PREM14A
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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  ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Manning & Napier, Inc.

(Name of Registrant as Specified in Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

 

No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

DATED JUNE 2, 2022

 

 

LOGO

MANNING & NAPIER, INC.

290 Woodcliff Drive

Fairport, New York 14450

[●], 2022

Dear Stockholder:

You are cordially invited to attend a special meeting (such meeting, including any adjournments or postponements thereof, the “special meeting”) of the stockholders of Manning & Napier, Inc., a Delaware corporation (the “Company”), to be held virtually via live webcast on [●], 2022, at [●]. The special meeting can be accessed by visiting [●] where you will be able to attend the live meeting and vote online. Additionally, you will be able to vote up until 11:59 PM Eastern Time the day before the meeting date by visiting [●] and following the instructions. In light of the ongoing coronavirus (COVID-19) pandemic, the special meeting will be held in a virtual meeting format only, via live webcast, without a physical meeting location. Please be sure to follow instructions found in the accompanying proxy statement and the accompanying notice of special meeting. Details regarding the business to be conducted at the special meeting are described in the accompanying proxy statement and the notice of special meeting.

On March 31, 2022, the Company entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”) with Manning & Napier Group, LLC, a Delaware limited liability company and a subsidiary of the Company (“Group LLC”), Callodine Midco, Inc., a Delaware corporation (“Parent”), Callodine Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Corp Merger Sub”), and Callodine Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Corp Merger Sub (“LLC Merger Sub” and together with Corp Merger Sub, the “merger subs”). Parent and the merger subs are entities that are affiliated with Callodine Group, LLC, a Delaware limited liability company (“Callodine”). Subject to the terms and conditions of the merger agreement, Corp Merger Sub shall be merged with and into the Company (the “company merger”) with the Company surviving the merger as a wholly-owned subsidiary of Parent, and LLC Merger Sub shall be merged with and into Group LLC with Group LLC surviving the merger as a wholly-owned subsidiary of the Company (the “LLC merger” and together with the company merger, the “mergers”).

At the special meeting, you will be asked to consider and vote on:

 

   

a proposal to adopt and approve the merger agreement (Proposal 1);

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise relates to the mergers (Proposal 2); and

 

   

a proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in favor of the proposal to adopt and approve the merger agreement if there are insufficient votes at the time of such special meeting to approve such proposal (Proposal 3).

If the mergers are consummated, (x) the holders of Class A common stock, par value $0.01, and Class B common stock, par value $0.01, of the Company (together, the “Company common stock”) will receive $12.85 in cash,


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without interest, less any applicable withholding taxes, for each share of Company common stock that they own immediately prior to the time the company merger becomes effective (the “company merger effective time”), other than shares (i) held in the treasury of the Company or owned, directly or indirectly, by Parent or its affiliates, the merger subs or any wholly-owned subsidiary of the Company immediately prior to the company merger effective time, (ii) issued and outstanding immediately prior to the company merger effective time that are held by a holder who did not vote in favor of the adoption of the merger agreement and has properly exercised appraisal rights in respect of such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware and (iii) subject to a rollover agreement (as we explain in more detail herein) and (y) the holders of units of Group LLC (“Group LLC Units”) (other than the Company) will receive $12.85 in cash for each Group LLC Unit held by such holder. There are no shares of the Company’s Class B common stock currently outstanding.

The Company’s board of directors (the “Company Board”) believes this transaction, maximizes value for Company stockholders and is in the best interest of the Company and its stockholders. Following the closing, Mr. Mayer will continue to be a substantial investor in the Company (through his post-closing ownership in its indirect parent entity), serve on the board of directors of that parent entity and serve as the Company’s chief executive officer. After consideration, all of the members of the Company Board (with Mr. Mayer recused) (i) determined that the terms of the merger agreement and the transactions contemplated thereby, including the company merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) determined that the company merger is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the merger agreement, (iii) approved the execution and delivery by the Company of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the company merger and the other transactions upon the terms and subject to the conditions contained therein and (iv) recommended that the Company’s stockholders vote to adopt the merger agreement. Accordingly, the Company Board recommends a vote “FOR” the adoption and approval of the merger agreement and the approval of the other proposals to be voted on at the special meeting, each as described in the accompanying proxy statement.

The accompanying proxy statement provides you with more specific information about the special meeting, the merger agreement, the mergers and the other transactions contemplated by the merger agreement. You should carefully read the entire proxy statement, including the annexes and documents referred to or incorporated by reference therein. You may also obtain more information about the Company from the documents the Company files with the U.S. Securities and Exchange Commission (the “SEC”), including those incorporated by reference therein.

The proposed transaction constitutes a Rule 13e-3 “going-private transaction” under the rules of the SEC.

In considering the recommendations of the Company Board, stockholders should be aware that some of the Company’s executive officers and directors may have certain interests in the mergers that are different from, or in addition to, the interests of Company stockholders generally. Those interests are more fully described in the accompanying proxy statement. The Company Board was aware of these interests and considered them, among other matters, in making its recommendations.

Mr. Mayer, the Company’s Chairman and Chief Executive Officer, and the other Section 16 officers of the Company, who collectively beneficially own approximately 10% of the voting power of the Company’s outstanding capital stock, have separately entered into support agreements (the “Support Agreements”) with Parent, pursuant to which they have agreed to vote their shares in favor of the adoption and approval of the merger agreement and the transactions contemplated thereby, including the company merger, subject to and in accordance with the terms and conditions of the applicable Support Agreement. Copies of the Support Agreements are attached as Annex B to the accompanying proxy statement.

On March 31, 2022, as a condition to the willingness of Callodine’s affiliates to enter into the merger agreement, Mr. Mayer entered into a rollover agreement (the “rollover agreement”) with Callodine MN Holdings, Inc. (“TopCo”), pursuant to which, immediately prior to the company merger effective time, Mr. Mayer agreed to


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contribute 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement. A copy of the rollover agreement is attached as Annex C to the accompanying proxy statement.

Your vote is very important. Adoption and approval of the merger agreement requires the affirmative vote of the holders of at least a majority of the outstanding shares of Company common stock. The failure of any stockholder to vote will have the same effect as a vote against the merger agreement. Accordingly, whether or not you plan to attend the virtual special meeting, you are requested to promptly vote your shares by completing, signing and dating the enclosed proxy card or voting instruction card and returning it in the envelope provided or by voting over the telephone or the Internet as instructed in these materials. If you are a stockholder of record and you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote:

 

  1.

FOR” adoption and approval of the merger agreement;

 

  2.

FOR” approval of the non-binding named executive officer merger-related compensation proposal; and

 

  3.

FOR” adjourning the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in favor of Proposal 1 above.

Voting by proxy will not prevent you from voting your shares by online ballot at the virtual special meeting if you choose to virtually attend the special meeting.

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the enclosed voting instruction card. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt and approve the merger agreement, without your instructions. As such, the failure of any stockholder to so instruct his, her or its broker will have the same effect as a vote against the merger agreement.

If you have any questions or need assistance voting your shares, please contact the Company’s proxy solicitor in connection with the special meeting:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

Stockholders and brokers, banks and other nominees may call 1-866-619-8917 (toll-free).

Thank you in advance for your cooperation and continued support.

Sincerely,

Sarah Turner

The accompanying proxy statement is dated [●], 2022, and is first being mailed to the Company’s stockholders on or about [●], 2022.

The mergers have not been approved or disapproved by the SEC or any state securities commission. Neither the SEC nor any state securities commission has passed upon the merits or fairness of the mergers or upon the adequacy or accuracy of the information contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.


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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

DATED JUNE 2, 2022

 

 

LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [], 2022

To Our Stockholders:

You are cordially invited to attend a special meeting (such meeting, including any adjournments or postponements thereof, the “special meeting”) of the stockholders of Manning & Napier, Inc., a Delaware corporation (the “Company”), to be held virtually via live webcast on [●], 2022, at [●]. The special meeting can be accessed by visiting [●] where you will be able to attend the live meeting and vote online. Additionally, you will be able to vote up until 11:59 PM Eastern Time the day before the meeting date by visiting [●] and following the instructions. In light of the ongoing coronavirus (COVID-19) pandemic, the special meeting will be held in a virtual meeting format only, via live webcast, without a physical meeting location. The special meeting is being held to consider and vote on the following proposals:

 

  1.

Adoption and Approval of the Merger Agreement. To consider and vote on a proposal to adopt and approve the Agreement and Plan of Merger, dated as of March 31, 2022, by and among the Company, Manning & Napier Group, LLC, a Delaware limited liability company (“Group LLC”) and a subsidiary of the Company, Callodine Midco, Inc., a Delaware corporation (“Parent”), Callodine Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Corp Merger Sub”), and Callodine Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Corp Merger Sub (“LLC Merger Sub” and together with Corp Merger Sub, the “merger subs”), pursuant to which Corp Merger Sub will be merged with and into the Company (the “company merger”), with the Company surviving the merger as a wholly-owned subsidiary of Parent and LLC Merger Sub will be merged with and into Group LLC with Group LLC surviving the merger as a wholly-owned subsidiary of the Company (the “LLC merger” and together with the company merger, the “mergers”) (such proposal, the “merger agreement proposal”);

 

  2.

Non-Binding Named Executive Officer Merger-Related Compensation Proposal. To consider and vote on a proposal to approve, on a non-binding, advisory basis, a resolution approving the compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise relates to the mergers (such proposal, the “non-binding named executive officer merger-related compensation proposal”); and

 

  3.

Adjournment of the Special Meeting. To approve the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger agreement proposal (such proposal, the “adjournment proposal”).

The Board of Directors of the Company recommends that the stockholders of the Company vote “FOR” the merger agreement proposal, “FOR” the non-binding named executive officer merger-related compensation proposal and “FOR” the adjournment proposal, each as described in greater detail in the accompanying proxy statement. The recommendation of the Company’s Board of Directors was unanimously approved by all of the members of the Company’s Board of Directors (with Mr. Mayer recused from the meeting at which that recommendation was adopted).


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Parent and merger subs are affiliates of Callodine Group, LLC (“Callodine”). On March 31, 2022, as a condition to the willingness of Callodine’s affiliates to enter into the merger agreement, Mr. Mayer entered into a rollover agreement (the “rollover agreement”) with Callodine MN Holdings, Inc. (“TopCo”), pursuant to which, immediately prior to the company merger effective time, Mr. Mayer agreed to contribute 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement. A copy of the rollover agreement is attached as Annex C to the accompanying proxy statement.

Only stockholders of record at the close of business on [●], 2022 are entitled to notice of and to vote at the special meeting and at any adjournment of the special meeting in accordance with the merger agreement.

To ensure your representation at the special meeting, regardless of whether you plan to attend the virtual special meeting, you are urged to vote your shares by completing, signing, dating and returning the enclosed proxy or voting instruction card as promptly as possible in the postage-paid envelope enclosed. Alternatively, you may vote by telephone or over the Internet as instructed in these materials. If you are voting by telephone or over the Internet, then your voting instructions must be received by 11:59 p.m., Eastern Time, on the day before the special meeting. Your proxy is being solicited by the Board of Directors of the Company.

A stockholder who does not vote in favor of the merger agreement proposal will have the right to seek appraisal of the fair value of his, her or its shares if the company merger is consummated, but only if such stockholder submits a written demand for appraisal to the Company prior to the time the vote is taken on the merger agreement proposal and complies with all other requirements of the Delaware General Corporation Law (“DGCL”). A copy of the applicable DGCL statutory provisions is included as Annex E to the accompanying proxy statement, and a summary of these provisions can be found under the section entitled “Appraisal Rights” in the accompanying proxy statement.

Approval of the merger agreement proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of common stock of the Company. The failure to vote will have the same effect as a vote against the merger agreement proposal. Even if you plan to attend the virtual special meeting, please complete, sign, date and return the enclosed proxy or voting instruction card or vote over the telephone or the Internet as instructed in these materials as promptly as possible to ensure that your shares will be represented at the special meeting if you are unable to attend. If you are a stockholder of record and sign, date and mail your proxy card without indicating how you wish to vote, your shares will be voted in favor of the merger agreement proposal, the non-binding named executive officer merger-related compensation proposal and the adjournment proposal. If you fail to return your proxy card, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and it will have the same effect as a vote against the merger agreement proposal. If your shares are held in “street name” and you fail to return your voting instruction card or otherwise properly instruct your broker, bank or other nominee how to vote your shares, it will have the same effect as a vote against the merger agreement proposal.

For more information concerning the special meeting, the merger agreement, the mergers and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement and the copy of the merger agreement attached as Annex A to the proxy statement.

By order of the Board of Directors,

Sarah Turner

Corporate Secretary [●], 2022


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TABLE OF CONTENTS

 

YOUR VOTE IS IMPORTANT

     1  

SUMMARY TERM SHEET

     1  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND THE SPECIAL MEETING

     11  

SPECIAL FACTORS

     18  

THE MERGER AGREEMENT

     64  

AGREEMENTS INVOLVING COMMON STOCK

     86  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

     88  

PARTIES TO THE MERGER

     90  

OTHER INTERESTED PARTIES IN THE MERGERS

     92  

INFORMATION ABOUT THE SPECIAL MEETING

     94  

THE MERGERS (THE MERGER AGREEMENT PROPOSAL — PROPOSAL 1)

     100  

MERGER RELATED EXECUTIVE COMPENSATION ARRANGEMENTS (THE NON-BINDING NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION PROPOSAL —PROPOSAL 2)

     101  

ADJOURNMENT OF THE SPECIAL MEETING (THE ADJOURNMENT PROPOSAL — PROPOSAL 3)

     102  

OTHER IMPORTANT INFORMATION REGARDING THE COMPANY

     103  

APPRAISAL RIGHTS

     112  

DELISTING AND DEREGISTRATION OF COMMON STOCK

     118  

OTHER MATTERS

     118  

STOCKHOLDER PROPOSALS AND NOMINATIONS

     118  

WHERE YOU CAN FIND MORE INFORMATION

     119  


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YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL SPECIAL MEETING, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS PROMPTLY AS POSSIBLE (1) BY TELEPHONE; (2) OVER THE INTERNET; OR (3) BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOU MAY REVOKE YOUR PROXY OR CHANGE YOUR VOTE AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.

If you are a stockholder of record, voting online during the special meeting will revoke any proxy that you previously submitted. The stockholders of record as of the close of business on the record date for the special meeting, their duly appointed proxy holders and the “street name” stockholders who beneficially owned shares of Company common stock as of the close of business on the record date are entitled to participate in the virtual meeting and will need their assigned control number to vote shares at the special meeting. The control number can be found on your proxy card. If your shares are held in the name of a bank, broker or other nominee and you do not have the assigned control number, please follow the instructions on the voting instruction card, or other applicable proxy notices, furnished by your bank, broker or other nominee to vote your shares accordingly or contact your bank broker or other nominee for instructions.

If you are a stockholder of record and you fail to (1) return your proxy, (2) grant your proxy or provide voting instructions electronically over the Internet or by telephone or (3) attend and vote at the virtual special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and it will have the same effect as a vote against the merger agreement proposal.

If you hold your shares in “street name,” you will need to instruct your bank, broker or other nominee how to vote your shares in accordance with the enclosed voting instruction card provided by your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the merger agreement proposal, without your instructions. Failure to provide these instructions will have the same effect as a vote against the merger agreement proposal.

We encourage you to read the accompanying proxy statement and its annexes, including all documents referred to or incorporated by reference into the accompanying proxy statement, carefully and in their entirety. If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of Company common stock, please contact.

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

(866) 619-8917 (toll-free)

Email: mn@allianceadvisors.com


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SUMMARY TERM SHEET

This Summary Term Sheet, together with “Questions and Answers about the Proposals and the Special Meeting” summarizes certain of the material information set forth or incorporated by reference in this proxy statement. We encourage you to read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement. Each item in this Summary Term Sheet includes a page reference directing you to a more complete description of that topic. See “Where You Can Find More Information” for additional information regarding the documents incorporated by reference in this proxy statement. In this proxy statement, the terms the “Company,” “we,” “our” and “us” refer to Manning & Napier, Inc. and its consolidated subsidiaries taken as a whole, unless the context requires otherwise.

The Parties to the Mergers (page 86)

Manning & Napier, Inc. is an independent investment management firm that provides clients with a broad range of financial solutions and investment strategies for wealth and asset management. Established in 1970, the Company serves a diversified client base of high-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley multi-employer plans, endowments and foundations. The Company’s principal executive offices are located at 290 Woodcliff Drive, Fairport, New York 14450. The Company’s telephone number is (585) 325-6880. For additional information about the Company, see “Where You Can Find More Information” or visit the Company’s website at https://www.manning-napier.com. The information provided on the Company’s website is not part of this proxy statement and is not incorporated by reference in this proxy statement.

Manning & Napier Group, LLC (“Group LLC”) is a Delaware limited liability company formed in 2011 and is the entity through the Company operates its investment management business. The Company is the sole managing member of Group LLC. The Company owns approximately 97.7544% of the Class A units of Group LLC, and the remaining 2.2456% of the Class A units are held by M&N Group Holdings, LLC. The Company does not own or manage M&N Group Holdings, LLC. Group LLC’s principal executive offices are located at 290 Woodcliff Drive, Fairport, New York 14450. Group LLC’s telephone number is (585) 325-6880.

Callodine Midco, Inc., a Delaware corporation (“Parent”), is an affiliate of Callodine Group, LLC (“Callodine”). Parent was formed solely for the purpose of engaging in the transactions contemplated by the merger agreement. Parent has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. Parent’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

Callodine Merger Sub, Inc., a Delaware corporation (“Corp Merger Sub”), is a wholly-owned subsidiary of Parent formed by Parent solely for the purposes of engaging in the transactions contemplated by the merger agreement. Upon completion of the merger, Corp Merger Sub will be merged with and into the Company, and Corp Merger Sub will cease to exist. Corp Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. Corp Merger Sub’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

Callodine Merger Sub, LLC, a Delaware limited liability company (“LLC Merger Sub” and together with Corp Merger Sub, the “merger subs”), is a wholly-owned subsidiary of Corp Merger Sub formed by Corp Merger Sub solely for the purpose of engaging in the transactions contemplated by the merger agreement. Upon completion of the merger, LLC Merger Sub will be merged with and into Group LLC, and LLC Merger Sub will cease to exist. LLC Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. LLC Merger Sub’s principal executive

 

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offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

The Mergers (page 61)

You are being asked to approve the Agreement and Plan of Merger, dated as of March 31, 2022, among the Parent, the merger subs, the Company, and Group LLC (as it may be amended, supplemented, or otherwise modified in accordance with its terms, the “merger agreement”). Subject to the terms and conditions of the merger agreement, Corp Merger Sub shall be merged with and into the Company (the “company merger”) with the Company surviving the merger as a wholly-owned subsidiary of Parent and LLC Merger Sub shall be merged with and into Group LLC with Group LLC surviving the merger as a wholly-owned subsidiary of the Company (the “LLC merger” and together with the company merger, the “mergers”). Upon completion of the mergers, the Company will cease to be a publicly traded company, and you will cease to have any rights in the Company as a stockholder except the right to receive the merger consideration.

Consideration to be Received in the Mergers (page 61)

If the mergers are consummated, (x) the holders of Class A common stock, par value $0.01, of the Company and Class B common stock, par value $0.01, of the Company (together, the “Company common stock”) will receive $12.85 in cash, without interest, less any applicable withholding taxes, for each share of Company common stock that they own immediately prior to the time the company merger becomes effective (the “company merger effective time”), other than shares (i) held in the treasury of the Company or owned, directly or indirectly, by Parent or its affiliates, the merger subs or any wholly-owned subsidiary of the Company immediately prior to the company merger effective time, (ii) issued and outstanding immediately prior to the company merger effective time that are held by a holder who did not vote in favor of the adoption of the merger agreement and has properly exercised appraisal rights in respect of such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware and (iii) subject to a rollover agreement (as we explain in more detail herein) and (y) the holders of Group LLC Units (other than the Company) will receive $12.85 in cash for each Group LLC Unit held by such holder. There are no shares of the Company’s Class B common stock currently outstanding.

Treatment of Company RSUs (page 62)

Subject to the terms of the merger agreement, at the effective time of the company merger, each outstanding award of restricted stock units (each, a “Company RSU”) with respect to shares of company common stock shall be cancelled and replaced with a restricted stock unit award (a “TopCo RSU”) with respect to a number of shares of common stock of Callodine MN Holdings, Inc (“TopCo”) that is equal to the number of shares of company common stock that were subject to such cancelled Company RSU. Except as otherwise agreed between TopCo and the holder of a replaced Company RSU, the vesting and all other terms and conditions that applied to any such replaced Company RSU shall apply to the replacement TopCo RSU; provided, that such replacement TopCo RSU shall be settled upon vesting in a combination of cash and/or shares of TopCo common stock (with the mix of cash and shares determined by TopCo in its sole discretion) valued in the aggregate at (x) the number of shares of TopCo common stock underlying such TopCo RSU multiplied by (y) the merger consideration, with shares of TopCo common stock valued for such purpose at the then-prevailing book value per TopCo share at the time of such settlement. For more information, see “The Merger Agreement—Treatment of Company RSUs.”

When the Mergers Are Expected to Be Completed

The Company currently anticipates that the mergers will be completed in the third quarter of 2022. However, there can be no assurances that the mergers will be completed at all, or if completed, that it will be completed in the third quarter of 2022.

 

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The Special Meeting (page 90)

A special meeting of our stockholders will be held via live webcast on [●], 2022 at [●] (the “special meeting”). The special meeting can be accessed by visiting [●], where you will be able to attend the live meeting. You will be able to vote by visiting [●]. You will need your 16-digit control number, provided on your proxy card, to join the virtual special meeting. Please note that you will not be able to attend the virtual special meeting in person. At the special meeting, you will be asked to, among other things, vote for the merger agreement proposal. See “Questions and Answers about the Proposals and the Special Meeting” and “Information about the Special Meeting.”

Record Date and Quorum (page 90)

Only holders of record of common stock, as of the close of business on [●], 2022, the date established by the Board of Directors of the Company (the “Company Board”) as the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. On the record date, there were [●] shares of Company common stock outstanding, consisting entirely of shares of Class A common stock.

To conduct any business at the special meeting, a quorum must be present virtually or by proxies. The holders of at least a majority of the issued and outstanding shares of Company common stock entitled to vote at the meeting, present virtually or by proxy, will constitute a quorum for the transaction of business at the special meeting. For more information, see “Information about the Special Meeting—Who Can Vote at the Special Meeting” and “—Quorum.”

Votes Required (page 91)

Adoption and approval of the merger agreement (the “merger agreement proposal”) requires the affirmative vote of the holders of at least a majority of the outstanding shares of Company common stock. Abstentions will have the same effect as a vote AGAINST the merger agreement proposal.

Approval of the specified compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise relates to the merger, on a non-binding, advisory basis (the “non-binding named executive officer merger-related compensation proposal”) requires the affirmative vote of shares of Company common stock entitled to be cast at the special meeting.

The adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger agreement proposal (the “adjournment proposal”) requires the affirmative vote of the holders of shares of Company common stock represented virtually or by proxy having a majority of the votes entitled to vote thereon at the special meeting.

Abstentions will have the same effect as a vote AGAINST the non-binding named executive officer merger-related compensation proposal or the adjournment proposal.

If you are a holder of record, failure to submit a proxy or to vote via the virtual meeting website will have the same effect as a vote against the merger agreement proposal, but it will have no effect on the non-binding named executive officer merger-related compensation proposal or the adjournment proposal.

In the absence of a quorum, the chairman of the meeting or the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided in the Company bylaws.

Recommendation of the Company Board (page 93)

After consideration, all of the members of the Company Board (with Mr. Mayer recused) (i) determined that the terms of the merger agreement and the transactions contemplated thereby, including the company merger, are

 

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advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) determined that the company merger is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the merger agreement, (iii) approved the execution and delivery by the Company of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the company merger and the other transactions upon the terms and subject to the conditions contained therein and (iv) recommended that the Company’s stockholders vote to adopt the merger agreement. Accordingly, the Company Board recommends a vote “FOR” the adoption and approval of the merger agreement and the approval of the other proposals to be voted on at the special meeting, each as described in this proxy statement.

Interests of Executive Officers and Directors of the Company in the Mergers (page 45)

In considering the recommendation of the Company Board, you should be aware that some of the Company’s directors and executive officers (including Mr. Mayer, who is also a director) may have interests in the mergers that are different from, or in addition to, your interests as a stockholder. These interests include, among others:

 

   

Agreements between Mr. Mayer and Callodine affiliates pursuant to which (i) Mr. Mayer will continue as chief executive officer of the Company following the closing, (ii) Mr. Mayer will contribute 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement that he entered into with TopCo and (iii) Mr. Mayer agreed with Parent to vote in favor of the proposal to approve and adopt the merger agreement and any related proposals at the special meeting. Prior to the closing of the mergers, Parent and certain additional members of management may negotiate and enter into contracts providing for a rollover (immediately prior to the closing) of all or a portion of such persons’ shares of Company common stock through their contribution of such shares to TopCo in exchange for equity interests in TopCo. In addition, the rollover agreement provides that at or prior to the rollover closing, the holder of rollover shares will enter into a stockholders agreement with TopCo that will govern the rights and obligations of the equity holders of TopCo following consummation of the mergers, including certain restrictions on transfers of the equity interests of TopCo and certain board designation rights (including the right of the Company’s chief executive officer to designate one member of TopCo’s board of directors), tag-along rights, drag-along rights, and liquidity rights with respect to the equity interests of TopCo.

 

   

In connection with the rollover agreement, Mr. Mayer also entered into a rollover “bonus” opportunity letter agreement which provides for either a cash payment or the issuance of additional shares of TopCo common stock, in TopCo’s sole discretion, to Mr. Mayer based on his continued post-closing ownership of TopCo equity. The amount is determined based on the percentage of equity that Mr. Mayer elects to rollover relative to his equity holdings at the time of the Company’s entry into the merger agreement, and any bonus payment to him will be made three years following the closing subject to his continued employment and the amount of retained equity at that time. Mr. Mayer’s rollover bonus opportunity can be valued at an amount up to 5% of the value of his rollover shares (as such, approximately $400,000 in value). Any additional members of management that become Rollover Holders like Mr. Mayer will also enter into a similar rollover “bonus” opportunity letter agreement. SeeSpecial Factors—Interests of Executive Officers and Directors of the Company in the Mergers,” beginning on page 45.

 

   

At the company merger effective time, each Company RSU will receive the treatment described in the section of this proxy statement captioned Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers.

 

   

With respect to certain executive officers, the opportunity to receive cash severance payments and benefits as described in the section of this proxy statement captioned “Special Factors—Interests of

 

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Executive Officers and Directors of the Company in the Mergers—Named Executive Officer Merger-Related Compensation”.

 

   

Continued indemnification rights and directors’ and officers’ liability insurance applicable for a period of six years following completion of the merger.

The Company Board was aware of these interests and considered them, among other matters, prior to making its determination to recommend the approval of the merger agreement to the Company’s stockholders. For more information, see the section entitled “Summary Term Sheet—Interests of Executive Officers and Directors of the Company in the Mergers.” Mr. Mayer recused himself from participation in this determination by the Company Board.

Support Agreement (page 56)

Concurrently with the execution of the merger agreement, Parent and each of Mr. Mayer and the Company’s other Section 16 officers (the “Company supporting stockholders”), who each hold Company common stock and collectively beneficially own approximately 10% of the voting power of the Company’s outstanding capital stock, separately, entered into a support agreement (the “support agreement”) pursuant to which they have agreed, among other things and subject to the terms and conditions of the support agreement, to vote each of the shares they beneficially own (as of the record date of the Company stockholders meeting held to obtain Company stockholder approval) in favor of the company merger, the approval of the merger agreement and any other matters necessary for the consummation of the company merger and other transactions contemplated by the merger agreement.

The obligations of the Company supporting stockholders under the support agreement will automatically terminate without any further action required by any person upon the earliest to occur of (i) the closing of the transactions, (ii) the date on which the merger agreement is validly terminated in accordance with its terms, (iii) the completion of the special meeting (including any adjournment or postponement, regardless of whether the merger agreement is approved or not) and (iv) written notice of the termination of the support agreement by Parent to the applicable Company supporting stockholder.

Opinion of the Company’s Financial Advisor (page 33 and Annex D)

PJT Partners LP (“PJT Partners”) was retained by Company to act as its financial advisor in connection with the mergers and, upon Company’s request, to render its fairness opinion to the Company Board in connection therewith. The Company selected PJT Partners to act as its financial advisor based on PJT Partners’ qualifications, expertise and reputation, its knowledge of Company’s industry and its knowledge and understanding of the business and affairs of Company. At a meeting of the Company Board on March 31, 2022, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated March 31, 2022, to the Company Board that, as of the date thereof and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the merger consideration to be received by the holders of Company common stock (other than the rollover holders was fair to such holders from a financial point of view).

The full text of PJT Partners’ written opinion delivered to the Company Board, dated March 31, 2022, is attached as Annex D and incorporated into this proxy statement by reference in its entirety. PJT Partners’ written opinion has been provided by PJT Partners at the request of the Company Board and is subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by PJT Partners in connection with the opinion (which are stated therein). You are encouraged to read the opinion carefully in its entirety. PJT Partners provided its

 

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opinion to the Company Board, in its capacity as such, in connection with and for purposes of its evaluation of the mergers only and PJT Partners’ opinion does not constitute a recommendation as to any action the Company Board should take with respect to the merger or how any holder of Company common stock should vote or act with respect to the mergers or any other matter. The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion. This summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion.

See “Special Factors—Opinion of the Companys Financial Advisor

Material US Federal Income Tax Consequences of the Company Merger (page 50)

If you are a US Holder (as defined below in “Special Factors—Material US Federal Income Tax Consequences of the Company Merger”), receipt of cash in exchange for shares of Company common stock pursuant to the company merger generally will be a taxable transaction for US federal income tax purposes. Generally, you will recognize gain or loss equal to the difference, if any, between the amount of cash you receive and the adjusted tax basis of your shares. However, the tax considerations of the company merger to you will depend on your particular circumstances, and you should consult your tax advisors to determine how the company merger will affect you.

If you are a Non-US Holder (as defined below in “Special Factors—Material US Federal Income Tax Consequences of the Company Merger”), you generally will not be subject to US federal income tax on any gain recognized in connection with the company merger unless you have certain connections to the United States. However, the tax considerations of the company merger to you will depend on your particular circumstances, and you should consult your tax advisors to determine how the company merger will affect you.

For a more detailed summary of the material tax considerations of the company merger, see the section below “Special Factors—Material US Federal Income Tax Consequences of the Company Merger.”

Solicitation of Company Acquisition Proposals (page 69)

In the merger agreement, until 12:01 a.m. on the 40th day after the date of the merger agreement (the “no-shop period start date”) the Company and its affiliates and their respective directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives had the right to (i) solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or offer that could constitute an acquisition proposal (as defined in “The Merger Agreement—No Solicitation; Recommendations of the Company Merger”), including by providing any information (including non-public information and data) relating to the Company or any of its subsidiaries and affording access to the business, properties, assets, books, records or other information, or to any personnel, of the Company or any of its subsidiaries to any person or entity (and its representatives, including potential financing sources), pursuant to a confidentiality agreement on terms at least as restrictive in all material respects on such person or entity as those contained in the Confidentiality Agreement with respect to Callodine, so long as the Company provided to Parent any material non-public information or data that was provided by the Company to any person or entity or their representatives (including potential financing sources) and (ii) engage in, enter into, continue or otherwise participate in, any discussions or negotiations with any persons or entities (and their respective representatives, including potential financing sources) with respect to any acquisition proposals (or inquiries, proposals or offers or other efforts that would reasonably be expected to lead to an acquisition proposal) and cooperate with or assist or participate in or facilitate any such inquiries, proposals, offers, discussions or negotiations or any effort or attempt to make any acquisition proposals, including granting a waiver, amendment or release under any pre-existing standstill or similar provision to the extent necessary to allow for a confidential acquisition proposal or amendment to a confidential acquisition proposal to be made to the Company or the Company Board.

 

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After the no-shop period start date, the Company may not, and has agreed to instruct and cause each of its subsidiaries and the respective representatives of the company and its subsidiaries not to, directly or indirectly, (i) solicit, initiate or knowingly encourage or facilitate any inquiry, proposal or offer with respect to, or the announcement, making or completion of, any acquisition proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to any acquisition proposal; (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person or entity (other than Parent or its representatives) any non-public information or data in furtherance of, any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to any acquisition proposal (in each case other than, in response to an inquiry that did not result from or arise in connection with a breach of the merger agreement, to refer the inquiring person to the merger agreement); (iii) enter into any acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement or partnership agreement (including any letter of intent or agreement in principle) or similar contract relating to any acquisition proposal (other than an acceptable confidentiality agreement pursuant to and in accordance with the merger agreement); (iv) terminate, waive, amend or modify any provision of any existing confidentiality or standstill agreement with respect to a potential acquisition proposal (other than a limited waiver under any pre-existing confidentiality or similar agreement to the extent necessary to allow for a confidential acquisition proposal to be made to the Company so long as the Company promptly (and in any event within 24 hours thereafter) notifies Parent thereof (including the identity of any such counterparty) after granting any such limited waiver); or (v) take any action to exempt any person or entity (other than Parent or merger subs) from any takeover law. However, the merger agreement allows the Company to furnish non-public information or data and participate in discussions or negotiations under certain circumstances prior to obtaining the requisite approval of the Company’s stockholders if the Company is otherwise in compliance with its non-solicitation covenants in the merger agreement, as further described under “The Merger Agreement—No Solicitation; Recommendations of the Company Merger.”

