PhenixFIN Corporation (PFX)

[Enterprising Investor]

Howard Amster sends letter to Independent Directors (7/17/20)

July 17, 2020

Dear Independent Directors of Medley Capital Corporation,

I am writing you to put forth a proposal to be included as part of the Board's Strategic Review process for Medley Capital Corporation (MCC). My intention, as is yours, is to the find the best possible outcome for MCC shareholders. This proposal is designed to maximize value for shareholders and I believe the Board should evaluate this proposal against other proposals received through its strategic review process. I appreciate the Board's commitment to MCC shareholders. With that background, I wanted to submit the following proposal, which I understand is supported by Matthew Howlett and Kevin McCallum, who intend to separately express their own proposals.

I believe a primary goal of the Board should be to close the gap between MCC's current market price and its NAV. The Board should also aspire to increase MCC's current NAV through positive financial engineering. Based on the current market environment, a sale or third-party investment in MCC will result in substantial dilution to MCC shareholders. I also believe that given the current distress in the Business Development Companies (BDC) industry, the environment does not represent an opportune time to consider a full or partial sale of the company. As a result, I believe the company should immediately focus on repurchasing stock and debt in a manner that would be accretive to MCC shareholders. I believe that over a period of time this should result in substantial improvement to NAV and enhanced long term shareholder value.

I would recommend the continuation of the investment management services of Medley Management beyond 09/30/2020, with the following terms: 1) A base management fee similar to the existing arrangement which expires on 09/30/20, B) An incentive payment to Medley Management for successfully achieving NAV in excess of $3.30 per share (or some other proper number as determined by the Board).

The management contract should stipulate the following: 1) No new investments will be made during the period without Board approval, with certain minor exceptions for existing portfolio companies. 2) All proceeds from loan runoff/maturities should be allocated to a mixture of debt and stock repurchases. 3) Asset sales should be initiated at or even below intrinsic value as long as there is an opportunity to purchase stock at substantial discounts to NAV.

In conjunction with my proposal, I am also requesting to be appointed to the Board as an independent director with a significant economic stake in the company and with broad experience in the management of financial institutions.

I would also propose Matthew Howlett and Kevin McCallum be appointed as independent directors to the Board of MCC.

Sincerely,

Howard Amster

https://www.sec.gov/Archives/edgar/data/904853/000090485320000004/071720.txt