is referred to collectively as the “MCC Merger Consideration.”

 

MCC Merger Consideration (per share of MCC Common Stock)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019 and assuming an exchange ratio of 0.67)

 

$

 

Total

 

$

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         MDLY: In the MDLY Merger, each share of MDLY Class A Common Stock issued and outstanding, immediately prior to the MDLY Merger Effective Time (other than “dissenting shares” (as discussed below and under “Description of the MDLY Merger Agreement — Appraisal Rights”) and Excluded MDLY Shares) held, immediately prior to the MDLY Merger Effective Time, by any person other than a Medley LLC Unitholder, will be converted into the right to receive (i) 0.2668 shares of Sierra Common Stock (the “MDLY Class A Merger Shares” and such ratio, the “MDLY Class A Exchange Ratio”), provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.96 per share (the “MDLY Class A Merger Cash Consideration” and together with the MDLY Class A Merger Shares, the “MDLY Class A Merger Consideration”). In addition, in the MDLY Merger, each share of MDLY Class A Common Stock issued and outstanding, immediately prior to the MDLY Merger Effective Time (other than “dissenting shares” (as discussed below and under “Description of the MDLY Merger Agreement — Appraisal Rights”) and Excluded MDLY Shares), held, immediately prior to the MDLY Merger Effective Time, by a Medley LLC Unitholder, will be converted into the right to receive (i) 0.2072 shares of Sierra Common Stock (the “MDLY Unitholder Merger Shares” and such ratio, the “MDLY Unitholder Exchange Ratio”) and together with MDLY Class A Exchange Ratio, the “MDLY Exchange Ratios”), provided that cash will be paid in lieu of fractional shares of Sierra Common Stock; plus (ii) cash in an amount equal to $2.66 per share (the “MDLY Unitholder Merger Cash Consideration” together with the MDLY Class A Merger Cash Consideration, the “MDLY Cash Consideration”). The MDLY Class A Merger Consideration and the MDLY Unitholder Merger Consideration is collectively referred to herein as the “MDLY Merger Consideration.” Each share of MDLY Class B Common Stock issued and outstanding immediately prior to the MDLY Merger Effective time (other than “dissenting shares” (as discussed under “Description of the Amended MDLY Merger Agreement — Appraisal Rights”)) will be canceled without consideration therefor.

 

MDLY Merger Consideration (per share of MDLY Class A Common Stock other than those held by the Unitholders)

 

Amount

Sierra Common Stock (dollar equivalent based on the pro forma Combined Company’s net asset value per share of $             as of June 30, 2019)

 

$

 

Cash from Sierra

 

$

2.96

Total

 

$

 

Q:     What are MCC Stockholders entitled to under the Settlement?

A:     The Settlement provides that, among other things, the defendant parties to the Settlement (other than MDLY) shall deposit, or cause to be deposited, $17 million in cash (the “Settlement Cash”) and $30 million of Sierra Common Stock with the number of shares of Sierra Common Stock to be calculated using the pro forma NAV reported in this Amended Joint Proxy Statement/Prospectus (the “Settlement Shares” and together with the Settlement Cash, the “Settlement Amount”), to a settlement fund that shall be formed immediately after, but on the same date as, the MCC Merger Closing (the “Settlement Fund”), which shall be distributed to Eligible Class Members.

Q:     How will MCC Stockholders and the MDLY Stockholders receive the MCC Merger Consideration and the MDLY Merger Consideration (as applicable), respectively?

A:     Following the MCC Merger or the MDLY Merger, as applicable, if you are a MCC Stockholder or MDLY Stockholder at the MCC Merger Effective Time or the MDLY Merger Effective Time, respectively, you will receive a letter of transmittal and instructions on how to obtain your portion of the MCC Merger Consideration or the MDLY Merger Consideration, as applicable. You will receive your respective portion of the MCC Merger Consideration or the MDLY Merger Consideration, as applicable, after the exchange agent for the Mergers receives your properly completed letter of transmittal and/or such other documents that may be required by such exchange agent.

Q:     How will Eligible Class Members receive the Settlement Cash and the Settlement Shares in connection with the Settlement?

A:     In connection with the Settlement, and pursuant to the Amended MCC Merger Agreement, at or prior to the MCC Merger Closing and following the appointment of an escrow agent reasonably acceptable to each of Sierra and MCC (the “Escrow Agent”), MCC shall deposit with the Escrow Agent (solely for the benefit of the Eligible Class Members) the Settlement Cash, and Sierra shall issue and deliver to the Escrow Agent (solely for the benefit of the Eligible Class Members) the Settlement Shares. The Settlement Cash deposited

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by MCC with the Escrow Agent and the Settlement Shares issued by Sierra to the Escrow Agent shall be held in an escrow fund (the “Escrow Fund”). Pursuant to an escrow agreement to be entered into by and among MCC, Sierra and the Escrow Agent (the “Escrow Agreement”), the Escrow Agent will hold the Settlement Cash and the Settlement Shares in the Escrow Fund and will only release the same to the Settlement Fund upon receiving confirmation that both MCC and Sierra have made the necessary state filings to effectuate the MCC Merger. Sierra has agreed to deliver to the Escrow Agent copies of the filings made in the State of Delaware and the State of Maryland effectuating the MCC Merger required for the Escrow Agent to release and deliver the Settlement Cash and the Settlement Shares in the Escrow Fund to the Settlement Fund.