In the merger agreement, the Company has also agreed that the Company Board, subject to certain exceptions contained in the merger agreement, will not (i) fail to make or withdraw (or modify or qualify in any manner adverse to Parent or publicly propose to withdraw, modify or qualify in any manner adverse to Parent) the recommendation of the Company Board in this proxy statement, (ii) adopt, approve, or publicly recommend, endorse or otherwise declare advisable any other acquisition proposal, (iii) fail to reaffirm the recommendation of the Company Board in this proxy statement within 10 days after receipt of a written request from Parent to do so (which requests under this clause (iii) shall be limited to no more than once every 30 days and no more than two requests in the aggregate), (iv) after receipt of any other acquisition proposal that has been publicly disclosed, fail to recommend against any acquisition proposal within 10 days after receipt of a written request from Parent to do so, (v) fail to include the recommendation of the Company Board in this proxy statement, or (vi) fail to recommend against any then-pending tender or exchange offer that constitutes an acquisition proposal within 10 business days after it is announced.

However, at any time prior to obtaining stockholder approval, upon the occurrence of an intervening event (as defined in “The Merger Agreement—No Solicitation; Recommendations of the Company Merger”), the Company may make an adverse recommendation change (as defined in “The Merger Agreement—No Solicitation; Recommendations of the Company Merger”) if (i) the Company has (A) provided to Parent four business days’ prior written notice setting forth in reasonable detail information describing the intervening event and the rationale for the adverse recommendation change and expressly stating that the Company Board has determined to make an adverse recommendation change and (B) prior to making such an adverse recommendation change, engaged with Parent in good faith (to the extent Parent wishes to engage) during such four business day period to consider any adjustments proposed by Parent to the terms and conditions of the merger agreement such that the failure of the Company Board to make an adverse recommendation change in response to the intervening event would no longer be inconsistent with the directors’ fiduciary duties under applicable law.

 

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In addition, at any time prior to obtaining stockholder approval, in response to a written acquisition proposal that did not result from a breach of the non-solicitation covenants of the merger agreement, if the Company Board determines in good faith after consultation with its financial advisor and outside legal counsel that the acquisition proposal constitutes a superior proposal (as defined in “The Merger Agreement—No Solicitation; Recommendations of the Company Merger”), then the Company Board may make an adverse recommendation change or terminate the merger agreement in order to enter into a definitive written acquisition agreement with respect to the superior proposal. The Company must comply with certain provisions of the merger agreement for the benefit of Parent (including with respect to notifying Parent and negotiating in good faith with Parent) before making an adverse recommendation change or terminating the merger agreement to enter into a definitive written agreement with respect to a superior proposal.

For more information about the restrictions on the Company’s solicitation of Acquisition Proposals and Adverse Recommendation Changes, see “The Merger Agreement—No Solicitation; Recommendations of the Company Merger.”

Conditions to Completion of the Mergers (page 76)

The closing of the mergers depends on a number of conditions being satisfied or waived. These conditions, which are described more fully in “The Merger Agreement—Conditions to Completion of the Mergers,” include:

 

   

the affirmative vote in favor of the mergers by the holders of at least a majority in combined voting power of the outstanding shares of the Company (the “Company stockholder approval”);

 

   

the receipt of approval in writing of the Financial Industry Regulatory Authority, Inc. (“FINRA”) of a continuing membership application (“CMA”) by Manning & Napier Investor Services, Inc. (“MNIS”) pursuant to FINRA Rule 1017; provided that (i) at least 31 days have elapsed since FINRA deemed the CMA to have been filed with FINRA, (ii) FINRA has not notified MNIS that the CMA is subject to “fast track” review, (iii) MNIS or its representatives shall have notified (in writing and at least five business days prior to the anticipated closing date) the FINRA Membership Application Program that the parties intend to consummate the closing pursuant to FINRA Rule 1017(c)(1), (iv) FINRA has not advised any of the parties hereto at any time prior to the closing that they are prohibited from consummating the closing without FINRA approval, and (v) FINRA has not informed any of the parties hereto at any time prior to the closing that FINRA will, or may, impose any “interim restrictions” on MNIS that materially limit the manner in which MNIS may conduct its business or operations, including but not limited to reducing the scope of MNIS’s business, if the closing is consummated without such FINRA approval;

 

   

the absence of any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal prohibition that, in any case, prohibits or makes illegal the consummation of the mergers; further, no law shall have been enacted, entered, promulgated, enforced or deemed applicable by any governmental entity that prohibits or makes illegal the consummation of the mergers;

 

   

the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

the accuracy of each party’s representations and warranties in the merger agreement (subject to materiality qualifiers);

 

   

the performance in all material respects by each party of all obligations required to be performed by it under the merger agreement;

 

   

the receipt of all consents and approvals required from the New Hampshire Banking Department pursuant to Title 35, Chapter 383-C of the New Hampshire Revised Statutes Annotated;

 

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the absence of a company material adverse effect; and

 

   

the Company having received, as of five business days prior to the closing date, the consent of its clients representing a run rate revenue (calculated by multiplying the annual fee rate or fee schedule (as reduced for any fee concessions) multiplied by the assets under management (as adjusted for net cash inflows and outflows from February 28, 2022 until the calculation date but not changes due to market appreciation or depreciation or any currency fluctuations)) of at least 75% of the run rate revenue of all clients based upon assets under management as of February 28, 2022;

 

   

the Company having received, as of five business days prior to the closing date, the consent of its clients representing assets under management (as adjusted for net cash inflows and outflows from February 28, 2022 until the calculation date but not changes due to market appreciation or depreciation or any currency fluctuations) of at least 75% of the assets under management as of February 28, 2022; and

 

   

the delivery of an officers’ certificate by each party with respect to representation and warranties and performance of obligations under the merger agreement.

For more information about the conditions to completion of the Merger, see “The Merger Agreement—Conditions to Completion of the Mergers.”

Termination of the Merger Agreement (page 77)

The merger agreement contains certain termination rights, including, but not limited to, the right of (i) the Company to terminate the merger agreement to accept a superior proposal or (ii) Parent to terminate the merger agreement upon an adverse recommendation change, in each case, subject to and in accordance with the terms and conditions of the merger agreement, and provides that, upon termination of the merger agreement by the Company or Parent in the instances set forth in clauses (i) and (ii) above, the Company will be required to pay Parent (or one or more of its designees) a Company Termination Fee of $8,790,000 in cash (or $3,140,000 in the event that the merger agreement was terminated by the Company to accept a superior proposal prior to the no-shop period start date, which date has now passed).

In addition, subject to specified exceptions and limitations, either the Company or Parent may terminate the merger agreement if the mergers are not consummated by October 1, 2022 (subject to extension to December 1, 2022 in certain instances).

Upon termination of the merger agreement by the Company or Parent under specified conditions, Parent will be required to pay the Company a Parent Termination Fee of $15,070,000 in cash.

We refer to October 1, 2022 (as it may be extended) as the “termination date.” For more information about the termination rights and terminations fees payable under the merger agreement, see “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Effect of Termination.”

Financing (page 54)

The total amount of funds necessary to consummate the mergers and related transactions, including payment of related fees and expenses, is anticipated to be approximately 6.4 million, which will be funded with the net proceeds of the equity financing and debt financing described below, along with cash on hand of the Company and its subsidiaries.

The equity financing will be on the terms and conditions set forth in the equity commitment letter, dated as of March 31, 2022 (the “Equity Commitment Letter”), pursuant to which East Asset Management, LLC (“EAM”)

 

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provided commitments to contribute as equity capital to Parent $148,997,560 in cash. Funding of the equity commitment is subject to the satisfaction of the conditions set forth in the equity commitment letter.

The debt financing is on the terms and conditions set forth in the commitment letter, dated as of March 31, 2022 (the “Debt Commitment Letter” and, together with the Equity Commitment Letter, the “Commitment Letters”) from Wells Fargo Bank, National Association, Citizens Bank, National Association and KeyBank National Association, pursuant to which such lenders have provided commitments to Corp Merger Sub in respect of a term loan facility of $100 million, the proceeds of which shall be used to consummate the acquisition of the Company as well as a $20 million revolving credit facility to fund the post-closing operations of the Company (as successor to Corp Merger Sub following the mergers). Funding of the Debt Financing is subject to the satisfaction of the conditions set forth in the debt commitment letter. See the section entitled The Merger Agreement—Financing of the Mergers.

Regulatory Approvals Required for the Merger (page 59)

The Company must file an application with the Financial Industry Regulatory Authority (which we refer to as “FINRA”) in accordance with FINRA Rule 1017 regarding the change of ownership of more than twenty-five percent (25%) of the equity of the Company’s subsidiary, Manning & Napier Investor Services, Inc., which is registered with the SEC as a broker-dealer and a member of FINRA as a result of the transaction contemplated by the merger agreement and make notice filings with the states in which Manning & Napier Investor Services, Inc. is registered and doing business. FINRA’s approval of this application is a condition to the parties’ obligations to consummate the mergers under the merger agreement. The Company submitted this application to FINRA on June 1, 2022.

The Company must file a change of control application with the New Hampshire Banking Department pursuant to Title 35, Chapter 383-C of the New Hampshire Revised Statutes Annotated regarding the change of control of the Company’s subsidiary Exeter Trust Company, which is registered a trust company in the State of New Hampshire. The New Hampshire Banking Department’s approval of this application is a condition to the parties’ obligations to consummate the mergers under the merger agreement. The Company submitted this application to the New Hampshire Banking Department on May 31, 2022.

Under the merger agreement, the mergers cannot be consummated until the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), has expired or been terminated. On April 14, 2022, the parties filed the required notification and report forms under the HSR Act with respect to the mergers, commencing the initial 30 calendar-day waiting period. This HSR Act waiting period expired on May 16, 2022.

For a description of the parties’ respective obligations under the merger agreement with respect to regulatory approvals, see the section entitled “The Merger Agreement—Further Actions; Efforts.

Additional Information (page 94)

You can find more information about Manning & Napier, Inc. in the periodic reports and other information we file with the SEC. The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND THE SPECIAL MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting, the merger agreement and the transactions contemplated thereby, including the mergers. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, all of which you should read carefully in their entirety. See “Where You Can Find More Information.”

 

Q.

Why am I receiving this document?

 

A.

You are receiving this proxy statement because on March 31, 2022 the Company entered into the merger agreement with Group LLC, Parent and the merger subs. You are receiving this proxy statement in connection with the solicitation of proxies by the Company Board in favor of the merger agreement proposal. The merger agreement is attached as Annex A to this proxy statement. The description of the merger agreement in this proxy statement is not complete and is qualified in its entirety by reference to the complete text of the merger agreement.

After consideration, all of the members of the Company Board (with Mr. Mayer recused) (i) determined that the terms of the merger agreement and the transactions contemplated thereby, including the company merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) determined that the company merger is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the merger agreement, (iii) approved the execution and delivery by the Company of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the company merger and the other transactions upon the terms and subject to the conditions contained therein and (iv) recommended that the Company’s stockholders vote to adopt the merger agreement. Accordingly, the Company Board recommends a vote “FOR” the adoption and approval of the merger agreement and the approval of the other proposals to be voted on at the special meeting, each as described in the accompanying proxy statement.

 

Q.

What will the Company’s stockholders receive in the company merger?

 

A.

If the company merger is consummated, each holder of Company common stock will receive the merger consideration of $12.85 in cash, without interest, less any applicable withholding taxes, for each share of the Company common stock that such stockholder owns immediately prior to the time the company merger becomes effective, unless such stockholder exercises and perfects its appraisal rights under the DGCL. As a condition to the willingness of Callodine’s affiliates to enter into the merger agreement, Mr. Mayer (the “Rollover Holder”) entered into a rollover agreement with Callodine MN Holdings, Inc. (“TopCo”), pursuant to which, immediately prior to the company merger effective time, Mr. Mayer agreed to contribute 175,902 shares of Company common stock and 500,000 options to purchase Company common stock to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement. Prior to the closing of the mergers, Parent and certain additional members of management may negotiate and enter into contracts providing for a rollover (immediately prior to the closing) of all or a portion of such persons’ shares of Company common stock through their contribution of such shares to TopCo in exchange for equity interests in TopCo. Any such additional members of management would also become a Rollover Holder and become a party to the stockholders agreement described herein and the rollover “bonus” opportunity. The Rollover Holders will only receive TopCo equity interests in respect of their rolled shares of Company common stock, and will not receive the merger consideration in respect thereof.

 

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Q.

When and where is the special meeting?

 

A.

The special meeting of stockholders of the Company will be held virtually via live webcast on [], 2022 at []. The special meeting can be accessed by visiting [●] where you will be able to attend the live meeting and vote online. Additionally, you will be able to vote up until 11:59 PM Eastern Time the day before the meeting date by visiting [●] and following the instructions. If you choose to attend the special meeting and vote your shares via the special meeting website, you will need the control number included on your proxy card. We encourage you to allow ample time for online check-in, which will open at [●]. Please note that you will not be able to attend the virtual special meeting in person. For more information about the Special Meeting, see “Information about the Special Meeting.”

 

Q.

Who can vote at the Special Meeting?

 

A.

Holders of record of the Company common stock as of the close of business on [●], 2022, the record date established by the Company Board for the special meeting, are eligible to vote.

 

Q.

How many votes do the Company’s stockholders have?

 

A.

Holders of the Class A and Class B Company common stock are entitled to one vote for each share of the Company Class A common stock that such holder owned at the close of business on [●], 2022, the record date for the special meeting on each matter properly brought before the special meeting. The Company has no shares of Class B common stock outstanding.

If, as of the record date, you are the beneficial owner of shares held in “street name” by your broker, bank or other nominee, and you wish to vote by attending the special meeting virtually, you will need to provide proof of ownership, such as a recent account statement or letter from your broker, bank or other nominee, along with proper identification. Please note that if you are a beneficial owner and wish to vote by attending the special meeting virtually, you must have a legal proxy from your broker, bank or other nominee naming you as the proxy. You should allow yourself enough time prior to the special meeting to obtain this proxy from the holder of record.

For more information about the stockholders of record and beneficial owners of shares held in “street name,” see “Information about the Special Meeting.”

 

Q.

What votes are required for the Company’s stockholders to approve the merger agreement proposal?

 

A.

Approval of the merger agreement proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Company common stock. Failures to vote, abstentions and broker non-votes will have the same effect as a vote against the merger agreement proposal.

 

Q.

What vote of the Company’s stockholders is required to approve the other proposals to be considered at the special meeting?

 

A.

Approval of the specified compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise relates to the merger, on a non-binding, advisory basis (the “non-binding named executive officer merger-related compensation proposal”) requires the affirmative vote of a majority of the votes entitled to be cast by all shares of Company common stock. Approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger agreement proposal (the “adjournment proposal”) requires the affirmative vote of the holders of Company common stock represented virtually or by proxy having a majority of the votes entitled to vote thereon at the special meeting. Abstentions will have the same effect as a vote AGAINST the non-binding named executive officer merger-related compensation proposal or the adjournment proposal.

 

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Q.

What is a quorum?

 

A.

The representation of the holders of a majority of the outstanding shares of company common stock as of the record date must be present at the special meeting, attending the special meeting virtually or represented by proxy, in order to constitute a quorum, for the purposes of holding the special meeting and conducting business. For more information about the quorum of the special meeting, see “Information about the Special Meeting—Who Can Vote at the Special Meeting—Quorum.”

 

Q.

How does the Company Board recommend that I vote?

 

A.

After consideration of various factors, including the factors described in the section entitled “Special Factors—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company Board; Fairness of the Company Merger,” the Company Board (with Mr. Mayer recused) (i) determined that the terms of the merger agreement and the transactions contemplated thereby, including the company merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) determined that the company merger is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the merger agreement, (iii) approved the execution and delivery by the Company of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the company merger and the other transactions upon the terms and subject to the conditions contained therein and (iv) recommended that the Company’s stockholders vote to adopt the merger agreement. Accordingly, the Company Board recommends a vote FOR the adoption and approval of the merger agreement and the approval of the other proposals to be voted on at the special meeting, each as described in the accompanying proxy statement.

You should be aware that some of the Company’s executive officers (including Mr. Mayer, who is a member of the Company Board) are subject to plans, agreements or arrangements that may provide them with interests in the mergers that are different from, or are in addition to, the interests of the Company’s stockholders generally. The Company Board was aware of these interests and considered them, among other matters, in evaluating and overseeing the negotiation of the merger agreement, and in approving the merger agreement and the mergers and in recommending that the merger agreement be approved and adopted by the Company stockholders. See the section entitled “Summary Term Sheet—Interests of Executive Officers and Directors of the Company in the Mergers.”

 

Q.

Have any Company stockholders already agreed to approve the merger agreement?

 

A.

Yes. Concurrently with the execution of the merger agreement, on March 31, 2022, Mr. Mayer, the Company’s Chairman and Chief Executive Officer, and the other Section 16 officers of the Company, who collectively beneficially own approximately 10% of the voting power of the Company’s outstanding capital stock, have separately entered into support agreements (the “Support Agreements”) with Parent, pursuant to which they have agreed to vote their shares in favor of the adoption and approval of the merger agreement and the transactions contemplated thereby, including the company merger, subject to and in accordance with the terms and conditions of the applicable Support Agreement, so long as, among other things, the Company Board has not made an adverse recommendation change or the merger agreement has otherwise terminated. See the section entitled Agreements Involving Common StockSupport Agreement.”

 

Q.

What do I need to do now?

 

A.

Please read this proxy statement carefully in its entirety, including its annexes and the documents referred to or incorporated by reference herein, to consider how the company merger would affect you. After you read these materials, you should complete, sign and date your proxy or voting instruction card and mail it in the enclosed return envelope or submit your vote over the telephone or the Internet as soon as possible so that your shares can be voted at the special meeting. If you are a stockholder of record and you sign, date and mail your proxy card or otherwise submit your proxy without indicating how you wish to vote, your shares

 

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  will be voted in accordance with the recommendations of the Company Board, as applicable, with respect to each proposal.

 

Q.

Do I need to attend the special meeting virtually?

 

A.

No. It is not necessary for you to attend the special meeting virtually in order to vote your Company common stock. If you are a stockholder of record as of the record date, you may vote by mail, by telephone or through the Internet, as described in more detail below. If you are a “street name” holder of Company common stock, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee for your shares of Company common stock to be voted at the special meeting, as described in more detail below.

 

Q.

How do I vote?

 

A.

If you are a stockholder of record as of the Record Date, you may vote:

 

   

by proxy by returning the enclosed proxy card in the enclosed return envelope;

 

   

by proxy over the telephone using the telephone number printed on each proxy card you receive;

 

   

by proxy through the Internet voting instructions printed on each proxy card you receive; or

 

   

by casting your vote at the special meeting via the virtual meeting website. Any stockholder of record can attend the special meeting by visiting [●] where you will be able to attend the live meeting and vote online. Additionally, you will be able to vote up until 11:59 PM Eastern Time the day before the meeting date by visiting [●] and following the instructions. The special meeting starts at [●]. We encourage you to allow ample time for online check-in, which will open at [●] on [●], 2022. You will need your control number, found on your proxy card, to join the special meeting. Instructions on who can attend and participate via Internet, including how to demonstrate proof of stock ownership, will be posted at www.proxydocs.com/MN.

Whether or not you plan to attend the virtual special meeting, the Company urges you to vote by proxy to ensure your vote is counted. You may still attend the virtual special meeting and vote online by ballot even if you have already voted by proxy.

If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received by 11:59 p.m., Eastern Time, on the day before the special meeting.

If you return your signed proxy card, but do not mark the boxes showing how you wish to vote, your shares of Company common stock will be voted “FOR” the approval of the merger agreement proposal, “FOR” the approval of the non-binding named executive officer merger-related compensation proposal and “FOR” the approval of the adjournment proposal.

If your shares of Company common stock are held in “street name” by your broker, bank or other nominee, you should have received a voting instruction card with these proxy materials from that organization rather than a proxy card from the Company. Your broker, bank or other nominee will vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares by following the procedures provided by your broker. See Information about the Special Meeting—How to Vote.

 

Q.

If my shares are held for me by a bank, broker, trust or other nominee, will my bank, broker, trust or other nominee vote those shares for me with respect to the proposals?

 

A.

Your bank, broker, trust or other nominee will NOT have the power to vote your shares of Company common stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote. You should instruct your bank, broker, trust or other nominee on how to vote your shares of Company common stock with respect to the proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.

 

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Q.

What happens if I do not return a proxy card, voting instruction card or otherwise vote or vote to abstain?

 

A.

If you are a holder of record, the failure to return your proxy card or to otherwise vote will have the same effect as voting against the merger agreement proposal, but it will have no effect on the non-binding named executive officer merger-related compensation proposal or the adjournment proposal.

If your shares are held in “street name” and you do not return your voting instruction card or otherwise instruct your broker, bank or other nominee how to vote your shares, it will have the same effect as a vote against the merger agreement proposal, but it will have no effect on the non-binding named executive officer merger-related compensation proposal or the adjournment proposal.

A vote to abstain will have the same effect as voting against each proposal as to which you abstain.

See “Information about the Special Meeting—How to Vote” and “—Votes Required; Treatment of Abstentions and Broker Non-Votes.”

 

Q.

What do I do if I receive more than one proxy card or voting instruction form?

 

A.

If, as of the Record Date, you hold shares as the beneficial owner of shares held in “street name,” or through more than one broker, bank or other nominee, and also directly as the stockholder of record or otherwise, you may receive more than one proxy card or voting instruction form relating to the special meeting. These should each be executed and returned separately in accordance with the instructions provided in this proxy statement in order to ensure that all of your shares are voted.

 

Q.

Why am I being asked to consider and vote on the non-binding named executive officer merger-related compensation proposal?

 

A.

SEC rules require the Company to seek approval on a non-binding, advisory basis with respect to certain payments that will or may be made to the Company’s named executive officers in connection with the mergers. Approval of the non-binding named executive officer merger-related compensation proposal is not required to complete the mergers.

 

Q.

What happens if I sell my shares of Company common stock before the special meeting?

 

A.

The record date for the special meeting is earlier than the expected date of the mergers. If you own shares of Company common stock as of the close of business on the record date but transfer your shares prior to the date of the special meeting, you will retain your right to vote at the special meeting, but the right to receive the merger consideration will pass to the person who holds your shares as of immediately prior to the effective time of the merger.

 

Q.

Am I entitled to appraisal rights?

 

A.

Yes. Under Section 262 of the DGCL, a stockholder will be entitled to dissent and to seek appraisal for its shares only if certain criteria are satisfied. See the section entitled “Appraisal Rights” and Annex E of this proxy statement.

 

Q.

Should I send in my stock certificates now?

 

A.

No. After the mergers are completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your shares for the merger consideration. If, as of the Record Date, you are the beneficial owner of shares held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your shares in exchange for the merger consideration. Please do not send in your certificates now.

 

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Q.

What happens if the mergers are not completed?

 

A.

In the event that the merger agreement proposal does not receive the required approval of the stockholders described in this proxy statement, or if the mergers are not completed for any other reason, and the merger agreement terminates, then the Company’s stockholders will not receive any payment for their shares of Company common stock in connection with the mergers. Instead, the Company expects that its management will operate the Company’s business in a manner similar to that in which it is being operated today, and the Company will remain an independent public company, the Company common stock will continue to be listed and traded on NYSE, the Company common stock will continue to be registered under the Exchange Act, and the Company’s stockholders will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of the Company common stock. Under certain circumstances, if the mergers are not completed, the Company may be obligated to pay to Parent a termination fee.

 

Q.

Who will solicit and pay the cost of soliciting proxies?

 

A.

We have engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not anticipated to exceed $40,000 in total. Parent has agreed to share this cost equally with us.

The Company also will reimburse brokers, banks, other nominees, custodians and fiduciaries representing beneficial owners of the shares of company common stock for their expenses in forwarding soliciting materials to beneficial owners of our shares of company common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may solicit proxies by telephone, by facsimile, by mail, over the Internet or in person. Our directors, officers and employees will not be paid any additional amounts for soliciting proxies. For more information, see Information about the Special Meeting—Solicitation of Proxies; Payment of Solicitation Expenses.

 

Q.

What are the material US federal income tax consequences of the company merger to me if I am a US Holder?

 

A.

If you are a US Holder (as defined below in Special Factors—Material US Federal Income Tax Consequences of the Company Merger), receipt of cash in exchange for shares of Company common stock pursuant to the company merger generally will be a taxable transaction for US federal income tax purposes. Generally, you will recognize gain or loss equal to the difference, if any, between the amount of cash you receive and the adjusted tax basis of your shares. However, the tax consequences of the company merger to you will depend on your particular circumstances, and you should consult your tax advisors to determine how the company merger will affect you. For a more detailed summary of the material tax consequences of the company merger, see the section below Special Factors—Material US Federal Income Tax Consequences of the Company Merger.

 

Q.

What are the material US federal income tax consequences of the company merger to me if I am a Non-US Holder?

 

A.

If you are a Non-US Holder (as defined below in “Special Factors—Material US Federal Income Tax Consequences of the Company Merger”), you generally will not be subject to US federal income tax on any gain recognized in connection with the company merger unless you have certain connections to the United States. However, the tax consequences of the company merger to you will depend on your particular circumstances, and you should consult your tax advisors to determine how the company merger will affect you. For a more detailed summary of the material tax consequences of the company merger, see the section below “Special Factors—Material US Federal Income Tax Consequences of the Company Merger.”

 

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Q.

Who can help answer my other questions?

 

A.

If you have additional questions about the special meeting, the mergers or this proxy statement, need assistance in submitting your proxy or voting your company common stock, or need additional copies of the proxy statement or the enclosed proxy card or voting instructions, please contact the Company’s proxy solicitor in connection with the special meeting:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

Stockholders and brokers, banks and other nominees may call (866) 619-8917 (toll-free).

 

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SPECIAL FACTORS

The following, together with the summary of the merger agreement set forth under the section titled “The Merger Agreement,” is a description of the material aspects of the mergers. While we believe that the following description covers the material aspects of the mergers, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire document, including the merger agreement attached to this proxy statement as Annex A, for a more complete understanding of the mergers. The following description is subject to, and is qualified in its entirety by reference to, the merger agreement. You may obtain additional information without charge as described in the section titled “Where You Can Find More Information.”

We are asking our stockholders to consider and vote on the approval and adoption of the merger agreement and the transactions contemplated thereby, including the company merger. Pursuant to the merger agreement, subject to the satisfaction or waiver of certain conditions, Corp Merger Sub will merge with and into the Company with the Company surviving the company merger as a wholly-owned subsidiary of Parent. If the company merger is completed, the holders of shares of Company common stock (other than the holders of cancelled shares and except for any dissenting shares and rollover shares) will have the right to receive an amount in cash equal to $12.85 per share of Company common stock in cash (the “merger consideration”), without interest, subject to and in accordance with the terms and conditions set forth in the merger agreement.

Background of the Mergers

The Company is an independent investment management firm that provides clients with a broad range of financial solutions and investment strategies for both wealth and asset management. As a part of its efforts to strengthen its business and enhance stockholder value, the Company Board and senior management of the Company regularly review and assess the Company’s operations, performance and prospects and the strategic landscape in the industry, including the possibility of pursuing various strategic transactions.

In July 2021, Mr. Mayer was introduced to Mr. Jim Morrow, founder and chief executive officer of Callodine Group, LLC (“Callodine”).

On August 2, 2021, Mr. Mayer and Mr. Morrow had a meeting at which they had preliminary discussions regarding a potential acquisition of the Company by Callodine. Following the introductory meeting, on August 16, Mr. Mayer and Mr. Morrow continued their preliminary discussions regarding a potential acquisition of the Company by Callodine.

On August 18, 2021, the Company entered into a confidentiality agreement with Callodine.

On September 14, 2021, Mr. Mayer continued preliminary discussions with Mr. Adam Gusky, the chief investment officer of East Asset Management, LLC (“EAM”), and Mr. Morrow and discussed potential next steps, including a potential meeting with Mr. Terry Pegula and Mrs. Kim Pegula, the managing members of EAM.

On September 17, 2021, the Company Board met to discuss Mr. Mayer’s discussions with Mr. Morrow and authorized Mr. Mayer to continue preliminary discussions and agreed to arrange a meeting with representatives of the Company Board and representatives of Callodine and EAM.

On October 2, 2021, Mr. Mayer, Mr. Richard Goldberg and Ms. Barbara Goodstein met in Orchard Park, New York with Mr. Morrow, Mr. Pegula, Mrs. Pegula and Mr. Gusky, to discuss the culture of the Company, its personnel and history.

On October 9, 2021 the Company Board met to discuss the October 2 meeting and the Company Board authorized Mr. Mayer and Mr. Goldberg to continue discussions with Callodine to learn more about Callodine and understand Callodine’s approach to valuation of the Company.

 

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Later on October 9, 2021, Mr. Mayer and Mr. Goldberg further discussed with Mr. Morrow the Company’s background and Callodine’s ownership structure.

On October 14, 2021, Mr. Mayer and Mr. Goldberg further discussed the Company with Mr. Morrow, including the recent performance of its asset management and wealth management businesses as well as the Company’s profitability.

On October 19, 2021, Mr. Mayer and Mr. Goldberg met with Mr. Morrow in Boston, Massachusetts. Mr. Morrow reviewed his preliminary valuation assessment of the Company and indicated that he would attribute an equity value range for the Company with a midpoint of approximately $290 million, implying an approximate $12.50 per share purchase price. Mr. Mayer and Mr. Goldberg indicated that they would present this valuation to the Company Board.

On October 22, 2021, the Company Board met and received an update from Mr. Mayer and Mr. Goldberg regarding Callodine’s preliminary valuation assessment. The Company Board authorized Mr. Mayer and Mr. Goldberg to continue discussions with Mr. Morrow to further explain the Company’s business model, including its business segments and cash flows, in connection with explaining why a higher valuation may be appropriate.

On October 28 and October 29, 2021, Mr. Mayer and Mr. Goldberg met with Mr. Morrow to further discuss the Company’s business and potential profitability as a private company.

On November 19, 2021, Mr. Mayer and Mr. Goldberg spoke with Mr. Morrow, and Mr. Morrow noted that Callodine’s current valuation of the Company based on performance information available to date to Callodine was in the $13.50 to $13.60 per-share range, subject to additional due diligence and further analysis.

On November 22, 2021, the Company Board met to receive an update from Mr. Mayer and Mr. Goldberg. Following discussion of Callodine’s most recent price proposal, the Company Board authorized Mr. Mayer and Mr. Goldberg to continue discussions with Callodine with a view toward obtaining a further increase in offer price.

On November 26, 2021, Mr. Mayer and Mr. Goldberg further discussed with Mr. Morrow the Company’s outlook and potential areas of improved financial results. Mr. Morrow noted that Callodine’s current estimated valuation of the Company was in the $13.65 to $13.70 range, subject to additional due diligence.

On November 29, 2021, Mr. Morrow notified Mr. Mayer and Mr. Goldberg that a formal letter, with a non-binding proposal to acquire the Company at $14.00 per share, would be delivered to the Company Board.

Later on November 29, 2021, the Company Board met to receive an update from Mr. Mayer and Mr. Goldberg regarding the November 26 meeting with Mr. Morrow, and Mr. Mayer also noted that earlier in the day Mr. Morrow indicated a written non-binding proposal letter was forthcoming with a $14.00 per-share offer price.

On November 30, 2021, Callodine delivered a written, non-binding proposal to acquire all of the outstanding shares of capital stock of the Company for a price of $14.00 per share in an all-cash transaction (the “November 30 Letter”). The proposal indicated that Callodine’s intention was to have existing employees continue managing the business day-to-day to maximize client retention, with strategic oversight from Callodine senior management on issues such as capital allocation and M&A. The non-binding proposal requested a 21-day exclusivity period and noted that Callodine’s ability to secure financing would not be a condition to close for the contemplated transaction. The Company Board did not agree to grant this requested exclusivity at that time.

On December 1, 2021, the Company Board met to discuss the November 30 Letter and to consider retention of potential financial advisors to assist in evaluating the proposal.

 

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On December 3, 2021, the Company Board met with representatives of Company management and representatives of Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) to further discuss the November 30 Letter and to receive a presentation regarding fiduciary duties in connection with the potential transaction from Gibson Dunn. The directors discussed potentially forming a special committee of disinterested directors, but declined to do so, noting that although Callodine had indicated an intention to retain management as part of a transaction, there were no agreements regarding continued employment and all directors, including Mr. Mayer, were aligned with the public stockholders to maximize the value of the Company’s shares. The Company Board however agreed that Mr. Mayer would recuse himself from a portion of applicable meetings of the Company Board to allow the other members of the Company Board an ability to continue to discuss these matters with legal counsel and, prior to receiving approval from the Company Board, Mr. Mayer would not engage in discussions with Callodine regarding post-closing employment or other matters that would dis-align Mr. Mayer from the Company’s stockholders in the potential merger transaction. The Company Board agreed that the next step would be to interview and retain a financial advisor to assist the Company Board in evaluating Callodine’s proposal. During executive session, the Company Board (with Mr. Mayer recused) further discussed a potential transaction with Callodine.

During early December 2021, the Company Board separately met with representatives of PJT Partners LP (“PJT Partners”) and representatives from another financial advisory firm to discuss a potential engagement in connection with a potential strategic transaction. On December 13, 2021, the Company Board agreed to retain PJT Partners in light of PJT Partners’ experience with public company transactions and transactions in the asset and wealth management industries.

