UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

 

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☐	Preliminary Proxy Statement
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☒	Definitive Proxy Statement
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☐	Soliciting Material Under §240.14a-12

 

AFC GAMMA, INC.

(Name of Registrant as Specified In Its Charter)

 

Not applicable

 (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check all boxes that apply):
☒	No fee required
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☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Thursday, May 19, 2022
10:00 a.m. Eastern Time

 

How to ATTEND:		The 2022 Annual Meeting of Shareholders of AFC Gamma, Inc. (the “Annual Meeting”) will be held virtually on Thursday, May 19, 2022, at 10:00 a.m. Eastern Time. In order to attend the Annual Meeting via live audio webcast, please visit: www.virtualshareholdermeeting.com/AFCG2022 and enter the control number on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials, as applicable, you previously received. You will not be able to attend the Annual Meeting in person.
Items of Business:		(1)   Elect the three directors named in the accompanying Proxy Statement to serve until the Company’s 2025 annual meeting of shareholders and until their respective successors are duly elected and qualified;   (2)   Ratify the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022; and   (3)   Transact such other business as may properly come before the meeting or any postponements or adjournments thereof.
Who May Vote:		Shareholders of record at the close of business on March 22, 2022.

 

Your vote is important to us. Whether or not you intend to attend the virtual meeting, please vote using the Internet, by telephone or by mail, in each case, by following the instructions in our Proxy Statement. Shareholders who execute a proxy may nevertheless attend the virtual meeting and vote their shares during the virtual meeting.

 

	By Order of the Board of Directors,
	Leonard M. Tannenbaum
April 4, 2022	Chairman and Chief Executive Officer

 

Important Notice Regarding the Availability of Proxy Materials:

 

This Proxy Statement and our 2021 Annual Report are available on the Internet at www.proxyvote.com These materials are also available on our website at https://investors.afcgamma.com. The other information on our corporate website does not constitute part of this Proxy Statement.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

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TABLE OF CONTENTS

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Proxy Summary	3
Proposal 1 — Election of Directors	5
Corporate Governance	11
Executive Officers of the Company	18
Executive Compensation	19
Compensation Committee Interlocks and Insider Participation	23
Director Compensation	23
Security Ownership of Certain Beneficial Owners and Management	24
Report of the Audit and Valuation Committee	26
Proposal 2 — Ratification of Independent Registered Public Accounting Firm	27
Transactions with Related Persons	29
Other Matters	36
Shareholder Proposals and Director Nominations for 2023 Annual Meeting	36
Annual Report to Shareholders	36
Questions and Answers About the Proxy Materials and Annual Meeting	38

 

2	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

 

 

525 Okeechobee Blvd., Suite 1770 

West Palm Beach, FL, 33401

 

PROXY SUMMARY

 

2022 Annual Meeting of Shareholders

To Be Held May 19, 2022

 

AFC Gamma, Inc.’s Board of Directors is soliciting your proxy for the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) to be held virtually on Thursday, May 19, 2022, at 10:00 a.m. Eastern Time, and at any and all postponements or adjournments of the Annual Meeting, for the purposes set forth in the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement. This Proxy Statement and our Annual Report for the year ended December 31, 2021 (the “2021 Annual Report”) are first being made available to shareholders on or about April 4, 2022.

 

We will be hosting the Annual Meeting via live audio webcast. Shareholders will be able to virtually attend the Annual Meeting via the internet by accessing www.virtualshareholdermeeting.com/AFCG2022 and entering the control number on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials they previously received, as applicable.  

 

Unless the context otherwise requires, references in this Proxy Statement to “AFC Gamma,” “Company,” “we,” “our,” “us,” and similar terms refer to AFC Gamma, Inc., a Maryland corporation. This proxy summary highlights information contained elsewhere in this Proxy Statement and does not contain all information that you should review and consider. Please read the entire proxy statement with care before voting.

 

MEETING INFORMATION

 

2022 Annual Meeting of Shareholders

 

TIME AND DATE	PLACE	RECORD DATE
10:00 a.m. Eastern Time on Thursday, May 19, 2022	The Annual Meeting will be hosted via live audio webcast on the Internet at www.virtualshareholdermeeting.com/AFCG2022.	March 22, 2022

 

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Voting

 

Shareholders as of the close of business on the record date are entitled to vote. If you are a beneficial owner who owns shares of our common stock, par value $0.01 (“Common Stock”), registered in the name of a broker, bank or other nominee, please follow the instructions they provide on how to vote your shares. Shareholders of record may vote as follows:

 

Vote by telephone by calling 1-800-690-6903.	Vote by Internet at www.proxyvote.com	Complete and return each proxy card received in the prepaid envelope.

 

Vote during the meeting via the Internet at www.virtualshareholdermeeting.com/AFCG2022.

 

Voting Matters

 

PROPOSALS		BOARD RECOMMENDATION
1	Election of Directors	FOR ALL director nominees
2	Ratification of the Appointment of CohnReznick LLP as the Company’s Independent Registered Public Accounting Firm for the Year Ending December 31, 2022	FOR

  

4	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

PROPOSAL 1 — ELECTION OF DIRECTORS

 

Our Board of Directors (“Board” or “Board of Directors”) is currently comprised of eight directors. Under our Articles of Incorporation (the “Articles of Incorporation”), our Board of Directors is divided into three classes, each serving a staggered three-year term and with one class being elected at each year’s annual meeting of shareholders as follows:

 

●

the Class I directors are Leonard Tannenbaum, Thomas Harrison and Marnie Sudnow, and their terms will expire at the 2024 annual meeting of shareholders;

 

●

the Class II directors are Jodi Hanson Bond, Jonathan Kalikow and Robert Levy and their terms will expire at the Annual Meeting; and

 

●

the Class III directors are Alexander Frank and Tomer Tzur, and their terms will expire at the 2023 annual meeting of shareholders.

 

Upon the recommendation of the Nominating and Corporate Governance Committee of our Board of Directors, our Board has nominated each of Jodi Hanson Bond, Jonathan Kalikow and Robert Levy for election to our Board of Directors as Class II directors to serve until the 2025 annual meeting of shareholders and until their respective successors are duly elected and qualified. Proxies may only be voted for the three Class II directors nominated for election at the Annual Meeting.

 

Each of the director nominees has consented to being named in this Proxy Statement and to serving as a director, if elected. We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, the proxy holders will vote the proxies received by them for another person nominated as a substitute by the Board of Directors, or the Board of Directors may reduce the number of directors on the Board.

 

Our Directors

 

Set forth below is biographical information about each of our director nominees and our continuing directors. The primary experience, qualifications, attributes and skills of each of our director nominees that led to the conclusion of the Nominating and Corporate Governance Committee and the Board of Directors that such nominee should serve as a member of the Board of Directors are also described below.

 

In January 2022, the Board expanded the number of directors from seven to eight directors and appointed Marnie Sudnow as a Class I director to fill the open seat on the Board. Ms. Sudnow was initially identified as a potential director candidate by our Chief Executive Officer, Mr. Tannenbaum.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Nominees for Election as Class II Directors at the Annual Meeting

 

JODI HANSON BOND
Class II Independent Age: 50 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Since March 2020, Ms. Bond has served as the Chief Executive Officer of Quantum Wave Strategies, LLC and, since August 2020, as the President of DevryBV Sustainable Strategies. From October 2017 to September 2019, Ms. Bond was the Executive Vice President and Head of Government and Industry Relations at Chubb Limited. Previously, Ms. Bond served as an Independent Director at Fifth Street Asset Management from March 2017 to June 2021. From October 2011 to October 2017, Ms. Bond was the Senior Vice President, International at the U.S. Chamber of Commerce and the President and a member of the Board of Directors for several U.S. Chamber of Commerce subsidiaries, including U.S.-Colombia Business Council, Association of American Chambers of Commerce of Latin America and the Caribbean, Brazil-U.S. Business Council, U.S.-Argentina Business Council, and U.S.-Cuba Business Council. Ms. Bond is also a member of the National Association of Corporate Directors and the Economic Club of Washington. Ms. Bond received her M.A. in Government from John Hopkins University and her B.A. in Politics from Whitman College.
		KEY ATTRIBUTES
		Ms. Bond’s experience as a global business practitioner and her executive leadership positioning for corporate advancement and business strategy development across various countries bring meaningful insight to our Board.

JONATHAN KALIKOW
Class II Age: 52 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Mr. Kalikow has served as our Head of Real Estate and as a director since July 2020. He has been the President and Founder of Gamma Real Estate, a boutique commercial real estate firm based in New York, since he co-founded it in October 2014. Gamma Real Estate lends on real estate nationwide, owns a portfolio of approximately 5,000 apartments and several office properties, including a 310,000 square foot residential building on Sutton Place in Manhattan. Prior to co-founding Gamma Real Estate, Mr. Kalikow spent 18 years on Wall Street investing across industries and asset classes as a proprietary trader at Morgan Stanley and then as a hedge fund trader and portfolio manager. Mr. Kalikow has also spent over 15 years in real estate as part of a family-owned real estate firm operating for approximately 100 years. Mr. Kalikow is a graduate of the Wharton School of Business with bachelor’s degrees in Real Estate and Finance. He also holds a juris doctor from Fordham University School of Law and is a member of the New York State Bar Association.
		KEY ATTRIBUTES
		Mr. Kalikow’s extensive experience in the real estate and finance industries provides our Board with deep experience. Mr. Kalikow’s management experience and understanding of the real estate industry make him an ideal choice to act as our director.

 

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ROBERT LEVY
Class II Independent Age: 55 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Since January 2018, Mr. Levy has been a Managing Member at LBX Investments, a diversified commercial real estate investment firm. Prior to launching LBX Investments, Mr. Levy co-founded Big V Capital (“BVC”) in March of 2016, where he oversaw and underwrote the partnership’s 11 southeastern U.S. shopping center acquisitions and managed all debt and equity capital raising activities and asset management efforts. From May 2015 to June 2016, Mr. Levy was the Chief Operating Officer of the Real Estate Group at Benefit Street Partners, a multi-strategy credit manager with over $11.0 billion in assets under management. Prior to Benefit Street Partners, Mr. Levy held various leadership positions including Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and a member of the Board of Trustees at Centerline Capital Group, a multifamily finance and investment management company with over $13 billion in debt and equity under management. Mr. Levy received his M.B.A. from the Leonard M. Stern School of Business at New York University and his B.A. in Economics from Northwestern University.
		KEY ATTRIBUTES
		Mr. Levy brings extensive real estate industry knowledge and critical management experience in capital raising within the finance industry to our Board.
		THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL” OF THE DIRECTOR NOMINEES.

  

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

All Other Continuing Directors

 

Leonard M. Tannenbaum
Class I Age: 50 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Mr. Tannenbaum has served as our Chief Executive Officer and as Chairman and a director since July 2020. Mr. Tannenbaum is responsible for our overall management and, in his capacity as a principal of the Manager, leads the Investment Committee, which is responsible for overseeing investment processes including origination, credit underwriting, risk analysis and loan approvals. Mr. Tannenbaum has extensive leadership experience, including his experience as the founder of Fifth Street Asset Management, Inc., a credit asset manager with a nationwide platform (“FSAM”), and its Chief Executive Officer from its inception in 1998 until October 2017 when substantially all of its assets were sold to Oaktree Capital Management (“Oaktree”). Prior to such sale to Oaktree, FSAM had a core focus on disciplined credit investing across multiple economic cycles, and issued billions of dollars in public equity, private capital and public debt securities. FSAM made flexible investments across capital structures to growing middle market companies, primarily in conjunction with private equity sponsors. It managed approximately $5 billion of assets across multiple private investment vehicles and two publicly-traded business development companies. Subsequent to the sale to Oaktree in 2017, Mr. Tannenbaum founded Tannenbaum Family Office, a single family office and one of our affiliates that is focused on allocating capital across various strategies including credit (from the Tannenbaum Strategic Credit Fund, a $100 million fund), equities and real estate. Mr. Tannenbaum graduated from The Wharton School of the University of Pennsylvania, where he received a B.S. in economics. Subsequent to his undergraduate degree from the University of Pennsylvania, he received an MBA in Finance from The Wharton School as part of the submatriculation program. He is also a holder of the Chartered Financial Analyst designation and is a member of The Wharton Graduate Executive Board.
		KEY ATTRIBUTES
		Mr. Tannenbaum brings extensive financing industry and leadership experience to our Board. He provides our Board with critical understanding of our business and execution of our strategic plans. He is the Founder, and a substantial shareholder, of AFC Gamma.

