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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): September 11, 2023
AFC GAMMA, INC.
(Exact
name of Registrant as Specified in Its Charter)
Maryland |
|
001-39995 |
|
85-1807125 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
525 Okeechobee Blvd., Suite 1650
West Palm Beach, FL, 33401
(Address
of principal executive offices, including zip code)
561-510-2390
(Registrant’s
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instructions A.2. below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common
Stock, par value $0.01 per share |
|
AFCG |
|
The
Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01
Entry into a Material Definitive Agreement
On
September 11, 2023, AFC Gamma, Inc. (the “Company”) entered into an amendment (the “Management Agreement Amendment”)
to the Company’s Amended and Restated Management Agreement, dated January 14, 2021, between the Company and AFC Management,
LLC (the “Manager”), as amended by the First Amendment to Amended and Restated Management Agreement, dated March 10,
2022, as further amended by the Second Amendment to Amended and Restated Management Agreement, dated November 7, 2022, as further
amended by the Third Amendment to Amended and Restated Management Agreement, dated March 6, 2023 (the “Amended and Restated
Management Agreement”). Pursuant to the Management Agreement Amendment, the Amended and Restated Management Agreement was amended
to update the investment guidelines to allow for investments in mezzanine loans to commercial real estate owners, operators and related
businesses. In addition, the investment guidelines were amended such that loans and investments made in respect of (x) first lien or
second lien loans secured by mortgages or mezzanine loans to commercial real estate owners, operators and related businesses, (y) the
ownership of non-cannabis related commercial real estate assets, and (z) mortgage-backed securities shall not exceed 35% of the Company’s
assets as evaluated on a quarterly basis and determined by the Company’s Board of Directors through the independent Audit and Valuation
Committee. The Manager is a wholly-owned subsidiary of Castleground Holdings LLC (f/k/a Advanced Flower Capital Management, LLC) (the
“Parent Manager”), which is approximately 79% beneficially owned by Leonard M. Tannenbaum, our Chief Executive Officer and
Chairman of the Board, and approximately 11% beneficially owned by Robyn Tannenbaum, our President.
The
foregoing description of the Amended and Restated Management Agreement is qualified in its entirety by reference to the full text of
the Management Agreement Amendment, which is filed as Exhibit 10.1D to this Current Report on Form 8-K and is incorporated by reference
herein.
Item 5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers. Compensatory Arrangements of Certain Officers.
On
September 11, 2023,
effective as of such date, Jonathan Kalikow resigned from each of his officer and director positions with the Company and each of its
subsidiaries, including, without limitation, as (i) a member of the Company’s board of directors, (ii) Head of Real Estate of the
Company and all other roles he has with the Company and each of its subsidiaries, whether as an employee or officer, and (iii) a member
of the Company’s Investment Committee. Mr. Kalikow’s decision to resign was based on his desire to focus on non-cannabis
investments and is not the result of any dispute or disagreement with the Company or any matter related to the Company’s operations,
policies or practices. In connection with Mr. Kalikow’s resignation, the Company has agreed to cause the Manager to recommend to
the Company’s Board of Directors to fully accelerate all restricted stock of the Company
owned by Mr. Kalikow.
As
of September 11, 2023,
Mr. Kalikow no longer owns any of the outstanding equity of the Parent Manager, and Mr. Tannenbaum and Mrs. Tannenbaum beneficially
own approximately 79% and 11%, respectively.
Item 9.01 Financial
Statements and Exhibits.
(d)
Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
AFC
GAMMA, INC. |
|
|
|
|
By: |
/s/
Brandon Hetzel |
|
|
Brandon
Hetzel |
|
|
Chief
Financial Officer and Treasurer |
Date:
September 11, 2023 |
|
|
Exhibit 10.1d
FOURTH
AMENDMENT TO AMENDED AND RESTATED MANAGEMENT AGREEMENT
This
Fourth Amendment to Amended and Restated Management Agreement (this “Amendment”) is entered into effective as of September 11,
2023 (the “Effective Date”) by and between AFC Gamma, Inc., a Maryland corporation (together with its subsidiaries,
the “Company”), and AFC Management, LLC, a Delaware limited liability company (the “Manager”).