On December 18, 2021, the Company Board met with representatives of Company management and representatives of Gibson Dunn to discuss certain financial projections for the Company’s five-year financial forecast that had been prepared by senior management and the key assumptions underlying such projections.

On December 28, 2021, the Company Board met with representatives of Company management and representatives of Gibson Dunn to further discuss the Company’s five-year financial forecast. Following discussion, the Company Board approved providing the forecasts to PJT Partners to be used for purposes of PJT Partners’ financial analyses and to be provided to Callodine.

On December 31, 2021, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Representatives of PJT Partners reviewed with the Company Board PJT Partners’ preliminary and illustrative financial analyses of the Company. The Company Board also discussed with representatives of management, Gibson Dunn and PJT Partners Callodine’s previous request for a 21-day exclusivity period as well as the Company potentially engaging in a pre-signing market check to evaluate interest of other potential acquirors and requesting a post-signing go-shop from Callodine that would allow the Company and its representatives to solicit interest from other potential acquirors after signing a definitive merger agreement. In light of concerns regarding the risk of leaks, including the potential adverse impact on Company employees and clients, and potential distractions to management in the event of such a leak, as well as the Company Board’s view as from discussions with informed by its financial advisors relating to the limited likely universe of potential acquirors, the Company Board determined that pursuing a post-signing go-shop was preferable to a pre-signing market check. However, the Company Board did not feel that the exclusivity as proposed by Callodine was appropriate at that time. The Company Board agreed to reconvene after its members had more time to consider potential responses to the November 30 Letter. During executive session, the Company Board (with Mr. Mayer recused) further discussed the preliminary and illustrative financial analyses of the Company from PJT Partners.

On January 3, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to further discuss PJT Partners’ preliminary and illustrative financial analyses. Following discussion, the Company Board agreed that in light of Callodine’s previous valuation increases it was unlikely Callodine would have additional ability to significantly increase its offer price, but that the Company proposing a further price increase could instead lead to more favorable transaction terms for the Company.

 

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Representatives of Gibson Dunn also discussed potential terms of a go-shop provision to be requested from Callodine including duration of the go-shop and corresponding termination fees. Following discussion, the Company Board instructed Gibson Dunn to prepare a summary of proposed go-shop terms for PJT Partners to share with Callodine and discussed including a 45-day go-shop period and a corresponding termination fee (payable by the Company) during this period equal to 1% of equity value, followed by a customary no-shop with a fiduciary out and a termination fee during this period equal to 2.5% of equity value. The Company Board also instructed PJT Partners to deliver the term sheet with a message that the Company Board was willing to move forward in negotiations.

On January 4, 2022, at the direction of the Company Board, representatives of PJT Partners delivered the draft go-shop summary to Callodine and, at the direction of the Company Board, noted that the Company Board continued to believe that additional consideration was appropriate in order to execute a transaction. At the direction of the Company Board, representatives of PJT Partners also advised Callodine that the Company was not prepared to provide exclusivity to Callodine. Callodine agreed that a go-shop would be acceptable subject to negotiation of the terms and agreed to forego its requested exclusivity. At this time, Callodine alternatively proposed an agreement with the Company requiring the Company to notify Callodine if other bids were received.

On January 4, 2022, Callodine also delivered an indicative transaction timeline to PJT Partners indicating the goal of signing and publicly announcing the mergers shortly before the Company’s anticipated earnings announcement during the week of February 7, 2022.

On January 6, 2022, Callodine delivered a revised draft of the go-shop summary contemplating a 30-day go-shop period with a corresponding termination fee (payable by the Company) during this period of 2% of equity value, plus reimbursement of Callodine’s expenses, followed by a no-shop with a fiduciary out and a termination fee during this period equal to 4.5% of equity value, plus reimbursement of Callodine’s expenses.

Later on January 6, 2022 representatives of PJT Partners and Callodine discussed the revised draft of the go-shop summary and Callodine again requested an agreement with the Company requiring the Company to notify Callodine if other bids were received as well as a representation that the Company had not been in contact with other parties regarding a potential strategic transaction since the November 30 Letter. During such discussion, representatives of Callodine further indicated that Callodine would cease participating in negotiations if the Company used the Callodine proposal to solicit alternative transactions.

On January 11, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Representatives of Gibson Dunn reviewed the latest draft of the go-shop term sheet and an initial draft merger agreement (prepared by Gibson Dunn) with the Company Board. The Company Board agreed that the Company would forego continued negotiation of the term sheet and instead move to negotiation of the full merger agreement. Representatives of Gibson Dunn discussed with the Company Board potential approaches for principal terms thereof, including a full equity backstop from Callodine’s equity sponsor, the duration of the go-shop period, the size of termination fees as well as regulatory provisions and conditions to the closing regarding the receipt of consents from the Company’s clients for an assignment of their investment-advisory agreement as required by the potential merger transaction. Following this review of the draft merger agreement, representatives of PJT Partners reported on recent calls with representatives of Callodine, including Callodine’s request for an agreement with the Company requiring the Company to notify Callodine if the Company received other bids and a representation from the Company that the Company had not been in contact with other parties regarding a potential strategic transaction since the November 30 Letter. Representatives of PJT Partners also conveyed Callodine’s assertion that Callodine would cease participating in negotiations if the Company used the Callodine proposal to solicit alternative transactions. Following discussion, the Company Board agreed that in light of the rights the Company would have to solicit alternative acquirors during the go-shop period and that the Company was not conducting a pre-signing market check, the Company would agree to notify Callodine if alternative transaction proposals were received prior to signing a definitive merger agreement, but would not agree to provide a representation about the Company’s solicitation activities since the November 30 Letter. During executive session, the Company Board (with Mr. Mayer recused)

 

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discussed the timeline received from Callodine on January 4, 2022, noting the proposed timeline to negotiate post-closing employment agreements was during the week prior to closing.

Later on January 11, 2022, representatives of Gibson Dunn sent an initial draft merger agreement to Sidley Austin (as outside transaction counsel to Callodine) as well as a draft letter requiring the Company to notify Callodine if other bids were received prior to signing the merger agreement; such letter was never executed. The initial draft of the merger agreement required Callodine to deliver an equity backstop for the full purchase price and contemplated the acquisition of 100% of the outstanding shares of the Company by Callodine’s acquisition vehicle, as well as the acceleration and cash out at closing of all options and Company RSUs. The initial draft merger agreement also included a 30 day go-shop period, but allowed for the Company to have an additional 10 days thereafter to negotiate with any bidders who made a proposal during the go-shop period and included termination fees (payable by the Company) of 1.25% during the go-shop period and 3.25% after the go-shop period. The initial draft merger agreement also permitted the Company to pay cash dividends between signing and closing in the ordinary course of business.

On January 14, 2022, representatives of Gibson Dunn, PJT Partners, Sidley Austin, Callodine and Callodine’s financial advisors discussed key issues identified by Callodine and its representatives in the initial draft merger agreement. Representatives of Callodine noted that Callodine intended to structure the transaction to incorporate a rollover of equity from senior members of Company management (including Mr. Mayer, with whom it would require an employment agreement to be agreed at signing), viewed the transaction as a Rule 13e-3 “take private” transaction, intended to seek support agreements from key Company management individuals pursuant to which they would, among other things, agree to vote in favor of the merger transaction and, following the negotiation of key economic and legal terms, to seek non-competition/non-solicit agreements from these individuals. Accordingly, Callodine also intended for options and equity-based awards to be contributed into its acquisition vehicle such that they would not be cashed out at closing. Callodine also noted that an equity backstop was unacceptable given its status as a financial sponsor and it would not proceed under such structure. Among other things, representatives of Callodine also discussed their views on the go-shop and related termination fees as well as the Company’s desire to pay dividends between signing and closing.

On January 17, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Representatives of Gibson Dunn and Mr. Mayer updated the Company Board on the change in circumstances regarding Callodine’s requested management rollover and discussed protocols that would be followed in all upcoming negotiations, including that Mr. Mayer could not discuss or negotiate the terms of the merger agreement with Callodine (in light of his status as a member of management who would roll some portion of his Company equity), that all communications that were not related to the negotiation of employment and management rollover documents or due diligence matters would be at the direction of the Company Board and that management of the Company would need to retain separate counsel for the negotiation of such documentation. The Company Board also discussed Callodine’s financing structure for the merger transaction and the risk to the Company associated therewith, as well as other issues discussed on the January 14 call. The Company Board noted that before negotiating certain points it would require a full markup of the merger agreement from Callodine. During executive session, the Company Board (with Mr. Mayer recused) further discussed the issues from the January 14 call and protocols to ensure Mr. Mayer’s role on the transaction would be limited as directed by the Company Board. The Company Board (with Mr. Mayer recused) agreed that the appropriate next steps were for Mr. Mayer and Mr. Goldberg to meet together with Mr. Morrow to understand the rationale for the changes in approach.

On January 18, 2022, at the direction of the Company Board, representatives of PJT Partners reiterated to Callodine’s financial advisors the Company’s request for a higher purchase price and discussed the Company Board’s requirement of a full markup of the merger agreement. Representatives of Callodine noted that it would not increase its purchase price above $14.00 per share.

On January 20, 2022, Mr. Mayer and Mr. Goldberg together discussed with Mr. Morrow the shift in transaction structure as well as Callodine’s proposed financing arrangements for the potential transaction. Mr. Mayer then

 

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recused himself from the meeting. Without Mr. Mayer present, Mr. Morrow noted to Mr. Goldberg that the Company’s financial advisors continued to seek to negotiate purchase price but that Callodine would not increase its offer above $14.00 per share.

On January 26, 2022, representatives of Sidley Austin delivered to representatives of Gibson Dunn a revised draft merger agreement. The revised draft contemplated rollover agreements to be executed by all Section 16 officers (including Mr. Mayer), and noted Callodine’s expectation that each Section 16 officer would roll over at least 75% of his or her Company stock, that Mr. Mayer would enter into an employment agreement at signing of the merger agreement and that Mr. Mayer and all other directors and officers with significant shareholdings would enter into support agreements relating to the merger transaction. The revised draft also replaced the Company’s request for a full equity backstop if Callodine’s debt financing was unavailable with (i) a reverse termination fee payable by Parent to the Company if the debt financing were not available and (ii) a customary private equity buyer construct entitling the Company to specific performance to cause the closing to occur only if all of the Company’s closing conditions are satisfied, the Company is ready, willing, and able to close the transaction and the debt financing is available. The revised draft also included a 30-day go-shop period with a corresponding termination fee (payable by the Company) during this period of 1.5% of the product of (x) the fully diluted capitalization of the Company multiplied by (y) the per-share merger consideration. The revised draft also included a termination fee equal to 3.5% of the product of (x) the fully diluted capitalization of the Company multiplied by (y) the per-share merger consideration after the go-shop period. The revised draft prohibited the Company from paying dividends between signing and closing.

On January 30, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Mr. Mayer and Mr. Goldberg reported on their January 20 meeting with Mr. Morrow, and during executive session (with Mr. Mayer recused) representatives of Gibson Dunn discussed the revised draft merger agreement received from Sidley Austin and discussed countering with reverse termination fee equal to 2.5 times the termination fee payable by the Company after the expiration of the go-shop. The Company Board (with Mr. Mayer recused) also agreed to counter the 30 day go-shop period with a 40 day go-shop period and to accept the 3.5% termination fee after the go-shop period, without any additional buyer expense reimbursement, but to propose a 1.25% Company termination fee during the go-shop period. The Company Board (with Mr. Mayer recused) also agreed that the Company should seek to preserve the ability to pay ordinary course dividends between signing and closing.

On January 31, 2022, representatives of Gibson Dunn delivered a revised draft of the merger agreement to Sidley Austin reflecting the terms discussed with the Company Board.

On February 2, 2022, representatives of Gibson Dunn and Sidley Austin discussed the revised draft of the merger agreement.

On February 6, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Mr. Mayer conveyed that significant issues remained open with respect to his rollover and post-closing employment arrangements, and representatives of Gibson Dunn noted that significant issues also remained open in the merger agreement. The Company Board, Mr. Mayer and representatives of Gibson Dunn discussed due diligence matters that remained subject to continued Callodine review. During executive session, the Company Board (with Mr. Mayer recused) further discussed the open issues in the transaction documents.

On February 8, 2022, the Company reported 2021 fourth quarter and full year results for the period ended December 31, 2021.

On February 10, 2022, Mr. Mayer met with Mr. Gusky in Boca Raton, Florida to discuss Callodine’s ongoing due diligence.

On February 12, 2022, representatives of Sidley Austin delivered to representatives of Gibson Dunn a revised draft of the merger agreement. The revised draft prohibited the Company from paying dividends between signing

 

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and closing and required a voting support agreement from all of the Company’s Section 16 officers (including Mr. Mayer). The revised draft also required, as a condition to closing, that clients representing at least 80% of the Company’s run rate revenue and 80% of its assets under management consent to the assignment of their investment-advisory agreement as a result of the merger transaction, and further included a termination fee (payable by the Company) during the go-shop period of 1.25% of equity value, plus reimbursement of Callodine’s expenses up to a cap of $1.5 million and after the go-shop period, a termination fee of 3.5% of equity value (with no expense reimbursement).

On February 18, 2022, representatives of Callodine met with Mr. Mayer and members of the Company’s management executive committee in Rochester, New York to discuss the Company’s culture and strategy and visions for the post-closing Company.

On February 21, 2022, representatives of Sidley Austin delivered to Mr. Mayer and Morgan Lewis, counsel to management, a draft of Mr. Mayer’s post-closing employment agreement. Thereafter, Mr. Mayer also retained Pasini Law to assist him in the negotiation of his employment agreement.

On February 23, 2022, Mr. Goldberg met with Mr. Morrow to discuss Callodine’s ongoing due diligence.

On February 24, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Mr. Mayer provided an update to the Company Board on the status of negotiations on his post-closing employment documents and reported that a draft of the shareholders agreement for his ownership in the post-closing company had not yet been provided. During executive session, the Company Board (with Mr. Mayer recused) discussed potential negotiation strategies in order to expedite entry into a transaction agreement. Following further discussion, the Company Board agreed to direct Mr. Mayer to convey to Callodine the Company Board’s desire to resolve open due diligence matters and to receive a commitment from Callodine to execute a transaction agreement, debt commitment papers and employment and rollover agreements as quickly as possible. The Company Board (with Mr. Mayer recused) further noted that Mr. Mayer should discuss the open due diligence matters with Callodine to assist in resolving such matters. Representatives of Gibson Dunn also reviewed with the Company Board (with Mr. Mayer recused) the latest draft merger agreement received from Sidley Austin.

On February 24, 2022, Mr. Mayer delivered the Company Board’s message to Callodine and discussed the open due diligence matters.

On February 27, 2022, Callodine delivered a draft stockholders’ agreement and rollover documentation to Mr. Mayer and Morgan Lewis.

On March 1, 2022, Callodine delivered a draft debt commitment letter from prospective lenders for senior secured credit facilities of $120 million consisting of (A) a revolving credit facility of $20 million (for ongoing working capital and general corporate purposes of the post-closing business) and (B) a term loan facility of $100 million (to consummate the transaction).

On March 2, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Mr. Mayer provided an update on his draft employment documents and the draft debt commitment letter as well as a recent communication from Mr. Morrow to Mr. Mayer that Callodine’s due diligence was generally complete. Following discussion, the Company Board instructed Gibson Dunn to return a draft of the merger agreement to Sidley Austin.

Later on March 2, 2022, representatives of Gibson Dunn delivered a revised draft merger agreement to Sidley Austin.

On March 7, 2022, representatives of Callodine met with Mr. Mayer and other members of the Company’s management executive committee to discuss Callodine’s views of the operation of the post-closing company, including liquidity options that could be available to equityholders of the post-closing company.

On March 8, 2022, Callodine’s financial advisors delivered an issues list to representatives of PJT Partners. During a call between Callodine’s financial advisors and representatives of PJT Partners and before discussion of

 

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the issues list, Callodine’s financial advisors communicated that, as a result of Callodine’s recent due diligence findings, Callodine was no longer willing to pay $14.00 per share and would instead pay $12.00 per share. Later on March 8, 2022, Mr. Morrow informed Mr. Mayer of the reduced purchase price proposal.

Later on March 8, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to discuss Callodine’s proposed price reduction. During executive session, the Company Board (with Mr. Mayer recused) discussed potential next steps, including continuing negotiations with Callodine, soliciting additional third-party interest in parallel with the Callodine negotiations and stopping negotiations with Callodine altogether. The Company Board (with Mr. Mayer recused) agreed it was necessary to get additional information from Callodine to evaluate the rationale for the proposed price reduction and discern whether there was an opportunity for Callodine to increase the purchase price from $12.00 per share.

On March 14, 2022, Mr. Goldberg discussed with Mr. Morrow the rationale for Callodine’s proposed price reduction. Mr. Morrow indicated that the price reduction was the result of Callodine’s recent financial due diligence findings regarding Q1 2022 market and financial performance, including, among others, that the Company’s expenses were growing faster than revenues, that volatile market performance was negatively impacting the Company’s investment performance (thereby negatively impacting its revenues), as well as unexpected cash balance factors such as the Company’s estimated uses of cash in the first half of 2022, and that the price reduction was unrelated to negotiations related to rollover agreements or employment agreements.

Later on March 14, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to receive an update regarding Mr. Goldberg’s meeting with Mr. Morrow earlier that same day. During executive session, the Company Board (with Mr. Mayer recused) agreed that representatives of PJT Partners should meet with Callodine and its representatives to further understand Callodine’s analysis leading to the proposed price reduction.

On March 16, 2022, at the direction of the Company Board, representatives of PJT Partners discussed Callodine’s rationale for the proposed price reduction with representatives of Callodine and its financial advisors.

On March 18, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to receive an update regarding PJT Partners’ discussion with Callodine and its financial advisors. Representatives of PJT Partners reviewed each of the items identified by Callodine as contributing to its proposed purchase price reduction. Representatives of PJT Partners also summarized the perspective of Company management regarding the total value impact of the items noted by Callodine. Representatives of Gibson Dunn reviewed with the Company Board (with Mr. Mayer recused) the open items from a business issues list previously circulated by Callodine’s advisors and discussed fiduciary duties of the Company Board in the context of the potential transaction. During executive session, following discussion, the Company Board (with Mr. Mayer recused) instructed PJT Partners to counter the $12 per-share offer price with a price of $13.50 per share, plus the continued ability of the Company to pay dividends in the ordinary course of business during the pre-closing period. The Company Board (with Mr. Mayer recused) agreed that it would instruct PJT Partners to make a proposal on the remaining core transaction terms in order to help ensure that upon reaching a resolution on price a deal could be quickly agreed without any further renegotiation. Accordingly, the Company Board (with Mr. Mayer recused) agreed that the Company would propose a Company Termination Fee of 1.25% of implied equity value during the go-shop period (without further expense reimbursement obligations) and 3.5% after the go-shop period (without further expense reimbursement obligations), a Parent Termination Fee of 7% of implied equity value and the removal of all closing conditions from the merger agreement relating to client consents (e.g., any run rate revenue- and AUM-based closing conditions).

On March 19, 2022, representatives of PJT Partners, as directed by the Company Board, communicated the counterproposal to Callodine.

 

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On March 22, 2022, Callodine delivered a letter (the “March 22 Letter”) to the Company Board stating that Callodine was now prepared to pay a maximum of $12.85 per share to acquire the Company, but would prohibit the Company from paying dividends between signing and closing. Callodine also indicated it would require closing conditions that clients representing at least 75% of the Company’s run rate revenue and 75% of its assets under management consent to the assignment of their investment-advisory agreement as a result of the merger transaction, and a proposed termination fee of 1.25% of equity value during the go-shop period, plus reimbursement of Callodine’s expenses up to a cap of $1.0 million. The March 22 Letter also proposed a termination fee of 3.5% of equity value after the go-shop period and a Parent termination fee equal to 5.25% of equity value.

On March 23, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to discuss the March 22 Letter. During executive session, the Company Board (with Mr. Mayer recused) instructed PJT Partners to make a counterproposal of $13.10 per share, with the Company permitted to pay dividends between signing and closing.

Following the meeting representatives of PJT Partners, as directed by the Company Board, communicated the counterproposal to Callodine. Representatives of Callodine noted that $12.85 per share with the continued ability to pay dividends between signing and closing was a best and final offer and that Callodine would abandon the transaction if that proposal was unacceptable. Callodine also requested responses to the other transaction terms proposed in the March 22 letter.

Later on March 23, 2022, the Company Board met again with representatives of Company management and representatives of Gibson Dunn and PJT Partners. During executive session, the Company Board (with Mr. Mayer recused) agreed that it would accept $12.85 per share with the continued ability to pay dividends between signing and closing. The Company Board (with Mr. Mayer recused) also instructed PJT Partners to accept the 75% run rate revenue and AUM closing conditions, a termination fee of 1.25% during the go-shop and 3.5% thereafter (without, in each case, any expense reimbursement) and a Parent termination fee of 6%.

Following the meeting, representatives of PJT Partners discussed the Company Board’s positions with representatives of Callodine. At that time, Callodine agreed to each of the proposals from the Company Board and agreed to work expeditiously towards executing a merger agreement.

Between March 24, 2022 and March 31, 2022, Sidley Austin and Gibson Dunn continued to negotiate the merger agreement, an equity commitment letter and related documentation and Sidley Austin, Morgan Lewis and Pasini Law continued to negotiate the post-closing employment and rollover documentation for Mr. Mayer.

On March 26, 2022, representatives of Company management, PJT Partners and Morgan Lewis met with Callodine and representatives of Sidley Austin to discuss outstanding issues in the employment and rollover documentation, including the provisions regarding governance and liquidity options available to equityholders of the post-closing company.

On March 28, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners to receive an update on the status of the negotiations of the merger agreement and the employment and rollover-related documents for Mr. Mayer.

On March 31, 2022, the Company Board met with representatives of Company management and representatives of Gibson Dunn and PJT Partners. Mr. Mayer noted that Mr. Pettinella was unable to attend the meeting but that representatives of PJT Partners would separately review its financial analyses in connection with the proposed transaction with Mr. Pettinella following the meeting. PJT Partners and Mr. Pettinella did so prior to the meeting of the Company Board taking place later that day. Representatives of Gibson Dunn provided the Company Board a summary of the proposed employment and rollover arrangements between Mr. Mayer and Callodine, as well as a summary of the proposed support agreements to be entered into by several members of Company management and a summary of the merger agreement.

 

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Later on March 31, 2022, the Company Board (with Mr. Mayer) met with representatives of Gibson Dunn and PJT Partners to further discuss the proposed final terms of the merger agreement and related documentation, including the support agreements and the rollover and employment agreements with Mr. Mayer. PJT Partners provided a presentation to the Company Board regarding Callodine’s proposal and the financial terms thereof. At the request of the Company Board, representatives of PJT Partners reviewed its financial analyses in connection with the proposed transaction. At the request of the Company Board, representatives of PJT Partners then rendered its oral opinion to the Company Board (which was subsequently confirmed in writing) that, as of the date thereof and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the merger consideration to be received by the holders of Company common stock (other than holders of Rollover Shares) in the transaction was fair to such holders, from a financial point of view. The full text of PJT Partners’ written opinion, which describes, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion, is attached as Annex D. Representatives of Gibson Dunn reviewed fiduciary duties of the Company Board under applicable law and reviewed the provisions of the proposed merger agreement, which previously had been provided to the disinterested members of the Company Board together with a summary thereof. After careful consideration of various reasons to approve the merger agreement and the transactions contemplated thereby, including the company merger, and certain countervailing factors, the Company Board (with Mr. Mayer) declared that the merger agreement and the transactions contemplated thereby, including the company merger, were advisable, fair to and in the best interests of the Company and its stockholders generally, and approved the form, terms and provisions of the merger agreement and authorized the Company to enter into the merger agreement and ancillary agreements and perform each of its obligations thereunder and recommended that stockholders adopt the merger agreement. Representatives of PJT Partners then discussed with the Company Board the go-shop process, including each of the parties that PJT Partners planned to contact during the process, which list of proposed go-shop participants was prepared in consultation with Company management and included feedback from prior discussions with the Company Board.

The Company entered into the Merger Agreement shortly thereafter, on March 31, 2022, and publicly announced the transaction on April 1, 2022.

On April 1, 2022, in accordance with the go-shop provisions in the Merger Agreement, representatives of PJT Partners began contacting parties on behalf of the Company. During the go-shop period, representatives of PJT Partners contacted 38 parties consisting of 29 strategic acquirors and 9 financial sponsors. Of such contacted parties, one private equity firm executed a non-disclosure agreement with the Company, which did not include a standstill provision. The go-shop period ended without any party submitting an acquisition proposal.

Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger

The Company Board evaluated, with the assistance of its legal and financial advisors, the merger agreement and the mergers and, on March 31, 2022, with Mr. Mayer recused from the meeting, the Company Board determined on behalf of the Company that the merger agreement, the company merger and the other transactions contemplated thereby, were fair, advisable and in the best interests of the Company and its stockholders, approved the company merger and the other transactions contemplated by the merger agreement and recommended that the Company’s stockholders adopt the merger agreement.

In considering the recommendations of the Company Board (other than Mr. Mayer, who recused himself from the meeting at which such determination was made) with respect to the company merger, you should be aware that executive officers and directors have certain interests in the company merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Company Board was aware of these interests and considered them, among other matters, in evaluating the merger agreement and the transactions contemplated thereby, including the company merger and in making its decision to adopt and approve the merger

 

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agreement and the transactions contemplated thereby, including the company merger. For more information about these interests, refer to the section entitled “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers.” The Company Board (other than Mr. Mayer, who recused himself from the meeting at which such determination was made) believes that the merger agreement and the transactions contemplated thereby, including the company merger, are fair to the Company stockholders.

In the course of making the determination and recommendation (with Mr. Mayer recused) described above, the members of the Company Board considered the following factors in favor of the merger agreement, the company merger and the other transactions contemplated thereby, each of which the members of the Company Board believed supported their decision to approve the merger agreement, the company merger and the other transactions contemplated thereby:

 

   

that the Company Board believed the merger consideration was fair to the Company and its unaffiliated stockholders, in light of the Company’s business, operations, financial condition, strategy and prospects, as well as the Company’s historical and projected financial performance;

 

   

the nature of the industry in which the Company operates, including anticipated industry trends and rapidly changing competitive and regulatory dynamics;

 

   

the fact that the cash merger consideration of $12.85 per share, and the other terms and conditions of the merger agreement resulted from several months of negotiations between the Company Board and Callodine;

 

   

the belief of the Company Board, based upon the course of negotiations with Callodine (as described in more detail under the section of this proxy statement captioned “—Background of the Mergers”), that the merger consideration represents the highest price that Callodine was willing to pay and that the terms of the merger agreement include the most favorable terms to the Company, in the aggregate, to which Callodine was willing to agree;

 

   

the potential risk of losing a favorable opportunity with Callodine if the Company sought to pursue strategic-transaction discussions with other third parties prior to entry into the merger agreement, including the potential negative effect that such a process might have on the Company’s business, especially given that the Company could defer such a process until after signing the merger agreement in light of the merger agreement’s “go-shop” provision;

 

   

the current and historical market prices of the Company’s common stock, including the market performance of the Company’s common stock relative to those of other participants in the Company’s industry and to general market indices, and the fact that the merger consideration of $12.85 per share represented a premium of approximately 41% to the closing price of the Company common stock on March 31, 2022, the last trading day before the merger agreement was announced;

 

   

the Company Board’s understanding of the Company’s business, assets, financial condition and results of operations, its competitive position, its strategic options and prospects and the risks involved in achieving those prospects, its historical and projected financial performance and the nature of the industry in which the Company competes, and current industry, economic and market conditions, both on a historical basis and on a prospective basis, which, in the Company Board’s belief, made the transaction desirable at this time, as compared with other times, in the Company’s operating history or the foreseeable future;

 

   

that the proposed merger consideration is all cash, such o that the transaction allows the Company’s stockholders (other than the Rollover Holders) to realize a fair value, in cash, for their investment and provides such stockholders liquidity and certainty of value for their shares, especially when viewed against the risks inherent in the Company’s business;

 

   

the financial presentation of PJT Partners and its oral opinion rendered to the Company Board on March 31, 2022, subsequently confirmed in its written opinion dated March 31, 2022, that, as of the

 

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date thereof and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the merger consideration to be received by the holders of Company common stock (other than the Rollover Holders) was fair to such holders from a financial point of view. PJT Partners’ written opinion is more fully described below under the caption “Opinion of the Company’s Financial Advisor” beginning on page 33;

 

   

the terms and conditions of the merger agreement and related transaction documents, including:

 

   

the requirement that the merger agreement be adopted by the holders of a majority of the outstanding shares of Company common stock;

 

   

the right of the Company, within a 40-day “go-shop” period (which expired on May 10, 2022), to solicit alternative acquisition proposals from, and participate in discussions and negotiations with, third parties regarding alternative acquisition proposals;

 

   

the Company’s ability to terminate the merger agreement in order to accept a superior proposal, subject to certain compliance with requirements in the merger agreement, including paying Parent a termination fee of either (i) $3,140,000 if the merger agreement was terminated during the go-shop period or (ii) $8,790,000 in certain cases after the go-shop period. These are amounts that the Company Board believes, based upon the advice of its financial and legal advisors, are unlikely to deter third parties from making competing proposals;

 

   

the absence of a financing condition for the benefit of Parent in the merger agreement;

 

   

the fact that Parent has already obtained committed debt and equity financing for the transaction, and the obligation of Parent to use reasonable best efforts to obtain the Debt Financing on the terms contemplated by the Debt Commitment Letter;

 

   

the Company’s ability, under circumstances specified in the merger agreement, to seek specific performance of Parent’s obligation to cause its equity financing sources to fund their contributions as contemplated by the equity commitment letters; and

 

   

the requirement that, in the event of a failure of the mergers to be consummated under certain circumstances, Parent will be obligated to pay the Company a termination fee of $15,070,000, with EAM having guaranteed the payment of such fee pursuant to a limited guarantee (the “Limited Guarantee”); and

 

   

the fact that the Company supporting stockholders agreed to support the transaction pursuant to a support agreement with Parent, that the support agreement terminates upon any termination of the merger agreement and that it does not prevent any other Company supporting stockholders, in their capacities as officers of the Company (including Mr. Mayer), from engaging in discussions relating to alternative acquisition proposals with any third party with which the Company is permitted to engage in discussions pursuant to the merger agreement;

 

   

the availability of appraisal rights under the DGCL to holders of shares of Company common stock who do not vote in favor of the adoption of the merger agreement and comply with all of the required procedures under the DGCL, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than, or the same as the amount such stockholders would have received under the merger agreement; and

 

   

the fact that, in the absence of the mergers, the Company would continue to incur significant expenses and other regulatory obligations by remaining a public company, including the legal, accounting, transfer agent, printing and filing fees associated therewith, and that those expenses could adversely affect the Company’s financial performance and the value of the Company common stock.

In evaluating the merger agreement and the transactions contemplated thereby, including the company merger, and making the decisions, determinations and recommendations described above, the Company Board (with

 

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Mr. Mayer recused) considered, among other things, a number of procedural safeguards that they believed were and are present in the merger agreement to ensure the fairness thereof and the transactions contemplated thereby, including the company merger, and to permit the Company Board (with Mr. Mayer recused) to represent effectively the interests of the stockholders. These procedural safeguards include, among other things, the following, which are not intended to be exhaustive and are not presented in any relative order of importance:

 

   

that the Company Board retained and was advised by independent legal counsel and financial advisors and that Mr. Mayer and management were represented by different sets of counsel than the Company;

 

   

that the Company Board conducted extensive deliberations and met regularly over a period of approximately six months regarding the mergers;

 

   

that the disinterested members of the Company Board represented a majority of the Company Board and had ultimate authority to decide whether or not to proceed with a transaction or any alternative thereto;

 

   

that the members of the Company Board were aware that they had no obligation to recommend any transaction and that the members of the Company Board had the authority to reject any proposals made by Parent or any other person;

 

   

that the Company Board made its evaluation of the merger agreement and the mergers based upon the factors discussed in this proxy statement and with the knowledge of Mr. Mayer’s interests in the merger; and;

 

   

the fact that although the merger agreement does not require the vote of at least a majority of the unaffiliated stockholders, stockholders representing in excess of approximately 85% of the outstanding shares of Company common stock are not affiliates of Mr. Mayer or the Callodine Filing Persons and will have an opportunity to consider and vote upon the adoption of the merger agreement.