 

8	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

PROPOSAL 1 — ELECTION OF DIRECTORS

  

THOMAS L. HARRISON
Class I Independent Age: 73 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Since April 2019, Mr. Harrison has served as a Senior Operating Partner at Merida Capital Holdings, a private equity firm investing across the cannabis ecosystem. In addition, Mr. Harrison brings 30 years of experience in marketing, communications and brand positioning. He formerly founded Harrison & Star Business Group in October 1987, a healthcare marketing and communications agency that was acquired by Omnicom Group Inc. (“Omnicom”) in 1992. He is Chairman Emeritus of Diversified Agency Services, a division of Omnicom and one of the world’s largest holding groups of marketing services companies. He was appointed President of the division in April 1997. He is currently a board member for MainStem, the leading purchasing platform in the state-regulated cannabis industry, as well as for EighthICON Holdings, a cannabis firm owning the Cheech & Chong cannabis brand, and one of our borrowers, Private Company A. Mr. Harrison was appointed to the board of Madison Logic in June 2016, a business-to-business account-based management marketing company and on the board of ACTV8me, an advertising attribution technology company, in 2020. Mr. Harrison is on the Board and acts as lead director for Fifth Street, a credit asset manager with a nationwide platform. In addition, he was previously the Chairman of the Corporate Governance and Nominating Committee for Zynerba Pharmaceuticals Inc., a leader in pharmaceutically-produced cannabinoid therapies from January 2015 to May 2019. He is a board director for the Montefiore Health System.
		KEY ATTRIBUTES
		Mr. Harrison brings to our Board an important combination of leadership, marketing, cannabis industry, healthcare and financial expertise. His experiences at large corporations and his current board service make him instrumental in helping our Board implement our business and financial strategy.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

TOMER J. TZUR
Class III Independent Age: 50 Director Since: 2020		POSITION AND BUSINESS EXPERIENCE
		Since January 2009, Mr. Tzur has been a Senior Managing Director and Partner at The Boston Consulting Group (“BCG”). Mr. Tzur has over 15 years’ experience in management consulting. As a leader in BCG’s Consumer Practice, Mr. Tzur advises global consumer companies on go to market, operations, strategy and M&A related topics, including a number of major food and beverage and distribution companies’ evaluation of the cannabis space. Mr. Tzur joined BCG in September 2001 in New York and spent 2003 to 2004 in BCG’s Mumbai office before returning to New York. He relocated to Israel to start and lead BCG’s Tel Aviv office in 2011, and in 2017 joined BCG’s Miami office. Prior to BCG, Mr. Tzur built a restaurant business and served for three years in the Israel Defense Forces. Mr. Tzur received his M.B.A. from the Wharton School at the University of Pennsylvania, his M.A. in International Studies from University of Pennsylvania, and his B.A. in International Relations from the Hebrew University.
		KEY ATTRIBUTES
		Mr. Tzur brings to our Board a wealth of experience in consumer goods, sales marketing and pricing, operations, and strategy topics - his knowledge of which significantly benefits the discussions of our Board.

 

10	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

Corporate Governance

 

Corporate Governance Guidelines

 

Our Board of Directors has adopted Corporate Governance Guidelines to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and our shareholders. Our Corporate Governance Guidelines direct our Board’s actions with respect to, among other things, our Board composition, responsibilities of directors, director compensation, director orientation and continuing education, succession planning and the Board’s annual performance evaluation. A current copy of our Corporate Governance Guidelines is available under “Corporate Governance” on our website at https://investors.afcgamma.com.

 

Director Independence

 

Under the rules of the Nasdaq Stock Market (the “Nasdaq”) and our Corporate Governance Guidelines, independent directors must comprise a majority of our Board of Directors. Under the Nasdaq rules, a director will only qualify as an “independent director” if our Board of Directors affirmatively determines that the director, in the opinion of our Board of Directors, does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

Our Board reviews any relationship that each of our directors has with us, either directly or indirectly, that could interfere with exercising independent judgment in carrying out a director’s responsibilities. Our Board has affirmatively determined that each of Messrs. Harrison, Frank, Tzur, and Levy, Mses. Bond and Sudnow is “independent” as that term is defined under the rules of Nasdaq. Mr. Tannenbaum is not an independent director as a result of his position as our Chief Executive Officer and Mr. Kalikow is not an independent director as a result of his position as our Head of Real Estate.

 

Board Leadership Structure

 

We do not have a policy as to whether the chairperson of our Board should be an independent director and we believe that our flexibility to select our chairman and reorganize our leadership structure from time to time is in the best interests of us and our shareholders. Presently, Mr. Tannenbaum, our Chief Executive Officer, serves as the Chairman of the Board. We believe that we are best served through our existing leadership structure with Mr. Tannenbaum serving as an executive Chairman of our Board combined with Mr. Harrison serving as lead independent director. We believe that Mr. Tannenbaum’s extensive finance industry and leadership experience and critical understanding of our business and knowledge of how to craft and execute on our business and strategic plans qualifies him to serve as the Chairman of the Board, and his relationship with AFC Management, LLC (our “Manager”) provides an effective bridge between our Board and our Manager, thus ensuring an open dialogue between our Board and our Manager and that both groups act with a common purpose.

 

We believe that the leadership structure of our Board must be evaluated on a case-by-case basis and that our existing Board leadership structure provides sufficient independent oversight over our Manager. In addition, we believe that the current governance structure, when combined with the functioning of the independent director component of our Board and our overall corporate governance structure, strikes an appropriate balance between strong and consistent leadership and independent oversight of our business and affairs. However, we re-examine our corporate governance policies on an ongoing basis to ensure that they continue to meet our needs.

 

The Board’s Role in Risk Oversight

 

One of the key functions of our Board is informed oversight of our risk management process. Our Board administers this oversight function directly, with support from its three standing committees, the Audit and Valuation Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which addresses risks specific to its respective areas of oversight as discussed below. In addition, our Manager has also established an Investment Committee for us, the members of which consist of employees of our Manager and/or its affiliates, and which currently includes certain affiliates of our Manager and certain of our officers. The Investment Committee works in conjunction with our Board to manage our credit risk through a comprehensive investment review process.

 

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●

Audit and Valuation Committee. Our Audit and Valuation Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit and Valuation Committee also monitors compliance with legal and regulatory requirements and the review and approval of our related party transactions, in addition to oversight of the performance of our internal audit function (to the extent such function is required by applicable rules and regulations). Because the Audit and Valuation Committee is already charged with approving our related party transactions, our Board has charged the Audit and Valuation Committee with overseeing amounts payable to our Manager pursuant to our Management Agreement and making recommendations to our Board with respect to our Board’s approval of the renewal of our Management Agreement.

 

●

Compensation Committee. Our Compensation Committee is generally responsible for discharging the Board’s responsibilities relating to the compensation, if any, of our executive officers and directors, overseeing the expense reimbursement of our Manager and its affiliates for compensation paid by such entities to their respective employees pursuant to our management agreement, by and between us and our Manager (the “Management Agreement”), the administration and implementation of our incentive and equity-based compensation plans, including the 2020 Stock Incentive Plan, and the preparation of reports on or relating to executive compensation required by the rules and regulations of the Securities and Exchange Commission (the “SEC”).

 

●

Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee provides oversight with respect to corporate governance and ethical conduct and monitors the effectiveness of our corporate governance guidelines, including whether such guidelines are successful in preventing illegal or improper liability-creating conduct.

 

In addition, our Board and the Audit and Valuation Committee meet regularly with our Manager and consider the feedback our Manager provides concerning the risks related to our enterprise, business, operations and strategies. Our Manager regularly reports to our Board and the Audit and Valuation Committee on our loan portfolio and the risks related thereto, asset impairments, leverage position, affiliate payments (including payments made and expenses reimbursed pursuant to the terms of the Management Agreement), compliance with applicable covenants under the agreements governing our indebtedness, compliance with our qualification as a real estate investment trust (“REIT”) and compliance with our exemption from registration as investment company under the Investment Company Act of 1940, as amended. Members of our Board are routinely in contact with our Manager and our executive officers, as appropriate, in connection with their consideration of matters submitted for the approval of our Board or the Audit and Valuation Committee and the risks associated with such matters.

 

We believe that the extent of our Board’s (and its committees’) role in risk oversight complements the Board’s leadership structure because it allows our independent directors, through the three fully independent Board committees, executive sessions with the independent auditors, and otherwise, to exercise oversight of risk without any conflict that might discourage critical review.

 

We believe that a board of directors’ role in risk oversight must be evaluated on a case by case basis and that our Board’s role in risk oversight is appropriate. However, we re-examine the manner in which our Board administers its oversight function on an ongoing basis to ensure that it continues to meet our needs.

 

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Committees of the Board of Directors

 

The Board has three standing committees: the Audit and Valuation Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of our standing committees is comprised solely of independent directors. The written charters of these committees are available under “Corporate Governance” on our website at https://investors.afcgamma.com.

 

	Audit & Valuation	Compensation	Nominating & Corporate Governance
Jodi Hanson Bond
Alexander Frank	Chair		Chair
Thomas Harrison		Chair
Robert Levy

 

Committee Member

Financial Expert

  

Audit and Valuation Committee

 

Our Audit and Valuation Committee consists of three members, Messrs. Frank, Harrison and Levy, with Mr. Frank serving as Chair of the committee. Our Board has affirmatively determined that each of Mr. Harrison, Mr. Frank and Mr. Levy is independent under Nasdaq rules and also meets the enhanced standards of “independence” established by Nasdaq and the SEC for members of the Audit and Valuation Committee. Our Board has also determined that (i) Mr. Frank and Mr. Levy each qualify as an “audit committee financial expert” under SEC rules and regulations and (ii) each member of the Audit and Valuation Committee is “financially literate” as the term is defined by Nasdaq listing standards.

 

The Audit and Valuation Committee’s principal functions include oversight related to:

 

●

the integrity of our financial statements;

 

●

the qualifications and independence of any independent registered public accounting firm engaged by us;

 

●

the performance of our internal audit function (to the extent such function is required by applicable rules and regulations) and any independent registered public accounting firm;

 

●

the determination of the fair value of assets that are not publicly traded or for which current market values are not readily available; and

 

●

the entry and monitoring of related party transactions.

 

The Audit and Valuation Committee assists our Board in its management of AFC Gamma. In particular, the Audit and Valuation Committee (i) serves as an independent party to monitor our financial reporting processes and internal control system; (ii) discusses the audit conducted by our independent registered public accounting firm; (iii) provides an open avenue of communication among our independent registered public accounting firm, our management and our Board; and (iv) serves as an independent party to review, approve and monitor our related party transactions.

 

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The responsibilities of the Audit and Valuation Committee include, but are not limited to, (i) the appointment, compensation, retention and oversight of any independent registered public accounting firm engaged by us, (ii) discussing and reviewing guidelines and policies with respect to risk assessment and risk management, (iii) reviewing the adequacy of our internal audit function (to the extent such function is required by applicable rules and regulations), (iv) assisting in performing oversight responsibilities for the internal control systems and disclosure procedures, (v) recommending to our Board whether the financial statements should be included in reports made available to its shareholders and (vi) meeting periodically with management to discuss any of the above or any identified issues.

 

Subject to the provisions of our related person transaction policies and procedures, the Audit and Valuation Committee is also responsible for reviewing and approving our related party transactions, including matters related to our Management Agreement. Because the Audit and Valuation Committee is already charged with approving our related party transactions, our Board has charged the Audit and Valuation Committee with overseeing amounts payable to our Manager pursuant to our Management Agreement and making recommendations to our Board with respect to our Board’s approval of the renewal of our Management Agreement. The Audit and Valuation Committee and our Board must approve any renewal of our Management Agreement. See “Transactions With Related Persons – Policies and Procedures Regarding Related Party Transaction” for additional information.

 

Compensation Committee

 

Our Compensation Committee consists of three members, Messrs. Levy and Harrison and Ms. Bond, with Mr. Harrison serving as Chair of the committee. Our Board has affirmatively determined that each of Messrs. Levy and Harrison and Ms. Bond is independent under Nasdaq rules and also meets the enhanced standards of independence established by Nasdaq and the SEC for members of the Compensation Committee. In making this determination, the Board considered whether the director has a relationship with the Company that is material to the director’s ability to be independent from management in connection with the duties of a member of the Compensation Committee.

 

The Compensation Committee’s principal functions include:

 

●

discharging the Board’s responsibilities relating to the compensation, if any, of our executive officers and directors;

 

●

overseeing the expense reimbursement of our Manager and its affiliates for compensation paid by such entities to their respective employees pursuant to our Management Agreement;

 

●

administering and implementing our incentive and equity-based compensation plans, including the 2020 Stock Incentive Plan; and

 

●

preparing reports on or relating to executive compensation required by the rules and regulations of the SEC.

 

The Compensation Committee has the sole authority to retain and terminate compensation consultants to assist in the evaluation of compensation matters and the sole authority to approve the fees and other retention terms of such compensation consultants. The Compensation Committee, with input from its compensation consultant, if any, and our Manager, discusses and considers potential risks that arise from our compensation practices, policies and programs.

 

In addition, the Compensation Committee may form and delegate authority to sub-committees or, to the extent permitted under applicable laws, regulations and Nasdaq rules, to any other independent director or committee comprised entirely of independent directors, in each case, to the extent the Compensation Committee deems necessary or appropriate.