Q:     What happens if the market price of MCC Common Stock or MDLY Class A Common Stock changes before the closing of the Mergers?

A:     No change will be made to the MCC Exchange Ratio or the MDLY Exchange Ratios, as applicable, if the market prices of MCC Common Stock or MDLY Class A Common Stock change before the Mergers. Because the exchange ratios are fixed, the value of the consideration to be received by MCC Stockholders and MDLY Stockholders in the Mergers will depend on the market price of Sierra Common Stock immediately following the MCC Merger Closing and the MDLY Merger Closing, as applicable.

Q:     Are the exchange ratios subject to any adjustment?

A:     MCC: Yes. The MCC Exchange Ratio varies depending on the amount of the Plaintiff Attorney Fees. See “What will the MCC Stockholders and the MDLY Stockholders receive in the MCC Merger and the MDLY Merger, respectively” above. In addition, if, between the date of the Amended 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 distribution reinvestment plan (the “Sierra Distribution Reinvestment Plan”) or otherwise in lieu of a portion of any cash dividend declared by Sierra), an appropriate and proportionate adjustment will be made to the MCC Exchange Ratio.

MDLY: If, between the date of the Amended MDLY Merger Agreement and the MDLY 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 the Sierra Distribution Reinvestment Plan or otherwise in lieu of a portion of any cash dividend declared by Sierra), an appropriate and proportionate adjustment will be made to the MDLY Exchange Ratios.

Q:     Will the Sierra Common Stock be listed on a national securities exchange following the Mergers?

A:     Yes. If the Mergers are, or only the MDLY Merger is consummated, Sierra Common Stock will be listed on the NYSE under the symbol “SRA”, with such listing expected to be effective as of the closing date of the Mergers or only the MDLY Merger, as applicable. If the MCC Merger is also consummated, Sierra Common Stock will be listed on the TASE, with such listing expected to be effective as of the closing date of the Mergers. The Combined Company or the Sierra/MDLY Company, as applicable, does not currently intend to continue to conduct the quarterly tender offers conducted by Sierra prior to the Mergers, and the Combined Company Common Stock or the Sierra/MDLY Company Common Stock, as applicable, may trade at a discount to NAV.

Q:     When and where are the stockholder meetings?

A:     Sierra: The Sierra Special Meeting will take place on [        ] at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036.

         MCC: The MCC Special Meeting will take place on [        ] at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036.

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         MDLY: The MDLY Special Meeting will take place on [        ] at [        ], Eastern Time, at the offices of Eversheds Sutherland (US) LLP located at 1114 Avenue of the Americas, 40th Floor, New York, New York 10036.

Q:     What is happening at the Sierra Special Meeting, the MCC Special Meeting, and the MDLY Special Meeting?

A:     Sierra: Sierra Stockholders are being asked to consider and vote on the following matters at the Sierra Special Meeting:

•        a proposal to approve the MCC Merger;

•        a proposal to approve the MDLY Merger;

•        a proposal to approve the issuance of the Settlement Shares and the shares of Sierra Common Stock to be issued pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement at a price below its then current NAV per share, if applicable;

•        a proposal to adopt the Sierra Incentive Plan;

•        proposals to adopt the Sierra Charter Amendments;

•        a proposal to approve the New Sierra Investment Advisory Agreement; and

•        a proposal to approve the adjournment of the Sierra Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Sierra Special Meeting to approve the foregoing proposals, or for other reasons.

MCC: MCC Stockholders are being asked to consider and vote on the following matters at the MCC Special Meeting:

•        a proposal to approve the adoption of the Amended MCC Merger Agreement; and

•        a proposal to approve the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

MDLY: MDLY Stockholders are being asked to consider and vote on the following matters at the MDLY Special Meeting:

•        a proposal to approve the adoption of the Amended MDLY Merger Agreement; and

•        a proposal to approve the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons.

Q:     How do I vote?

A:     Sierra: If you are a holder of record of shares of Sierra Common Stock as of the close of business on the Sierra Record Date, you may vote on the applicable proposals by:

•        attending the Sierra Special Meeting in person as specified on the enclosed WHITE proxy card;

•        accessing the Internet website specified on the enclosed WHITE proxy card;

•        calling the toll-free number specified on the enclosed WHITE proxy card; or

•        signing and returning the enclosed WHITE proxy card in the postage-paid envelope provided.