In evaluating the merger agreement and the transactions contemplated thereby, including the company merger, and making the decisions, determinations and recommendations described above, the Company Board (other than Mr. Mayer, who was recused from the meeting at which such determination was made) also considered, among other things, certain countervailing factors, including the following uncertainties, risks and other potentially negative factors, which are not intended to be exhaustive and are not presented in any relative order of importance:

 

   

that, following the completion of the mergers, the Company will no longer continue as a public company and that the consummation of the mergers and receipt of the merger consideration, while providing certainty of value to the Company’s stockholders, will not allow stockholders (other than the Rollover Holders) to participate in potential further growth in the Company’s assets, earnings or appreciation in value of the Company common stock, or to participate in any Company dividends after the mergers;

 

   

the risk that the transactions contemplated by the merger agreement, including the mergers, may not be consummated in a timely manner or at all, for a variety of reasons, and the consequences thereof, including (i) the potential loss of value to the Company’s stockholders, including the reduction of the trading price of the Company common stock, (ii) the potential negative impact on the operations and prospects of the Company, including the risk of loss of key personnel, and (iii) that the market’s and clients’ perception of the Company’s prospects could be adversely affected if such transactions were delayed or were not consummated;

 

   

the possible effects of the pendency or consummation of the transactions contemplated by the merger agreement, including the potential for lawsuits, actions or proceedings in respect of the merger agreement or the transactions contemplated by the merger agreement, the risk of any loss or change in the relationship of the Company and its subsidiaries with their respective employees, agents, customers and other business relationships, and any possible effect on the Company’s ability to attract and retain

 

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key employees, including that certain key members of senior management might choose not to remain employed with the Company to terminate their employment prior to the completion of the mergers;

 

   

the risk of incurring substantial expenses related to the mergers, including in connection with any litigation that may arise prior to the mergers or thereafter;

 

   

the risks and potentially negative factors described in “Special Factors—Certain Effects of the Mergers” and “Special Factors—Certain Effects on the Company if the Mergers are Not Completed,” respectively;

 

   

that the Company’s directors, officers and employees have expended and will expend extensive efforts attempting to complete the transactions contemplated by the merger agreement and such persons have experienced and will experience significant distractions from their work during the pendency of such transactions and that the Company has incurred and will incur substantial costs in connection with such transactions, even if such transactions are not consummated;

 

   

that the receipt of the merger consideration in exchange for shares pursuant to the merger agreement will be a taxable transaction for U.S. federal income tax purposes;

 

   

the restrictions imposed by the merger agreement, after the no-shop period start date (which commended on May 10, 2022) on the Company’s solicitation of acquisition proposals from third parties, and that prospective bidders may perceive Parent’s right under the merger agreement to negotiate with the Company to match the terms of any superior proposal, including during the go-shop period (which ended on May 10, 2022), prior to the Company being able to terminate the merger agreement and accept a superior proposal, to be a deterrent to making alternative acquisition proposals;

 

   

that Mr. Mayer’s existing ownership interest in the Company and obligations under the Support Agreement, and the Company Termination Fee would likely be taken into account by third parties considering whether to make alternative proposals, including during the go-shop period that expired on May 10, 2022;

 

   

the possibility that the Company may be required to pay Parent a Company Termination Fee of $3,140,000 or $8,790,000 under certain circumstances, including upon termination of the merger agreement to accept a superior proposal (as more fully described under The Merger Agreement—Effect of Termination);

 

   

the possibility that the Parent Termination Fee of $15,070,000 and certain enforcement expenses payable by Parent to the Company may be the Company’s sole and exclusive remedy in the event that the merger agreement is terminated by the Company due to (a) Parent’s breach of, or failure to perform its representations, warranties or obligations under the merger agreement or (b) Parent’s failure to consummate the mergers at such time at which all of the applicable conditions to closing have been satisfied (subject to certain conditions);

 

   

that Parent and merger subs are newly formed entities with essentially no assets and that the limited guarantee from EAM to the Company (guaranteeing, among other things, the Parent Termination Fee) is capped at $15,070,000, plus certain expense reimbursement obligations of Parent;

 

   

that, if the merger agreement is terminated in connection with the Company’s entry into a definitive agreement with respect to a superior proposal, the Company supporting stockholders have not agreed to vote their shares in favor of such superior proposal;

 

   

the understanding that some of the Company’s directors and executive officers (including Mr. Mayer) may have certain interests in the company merger that may be different from, or in addition to, the interests of the Company’s stockholders generally (as discussed under “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers”); and

 

   

the restrictions placed on the conduct of the Company’s business prior to the completion of the mergers pursuant to the terms of the merger agreement, which could delay or prevent the Company from

 

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undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the mergers.

The Company Board (other than Mr. Mayer who was recused from the meeting at which such determination was made) concluded that, overall, the potentially positive factors outweighed the uncertainties, risks and potentially negative factors relevant to the merger agreement and the transactions contemplated thereby, including the mergers. Accordingly, the Company Board (other than Mr. Mayer who was recused from the meeting at which such determination was made) determined that the merger agreement and the transactions contemplated thereby, including the company merger are advisable, fair to, and in the best interests of, the Company and the Company’s stockholders.

In the course of evaluating the merger agreement and the transactions contemplated thereby, including the company merger, and making the decisions, determinations and recommendations described above, the Company Board (other than Mr. Mayer who was recused) did not consider the liquidation value of the Company because it considered the Company to be a viable, going concern and as such considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of the Company. For the foregoing reasons, the Company Board (other than Mr. Mayer who was recused) did not consider liquidation value to be a relevant factor. Further, the Company Board (other than Mr. Mayer who was recused) did not consider the Company’s net book value, which is an accounting concept, as a factor because it believes (i) that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and (ii) net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in that industry. The Company Board believes that the trading price of the Company common stock represents the best available indicator of the Company’s going concern value; and that to the extent the pre-merger going concern value was reflected in the pre-announcement per share price of the Company common stock, the per share merger consideration of $12.85 represented a premium to the going concern value of the Company.

In addition, the Company Board (other than Mr. Mayer who was recused) considered the value of the Company as a going concern by taking into account the value of the Company’s current and anticipated business, financial condition, results of operations, prospects and other forward looking matters, as well as by considering the discounted cash flow analysis presented by PJT Partners to the Company Board, as more fully described below in the section entitled “Special Factors—Opinion of the Companys Financial Advisor”. The full text of the written Opinion of the Company’s Financial Advisor is attached as Annex D to this proxy statement.

Accordingly, the Company Board recommends that you vote “FOR” the merger agreement proposal, to approve and adopt the merger agreement and the transactions contemplated thereby, including the company merger, at the special meeting.

The Company Board is not aware of any firm offer for a merger, sale of all or a substantial part of the Company’s assets, or a purchase of a controlling amount of the Company securities having been received by the Company from anyone other than a filing person in the two (2) years preceding the signing of the merger agreement.

The foregoing discussion is not exhaustive, but is intended to summarize the material information and factors considered by the Company Board in their consideration of the merger agreement and the transactions contemplated thereby, including the company merger. The Company Board (other than Mr. Mayer who was recused from the meeting at which such decision was made) reached the decision to approve the entry into the merger agreement and recommend its adoption by the Company’s stockholders in light of the factors described above and other factors that the Company Board believed were appropriate. In view of the variety of factors and the quality and amount of information considered, the Company Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations. In addition, each of the members of the Company Board (other than Mr. Mayer who was recused) may have given different weight to different factors. The Company Board conducted an overall review of the factors

 

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described above, including through discussions with the Company’s management and the Company’s legal and financial advisors, and considered the factors overall to be favorable to, and to support, their decisions, determinations and recommendations.

Certain Unaudited Prospective Financial Information

The Company does not, as a matter of course, prepare or publicly disclose financial forecasts as to future financial performance, earnings or other results and is especially cautious of making financial forecasts due to the unpredictability of the underlying assumptions and estimates. However, in connection with the evaluation of a possible transaction involving the Company, the Company provided certain non-public forecasts that were prepared by Company management (including Mr. Mayer) to the Company Board, to PJT Partners in its capacity as financial advisor to the Company Board, and to Callodine, which we refer to as the “Company forecasts.”

A summary of the Company forecasts is not being included in this document to influence your decision whether to vote for or against the merger agreement proposal, but rather because the Company forecasts were made available to the Company Board and PJT Partners. The inclusion of this information should not be regarded as an indication that the Company Board or its advisors or any other person considered, or now considers, these forecasts to be material or to be necessarily predictive of actual future results, and these forecasts should not be relied upon as such. The Company forecasts are subjective in many respects. There can be no assurance that the Company forecasts will be realized or that actual future results will not be significantly higher or lower than forecasted. Because the forecasts cover multiple years, by their nature, they become subject to greater uncertainty with each successive year.

In addition, the Company forecasts were not prepared with a view toward public disclosure or toward complying with generally accepted accounting principles, which we refer to as GAAP, the published guidelines of the SEC regarding projections and the use of non-GAAP measures or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Company forecasts include non-GAAP financial measures, including non-GAAP revenue, EBITDA and unlevered free cash flow, because the Company believed these measures could be useful in evaluating, on a prospective basis, the Company’s potential operating performance and cash flows. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled measures used by other companies.

The Company forecasts have been prepared by, and are the responsibility of, the Company’s management. PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, has not audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the Company projections and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report on the Company’s consolidated financial statements incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 relates to the Company’s previously issued financial statements. It does not extend to the Company projections and should not be read to do so.

The Company forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond our control. The forecasts were prepared on the basis that the Company would remain an independent, standalone public company, and did not contemplate the mergers. We believe the assumptions that our management used as a basis for this projected financial information were reasonable at the time our management prepared these forecasts, given the information our management had at the time. Important factors that may affect actual results and cause these forecasts not to be achieved include, but are not limited to, risks and uncertainties relating to our business (including our ability to achieve strategic goals, objectives and targets over the applicable periods), industry performance, the regulatory environment, the impact of the COVID-19 pandemic, general business and economic conditions and other factors described or referenced under

 

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Cautionary Statement Concerning Forward-Looking Information.” In addition, the Company forecasts also reflect assumptions that are subject to change and do not reflect revised prospects for our business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the Company forecasts were prepared. Accordingly, there can be no assurance that these forecasts will be realized or that the Company’s future financial results will not materially vary from these forecasts.

Accordingly, there can be no assurance that these forecasts will be realized or that the Company’s future financial results will not materially vary from these forecasts.

No one has made or makes any representation to any stockholder regarding the information included in the Company forecasts set forth below. Readers of this proxy statement are cautioned not to place undue reliance on the projected financial information contained in the Company forecasts. Some or all of the assumptions which have been made regarding, among other things, the timing of certain occurrences or impacts, may have changed since the date such forecasts were made. We have not updated and, unless required by law, do not intend to update, or otherwise revise, the Company forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions on which such forecasts were based are shown to be in error. We have made no representation to Callodine, Parent or merger subs in the merger agreement concerning these forecasts.

The Company forecasts are forward-looking statements. For information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Statement Concerning Forward-Looking Information.”

The following is a summary of the Company forecasts provided to the Company Board and PJT:

 

     Calendar Year Ending December 31  

($ in mm)

     2021E        2022E        2023E        2024E        2025E        2026E  

Revenue

   $ 146      $ 158      $ 166      $ 178      $ 195      $ 213  

EBITDA

   $ 35      $ 34      $ 36      $ 40      $ 47      $ 54  

Note:    Levered free cash flows for the Company were calculated by PJT Partners based on the Company forecasts, and approved by Company management for use by the Company’s financial advisors for purposes of their respective opinions and financial analyses. PJT Partners calculated the estimated levered free cash flows for the Company, based on information provided by Company management, as Net Operating Profit After Tax plus depreciation and amortization, less capital expenditures, less changes in working capital, for calendar years 2022 (representing second through fourth quarter 2022) through 2026 in the amounts of $46, $33, $37, $41 and $47 million, respectively.

Opinion of the Company’s Financial Advisor

PJT Partners was retained by the Company to act as its financial advisor in connection with the mergers and, upon the Company’s request, to render a fairness opinion to the Company Board in connection therewith. The Company selected PJT Partners to act as its financial advisor based on PJT Partners’ qualifications, expertise and reputation, its knowledge of the Company’s industry and its knowledge and understanding of the business and affairs of the Company.

At a meeting of the Company Board on March 31, 2022, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated March 31, 2022, to the Company Board to the effect that, as of such date and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the merger consideration to be received by the holders of the Shares (as defined in the merger agreement) (other than holders of Rollover Shares (as defined in the merger agreement)) was fair to such holders from a financial point of view.

 

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The full text of PJT Partners’ written opinion delivered to the Company Board, dated March 31, 2022, is attached as Annex B to this proxy statement and incorporated herein by reference. PJT Partners’ written opinion has been provided by PJT Partners at the request of the Company Board and is subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated therein). You are encouraged to read PJT Partners’ written opinion carefully and in its entirety. PJT Partners provided its opinion to the Company Board, in its capacity as such, in connection with and for purposes of its evaluation of the mergers only and PJT Partners’ opinion does not constitute a recommendation as to any action the Company Board should take with respect to the mergers or how any Company stockholder should vote or act with respect to the mergers or any other matter. The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion. This summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion.

In arriving at its opinion, PJT Partners, among other things:

 

   

reviewed certain publicly available information concerning the business, financial condition and operations of the Company;

 

   

reviewed certain internal information concerning the business, financial condition and operations of the Company prepared and furnished to PJT Partners by the management of the Company;

 

   

reviewed certain internal financial analyses, estimates and forecasts relating to the Company, including projections for fiscal years 2021 through 2026 that were prepared by or at the direction of and approved for PJT Partners’ use by the management of the Company (collectively, the “Projections”);

 

   

held discussions with members of senior management of the Company concerning, among other things, their evaluation of the mergers and the Company’s business, operating and regulatory environment, financial condition, prospects and strategic objectives;

 

   

reviewed the historical market prices and trading activity for the Shares;

 

   

compared certain publicly available financial and stock market data for the Company with similar information for certain other companies that PJT Partners deemed to be relevant;

 

   

compared the proposed financial terms of the mergers with publicly available financial terms of certain other business combinations that we deemed to be relevant;

 

   

reviewed a draft, dated March 30, 2022, of the merger agreement; and

 

   

performed such other financial studies, analyses and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.

In preparing its opinion, with the consent of the Company Board, PJT Partners relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by PJT Partners, without independent verification thereof. PJT Partners assumed, with the consent of the Company Board, that the Projections and the assumptions underlying the Projections, and all other financial analyses, estimates and forecasts provided to PJT Partners by Company management, were reasonably prepared in accordance with industry practice and represent Company management’s best then currently available estimates and judgments as to the business and operations and future financial performance of the Company. PJT Partners assumed no responsibility for and expressed no opinion as to the Projections, the assumptions upon which they were based or any other financial analyses, estimates and forecasts provided to PJT Partners by the management of the Company. PJT Partners also assumed that there were no material changes in the assets, financial condition, results of operations, business or prospects of the Company since the respective dates of the last financial statements made available to PJT Partners. PJT Partners relied, with the consent of the Company Board, on Company management’s representations and/or projections regarding taxable income, standalone net operating

 

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loss utilization and other tax attributes of the Company. PJT Partners further relied, with the consent of the Company Board, upon the assurances of the management of the Company that they were not aware of any facts that would make the information, including the Projections, provided by them inaccurate, incomplete or misleading.

PJT Partners was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by it, nor was it furnished with any such verification and it does not assume any responsibility or liability for the accuracy or completeness thereof. PJT Partners did not conduct a physical inspection of any of the properties or assets of the Company. PJT Partners did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of the Company, nor was it furnished with any such evaluations or appraisals, nor did it evaluate the solvency of the Company under any applicable laws.

PJT Partners also assumed, with the consent of the Company Board, that the final executed form of the merger agreement would not differ in any material respects from the draft reviewed by PJT Partners and that the consummation of the mergers would be effected in accordance with the terms and conditions of the merger agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise) for the mergers, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Company or Parent or the contemplated benefits of the mergers. PJT Partners did not express any opinion as to any tax or other consequences that might result from the mergers, nor did its opinion address any legal, tax, regulatory or accounting matters, as to which PJT Partners understood that the Company obtained such advice as it deemed necessary from qualified professionals. PJT Partners is not a legal, tax or regulatory advisor and relied upon, without independent verification, the assessment of the Company and its legal, tax and regulatory advisors with respect to such matters.

PJT Partners did not express any opinion as to the fairness of the LLC merger consideration (as defined in the merger agreement) to be paid to the holders of the Group LLC units in connection with the LLC Merger or any consideration to be received by holders of Rollover Shares. In arriving at its opinion, PJT Partners was not asked to solicit, and did not solicit, interest from any party with respect to any sale, acquisition, business combination or other extraordinary transaction involving the Company or its assets. PJT Partners did not consider the relative merits of the mergers as compared to any other business plan or opportunity that might be available to the Company or the effect of any other arrangement in which the Company might engage and PJT Partners’ opinion did not address the underlying decision by the Company to engage in the mergers. PJT Partners’ opinion was limited to the fairness as of the date of the opinion, from a financial point of view, to the holders of the Shares of the merger consideration to be received by such holders (other than holders of Rollover Shares) in the mergers, and PJT Partners’ opinion did not address any other aspect or implication of the mergers, the merger agreement, or any other agreement or understanding entered into in connection with the mergers or otherwise. PJT Partners further expressed no opinion or view as to the fairness of the mergers to the holders of any other class of securities (including to the holders of Group LLC Units), creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the mergers. PJT Partners also expressed no opinion as to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees, or any class of such persons, relative to the merger consideration to be received by the holders of Shares or otherwise. PJT Partners’ opinion was necessarily based upon economic, market, monetary, regulatory and other conditions as they existed and could be evaluated, and the information made available to PJT Partners, as of the date of its opinion. PJT Partners assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of its opinion. PJT Partners expressed no opinion as to the prices or trading ranges at which the Shares will trade at any time. The issuance of PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures.

PJT Partners’ advisory services and opinion were provided to the Company Board, in its capacity as such, in connection with and for the purposes of its evaluation of the mergers only and the opinion does not constitute a

 

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recommendation as to any action the Company Board should take with respect to the mergers or any aspect thereof. PJT Partners’ opinion does not constitute a recommendation to any holder of the Shares (including any holder of Rollover Shares) as to how any stockholder should vote or act with respect to the mergers or any other matter.

Summary of PJT Partners’ Financial Analyses

In connection with rendering its opinion, PJT Partners performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, PJT Partners did not ascribe a specific range of values to the Shares but rather made its determination as to fairness, from a financial point of view, to the holders of the Shares (other than holders of Rollover Shares) of the merger consideration to be received by such holders pursuant to the merger agreement on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, PJT Partners did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the mergers. Accordingly, PJT Partners believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by PJT Partners in preparing its opinion to the Company Board. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by PJT Partners, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, PJT Partners made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company or any other parties to the mergers. None of the Company, the Company Board, PJT Partners, or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold. The financial analyses summarized below were based on the Projections and other financial information prepared and furnished to PJT Partners by or at the direction of the management of the Company and approved for PJT Partners’ use by the management of the Company. The following summary does not purport to be a complete description of the financial analyses performed by PJT Partners. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed for the Company as of March 29, 2022 (which was the second to last full trading day for the Shares prior to the date of delivery PJT Partners’ opinion), and is not necessarily indicative of current or future market conditions. Calculations of implied per share equity values were rounded to the nearest $0.25. The detail underlying the fully diluted share count for the Company used below was provided by Company management.

Selected Comparable Company Analysis

PJT Partners reviewed and compared specific financial, operating and public trading data relating to the Company with similar information for twelve (12) selected publicly-traded small and mid-size capitalization asset management companies (“SMID”) and wealth management companies that PJT Partners deemed comparable to the Company. PJT Partners reviewed and compared such data in order to assess how the public market values shares of similar publicly traded companies and to provide a range of relative implied equity values per Company share on a standalone basis, in each case by reference to these companies. The selected

 

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comparable companies in the SMID industry were Janus Henderson, Cohen & Steers, CI Financial, Artisan Partners, Federated Hermes and WisdomTree Investments and the selected comparable companies in the wealth management industry were Raymond James, LPL Financial, Stifel, Focus Financial Partners, Blucora and Silvercrest.

As part of its selected comparable company analysis, PJT Partners calculated and analyzed certain ratios and multiples, including: (i) total enterprise value (calculated as the equity value based on fully diluted shares outstanding using the treasury stock method, plus debt and less cash and cash equivalents, after giving effect to certain adjustments for non-controlling interests and equity investments) (“TEV”) as a multiple of EBITDA for fiscal years ending in 2022 and 2023 (“TEV / EBITDA”) and (ii) the price to earnings ratio for fiscal years ending in 2022 and 2023 (“P / E”).

All of these calculations were performed and based on publicly available financial data and on closing share prices for each comparable company as of March 29, 2022. The median results of this selected comparable company analysis are summarized below:

 

     2022E SMID
Median
     2023E SMID
Median
     2022E Wealth
Management
Median
     2023E Wealth
Management
Median
 

TEV / EBITDA

     7.6x        6.9x        8.8x        8.0x  

P / E

     10.6x        10.0x        10.6x        9.6x  

PJT Partners, based on its professional judgment, selected the comparable companies because PJT Partners believed their businesses, operating and public trading profiles are reasonably similar to those of the Company. However, because of the inherent differences between the businesses, operations and prospects of the Company and those of the selected comparable companies, PJT Partners believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected comparable company analysis. Accordingly, PJT Partners also made qualitative judgments concerning differences between the public trading histories, businesses, financial and operating characteristics and prospects of the Company and the selected comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between the Company, as applicable, and the companies included in the selected comparable company analysis.

Based upon these judgments, PJT Partners selected a P / E multiple range of 7.0x to 9.0x for estimated 2022E net income for the Company, on a standalone basis. PJT Partners then applied this range to the Company’s estimated fiscal year 2022 net income based on the Projections, added the present value of certain net tax savings and divided by the Company’s implied fully diluted Share count based on the Shares outstanding as of March 30, 2022, all as provided by management of the Company, to calculate a range of implied prices of $7.50 to $9.50 per Share on a standalone basis. Also based upon these judgments, PJT Partners also selected a TEV / EBITDA multiple range of 4.5x to 6.5x for estimated 2022E EBITDA for the Company, on a standalone basis. PJT Partners then applied this range to the Company’s estimated fiscal year 2022 EBITDA based on the Projections, added the Company’s estimated March 31, 2022 estimated cash, cash equivalents, short-term investments and present value of certain net tax savings and subtracted the Company’s estimated March 31, 2022 debt balance, and divided the result by the Company’s implied fully diluted Share count based on the Shares outstanding as of March 30, 2022, all as provided by management of the Company, to calculate a range of implied prices of $9.25 to $12.25 per Share on a standalone basis.

PJT Partners then compared these ranges of implied value per Share with the offer price of $12.85 per Share in the transaction and the 30-day VWAP, as of March 29, 2022, of $8.44 per Share.

 

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Selected Precedent Merger Analysis

PJT Partners reviewed, to the extent publicly available, and analyzed the valuation and financial metrics relating to the following eight (8) selected transactions involving companies in the asset management industry, which PJT Partners in its professional judgment considered generally relevant for comparative purposes:

 

Announcement Date

  

Acquiror

  

Target

Asset Management

     
October 2021    Pendal Group Limited    Thompson, Siegel & Walmsley, LLC
December 2020    Macquarie Asset Management    Waddell & Reed Financial, Inc.
July 2020    Perpetual Limited    Barrow, Hanley, Mewhinney & Strauss, LLC
November 2018    Victory Capital Holdings, Inc.    USAA Asset Management Company
October 2018    Invesco Ltd.    OppenheimerFunds
April 2018    Federated Investors, Inc.    Hermes Fund Managers Limited
February 2016    Fiera Capital Corporation    Apex Capital Management, Inc.
June 2014    Man Group plc    Numeric Holdings, LLC

For each precedent transaction, PJT Partners reviewed (i) the TEV of the target company in the transaction based upon the consideration payable in the transaction as a multiple of the target company’s EBITDA for the last twelve months (which we refer to as “TEV / LTM EBITDA”) and (ii) the price per share of the target company’s capital stock as a multiple of the target company’s earnings per share for the last twelve months (which we refer to as “P / LTM E”). Estimated financial data of the selected transactions were based on publicly available information.

The average and median results of this selected precedent merger analysis are summarized below:

 

     Average      Median  

TEV / LTM EBITDA

     8.1x        7.8x  

P / LTM E

     13.7x        13.1x  

The reasons for and the circumstances surrounding each of the selected precedent transactions analyzed were diverse and there are inherent differences in the business, operations, financial conditions and prospects of the Company and the companies included in the selected precedent transaction analysis, which PJT Partners discussed with the Company Board. In addition, certain of the selected precedent transactions occurred during periods in which financial, economic and market conditions were different from those in existence as of the date of PJT Partners’ opinion. Accordingly, PJT Partners believed, and discussed with the Company Board, that a purely quantitative selected precedent transaction analysis would not be particularly meaningful in the context of considering the mergers. PJT Partners therefore made qualitative judgments concerning the differences between the characteristics of the selected precedent transactions and the mergers that would affect the acquisition values of the selected target companies and the Company.

After reviewing the above analyses, PJT Partners selected a P / E multiple range of 8.0x to 11.0x, and applied such range to the Company’s estimated LTM net income as of March 31, 2022 based on the Projections to calculate a range of implied values per Share for the Company as of March 29, 2022. PJT Partners also selected a TEV / EBITDA multiple range of 6.0x to 8.0x, and applied such range to the Company’s estimated LTM EBITDA as of March 31, 2022 based on the Projections to calculate a range of implied values per Share for the Company as of March 29, 2022.

 

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The following table summarizes the result of these calculations:

 

     Implied Value per Share  
         Low              High      

P / E

   $ 8.75      $ 12.00  

TEV / EBITDA

   $ 11.25      $ 14.25  

PJT Partners compared these ranges of implied value per Share with the offer price of $12.85 per Share in the transaction and the 30-day VWAP, as of March 29, 2022, of $8.44 per Share.

Discounted Cash Flow to Equity Analysis

In order to estimate the present value of a Share, PJT Partners performed a discounted cash flow to equity analysis of the Company. A discounted cash flow to equity analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows generated by the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

To calculate the estimated equity value of the Company using the discounted cash flow to equity method, PJT Partners discounted the Company’s projected levered free cash flows for the period Q2 through Q4 2022, through fiscal year end 2026 based on the Projections to present value at March 31, 2022, using a range of selected discount rates. PJT Partners selected a range of after-tax discount rates of 18% to 22% based on its analysis of the weighted average cost of capital of the Company as of March 31, 2022. The residual value of the Company at the end of the projection period, or terminal value, was estimated by applying a perpetuity growth rate range of 3.5% to 4.5% to the Company’s 2026E levered free cash flow. PJT Partners then calculated a range of implied equity values per Share by adding the present value of certain net tax savings (approximately $(0.8) million as provided by Company management) and dividing such amount by the implied fully diluted number of the Shares based on the Shares as of March 29, 2022, all as provided by management of the Company, to derive a range of implied value per Share on a standalone basis of $10.00 to $13.00. PJT Partners compared this range of implied value per Share with the offer price of $12.85 per Share in the transaction and the 30-day VWAP, as of March 29, 2022, of $8.44 per Share.

Other Information

PJT Partners also observed historical trading activity of the Shares during the 52-week period ending March 29, 2022, which was not part of its financial analyses in connection with rendering its opinion, but was referenced solely for informational purposes. The historical trading activity during the 52-week period ending March 29, 2022, indicated low and high intraday trading prices of the Shares during such period of $6.00 to $10.25.

PJT Partners also performed a discounted cash flow to equity analysis, which was not part of its financial analyses in connection with rendering its opinion, but was referenced solely for informational purposes. PJT Partners assumed 0.0% revenue growth and constant EBITDA margins for the period Q2 through Q4 2022 through fiscal year end 2026 based on the Projections to present value at March 31, 2022, using a range of selected discount rates.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying PJT Partners’ opinion. In arriving at its fairness determination, PJT Partners considered the results of all of its analyses and did not

 

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attribute any particular weight to any factor or analysis considered by it. Rather, PJT Partners made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company or the contemplated transaction. The terms of the merger agreement, including the merger consideration, were determined through arm’s-length negotiations between the Company, Parent and the Merger Subs, rather than PJT Partners, and the decision to enter into the merger agreement was solely that of the Company, Parent and the Merger Subs.

PJT Partners prepared these analyses for purposes of providing its opinion to the Company Board as to the fairness, from a financial point of view, as of the date of the written opinion of PJT Partners, to the holders of the Shares (other than holders of Rollover Shares), of the merger consideration to be received by such holders pursuant to the mergers. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the Company, Parent, PJT Partners or any other person assumes responsibility if future results are materially different from those forecasts.

PJT Partners is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The Company selected PJT Partners to act as its financial advisor because of its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally and in the financial services industry specifically.

PJT Partners is acting as financial advisor to the Company in connection with the mergers. As compensation for its services in connection with the mergers, PJT Partners is entitled to receive from the Company a $1.0 million opinion fee, which became payable upon the delivery of PJT Partners’ opinion to the Company Board and is creditable against a transaction fee payable and contingent upon the closing of the mergers. Upon the closing of the mergers, PJT Partners is entitled to receive a transaction fee of $3.75 million. The Company has also agreed to reimburse PJT Partners for out-of-pocket expenses and to indemnify PJT Partners for certain liabilities arising out of the performance of such services (including the rendering of PJT Partners’ opinion).

In the ordinary course of PJT Partners’ and its affiliates’ businesses, PJT Partners and its affiliates may provide investment banking and other financial services to the Company, Parent or their respective affiliates and may receive compensation for the rendering of these services. During the two years preceding the date of its written opinion, PJT Partners has not received fees from the Company or Parent for any such services.

Position of the Callodine Filing Persons as to the Fairness of the Company Merger

Under SEC rules governing Rule 13e-3 “going-private” transactions, each of James Morrow, Aggregator, Callodine, TopCo, Parent, Corp Merger Sub and LLC Merger Sub (the “Callodine Filing Persons”) is required to express its beliefs as to the fairness of the proposed merger to the Company’s “unaffiliated security holders” as defined under Rule 13e-3 of the Exchange Act. The company merger is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC. The Callodine Filing Persons may be deemed to be affiliates of the Company under SEC rules governing “going-private” transactions. The Callodine Filing Persons are making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Callodine Filing Persons as to the fairness of the proposed merger are not intended and should not be construed as a recommendation to any shareholder of the Company as to how to vote on the proposal to approve the merger agreement. The Callodine Filing Persons have interests in the merger that are different from those of the other shareholders of the Company by virtue of their continuing interests in the surviving company after the consummation of the merger.

 

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These interests are described under “Special Factors—Purposes and Reasons of the Callodine Filing Persons for the Company Merger.”

The Callodine Filing Persons believe the interests of the unaffiliated stockholders were represented by the Company Board, which negotiated the terms and conditions of the mergers and the merger agreement on behalf of the Company and its stockholders, with the assistance of the Company Board’s financial and legal advisors. The Callodine Filing Persons attempted to negotiate a transaction that would be most favorable to them, and not to the unaffiliated shareholders and, accordingly, did not negotiate the merger agreement with a goal of obtaining terms that were substantively and procedurally fair to such unaffiliated shareholders. The Callodine Filing Persons did not participate in the deliberations of the Company Board regarding the company merger, and did not receive advice from the legal or other advisors of the Company as to the fairness of the company merger to the unaffiliated shareholders. The Callodine Filing Persons did not perform, or engage a financial advisor to perform, any independent valuation or other analysis for the purpose of assessing the fairness of the company merger to the unaffiliated stockholders.

Based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Company’s board of directors discussed in “Special Factors—Purposes and Reasons of the Company for the Company Merger” of this proxy statement (which considerations and findings are adopted by the Callodine Filing Persons solely for the purposes of making the statements in this section), the Callodine Filing Persons believe the proposed merger is substantively and procedurally fair to the unaffiliated shareholders based upon their knowledge of the Company and on substantially the same factors considered, by, and the findings of, the Company Board with respect to the fairness of the company merger. See “—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger”. The Callodine Filing Persons agree with the analyses, determinations and conclusions of the Company Board described under “—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger,” based on the reasonableness of these determinations and conclusions, which the Calldine Filing Persons adopt.

The foregoing discussion of the information and factors considered and given weight by the Callodine Filing Persons in connection with the fairness of the merger agreement and transactions contemplated thereby, including the company merger, is not intended to be exhaustive but is believed to include all material factors considered by them. The Callodine Filing Persons did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their position as to the fairness of the merger agreement and transactions contemplated thereby, including the company merger. Rather, they made their fairness determinations after considering all of the foregoing as a whole. The Callodine Filing Persons believe these factors provide a reasonable basis upon which to form their belief that the company merger is fair to the unaffiliated stockholders. This belief should not, however, be construed as a recommendation to any Company stockholder to adopt the merger agreement. The Callodine Filing Persons do not make any recommendation as to how stockholders of the Company should vote their shares of Company common stock relating to the company merger.

Position of Mr. Mayer as to the Fairness of the Company Merger

Under the SEC rules governing Rule 13e-3 “going-private” transactions, Mr. Mayer, as a Rollover Holder, may be deemed to be an affiliate of the Company and, therefore, also required to express beliefs as to the fairness of the proposed company merger to the Company’s “unaffiliated security holders” as defined under Rule 13e-3 of the Exchange Act. The company merger is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC. Mr. Mayer is making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The view of Mr. Mayer should not be construed as a recommendation to any Company stockholder as to how that stockholder should vote on the proposal to adopt the merger agreement. As described below, Mr. Mayer believes

 

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that the company merger is fair to the unaffiliated stockholders on the basis of the factors described under “—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company Board; Fairness of the Company Merger, —Opinion of the Companys Financial Advisor, “—Position of the Callodine Filing Persons as to the Fairness of the Company Merger,” and “—Purposes and Reasons of the Callodine Filing Persons for the Company Merger.”