 

Nominating and Corporate Governance Committee

 

Our Nominating and Corporate Governance Committee currently consists of three members, Messrs. Harrison and Frank and Ms. Bond, with Mr. Frank serving as Chair of the committee. Our Board has affirmatively determined that that each of Messrs. Harrison and Frank and Ms. Bond is independent under Nasdaq rules.

 

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The Nominating and Corporate Governance Committee charter defines the Nominating and Corporate Governance Committee’s principal functions, including:

 

	●	identifying individuals to become members of the Board, consistent with the procedures and selection criteria established by the Nominating and Corporate Governance Committee;
	●	periodically reviewing the size and composition of the Board and recommending to the Board such modifications to its size and/or composition as are determined by the Nominating and Corporate Governance Committee to be necessary or desirable;
	●	recommending to the Board the director nominees for the next annual meeting of shareholders;
	●	recommending to the Board individuals to fill vacant Board positions;
	●	recommending to the Board committee appointments and chairpersons;
	●	developing and recommending to the Board a set of corporate governance principles, a Code of Business Conduct and Ethics and related corporation policies, practices and procedures;
	●	periodically reviewing and recommending to the Board updates to our corporate governance principles, Code of Business Conduct and Ethics and related corporation policies, practices and procedures;
	●	monitoring the Company’s compliance with applicable corporate governance requirements; and
	●	overseeing an annual evaluation of the Board, its committees and individual directors.

 

Meetings and Attendance

 

During 2021, the Board held 21 meetings, the Audit and Valuation Committee held nine (9) meetings, the Compensation Committee held two (2) meetings and the Nominating and Corporate Governance Committee held two (2) meetings. Each of our directors attended at least 75% of the aggregate meetings of the Board and the committees of the Board on which he or she served during 2021. In addition, independent directors of our Board of Directors meet in regularly scheduled sessions without management.

 

It is the Board’s policy that all directors are invited and encouraged to attend the Company’s annual meeting of shareholders, either in person or telephonically. Two of our directors, Messrs. Tannenbaum and Harrison, attended our 2021 annual meeting of shareholders.

 

Succession Planning

 

The Board works on a periodic basis with the executive officers of the Manager to develop, review, maintain and revise, if necessary, the Company’s succession plan upon the Chief Executive Officer’s retirement, the termination or non-renewal of the Manager under the Management Agreement or in the event of an unexpected occurrence. The Chief Executive Officer’s recommendations regarding his or her successor should he or she be unexpectedly disabled are made available to the Board on a continuing basis.

 

Annual Self-Evaluation Process

 

At least annually, the Nominating and Corporate Governance Committee oversees and coordinates a self-assessment of the Board and each committee’s own performance. These self-assessments also take into account other corporate governance principles that may, from time to time, merit consideration by the Board and each committee. The Board conducted its annual self-assessment process in January 2022.

 

The assessment of the Board will generally include a review of any areas in which the Board or management believes the Board can make a better contribution to the governance of the Company, as well as a review of the committee structure and an assessment of the Board’s compliance with the principles set forth in our Corporate Governance Guidelines. The purpose of the review is to improve the performance of the Board as a unit, and not to target the performance of any individual Board member. The Board utilizes the results of this evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board. Each committee of the Board conducts its self-assessment under the oversight of the Nominating and Corporate Governance Committee in accordance with the provisions set forth in its respective charter.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

15

 

 

Consideration of Director Candidates

 

Our Board of Directors and the Nominating and Corporate Governance Committee will consider director candidates recommended for election to the Board of Directors by shareholders in the same manner and using the same criteria as that used for any other director candidate. All recommendations must be directed to the Nominating and Corporate Governance Committee c/o Secretary at 525 Okeechobee Blvd., Suite 1770, West Palm Beach, FL, 33401. Recommendations for director nominees to be considered at the 2023 annual meeting of shareholders must be received in writing not later than December 5, 2022, which is 120 days prior to the one-year anniversary of the date this Proxy Statement is first available to shareholders.

 

Our Board of Directors does not have a formal diversity policy. However, in evaluating a director candidate, the Nominating and Corporate Governance Committee will consider the following criteria, among others the Nominating and Corporate Governance Committee shall deem appropriate: (i) business and professional background, (ii) contribution to the Board’s diversity of experience, profession, expertise, skill and background (including with respect to race and gender); (iii) history of leadership or contributions to other organizations; (iv) functional skill set and expertise; (v) general understanding of marketing, finance, accounting, corporate governance, federal securities and other relevant laws and regulations, and other elements relevant to the success of a publicly-traded company in today’s business environment; (vi) meets high ethical standards; (vii) experience in the cannabis or REIT industries and/or as a member of the board of directors of another publicly-held company; (viii) commitment to devoting the time and effort necessary to be a responsible and productive member of the Board of Directors; and (ix) ability to perpetuate the success of the business and represent stakeholder interests.

 

Shareholders who wish to nominate a person for election as a director in connection with an annual meeting of shareholders (as opposed to making a recommendation to the Nominating and Corporate Governance Committee as described above) must deliver written notice to our Secretary in the manner described in our Amended and Restated Bylaws (“Bylaws”), and as described further under “Shareholder Proposals and Director Nominations for 2023 Annual Meeting” below.

 

Communications with the Board of Directors

 

Shareholders or other interested parties who wish to contact the Board, the lead independent director, any Board committee, or our independent directors as a group may send written correspondence c/o Board of Directors at 525 Okeechobee Blvd., Suite 1770, West Palm Beach, FL, 33401. The name of any specific intended Board recipients should be clearly noted in the communication. All communications will be received, processed and then forwarded to the appropriate member(s) of our Board, except that, certain items unrelated to the Board’s duties and responsibilities, such as spam, junk mail, mass mailings, solicitations, resumes and employment inquiries and similar items will not be forwarded. Board members receiving communications will respond as such directors deem appropriate, including the possibility of referring the matter to our management team, to the full Board or to an appropriate committee of the Board. In addition, if requested by shareholders, our lead independent director will ensure that he is available, when appropriate, for consultation and direct communication with shareholders.

 

Policy on Pledging and Hedging of Company Shares

 

Our insider trading policy provides that insiders, which includes all directors, officers and employees of the Company, are prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities. In addition, our insider trading policy provides that insiders are prohibited from margining the Company securities in a margin account or pledging Company securities as collateral for a loan.

 

16	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

Code of Business Conduct and Ethics

 

We have adopted a written code of business ethics that seeks to identify and mitigate conflicts of interest between us and our employees, if any, directors and officers. A current copy of the code is posted under “Corporate Governance” on our website at https://investors.afcgamma.com. To the extent required by rules adopted by the SEC and Nasdaq, we intend to promptly disclose future amendments to certain provisions of the code, or waivers of such provisions granted to executive officers and directors, on our website at https://investors.afcgamma.com.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

17

Executive Officers of the Company

 

The table below sets forth certain information regarding our executive officers:

 

Name	Age	Position
Leonard M. Tannenbaum	50	Chief Executive Officer, Chairman and Director
Jonathan Kalikow	52	Head of Real Estate and Director
Brett Kaufman	49	Chief Financial Officer and Treasurer
Robyn Tannenbaum	36	Managing Director, Head of Origination and Investor Relations

 

See “Proposal 1 — Election of Directors” for information concerning the business experience of Mr. Tannenbaum and Mr. Kalikow. Information concerning the business experience of our other executive officers is set forth below.

Brett Kaufman	Mr. Kaufman has served as our Chief Financial Officer and Treasurer since August 2021. Prior to joining the Company, Mr. Kaufman served for twelve years as Chief Financial Officer with Ladenburg Thalmann Financial Services, an NYSE-traded financial services company. Most recently, he played a central role in the company’s $1.3 billion sale to a portfolio company of a private equity firm, championing the executive task force, due diligence, and coordination which resulted in a successful close in 2020. Prior to Ladenburg Thalmann, Mr. Kaufman spent nine years with Bear Stearns, where he held progressive roles supporting internal and external financial reporting for all business units, and ultimately grew to head the global company’s FP&A function as Managing Director. In these executive roles, he enhanced global corporate decision capability in a number of key areas, most notably, forecasting, GAAP-compliant internal and external reporting, and budgeting. In addition, he was responsible for oversight of the company’s core financial reporting including earning releases, SEC external reporting, and other data for presentations to C-level leaders, board of directors, investors, and rating agencies. He also served as a key partner on a portfolio of corporate strategic initiatives. Mr. Kaufman initially began his career with PwC, rising to Senior Associate in the Audit and Business Advisory Services group, where he was responsible for performing and reviewing audit procedures, drafting financial statements, and reviewing financial transactions for Fortune 500-level clients across a variety of industries. He was also an active participant in new hire development and mentorship programs. Mr. Kaufman graduated from Binghamton University with a B.S. in Accounting and is an active Certified Public Accountant.
Robyn Tannenbaum	Mrs. Tannenbaum has served as our Managing Director, Head of Origination and Investor Relations since July 2020. Mrs. Tannenbaum has over 7 years’ experience focusing on mergers and acquisitions and leveraged loans to healthcare companies. Additionally, she has 5 years of experience as an investor relations professional within the finance industry. Mrs. Tannenbaum formerly served as Head of Investor Relations at Fifth Street from March 2014 to October 2017 and as a Vice President in Healthcare mergers and acquisitions at CIT Group Inc. Subsequent to her time at Fifth Street, from October 2017 through July 2020, she founded and worked at REC Investor Relations, a boutique investor relations and marketing consulting firm advising healthcare and financial services companies. She graduated summa cum laude with a B.S. in Finance, with a concentration in Marketing and a Public Relations minor from Lehigh University.

 

Other than between Mr. Leonard Tannenbaum and Mrs. Robyn Tannenbaum, who are husband and wife, there are no family relationships between or among any of our executive officers or directors.

 

18	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

Executive COMPENSATION

 

We do not have any employees nor do we intend to hire any employees who will be compensated directly by us. Our loans are sourced and overseen by the members of our senior team, which currently consists of over 20 investment and other professionals who are employees of our Manager and/or its affiliates. Each of our executive officers, including each executive officer who serves as a director, is employed by our Manager and/or its affiliates and receives compensation for his or her services, including services performed on our behalf, from our Manager and/or its affiliates, as applicable, except we may award equity-based incentive awards for our executive officers under our 2020 Stock Incentive Plan. Instead, we pay our Manager the fees described under “Management Compensation” in our 2021 Annual Report on Form 10-K and we indirectly bear the costs of the compensation paid to certain of our executive officers through expense reimbursements we pay to our Manager or its affiliates, as applicable. Pursuant to our Management Agreement, we reimburse our Manager or its affiliates, as applicable, for our fair and equitable allocable share of the compensation, including annual base salary, bonus, any related withholding taxes and employee benefits, paid to (i) subject to review by the Compensation Committee of our Board, our Manager’s personnel serving as our Chief Executive Officer (except when the Chief Executive Officer serves as a member of the Investment Committee prior to the consummation of an internalization transaction of our Manager by us), General Counsel, Chief Compliance Officer, Chief Financial Officer, Chief Marketing Officer, Managing Director and any of our other officers based on the percentage of his or her time spent devoted to our affairs and (ii) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment personnel of the Manager and its affiliates who spend all or a portion of their time managing our affairs, with the allocable share of the compensation of such personnel described in this clause (ii) being as reasonably determined by our Manager to appropriately reflect the amount of time spent devoted by such personnel to our affairs. The service by any personnel of our Manager and its affiliates as a member of the Investment Committee will not, by itself, be dispositive in the determination as to whether such personnel is deemed “investment personnel” of our Manager and its affiliates for purposes of expense reimbursement. Prior to our initial public offering, we were not obligated to reimburse our Manager or its affiliates, as applicable, for any compensation paid to Mr. Tannenbaum, Mr. Kalikow or Mrs. Tannenbaum. For the 2021 fiscal year, our Manager did not seek reimbursement for our allocable share of Mr. Kalikow’s compensation, but did seek reimbursement for our allocable share of Mrs. Tannenbaum’s compensation. We do not currently, nor do we intend to, pay any compensation directly to our officers, except we may award equity-based incentive awards for our officers under our 2020 Stock Incentive Plan. Our executive officers are entitled to receive awards in the future under our 2020 Stock Incentive Plan.

 

In August 2021, Mr. Kaufman joined us as our Chief Financial Officer. In connection with his hiring and appointment as our Chief Financial Officer, Mr. Kaufman entered into an employment agreement with our Manager that set his annual base salary at $500,000, which was established through an arm’s length negotiation with Mr. Kaufman, in consultation with the Board’s Compensation Committee and Nominating and Corporate Governance Committee and with input from the executive search firm which assisted in our review of candidates for our chief financial officer position.