All shares of Sierra Common Stock represented by properly executed proxies received in time for the Sierra Special Meeting will be voted in the manner specified by the Sierra Stockholders giving those proxies. Unless your shares are held in a brokerage account, if you sign, date and send the enclosed proxy card and do not indicate how you want to vote on a proposal, your proxy will be voted for each of the Sierra proposals.

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If you hold shares of Sierra Common Stock in the name of a broker, bank or nominee, please follow the voting instructions provided by your broker, bank or nominee to ensure that your shares are represented at the Sierra Special Meeting.

MCC: If you are a holder of record of shares of MCC Common Stock as of the close of business on the MCC Record Date, you may vote on the applicable proposals by:

•        attending the MCC Special Meeting in person as specified on the enclosed WHITE proxy card;

•        accessing the Internet website specified on the enclosed WHITE proxy card;

•        calling the toll-free number specified on the enclosed WHITE proxy card; or

•        signing and returning the WHITE enclosed proxy card in the postage-paid envelope provided.

         All shares of MCC Common Stock represented by properly executed proxies received in time for the MCC Special Meeting will be voted in the manner specified by the MCC Stockholders giving those proxies. Unless your shares are held in a brokerage account, if you sign, date and send the enclosed proxy card and do not indicate how you want to vote on a proposal, your proxy will be voted for each of the MCC proposals.

         If you hold shares MCC Common Stock in the name of a broker, bank or nominee, please follow the voting instructions provided by your broker, bank or nominee to ensure that your shares are represented at the MCC Special Meeting.

MDLY: If you are a holder of record of shares of MDLY Common Stock as of the close of business on the MDLY Record Date, you may vote on the applicable proposals by:

•        attending the MDLY Special Meeting in person as specified on the enclosed WHITE proxy card;

•        accessing the Internet website specified on the enclosed WHITE proxy card;

•        calling the toll-free number specified on the enclosed WHITE proxy card; or

•        signing and returning the WHITE enclosed proxy card in the postage-paid envelope provided.

All shares of MDLY Common Stock represented by properly executed proxies received in time for the MDLY Special Meeting will be voted in the manner specified by the MDLY Stockholders giving those proxies. Unless your shares are held in a brokerage account, if you sign, date and send the enclosed proxy card and do not indicate how you want to vote on a proposal, your proxy will be voted for each of the MDLY proposals.

If you hold shares of MDLY Common Stock in the name of a broker, bank or nominee, please follow the voting instructions provided by your broker, bank or nominee to ensure that your shares are represented at the MDLY Special Meeting.

Q:     What constitutes a quorum at the stockholder meetings?

A:     Sierra: The presence, in person or by proxy, of the holders of one-third of issued and outstanding shares of Sierra Common Stock as of the Sierra Record Date will constitute a quorum for the purposes of the Sierra Special Meeting.

MCC: The presence, in person or by proxy, of the holders of a majority of issued and outstanding shares of MCC Common Stock as of the MCC Record Date will constitute a quorum for the purposes of the MCC Special Meeting.

MDLY: The presence, in person or by proxy, of the holders of a majority in voting power of MDLY Common Stock issued and outstanding as of the MDLY Record Date will constitute a quorum for the purposes of the MDLY Special Meeting.

Q:     How do the boards of directors of Sierra, MCC and MDLY recommend that I vote?

A:     Sierra: Based upon the recommendation of the Sierra Special Committee, the Sierra Board unanimously recommends Sierra Stockholders vote “FOR” each of the Sierra proposals.

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MCC: Based upon the recommendation of the MCC Special Committee, the MCC Board unanimously recommends MCC Stockholders vote “FOR” the approval of the adoption of the Amended MCC Merger Agreement and “FOR” the adjournment of the MCC Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MCC Special Meeting to approve the adoption of the Amended MCC Merger Agreement, or for other reasons.

MDLY: Based upon the recommendation of the MDLY Special Committee, the MDLY Board unanimously recommends MDLY Stockholders vote “FOR” the approval of the adoption of the Amended MDLY Merger Agreement and “FOR” the adjournment of the MDLY Special Meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the MDLY Special Meeting to approve the adoption of the Amended MDLY Merger Agreement, or for other reasons.

Q:     What Sierra Stockholder vote is required to approve the Sierra proposals?

A:     With regard to Sierra Proposal #1 (approval of MCC Merger), and Sierra Proposal #2 (approval of MDLY Merger), the holders of a majority of the outstanding shares of Sierra Common Stock as of the Sierra Record Date must affirmatively vote “FOR” in order for it to be approved. Because the vote on each proposal is based on the total number of shares of Sierra Common Stock outstanding, abstentions and “broker non-votes” will have the same effect as voting “AGAINST” the approval of the proposal.