Mr. Mayer did not participate in the deliberations of the Company Board regarding the company merger, and did not receive advice from the legal or other advisors of the Company as to the fairness of the company merger. As disclosed under “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers,” Mr. Mayer has interests in the company merger both the same as those of the unaffiliated security holders by virtue of the expected receipt of the merger consideration for a portion of the Rollover Holder’s equity interests in the Company upon completion of the mergers, and not identical to those of the unaffiliated security holders by virtue of (1) Mr. Mayer’s ability to roll over a portion of his ownership stake in the post-closing Company (such rollover being valued with the same per share valuation of the shares of Company common stock used to determine the merger consideration) in exchange for a continuing ownership stake in Parent, (2) Mr. Mayer’s eligibility to potentially receive either a cash payment or the issuance of additional shares of TopCo common stock, in TopCo’s sole discretion, under his rollover-bonus-opportunity letter agreement, and (3) Mr. Mayer’s continuing leadership role in the post-closing Company (the “Surviving Corporation”) as its Chief Executive Officer, including the terms of the new employment agreement with Mr. Mayer to be effective upon the effective time of the merger, which provides for (among other things) a base salary of $600,000 per annum, eligibility to receive a cash bonus with a target range for 2022 of between $3,000,000 to $3,500,000 and a portion of which is guaranteed based on the number of days in 2022 occurring prior to the closing of the mergers, and eligibility to participate in health, group insurance, welfare, pension, and other employee benefit plans, programs, and arrangements as are made generally available from time to time to other employees of the Company, subject to satisfaction of all applicable eligibility conditions of such plans. Mr. Mayer’s employment agreement also provides that if Mr. Mayer’s employment is terminated by the post-closing Company without cause, or if Mr. Mayer resigns for good reason then subject to Mr. Mayer’s execution of a release of claims in favor of the Company and compliance with his post-termination obligations to the Company, Mr. Mayer will receive cash severance in the amount of $5 million payable over the two-year period following the termination date, plus 60% of the guaranteed portion of the cash bonus for 2022 if not yet paid, and accelerated vesting of all unvested equity awards granted to Mr. Mayer pursuant to the merger agreement. In addition, the employment agreement provides for up to 40% of each annual cash bonus award to be deferred and paid in the form of a vested award pursuant to the Company’s deferred incentive compensation program and/or one or more employer equity instruments. While Mr. Mayer is a current officer of the Company and chairman and member of the Company Board, because of his participation in the transaction as described under the section captioned “Summary Term Sheet—Interests of Executive Officers and Directors of the Company in the Mergers” he recused himself from the Company Board’s determination on the merger and its related transactions and did not participate in the related Company Board vote and approval. For these reasons, Mr. Mayer does not believe that his interests in the company merger influenced the decision of the Company Board with respect to the merger agreement or the merger.

The unaffiliated stockholders were represented by the Company Board, which negotiated the terms and conditions of the mergers and the merger agreement on behalf of the Company, with the assistance of the Company Board’s financial and legal advisors. The Company Board approved the terms and conditions of the mergers and the merger agreement (with Mr. Mayer recused from the Company Board’s determination in respect thereof, and not participating in the related Company Board vote and approval due to his involvement in the transaction as outlined in the precedent paragraph). Accordingly, Mr. Mayer has not performed, or engaged a financial advisor to perform, any independent valuation or other analysis for the purpose of assessing the fairness of the company merger to the unaffiliated stockholders. Mr. Mayer believes, however, that the company merger is substantively and procedurally fair to the unaffiliated stockholders based upon his knowledge of the Company and on substantially the same factors considered by, and the finding of, the Company Board (other than Mr. Mayer) with respect to the fairness of the company merger to the unaffiliated stockholders. See —Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the

 

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Company Merger. Mr. Mayer agrees with the analyses, determinations and conclusions of the Company Board described under “Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger,” based on the reasonableness of these determinations and conclusions, which Mr. Mayer adopts.

The foregoing discussion of the information and factors considered and given weight by Mr. Mayer in connection with the fairness of the merger agreement and transactions contemplated thereby, including the company merger, is not intended to be exhaustive but is believed to include all material factors considered by him. Mr. Mayer did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching his position as to the fairness of the merger agreement and transactions contemplated thereby, including the company merger. Rather, he made his fairness determinations after considering all of the foregoing as a whole. Mr. Mayer believes these factors provide a reasonable basis upon which to form his belief that the company merger is fair to the unaffiliated stockholders. This belief should not, however, be construed as a recommendation to any Company stockholder to adopt the merger agreement. Mr. Mayer does not make any recommendation as to how stockholders of the Company should vote their shares of Company common stock relating to the company merger.

Purposes and Reasons of the Company for the Company Merger

The purpose of the company mergers for the Company is to enable its stockholders to realize the value of their investment in the Company through their receipt of the per share merger consideration of $12.85 in cash, without interest and less any applicable withholding taxes, representing a premium of approximately 41% to the closing market price of the Company common stock on March 31, 2022, the last trading day prior to the announcement of the Company’s entry into the merger agreement. The Company has determined to undertake the company merger at this time based on the analyses, determinations and conclusions of the Company Board described in detail above under Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger.

Purposes and Reasons of the Callodine Filing Persons for the Company Merger

Under the SEC rules governing Rule 13e-3 “going-private” transactions, the Callodine Filing Persons may be deemed to be affiliates of the Company, and, therefore, they are required to express their purposes and reasons for the company merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Callodine Filing Persons are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and the related rules under the Exchange Act. The views of each of the Callodine Filing Persons should not be construed as a recommendation to any Company stockholder as to how that stockholder should vote on the proposal to adopt the merger agreement.

For the Callodine Filing Persons the primary purpose of the mergers is to allow Callodine to indirectly own equity interests in the Company and to bear the rewards and risks of such ownership after the mergers are completed and the shares of Company common stock cease to be publicly traded. The Callodine Filing Persons believe that structuring the transaction as a merger is preferable to other transaction structures (such as a tender offer) because it (i) will enable Callodine to indirectly acquire all of the Company’s outstanding shares at the same time, (ii) will allow the Company to cease (immediately, as of the closing of the mergers) to be a publicly registered and reporting company, (iii) represents an opportunity for the unaffiliated stockholders (other than the Rollover Holders with respect to the rollover shares) to receive the merger consideration in cash, without interest and less any applicable withholding taxes, subject to and in accordance with the terms and conditions of the merger agreement and (iv) allows the Rollover Holders to maintain a portion of their investment in the post-closing Company through direct ownership in TopCo. The Callodine Filing Persons did not consider any other alternative transaction structures or other alternative means to accomplish the foregoing purposes.

 

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Purposes and Reasons of Mr. Mayer for the Company Merger

Under the SEC rules governing 13e-3 “going-private” transactions, Mr. Mayer may be deemed to be an affiliate of the Company, and, therefore, he is required to express his purposes and reasons for the company merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. Mr. Mayer is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and the related rules under the Exchange Act. The views of Mr. Mayer should not be construed as a recommendation to any Company stockholder as to how that stockholder should vote on the proposal to adopt the merger agreement.

Mr. Mayer has served as the Company’s Chairman of the Board since July 30, 2020 and Chief Executive Officer since January 2019. Representatives of Callodine indicated they were not prepared to move forward with a proposed transaction without a rollover of existing company common stock from Mr. Mayer. As a result, Mr. Mayer eventually agreed to enter into the rollover agreement because he believed that the overall benefits of the Company merger outweighed the detriments to him associated with the rollover agreement, including the potential lack of liquidity Mr. Mayer will have in the equity of TopCo, the control of TopCo by Callodine, and the increased risk associated with the debt leverage contemplated for the Company by Callodine after closing. In determining to enter into the rollover agreement, Mr. Mayer also considered the confidence he has in the existing management team and in the prospects of the Company operating under private ownership as a portfolio company of Callodine after the closing.

The Rollover Holder believes that it is in the best interests of the Company’s stockholders to effect a liquidity transaction while market conditions remain favorable, as well as in the best interests of the Company to operate as a privately held entity. The Rollover Holder believes that, as a privately held entity, the Company will have greater operational flexibility to pursue alternatives than it would have as a public company, and management of the Company will be able to concentrate on long-term growth, reducing the focus on the quarter-to-quarter performance often emphasized by the public equity market’s valuation of the shares of Company common stock. Although the Rollover Holder believes that there may be substantial future upside opportunities associated with their ownership of TopCo shares following the closing, the Rollover Holder recognizes that there may also be substantial risks (including the risks and uncertainties relating to the prospects of the Company) and that such opportunities may not ever be fully realized.

If the mergers are completed, the Company will become a wholly-owned subsidiary of Parent, and the Company common stock will cease to be publicly traded. For Mr. Mayer, the purpose of the company merger is to effectuate the transactions contemplated by the merger agreement and the separate rollover agreement, which will allow Mr. Mayer to realize the value of a portion of his shares of Company common stock by receiving $12.85 per share in cash for a portion of his shares and also own equity interests of TopCo and to bear the rewards and risks of such ownership after the mergers are completed and the shares cease to be publicly traded. Mr. Mayer believes that structuring the transaction in this manner is preferable for unaffiliated stockholders to other alternative transaction structures because (i) it will enable Parent to acquire all of the outstanding shares of the Company at the same time; (ii) it represents an opportunity for the unaffiliated stockholders to immediately realize the value of their investment in the Company and for Mr. Mayer to immediately realize the value of a significant portion of his investment in the Company at a price of $12.85 per share in cash, without interest, less any applicable withholding taxes, in accordance with and subject to the terms and conditions set forth in the merger agreement; and (iii) it allows him to continue to own indirect equity interests in the Company after the mergers and to bear the rewards and risks of such ownership after the mergers.

Plans for the Company After the Mergers

If the mergers are completed, it is expected that the current officers of the Company will continue to manage the day-to-day operations of the business and that the Company will continue to be based in Western New York. Callodine intends to provide strategic guidance and oversight for the Company, leveraging its institutional

 

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relationships and operational resources to help accelerate growth. Callodine also intends to help introduce new investment strategies and fund offerings into the Company’s current product set. By offering a more diversified suite of investment products to the Company’s clients, Callodine believes that there is potential for improved client retention, larger portfolio allocations, and enhanced customer growth.

Certain Effects of the Mergers

If the merger agreement is adopted by the Company’s stockholders and the other conditions to the closing of the mergers are either satisfied or, to the extent permitted, waived, then the Corp Merger Sub will merge with and into the Company, with the Company surviving the company merger as a wholly-owned subsidiary of Parent and LLC Merger Sub will merge with and into Group LLC with Group LLC surviving the LLC merger as a wholly-owned subsidiary of the Company.

Treatment of the Shares of Company Common Stock

At the company merger effective time, each share of Company common stock outstanding immediately prior to the company merger effective time (other than shares (i) held in the treasury of the Company or owned, directly or indirectly, by Parent or its affiliates, the merger subs or any wholly-owned subsidiary of the Company immediately prior to the company merger effective time (ii) issued and outstanding immediately prior to the company merger effective time that are held by a holder who did not vote in favor of the adoption of the merger agreement and has properly exercised appraisal rights in respect of such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware and (iii) subject to a rollover agreement (as we explain in more detail herein)) will be cancelled and extinguished and automatically converted into the right to receive the merger consideration, in accordance with and subject to the terms and conditions set forth in the merger agreement, whereupon the holders of such shares will cease to have any rights with respect thereto, other than the right to receive the merger consideration, subject to and in accordance with the terms and conditions of the merger agreement.

Treatment of Equity Compensation Awards

At the company merger effective time and as a result of the company merger:

 

   

Each option (each, a “Company Stock Option”) to purchase shares of Company common stock granted under the Company’s 2011 Equity Compensation Plan, other than options contributed to TopCo in exchange for options to purchase shares of TopCo common stock, shall be cancelled for no consideration.

 

   

At the effective time of the company merger, each outstanding award of restricted stock units (each, a “Company RSU”) with respect to shares of company common stock shall be cancelled and replaced with a restricted stock unit award (a “TopCo RSU”) with respect to a number of shares of common stock of TopCo that is equal to the number of shares of company common stock that were subject to such cancelled Company RSU. Except as otherwise agreed between TopCo and the holder of a replaced Company RSU, the vesting and all other terms and conditions that applied to any such replaced Company RSU shall apply to the replacement TopCo RSU; provided, that such replacement TopCo RSU shall be settled upon vesting in a combination of cash and/or shares of TopCo common stock (with the mix of cash and shares determined by Parent in its sole discretion) valued in the aggregate at (x) the number of shares of TopCo common stock underlying such TopCo RSU multiplied by (y) the merger consideration, with shares of TopCo common stock valued for such purpose at the then prevailing book value per share at the time of such settlement.

Benefits of the Company Merger for the Company’s Unaffiliated Stockholders

The primary benefit of the company merger to the unaffiliated stockholders will be their right to receive the merger consideration of $12.85 per share in cash, without interest, less any applicable withholding taxes, in

 

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accordance with and subject to the terms and conditions set forth in the merger agreement, representing a premium of 41% over the closing price of the Company’s common stock on March 31, 2022, the last trading day prior to announcement of the merger agreement. Additionally, such unaffiliated stockholders will avoid the risk after the company merger of any possible decrease in the Company’s future earnings, growth or value.

Detriments of the Company Merger to the Company’s Unaffiliated Stockholders

The primary detriments of the company merger to the unaffiliated stockholders include the lack of an interest of such unaffiliated stockholders in the potential future earnings, growth, or value realized by the Company after the company merger. In addition, the unaffiliated stockholders will not benefit from any sale of the Company or its assets to a third party in the future.

Certain Effects of the Mergers for the Callodine Filing Persons

If the mergers are completed and the shares of Company common stock cease to be publicly traded, the Callodine Filing Persons will indirectly own equity interests in the Company and to bear the rewards and risks of such ownership. The Callodine Filing Persons intend to provide strategic guidance and oversight for the Company, leveraging its institutional relationships and operational resources to help accelerate growth. The Callodine Filing Persons also intend to help introduce new investment strategies and fund offerings into the Company’s current product set. By offering a more diversified suite of investment products to the Company’s clients, the Callodine Filing Persons believe that there is potential for improved client retention, larger portfolio allocations, and enhanced customer growth.

Certain Effects on the Company if the Mergers are Not Completed

If the merger agreement proposal is not approved by the Company’s stockholders or if the mergers are not completed for any other reason, and the merger agreement is terminated, the Company’s stockholders will not receive any payment for their shares of Company common stock in connection with the company merger. Instead, unless the Company is sold to a third party, the Company will remain an independent public company, and the shares of Company common stock will continue to be listed and traded on the NYSE, so long as the Company continues to meet the applicable listing requirements. In addition, if the mergers are not completed, the Company expects that management will operate the Company’s business in a manner similar to that in which it is being operated today, and that the Company’s stockholders will continue to be subject to the same risks and opportunities to which they are currently subject. There is no assurance as to the effect of these risks and opportunities on the future value of your shares of Company common stock, including the risk that the current market price of shares of Company common stock may decline to the extent the current market price of shares of Company common stock reflects a market assumption that the mergers will be completed on the terms and at the price contemplated by the merger agreement.

Under certain circumstances, if the mergers are not completed, the Company may be required to pay Parent the Company Termination Fee or Parent may be required to pay the Company the Parent Termination Fee, as well as pay certain enforcement costs if applicable. See “The Merger Agreement—Effect of Termination.”

Interests of Executive Officers and Directors of the Company in the Mergers

The Company’s executive officers and directors have interests in the mergers that are different from, or in addition to, the interests of the Company stockholders generally. The Company Board was aware of these interests and considered them, among other matters, prior to making its determination to recommend the approval of the merger agreement to the Company’s stockholders.

The Company’s stockholders should take these interests into account in deciding whether to vote “FOR” the merger agreement proposal. These interests are described in more detail below, and certain of them are quantified in the narrative and the table included under the section entitled “Golden Parachute Compensation.

 

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These interests may include, but are not limited to:

 

   

agreements to rollover stock and options in the Company into stock and options of TopCo, the amounts of which are described in the section entitled “Rollover Agreement”;

 

   

the rollover bonus opportunity, the amounts of which are described in the section entitled “Rollover Bonus Opportunity”;

 

   

the continued engagement and/or employment, as applicable, of certain board members and executive officers of the Company, as described below;

 

   

the continued positions of certain directors of the Company as directors on the board of directors of TopCo, as described below;

 

   

the treatment in the mergers of equity awards and stock options held by the Company directors and executive officers described in the section of this proxy statement captioned “Certain Effects of the Mergers—Treatment of Equity Compensation Awards”;

 

   

severance payments and benefits payable under existing arrangements or arrangements that may be entered into in connection with the mergers; and

 

   

continued indemnification and directors’ and officers’ liability insurance applicable for a period of six years following completion of the merger.

In respect of the Company directors and named executive officers, the mergers shall impact their board service and results in equity and cash-based awards as summarized below:

Compensation Payable as a Result of the Mergers

All directors and executive officers of the Company who are Company stockholders will receive the merger consideration in respect of their shares of Company common stock, calculated in the same manner as the merger consideration is calculated for all other Company stockholders. As described below in the section entitled “Interests of Executive Officers and Directors of the Company in the Mergers—Executive Severance Arrangements” and as summarized in the table entitled “Interests of Executive Officers and Directors of the Company in the Mergers—Golden Parachute Compensation,” Messrs. Mayer, Busheri and Battaglia, as well as certain other executive officers who are Company stockholders, are eligible for severance payments under certain circumstances. The severance arrangements are contractual and were established prior to signing of the merger agreement and not in anticipation of the mergers. As described below in the sections entitled “Interests of Executive Officers and Directors of the Company in the Mergers—Rollover Bonus Opportunity” and “Interests of Executive Officers and Directors of the Company in the Mergers—Rollover Agreement” and as summarized in the table entitled “Interests of Executive Officers and Directors of the Company in the Merger—Golden Parachute Compensation,” TopCo has entered into rollover agreements and a rollover bonus opportunity agreement with Mr. Mayer.

Compensation following the Mergers

The merger agreement contemplates that Mr. Mayer will continue to serve as the Chief Executive Officer of the Company, Mr. Busheri will continue to serve as the Director of Investments of the Company, and Mr. Battaglia will serve as Chief Financial Officer of the Company, in each case after closing the merger. In this role, Mr. Mayer will be entitled to an annual base salary equal to $600,000 and a target bonus range of $3,000,000 to $3,500,000 for 2022. Compensation changes, if any, for Messrs. Busheri and Battaglia in such roles have not yet been determined.

Treatment of the Company Equity Awards

See the section below entitled “Interests of Executive Officers and Directors of the Company in the Mergers—Treatment of the Company Equity Awards” for a description of the treatment of the Company equity awards held

 

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by members of the Company Board and management of the Company after the closing of the mergers. In general, directors and members of management will receive the same treatment as other holders of company equity awards, except that certain of Mr. Mayer’s vested options are subject to the Rollover Agreement.

Shareholding by Directors and Officers

See the section below entitled “Security Ownership of Certain Beneficial Owners and Management” for a summary of the shareholding of members of the Company Board and the named executive officers of the Company.

Treatment of the Company Equity Awards

Stock Options

As of December 31, 2021, the only Company Stock Options outstanding were vested options (owned by Mr. Mayer) to be contributed to TopCo in exchange for vested options to purchase shares of TopCo common stock. Each Company Stock Option, other than options contributed to TopCo in exchange for options to purchase shares of TopCo common stock, if any, will be cancelled for no consideration at the company merger effective time as a result of the company merger.

Restricted Stock Units

As of December 31, 2021, there were 3,421,611 Company RSUs outstanding. At the effective time of the company merger, each outstanding Company RSU will be cancelled and replaced with a TopCo RSU with respect to a number of shares of common stock of TopCo that is equal to the number of shares of company common stock that were subject to such cancelled Company RSU. Except as otherwise agreed between TopCo and the holder of a replaced Company RSU, the vesting and all other terms and conditions that applied to any such replaced Company RSU shall apply to the replacement TopCo RSU; provided, that such replacement TopCo RSU shall be settled upon vesting in a combination of cash and/or shares of TopCo common stock (with the mix of cash and shares determined by Parent in its sole discretion) valued in the aggregate at (x) the number of shares of TopCo common stock underlying such TopCo RSU multiplied by (y) the merger consideration, with shares of TopCo common stock valued for such purpose at the then prevailing book value per share at the time of such settlement.

Pursuant to an employment agreement entered into with Mr. Mayer in connection with the mergers, in the event that Mr. Mayer’s employment is terminated without cause or as a result of Mr. Mayer’s death, disability or resignation for good reason, in connection with or following the closing of the company merger, Mr. Mayer’s outstanding and unvested equity awards in TopCo will become fully vested.

The following table sets forth the number of the Company Stock Options and the Company RSUs that were awarded to and held by the Company executive officers (none of the non-employee directors hold Company Stock Options or Company RSUs) as of March 28, 2022 and the value of these awards in the company merger, assuming a per share value of the Company’s common stock equal to $12.74, which is the average of the closing price of the Company’s common stock over the first five trading days following the announcement of the

 

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mergers. The foregoing equity awards will be treated in the same manner as outstanding equity awards generally and described above.

 

Executive Officers

   Company
Options
(Vested)
(#)
     Company
Options
(Vested)
($)
     Company
RSUs
(Unvested)
(#)
     Company
RSUs
(Unvested)
($)
 

Marc O. Mayer

     500,000      $ 6,370,000        163,399      $ 2,081,703  

Ebrahim Busheri

     —          —          100,407      $ 1,279,185  

Paul Battaglia

     —          —          111,627      $ 1,422,128  

Christopher Briley

     —          —          88,393      $ 1,126,127  

Stacey Green

     —          —          47,918      $ 610,475  

Nicole Kingsley-Brunner

     —          —          83,720      $ 1,066,593  

Aaron McGreevy

     —          —          103,457      $ 1,318,042  

Scott Morabito

     —          —          63,984      $ 815,156  

Sarah Turner

     —          —          91,890      $ 1,170,679  

Executive Severance Arrangements

Marc O. Mayer

In connection with the mergers, Callodine Midco, Inc. entered into an employment agreement with Mr. Mayer, pursuant to which he is eligible for severance payments and benefits. In the event of a termination of employment without “cause” or if he resigns for “good reason,” subject to his execution and non-revocation of a release in favor of the Company and his compliance with post-termination obligations owed to the Company, he is entitled to receive an amount equal to $5 million, payable in installments over the two-year period following Mr. Mayer’s termination of employment, plus 60% of the guaranteed portion of the cash bonus for 2022 if not yet paid, in addition to the vesting acceleration described above.

For purposes of Mr. Mayer’s employment agreement:

 

   

“cause” means, subject to notice and cure rights, (a) a material breach by Mr. Mayer of his fiduciary duties to the Company; (b) Mr. Mayer’s material breach of the agreement or any other agreement between the Company or the Company Board and Mr. Mayer, which, if curable, remains uncured or continues after 30 days’ notice by the Company thereof; (c) the conviction of, or entry of a plea of guilty or nolo contendere to, (i) any crime constituting a felony in the jurisdiction in which committed, (ii) any crime involving moral turpitude (whether or not a felony), or (iii) any other criminal act involving embezzlement, misappropriation of money, or fraud (whether or not a felony); (d) reporting to work or working while using illegal drugs; or (e) Mr. Mayer’s material negligence or dereliction in the performance of, or failure to perform Mr. Mayer’s duties of employment with the Company, which remains uncured or continues after 30 days’ notice by the Company thereof; or (f) any willful conduct, action or behavior by Mr. Mayer that is materially damaging to the Company, whether to the business interests, finance or reputation; and

 

   

“good reason” means, subject to notice and cure rights, Mr. Mayer’s resignation following any of the following without his prior written approval: (i) a material diminution of Mr. Mayer’s titles including, but not limited to, the appointment of a co-Chief Executive Officer of the Company, Mr. Mayer becoming the chief executive officer of a division or subsidiary instead of the Chief Executive Officer of the Company, or Mr. Mayer no longer reporting directly to the TopCo board; (ii) a material diminution of Mr. Mayer’s duties, responsibilities, authorities or reporting relationship or obligations such that Mr. Mayer is no longer serving as the sole most senior executive managing the day-to-day operations of the Company’s business (iii) the failure of the TopCo board to nominate Mr. Mayer for election or reelection as a director of TopCo; (iv) a material reduction in Mr. Mayer’s base salary or target cash bonus (other than pursuant to the terms of the agreement); (v) a relocation of Mr. Mayer’s

 

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principal place of employment by more than 50 miles from the Company’s offices in Fairport, New York (other than a relocation to New York, New York); (vi) Mr. Mayer is not the Chief Executive Officer of the Company; or (vii) a material breach by the Company of the agreement or any other agreement between the Company or the TopCo board and Mr. Mayer.

Paul Battaglia

Pursuant to his employment terms, Mr. Battaglia is entitled to severance payments of up to one year’s base salary plus 50% of his annual target bonus, as well as continuation of medical benefits for up to one year.

Rollover Agreement

Concurrently with the execution and delivery of the merger agreement, TopCo entered into the rollover agreement with Mr. Mayer, as a Rollover Holder, pursuant to which he has committed to contribute, immediately prior to the consummation of the company merger, 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement. Mr. Mayer has also agreed not to transfer (other than to Parent) until the termination of the rollover agreement (if applicable) any of the options or shares of Company common stock that are subject to the rollover agreement.

In addition, the rollover agreement provides that at or prior to the rollover closing, Mr. Mayer will enter into a stockholders agreement with TopCo that will govern the rights and obligations of him and the other equity holders of TopCo following consummation of the mergers, including certain restrictions on transfers of the equity interests of TopCo and certain board designation rights (including the right of the Company’s chief executive officer to designate one member of TopCo’s board of directors), tag-along rights, drag-along rights, and liquidity rights with respect to the equity interests of TopCo.

Rollover Bonus Opportunity

In connection with the mergers and the rollover of his equity, Mr. Mayer entered into a rollover-bonus-opportunity letter agreement which provides for either a cash payment or the issuance of additional shares of TopCo common stock, in TopCo’s sole discretion, to Mr. Mayer, which amount is determined based on the percentage of equity Mr. Mayer elects to rollover, the payment of which will be made after 3 years following the closing of the mergers subject to continued employment and retention of the contributed equity for the 3-year term; provided, however, that the continued employment requirement is automatically waived if Mr. Mayer’s employment is terminated without cause or his employment terminates as a result of his death, disability or resignation for good reason. Mr. Mayer’s bonus opportunity will be between 0% and 5% of the value of the rollover shares (between zero and approximately $400,000), based on an initial 40% rollover.

Employment Agreement

In connection with the mergers, Mr. Mayer will enter into a new employment agreement to continue as the CEO of the Company, effective upon the effective time of the company merger. Mr. Mayer’s employment agreement will provide for (among other things) a base salary of $600,000 per annum, eligibility to receive a cash bonus with a target range for 2022 of between $3,000,000 to $3,500,000 and a portion of which is guaranteed based on the number of days in 2022 occurring prior to the closing of the mergers, and eligibility to participate in health, group insurance, welfare, pension, and other employee benefit plans, programs, and arrangements as are made generally available from time to time to other employees of the Company, subject to satisfaction of all applicable eligibility conditions of such plans. Mr. Mayer’s employment agreement will also provide that if Mr. Mayer’s employment is terminated by the post-closing Company without cause, or if Mr. Mayer resigns for good reason then subject to Mr. Mayer’s execution of a release of claims in favor of the Company and compliance with his post-termination obligations to the Company, Mr. Mayer will receive cash severance in the amount of $5 million

 

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payable over the two-year period following the termination date, plus 60% of the guaranteed portion of the cash bonus for 2022 if not yet paid, and accelerated vesting of all unvested equity awards granted to Mr. Mayer pursuant to the merger agreement. In addition, the employment agreement provides for up to 40% of each annual cash bonus award to be deferred and paid in the form of a vested award pursuant to the Company’s deferred incentive compensation program and/or one or more employer equity instruments.

Golden Parachute Compensation

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation of each of the Company’s three current named executive officers that is based on or otherwise relates to the mergers and that will or may become payable to the named executive officers at the company merger effective time or on a qualifying termination of employment on or following the company merger effective time. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the mergers-related compensation payable to the Company’s named executive officers.

The amounts in the following table are estimates based on multiple assumptions that may not actually occur, including assumptions described in this proxy statement, and do not include amounts that were vested as of the assumed closing date of the mergers as described below. In addition, certain amounts will vary depending on the actual date of closing of the mergers, which is presently expected to be in the third quarter of 2022. As a result, the actual amounts, if any, to be received by a named executive officer may differ in material respects from the amounts set forth below. In the footnotes to the table below, we refer to payments that are conditioned on the occurrence of both the mergers and the named executive officer’s qualifying termination of employment as being payable on a “double trigger” basis and payment or benefits that are conditioned only upon the occurrence of the mergers as being payable on a “single trigger” basis.

The potential payments in the table below are based on the following assumptions:

 

   

the closing date of the mergers is March 31, 2022, which is the estimated date of the completion of the mergers solely for purposes of this golden parachute compensation disclosure; and

 

   

the per share value of the Company’s common stock is $12.74, which is the average of the closing price of the Company’s common stock over the first five trading days following the announcement of the mergers.

 

Name

   Cash ($)(1)      Equity ($)(2)      Perquisites/
Benefits ($)
     Other      Total($)  

Marc O. Mayer

     5,400,000        2,081,703        —          —          7,481,703  

Chief Executive Officer

              

Ebrahim Busheri

     —          —          —          —          —    

Director of Investments

              

Paul Battaglia

     465,000        —          —          —          465,000  

Chief Financial Officer

              

 

(1)

Cash severance, and, with respect to Mr. Mayer, the continued payment of the rollover bonus opportunity, is payable only if the named executive officer is terminated without cause or resigns for good reason.

(2)

The amounts in this column represent the value of unvested equity awards held by Mr. Mayer. These amounts would vest on a double trigger basis.

Tax Receivables Agreement

In connection with the Company’s initial public offering, a tax receivable agreement (“TRA”) was entered into between the Company and the holders of membership interests of Group LLC, pursuant to which the Company is required to pay to such holders 85% of the applicable cash savings, if any, in U.S. federal, state, local and foreign

 

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income tax that the Company actually realizes, or is deemed to realize in certain circumstances, as a result of (i) any step-up in tax basis in Group LLC’s assets resulting from the Company’s purchase of Class A units of Group LLC or exchange of Class A units of Group LLC (for shares of Class A common stock or cash) and (ii) payments under the tax receivable agreement, including any additional step-up in tax basis in Group LLC’s assets as a result of such payments and any tax benefits related to imputed interest deemed to be paid by the Company as a result of such agreement.

Transaction Bonus

Mr. Goldberg receives quarterly compensation of $12,500 per quarter in his role as a consultant to the Company. On January 13, 2022, in recognition of the significant efforts and contributions that Mr. Goldberg had and would continue to render in connection with the evaluation of a potential strategic transaction, the Compensation Committee approved a one-time payment of $150,000 to Mr. Goldberg, such fees to be in addition to the regular fees paid pursuant to the consulting agreement between Mr. Goldberg and the Company.

Intent of the Executive Officers to Vote in Favor of the Company Merger

Our Section 16 officers (including Mr. Mayer, who is a member of the Company Board) have informed us that, as of the date of this proxy statement, they are required under the terms of support agreements that they entered into with Parent to vote all of the shares of Company common stock owned directly by them in favor of the merger agreement proposal and each of the other proposals listed in this proxy statement. As of [●], 2022, the record date for the special meeting, these officers directly owned, in the aggregate, [●] shares of Company common stock entitled to vote at the special meeting, or collectively approximately [●]% of the outstanding shares of Company common stock entitled to vote at the special meeting. Copies of the support agreements are attached as Annex B to the accompanying proxy statement.

The obligations of the Company supporting stockholders under the support agreements will automatically terminate without any further action required by any person upon the earliest to occur of (i) the closing of the transactions, (ii) the date on which the merger agreement is validly terminated in accordance with its terms, (iii) the completion of the Company stockholders meeting (regardless of whether the merger agreement is approved or not) and (iv) written notice of the termination of the support agreement by Parent to the Company supporting stockholders.

Material US Federal Income Tax Consequences of the Company Merger

The following discussion is a summary of material US federal income tax consequences of the company merger to US Holders (as defined below) of the shares of Company common stock. This summary is general in nature and does not discuss all aspects of US federal income taxation that may be relevant to a holder of shares of Company common stock in light of their particular circumstances. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury Regulations promulgated under the Code, judicial authority, published administrative positions of the Internal Revenue Service, which we refer to as the IRS, and other applicable authorities, all as in effect as of the date of this proxy statement, and all of which are subject to change or differing interpretations at any time, with possible retroactive effect. We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following discussion, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation. This discussion does not describe any tax consequences arising under the laws of any state, local or non-US jurisdiction, and does not consider any aspects of US federal tax law other than income taxation, nor does it address any aspects of the unearned income Medicare contribution tax. In addition, this discussion only applies to the shares of Company common stock that are held as a capital asset (generally, property held for investment) within the meaning of Section 1221 of the

 

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Code, and does not address tax consequences applicable to any holder of shares of Company common stock that may be subject to special treatment under US federal income tax law, including:

 

   

a bank or other financial institution;

 

   

a tax-exempt organization;

 

   

a retirement plan or other tax-deferred account;

 

   

an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity);

 

   

a person holding a direct or an indirect interest in Parent or merger subs;

 

   

an insurance company;

 

   

a mutual fund;

 

   

a regulated investment company or real estate investment trust;

 

   

a dealer or broker in commodities, stocks, securities or in currencies;

 

   

a dealer or trader in securities that elects mark-to-market treatment;

 

   

a controlled foreign corporation;

 

   

a passive foreign investment company;

 

   

a stockholder that owns, or has owned, actually or constructively, more than 5% of the shares of Company common stock;

 

   

a stockholder subject to the alternative minimum tax provisions of the Code;

 

   

a stockholder that received the shares of Company common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

   

a person that has a functional currency other than the US dollar;

 

   

a person that is required to report income no later than when such income is reported in an “applicable financial statement”;

 

   

a person that holds the shares of Company common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction;

 

   

a stockholder that is not exchanging its shares of Company common stock for cash pursuant to the company merger; and

 

   

certain former US citizens or long-term residents.