 

In connection with Mr. Kaufman’s hiring, the Compensation Committee approved a grant of 49,043 shares of restricted common stock, equivalent to $1,000,000 (as determined by the per-share closing price of our common stock on the date of grant). Such restricted common stock award shall vest and become nonforfeitable with respect to 33% of the total number of shares of such restricted common stock on each of the second, third and fourth anniversaries of Mr. Kaufman’s hiring and as otherwise provided in his employment agreement, subject to Mr. Kaufman’s continued employment or service. Notwithstanding the foregoing, all of Mr. Kaufman’s outstanding equity will fully vest upon the occurrence of both a “Change in Control Event” (as defined in our 2020 Stock Incentive Plan) and the termination of his employment by our Manager without “cause” or by Mr. Kaufman for “good reason” (each as defined in Mr. Kaufman’s employment agreement) within three months prior to, or one year following such Change in Control Event.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

19

 

 

The following table sets forth all compensation paid to or accrued by those named executive officers for whom we are able to quantify such compensation for services the named executive officer rendered to us during the fiscal period presented.

 

Summary Compensation Table

Name and Principal Position

​

Year

​

Salary ($)

​

Bonus ($)

​

Stock Awards ($)(8)

​

Option Awards   ($)(8)

​

Non-Equity Incentive Plan Compensation ($)

​

Nonqualified Deferred Compensation Earnings ($)

​

All Other Compensation ($)

​

Total ($)

Leonard M. Tannenbaum(1)

​

2021

​

—

​

—

​

—

​

827,183

​

—

​

—

​

—

​

827,183

(Chief Executive Officer)

​

​

​

​

​

​

​

​

​

Brett Kaufman(2)

​

2021

​

186,667

​

102,750

​

1,000,000

​

—

​

—

​

—

​

​

1,289,417

(Chief Financial Officer)

​

​

​

​

​

​

​

​

​

Jonathan Kalikow(3)

​

2021

​

—

​

—

​

—

​

18,382

​

—

​

—

​

—

​

18,382

(Head of Real Estate)

​

​

​

​

​

​

​

​

​

Robyn Tannenbaum(4)

​

2021

​

83,097

​

—

​

—

​

18,382

​

—

​

—

​

—

​

101,479

(Head of Origination and Investor Relations)

​

​

​

​

​

​

​

​

​

Thomas Geoffroy(5)(6)

​

2021

​

141,875

​

93,638

​

—

​

4,595(6)

​

—

​

—

​

​

240,108

(Former Chief Financial Officer)

​

2020

​

86,430

​

20,740

​

—

​

—

​

—

​

—

​

9,690(7)

​

116,860

 

(1)	Mr. Tannenbaum does not take a salary from us or our Manager. Mr. Tannenbaum’s option awards vested upon consummation of our initial public offering.
(2)	Mr. Kaufman was hired to serve as our Chief Financial Officer on August 6, 2021, and was granted 49,043 shares of restricted stock under Mr. Kaufman’s employment agreement which vest over a four-year period pursuant to our 2020 Stock Incentive Plan.
(3)	Mr. Kalikow does not take a salary from us or our Manager.
(4)	Mrs. Tannenbaum’s outstanding option awards vested upon consummation of our initial public offering.
(5)	Mr. Geoffroy was an employee of our Manager and was not paid compensation by us. Amounts in the column entitled “Salary” represent the compensation expense, which consists of annual base salary, that is allocable to us based on the percentage of time Mr. Geoffroy spent devoted to our affairs in the years presented in his capacity as Chief Financial Officer. Mr. Geoffroy resigned as our Chief Financial Officer on August 6, 2021.
(6)	Mr. Geoffroy was granted a total of 25,130 options, but the grant date fair market value of these awards were estimated at zero dollars per share. Mr. Geoffroy was granted up to an additional 3,500 options immediately prior to the consummation of the initial public offering. Such options were forfeited in connection with Mr. Geoffroy’s resignation.
(7)	All Other Compensation includes medical and dental healthcare coverage as well as life and long-term disability insurance provided under benefit plans maintained by our Manager.
(8)	The stock award and option award amounts reflected in the table and the grant-date values are computed in accordance with FASB ASC Topic 718 for the stock and option awards granted to the Named Executive Officers in the corresponding fiscal year based on the assumptions set forth in Note 11 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2022.

 

20	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

 

Outstanding Equity Awards at 2021 Fiscal Year-End

 

The following table presents information regarding the outstanding equity awards held by each of our named executive officers as of December 31, 2021, including the vesting dates for the portions of these awards that had not vested as of that date.

​

Option Awards

​

Stock Awards

​

​

​

​

​

​

​

​

Equity Incentive Plan Awards

​

Name

​

Number of securities underlying unexercised options exercisable

​

Number of securities underlying unexercised options unexercisable

​

Equity Incentive plan awards: Number of securities underlying unexercised unearned options

​

Option exercise price ($)

​

Option Expiration date(1)

​

Number of shares that have not vested

​

Market value of shares that have not vested ($)

​

Number of unearned shares or other rights that have not vested

​

Market value of unearned shares or other rights that have not vested ($)

​

Leonard M. Tannenbaum(2)

​

670,978

​

—

​

—

​

14.71

​

8/12/2027

​

—

​

—

​

—

​

—

​

​

105,980

​

—

​

—

​

15.29

​

11/18/2027

​

—

​

—

​

—

​

—

​

​

630,000(3)

​

—

​

—

​

19.00

​

3/19/2028

​

—

​

—

​

—

​

—

​

Brett Kaufman(4)

​

—

​

—

​

—

​

—

​

—

​

49,043

​

1,116,219

​

—

​

—

​

​

​

​

​

​

​

​

​

​

​

Jonathan Kalikow(5)

​

—

​

40,320

​

—

​

14.71

​

8/12/2027

​

—

​

—

​

—

​

—

​

​

—

​

14,000(3)

​

—

​

19.00

​

3/19/2028

​

—

​

—

​

—

​

—

​

Robyn Tannenbaum(6)

​

20,160

​

—

​

—

​

14.71

​

8/12/2027

​

—

​

—

​

—

​

—

​

​

14,000(3)

​

—

​

—

​

19.00

​

3/19/2028

​

—

​

—

​

—

​

—

​

Thomas Geoffroy(7)

​

—

​

16,534

​

—

​

14.71

​

8/12/2027

​

—

​

—

​

—

​

—

​

​

—

​

5,096

​

—

​

15.29

​

11/18/2027

​

—

​

—

​

—

​

—

​

​

—

​

3,500(3)

​

—

​

19.00

​

3/19/2028

​

—

​

—

​

—

​

—

​

(1)	Options granted pursuant to awards under our 2020 Stock Incentive Plan expire seven years following the grant date.

(2)	Mr. Tannenbaum was granted three separate awards of options exercisable into shares of Common Stock on August 12, 2020, November 18, 2020, and March 19, 2021, respectively, which were fully vested on each respective grant date and became exercisable following the initial public offering.

(3)	Grant award of options in connection with the consummation of our initial public offering on March 19, 2021.

(4)

Upon commencement of his employment, Mr. Kaufman received a grant of restricted common stock under our 2020 Stock Incentive Plan on August 6, 2021, which vests and become nonforfeitable with respect to 33% of the total number of shares of such restricted common stock on each of the second, third and fourth anniversaries of the grant date and as otherwise provided in his employment agreement, subject to his continued employment on such dates.

(5)

Mr. Kalikow was granted two separate awards of options exercisable into shares of Common Stock on August 12, 2020 and March 19, 2021, respectively, which each vest over a four-year period with approximately 33% vesting on each of the second, third and fourth anniversaries of the respective grant date.

(6)	Mrs. Tannenbaum was granted two separate awards of options exercisable into shares of Common Stock on August 12, 2020 and March 19, 2021, respectively, which were fully vested on each respective grant date and became exercisable following the initial public offering.

(7)

Mr. Geoffroy was granted three separate awards of options exercisable into shares of Common Stock on August 12, 2020, November 18, 2020, and March 19, 2021, respectively, each of which would have vested over a four-year period; however, such options were forfeited in connection with Mr. Geoffroy’s resignation.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

21

 

 

Equity Compensation Plan Information

 

The following table provides information about our Common Stock that may be issued as of December 31, 2021, under the 2020 Stock Incentive Plan, which is our only existing equity compensation plan.

 

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and   Rights		Weighted- Average Exercise Price   of Outstanding   Options,   Warrants, and   Rights(1)		Number of   Securities Remaining   Available for   Future Issuance   Under Equity   Compensation Plans (excluding Securities   Reflected in the First Column) (2)
Equity Compensation Plans Approved by Security Holders	1,604,236		$16.59		741,444
Equity Compensation Plans Not Approved by Security Holders	—		—		—
Total at December 31, 2021	1,604,236		$16.59		741,444

 

(1)	Reflects the weighted-average exercise price of outstanding options granted under the 2020 Stock Incentive Plan.

(2)	All of these shares remained available under our 2020 Stock Incentive Plan and may be used for any type of award authorized under our 2020 Stock Incentive Plan, including stock options, stock units, restricted stock and stock bonuses.

 

22	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Board or our Compensation Committee. None of the members of our Compensation Committee is, or has ever been, our officer or employee.

 

DIRECTOR COMPENSATION

 

We pay each of our directors an annual cash retainer of $50,000 in equal quarterly payments. Each director is entitled to reimbursement of reasonable expenses associated with attending board meetings. However, we do not pay our directors any fees for attending individual board or committee meetings. The lead independent director receives an additional $15,000 annual cash retainer in equal quarterly payments. The Audit and Valuation Committee Chair receives an additional $25,000 annual cash retainer in equal quarterly payments. The Compensation Committee Chair receives an additional $10,000 annual cash retainer in equal quarterly payments. The Nominating and Corporate Governance Committee Chair receives an additional $5,000 annual cash retainer in equal quarterly payments. Directors must attend at least 75% of all meetings of the Board and all committees on which the director sits (including separate meetings of non-management directors or independent directors) in any specified fiscal year in order to be eligible to receive director compensation. If a director is also one of our executive officers, we will not pay any compensation to such person for services rendered as a director. Additionally, our directors are entitled to receive awards in the future under our 2020 Stock Incentive Plan. At his request, we have deferred the payment of Mr. Tzur’s director cash compensation in an aggregate amount equal to $60,000 and such payment is recorded in accounts payable on our balance sheet as of December 31, 2021.

 

The following table sets forth all compensation paid to or accrued by our directors for services rendered to us during the fiscal period presented.

Name

​

​

Year

​

​

Fees Earned Or Paid in Cash ($)

​

​

Stock Awards ($)

​

​

Option Awards ($)(1)

​

​

Total ($)

Thomas Harrison(2)

​

​

2021

​

​

63,750

​

​

—

​

​

919

​

​

64,669

Jodi H. Bond(3)

​

​

2021

​

​

45,000

​

​

—

​

​

1,838

​

​

46,838

Alexander Frank(4)

​

​

2021

​

​

71,250

​

​

—

​

​

919

​

​

72,169

Robert Levy(5)

​

​

2021

​

​

45,000

​

​

—

​

​

1,838

​

​

46,838

Tomer Tzur(6)

​

​

2021

​

​

45,000

​

​

—

​

​

919

​

​

45,919

*	Ms. Sudnow was appointed to the Board on January 31, 2022, subsequent to the end of the fiscal period provided.
(1)	The option award amounts reflected in the table are computed in accordance with FASB ASC Topic 718 based on assumptions set forth in Note 11 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2022.

(2)	Fees earned includes additional annual retainer for service as the Lead Independent Director and Chair of the Compensation Committee. As of December 31, 2021, Mr. Harrison had vested options to purchase 1,400 shares of Common Stock.

(3)	As of December 31, 2021, Ms. Bond had vested options to purchase 1,400 shares of Common Stock.

(4)	Includes additional annual retainer for service as our Chair of the Audit and Valuation Committee and Nominating and Corporate Governance Committee. As of December 31, 2021, Mr. Frank had vested options to purchase 1,400 shares of Common Stock.

(5)	As of December 31, 2021, Mr. Levy had vested options to purchase 1,400 shares of Common Stock.

(6)	As of December 31, 2021, Mr. Tzur had vested options to purchase 1,400 shares of Common Stock.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

23

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information with respect to the beneficial ownership of our Common Stock, as of March 22, 2022, by:

 

●

each person known by us to beneficially own more than 5% of the outstanding shares of our Common Stock;

 

●

each of our named executive officers and directors;

 

●

all of our current directors and executive officers as a group.

 

The information below is based on 19,742,940 shares of our Common Stock outstanding as of March 22, 2022.

 

We have determined beneficial ownership in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that each person or entity named in the table below has sole voting and investment power with respect to all shares of Common Stock that such person or entity beneficially owns, subject to applicable community property laws. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have deemed shares of our Common Stock subject to options that are currently vested and exercisable held by that person, or that will become exercisable and vest within 60 days of March 22, 2022, to be outstanding, but we have not deemed these shares to be outstanding for computing the percentage ownership of any other person.