RECITALS
WHEREAS,
the Company and the Manager entered into the Amended and Restated Management Agreement, dated as of January 14, 2021, as amended
by the First Amendment, dated March 10, 2022, the Second Amendment, dated November 7, 2022, and that Third Amendment, dated
March 6, 2023 (as amended, the “Management Agreement”), under which the Company has retained the Manager to administer
the business activities and day-to-day operations of the Company and to perform services for the Company in the manner and on the terms
set forth therein; and
WHEREAS,
the Company and the Manager desire to amend the Management Agreement in certain respects as more fully set forth below.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Manager, intending to be legally bound hereby, agree as follows:
| 1. | All
capitalized terms not defined in this Amendment shall have the meanings assigned to them
in the Management Agreement. |
| 2. | Upon
the Effective Date, the Investment Guidelines, as set forth on Exhibit A to the Management
Agreement, are hereby amended and restated in their entirety as set forth on Annex I
attached hereto, and made a part hereof for all purposes. |
| 3. | Except
as expressly modified by this Amendment, the Management Agreement shall continue to be and
remain in full force and effect in accordance with its terms. Any future reference to the
Management Agreement shall be deemed to be a reference to the Management Agreement as modified
by this Amendment. |
| 4. | The
provisions of Section 16 of the Management Agreement are incorporated herein by reference
mutatis mutandis with the same force and effect as if expressly written herein. |
| 5. | This
Amendment may be executed by the parties to this Amendment on any number of separate counterparts
(including by facsimile), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. |
[Signature
Page Follows]
IN
WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the Effective Date.
|
AFC GAMMA, INC. |
|
|
|
|
By: |
/s/ Gabriel Katz |
|
Name: |
Gabriel Katz |
|
Title: |
Secretary and Chief Legal
Officer |
|
|
|
|
AFC MANAGEMENT, LLC |
|
|
|
|
By: |
/s/ Leonard M. Tannenbaum |
|
Name: |
Leonard M. Tannenbaum |
|
Title: |
Manager |
[Signature
Page To Fourth Amendment]
Annex
I
Amended
Investment Guidelines
Investment
Guidelines
1.
No investment shall be made that would cause the Company to fail to qualify as a REIT under the Code.
2.
No investment shall be made that would cause the Company to be regulated as an investment company under the Investment Company Act.
3.
No investment shall be made that would cause the Company to violate any law, rule or regulation of any governmental body or agency having
jurisdiction over the Company (excluding for purposes of this clause, the federal prohibition under the U.S. Controlled Substances Act
of the cultivation, processing, sale or possession of cannabis or parts of cannabis including the sale or possession of cannabis paraphernalia,
advertising the sale of cannabis, products containing cannabis or cannabis paraphernalia, or controlling or managing real estate on which
cannabis is trafficked, as long as such investments are in compliance with applicable state law) or of any securities exchange on which
the securities of the Company may be listed or that would otherwise not be permitted by the Company’s Governing Instruments.
4.
The Company’s investments shall be in (i) first lien loans secured by mortgages to cannabis operators in states that have legalized
medical and/or adult use cannabis (the “Cannabis Investments”); (ii) first lien or second lien loans secured by mortgages
or mezzanine loans to commercial real estate owners, operators and related businesses; (iii) the ownership of non-cannabis related commercial
real estate assets; and (iv) mortgage-backed securities, in each case subject to the restrictions set forth in paragraphs 1 through
3 above; provided, that, loans and investments made in respect of items (ii), (iii) and (iv) of this paragraph 4 shall not exceed 35%
of the Company’s assets as evaluated on a quarterly basis and determined by the Board through its independent Audit and Valuation
Committee.
Notwithstanding
the foregoing, this paragraph 4 shall not prohibit the Manager from causing the Company to invest in (a) debt securities (including seller
notes) with characteristics similar to the Cannabis Investments, or (b) the types of assets described in paragraph 5 below until appropriate
investments described in this paragraph 4 are identified.
5.
Until appropriate investments are identified, the Manager may cause the Company to invest its available cash in interest-bearing, short-term
investments, including money market accounts or funds, commercial mortgage-backed securities, corporate bonds, debt and equity interests
of REITs and other investments, in each case subject to the requirements set forth in paragraphs 1 through 3 above.
6.
All investments by the Company require the approval of the Investment Committee.
These
Investment Guidelines may be amended, restated, modified, supplemented or waived by the Board (which must include a majority of the Independent
Directors) and the Manager without the approval of the Company’s stockholders.
v3.23.2
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