With regard to Sierra Proposal #3 (issuance of the Settlement Shares and Sierra Common Stock pursuant to each of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement), under the Investment Company Act, Sierra is not permitted to issue shares of Sierra Common Stock at a price below the then current NAV per share unless such issuance is approved by a majority of the holders of (1) the outstanding shares of Sierra Common Stock and (2) the outstanding shares of Sierra Common Stock held by persons who are not affiliated persons of Sierra. The vote of holders of a “majority,” as defined in the Investment Company Act, means the vote of the holders of the lesser of (1) 67% or more of the outstanding shares of Sierra Common Stock present or represented by proxy at the Sierra Special Meeting if the holders of more than 50% of the shares of Sierra Common Stock are present or represented by proxy or (2) more than 50% of the outstanding shares of Sierra Common Stock. In order to issue shares at a price below NAV pursuant to this approval, the Sierra Board would need to make certain determinations as required under the Investment Company Act. Abstentions and “broker non-votes” will have the effect of a vote “AGAINST” the proposal. See “The Special Meeting of Sierra — Vote Required” (page 314 of this Amended Joint Proxy Statement/Prospectus) for more information on Sierra Proposal #3.

With regard to Sierra Proposal #4 (adoption of the Sierra Incentive Plan), the majority of the votes cast by the holders of Sierra Common Stock as of the Sierra Record Date present or represented by proxy at the Sierra Special Meeting must affirmatively vote “FOR” Sierra Proposal #4 in order for it to be approved (meaning the number of shares voted “FOR” a proposal must exceed the number of shares voted “AGAINST” such proposal). Abstentions have the same effect as votes cast against the proposal, while “broker non-votes” will not be included in determining the number of votes cast and, as a result, do not affect the outcome.

With regard to Sierra Proposal #5 (adoption of the Sierra Charter Amendments), the requisite Sierra Stockholder approval depends on the particular Sierra Charter Amendment being considered, as described below.

•        The holders of shares of Sierra Common Stock entitled to cast a majority of all the votes entitled to be cast as of the Sierra Record Date must affirmatively vote “FOR” the approval of each of Charter Amendment Proposals #5(A)(i) through (A)(xi) in order for it to be approved. Abstentions and “broker non-votes” will not count as affirmative votes cast and will therefore have the same effect as votes “AGAINST” each of Charter Amendment Proposals #5(A)(i) through (A)(xi).

•        The holders of shares of Sierra Common Stock entitled to cast a majority of all the votes entitled to be cast as of the Sierra Record Date must affirmatively vote “FOR” the approval of Charter Amendment Proposal #5(B). Abstentions and “broker non-votes” will not count as affirmative votes cast and will therefore have the same effect as votes “AGAINST” Charter Amendment Proposal #5(B).

•        The holders of shares of Sierra Common Stock entitled to cast a majority of all the votes entitled to be cast on the matter as of the Sierra Record Date must affirmatively vote “FOR” the approval of Charter Amendment Proposal #5(C). Abstentions and “broker non-votes” will not count as affirmative votes cast and will therefore have the same effect as votes “AGAINST” Charter Amendment Proposal #5(C).

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•        The holders of shares of Sierra Common Stock entitled to cast a majority of all the votes entitled to be cast on the matter as of the Sierra Record Date must affirmatively vote “FOR” the approval of Charter Amendment Proposal #5(D). Abstentions and “broker non-votes” will not count as affirmative votes cast and will therefore have the same effect as votes “AGAINST” Charter Amendment Proposal #5(D).

•        The holders of shares of Sierra Common Stock entitled to cast at least two-thirds of all the votes entitled to be cast as of the Sierra Record Date must affirmatively vote “FOR” the approval of Charter Amendment Proposal #5(E). Abstentions and “broker non-votes” will not count as affirmative votes cast and will therefore have the same effect as votes “AGAINST” Charter Amendment Proposal #5(E).

With regard to Sierra Proposal #6 (approval of the New Sierra Investment Advisory Agreement), a majority of the holders of (1) the outstanding shares of Sierra Common Stock as of the Sierra Record Date and (2) the outstanding shares of Sierra Common Stock as of the Sierra Record Date held by persons who are not affiliated persons of Sierra, each must affirmatively vote “FOR” the proposal in order for it to be approved. The vote of holders of a “majority,” as defined in the Investment Company Act, means the vote of the holders of the lesser of (1) 67% or more of the outstanding shares of Sierra Common Stock present or represented by proxy at the Sierra Special Meeting if the holders of more than 50% of the shares of Sierra Common Stock are present or represented by proxy or (2) more than 50% of the outstanding shares of Sierra Common Stock. Because the vote on the proposal is based on the total number of shares outstanding, abstentions and “broker non-votes” will have the same effect as voting “AGAINST” the approval of the proposal.