 

Name of Beneficial Owner (1)		Total Number of Shares Beneficially Owned		% of Common Stock
5% Shareholders
Leonard M. Tannenbaum (2)		5,249,458		24.2%
Named Executive Officers and Directors
Leonard M. Tannenbaum (2)		5,249,458		24.2%
Jonathan Kalikow (3)		723,500		3.7%
Robyn Tannenbaum (4)		86,160		*
Brett Kaufman (5)		3,000		*
Thomas Geoffroy (6)		—		—
Jodi Hanson Bond (7)		12,408		*
Alexander C. Frank (8)		8,085		*
Thomas L. Harrison (9)		16,428		*
Robert Levy (10)		1,400		*
Marnie Sudnow		—		—
Tomer J. Tzur (11)		7,938		*
All directors and executive officers as a group (10 persons)(12)		6,108,377		28.0%

 

	*	Less than 1% of the outstanding shares.

	(1)	Unless otherwise indicated, the address of each of the beneficial owners identified is 525 Okeechobee Blvd., Suite 1770, West Palm Beach, FL 33401.
	(2)	Includes (i) 3,342,500 shares of Common Stock and (ii) 1,906,958 shares of Common Stock which Mr. Tannenbaum has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.

24	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

	(3)	Includes (i) 50,000 shares of Common Stock which Mr. Kalikow has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options and (ii) 673,500 shares of Common Stock, of which 668,500 are owned by Gamma Lending Holdco LLC. Gamma Lending Holdco LLC is a Delaware limited liability company (“GLO”), whose managing member is Gamma Lending Opportunities LP, a Delaware limited partnership (“GLO LP”). GLO LP’s sole General Partner is GRE Lending Opportunities LLC, a Delaware limited liability company (“GLO GP”). GLO GP is a wholly owned subsidiary of Gamma Real Estate LLC (“GRE”), which is beneficially held by Mr. Kalikow and his father.
	(4)	Includes (i) 2,000 shares of Common Stock and (ii) 84,160 shares of Common Stock which Mrs. Tannenbaum has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(5)	Mr. Kaufman was appointed our Chief Financial Officer on August 6, 2021. Includes 3,000 shares of Common Stock.
	(6)	Mr. Geoffroy resigned as our Chief Financial Officer on August 6, 2021.
	(7)	Includes (i) 11,008 shares of Common Stock and (ii) 1,400 shares of Common Stock which Ms. Bond has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(8)	Includes (i) 6,685 shares of Common Stock and (ii) 1,400 shares of Common Stock which Mr. Frank has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(9)	Includes (i) 15,028 shares of Common Stock and (ii) 1,400 shares of Common Stock which Mr. Harrison has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(10)	Includes 1,400 shares of Common Stock which Mr. Levy has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(11)	Includes (i) 6,538 shares of Common Stock and (ii) 1,400 shares of Common Stock which Mr. Tzur has the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.
	(12)	Includes (i) 4,060,259 shares of Common Stock and (ii) up to 2,048,118 shares of Common Stock which our current executive officers and directors will have the right to acquire within 60 days of March 22, 2022 pursuant to outstanding and vested stock options.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

25

 

 

REPORT OF THE AUDIT AND VALUATION COMMITTEE

 

The Audit and Valuation Committee assists the Board in its oversight of the Company’s financial statements and reporting process and audit process. The Audit and Valuation Committee operates under a written charter adopted by the Board, which describes this and the other responsibilities of the Audit and Valuation Committee. Management has the primary responsibility for the financial statements and the reporting process. Our independent registered public accounting firm is responsible for performing an independent audit of our financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) and to issue a report thereon.

 

The Audit and Valuation Committee has reviewed and discussed the Company’s audited financial statements with management, which has primary responsibility for the financial statements. CohnReznick LLP, the Company’s independent registered public accounting firm throughout 2021, is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles. The Audit and Valuation Committee has discussed with CohnReznick LLP the matters required to be discussed by the applicable requirements of the PCAOB and SEC. The Audit and Valuation Committee has received and reviewed the written disclosures and the letter from CohnReznick LLP required by applicable requirements of the PCAOB regarding CohnReznick LLP’s communications with the Audit and Valuation Committee concerning independence, and has discussed with CohnReznick LLP its independence.

 

Based on the review and discussions referred to above, the Audit and Valuation Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC. The Audit Committee also appointed CohnReznick LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022 and is seeking ratification of such appointment by the Company’s shareholders at the Annual Meeting.

 

	AUDIT COMMITTEE
	Alexander Frank (Chair)
	Thomas Harrison
	Robert Levy

 

April 4, 2022

 

The foregoing report of the Audit and Valuation Committee does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.

 

26	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit and Valuation Committee of our Board of Directors has appointed CohnReznick LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2022. We are not required to submit the appointment of CohnReznick LLP for shareholder approval, but our Board of Directors has elected to seek ratification of the appointment of our independent registered public accounting firm by our shareholders at the Annual Meeting as a matter of good corporate governance. If our shareholders do not ratify the appointment of CohnReznick LLP, the Audit and Valuation Committee will reconsider its appointment of CohnReznick LLP and will either continue to retain this firm or appoint a new independent registered public accounting firm. Even if the appointment is ratified, the Audit and Valuation Committee, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if the Audit and Valuation Committee determines that such a change would be in our best interests and the best interests of our shareholders.

 

We expect one or more representatives of CohnReznick LLP to be present at the Annual Meeting and they will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

 

The aggregate fees billed to us for (i) the period from July 31, 2020 through December 31, 2020 and (ii) the year ended December 31, 2021 by our independent registered public accounting firm, CohnReznick LLP, are set forth below:

 

			2020				2021
Audit Fees(1)			$	76,300		$	432,600
Audit-Related Fees(2)				0			0
Tax Fees				0			44,625
All Other Fees				0			0
Total Fees			$	76,300		$	477,225

 

(1)

Audit Fees represents the aggregate fees billed to us by CohnReznick LLP for professional services rendered for the audits of our financial statements for the year and period ended December 31, 2021 and 2020, respectively, and for procedures performed on our quarterly reports on Form 10-Q. During the year and period ended December 31, 2021 and 2020, respectively, Audit Fees also include services in preparation of consents and comfort letters that our auditor provided in connection with our equity and debt offerings.

(2)

Audit-Related Fees represent fees billed for services rendered during the fiscal year for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” During the year and period ended December 31, 2021 and 2020, respectively, we did not incur any such Audit-Related Fees.

 

AFC GAMMA, INC.  |  2022 PROXY STATEMENT

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PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Audit and Valuation Committee Pre-Approval Policies and Procedures

 

The Audit and Valuation Committee is required to pre-approve the audit and non-audit services performed by our independent registered public accounting firm in order to assure that the provision of such services does not impair the auditor’s independence.

 

All services performed and related fees billed by CohnReznick LLP during 2021 and 2020 were pre-approved by the Audit and Valuation Committee pursuant to regulations of the SEC.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF CohnReznick LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR The YEAR ENDING December 31, 2022.

 

28	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

TRANSACTIONS WITH RELATED PERSONS

 

Policies and Procedures Regarding Related Party Transactions

 

Our Board has adopted written related person transaction policies and procedures. The purpose of this policy is to describe the procedures used to identify, review, approve, disapprove, ratify and disclose, if necessary, any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) with related persons. Under this policy, the Audit and Valuation Committee is responsible for reviewing, approving or ratifying each related person transaction or proposed transaction, subject to certain exceptions. In determining whether to approve or ratify a related person transaction, the Audit and Valuation Committee or its chairperson, as applicable, will consider all relevant facts and circumstances of the related person transaction available and will approve only those related person transactions that are, under all of the circumstances, fair as to us, as the Audit and Valuation Committee or its chairperson, as applicable, determines in good faith. 

 

Certain Relationships and Related Party Transactions

 

Since our formation, we have engaged in the following transactions with our directors, executive officers or holders of more than 5% of our outstanding share capital and their affiliates, which we refer to as our related parties.

 

The Initial Portfolio Transaction

 

We acquired our initial portfolio of loans at fair value of approximately $46,802,841 and cash from AFC Warehouse, LLC (“AFC Warehouse”) and LMT Investments, LLC, each of which is wholly-owned by Mr. Tannenbaum, in exchange for the issuance of 3,342,500 shares of our Common Stock (on a post-split basis) on July 31, 2020 (date of commencement of operations) (the “Initial Portfolio Transaction”). The initial portfolio consisted of loans to Public Company A, Public Company B and Private Company A, as well as two loans to other entities that are no longer borrowers that we subsequently sold after our acquisition.

 

Revolving Credit Agreement

 

On August 18, 2020, we entered into the Revolving Credit Agreement pursuant to which Mr. Tannenbaum, through AFC Finance, LLC, an entity wholly-owned by Mr. Tannenbaum, provides our Revolving Credit Facility. In May 2021, the Revolving Credit Facility was amended to, among other things, remove Gamma Lending Holdco LLC, a fund controlled by Jonathan Kalikow, our Head of Real Estate, one of our directors and an affiliate of our Manager, and his father, as a Lender. In November 2021, the Revolving Credit Facility was further amended to, among other things: (i) decrease the interest rate; (ii) extend the maturity date; (iii) increase the aggregate revolving credit commitments; (iv) add an unused fee (v) add a one-time commitment fee and (vi) require all payments of interest, the commitment fee and unused fee (in each case, net of applicable taxes) to be paid, directly or indirectly, to a charitable foundation to be designated by AFC Finance, LLC in its sole discretion, net of any taxes. The Revolving Credit Facility now provides revolving loan commitments of up to $75.0 million, bears interest at a fixed rate of 4.75% per annum, payable in cash in arrears, and is subject to a one-time commitment fee of 0.25%, or $187,500, which is payable in three quarterly installments, that began in the first quarter of 2022, and an unused fee of 0.25% per annum on the undrawn amount of the revolving loan commitments, to be paid quarterly in arrears. On December 30, 2021, we drew $75.0 million on our Revolving Credit Facility. All outstanding borrowings were subsequently repaid in full on January 3, 2022. As of January 3, 2022, we have accrued an aggregate of approximately $40,000 in interest under the Revolving Credit Facility. Future proceeds under the Revolving Credit Facility are available to fund loans and bridge capital contributions and for general corporate purposes. We did not incur any fees or costs related to the origination of the Revolving Credit Facility. Our obligations under the Revolving Credit Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of our existing and future assets. The maturity date of the Revolving Credit Facility is the earlier of (i) September 30, 2022 and (ii) the closing date of any Refinancing Credit Facility.

 

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Management Agreement

 

Pursuant to our Management Agreement, our Manager, a Delaware limited liability company and wholly-owned subsidiary of the Parent Manager, which is an entity that is over 70%, 10% and 5% beneficially owned by Mr. Tannenbaum, Mrs. Tannenbaum and Mr. Kalikow, respectively, manages our loans and our day-to-day operations, subject at all times to the further terms and conditions set forth in our Management Agreement and such further limitations or parameters as may be imposed from time to time by our Board.

 

Our Manager receives Base Management Fees that are calculated and payable quarterly in arrears in cash, (i) in an amount equal to 0.375% of our Equity, determined as of the last day of each quarter, and (ii) will be reduced by only 50% of the aggregate amount of any Outside Fees, including any agency fees relating to our loans, but excluding the Incentive Compensation and any diligence fees paid to and earned by our Manager and paid by third parties in connection with our Manager’s due diligence of potential loans. Under no circumstances will the Base Management Fees be less than zero.

 

In addition to the Base Management Fees, our Manager receives Incentive Compensation with respect to each fiscal quarter (or portion thereof that our Management Agreement is in effect) based upon our achievement of targeted levels of Core Earnings (as defined in our Management Agreement), pursuant to the terms provided in our Management Agreement. To the extent earned by our Manager, the Incentive Compensation will be payable to our Manager quarterly in arrears in cash.

 

For the period ended December 31, 2020, we incurred fees earned by our Manager for a Base Management Fee of approximately $0.4 million, which was net of a Base Management Fee Rebate of approximately $0.3 million. Our Manager agreed to waive the Incentive Compensation for the period from July 31, 2020 through December 31, 2020, which was approximately $0.5 million for the period.

 

For the year ended December 31, 2021, we incurred fees payable to our manager for a Base Management Fee of approximately $2.3 million, which was net of a Base Management Fee Rebate of approximately $1.0 million. The Incentive Compensation fee payable to our Manager for the year ended December 31, 2021, was approximately $6.0 million.

 

We pay all of our costs and expenses and reimburse our Manager or its affiliates for expenses of our Manager and its affiliates paid or incurred on our behalf, excepting only those expenses that are specifically the responsibility of our Manager pursuant to our Management Agreement. For the period ended December 31, 2020, our Manager was reimbursed for approximately $0.7 million for out-of-pocket costs incurred on our behalf. For the year ended December 31, 2021, our Manager was reimbursed for approximately $2.3 million for out-of-pocket costs incurred on our behalf.

 

Our Management Agreement provides that, upon termination of our Management Agreement under certain circumstances, a Termination Fee will be payable to our Manager by us in an amount equal to three times the sum of (i) the annual Base Management Fee and (ii) the annual Incentive Compensation, in each case, earned by our Manager during the 12-month period immediately preceding the most recently completed fiscal quarter prior to the date of termination.