If a partnership (including any entity or arrangement treated as a partnership for US federal income tax purposes) holds the shares of Company common stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partner and the partnership. Any such partnership (including any entity or arrangement treated as a partnership for US federal income tax purposes), and any partners thereof, that hold the shares of Company common stock should consult their tax advisors regarding the tax consequences of exchanging the shares of Company common stock pursuant to the company merger. In addition, holders of shares of Company common stock who are not US Holders may be subject to different tax consequences than those described below, and are urged to consult their tax advisors regarding their tax treatment under US and non-US tax laws.

The following summary is for general informational purposes only and is not a substitute for careful tax planning and advice. Holders of shares of Company common stock are urged to consult their tax advisor

 

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with respect to the specific tax consequences to them of the company merger in light of their own particular circumstances, including US federal estate, gift and other non-income tax consequences, and tax consequences under state, local and non-US tax laws.

US Holders

The following is a summary of the material US federal income tax consequences of the company merger that will apply to US Holders. For purposes of this discussion, the term US Holder refers to a beneficial owner of the shares of Company common stock that is, for US federal income tax purposes:

 

   

an individual who is a citizen or resident in the United States;

 

   

a corporation (or any other entity or arrangement treated as a corporation for US federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

   

an estate, the income of which is subject to US federal income taxation regardless of its source; or

 

   

a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust, or (ii) the trust has validly elected to be treated as a “United States person” under applicable Treasury Regulations.

Exchange of Company common stock for Cash Pursuant to the Merger Agreement. The exchange of the Company common stock by a US Holder for cash in the company merger (or for cash upon exercise of appraisal rights) will generally be a taxable transaction for US federal income tax purposes. A US Holder will generally recognize gain or loss equal to the difference, if any, between the amount of cash received in the company merger (or cash received upon exercise of appraisal rights) and the holder’s adjusted tax basis in the Company common stock exchanged therefor. Gain or loss will generally be determined separately for each block of the shares of Company common stock (generally, the Company common stock acquired at the same cost in a single transaction) held by such US Holder. Such gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if such US Holder’s holding period for the Company common stock is more than one (1) year at the time of the exchange. Long-term capital gains recognized by a non-corporate US Holder are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to certain limitations.

Non-US Holders

For purposes of this discussion, a “Non-US Holder” is a beneficial owner of Company common stock that is neither a US Holder nor an entity or arrangement classified as a partnership for US federal income tax purposes.

Exchange of the Shares for Cash Pursuant to the Merger Agreement. A Non-US Holder generally will not be subject to US federal income tax on any gain realized on the receipt of cash in exchange for shares of Company common stock pursuant to the company merger (or for cash upon exercise of appraisal rights), unless:

 

   

the gain is effectively connected with the Non-US Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, such gain is attributable to a permanent establishment maintained by the Non-US Holder in the United States); or

 

   

the Non-US Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition of shares pursuant to the company merger, and certain other requirements are met.

Gain described in the first bullet point above generally will be subject to US federal income tax on a net income basis at generally applicable US federal income tax rates in the same manner as if such Non-US Holder were a US Holder. A Non-US Holder that is a corporation also may be subject to a branch profits tax at a rate of 30%, or

 

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lower rate specified in an applicable income tax treaty, on such effectively connected gain, as adjusted for certain items.

Gain described in the second bullet point above generally will be subject to US federal income tax at a rate of 30% (or such lower rate as may be specified under an applicable income tax treaty), which may be offset by US-source capital losses of the Non-US Holder (even though the individual is not considered a resident of the United States), provided the Non-US Holder has timely filed US federal income tax returns with respect to such losses.

Information Reporting and Backup Withholding Tax

Proceeds from the exchange of the shares pursuant to the company merger (or as a result of exercising appraisal rights) generally will be subject to information reporting. In addition, backup withholding tax at the applicable rate (currently 24%) generally will apply unless the applicable US Holder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed IRS Form W-9), or otherwise establishes an exemption from backup withholding tax. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding tax rules from a payment to a US Holder will be allowed as a credit against that holder’s US federal income tax liability, and may entitle the holder to a refund, provided, that, the required information is timely furnished to the IRS. Each US Holder should duly complete, sign and deliver to the exchange agent an appropriate IRS Form W-9 to provide the information and certification necessary to avoid backup withholding tax, unless an exemption applies and is established in a manner satisfactory to the exchange agent.

A Non-US Holder generally certifies its status as such by providing a properly completed and signed IRS Form W-8BEN or W-BEN-E (or other applicable IRS Form W-8). A Non-US Holder that does not provide such form generally will be presumed to be a US Holder, subject to backup withholding tax as described above.

Financing of the Mergers

The merger agreement does not contain any financing-related contingencies or financing conditions to consummation of the mergers. We anticipate that the total amount of funds necessary to consummate the mergers and related transactions, including payment of related fees and expenses, is anticipated to be approximately $6,4 million, which will be funded with the net proceeds of the equity financing and debt financing described below, along with cash on hand of the Company and its subsidiaries. This amount does not include funds needed to: (i) pay holders of Company common stock and holders of Group LLC units the amounts due under the merger agreement, (ii) make payments in respect of Company RSUs payable at closing of the mergers pursuant to the merger agreement and (iii) pay any fees and expenses of or payable by Parent, Corp Merger Sub or the Surviving Corporation at the closing of the mergers.

Parent and Corp Merger Sub have obtained committed financing consisting of (i) equity to be provided by East Asset Management, LLC pursuant to the terms of the Equity Commitment Letter and (ii) debt financing to be provided pursuant to the Debt Commitment Letter by the lenders party thereto. In connection with the merger agreement, Parent and Corp Merger Sub have delivered to the Company copies of the Commitment Letters. Notwithstanding anything in the merger agreement to the contrary, in no event will the receipt or availability of any funds or financing (including the financing contemplated by the Commitment Letters) by or to Parent or any of its affiliates or any other financing transaction be a condition to any of the obligations of Parent or Corp Merger Sub under the merger agreement.

Equity Financing

The Equity Commitment Letter provides that EAM will provide, upon the terms and subject to the conditions set forth in the Equity Commitment Letter, cash to Parent in an aggregate amount of up to $148,997,560, which is

 

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solely to be used by Parent for the purpose funding, to the extent necessary, the amounts payable by Parent at the closing. We refer to the equity financing described above as the “Equity Financing.” This equity commitment is payable only at the Closing upon satisfaction of the following conditions and only for the uses described above: (a) the satisfaction in full, or waiver by Parent, of each of the conditions to Parent’s obligations to consummate the transactions, as set forth in the merger agreement and (b) the substantially concurrent consummation of the Closing, provided that if the Company seeks specific performance to effect the Closing in accordance with the merger agreement and Parent is ordered by a court of competent jurisdiction (in a final, non-appealable adjudication) to specifically perform its obligations to effect the Closing, such conditions are to be deemed satisfied.

The Equity Commitment Letter will terminate as of the earliest of: (a) the closing of the transactions, and (b) the date on which the merger agreement is validly terminated (unless the Company has previously commenced an action pursuant to the Equity Commitment Letter, in which case only after the final, non-appealable resolution of such action and satisfaction by EAM of any obligations then determined or agreed by EAM to be owed), (c) the Company receiving payment of the full amount of the Parent Termination Fee (plus any other obligations due from EAM under the Limited Guarantee), and (d) the commencement of other specified claims by the Company to enforce the transaction.

While EAM can fulfill its obligations under the Equity Commitment Letter on its own, Callodine is in discussions with additional third party investors to support cash contributions to Parent. If such third party investors join, the cash amount invested by EAM under the Equity Commitment Letter would be reduced accordingly.

Debt Financing

The Debt Commitment Letter provides that the lenders party thereto will provide, upon the terms and subject to the conditions set forth in the Debt Commitment Letter, an aggregate principal amount up to $120 million in debt financing (not all of which is expected to be drawn at the closing of the mergers), consisting of the following:

 

   

$100 million senior secured term loan A facility; and

 

   

$20 million senior secured revolving credit facility

We refer to the Debt Financing described above as the “Debt Financing.” The proceeds of the Debt Financing will be used by Parent and Corp Merger Sub (i) to effect the mergers and related transactions on the closing date, (ii) for working capital, capital expenditures and other general corporate purposes and (iii) to pay fees and expenses related to the mergers and related transactions.

The obligations of the lenders party to the Debt Commitment Letter to provide the Debt Financing under the Debt Commitment Letter are subject to a number of customary conditions, including, but not limited to (as applicable):

 

   

the absence of a Material Adverse Effect (as defined in the merger agreement) since March 31, 2022;

 

   

the consummation of the mergers in accordance with the merger agreement as in effect on March 31, 2022 (without giving effect to any waiver, modification or consent of any of the provisions thereof that would be materially adverse to the interests of the lenders and the Commitment Parties (as defined in the Debt Commitment Letter) (as reasonably determined by the Administrative Agent), unless approved by the Administrative Agent);

 

   

subject to certain limitations and exceptions, the accuracy in all material respects as of the closing of the mergers of certain specified representations and warranties in the merger agreement and certain specified representations and warranties in the loan documents; and

 

   

the Equity Financing has occurred.

 

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The term loans shall amortize in equal quarterly amounts equal to 2.5% of the original principal amount of the term loan facility, such percentage reducing to 1.25% per quarter after the fifth full fiscal quarter ended following the closing so long as the total leverage ratio is less than 2.00:1.00. The revolving credit facility will not amortize. All loans will bear interest based on the secured overnight financing rate for interest period tenors to be selected by Parent and the Company, plus a margin of 375 basis points, adjusting up or down on a quarterly basis based on achievement of certain total leverage ratios.

Parent intends to pay a commitment fee of 25 basis points annually on the available unused funds of the revolving credit facility, adjusting up or down on a quarterly basis based on achievement of certain total leverage ratios. Commitment fees will be payable quarterly in arrears.

The Administrative Agent shall, for the benefit of the lenders, obtain a perfected first-priority lien on substantially all personal property of, including equity interests held by, Parent, Corp Merger Sub and the Surviving Company, with customary exclusions, including property that is currently owned or may be acquired in the future.

Currently, neither Parent nor Corp Merger Sub has any alternative financing arrangements or alternative financing plans for the acquisition of the Company. As of the date hereof, the documentation governing the Debt Financing contemplated by the Debt Commitment Letter has not been finalized and, accordingly, the actual terms of the Debt Financing may differ from those described in this proxy statement.

Limited Guarantee

Concurrently with the execution and delivery of the merger agreement, EAM entered into the Limited Guarantee in favor of the Company, pursuant to which EAM guaranteed Parent’s obligation to pay the Company the Parent Termination Fee (up to a maximum of $15,070,000) and certain expense reimbursement costs.

The Limited Guarantee is a guarantee of payment only and not of collection or performance, but the Company is not required to proceed against Parent or any merger sub or any other person before proceeding against EAM as the Guarantor. The Company may extend the time of payment and may also enter into any agreement with Parent for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms of the merger agreement or of any other agreement among or between the Company, on the one hand, and Parent and/or the merger subs, on the other hand, without in any way impairing or affecting EAM’s obligations or the validity or enforceability of the Limited Guarantee, but no action will increase EAM’s maximum obligation amount of $15,070,000 (plus expense reimbursement costs, if applicable).

The Limited Guarantee will terminate as of the earliest of: (a) the closing of the transactions, and (b) the date that is six (6) months after the date on which the merger agreement is validly terminated, unless prior to such date the Company has notified EAM of non-payment or commenced a legal proceeding against EAM alleging non-payment, in which case, the Limited Guarantee will terminate upon the earlier of (y) the payment of a total of $15,070,000 (plus expense reimbursement costs, if applicable) to the Company and (z) the final, non-appealable resolution of such action and satisfaction by EAM of any obligations then determined or agreed by EAM to be owed. However, if the Company asserts a claim other than as permitted under the Limited Guarantee, including a claim against certain specified non-recourse parties or a claim in excess of the guaranteed amounts, the Limited Guarantee will immediately terminate and become null and void and EAM and its affiliates will not have any liability to the Company or its affiliates under it.

 

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Fees and Expenses

The estimated fees and expenses incurred or expected to be incurred by the Company in connection with the mergers are as follows:

 

Description    Amount  

Financial advisory fees and expenses

   $ 3,750,000  

Legal, accounting and other professional fees and expenses

   $ 2,500,000  

SEC filing fees

   $ 23,376.41  

Printing, proxy solicitation and mailing costs

   $ 35,000.00  

Miscellaneous

   $ 91,623.59  
  

 

 

 

Total

   $ 6,400,000.00  

Appraisal Rights

If the company merger is consummated and certain conditions are met, stockholders who continuously hold shares of Company common stock through the company merger effective time, who do not vote such shares of Company common stock in favor of the adoption of the merger agreement, who properly demand appraisal of such shares of Company common stock and who do not effectively withdraw their demands or otherwise lose their rights to seek appraisal, will be entitled to an appraisal of such shares of Company common stock in connection with the company merger under Section 262 of the DGCL. This means that holders of shares of Company common stock who perfect their appraisal rights, who do not thereafter effectively withdraw their demand for appraisal and who follow the procedures in the manner prescribed by Section 262 of the DGCL, will be entitled to have such shares of Company common stock appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of such shares of Company common stock, exclusive of any elements of value arising from the accomplishment or expectation of the company merger, as determined by the Delaware Court of Chancery, together with interest to be paid on the amount determined to be fair value, if any (or in certain circumstances on the difference between the amount determined to be the fair value and the amount paid by the surviving corporation in the company merger to each stockholder entitled to appraisal prior to the entry of judgment in any appraisal proceeding). Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares of Company common stock are encouraged to review Section 262 of the DGCL carefully and to seek the advice of legal counsel with respect to the exercise of appraisal rights.

Stockholders considering seeking appraisal should be aware that the fair value of their shares of Company common stock as determined pursuant to Section 262 of the DGCL, could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares of Company common stock.

To exercise your appraisal rights, you must: (i) submit a written demand for appraisal to the Company before the vote is taken on the adoption of the merger agreement; (ii) not submit a proxy with respect to, or otherwise vote, the shares of Company common stock for which you seek appraisal in favor of the proposal to adopt the merger agreement; (iii) continue to hold such shares of Company common stock of record on and from the date of the making of the demand through the company merger effective time; and (iv) strictly comply with all other procedures for exercising appraisal rights under Section 262 of the DGCL. Your failure to follow exactly the procedures specified under Section 262 of the DGCL will result in the loss of your appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of the shares of Company common stock, unless certain stock ownership conditions are satisfied by the stockholders seeking appraisal. The DGCL requirements for exercising appraisal rights are described in further detail in the section of this proxy statement captioned “Appraisal Rights” which is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights. A copy of Section 262 of the DGCL is reproduced and attached as Annex E to this proxy statement and incorporated by reference in this proxy statement in its entirety. If you hold

 

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your shares of Company common stock through a broker, bank or other nominee, and you wish to exercise appraisal rights, you should consult with such broker, bank or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such broker, bank or other nominee.

Support Agreement

Concurrently with the execution of the merger agreement, Parent and each of Mr. Mayer and the Company’s other Section 16 officers (Nicole Kingsley-Brunner, Ebrahim Busheri, Christopher Briley, Aaron McGreevy, Stacey Green, Scott Morabito, Sarah Turner and Paul Battaglia) (the “Company supporting stockholders”), who each hold Company common stock and collectively beneficially own approximately 10% of the voting power of the Company’s outstanding capital stock, separately entered into support agreements with Parent (together, the “Support Agreements”).

Pursuant to the Support Agreements, each of the Company supporting stockholders have agreed, subject to certain conditions, to vote, or cause to be voted, all shares of Company common stock beneficially owned by them (as of the record date of the Company stockholders meeting held to obtain Company stockholder approval): (1) in favor of (i) the company merger, (ii) each of the other actions contemplated by the merger agreement and (iii) any action in furtherance of any of the foregoing, (2) against approval of any other acquisition proposal or other proposal made in opposition to or in competition with the company merger or the merger agreement and against any action or agreement that would result in a breach of any representation, warranty, covenant or obligation of the Company in the merger agreement, and (3) against any of the following actions (other than the company merger): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or any of its subsidiaries; (ii) any sale, lease, sublease, license, sublicense or transfer of a material portion of the properties, rights or other assets of the Company or any of its subsidiaries; (iii) any reorganization, restructuring, recapitalization, dissolution or liquidation of the Company or any of its subsidiaries; and (iv) any other action which is intended or would reasonably be expected to impede, interfere with, delay, postpone or adversely affect the company merger.

The support agreement also restricts the supporting stockholders from transferring any shares of Company common stock beneficially owned by them. The support agreement also restricts, after the no-shop period start date, the Company supporting stockholders from entering into discussions or solicitations with respect to alternate transactions, but does not restrict the Company supporting stockholders, in any such stockholder’s capacity as a director, officer or employee of the Company and/or its subsidiaries, from participating in discussions and negotiations with, and furnishing information and data to, any person with whom the Company Board has determined to engage in discussions and negotiations, and with whom the Company Board is then engaging in discussions and negotiations, in each case pursuant to and in compliance with the merger agreement.

Each support agreement terminates upon the earliest to occur of: (i) the closing of the transactions, (ii) the date on which the merger agreement is validly terminated, time in accordance with its terms, (iii) the completion of the special meeting (including any adjournment or postponement thereof) (regardless of whether the merger agreement is approved or not) and (iv) written notice of the termination of the support agreement by Parent to the applicable Company supporting stockholder.

The foregoing description of the Support Agreements does not purport to be complete and is qualified in its entirety by reference to the complete text of the Support Agreements, copies of which are attached as Annex B to this proxy statement and which are incorporated by reference in this proxy statement in their entirety.

Rollover Agreement

Concurrently with the execution and delivery of the merger agreement, TopCo entered into the rollover agreement with Mr. Mayer, as a Rollover Holder, pursuant to which he has committed to contribute, immediately

 

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prior to the consummation of the company merger, 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of the rollover agreement. Mr. Mayer has also agreed not to transfer (other than to Parent) until the termination of the rollover agreement (if applicable) any of the options or shares of Company common stock that are subject to the rollover agreement.

In addition, the rollover agreement provides that at or prior to the rollover closing, Mr. Mayer will enter into a stockholders agreement with TopCo that will govern the rights and obligations of him and the other equity holders of TopCo following consummation of the mergers, including certain restrictions on transfers of the equity interests of TopCo and certain board designation rights (including the right of the Company’s chief executive officer to designate one member of TopCo’s board of directors), tag-along rights, drag-along rights, and liquidity rights with respect to the equity interests of TopCo.

In connection with the rollover agreement, the Rollover Holder also entered into a rollover “bonus” opportunity letter agreement which provides for either a cash payment or the issuance of additional shares of TopCo common stock, in TopCo’s sole discretion, to Mr. Mayer. The amount is determined based on the percentage of equity that he elects to rollover, and any payment will be made after 3 years subject to continued employment and retention of the contributed equity for the term. Mr. Mayer’s bonus opportunity will be between 0% and 5% of the value of the rollover shares (between $0 and approximately $400,000), based on an initial 40% rollover. See “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers.”

Prior to the closing of the mergers, Parent and certain additional members of management may negotiate and enter into contracts providing for a rollover of all or a portion of such members’ shares of Company common stock through their contribution of such shares to TopCo in exchange for equity interests in TopCo. Any additional members of management that become Rollover Holders like Mr. Mayer will also enter into a rollover “bonus” opportunity letter agreement.

The foregoing description of the rollover agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the rollover agreement, a copy of which is attached as Annex C to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.

Effective Time of the Mergers

The merger agreement provides that the closing of the mergers, which we refer to as the “closing,” will take place at 8:00 a.m. Eastern Time on the second business day following the satisfaction or, to the extent permitted by applicable law, waiver of the conditions (described in the section entitled “The Merger Agreement—Conditions to Completion of the Mergers”) to the closing, (other than those conditions that by their terms are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions), unless another date or time is agreed to in writing by Parent and the Company.

Assuming receipt of required regulatory approvals and timely satisfaction of other closing conditions, including the approval by our stockholders of the merger agreement proposal, we currently expect the closing of the mergers to occur in the third quarter of 2022.

The company merger effective time will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later time as the Company and Parent may agree and specify in the certificate of merger).

Payment of Merger Consideration

At the company merger effective time, each share of Company common stock outstanding immediately prior to the company merger effective time (but excluding any rollover shares, cancelled shares and dissenting shares)

 

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will be converted into the right to receive the merger consideration, in accordance with and subject to the terms and conditions set forth in the merger agreement, whereupon all such shares will cease to be outstanding and will cease to exist, and the holders of such shares will cease to have any rights with respect thereto, other than the right to receive the merger consideration.

At or promptly following the company merger effective time on the closing date, Parent will deposit, or cause to be deposited, with the paying agent, cash in an amount sufficient to pay the aggregate merger consideration required to be paid by the paying agent in accordance with the merger agreement.

Promptly following the company merger effective time, and in any event not later than the third business day thereafter, the Surviving Corporation shall cause the paying agent to mail to each holder of record of an outstanding certificate or outstanding certificates that immediately prior to the company merger effective time represented outstanding shares of Company common stock that were converted into the right to receive the merger consideration (i) a letter of transmittal (which specifies that delivery will be effected, and risk of loss and title will pass, only upon proper delivery of the Certificates (as defined in the merger agreement) (or customary and effective affidavits of loss in lieu thereof) or Book-Entry Shares (as defined in the merger agreement), as applicable, to the paying agent) in such form as Parent and the Company may reasonably agree, for use in effecting delivery of shares to the paying agent and (ii) instructions for use in effecting the surrender of Certificates (or customary and effective affidavits of loss in lieu thereof) in exchange for the merger consideration in such form as Parent and the Company may reasonably agree.

Upon the surrender of a Certificate together with such letter of transmittal duly completed and validly executed in accordance with the instructions thereto, the holder of such Certificate will be entitled to receive in exchange therefor, and Parent will cause the paying agent to pay in exchange therefor, as promptly as practicable (but, in any event, within three business days), the merger consideration pursuant to the provisions of the merger agreement, and the Certificates surrendered will forthwith be cancelled.

Promptly after the company merger effective time and in any event not later than the third business day following the company merger effective time, the paying agent shall issue and deliver to each holder of uncertificated shares represented by book entry (“Book-Entry Shares”) a letter of transmittal in customary form of the paying agent. Upon delivery to the paying agent of such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holder of such Book-Entry Shares shall be entitled to receive in exchange therefor, by a check or wire transfer, the amount of cash that such holder is entitled to receive pursuant to the merger agreement, without such holder being required to deliver a Certificate.

No interest will be paid or accrued for the benefit of holders of the Certificates and Book-Entry Shares on the merger consideration payable upon the surrender of such Certificates and Book-Entry Shares. Until so surrendered, outstanding Certificates and Book-Entry Shares will be deemed from and after the company merger effective time to evidence only the right to receive the merger consideration, without interest.

Regulatory Approvals Required for the Mergers

FINRA Approval

The Company must file an application with the FINRA (the “FINRA application”) in accordance with FINRA Rule 1017 regarding the change of ownership of more than twenty-five percent (25%) of the equity of the Company’s subsidiary, Manning & Napier Investor Services, Inc., registered with the SEC as a broker-dealers and that is a member of FINRA as a result of the transaction contemplated by the merger agreement and make notice filings with the states in which Manning & Napier Investor Services, Inc. is registered and doing business.

On June 1, 2022, the Company and Callodine jointly filed an application with FINRA application with respect to the transactions contemplated by the merger agreement, including the mergers.

 

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New Hampshire Banking Department Approval

The Company must file a change of control application with the New Hampshire Banking Department pursuant to Title 35, Chapter 383-C of the New Hampshire Revised Statutes Annotated regarding the change of control of the Company’s subsidiary Exeter Trust Company.

On May 31, 2022, Exeter Trust Company filed its change of control application with the New Hampshire Banking Department.

HSR Approval

Under the merger agreement, the mergers cannot be consummated until the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), has expired or been terminated. On April 14, 2022, the parties filed the required notification and report forms under the HSR Act with respect to the mergers, commencing the initial 30 calendar-day waiting period. This HSR Act waiting period expired on May 16, 2022.

For a description of the parties’ respective obligations under the merger agreement with respect to regulatory approvals, see the section entitled The Merger Agreement—Further Actions; Efforts.

Provisions for Unaffiliated Stockholders

No provision has been made to grant the Company’s stockholders, other than Parent or its affiliates, access to the corporate files of the Company or to any other party to the mergers or the right to obtain counsel or appraisal services at the expense of the Company or any other such party.

 

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THE MERGER AGREEMENT

The following discussion sets forth the principal terms of the Agreement and Plan of Merger, which is referred to as the merger agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated by reference herein. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not by this discussion, which is summary by nature. This discussion is not complete and is qualified in its entirety by reference to the complete text of the merger agreement. You are urged to read the merger agreement carefully in its entirety, as well as this proxy statement, before making any decisions regarding the merger.

The Mergers

Upon the terms and conditions of the merger agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), at the company merger effective time, Corp Merger Sub will be merged with and into the Company (the “company merger”). Following the company merger, the separate corporate existence of Corp Merger Sub will cease, and the Company will continue as the surviving corporation as a wholly-owned subsidiary of Parent.

Upon the terms and conditions of the merger agreement, in accordance with the Delaware Limited Liability Company Act, and immediately following the company merger effective time, at the LLC merger effective time, LLC Merger Sub will be merged with and into Group LLC (the “LLC merger” and together with the company merger, the “mergers”). Following the LLC Merger, the separate corporate existence of LLC Merger Sub will cease, and Group LLC will continue as the surviving company as a wholly-owned subsidiary of the Company.

Both mergers must occur in the sequence set forth above on the closing date, or neither merger will be required to be consummated.

Closing and Effective Time of the Mergers

The closing of the mergers will occur at 8:00 a.m., Eastern Time, on the second business day following the satisfaction or waiver, to the extent permitted by applicable law, of all of the conditions described under “The Merger Agreement—Conditions to Completion of the Mergers” (other than those conditions that by their terms are to be satisfied at the closing, but subject to the satisfaction or waiver, to the extent permitted by applicable law, of such conditions), or at such other date or time as may be agreed to in writing by Parent and the Company. The date on which the closing actually occurs is referred to in this proxy statement as the “closing date.” The mergers will become effective at such time as the parties file the applicable certificate of merger with the Secretary of State of the State of Delaware (or at such later time as Parent and the Company may agree), it being understood and agreed that the parties shall cause the LLC merger to be effective immediately after the company merger is effective.

Directors and Officers

At the company merger effective time, the directors of Corp Merger Sub immediately prior to the company merger effective time will be the directors of the Surviving Corporation until the earlier of their death, resignation or removal or until their respective successors are duly elected and qualified.

At the company merger effective time, the officers of the Company immediately prior to the company merger effective time will be the officers of the Surviving Corporation, in each case until the earlier of their death, resignation or removal or until their respective successors are duly elected and qualified.

At the LLC merger effective time, the officers of Group LLC immediately prior to the LLC merger effective time shall become of the officers of the surviving company (the “Surviving Company”) until the earlier of their resignation or removal or until their respective successor are duly elected and qualified.

 

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Consideration to Be Received in the Mergers

Common Stock. At the company merger effective time, each share of Class A common stock (“Class A Stock”) and Class B common stock (“Class B Stock” and together with the Class A Stock, the “Company common stock”) issued and outstanding immediately prior to the company merger effective time (other than (i) shares of Company common stock owned, directly or indirectly, by Parent, the merger subs or any wholly-owned subsidiary of the Company immediately prior to the company merger effective time (collectively, the “excluded shares”), (ii) shares of Company common stock for which the holder, who is entitled to demand, properly and timely demands, dissenters’ rights in the manner required under Section 262 of the DGCL (the “dissenting shares”); and (iii) any Class A Stock held by Rollover Holders) will be converted automatically into and represent the right to receive $12.85 in cash, without interest, less any applicable withholding taxes (the “merger consideration”). As of the company merger effective time, all shares of Company common stock will no longer be outstanding and will automatically be canceled and cease to exist, and will only represent the right to receive the merger consideration, to be issued and/or paid without interest.

Excluded Shares. Each share of Company common stock held in the treasury of the Company or owned, directly, or indirectly, by Parent or its affiliates (including TopCo, and including the rollover shares), Corp Merger Sub, LLC Merger Sub or any wholly-owned subsidiary of the Company immediately prior to the Company merger effective time (in each case, other than any such shares held on behalf of clients) will automatically be canceled and will cease to exist, and no consideration will be delivered in exchange therefor. The Company currently has no shares of Class B common stock outstanding.

Dissenting Shares. A holder of common stock may demand dissenters’ rights available under Section 262 of the DGCL, which is included with this proxy statement as Annex E. Dissenting Shares shall be treated in accordance with Section 262 of the DGCL. Shares of Company common stock issued and outstanding immediately prior to the Company merger effective time that are held by any holder of dissenting shares shall not be converted into the right to receive the merger consideration, unless and until such holder has failed to perfect, or withdrawn or lost, such holder’s right to appraisal under the DGCL. If any such holder fails to perfect or withdraws or loses any such right of appraisal, each such share of such holder shall thereupon be converted into and become exchangeable only for the right to receive, as of the later of the Company merger effective time and the time that such right to appraisal has been lost, withdrawn or expired, the merger consideration.

Group LLC Units. Each Group LLC Unit issued and outstanding immediately prior to the LLC merger effective time that is held by the Company or any of its subsidiaries will no longer be outstanding and will automatically be retired and will cease to exist, and no payment will be made with respect thereto. Each Group LLC Unit issued and outstanding immediately prior to the LLC merger effective time that is not held by the Company or any of its subsidiaries will automatically be converted into the right to receive an amount in cash equal to $12.85.

Treatment of Company Options

At the company merger effective time, each option to purchase shares of Company common stock under the Company’s 2011 Equity Compensation Plan, other than such options that are contributed to TopCo in exchange for options to purchase TopCo common stock, shall be cancelled for no consideration.

Treatment of Company RSUs

In connection with the completion of the mergers and subject to the terms of the merger agreement, at the company merger effective time, each Company RSU that is outstanding immediately prior to the company merger effective time (whether vested or unvested) will be canceled in exchange for the right to receive a restricted stock unit award (a “TopCo RSU”) with respect to a number of shares of TopCo common stock that is equal to the number of shares of Company common stock that were subject to such cancelled Company RSU. Except as otherwise agreed between TopCo and the holder of a replaced Company RSU, the vesting and all other

 

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terms and conditions that applied to any such replaced Company RSU shall apply to the TopCo RSU; provided, that such replacement TopCo RSU shall be settled upon vesting in a combination of cash and/or shares of TopCo common stock (with the mix of cash and shares determined by Parent in its sole discretion) valued in the aggregate at (x) the number of shares to TopCo common stock underlying such TopCo RSU multiplied by (y) the merger consideration, with shares of TopCo common stock valued for such purpose at the then-prevailing book value per share of TopCo.

Payment for the Common Stock

Prior to the company merger effective time, Parent will designate a bank or trust company that is approved by the Company to act as agent for the stockholders of the Company in connection with the company merger and the holders of Group LLC Units in connection with the LLC Merger (the “paying agent”) to receive the merger consideration the stockholders will become entitled to under the merger agreement and the LLC merger consideration the holders of Group LLC Units will become entitled to under the merger agreement. At or promptly following the company merger effective time on the closing date, Parent will deposit cash with the paying agent in an amount sufficient to pay the aggregate merger consideration (the “payment fund”).

If your shares of common stock are held in “street name” in an account at a broker, in nominee name or otherwise, shortly after the effective time, you will receive instructions from your broker or other nominee as to how to effect the surrender of such shares in exchange for the merger consideration.

If you are a holder of record of common stock, you will not be entitled to receive the merger consideration until you deliver a duly completed and executed letter of transmittal to the paying agent. If your shares are certificated, you must also surrender your stock certificates to the paying agent.

Promptly after the company merger effective time, the Surviving Corporation will cause the paying agent to mail to (x) each holder of record of an outstanding certificate or outstanding certificates (“certificates”) that immediately prior to the company merger effective time represented outstanding shares of Company common stock that were converted into the right to receive the merger consideration and (y) each holder of the LLC Certificates that immediately prior to the LLC merger effective time represented outstanding Group LLC Units that were converted into the right to receive LLC Merger Consideration, (i) a form of letter of transmittal and (ii) instructions for use in effecting the surrender of such certificates or LLC Certificates in exchange for the merger consideration. Upon surrender of a certificate to the paying agent with a duly completed and validly executed letter of transmittal, the holder of such certificate will be entitled to receive the merger consideration in exchange for each share of Company common stock or Group LLC Unit formerly represented by such certificate, and the surrendered certificate will be canceled.

Promptly after the company merger effective time, the paying agent will issue and deliver to each holder of uncertificated shares represented by book entry (“book-entry shares”) and book entry Group LLC Units (“book-entry units”) a check or wire transfer for the merger consideration the holder is entitled to receive in exchange for such book-entry shares or book-entry units, and the book-entry shares and book-entry units will then be canceled.

No interest will be paid or accrued for the benefit of holders of certificates or book-entry shares or book-entry units.