Q:     What MCC Stockholder vote is required to approve MCC Proposal #1 (approval of the adoption of the Amended MCC Merger Agreement)?

A:     A majority of the outstanding shares of MCC Common Stock as of the MCC Record Date must affirmatively vote “FOR” MCC Proposal #1 in order for it to be approved. Because the vote on the proposal is based on the total number of shares of MCC Common Stock outstanding, abstentions and “broker non-votes” will have the same effect as voting “AGAINST” the approval of the proposal.

Q:     What MDLY Stockholder vote is required to approve MDLY Proposal #1 (approval of the adoption of the Amended MDLY Merger Agreement)?

A:     The holders of a majority of the voting power of the outstanding shares of MDLY Common Stock as of the MDLY Record Date must affirmatively vote “FOR” MDLY Proposal #1 in order for it to be approved. Because the vote on the proposal is based on the total number of shares of MDLY Common Stock outstanding, abstentions and “broker non-votes” will have the same effect as voting “AGAINST” the approval of the proposal. As a result of the voting control of Medley Group LLC of [        ]% of the voting power of the outstanding shares of MDLY Common Stock as of the MDLY Record Date, the approval of the adoption of the Amended MDLY Merger Agreement by MDLY Stockholders is assured.

Q:     How were the actual and potential conflicts of interests addressed in consideration of the approval of the Mergers?

A:     Various safeguards were implemented to protect against actual and potential conflicts of interests in light of the fact that the Mergers required agreement among Management and three affiliated, separate and distinct public entities, one of which, MDLY, is controlled by Management through majority equity ownership and two of which, Sierra and MCC, are managed by subsidiaries of MDLY. In order to mitigate such conflicts, each of the Sierra Board, the MCC Board, and the MDLY Board formed a special committee, comprised solely of independent directors of each respective board. Each of the Sierra Special Committee, MCC Special Committee and MDLY Special Committee exercised the authority, granted by each respective board, to hire advisors that it deemed appropriate, including in each case its own independent legal counsel and independent financial advisor. Moreover, the role that each of Management, the Sierra Special Committee, MCC Special Committee and MDLY Special Committee served varied during Phase 1 and Phase 2 (each as defined in the section entitled “Special Factors”). For a more detailed discussion of the processes undertaken to mitigate Management’s conflicts of interests and role in the Mergers, see “Special Factors — Overview of the Background of the Mergers — Management’s Conflicts of Interests and Role in the Mergers — Phase 1

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Considerations” (page 71 of this Amended Joint Proxy Statement/Prospectus); and “Special Factors — Overview of the Background of the Mergers — Management’s Conflicts of Interests and Role in the Mergers — Phase 2 Considerations” (page 73 of this Amended Joint Proxy Statement/Prospectus). For a more detailed description of the process undertaken by each of the Sierra Special Committee, the MCC Special Committee, and the MDLY Special Committee, see “Special Factors — Phase 1  — Background of the Mergers — Sierra — Process Undertaken During Phase 1” (page 76 of this Amended Joint Proxy Statement/Prospectus), “Special Factors — Phase 1 — Background of the Mergers — MCC — Process Undertaken During Phase 1” (page 87 of this Amended Joint Proxy Statement/Prospectus), and “Special Factors — Phase 1 — Background of the Mergers — MDLY — Process Undertaken During Phase 1” (page 90 of this Amended Joint Proxy Statement/Prospectus); and see “Special Factors — Phase 2 — Background of the Mergers — Sierra — Process Undertaken During Phase 2” (page 123 of this Amended Joint Proxy Statement/Prospectus), “Special Factors — Phase 2 — Background of the Mergers — MCC — Process Undertaken During Phase 2” (page 131 of this Amended Joint Proxy Statement/Prospectus), and “Special Factors — Phase 2 — Background of the Mergers — MDLY — Process Undertaken During Phase 2” (page 136 of this Amended Joint Proxy Statement/Prospectus).

Q:     Did the Sierra Special Committee, the MCC Special Committee, and the MDLY Special Committee receive opinions from financial advisors regarding the merger consideration?

A:     Sierra: Yes. For more information, see “Special Factors — Opinion of Financial Advisor to the Sierra Special Committee” (page 156 of this Amended Joint Proxy Statement/Prospectus).

         MCC: Yes. For more information, see “Special Factors — Opinion of Financial Advisor to the MCC Special Committee” (page 166 of this Amended Joint Proxy Statement/Prospectus).

         MDLY: Yes. For more information, see “Special Factors — Opinion of Financial Advisor to the MDLY Special Committee” (page 178 of this Amended Joint Proxy Statement/Prospectus).

Q:     Who is responsible for paying the expenses relating to completing the Mergers, including the preparation of this Amended Joint Proxy Statement/Prospectus and the solicitation of proxies?