 

Subsidiary of Private Company G Transactions

 

On February 14, 2021, in connection with the Sub. of Private Co. G Credit Facility, we entered into a syndication letter agreement (the “Initial Syndication Letter”) with our Manager to allocate $24.2 million (the “Manager Portion”) of the total $46.2 million of loans under the Sub. of Private Co. G Credit Facility to our Manager to fund or further allocate or syndicate. The Initial Syndication Letter also provides that our Manager shall act as administrative agent for the anticipated $46.2 million credit facility and shall therefore be entitled to the entirety of any agent fee, which will be paid by the borrower and was contemplated to be 1.0% per annum of the total loan amount.

 

On February 22, 2021, we entered into an additional syndication letter agreement (the “Second Syndication Letter” and, together with the Initial Syndication Letter, the “Syndication Letters”) relating to the Credit Facility with our Manager and AFC Investments, one of our affiliates that is beneficially owned by Mr. Tannenbaum and Mrs. Tannenbaum. Pursuant to the Second Syndication Letter, each party agreed that (i) we would severally and not jointly lend $22.0 million of the Sub. of Private Co. G Credit Facility, (ii) AFC Investments would severally and not jointly lend $24.2 million of the Sub. of Private Co. G Credit Facility and (iii) each funding under the Sub. of Private Co. G Credit Facility would be made pro rata in proportion to each party’s commitments and each party would receive payments of interest, principal, fees and other amounts due to such party, including the allocation of original issue discount, on such pro rata basis.

 

30	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

 

In April 2021, we entered into a loan commitment related to the Sub. of Private Co. G Credit Facility. The final loan commitment at such time was for $22.0 million and we held the entire amount of the loan commitment with no portion syndicated to AFC Investments. Our Manager serves as the administrative agent of the Sub. of Private Co. G Credit Facility and receives agent fees equal to 1.0% per annum of the total loan commitment amount.

 

In September 2021, we entered into the A&R Sub. of Private Co. G Credit Agreement to, among other things, increase the total loan commitments by $53.4 million across three tranches, with $10.0 million of new loan commitments allocated to A BDC Warehouse, LLC ("ABW"), and the remaining $43.4 million of new loan commitments allocated to us.

 

As of December 31, 2021, there was approximately $52.3 million of outstanding principal amount under the Sub. of Private Co. G Credit Facility, with approximately $46.7 million of such loans owing to us and the remainder owing to ABW. In addition, as of December 31, 2021, approximately $0.5 million of PIK interest had accrued with respect to the initial $22.0 million loan we funded in April. Amortization of the Sub. of Private Co. G Credit Facility under the A&R Sub. of Private Co. G Credit Agreement (as may be amended, supplemented, amended and restated or otherwise modified from time to time, the “Sub. of Private Co. G Credit Facility”) will begin on September 30, 2022, and no principal has been repaid to us or ABW as of September 30, 2021. The Sub. of Private Co. G Credit Facility bears interest at (i) a blended floating interest rate, which as of December 31, 2021, was 12.4% per annum, payable in cash, and (ii) a blended PIK interest rate of 1.8% per annum, payable in kind, in each case, across the three tranches of the Sub. of Private Co. G Credit Facility. The Sub. of Private Co. G Credit Facility has an exit fee of 10.0%, which will be reduced to 5.0% upon the satisfaction of certain specified criteria, and an annual agent fee of 1.0% of the total loan commitment amount. The aggregate amount of cash interest earned for the period from April 30, 2021 (the date we initially funded the loan) to December 31, 2021, was approximately $2.5 million. The maturity date of the Sub. of Private Co. G Credit Facility is May 1, 2026.

 

Private Company A Transactions

 

Private Company A Credit Agreement

 

On July 31, 2020, we acquired (pursuant to the Initial Portfolio Transaction) an interest in the Private Company A Credit Facility pursuant to which we and one other lender initially held senior secured term loan commitments in an aggregate principal amount of $40.0 million, of which our loan commitment constituted $32.0 million in principal amount. On October 23, 2020, we entered into an amendment to the Private Company A Credit Agreement (the “Private Company A Amendment”) to, among other things, increase our loan commitment under the Private Company A Credit Facility by $2.0 million to an aggregate loan commitment of $34.0 million in principal amount.

 

In July 2021, Flower Loan Holdco, LLC, an affiliated entity in which Mr. Tannenbaum is the majority ultimate beneficial owner, purchased a third-party lender’s interest in such lender’s $8.5 million portion of the loan to Private Company A under the Private Company A Credit Facility, and we had a 30-day option to purchase such interest from FLH. We, Private Company A and our Manager, as agent for the lenders under the Private Company A Credit Agreement (in such capacity, the “Agent”), concurrently amended and restated the Private Company A Credit Agreement to, among other things, add an additional tranche of loans, which increased the aggregate loan commitments thereunder by $30.0 million, $10.0 million of which our Manager syndicated to ABW, an affiliate of ours that is wholly-owned by Mr. and Mrs. Tannenbaum and a trust affiliated with Mr. and Mrs. Tannenbaum, and $20.0 million of which was to be held by a designee of the Agent, subject to the satisfaction of certain conditions precedent. The A&R Private Company A Credit Agreement has a maturity date of May 8, 2024. The original tranche of term loans has an exit fee of 2.0% of the original tranche term loan amount (excluding any unfunded portions of the original tranche term loan amount) and the additional tranche of term loans has an exit fee of 2.0% of the total amount of such additional tranches (excluding any unfunded portions of the additional tranche term loan amount). The original tranche of term loans has an agent fee of 1.0% of the total loan commitment amount payable annually. The second tranche of term loans has an agent fee of (i) 0.3333% of the total loan commitment amount of the additional tranche of term loans payable on the closing date of the A&R Private Company A Credit Agreement and (ii) 0.6667% of the total loan commitment amount of the additional tranche payable subject to the satisfaction of certain conditions precedent. The Private Company A Credit Facility bears interest at (i) a fixed interest rate of 13.0% per annum, payable in cash, and (ii) a blended PIK interest rate of 3.4% per annum, payable in kind, across the two tranches of loans under the Private Company A Credit Facility. The Private Company A Credit Facility included an upfront fee of 4.0% on the aggregate amount funded of the original tranche of term loans payable on the closing date of the original tranche of term loans and an unused line fee of 2.0% of the amount of any unfunded portion of the term loans payable annually. In connection with certain financing accommodations, a fee of $750,000 was payable to the Agent by the borrower on the closing date thereof. The A&R Private Company A Credit Agreement also included an OID of $0.2 million payable on the closing date of the A&R Private Company A Credit Agreement and $0.4 million payable to lenders subject to the satisfaction of certain conditions precedent.

 

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In September 2021, we entered into (i) the September Loan Assignment with FLH, Private Company A and our Manager, as the agent, pursuant to which we acquired FLH’s interest in the $8.5 million portion of the loan to Private Company A, for a purchase price of approximately $8,471,307 (which equaled the outstanding principal amount of the loan plus any accrued and unpaid interest and less any unaccreted original issue discount) and (ii) the September Commitment Assignment with our Manager, pursuant to which our Manager assigned to us its commitment to make loans to Private Company A under the A&R Private Company A Credit Agreement in a principal amount of up to $20.0 million, which was funded in September 2021. We did not pay any consideration to our Manager for our acquisition of our Manager’s loan commitments under the A&R Private Company A Credit Agreement pursuant to the September Commitment Assignment.

 

In December 2021, the Private Company A Credit Facility was amended to among other things, (i) replace our Manager with AFC Agent, as the Agent under the Private Company A Credit Facility and (ii) add an additional tranche of loans, which increased the aggregate loan commitments thereunder by $20.0 million, which our Manager syndicated to FLH and two third party lenders (the “December Amendments”). Our total loan commitments to Private Company A did not change as a result of the December Amendments. In connection with the December Amendments, the then-existing lenders under the Private Company A Credit Facility received an aggregate amendment fee of $0.5 million, distributed pro rata among such lenders in accordance with their then-existing loan commitments.

 

As a result of the September Assignments and the December Amendments, the total loan commitments to Private Company A under the Private Company A Credit Facility increased to an aggregate commitment amount of $92.5 million, of which our total loan commitments accounted for $62.5 million.

 

As of December 31, 2021, Private Company A had $63.9 million outstanding attributable to our allocation of the Private Company A Credit Facility, which consisted of $62.5 million in initial funded principal amount and approximately $2.1 million in earned PIK interest added to the outstanding principal balance of the Private Company A Credit Facility, net of $0.9 million of principal repayment to us and $0.2 million of principal repayment to the third-party lender that subsequently sold its interest in its portion of the Private Company A Credit Facility to FLH and of which we ultimately acquired from FLH as described above. Amortization of the Private Company A Credit Facility began on May 1, 2021 and, on July 30, 2021, was paused until August 1, 2022 in connection with the A&R Private Company A Credit Agreement, and $1.1 million of principal has been repaid through December 31, 2021. The loans under the Private Company A Credit Facility across the first two tranches of loans with respect to our allocation only (and not including the additional tranche added under the December Amendments) bear interest at (i) a fixed interest rate of 13.0% per annum, payable in cash, and (ii) a blended PIK interest rate of 3.4% per annum, payable in kind. The aggregate amount of cash interest earned by us for the period from July 31, 2020 (the date we acquired the loan pursuant to the Initial Portfolio Transaction) to December 31, 2021 was $5.8 million. The maturity date of the Private Company A Credit Facility is May 8, 2024. AFC Agent, as the Agent, earns agent fees as specified above, which is payable by the borrower of the Private Company A Credit Facility, and we do not pay any consideration to AFC Agent for its services as administrative agent under such credit facility.

 

Separately, FLH entered into a new credit facility with Private Company A and a third party lender in July 2021, under which Private Company A could draw up to $40.0 million in bridge term loans (the “Bridge Facility”) secured by collateral separate from collateral securing the Private Company A Credit Facility. The Bridge Facility was repaid in full in October 2021. In connection with the new credit facility with FLH and a related equity raise by Private Company A, our Manager or its designees are entitled to (i) appoint three of the seven members of Private Company A’s board of directors and (ii) receive warrants to purchase common stock of Private Company A in an amount representing 5.1% of the equity interest of Private Company A on a fully-diluted basis. In connection with the equity raise by Private Company A, an investment vehicle controlled by Jonathan Kalikow, one of our directors and executive officers, acquired approximately 11.3% of the equity interest of Private Company A on a fully-diluted basis. As of December 31, 2021, Mr. Kalikow beneficially held or controlled, through investment vehicles and the Manager, a total of approximately 12.5% of Private Company A’s equity interest on a fully-diluted basis. As of December 31, 2021, Mr. Tannenbaum beneficially held approximately 22.6% of Private Company A’s equity interest on a fully-diluted basis through investment vehicles and the Manager, which amount reflects four separate acquisitions of equity of Private Company A by Mr. Tannenbaum, through various investment vehicles, from third-party stockholders and purchase of stock directly from Private Company A.

 

32	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

 

In December 2021, the Private Company A Credit Facility was expanded to include a expansion of the Existing Credit Facility in the form of a $20.0 million third tranche senior term loan, which, among other things, (i) included a $2.5 million commitment by FLH, with the remaining principal amount committed by third-party lender parties and (ii) replaced our Manager with AFC Agent LLC, as agent to the Private Company A Credit Facility. In February 2022, we committed an additional $15.3 million under the expansion to the Private Company A Credit Facility, and now hold $77.8 million in total of the expanded credit facility, and an additional $1.0 million of the expansion was syndicated.

 

Waiver of Subsidiary Guarantor

 

In connection with the Private Company A Amendment, we and the other lender under the credit agreement governing our loan to Private Company A (such credit agreement and related loan documents, the “Private Company A Credit Documents”) granted the loan parties a waiver from, among other things, the affirmative covenants under the Private Company A Credit Documents requiring that the loan parties cause certain subsidiaries of the loan parties to provide a guarantee of, and pledge collateral securing, the loan parties’ obligations under the Private Company A Credit Agreement. This waiver was limited to a specific majority-owned subsidiary of Private Company A which Mr. Tannenbaum owns a minority 20% equity interest in.

 

Private Company I Credit Agreement

 

On July 14, 2021, we entered into a credit agreement with Private Company I pursuant to which we and ABW, an entity that is wholly-owned by Mr. and Mrs. Tannenbaum and is one of our and our Manager’s affiliates, provided a senior secured loan facility (the “Private Company I Credit Facility”) in an aggregate principal amount of $15.5 million. Our Manager serves as the agent for the lenders under the Private Company I credit agreement. The Private Company I Credit Facility bears interest at per annum rates of (i) 12.0% plus LIBOR, payable in cash, and (ii) 2.5%, payable in kind. The Private Company I Credit Facility also contains an exit fee of 3.0%, an agent fee of 1.0% per annum of the outstanding term loan amount and OID of 4.0%. As of December 31, 2021, Private Company I had $10.4 million outstanding attributable to our allocation of the Private Company I Credit Facility, which consisted of $10.1 million in initial funded principal amount and approximately $0.3 million in earned PIK interest added to the outstanding principal balance of the Private Company I Credit Facility. Amortization of the Private Company I Credit Facility will begin on July 14, 2022 and no principal has been repaid to us as of December 31, 2021. The aggregate amount of cash interest earned by us up until December 31, 2021 is approximately $0.6 million. The maturity date of the Private Company I Credit Facility is August 1, 2026.

