Item 1.01 Entry into a Material Definitive Agreement.
In connection with the appointment of Howard Amster to the Board of Directors
(the "Board") of Medley Capital Corporation (the "Company") described in Item
5.02 below, the Company entered into a Standstill Agreement, dated August 19,
2020 (the "Standstill Agreement"), with Mr. Amster and certain of his affiliates
(the "Amster Parties").
Under the Standstill Agreement, the Amster Parties have agreed that, until
December 31, 2021, they will not: (i) seek to call a meeting of stockholders, or
seek representation on the Board (except as provided in the Standstill
Agreement) or seek to remove any member of the Board; (ii) become a participant
in proxy contest (other than as recommended by the Board); (iii) form a group
with respect to the shares of the Company's common stock (other than with their
affiliates), grant proxies (other than pursuant to the Company's proxy card) or
deposit shares into a voting trust; (iv) execute a written stockholder consent
(except as approved by the Board); (v) without Board approval, propose or
support, alone or together with a third party, any business combination
involving the Company; (vi) without Board approval, present a proposal to a
meeting of stockholders; (vii) make a request for books and records under
Section 220 of the General Corporation Law of the State of Delaware; (viii)
comment publicly concerning the Company's management, policies, strategy,
operations, financial results or affairs or any transactions involving the
Company; (ix) publicly disclose any request that the Company amend or waive any
provision of the Standstill Agreement; or (x) take any action that could have
the effect of encouraging, assisting or influencing other persons to engage in
actions that would violate the Standstill Agreement.
These provisions are subject to various exceptions as provided in the Standstill
Agreement. Among others things, Mr. Amster is not restricted from taking any
action, or engaging in any communication in furtherance of his rights and
responsibilities as a member of the Board.
The Amster Parties have also agreed that, until December 31, 2021, they and
their affiliates will vote their shares in favor of any matter that has been
approved by the Board, including the election of Howard Amster and David Lorber,
a current director on the Board, at the Company's 2021 Annual Meeting of
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Stockholders (the "2021 Annual Meeting"); and against any matter that has not
been approved by the Board. Notwithstanding these provisions, the Amster Parties
may vote in their discretion regarding any Extraordinary Transaction (as defined
in the Standstill Agreement) and on any other matter that relates to the
authorized stock or other capitalization matters, business or assets or
compensation matters of the Company.
Under the Standstill Agreement, the Company has agreed to nominate Mr. Amster
for election at the 2021 Annual Meeting, provided that Mr. Amster continues to
qualify as an independent director under the rules and regulation of the New
York Stock Exchange and a person who is not an "interested person" under the
Investment Company Act of 1940, continues to satisfy the requirements of good
character and integrity and is not in violation of the Standstill Agreement.
The Company has also agreed to reimburse Mr. Amster for up to $25,000 in legal
fees that he incurred in connection with the negotiation of the Standstill
Agreement and various related matters.
The Standstill Agreement is filed as Exhibit 10.1 to this Form 8-K. The
foregoing description of the Standstill Agreement in this Item 1.01 is not
complete and is qualified in its entirety by reference to the full text of the
Standstill Agreement, which is attached hereto as Exhibit 10.1.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Resignation of Jeffrey Tonkel as Class I Director
On August 19, 2020, Jeffrey Tonkel notified the Board that he was resigning
voluntarily from the Board, effective August 19, 2020. In submitting his
resignation, Mr. Tonkel did not express any disagreement on any matter relating
to the Company's operations, policies or practices.
Appointment of Howard Amster as Class I Director
On August 19, 2020, the Board appointed Howard Amster to the Board to fill the
vacancy created by the resignation of Mr. Tonkel, effective August 19, 2020. Mr.
Amster will serve as a Class I director for a term expiring at the 2021 Annual
Meeting. As described in Item 1.01 above, the Company has agreed to nominate Mr.
Amster for election at the 2021 Annual Meeting. In addition, the Board appointed
Mr. Amster to the Special Committee of the Board (the "Special Committee").
Other than the Standstill Agreement described in Item 1.01, there is no
arrangement or understanding with any other person pursuant to which Mr. Amster
was appointed as a member of the Board. There are no current or proposed
transactions between the Company and Mr. Amster or his immediate family members
which would require disclosure under Item 404(a) of Regulation S-K promulgated
by the Securities and Exchange Commission.
Mr. Amster will be compensated for his service on the Board and the Special
Committee in accordance with the Company's compensation practices for
independent directors.
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
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(d) Exhibits.
Exhibit No. Description
10.1 Standstill Agreement, dated as of August 19, 2020, by and between the
Medley Capital Corporation and Howard Amster and certain of his
affiliates named therein.
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