A:     In general, Sierra and MCC will each be responsible for its own fees and expenses incurred in connection with the Amended MCC Merger Agreement and the transactions contemplated thereby, including the completion of the MCC Merger, as the case may be, irrespective of whether the MCC Merger is completed. In general, Sierra and MDLY will each be responsible for its own fees and expenses incurred in connection with the Amended MDLY Merger Agreement and the transactions contemplated thereby, including the completion of the MDLY Merger, as the case may be, irrespective of whether the MDLY Merger is completed. However, the costs and expenses of preparing, filing, printing and mailing the Registration Statement on Form N-14 and related Amended Joint Proxy Statement/Prospectus, all other filing fees and amounts paid to the SEC in connection with the MCC Merger and the MDLY Merger, and the fees of any filings under the HSR Act, will be borne equally by Sierra, MCC, and MDLY. See “Description of the Amended MCC Merger Agreement — Transaction Expenses” (page 346 of this Amended Joint Proxy Statement/Prospectus) and “Description of the Amended MDLY Merger Agreement — Transaction Expenses” (page 371 of this Amended Joint Proxy Statement/Prospectus).

Q:     Will I receive dividends after the effective time of the MCC Merger and the MDLY Merger?

A:     To the extent Sierra, as the Combined Company or the Sierra/MDLY Company, as applicable, declares and pays dividends on the Combined Company Common Stock or the Sierra/MDLY Company Common Stock, as applicable, all holders of Combined Company Common Stock or the Sierra/MDLY Company Common Stock, as applicable (including former holders of MCC Common Stock and MDLY Class A Common Stock, as applicable) as of the relevant record dates will be entitled to receive such dividends. However, no dividends or other distributions declared with respect to Combined Company Common Stock or the Sierra/MDLY Company Common Stock, as applicable, to stockholders of record on or after the MCC Merger Effective Time or MDLY Merger Effective Time, as applicable, will be paid to the holder of any unsurrendered certificate of MCC Common Stock or MDLY Class A Common Stock, as applicable, unless and until the holder thereof has surrendered such certificate in accordance with the terms of the

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relevant merger agreement. Subject to the effect of applicable abandoned property, escheat or similar laws, following surrender of any such certificate, the record holder of such certificate will be entitled to receive, without interest, (i) the amount of dividends or other distributions with a record date after the effective time theretofore payable with respect to the whole shares of Sierra Common Stock represented by such certificate and not paid to the relevant stockholder prior to the date of surrender, and/or (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to whole shares of Combined Company Common Stock or the Sierra/MDLY Company Common Stock, as applicable, represented by such certificate with a record date after the effective time (but before such surrender date) and with a payment date subsequent to the surrender date. For a history of the dividends and distributions paid by Sierra, MCC, and MDLY, see “Market Price, Dividend and Distribution Information” (page 465 of this Amended Joint Proxy Statement/Prospectus).

Q:     Are there any conditions to the MCC Merger Closing that must be satisfied for the MCC Merger to be completed?

A:     Yes. In addition to the approvals of the Sierra Stockholders and MCC Stockholders described herein, there are a number of conditions that must be satisfied or waived for the MCC Merger to be consummated under the Amended MCC Merger Agreement, including but not limited to: (a) the consummation of the MDLY Merger, (b) obtaining an exemptive order from the SEC in connection with the Mergers, (c) expiration or termination of any applicable waiting period (and any extension thereof) under the HSR Act, (d) receipt of certain third party consents and approvals relating to joint venture arrangements of Sierra and MCC and certain consents relating to private funds and managed accounts of MDLY, (e) the SEC shall not have rescinded its confirmation that Merger Sub will, following the MDLY Merger, be treated as a portfolio investment and will not be consolidated on the Combined Company’s financial statements, and (f) final approval of the settlement of the MCC Stockholder Action pursuant to the Settlement. See “Description of the Amended MCC Merger Agreement — Conditions to the MCC Merger” (page 347 of this Amended Joint Proxy Statement/Prospectus).

Q:     Are there any conditions to the MDLY Merger Closing that must be satisfied for the MDLY Merger to be completed?