 

The purpose of the senior secured loan facility was to, among other things, fund Private Company I’s refinancing of our existing bridge loan to Private Company I, which consisted of $5.5 million in then-outstanding principal amount. As part of the refinancing, the exit fee on the bridge loan was waived and the borrower was credited for a portion of the agent fee and original OID on the bridge loan.

 

Subsidiary of Public Company H Credit Agreement

 

On December 16, 2021, we entered into the Sub. of Public Company H Credit Agreement, pursuant to which we, together with Warehouse and a third-party lender, provided the Subsidiary of Public Company H with a $100.0 million senior secured credit facility. Of the aggregate $100.0 million in loan commitments, we committed $60.0 million, Warehouse, which is a fund affiliated with us and our Manager, committed $10.0 million, and a third-party lender committed $30.0 million of the aggregate principal amount. Warehouse is an entity beneficially owned, in part, by Leonard M. Tannenbaum, one of our directors and our Chief Executive Officer, Robyn Tannenbaum, our Managing Director, Head of Origination and Investor Relations, other members of the Tannenbaum family, Brett Kaufman, our Chief Financial Officer, and Jonathan Kalikow, one of our directors and our Head of Real Estate. As of December 31, 2021, Subsidiary of Public Company H had $42.5 million outstanding attributable to our allocation of the Sub. of Public Company H Credit Facility, which consisted of our initial funded principal. The Sub. of Public Company H Credit Facility also includes an option for the borrower, upon its request and subject to its achievement of predetermined milestones and the terms and conditions of the Sub. of Public Company H Credit Agreement, to increase the amount of the Sub. of Public Company H Credit Facility by up to $50.0 million on or around December 16, 2022, to be funded by one or more of the lenders. The Sub. of Public Company H Credit Facility bears interest at (i) a fixed interest rate of 9.75% per annum, payable in cash, and (ii) a contingent interest rate of 1.0% per annum, payable in cash. The Sub. of Public Company H Credit Facility also contains an unused line fee of 3.0% per annum of the unused amount of the commitments, an agent fee of 0.75% per annum of the outstanding term loan amount and OID of 4.0%. The aggregate amount of cash interest earned by us up to December 31, 2021 is approximately $0.1 million. The Sub. of Public Company H Credit Facility does not require amortization and as of December 31, 2021, Subsidiary of Public Company H had not repaid any principal amount under such credit facility. The maturity date of the Sub. of Public Company H Credit Facility is January 1, 2026. AFC Agent, an entity wholly owned by Mr. Tannenbaum and Mrs. Tannenbaum, serves as the administrative agent to all lenders under the Sub. of Public Company H Credit Facility. AFC Agent earns an agent fee of 0.75%, which is payable by the borrower of the Sub. of Public Company H Credit Facility, and we do not pay any consideration to AFC Agent for its services as administrative agent under such credit facility.

 

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Connecticut and New York Offices

 

We currently maintain one of our executive offices in Greenwich, Connecticut. This office is leased by our Manager or one of its affiliates from Mr. Tannenbaum and pursuant to the terms of our Management Agreement, we reimburse our Manager (or its affiliate, as applicable) for certain expenses relating to such office (including our pro-rata portion of telephone, printing, mailing, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses), as well as expenses relating to disaster backup recovery sites and facilities maintained for us, our affiliates, our loans or our Manager or its affiliates as required for our operation. We do not have to reimburse our Manager for rent for the use of this office space. Our expenses related to this office have been less than $120,000 since inception. Mr. Kalikow operates out of New York from property that he owns and is reimbursed by the Manager for certain expenses relating to such office (including our pro-rata portion of telephone, printing, mailing, utilities, office furniture, equipment machinery and other office, internal and overhead expenses), as well as expenses relating to disaster backup recovery sites and, in turn, pursuant to the terms of our Management Agreement, we reimburse the Manager for such expenses. We do not have to reimburse our Manager for rent for the use of this office space. Our expenses related to this office have been less than $120,000 since inception.

 

Investments in Loans

 

From time to time, we may co-invest in loans with other investment vehicles managed by our management or our affiliates, including our Manager, and their borrowers, including by means of splitting commitments, participating in loans or other means of syndicating loans. We are not obligated to provide, nor have we provided, any financial support to the other managed investment vehicles. As such, our risk is limited to the carrying value of our investment in any such loan. As of and for the period from July 31, 2020 to December 31, 2021, there were four co-invested loans held by us and an affiliate of ours. For additional information regarding our four affiliate co-investments, see “—Private Company A Transactions—Private Company A Credit Agreement,” “—Subsidiary of Private Company G Transactions”, “—Private Company I Credit Agreement” and “—Subsidiary of Public Company H Credit Agreement.”

 

Assigned Rights

 

In connection with our investments in loans, we may from time to time receive an Assigned Right to acquire warrants and/or equity of a borrower. We will sell any Assigned Rights, and the sale may be to one of our affiliates, subject to any such affiliate’s separate approval process and our related person transactions policy, or a third-party buyer on the market.

 

In October 2020, we sold to AFC Warehouse, our affiliate which is also managed by our Manager, Assigned Rights to acquire and/or assign (i) a warrant to purchase 540,732 shares of common stock of Private Company A at an exercise price of $0.01 per share and (ii) a warrant to purchase 551,768 shares of common stock of Private Company A at an exercise price of $0.75 per share for an aggregate purchase price of $217,783, representing the fair value of such Assigned Rights as of the date of such sale, as determined by our Board (based on various subjective and objective factors, including input from an independent third-party valuation firm) and approved by AFC Warehouse.

 

In November 2020, we also sold to AFC Warehouse an Assigned Right to acquire and/or assign a warrant to purchase 3,000,000 common shares of the parent company of Subsidiary of Public Company C at an exercise price of $0.375 per share for an aggregate purchase price of $858,216, representing the fair value of such Assigned Right as of the date of such sale, as determined by our Board (based on various subjective and objective factors, including input from an independent third-party valuation firm) and approved by AFC Warehouse.

 

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In December 2020, we also sold to AFC Warehouse an Assigned Right to acquire and/or assign a warrant to purchase 261 common shares of Private Company D at an exercise price of $0.01 per share for an aggregate purchase price of $573,469, representing the fair value of such Assigned Right as of the date of such sale, as determined by our Board (based on various subjective and objective factors, including input from an independent third-party valuation firm) and approved by AFC Warehouse.

 

In March 2021, we sold to AFC Warehouse an Assigned Right to acquire and/or assign a warrant to purchase 1,382,000 common shares of Private Company E, representing 10% of the fully-diluted equity of Private Company E at such time, at an exercise price of $0.01 per share for an aggregate purchase price of $1,104,614, representing the fair value of such Assigned Right as of the date of such sale, as determined by our Board (based on various subjective and objective factors, including input from an independent third-party valuation firm) and approved by AFC Warehouse.

 

In June 2021, we sold to AFC Warehouse, one of our affiliates and an affiliate of our Manager, an Assigned Right to acquire and/or assign a warrant to purchase 1,978,000 common shares of Private Company E, representing 10% of the fully-diluted equity of Private Company E at such time, at an exercise price of $0.01 per share for an aggregate purchase price of approximately $1.1 million, representing the fair value of such Assigned Right as of the date of such sale, as determined by management and a majority of our independent directors (based on various subjective and objective factors, including input from an independent third-party valuation firm).

 

Under the terms of its governing documents, AFC Warehouse, subject to any required approval by its board of directors and equity holders, is taking all necessary action to liquidate its assets and dissolve upon consummation of the IPO. This means that any future Assigned Rights will likely be sold to a third-party buyer on the market or one of our affiliates other than AFC Warehouse, which may be managed by our Manager or its affiliates. Mr. Kalikow has formed a new entity to which we may sell future Assigned Rights, subject to such entity’s separate approval process and our related person transactions policy. Mr. Kalikow provides investment advisory and other management services to this entity but he is not a significant equity holder in such entity.

 

Directed Share Program

 

At our request in our IPO, the underwriters reserved shares for sale, at the initial public offering price of $19.00 per share, through a directed share program to our directors, officers, employees, business associates and other persons with whom we have a relationship. The sales were made by Empire Asset Management Co. as the directed share program administrator. Participants in the directed share program are not subject to lockup or market standoff restrictions with the underwriters of such offering or with us with respect to any reserved shares purchased through the directed share program, except in the case of shares purchased by any director or executive officer. Mr. Kalikow, Mr. Harrison, Ms. Bond and Mrs. Tannenbaum purchased 5,000, 5,000, 1,200 and 1,000 shares, respectively, in the directed share program.

 

Affiliate Investment in 2027 Senior Notes

 

In November 2021, in connection with our private placement offering of the 2027 Senior Notes, Mr. Tannenbaum, our Chief Executive Officer and one of our directors, purchased, indirectly through an investment vehicle, $22,350,000 in principal amount of the 2027 Senior Notes at the offering price offered to all investors, through a resale transaction with the initial purchasers of the offering. The 2027 Senior Notes accrue interest at a rate of 5.750% per annum. As of December 31, 2021, we had not repaid or paid, as applicable, any principal amount or interest on the 2027 Senior Notes.

 

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OTHER MATTERS

 

We do not know of any other matter that will be brought before the Annual Meeting. However, if any other matter properly comes before the Annual Meeting or any adjournment(s) or postponement(s) thereof, which may properly be acted upon, the proxyholders named in the proxies solicited by the Board of Directors will have the authority to vote all proxies received with respect to such matters in their discretion, and it is their intention to vote such proxies in accordance with the recommendation of the Board of Directors.

 

As permitted by the Exchange Act, only one copy of our proxy materials is being delivered to shareholders of record residing at the same address and who did not receive a Notice of Internet Availability or otherwise receive their proxy materials electronically, unless such shareholders have notified us of their desire to receive multiple copies of our proxy materials. This is known as householding. We will promptly deliver, upon oral or written request, a separate copy of the proxy materials to any shareholder residing at an address to which only one copy was mailed. Shareholders who currently receive multiple copies of proxy materials at their address and would like to request householding of their communications should contact us. Requests for additional copies or requests for householding for this year or future years should be directed in writing to Householding Department of Broadridge Financial Solutions, Inc. at 51 Mercedes Way, Edgewood, New York 11717, or at 1-866-540-7095.

 

ANNUAL REPORT TO SHAREHOLDERS

 

Our 2021 Annual Report is available on our corporate website at https://investors.afcgamma.com and on the Internet at www.proxyvote.com. For shareholders receiving a Notice of Internet Availability, instructions on how to request a printed copy of our proxy materials and 2021 Annual Report are included in the Notice of Internet Availability. Shareholders receiving a printed copy of this Proxy Statement have also received a copy of our 2021 Annual Report. We will provide, without charge, a copy of our 2021 Annual Report for the year ended December 31, 2021 (including the financial statements but excluding the exhibits thereto) upon the written request of any shareholder or beneficial owner of our Common Stock. Requests should be directed to our Secretary, at the following address:

 

AFC Gamma, Inc.
525 Okeechobee Blvd., Suite 1770
West Palm Beach, FL, 33401

 

SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2023 ANNUAL MEETING

 

Requirements for Proposals to be Considered for Inclusion in Proxy Materials.

 

For your proposal to be considered for inclusion in our proxy statement for the 2023 annual meeting of shareholders, your written proposal must be received by our Secretary at our principal executive offices no later than December 5, 2022. and must comply with Rule 14a-8 under the Exchange Act regarding the inclusion of shareholder proposals in Company-sponsored proxy materials. If we change the date of the 2023 annual meeting of shareholders by more than 30 days from the anniversary of this year’s Annual Meeting, your written proposal must be received a reasonable time before we begin to print and mail our proxy materials for the 2023 annual meeting of shareholders.

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Shareholder Proposals and Nomination of Director Candidates Not Intended for Inclusion in Proxy Materials.

 

If you intend to nominate an individual for election to our Board of Directors at our 2023 annual meeting of shareholders or wish to present a proposal at the 2023 annual meeting of shareholders but do not intend for such proposal to be included in the proxy statement for such meeting, our Bylaws require that, among other things, shareholders give written notice of the nomination or proposal to our Secretary at our principal executive offices than no later than 5:00 p.m. Eastern Time on January 19, 2023 (the 120th day before the first anniversary of the date of the preceding year’s annual meeting) nor earlier than December 20, 2022 (the 150th day before the first anniversary of the date of the preceding year’s annual meeting) for the Annual Meeting. Notwithstanding the foregoing, in the event that we change the date of the 2023 annual meeting of shareholders to a date that is more than 30 days before the anniversary of the Annual Meeting, written notice by a shareholder must be given no earlier than the 150th day prior to the date of the 2023 annual meeting of shareholders and no later than 5:00 p.m. Eastern Time on the later of (i) the 120th day prior to the date of the 2023 annual meeting of shareholders or (ii) the tenth day following the day on which public announcement of the 2023 annual meeting of shareholders is made. Shareholder proposals not intended to be included in the proxy statement or nominations for director candidates that do not meet the notice requirements set forth above and further described in Article II, Section 11 of our Bylaws will not be acted upon at the 2023 annual meeting of shareholders.