If the merger consideration is to be paid to someone other than the person in whose name the surrendered certificate representing a book-entry share or book-entry unit is registered, such certificate must be properly endorsed or otherwise in proper form for transfer or such book-entry share or book-entry unit must be properly transferred, and all applicable transfer or other taxes required by the payment of the merger consideration must be paid by the person requesting payment.

 

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Until surrendered in the manner described above, each such certificate, book-entry share or book-entry unit will represent only the right to receive the merger consideration, without interest.

With respect to shares of Company common stock held by The Depository Trust Company (“DTC”), the paying agent will transmit to DTC or its nominees an amount in cash equal to the number of shares of Company common stock held of record by DTC or such nominee immediately prior to the company merger effective time multiplied by the merger consideration

All cash paid upon the surrender of certificates or book-entry share in accordance with the above will be deemed to have been paid in full satisfaction of all rights pertaining to the shares formerly represented by such certificates for book-entry shares or book-entry units.

At the company merger effective time, the stock transfer books of the Company will be closed and there will be no further registration of transfers of the shares of Company common stock that were outstanding prior to the company merger effective time. If, after the company merger effective time, certificates are presented to the Surviving Corporation or the paying agent for transfer or transfer is sought for book-entry shares, such certificates or book-entry shares will be canceled and exchanged in accordance with the procedures described above, subject to applicable law in the case of dissenting shares.

At the LLC merger effective time, the unit transfer books of Group LLC will be closed and there will be no further registration of transfers of the Group LLC Units that were outstanding prior to the company merger effective time. If, after the LLC merger effective time, certificates are presented to the Surviving Company or the paying agent for transfer or transfer is sought for book-entry shares, such certificates or book-entry units will be canceled and exchanged in accordance with the procedures described above.

After 12 months following the effective time, the Surviving Corporation will be entitled to require the paying agent to deliver to Parent or the Surviving Corporation, as directed by Parent, any portion of the payment fund that has not been disbursed to stockholders and holders of Group LLC Units. Such holders may look to Parent and the Surviving Corporation only as general creditors with respect to the payment of the merger consideration (subject to abandoned property, escheat or other similar laws).

Lost, Stolen or Destroyed Certificates

If a certificate has been lost, stolen or destroyed, the paying agent may still deliver merger consideration to the holder claiming such certificate to be lost, stolen or destroyed, if such holder complies with the replacement requirements established by the paying agent, including, if necessary, the posting by such holder of a bond in a customary amount as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such certificate.

Representations and Warranties

The merger agreement contains representations and warranties made by the parties to each other. The assertions embodied in those representations and warranties were made solely for purposes of the merger agreement (and solely for the benefit of the parties thereto), were not made to stockholders of the Company, were made only as of specific dates and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the merger agreement. The assertions embodied in the Company’s representations and warranties are qualified by information contained in a confidential disclosure letter that the Company provided to Parent and the merger subs in connection with their entry into the merger agreement (the “disclosure letter”), were made for the purpose of allocating contractual risk between the parties instead of establishing matters of fact and may be subject to standards of materiality applicable to the parties to the merger agreement that differ from those applicable to the Company’s investors or security holders. None of the representations and warranties of the parties in the merger agreement will survive the company merger effective

 

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time. Additionally, certain of the assertions embodied in the Company’s representations and warranties are qualified by certain information disclosed in documents publicly filed by the Company with the SEC after January 1, 2019 through the business day prior to the execution of the merger agreement. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be reflected in the parties’ public disclosures. For the foregoing reasons, you should not rely on the representations and warranties contained in the merger agreement as statements of fact. This description of the representations and warranties is included to provide the Company stockholders only with information regarding the terms of the merger agreement. The representations and warranties in the merger agreement and the description of them in this proxy statement should be read in conjunction with the other information contained in the reports, statements and filings the parties publicly file with the SEC. See the section entitled “Where You Can Find More Information.” 

In the merger agreement, the Company, Parent and the merger subs made a number of representations and warranties to each other. The parties each made representations and warranties relating to, among other things:

 

   

due organization, valid existence, good standing, qualification, and corporate power to carry on their businesses as conducted;

 

   

compliance with their organizational documents;

 

   

corporate power and authority to execute, deliver and perform such party’s obligations under the merger agreement and, subject to the receipt of the requisite stockholder approval, to consummate the transactions contemplated thereby;

 

   

the absence of any conflict with or violation of such party’s organizational documents, contracts or applicable laws, rules or regulations as a result of entering into the merger agreement, entering into related agreements and consummating the merger;

 

   

the absence of consent, approval, or authorization of, action by, filing with or notice to governmental entities, subject to certain exceptions, including this proxy statement, such filings and reports as may be required under the federal securities laws or state securities, takeover and “blue sky” laws, the filing of the articles of merger with the Secretary of State of the State of Washington and any required NYSE filings or approvals;

 

   

this proxy statement, the 13E-3 Transaction Statement and the accuracy of information contained herein and therein;

 

   

the absence of undisclosed brokers’ and financial advisors’ fees related to the merger; and

 

   

acknowledging the absence of other representations and warranties from the other party outside of the representations and warranties contained in the merger agreement and in any certificate delivered pursuant to the merger agreement.

In addition to the foregoing, the merger agreement contains representations and warranties made by the Company to Parent and the merger subs, including regarding:

 

   

the Company’s capitalization, equity awards, capital structure and subsidiaries;

 

   

the stockholder approvals required to consummate the merger and the recommendation of the Company Board in favor of the mergers;

 

   

the absence of consents and approvals related to the merger and conflicts;

 

   

documents filed by the Company with the SEC since January 1, 2019 and the Company’s financial statements, disclosure controls and internal controls over financial reporting;

 

   

the absence of undisclosed liabilities;

 

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the absence, since January 1, 2022 through March 31, 2022, of (i) any failure to conduct the business of the Company or its subsidiaries, in all material respects, in the ordinary course, and (ii) any change, development, event or circumstance that has or would reasonably be expected to have a material adverse effect (as defined in the merger agreement) on the Company;

 

   

litigation and other legal proceedings;

 

   

compliance with applicable laws and possession of necessary permits, licenses, exemptions, authorizations, franchises, registrations, consents and approvals of any governmental entity;

 

   

employment, benefits and labor matters;

 

   

compliance with environmental laws and regulations and other environmental matters;

 

   

tax matters;

 

   

compliance matters related to (1) the Company’s registered investment adviser businesses and subsidiaries and (2) the Company’s broker-dealer businesses and subsidiaries;

 

   

(1) clients of the Company’s registered investment adviser business, (2) the legally compliant nature of each investment advisory agreement pursuant to which the applicable Company subsidiary renders such investment advice to clients and (3) clients of the Company’s wealth management business;

 

   

disclosure of, and matters with respect to, certain material contracts of the Company;

 

   

insurance matters;

 

   

matters related to property, leases and assets;

 

   

intellectual property matters and matters related to privacy and data security;

 

   

the inapplicability of certain state takeover statutes to the merger;

 

   

affiliate transactions; and

 

   

receipt by the Company of a fairness opinion from PJT Partners LP.

In addition, the merger agreement contains representations and warranties made by Parent and merger subs to the Company regarding Parent’s organization and authority, the absence of consents and approvals related to the merger and conflicts, litigation matters, the equity and debt commitments of the Parent obtained in order to finance the mergers, and the absence of broker’s fees and Parent’s and the merger subs’ access to, and investigation of, certain confidential information of the Company.

A “material adverse effect” is defined as any material adverse effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries, taken as a whole.

The definition of “material adverse effect” immediately above excludes any change, effect, event or occurrence arising out of, attributable to or resulting from, alone or in combination:

 

   

any changes in general economic or business conditions or in the financial, debt, banking, capital, credit or securities markets, or in interest or exchange rates, in each case, in the United States or elsewhere in the world;

 

   

any changes or developments generally affecting any of the industries in which the Company or its subsidiaries operate;

 

   

any actions required under the merger agreement to obtain any approval or authorization under applicable antitrust or competition laws for the consummation of the mergers or any of the other transactions contemplated hereby;

 

   

any change in the price or trading volume of the Company’s stock, in and of itself;

 

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any failure by the Company to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself;

 

   

political, geopolitical, social or regulatory conditions, including any outbreak, continuation or escalation of any military conflict, declared or undeclared war, armed hostilities, civil unrest, public demonstrations or acts of foreign or domestic terrorism or sabotage (including hacking, ransomware or any other electronic attack), or any escalation or worsening of any such conditions;

 

   

any natural or manmade disasters or calamities, weather conditions including hurricanes, floods, tornados, tsunamis, earthquakes and wild fires, cyber outages, or other force majeure events, or any escalation or worsening of such conditions;

 

   

any epidemic, pandemic or outbreak of disease (including, for the avoidance of doubt, COVID-19 and variants thereof), or any escalation or worsening of such conditions;

 

   

any other regional, national or international calamity, crisis or emergency, whether or not caused by any person or entity;

 

   

the announcement of the merger agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any clients, suppliers, distributors, partners or employees of the Company or any of its subsidiaries due to the identity of Parent or any plans announced by Parent with respect to the period following the closing;

 

   

any action taken by the Company, or which the Company causes to be taken by any of its subsidiaries, in each case which is expressly required by the merger agreement;

 

   

any reduction in the assets under management of the Company or any of its subsidiaries;

 

   

any actions taken (or omitted to be taken) at the written request of Parent; and

 

   

any matter set forth in the disclosure letter, to the extent (and only to the extent) that the effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, is specifically disclosed or reasonably apparent on its face in such disclosure letter.

Any change, effect, event or occurrence described in the first two bullets and the sixth, seventh, eighth and ninth bullet in the immediately preceding list will be taken into account in determining the occurrence of a material adverse effect to the extent it disproportionately and adversely impacts the Company and its subsidiaries relative to other companies operating in any industry in which the Company and its subsidiaries operate, but in such case only the incremental disproportionate adverse impact will be taken into account.

Conduct of Business Pending the Mergers

From the date of the merger agreement until the company merger effective time, except as permitted by the merger agreement, as disclosed in the Company Disclosure Letter, as previously consented to in writing in advance by Parent or as otherwise required by applicable law, the Company has agreed that it will, and will cause each of its subsidiaries to, carry on its business in the ordinary course of business in all material respects.

In addition, during such period, except as permitted by the merger agreement, disclosed in the Company Disclosure Letter, or required by applicable law, the Company will not, and the Company will cause its subsidiaries not to, without Parent’s prior written consent (not to be unreasonably withheld, conditioned or delayed):

 

   

amend or otherwise change its articles of incorporation or bylaws or any similar governing instruments;

 

   

issue, deliver, sell, pledge, dispose of or encumber any shares of capital stock, Group LLC Units, membership interests or other equity interests (including any Company Stock Options or Company

 

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RSUs, any options to purchase shares, restricted stock or restricted stock units, or any other equity incentive grants or awards), other than (A) issuances of shares pursuant to the exercise of Company Stock Options or settlement of Company RSUs or other awards outstanding as of the date of the merger agreement and (B) issuances of shares in connection with the vesting of the Company RSUs outstanding as of the date of the merger agreement;

 

   

declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock or Group LLC Units, except for (x) regular quarterly cash dividends on the shares consistent with past practice not to exceed $0.05 per share per quarter, (y) required distributions from Group LLC to its members, or (z) any dividend or distribution by a subsidiary of Group LLC to another subsidiary;

 

   

adjust, split, combine, redeem, repurchase or otherwise acquire any shares of capital stock, units or interests of the Company or its subsidiaries (except in connection with the cashless exercise or similar transactions pursuant to settlement of other awards or obligations outstanding as of the date of the merger agreement or permitted to be granted after the date of the merger agreement), or reclassify, combine, split, subdivide or otherwise amend the terms of its or its subsidiaries’ capital stock, units, or interests;

 

   

(A) acquire any corporation, partnership or other business organization thereof or any material assets, other than purchases of inventory and other assets or investments made in the ordinary course of business or pursuant to existing obligations, whether by merger, consolidation, acquisition, or otherwise, or (B) sell or otherwise dispose of any corporation, partnership or other business organization thereof or any material assets, other than sales or dispositions of inventory and other assets in the ordinary course of business or pursuant to existing obligations, whether by merger, consolidation, acquisition, or otherwise;

 

   

other than in the ordinary course of business, (A) enter into any material contract or (B) materially and adversely amend, renew, waive any material right under, or terminate any material contract;

 

   

authorize any new capital expenditures which are, in the aggregate, in excess of the Company’s planned capital expenditure budget for 2022;

 

   

(A) make any loans, advances or capital contributions to any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, other than a subsidiary of the Company; (B) incur any indebtedness for borrowed money or issue any debt securities or (C) assume, guarantee, endorse or otherwise become liable or responsible for the indebtedness or other obligations of another individual, corporation, partnership, limited liability company, association, trust or other entity or organization, other than a guaranty by the Company for the sole benefit of its subsidiaries;

 

   

form any new subsidiary;

 

   

except to the extent required by applicable law or the terms of any Company plan (as defined in “The Merger Agreement—Employment and Employee Benefits Matters; Other Plans”) in effect as of the date of the merger agreement, (A) increase the compensation or benefits of (x) any director or executive officer of the Company or any of its subsidiaries or (y) employee of the Company or its subsidiaries whose annualized cash compensation is $150,000 or greater; (B) enter into, amend, modify, terminate or adopt any employment agreement or compensation or benefit plan including any pension, retirement, profit-sharing, bonus or other employee benefit or welfare benefit plan with or for the benefit or its employees or directors; (C) accelerate the vesting, payment or funding of, or the lapsing of restrictions with respect to, any compensation or benefits to any current or former employee, director, officer or other service provider; (D) grant any equity or equity-based awards; (E) loan or advance any money or other property to any current or former employee, director, officer or other service provider (other than routine advancement of business expenses in the ordinary course of business); (F) enter into any collective bargaining agreement or other contract with a labor union,

 

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works council, employee association, or labor organization; (G) hire any employee (other than in replacement for a departing employee with substantially similar compensation) or terminate (other than for “cause” as determined by the Company or its subsidiaries in its reasonable discretion in accordance with applicable law) any employee of the Company or any of its subsidiaries whose annualized cash compensation is $250,000 or greater; (H) conduct a mass layoff or reduction in force affecting a group of employees of the Company or any of its subsidiaries; or (I) increase the total number of employees (including vacant positions) of the Company by more than 5% from the date of entry into the merger agreement through the closing;

 

   

implement or adopt any material change in its methods of accounting, except as may be required to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;

 

   

(A) compromise, settle or agree to settle any legal action, or consent to the same, other than compromises, settlements or agreements in the ordinary course of business and that further involve only the payment of money damages (I) not in excess of $100,000 individually or $250,000 in the aggregate or (II) consistent with the reserves reflected in the Company’s balance sheet at December 31, 2021 or (B) commence any legal action;

 

   

cancel or terminate any material insurance policy;

 

   

adopt or implement any stockholder rights plan or similar arrangement;

 

   

cancel or terminate any material permit;

 

   

engage in any transaction with, or enter into any agreement, arrangement or understanding with any affiliate of the Company or other person or entity covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;

 

   

make, change or revoke any tax election, adopt or change any tax accounting method or change any tax accounting period, settle or compromise any tax liability or consent to any claim or assessment relating to a material amount of taxes, initiate or enter into any voluntary disclosure, closing agreement or other contract with a governmental entity relating to taxes, or waive or extend the statute of limitations in respect of taxes, in each case, that is material to the Company and its subsidiaries, taken as a whole; or

 

   

agree to take any of the actions described above.

No Solicitation; Recommendations of the Company Merger

In the merger agreement, until 12:01 a.m. on the 40th day after the date of the merger agreement (the “no-shop period start date”) (which date was May 10, 2022) the Company and its affiliates and their respective directors, officers, employees, investment bankers, attorneys, accountants and other advisors or representatives had the right to (i) solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or offer that could constitute an “acquisition proposal” (as defined below in this sub-section), including by providing any information (including non-public information and data) relating to the Company or any of its subsidiaries and affording access to the business, properties, assets, books, records or other information, or to any personnel, of the Company or any of its subsidiaries to any person or entity (and its representatives, including potential financing sources), pursuant to a confidentiality agreement on terms at least as restrictive in all material respects on such person or entity as those contained in the Confidentiality Agreement with respect to Callodine, so long as the Company provided to Parent any material non-public information or data that was provided by the Company to any person or entity or their representatives (including potential financing sources) and (ii) engage in, enter into, continue or otherwise participate in, any discussions or negotiations with any persons or entities (and their respective representatives, including potential financing sources) with respect to any acquisition proposals (or inquiries, proposals or offers or other efforts that would reasonably be expected to lead to an acquisition proposal) and cooperate with or assist or participate in or facilitate any such inquiries, proposals, offers, discussions or negotiations or any effort or attempt to make any

 

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acquisition proposals, including granting a waiver, amendment or release under any pre-existing standstill or similar provision to the extent necessary to allow for a confidential acquisition proposal or amendment to a confidential acquisition proposal to be made to the Company or the Company Board.

The Company agreed after the no-shop period start date (which commenced on May 10, 2022) to instruct and cause each of its subsidiaries and the respective representatives of the Company and its subsidiaries not to, directly or indirectly:

 

   

solicit, initiate or knowingly encourage or facilitate any inquiry, proposal or offer with respect to, or the announcement, making or completion of, any acquisition proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to any acquisition proposal;

 

   

enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person or entity (other than Parent or its representatives) any non-public information or data in furtherance of, any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to any acquisition proposal (in each case other than, in response to an inquiry that did not result from or arise in connection with a breach of the merger agreement, to refer the inquiring person to the merger agreement);

 

   

enter into any acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement or partnership agreement (including any letter of intent or agreement in principle) or similar contract relating to any acquisition proposal (other than an acceptable confidentiality agreement pursuant to and in accordance with the merger agreement);

 

   

terminate, waive, amend or modify any provision of any existing confidentiality or standstill agreement with respect to a potential acquisition proposal (other than a limited waiver under any pre-existing confidentiality or similar agreement to the extent necessary to allow for a confidential acquisition proposal to be made to the Company so long as the Company promptly (and in any event within 24 hours thereafter) notifies Parent thereof (including the identity of any such counterparty) after granting any such limited waiver); or

 

   

take any action to exempt any person or entity (other than Parent or merger subs) from any takeover law.

The Company agreed that on the no-shop period start date (which was May 10, 2022) that it would, and would cause its subsidiaries to, and would cause its and their representatives to (i) terminate all existing negotiations with any person or entity or any of their representatives (other than Parent or any of its representatives) with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal, (ii) request the prompt return or destruction of all non-public information or data furnished prior to the date hereof to any person or entity or any of its representatives with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal and (iii) immediately terminate all physical and electronic data room access granted to any such person or entity or any of its representatives.

If at any time following March 31, 2022 and prior to obtaining the stockholder approval, the Company receives a bona fide written acquisition proposal that did not result from a breach of the non-solicitation covenants described above, and the Company Board determines in good faith based on the information then available and after consultation with its financial advisor and outside legal counsel that the acquisition proposal constitutes or is reasonably likely to lead to a superior proposal (as defined below), the Company may:

 

   

furnish non-public information or data with respect to the Company and its subsidiaries to the person making the acquisition proposal and its representatives pursuant to a confidentiality agreement with terms not at least as restrictive in all material respects those contained in the Company’s confidentiality agreement with Callodine Group, LLC (except that no such confidentiality agreement will be required to include a standstill provision) (an “acceptable confidentiality agreement”), and;

 

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participate in discussions and negotiations with such person and its representatives regarding the acquisition proposal.

The Company has agreed from the no-shop period start date (which commenced on May 10, 2022) until the earlier to occur of the termination of the merger agreement and the company merger effective time to promptly (and in any event within 24 hours of receipt thereof) advise Parent orally and in writing of its receipt of (i) any acquisition proposal, (ii) any request for non-public information relating to the Company or its subsidiaries, other than requests for information not reasonably expected to be related to an acquisition proposal and (iii) any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal, including in each case the identity of the person or entity making any such acquisition proposal, inquiry or request and the material terms (including pricing and sources and terms of financing) of any such acquisition proposal, inquiry or request and thereafter shall keep Parent informed, on a current basis, of the status and terms of any such proposals or offers and the status of any such discussions or negotiations.

In the merger agreement, the Company has also agreed that the Company Board, subject to certain exceptions contained in the merger agreement, will not (i) fail to make or withdraw (or modify or qualify in any manner adverse to Parent or publicly propose to withdraw, modify or qualify in any manner adverse to Parent) the recommendation of the Company Board, (ii) adopt, approve, or publicly recommend, endorse or otherwise declare advisable any acquisition proposal, (iii) fail to reaffirm the recommendation of the Company Board within 10 days after receipt of a written request from Parent to do so (which requests under this clause (iii) shall be limited to no more than once every 30 days and no more than two requests in the aggregate), (iv) after receipt of any acquisition proposal that has been publicly disclosed, fail to recommend against any acquisition proposal within 10 days after receipt of a written request from Parent to do so, (v) fail to include the recommendation of the Company Board in this proxy statement, or (vi) fail to recommend against any then-pending tender or exchange offer that constitutes an acquisition proposal within 10 business days after it is announced (each such action, an “adverse recommendation change”).

However, at any time prior to obtaining shareholder approval, upon an “intervening event” (as defined below in this sub-section), the Company may make an adverse recommendation change if (i) the Company has (A) provided to Parent four business days’ prior written notice setting forth in reasonable detail information describing the intervening event and the rationale for the adverse recommendation change and expressly stating that the Company Board has determined to make an adverse recommendation change and (B) prior to making such an adverse recommendation change, engaged with Parent in good faith (to the extent Parent wishes to engage) during such four business day period to consider any adjustments proposed by Parent to the terms and conditions of the merger agreement such that the failure of the Company Board to make an adverse recommendation change in response to the intervening event would no longer be inconsistent with the directors’ fiduciary duties under applicable law.

In addition, at any time prior to obtaining stockholder approval, in response to a written acquisition proposal that did not result from a breach of the non-solicitation covenants of the merger agreement, if the Company Board determines in good faith after consultation with its financial advisor and outside legal counsel that the acquisition proposal is a “superior proposal” (as defined below in this sub-section), then the Company Board may make an adverse recommendation change or terminate the merger agreement in order to enter into a definitive written acquisition agreement with respect to the superior proposal. The Company must comply with certain provisions of the merger agreement related to Parent (including with respect to notifying Parent and negotiating in good faith with Parent) before making an adverse recommendation change or terminating the merger agreement to enter into a definitive written agreement with respect to a superior proposal.

The merger agreement further provides that nothing contained in it will prohibit the Company or the Company Board from (i) taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communication to shareholders in connection with the making or amendment of a tender offer or exchange offer) or other

 

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disclosure required to be made in the proxy statement by applicable law, or (ii) making any required disclosure to the Company’s stockholders if, in the good faith judgment of the Company Board, after consultation with outside counsel, failure to disclose such information would reasonably be expected to violate its obligations under applicable law.

The term “acquisition proposal” means any proposal, offer, or inquiry from any person or entity or group of persons or entities relating to any direct or indirect acquisition or purchase, in one transaction or a series of transactions, including any merger, reorganization, share exchange, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, business combination, liquidation, dissolution, joint venture or similar transaction, (A) of or for assets or businesses of the Company and its subsidiaries that generate 20% or more of the revenues or net income or that represent 20% or more of the consolidated total assets of the Company and its subsidiaries taken as a whole, immediately prior to such transaction or (B) of or for 20% or more of any class of capital stock, units, membership interests or other equity securities or voting power of the Company or of Group LLC, in each case other than the transactions contemplated by the merger agreement.

The term “intervening event” means a material event, change or development relating to the Company and its subsidiaries, taken as a whole, first occurring after execution of the merger agreement that (A) was not known to, or reasonably foreseeable by, the Company Board prior to the execution of the merger agreement, which event, change or development becomes known to, or reasonably foreseeable by, the Company Board prior to the Company stockholders meeting and (B) does not relate to an acquisition proposal or other inquiry, offer or proposal that would reasonably be expected to lead to an acquisition proposal; provided, that an “intervening event” will exclude any event, change or development to the extent (i) consisting of or resulting from a breach of the merger agreement by the Company or any of its subsidiaries, (ii) relating to changes in the price of the shares of Company common stock, in and of itself (however, the underlying reasons for such changes may constitute an intervening event unless excluded by any other exclusion in this definition), (iii) relating to the fact that, in and of itself, the Company exceeds any internal or published projections, estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period (provided, that the underlying reasons for the Company exceeding such projections, estimates or expectations may constitute an intervening event unless excluded by any other exclusion in this definition) or (iv) relating to Parent or any of its affiliates.

The term “superior proposal” means any bona fide unsolicited acquisition proposal (with all percentages included in the definition of “acquisition proposal” increased to 50%) that the Company Board has determined in good faith (after consultation with the Company financial advisor and outside legal counsel and after taking into account all relevant factors, including financing certainty, the likelihood and anticipated timing of consummation, and all other financial, legal, regulatory and other aspects of such proposal) that if consummated, would be more favorable to the stockholders of the Company, from a financial point of view, than the Company merger and the other transactions contemplated by the merger agreement (including any adjustment to the terms and conditions thereof proposed in writing by Parent in response to any such acquisition proposal).

Preparation of Proxy Statement; Stockholders’ Meeting

Under the merger agreement, the Company agreed to prepare and file this proxy statement with the SEC as promptly as reasonably practicable after the expiration of the no-shop period start date. The Company agreed to allow Parent the opportunity to review and comment on the proxy statement prior to its filing with the SEC and to review and comment on the Company’s responses to any related comments from the SEC, as well as to give good faith consideration to such reasonably proposed comments by Parent.

In consultation with Parent, the Company will take all action necessary or appropriate to establish a record date for, duly call and give notice of, and use its reasonable best efforts to convene, a meeting of the holders of shares of Company common stock for the purpose of obtaining the Company stockholder approval. No later than the fifth business day following the clearance of the proxy statement by the SEC, the Company will mail the definitive proxy statement.

 

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The Company has agreed to use commercially reasonable efforts to hold the Company stockholders meeting no less than 35 days and no more than 50 days after the mailing of the proxy statement. The Company may adjourn the special meeting (i) with the consent of Parent, (ii) if, on a date for which the special meeting is scheduled, a quorum is not present or the Company has not received proxies representing a number of shares of common stock sufficient to obtain the stockholder approval, solely for the purpose of soliciting additional proxies and votes in favor of stockholder approval, or (iii) if the failure to adjourn the special meeting would, in the good faith opinion of the Company Board, after consultation with outside legal counsel, reasonably be expected to be a violation of applicable law, or be required for the distribution of any required supplement or amendment to this proxy statement which failure to supplement or amend would be inconsistent with its fiduciary duties to the stockholders of the Company under applicable law. If requested by Parent, the Company shall adjourn the special meeting (for a period of up to 10 days (provided, that Parent shall only make up to one such request, and no such request for an adjournment shall be permitted if it would require a change in the record date for the special meeting) if, on a date for which the special meeting is scheduled, a quorum is not present or the Company has not received proxies representing a number of shares of common stock sufficient to obtain the stockholder approval, for the purpose of soliciting additional proxies and votes in favor of stockholder approval).

Further Actions; Efforts

Each of the parties have agreed, subject to the terms of the merger agreement, to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with each other in order to do, all things reasonably necessary, proper or advisable under applicable law (including under any antitrust law) to consummate the transactions contemplated by the merger agreement at the earliest practicable date, including: (i) causing the preparation and filing of all forms, registrations and notices required to be filed to consummate the mergers and the taking of such actions as are necessary to obtain any requisite consent or expiration of any applicable waiting period under the HSR Act; (ii) causing the preparation and filing of all forms, registrations and notices required to be filed with any other governmental entity (including state governments and the New Hampshire Banking Department) or self-regulatory organization, including NYSE and FINRA, to consummate the mergers, (iii) using reasonable best efforts to defend all lawsuits and other proceedings by or before any governmental entity or self-regulatory organization challenging the merger agreement or the consummation of the mergers; and (iv) using reasonable best efforts to resolve any objection asserted with respect to the transactions contemplated under the merger agreement under any antitrust law raised by any governmental entity and to prevent the entry of any court order, and to have vacated, lifted, reversed or overturned any injunction, decree, ruling, order or other action of any governmental entity that would prevent, prohibit, restrict or delay the consummation of the transactions contemplated by the merger agreement.

Each of the parties have further agreed that if either party receives a request for information or documentary material from any governmental entity with respect to the merger agreement or any of the transactions contemplated thereby, then such party shall in good faith make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, a response which is, at a minimum, in substantial compliance with such request.

The parties have additionally agreed to keep each other apprised of the status of matters relating to the completion of the transactions contemplated by the merger agreement and work cooperatively in connection with obtaining the approvals of or clearances from each applicable governmental entity, including taking certain actions as specified in the merger agreement.

Each parties has agreed to, and to cause its affiliates to, (i) provide such assistance, information and cooperation to each other as is reasonably required to obtain the approval or non-objection of, FINRA with respect to the FINRA riling (which assistance and cooperation may include participation in any membership interviews as may be required by FINRA as well as adhering to any time limitations or time requirements imposed by FINRA for any applications, notices and filings), and (ii) provide each other with a reasonable opportunity to review any applications, notices or other filings proposed to be made in connection with obtaining such approvals or

 

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non-objections, or making such notice filings (and will give due consideration to any comments and suggestions made with respect thereto by the other party).

If the FINRA Filing is not formally approved by FINRA prior to the 31st day following the date that FINRA has deemed the CMA to have been filed with FINRA (unless FINRA has notified MNIS that the CMA is subject to “fast track” review), then MNIS or its representatives shall notify (in writing and at least five business days prior to the anticipated closing date) the FINRA Membership Application Program that the parties intend to consummate the closing pursuant to FINRA Rule 1017(c)(1) notwithstanding the lack of formal FINRA approval.

Employment and Employee Benefits Matters; Other Plans

The merger agreement provides that (except as otherwise agreed in writing between Parent and any employee of the Company or its subsidiaries (each, a “Company employee”)), for the 12-month period immediately following the effective time, Parent shall cause the Surviving Corporation and each of its subsidiaries, for the period commencing at the company merger effective time and ending on the first anniversary thereof, to maintain for any Company employee (i) base salary or wage rate and target annual cash bonus and commission opportunities that are no less favorable in the aggregate than the base salary or wage rate and target annual cash bonus and commission opportunities to which such Company employee was entitled immediately prior to the company merger effective time, and (ii) employee benefits (excluding, for the avoidance of doubt, any defined benefit, retiree welfare or life insurance, or equity incentive benefit) that are substantially similar in the aggregate to the overall employee benefits (excluding, for the avoidance of doubt, any defined benefit, retiree welfare or life insurance, or equity incentive benefit) to which such Company employee was entitled immediately prior to the company merger effective time.

As of and after the company merger effective time, Parent will, or will cause the Surviving Corporation to, give Company employees full credit for purposes of eligibility and vesting and benefit accruals (but not for purposes of benefit accruals under any defined benefit pension plans), under any employee compensation, incentive, and benefit (including vacation) plans, programs, policies and arrangements maintained for the benefit of Company employees as of and after the company merger effective time by Parent, its subsidiaries or the Surviving Corporation for the Company employees’ service with the Company, its subsidiaries and their predecessor entities (each, a “Parent plan”) to the same extent recognized by the Company immediately prior to the company merger effective time. Notwithstanding the foregoing, neither Parent nor any of its subsidiaries shall be required to recognize such service to the extent doing so would result in the duplication of benefits. With respect to each Parent plan that is a “welfare benefit plan” (as defined in Section 3(1) of ERISA), Parent shall, or shall cause its applicable subsidiary (including the Surviving Corporation) to (i) cause there to be waived any pre-existing condition exclusions or actively-at-work requirements of such Parent plans for each company employee and their covered dependents and (ii) give effect, in determining any deductible and maximum out-of-pocket limitations, to eligible expenses incurred by company employees during the portion of the plan year of the corresponding Company plan ending on the date such Company employee’s participation in the corresponding Company plan ends as if such amounts had been paid in accordance with the applicable Parent plan.

From and after the company merger effective time, except as otherwise agreed in writing between Parent and a Company employee or as otherwise provided in the merger agreement, Parent will honor, and will cause its subsidiaries to honor, in accordance with the terms of the applicable Company plan, (i) each existing employment, change in control, severance and termination protection plan, policy or agreement of or between the Company or any of its subsidiaries and any officer, director or employee of that company, (ii) all obligations in effect as of the effective time under any equity-based, bonus or bonus deferral plans, programs or agreements of the Company or its subsidiaries and (iii) all obligations in effect as of the effective time pursuant to outstanding restoration or equity-based plans, programs or agreements, and all vested and accrued benefits under any employee benefit, employment compensation or similar plans, programs, agreements or arrangements of the Company or its subsidiaries.

 

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Client Consents

The Company will cause the Manning & Napier Advisors, LLC and Rainier Investment Management, LLC to use their reasonable best efforts to obtain, as promptly as practicable following the date of the merger agreement the approval of the Public Fund (as defined in the merger agreement) board of directors of, and to solicit the approval of the unit holders or interest holders of each Public Fund of, pursuant to the provisions of Section 15 of the Investment Company Act applicable thereto, a new advisory contract for such Public Fund to be effective as of the closing with such agreement containing terms (including fees and other economic terms), taken as a whole, that are no less favorable in the aggregate than the terms of the existing advisory contract between such Public Fund and the Company, with the exception of its effective and termination dates. On May 3, 2022, each Public Fund board of directors approved a new advisory contract for such Public Fund to be effective as of the closing of the mergers in accordance with Section 15 of the Investment Company Act and each such board recommended that its unitholders or interest holders, as applicable, approve such new advisory contract.