A:     Yes. In addition to the approvals of the Sierra Stockholders and MDLY Stockholders described herein, there are a number of conditions that must be satisfied or waived for the MDLY Merger to be consummated under the Amended MDLY Merger Agreement, including but not limited to: (a) obtaining an exemptive order from the SEC in connection with the Mergers or the MDLY Merger, as applicable, (b) on (and not sooner than) the MDLY Merger Closing Date but prior to the MDLY Merger Effective Time, conversion of all issued and outstanding Medley LLC Units (including the Vesting Medley LLC Restricted Units) other than Non-Vesting Medley Restricted Units and Medley LLC Units held by MDLY, into MDLY Class A Common Stock in accordance with the Exchange Agreement and the Amended MDLY Merger Agreement and no shares of MDLY Class A Common Stock issued in such conversion shall have been transferred by a Medley LLC Unitholder prior to the MDLY Merger Effective Time, (c) execution, delivery and effectiveness of the Tax Receivable Termination Agreement and each of the representations and warranties of the Medley LLC Unitholders under the Tax Receivable Termination Agreement shall be true and correct in all material respects on and as if made as of the MDLY Merger Closing Date and each Medley LLC Unitholder shall have complied with each of its covenants set forth in the Tax Receivable Termination Agreement since the date thereof, (d) MDLY obtaining written consents relating to the continuation, following the MDLY Merger Effective Time, of the advisory relationship with private funds and managed accounts representing 65% of MDLY’s total revenues from private funds and managed accounts for the 12-month period ended as of June 30, 2018, (e) the SEC shall not have rescinded its confirmation that the equity of Merger Sub will, following the MDLY Merger, be treated as a portfolio investment of the Combined Company or the Sierra/MDLY Company, as applicable, and reflected in the consolidated financial statements of the Combined Company or the Sierra/MDLY Company, as applicable, at fair value for accounting purposes, and that Merger Sub’s financial results will not be consolidated into the financial statements of the

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Combined Company or the Sierra/MDLY Company, as applicable, and (f) entry by specified executives into employment agreements, effective at the MDLY Merger Effective Time, substantially in the forms attached to the Amended MDLY Merger Agreement. See “Description of the Amended MDLY Merger Agreement — Conditions to the MDLY Merger” (page 371 of this Amended Joint Proxy Statement/Prospectus). The MDLY Merger is not conditioned on the consummation of the MCC Merger.

Q:     How will the Combined Company be managed following the completion of the Mergers?

A:     On [        ], 2019, the Sierra Board took the necessary actions to appoint individuals to serve as directors and executive officers of the Combined Company. Effective as of the closing of the Mergers, the following actions will occur with respect to the Combined Company Board and the management of the Combined Company: (1) Seth Taube will resign from his positions as a director and Chief Executive Officer of Sierra, (2) Brook Taube will be appointed as Chief Executive Officer, President, and Chief Investment Officer of the Combined Company and a member of the Combined Company Board, (3) one independent director of MCC will be selected by the independent directors of the Sierra Board, and (4) if the independent directors of the Sierra Board elect in their sole discretion, an additional independent director who will be selected by the independent directors of the Sierra Board. The current independent directors of Sierra, Oliver T. Kane, Valerie Lancaster-Beal, and Stephen R. Byers, will continue as directors of the Combined Company Board. In addition, effective as of the closing of the Mergers, one of the current independent directors of Sierra will be appointed to serve as the Chair of the Combined Company Board.

         Effective as of the closing of the Mergers, the following persons will serve as the Combined Company’s executive officers or key employees in the following capacities:

 

Name

 

Position(s) Held

Brook Taube

 

Chief Executive Officer, President, Chief Investment Officer and a member of the Combined Company Board

Seth Taube

 

Senior Executive Vice President and Senior Managing Director

Richard T. Allorto, Jr.

 

Chief Financial Officer, Treasurer, Senior Executive Vice President, and Senior Managing Director

John D. Fredericks

 

General Counsel, Chief Compliance Officer, Secretary, Senior Executive Vice President, and Senior Managing Director

Samuel Anderson

 

Head of Capital Markets & Risk Management, Senior Executive Vice President, and Senior Managing Director

Christopher Taube

 

Head of Institutional Fundraising, Senior Executive Vice President, and Senior Managing Director

         For more information regarding the management of the Combined Company, see “Information about the Combined Company — Management” (page 763 of this Amended Joint Proxy Statement/Prospectus).

Q:     If the MDLY Merger is consummated and the MCC Merger is not consummated, how will the Sierra/MDLY Company be managed?

A:     On [        ], 2019, the Sierra Board took the necessary actions to appoint individuals to serve as directors and executive officers of the Sierra/MDLY Company if the MDLY Merger is consummated and the MCC Merger is not consummated. Effective as of the MDLY Merger Closing, the following actions will occur with respect to the Sierra/MDLY Company Board and the management of the Sierra/MDLY Company: (1) Seth Taube will resign from his positions as a director and Chief Executive Officer of Sierra, (2) Brook Taube will be appointed as Chief Executive Officer, President, and Chief Investment Officer of the Sierra/MDLY Company and a member of the Sierra/MDLY Company Board, and (3) if the independent directors of the Sierra Board elect in their sole discretion, an additional independent director who will be selected by the independent directors of the Sierra Board. The current independent directors of Sierra, Oliver T. Kane, Valerie Lancaster-Beal, and Stephen R. Byers, will continue as directors of the Sierra/MDLY Company Board. In addition, effective as of the MDLY Merger Closing, one of the current independent directors of Sierra will be appointed to serve as the Chair of the Sierra/MDLY Company Board.