 

In addition, a shareholder who intends to solicit proxies in support of director nominees other than the Company’s nominees at the 2023 annual meeting of shareholder must deliver written notice to the Company setting forth the information required by Rule 14a-19 under the Exchange Act no later than March 20, 2023. If we change the date of the 2023 annual meeting of shareholder by more than 30 days from the date of this year’s Annual Meeting, your written notice must be received by the later of 60 days prior to the date of the 2023 annual meeting of shareholders or the 10th calendar day following the day on which public announcement of the date of the 2023 annual meeting of shareholder is first made. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our Bylaws as described above. 

 

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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING

 

We are using the SEC rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to most of our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) instead of a printed copy of this Proxy Statement and our 2021 Annual Report. The Notice of Internet Availability contains instructions on how shareholders can access those documents over the Internet and vote their shares. The Notice of Internet Availability also contains instructions on how each of those shareholders can receive a printed copy of our proxy materials, including this Proxy Statement, our 2021 Annual Report and a proxy card or voting instruction form. All shareholders who do not receive a Notice of Internet Availability or a copy of the proxy materials by email will receive a printed copy of the proxy materials by mail. We believe this process will expedite shareholders’ receipt of proxy materials, lower the costs of our Annual Meeting and conserve natural resources.

 

We are first mailing the Notice of Internet Availability to our shareholders on or about April 4, 2022. For shareholders who have affirmatively requested printed copies of proxy materials, we intend to first mail printed copies of this Proxy Statement, the accompanying proxy card or voting instruction form and our 2021 Annual Report on or about April 4, 2022.

 

What items of business will be voted on at the Annual Meeting?

 

The items of business scheduled to be voted on at the Annual Meeting are:

 

Proposal 1:	To elect Jodi Hanson Bond, Jonathan Kalikow and Robert Levy as Class II directors to serve until our 2025 annual meeting of shareholders and until their respective successors are duly elected and qualified.
Proposal 2:	To ratify the appointment of CohnReznick LLP as our independent registered public accounting firm for the year ending December 31, 2022.

 

Shareholders will also be asked to consider and transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the meeting.

 

How does the Board of Directors recommend I vote on these proposals?

 

Our Board of Directors recommends that you vote your shares:

 

Proposal 1:		“FOR ALL” of the director nominees named in this Proxy Statement to be elected to the Board of Directors.
Proposal 2:		“FOR” the ratification of the appointment of CohnReznick LLP as our independent registered public accounting firm for the year ending December 31, 2022.

 

Who is entitled to vote?

 

Only shareholders of record at the close of business on March 22, 2022 (the “Record Date”) will be entitled to vote at the Annual Meeting. As of the Record Date, there were 19,742,940 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting.

 

 

38	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

What is the difference between a “beneficial owner” and a “shareholder of record”?

 

Whether you are a “beneficial owner” or a “shareholder of record” with respect to your shares depends on how you hold your shares:

 

	●	Beneficial Owners. Most of our shareholders hold their shares through a broker, bank or other nominee (that is, in “street name”) rather than directly in their own names. If you hold shares in street name, you are a “beneficial owner” of those shares, and the Notice of Internet Availability or a complete set of the proxy materials, together with a voting instruction form, will be forwarded to you by your broker, bank or other nominee.
	●	Shareholders of Record. If you hold shares directly in your name with our stock transfer agent, Continental Stock Transfer & Trust Company, you are considered the “shareholder of record” with respect to those shares, and the Notice of Internet Availability or a complete set of the proxy materials, together with a proxy card, have been sent directly to you by the Company.

 

How can I attend the Annual Meeting?

 

We will be hosting the Annual Meeting live via the Internet. You will not be able to attend the Annual Meeting in person. Only shareholders and our invited guests are invited to attend the Annual Meeting. Any shareholder can listen to and participate in the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/AFCG2022. Our virtual annual meeting allows shareholders to submit questions and comments during the 15 minutes prior to the meeting and during the meeting. After all proposals are presented at the meeting and to the extent time allows, we will spend a few minutes responding to appropriate shareholder questions submitted during the Annual Meeting. All questions must comply with the meeting’s rules of conduct, which will be posted on the virtual meeting web portal. To the extent time doesn’t allow us to answer all of the appropriately submitted questions, we may answer them in writing on our investor relations website, at https://investors.afcgamma.com soon after the meeting. If we receive substantially similar questions may be grouped together with a single response to avoid repetition.

 

The Annual Meeting webcast will begin promptly at 10:00 a.m. Eastern Time. We encourage you to access the Annual Meeting webcast prior to the start time. Online check-in will begin 15 minutes prior to the meeting and you should allow ample time for the check-in procedures.

 

How do I access and participate in the Annual Meeting?

 

You will need the control number included on your Notice of Internet Availability or your proxy card or voting instruction form (if you received a printed copy of the proxy materials) or included in the email to you if you received the proxy materials by email in order to be able to vote your shares or submit questions during the Annual Meeting. If you do not have your control number, you will not be able to access the Annual Meeting.

 

The virtual meeting host will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting web portal. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting log-in page.

 

Why is the Company holding the Annual Meeting virtually?

 

We are embracing technology to provide expanded access, improved communication, reduced environmental impact and cost savings for our shareholders and the Company. Hosting a virtual meeting enables increased shareholder attendance and participation since shareholders can participate and ask questions from any location around the world. In comparison to typical in-person meetings, we believe the virtual meeting format enables more meaningful engagement and a greater level of information sharing with a broader group of shareholders. Our shareholders will be afforded equivalent opportunities to participate during the virtual-format Annual Meeting as they would at a typical in-person annual meeting of shareholders.

 

How do I vote?

 

●

Beneficial Owners.  If you hold your shares of Common Stock in street name, which means your shares are held of record by a broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to vote your shares. Your broker, bank or other nominee will allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone. In addition, if you received a printed copy of this Proxy Statement, you may submit your voting instructions by completing, dating and signing the voting instruction form that was included with this Proxy Statement and promptly returning it in the preaddressed, postage paid envelope provided to you. If you vote by Internet or telephone, then you need not return a written voting instruction form by mail.

 

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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

	●	Shareholders of Record.  If you hold your shares of Common Stock as a record holder and you are viewing this Proxy Statement on the Internet, you may vote by submitting a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. If you hold your shares of Common Stock as a record holder and you are reviewing a printed copy of this Proxy Statement, you may vote your shares by completing, dating and signing the proxy card that was included with this Proxy Statement and promptly returning it in the preaddressed, postage paid envelope provided to you, or by submitting a proxy over the Internet or by telephone by following the instructions on the proxy card. If you vote by Internet or telephone, then you need not return a written proxy card by mail.
	●	During the Meeting. If you plan to vote at the Annual Meeting, you will be given the opportunity to do so by following the instructions available on the Annual Meeting website.

 

What is the deadline for voting my shares if I do not attend the Annual Meeting?

 

If you are a shareholder of record, your proxy must be received by telephone or the Internet by 11:59 p.m. Eastern Time on May 18, 2022 in order for your shares to be voted at the Annual Meeting. If you are a shareholder of record and you received a printed set of proxy materials, you also have the option of completing, signing, dating and returning the proxy card enclosed with the proxy materials before the Annual Meeting in order for your shares to be voted at the Annual Meeting. If you are a beneficial owner of shares of our Common Stock, you will also need to refer to any other deadlines included in the voting instructions provided by the bank, broker or other nominee that holds your shares.

 

How can I revoke or change my vote after I submitted my proxy?

 

	●	Beneficial Owners.  If you are a beneficial owner of your shares, you must contact the broker, bank or other nominee holding your shares and follow their instructions for revoking or changing your vote.
	●	Shareholders of Record.  If you are a shareholder of record, you may change or revoke a previously submitted proxy at any time before it is voted at the Annual Meeting by:

 

	●	signing and returning a new proxy card with a later date;
	●	submitting a later-dated vote by telephone or via the Internet – only your latest Internet or telephone proxy received by 11:59 p.m., Eastern Time, on May 18, 2022, will be counted;
	●	participating in the Annual Meeting live via the Internet and voting your shares electronically at the Annual Meeting; or
	●	delivering a written revocation to our Secretary at 525 Okeechobee Blvd., Suite 1770, West Palm Beach, FL 33401 to be received before the voting at the Annual Meeting.

How will my shares be voted if I do not provide specific voting instructions?

 

If you are a shareholder of record and you sign and return a proxy card without giving specific voting instructions on one or more of the proposals, then Mr. Tannenbaum and Mr. Katz, as the persons named as proxy holders in the proxy card, will vote your shares in the manner recommended by the Board on those proposals as presented in this Proxy Statement.

 

40	2022 PROXY STATEMENT  |  AFC GAMMA, INC.

 

 

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

If you are a beneficial shareholder and your shares are held in the name of a broker, the broker is bound by the rules of the New York Stock Exchange regarding whether or not it can exercise discretionary voting power for any particular proposal if the broker has not received voting instructions from you. Brokers have the authority to vote shares for which their customers do not provide voting instructions only on certain “routine” matters. Proposal 2 (Ratification of appointment of CohnReznick LLP as our independent registered public accounting firm) is considered routine and may be voted upon by your broker if you do not submit voting instructions. Proposal 1 (Election of Directors) is considered non-routine. Consequently, if you hold your shares through a brokerage account and do not submit voting instructions to your broker, your broker may exercise its discretion to vote your shares on Proposal 2, but will not be permitted to vote your shares on Proposal 1. If your broker exercises this discretion, your shares will be voted on Proposal 2 in the manner directed by your broker, but your shares will constitute broker non-votes on Proposal 1 and will not be counted in determining the outcome of that item.

 

As to any other business that may properly come before the Annual Meeting, all properly submitted proxies will be voted by the persons named as proxy holders in the proxy card, in their discretion, on such matters. We do not presently know of any other business that may come before the Annual Meeting.

 

What constitutes a quorum to conduct business at the Annual Meeting?

 

The presence in person or by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting on any matter will constitute a quorum for the transaction of business at the Annual Meeting and any adjournments or postponements thereof. If you submit a proxy or voting instructions, your shares will be counted for purposes of determining the presence or absence of a quorum, even if you abstain from voting your shares. Broker non-votes (as discussed above) will also be counted for purposes of determining the presence of a quorum at the Annual Meeting. If a quorum is not present, our Bylaws provide that the Annual Meeting may be adjourned by the chairperson.

 

What vote is required to approve each of the proposals?

 

Each share of our Common Stock outstanding at the close of business on the Record Date is entitled to one vote on each of the three director nominees and one vote on each other matter that may be presented for consideration and action by the shareholders at the Annual Meeting.

 

For purposes of Proposal 1 (election of directors), you may vote FOR ALL of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any of the nominees. Our Bylaws provide for a plurality voting standard for the election of directors. Under this voting standard, the three director nominees receiving the highest number of affirmative votes will be elected as Class II directors to serve until the 2025 annual meeting of shareholders and until their respective successors are duly elected and qualified.

 

For purposes of Proposal 2 (ratification of the appointment of CohnReznick LLP as our independent registered public accounting firm), you may vote FOR, AGAINST or ABSTAIN. Approval of Proposal 2 requires the affirmative vote of a majority of the votes cast at the Annual Meeting.

 

Please be aware that Proposal 2 is advisory only and is not binding on the Company. Our Board of Directors will consider the outcome of the votes on this item in considering what action, if any, should be taken in response to the advisory vote by shareholders.

 

What effect do withhold votes, abstentions and broker non-votes have on the proposals?

 

For Proposal 1 (Election of Directors), shares voted “WITHHOLD” and broker non-votes will not be counted in determining the outcome of a director nominee’s election. For Proposal 2 (Ratification of appointment of CohnReznick LLP as our independent registered public accounting firm), a vote to “ABSTAIN” with respect to such proposals is not treated as a vote cast and will not be counted in determining the outcome of the vote on the proposal. No broker non-votes are expected on Proposal 2.

 

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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

Who will bear the costs of solicitation?

 

The accompanying proxy is being solicited on behalf of our Board of Directors. The cost of preparing, assembling and mailing the Notice of Annual Meeting of Shareholders, the Notice of Internet Availability, this Proxy Statement and form of proxy and the 2021 Annual Report, the cost of making such materials available on the Internet and the cost of soliciting proxies and holding our virtual meeting of shareholders will be paid by us. In addition to use of the mails, we may solicit proxies in person or by telephone, facsimile or other means of communication by certain of our directors, officers, and regular employees who will not receive any additional compensation for such solicitation. We will also reimburse brokers or other persons holding our Common Stock in their names or the names of their nominees for the expenses of forwarding soliciting material to their principals.

 

42	2022 PROXY STATEMENT  |  AFC GAMMA, INC.