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         Effective as of the MDLY Merger Closing, the following persons will serve as the Sierra/MDLY Company’s executive officers or key employees in the following capacities:

 

Name

 

Position(s) Held

Brook Taube

 

Chief Executive Officer, President, Chief Investment Officer and a member of the Combined Company Board

Seth Taube

 

Senior Executive Vice President and Senior Managing Director

Richard T. Allorto, Jr.

 

Chief Financial Officer, Treasurer, Senior Executive Vice President, and Senior Managing Director

John D. Fredericks

 

General Counsel, Chief Compliance Officer, Secretary, Senior Executive Vice President, and Senior Managing Director

Samuel Anderson

 

Head of Capital Markets & Risk Management, Senior Executive Vice President, and Senior Managing Director

Christopher Taube

 

Head of Institutional Fundraising, Senior Executive Vice President, and Senior Managing Director

         For more information regarding the management of the Sierra/MDLY Company, see “Information about the Sierra/MDLY Company — Management.

Q:     How do Sierra’s investment objective and strategies differ from MCC’s investment objective and strategies?

A:     The following table presents a comparison of Sierra’s and MCC’s investment objective and strategies:

     

Sierra

 

MCC

Investment Objective

 

To generate current income, and to a lesser extent, long-term capital appreciation by primarily lending to and investing in the debt of privately-owned U.S. middle-market companies

 

To generate current income and capital appreciation by lending to privately-owned middle market companies, primarily through directly originated transactions

Investment Focus

 

First lien senior secured debt, second lien secured debt and, to a lesser extent, subordinated debt

 

Senior secured first lien loans and senior secured second lien loans

Investment Range

 

Investment sizes will vary as Sierra’s capital base changes and will ultimately be at the discretion of SIC Advisors subject to oversight by the Sierra Board

 

Between $10 million and $50 million

Target Borrower

 

U.S. companies operating in a broad range of industries with annual revenue between $50 million and $1 billion

 

U.S. companies operating in a variety of industries with enterprise or asset values between $25 million and $250 million

Equity and Equity-Related Investments

 

May make equity investments in companies that Sierra believes will generate appropriate risk adjusted returns, although Sierra does not expect such investments to be a substantial portion of its portfolio

 

In connection with some of MCC’s investments, MCC receives warrants or other equity participation features

         Following the completion of the Mergers or the MDLY Merger, as applicable, the Combined Company’s or the Sierra/MDLY Company’s, as applicable, investment objective and principal investment strategies will be the same as Sierra’s current investment objective and principal investment strategies, as described above. In connection with the Mergers, neither Sierra nor MCC expects to sell any investments in order for such investments to comply with the Combined Company’s investment objective and principal investment strategies. In addition, if the MDLY Merger is consummated and the MCC Merger is not consummated, Sierra does not expect to sell any investments in order for such investments to comply with the Sierra/MDLY Company’s investment objective and principal investment strategies.

         SIC Advisors currently serves as the registered investment adviser of Sierra, MCC Advisors currently serves as the registered investment adviser of MCC, and, following the consummation of the Mergers or

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the MDLY Merger, as applicable, MCC Advisors will serve as the wholly owned registered investment adviser of the Combined Company or the Sierra/MDLY Company, as applicable. If the MDLY Merger is consummated and the MCC Merger is not consummated, the investment portfolios of MCC and Sierra would not be combined; however, the investment management function relating to the operation of the Sierra/MDLY Company would be internalized and MCC Advisors will serve as the wholly owned registered investment adviser of the Sierra/MDLY Company.

Q:     What will the Combined Company look like following the completion of the Mergers?

A:     Upon the completion of the Mergers, the investment management function relating to the operation of the Combined Company will be internalized and Merger Sub, as the surviving company in the MDLY Merger, will be a wholly owned subsidiary and wholly owned portfolio company of the Combined Company.

Simplified Structure before the Completion of both of the Mergers

Simplified Structure Following the Completion of both of the Mergers

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         The following table presents the mix of investments for Sierra and MCC as of June 30, 2019 and pro forma for the Sierra/MDLY Company or the Combined Company, as applicable, as of June 30, 2019:

     

Actual
Sierra

 

Pro Forma Sierra/MDLY Company

 

Actual
MCC

 

Pro Forma
Combined
Company

Senior Secured First Lien Term Loans

 

50.0

%

 

43.0

%

 

48.1

%

 

49.2

%

Senior Secured Second Lien Term Loans

 

18.6

 

 

15.7

 

 

7.1

 

 

14.5

 

Senior Secured First Lien Notes

 

3.7

 

 

3.2

 

 

4.1

 

 

3.9

 

Subordinated Notes

 

8.3

 

 

7.1

 

 

 

 

5.2

 

Unsecured Debt