If consent is required by applicable law or by the Investment Advisory Contract of any client (other than a Public Fund) for the “assignment” (as defined in the Advisers Act) or continuation of the Investment Advisory Contract with such client resulting from the consummation of the transactions contemplated by the merger agreement, as promptly as practicable following the date of the merger agreement (but no later than 30 days following the date of the merger agreement), an Adviser (as defined in the merger agreement) or the Exeter Trust Company, as applicable, will send a written notice (“Transaction Notice”) informing each such client of the transactions contemplated by the merger agreement and requesting the written consent of such client to the “assignment” (as defined in the Advisers Act) or continuation of the Investment Advisory Contract with such client in the case of each such client who is party to an Investment Advisory Contract which does not terminate (or give rise to a termination right thereunder) (by its terms and/or under applicable laws) as a result of the consummation of the merger.

For any client (other than a Public Fund) party to an Investment Advisory Contract whereby consent other than written consent is permitted under applicable law and such Investment Advisory Contract (a “negative consent client”), if no such written consent is received within 30 days after the date of delivery of the Transaction Notice, each Adviser or the Exeter Trust Company will as promptly as reasonably practicable thereafter (and in any event no more than five days thereafter) send a second written notice to such client (a “Negative Consent Notice”), informing such client: (A) of the intention to complete the transactions contemplated by the merger agreement, which will result in an “assignment” (as defined in the Advisers Act); (B) of the intention of the applicable Adviser or the Exeter Trust Company to continue to provide the advisory services pursuant to the existing Investment Advisory Contract with such client after the closing if such client does not terminate such Investment Advisory Contract prior to the closing; and (C) that the consent of such client will be deemed to have been granted if such client continues to accept such advisory services for a period of 30 days after the sending of the Negative Consent Notice without termination. Any consent required for the “assignment” (as defined in the Advisers Act) or continuation of any Investment Advisory Contract with a Negative Consent Client shall be deemed given for all purposes under the merger agreement if 30 days have passed since the sending of the Negative Consent Notice to such client and such client continues to accept such advisory services during such 30-day period without termination.

Indemnification, Exculpation and Insurance

Under the merger agreement, the Company and Parent agreed that, for a period of six years following the effective time of the company merger, Parent will or will cause the Surviving Corporation to, indemnify and hold harmless the present and former directors, officers and employees of the Company and its subsidiaries against all claims arising out of (i) the fact that the indemnified party is or was an officer, director, employee, fiduciary or agent of the Company or any of its subsidiaries or (ii) matters existing or occurring at or prior to the company merger effective time to the fullest extent permitted under applicable law.

 

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In addition, for a period of six years following the effective time, Parent will either maintain the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the Company and its subsidiaries, or provide substitute policies or purchase or cause the Surviving Corporation to purchase a “tail policy” providing such liability insurance, in either case with terms no less favorable than those of the Company’s existing policy. After the company merger effective time, Parent will not be required to pay more than 300% of the last aggregate annual premium paid by the Company prior to the date of the merger agreement for its existing policies, and will purchase only as much coverage as reasonably practicable for such amount. If the Surviving Corporation purchases a “tail policy,” the Surviving Corporation will not be required to pay more than 300% of the last annual premium, and will purchase the maximum amount of coverage that can be obtained for such amount. At the Company’s option and in lieu of the foregoing obligations of Parent, the Company may purchase, prior to the effective time, a six-year prepaid “tail policy” on terms and conditions providing substantially equivalent benefits as the Company’s and its subsidiaries’ existing policies, with respect to matters arising on or before the company merger effective time, covering without limitation the transactions contemplated by the merger agreement. If the Company purchases such “tail policy,” the Company may not pay more than 300% of the last annual premium. If such prepaid policy has been obtained by the Company prior to the company merger effective time, Parent will cause such policy to be maintained in full force and effect, for its full term, and cause all obligations thereunder to be honored by the Surviving Corporation.

If any legal action is instituted against any of the present and former directors and officers of the Company and its subsidiaries on or prior to the sixth anniversary of the effective time, the indemnification, exculpation and insurance provisions under the merger agreement shall continue until the final disposition of such legal action. The parties to the merger agreement agreed that the indemnification, exculpation and insurance provisions under the merger agreement will not be deemed exclusive of other rights held by the present and former directors and officers of the Company and its subsidiaries under law, contract or otherwise and will survive the consummation of the merger.

Other Covenants

The merger agreement contains certain other covenants, including covenants relating to Parent’s debt financing and access to information and confidentiality, the Company’s and the Company Board’s obligations with respect to the application of takeover laws to the merger agreement and the transactions contemplated thereby, public announcements regarding the transactions contemplated by the merger agreement and notification obligations upon the occurrence of certain events.

Conditions to Completion of the Mergers

The obligations of each party to consummate the mergers are subject to the satisfaction or waiver of certain customary conditions on or prior to the company merger effective time, including the following:

 

   

the receipt of the affirmative approval of the holders of at least a majority in combined voting power of the outstanding shares of the Company’s common stock (the “stockholder approval”);

 

   

the approval from FINRA of the FINRA Filing in writing; provided, that notwithstanding the foregoing, approval shall not be required as a condition to closing if despite the FINRA Filing not having been so approved by FINRA, (i) at least 31 days have elapsed since FINRA deemed the FINRA Filing to have been filed with FINRA, (ii) FINRA has not notified MNIS that the CMA is subject to “fast track” review, (iii) MNIS or its representatives shall have notified (in writing and at least five business days prior to the anticipated closing date) the FINRA Membership Application Program that the parties intend to consummate the closing pursuant to FINRA Rule 1017(c)(1), (iv) FINRA has not advised any of the parties to the merger agreement at any time prior to the closing that they are prohibited from consummating the closing without FINRA approval, and (v) FINRA has not informed any of the parties to the merger agreement at any time prior to the closing that FINRA will, or may, impose any “interim restrictions” on MNIS that materially limit the manner in which MNIS may

 

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conduct its business or operations, including but not limited to reducing the scope of MNIS’s business, if the closing is consummated without such FINRA approval;

 

   

the absence of any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal prohibition that, in any case, prohibits or makes illegal the consummation of the mergers and no law shall have been enacted, entered, promulgated, enforced or deemed applicable by any governmental entity that prohibits or makes illegal the consummation of the mergers; and

 

   

the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The obligations of the Company and Group LLC to complete the mergers are subject to the satisfaction or waiver of additional conditions, which include the following:

 

   

the accuracy of Parent’s and merger subs’ representations and warranties in the merger agreement as of the date of the merger agreement and as of the closing date (other than representations and warranties that by their terms are made as of another specified earlier date, in which case as of such earlier date), except where such inaccuracy does not constitute or would not reasonably be expected to have a “Parent material adverse effect” (disregarding all material adverse effect qualifications and other materiality qualifications in such representations and warranties), where a “Parent material adverse effect” means any event, change, occurrence or effect that would prevent, materially delay or materially impede the performance by Parent or the merger subs of its obligations under the merger agreement or the consummation of the mergers or any of the other transactions contemplated by the merger agreement;

 

   

Parent’s and merger sub’s performance in all material respects of their obligations under the merger agreement at or prior to the company merger effective time; and

 

   

the receipt by the Company of a certificate signed by an executive officer of Parent certifying that the conditions described in the immediately preceding two bullets have been satisfied.

Parent’s and merger subs’ obligations to consummate the mergers are subject to the satisfaction or waiver of additional conditions, which include the following:

 

   

the accuracy in all respects of the Company’s representations and warranties as of the date of the merger agreement and the closing date relating to the Company’s and Group LLC’s capitalization and authority to consummate the transactions (except where such failures to be accurate are de minimis);

 

   

the accuracy in all material respects of the Company’s representations and warranties as of the date of the merger agreement and the closing date relating to its (i) organization, standing and power, (ii) capital stock (except for representations covered by the preceding bullet), (iii) corporate organization, (iv) broker’s fees and (v) receipt of a fairness opinion (except to the extent any such representation or warranty expressly relates to an earlier date or period);

 

   

the accuracy of the Company’s representations and warranties in the merger agreement (other than representations in the preceding two bullets) as of the date of the merger agreement and as of the closing date (other than representations and warranties that by their terms are made as of another specified date, in which case as of such date), except where such inaccuracy does not constitute or would not reasonably be expected to have a material adverse effect (disregarding all material adverse effect qualifications and other materiality qualifications in such representations and warranties);

 

   

the Company’s performance in all material respects of its obligations under the merger agreement at or prior to the company merger effective time;

 

   

the receipt of all consents and approvals required from the New Hampshire Banking Department pursuant to Title 35, Chapter 383-C of the New Hampshire Revised Statutes Annotated;

 

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the absence of the occurrence of any material adverse effect since the date of the merger agreement;

 

   

the Company having received, as of five business days prior to the closing date, the consent of its clients representing a run rate revenue (calculated by multiplying the annual fee rate or fee schedule (as reduced for any fee concessions) multiplied by the assets under management (as adjusted for net cash inflows and outflows from February 28, 2022 until the calculation date but not changes due to market appreciation or depreciation or any currency fluctuations)) of at least 75% of the run rate revenue of all clients based upon assets under management as of February 28, 2022;

 

   

the Company having received, as of five business days prior to the closing date, the consent of its clients representing assets under management (as adjusted for net cash inflows and outflows from February 28, 2022 until the calculation date but not changes due to market appreciation or depreciation or any currency fluctuations) of at least 75% of the assets under management as of February 28, 2022; and

 

   

the receipt by Parent of a certificate signed by an executive officer of the Company certifying that the conditions described in the preceding eight bullets have been satisfied.

Termination of the Merger Agreement

The merger agreement may be terminated, and the mergers may be abandoned at any time prior to the company merger effective time, whether before or after stockholder approval has been obtained:

 

   

by mutual written consent of Parent and the Company;

 

   

by either Parent or the Company, if:

 

   

the mergers have not been consummated on or before October 1, 2022, provided that if on such date all of the conditions to each party’s obligation to effect the mergers shall have been satisfied or waived except for the required approvals from FINRA or the New Hampshire Banking Department, then either Parent or the Company may extend the termination date to December 1, 2022;

 

   

any court of competent jurisdiction or other governmental entity has issued a judgment, order, injunction, ruling, writ, decree or taken any other action, restraining, enjoining or otherwise prohibiting any of the transactions contemplated by the merger agreement and such judgment, order, injunction, ruling, writ, decree or other action shall have become final and nonappealable, except that no party will have such right to terminate if such party failed to use its reasonable best efforts to contest, appeal and remove such judgment, order, injunction, ruling, writ, decree or other action; or

 

   

the Company stockholder approval is not obtained at the special meeting or at any adjournment or postponement thereof at which a vote on the adoption of the merger agreement is taken;

 

   

by the Company:

 

   

if Parent or either merger sub has breached or failed to perform any of its representations, warranties, covenants or agreements in the merger agreement, which breach or failure to perform or to be true (i) would result in the failure of one of its closing conditions and (ii) cannot be cured by the termination date; provided that the Company has given Parent written notice at least 30 days prior to such termination, stating the Company’s intention to terminate the merger agreement and the basis for such termination, except the Company will not have the right to effect such termination if it is then in breach of any of its covenants or agreements in the merger agreement;

 

   

prior to obtaining Company stockholder approval, in order to enter into a transaction that is a superior proposal if (A) the Company has complied with its obligations under the non-solicitation covenants contained in the merger agreement (other than non-compliance

 

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that was both immaterial and unintentional), (B) the Company Board authorizes the Company to enter into such superior proposal, (C) prior to or substantially concurrently with such termination, the Company pays to Parent in immediately available funds any Company Termination Fee required; and (D) substantially concurrently with such termination, the Company enters into an agreement to consummate such superior proposal, or

 

   

prior to the company merger effective time, if (A) all of the Company’s closing conditions have been satisfied or waived, (B) Parent and merger subs have failed to consummate the mergers by the termination date, (C) the Company has irrevocably notified Parent in writing that the Company is ready, willing and able to consummate the mergers, and (D) Parent fails to consummate the mergers within three business days following receipt of such written notice.

 

   

by Parent:

 

   

if the Company has breached or failed to perform any of its representations, warranties, covenants or agreements in the merger agreement, which breach or failure to perform (i) would result in the failure of one of its closing conditions and (ii) cannot be cured by the termination date; provided that Parent has given the Company written notice at least 30 days prior to such termination, stating Parent’s intention to terminate the merger agreement and the basis for such termination, except Parent will not have the right to effect such termination if Parent, Corp Merger Sub or LLC Merger Sub are then in material breach of any of their covenants or agreements in the merger agreement;

 

   

if (i) at any time the Company is or has materially breached its non-solicitation restrictions or (ii) prior to obtaining the Company stockholder approval, the Company Board has effected an adverse recommendation change.

Effect of Termination

If the merger agreement is terminated, it will become void and have no effect, without any liability or obligation on the part of the parties, except that the confidentiality agreement and certain provisions of the merger agreement, including, among others, the provisions relating to brokers, public announcements, the effect of termination of the merger agreement, fees and expenses, the notice information and obligations of the parties, governing law, submission to jurisdiction and waiver of jury trial will survive termination. In addition, the company’s liability for any “willful breach” (as defined in the merger agreement) by it of the merger agreement will survive termination.

Termination Fees and Expenses

Except as expressly provided in the merger agreement, all fees and expenses incurred in connection with the merger agreement, the mergers and the other transactions contemplated by the merger agreement will be paid by the party incurring such fees or expenses, whether or not the mergers are consummated. Fees and expenses incurred in connection with the Debt Financing shall be borne solely by Parent and any expenses incurred in connection with the filing, printing and mailing of the proxy statement (including applicable SEC filing fees) and the solicitation of the Company stockholder approval shall be shared equally by Parent and the Company.

The Company agreed to pay Parent a one-time termination fee (the “company termination fee”) of $3,140,000 in the event that the merger agreement was terminated by the Company prior to the no-shop period start date (which period ended on May 10, 2022) in order to pursue a superior proposal in compliance with the merger agreement. The Company has also agreed to pay a termination fee of $8,790,000 in the event that:

 

   

the merger agreement is terminated by the Company or Parent as a result of the Company stockholder approval not having been obtained at the special meeting if (i) at any time after the date of the merger agreement an Acquisition Proposal has been publicly announced, and not withdrawn prior to the vote

 

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to adopt the merger agreement, and (ii) within twelve months after such termination, the Company has entered into a definitive agreement or consummated an Acquisition Proposal (with references to “20% or more” in the definition of Acquisition Proposal deemed to be “more than 50%” for this purpose);

 

   

the merger agreement is terminated by either Parent or the Company because the mergers are not consummated on or before the termination date (but only if the Company stockholders meeting has not been held by such date and the Parent termination fee is not otherwise payable), or by Parent if the Company has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the merger agreement, and (i) at any time after the date of the merger agreement and prior to such a termination of the merger agreement an Acquisition Proposal has been communicated in writing to the Company Board, is publicly announced or made known to the Company stockholders, and not withdrawn prior to such termination, and (ii) within twelve months after such termination, the Company has entered into an agreement with respect to, or consummated, an Acquisition Proposal (with references to “20% or more” in the definition of Acquisition Proposal deemed to be “more than 50%” for this purpose);

 

   

the merger agreement is terminated by the Company if, after the no-shop period start date (May 10, 2022) and prior to the receipt of Company stockholder approval, the Company terminates the merger agreement in order to enter into an alternative acquisition agreement providing for the consummation of a superior proposal; or

 

   

the merger agreement is terminated by Parent because (i) the Company is in breach of the non-solicitation provisions of the merger agreement or (ii) prior to obtaining the Company stockholder approval, the Company Board has affected an adverse recommendation change.

The parties have agreed that in the event that Parent receives the Company termination fee (plus related collection costs, if any), and except for a willful breach by the Company of the merger agreement, the receipt of such amount will be deemed to be liquidated damages for any and all losses suffered by Parent, merger subs and their respective affiliates, or any other person in connection with the merger agreement (and its termination), the transactions contemplated by it (and the abandonment of it) or any matter forming the basis for such termination, and none of Parent, merger subs, or any of their affiliates, or any other person will be entitled to bring or maintain any other legal action against the Company or any of their affiliates arising out of the merger agreement, any of the transactions contemplated by it or any matters forming the basis for such termination. Parent has further agreed that payment of the termination fee (plus any related collection costs) will be the sole and exclusive monetary remedy of Parent, merger subs and any other person against the Company or its affiliates in connection with the transactions contemplated by the merger agreement, and, subject to Parent’s and merger subs’ right to seek specific performance, injunctive relief or other equitable relief to enforce the merger agreement, none of the Company or any of its affiliates shall have any other liability or obligation (other than to the Company) for any losses, claims, damages or liabilities suffered or incurred by Parent, merger subs, their respective affiliates or any other person relating to or arising out of the merger agreement and the transactions contemplated by it (including the failure to consummate the merger).

Parent has agreed that Parent will pay to the Company a termination fee of $15,070,000 in cash, in the event that the merger agreement is terminated (i) by Parent or the Company at the termination date if on such termination date all of the conditions to the obligations of Parent have then been satisfied (other than those conditions that by their terms are to be satisfied by actions taken at closing), (ii) by the Company if (A) Parent or either merger sub has breached or failed to perform any of its representations, warranties, covenants or agreements (which breach or failure cannot be cured) or (B) if Parent fails to consummate the mergers at a time when all of the conditions to the obligations of Parent have been satisfied (other than those conditions that by their terms are to be satisfied by actions taken at closing) and the Company has notified Parent that the Company is ready, willing and able to consummate the mergers, or (iii) by Parent at the termination date when the Company would otherwise be entitled to terminated pursuant to clause (ii) above.

 

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The Company has further agreed that payment of the Parent termination fee in this foregoing paragraph (plus any related collection costs) from Parent will be the sole and exclusive monetary remedy of the Company, its subsidiaries and their related parties and affiliates relating to or arising out of the merger agreement and the transactions contemplated by it (including the failure to consummate the merger).

Amendment or Supplement

The merger agreement may be amended, modified or supplemented by the parties by action taken or authorized by their respective boards of directors at any time prior to the company merger effective time, whether before or after Company stockholder approval has been obtained. However, after Company stockholder approval has been obtained, the merger agreement provides that no amendment may be made that, pursuant to applicable law, requires further approval by the stockholders of the Company without the Company receiving such further approval. Further, the merger agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment thereto, signed on behalf of each of the parties in interest at the time of the amendment.

Financing

The merger agreement does not contain any financing-related contingencies or financing conditions to consummation of the mergers. We anticipate that the total amount of funds necessary to consummate the mergers and related transactions, including payment of related fees and expenses, is approximately $6.4 million, which will be funded with the net proceeds of the Equity Financing and Debt Financing described above, along with cash on hand of the Company and its subsidiaries. This amount does not include funds needed to (i) pay holders of Company common stock and holders of Group LLC units the amounts due under the merger agreement and (ii) pay any fees and expenses of or payable by Parent, the merger subs or the Surviving Corporation at the closing of the mergers.

Parent and Corp Merger Sub have obtained committed financing consisting of (i) equity financing to be provided to Parent by East Asset Management, LLC pursuant to the terms of the Equity Commitment Letter and (ii) debt financing to be provided to Corp Merger Sub by the lenders party to the Debt Commitment Letter pursuant to the Debt Commitment Letter. In connection with the merger agreement, Parent and Corp Merger Sub have delivered to the Company copies of the Commitment Letters.

Governing Law

The merger agreement and any action (whether at law, in contract or in tort) that may arising out of or relating to the merger agreement or the transaction contemplated by it will be governed by and construed in accordance with the internal laws of the State of Delaware (without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware).

Specific Performance

The merger agreement provides that the parties are entitled to specific performance of the terms of the merger agreement, including an injunction or injunctions and other equitable relief to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of it, in the Court of Chancery of the State of Delaware. Under no circumstances shall the Company be entitled to receive both a grant of specific performance that results in the closing, on the one hand, and the payment of the Parent Termination Fee or any other damages, on the other hand.

In addition, the Company shall only have the right to an injunction, specific performance or other equitable remedies in connection with enforcing Parent’s obligation to cause the closing to occur or to cause the Equity Financing (as defined in the merger agreement) to fund if, and only if, (A) all of the closing conditions set forth

 

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in Section 6.1 (the mutual closing conditions) and Section 6.3 (the closing conditions for the benefit of Parent) of the merger agreement have been satisfied or duly waived (other than those conditions that by their terms are to be satisfied at the closing, which conditions would be capable of being satisfied at the closing), (B) the debt financing has been funded in accordance with the terms and conditions of the Debt Commitment Letter or will be funded in accordance with the terms and conditions of the Debt Commitment Letter if the Equity Financing is funded, (C) Parent and merger subs are required to consummate the closing in accordance with the merger agreement, and (D) the Company has irrevocably confirmed to Parent in writing that the Company is ready, willing and able to consummate the closing and that if such specific performance is granted and if the Equity Financing and the Debt Financing are funded.

 

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AGREEMENTS INVOLVING COMMON STOCK

Support Agreement

In connection with the merger agreement, Parent entered into support agreements, which we refer to as the support agreements, with each of the Section 16 executive officers (including Mr. Mayer, who is also a member of the Company Board), whom we refer to as the supporting stockholders, pursuant to which each of the supporting stockholders has agreed, subject to certain conditions, to vote, or cause to be voted, all shares of Company common stock beneficially owned by them (as of the record date of the Company stockholders meeting held to obtain Company stockholder approval):

 

   

in favor of (i) the company merger, (ii) each of the other actions contemplated by the merger agreement and (iii) any action in furtherance of any of the foregoing;

 

   

against approval of any other acquisition proposal or other proposal made in opposition to or in competition with the company merger or the merger agreement and against any action or agreement that would result in a breach of any representation, warranty, covenant or obligation of the Company in the merger agreement; and

 

   

against any of the following actions (other than the company merger): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or any of its subsidiaries; (ii) any sale, lease, sublease, license, sublicense or transfer of a material portion of the properties, rights or other assets of the Company or any of its subsidiaries; (iii) any reorganization, restructuring, recapitalization, dissolution or liquidation of the Company or any of its subsidiaries; and (iv) any other action which is intended or would reasonably be expected to impede, interfere with, delay, postpone or adversely affect the company merger.

The support agreement also restricts the supporting stockholders from transferring any shares of Company common stock beneficially owned by them prior to the earliest of: (i) the closing of the transactions, (ii) the date on which the merger agreement is validly terminated, (iii) in accordance with its terms, (iv) the completion of the special meeting (including any adjournment or postponement) (regardless of whether the merger agreement is approved or not) and (v) written notice of the termination of the support agreement by Parent to the applicable Company supporting stockholder. The support agreement also restricts, after the no-shop period start date, the Company supporting stockholders from entering into discussions or solicitations with respect to alternate transactions, but does not restrict the Company supporting stockholders, in any such stockholder’s capacity as a director, officer or employee of the Company and/or its subsidiaries, from participating in discussions and negotiations with, and furnishing information and data to, any person with whom the Company Board has determined to engage in discussions and negotiations, and with whom the Company Board is then engaging in discussions and negotiations, in each case pursuant to and in compliance with the merger agreement.

As of [●], the latest practicable date prior to the filing of this proxy statement, the supporting stockholders collectively held 1,896,167 shares of Company common stock representing approximately 10% of the voting power of the Company’s outstanding capital stock.

Rollover Agreement

Concurrently with the execution and delivery of the merger agreement, TopCo entered into a rollover agreement with Mr. Mayer, as a Rollover Holder, pursuant to which he has committed to contribute, immediately prior to the consummation of the company merger, 175,902 shares of Company common stock and 500,000 options to purchase Company common stock then held by him to TopCo in exchange for equity interests and options in TopCo, subject to the terms and conditions of a rollover agreement with TopCo. Mr. Mayer has also agreed not to transfer any of the options or shares of Company common stock that are subject to the rollover agreement.

 

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In addition, the rollover agreement provides that at or prior to the rollover closing, Mr. Mayer will enter into a stockholders agreement with TopCo that will govern the rights and obligations of him and the other equity holders of TopCo following consummation of the mergers, including certain restrictions on transfers of the equity interests of TopCo and certain board designation rights (including the right of the Company’s chief executive officer to designate one member of TopCo’s board of directors), tag-along rights, drag-along rights, and liquidity rights with respect to the equity interests of TopCo.

In connection with the rollover agreement, Mr. Mayer also entered into a rollover “bonus” opportunity letter agreement which provides for either a cash payment or the issuance of additional shares of TopCo common stock, in TopCo’s sole discretion, to him based on his continued post-closing ownership of TopCo equity. The amount is determined based on the percentage of equity that such Rollover Holder elects to rollover relative to his equity holdings at the time of the Company’s entry into the merger agreement, and any bonus payment to him will be made after three years subject to his continued employment and amount of retained equity for the term. Mr. Mayer’s bonus opportunity can be valued at an amount up to 5% of the value of his rollover shares (as such, approximately $400,000 in value). See “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers.”

Prior to the closing of the mergers, Parent and certain additional members of management may negotiate and enter into contracts providing for a rollover (immediately prior to the closing) of all or a portion of such members’ shares of Company common stock through their contribution of such shares to TopCo in exchange for equity interests in TopCo. Any additional members of management that become Rollover Holders will also enter into a rollover “bonus” opportunity letter agreement.

The foregoing description of the rollover agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the rollover agreement, a copy of which is attached as Annex C to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement contains forward-looking statements, including those based on estimates and assumptions. Forward-looking statements include information concerning possible or assumed future results of operations of the Company, the expected completion and timing of the mergers and other information relating to the mergers. The safe harbor provisions in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which may be referenced in the periodic reports incorporated by reference into this proxy statement, do not apply to any forward-looking statements made in connection with the mergers. There are forward-looking statements throughout this proxy statement, including, among others, under the headings Summary Term Sheet, Questions and Answers about the Proposals and the Special Meeting, Special Factors—Plans for the Company After the Mergers, Special Factors—Certain Effects of the Mergers, Special Factors—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger, Special Factors—Certain Unaudited Prospective Financial Information, Special Factors—Purposes and Reasons of the Callodine Filing Persons for the Company Merger, Special Factors—Position of the Callodine Filing Persons as to the Fairness of the Company Merger, Special Factors—Fees and Expenses, and The Merger Agreement, and in statements containing the words “believes,” “expects,” “anticipates,” “intends,” “estimates” or other similar expressions. You should be aware that forward-looking statements involve known and unknown risks and uncertainties. There can be no assurances that the actual results or developments described in such forward-looking statements will be realized, or even if realized, that they will have the expected effects on the business or operations of the Company (including the mergers). These forward-looking statements speak only as of the date on which the statements were made. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this proxy statement, except as required by law. In addition to other factors and matters contained or incorporated in this document, the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

 

   

risks and uncertainties related to securing the necessary regulatory and stockholder approvals and the satisfaction of other closing conditions to consummate the mergers;

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

 

   

risks related to diverting the attention of Company management from ongoing business operations during the pendency of the mergers;

 

   

risk that the pendency of the mergers disrupts the Company’s current operations;

 

   

significant transaction costs and/or unknown or inestimable liabilities associated with the mergers;

 

   

the risk of stockholder litigation in connection with the mergers, including resulting expense or delay;

 

   

Callodine’s ability to obtain the expected financing to consummate the mergers;

 

   

operational disruption during the pendency of the mergers, making it more difficult for the Company to conduct business as usual or maintain relationships with clients, employees, suppliers or other third parties;

 

   

effects relating to the announcements regarding, or the consummation of, the mergers on the market price of the Company’s common stock;

 

   

harm to the Company’s reputation as a result of the mergers that may negatively impact its revenues and income

 

   

the effect of the announcement or pendency of the mergers on the Company’s ability to retain and hire key personnel and other employees or on the Company’s business relationships (including clients and suppliers), operating results and business generally;

 

   

limitations under the merger agreement placed on the Company’s ability to operate its business during the pendency of the mergers;

 

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regulatory initiatives and changes in tax laws;

 

   

the impact of the COVID-19 pandemic on the operations and financial results of the Company;

 

   

market volatility;

 

   

the financial performance of the Company during the pendency of the merger;

 

   

general economic conditions;

 

   

strong competition from numerous and sometimes larger companies with competing offerings and products that could limit or reduce sales of our products, potentially resulting in a decline in our market share, revenues and income;

 

   

challenges in managing and growing our business due to systems and other technological limitations;

 

   

dependence on key personnel, which could in turn negatively affect our financial performance in the event of their separation of employment from the Company;

 

   

the fact that Company stockholders would forgo the opportunity to realize the potential long-term value of a successful execution of the Company’s current strategy if they remained stockholders in an otherwise independent public company; and

 

   

other risks and uncertainties affecting the Company, including those described from time to time in the Company’s filings and reports, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 and the current reports on Form 8-K as filed with the SEC on March 4, 2022, April 1, 2022, April 15, 2022 and April 22, 2022.

All of the forward-looking statements in this proxy statement are qualified by the information contained or incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information.”

Moreover, other risks and uncertainties of which the Company is not currently aware may also affect its forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The Company cautions investors that such forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such forward-looking statements.

The forward-looking statements in this proxy statement are made only as of the date hereof or as of the dates indicated in the forward-looking statements and reflect the views stated therein with respect to future events as at such dates, even if they are subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law.

 

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PARTIES TO THE MERGERs

The Company

Manning & Napier, Inc.

290 Woodcliff Drive

Fairport, New York 14450

Telephone: (585) 325-6880

The Company is an independent investment management firm that provides its clients with a broad range of financial solutions and investment strategies for both wealth and asset management. Founded in 1970 and headquartered in Fairport, New York, the Company serves a diversified client base of high-net-worth individuals and institutions. The institutions the Company serves include 401(k) plans, pension plans, Taft-Hartley multi-employer plans, endowments and foundations. The Company serves clients through its Wealth and Asset Management divisions. The Company’s Wealth Management private clients are primarily composed of individual investors and families, small businesses and business owners, and small- to mid-sized non-profit organizations, endowments, and foundations. The Company’s Asset Management division includes its Intermediary Distribution Group, focused on delivering its investment strategies and expertise to third-party financial advisors, its dedicated Taft-Hartley team, and its Institutional and Consultant Relations teams, serving 401(k) plans, pension plans, large organizations, institutional investors, and third-party investment consultants. The Company was incorporated in 2011 as a Delaware corporation, and is the sole managing member of Manning & Napier Group, LLC. The Company’s telephone number is (585) 325-6880. For additional information about the Company, see Where You Can Find More Information or visit the Company’s website at https://www.manning-napier.com. The information provided on the Company’s website is not part of this proxy statement and is not incorporated by reference in this proxy statement.

Group LLC

Manning & Napier Group, LLC.

290 Woodcliff Drive

Fairport, New York 14450

Telephone: (585) 325-6880

Manning & Napier Group, LLC is a Delaware limited liability company formed in 2011 and is the entity through the Company operates its investment management business. The Company is the sole managing member of Group LLC. The Company owns approximately 97.7544% of the Class A units of Group LLC, and the remaining 2.2456% of the Class A units are held by M&N Group Holdings, LLC. Group LLC’s principal executive offices are located at 290 Woodcliff Drive, Fairport, New York 14450. Group LLC’s telephone number is (585) 325-6880.

Parent and Merger Subs

Callodine Midco, Inc.

Callodine Merger Sub, Inc.

Callodine Merger Sub, LLC

Two International Place, Suite 1830

Boston, MA 02110

Callodine Midco, Inc., a Delaware corporation (“Parent”), is an affiliate of Callodine Group, LLC (“Callodine”). Parent was formed solely for the purpose of engaging in the transactions contemplated by the merger agreement. Parent has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. Parent’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

 

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Callodine Merger Sub, Inc., a Delaware corporation (“Corp Merger Sub”), is a wholly-owned subsidiary of Parent formed by Parent solely for the purposes of engaging in the transactions contemplated by the merger agreement. Upon completion of the company merger, Corp Merger Sub will be merged with and into the Company, and Corp Merger Sub will cease to exist. Corp Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. Corp Merger Sub’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

Callodine Merger Sub, LLC, a Delaware limited liability company (“LLC Merger Sub” and together with Corp Merger Sub, the “merger subs”), is a wholly-owned subsidiary of Corp Merger Sub formed by Corp Merger Sub solely for the purpose of engaging in the transactions contemplated by the merger agreement. Upon completion of the LLC merger, LLC Merger Sub will be merged with and into Group LLC, and LLC Merger Sub will cease to exist. LLC Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. LLC Merger Sub’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

 

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OTHER INTERESTED PARTIES IN THE MERGERS

Callodine Group, LLC

Callodine Aggregator, LLC

c/o Callodine Group, LLC

Two International Place, Suite 1830

Boston, MA 02110

Telephone: (617) 880-7480

Callodine Group, LLC, a Delaware limited liability company (“Callodine”), is an entity controlled and principally owned by James Morrow. Callodine is an asset management platform with approximately $2 billion in assets under management and that specializes in yield-oriented investment strategies. Upon completion of the merger, Callodine will partially own and will control Callodine Aggregator, LLC, a Delaware limited liability company (“Aggregator”) formed for purposes of funding the mergers and indirectly investing in the Surviving Corporation. EAM will also own an equity interest in Aggregator.

Formed in 2010, EAM is dedicated to investing in private and public market securities and has formed multiple investment vehicles that provide capital to a variety of industries including energy, media, real estate, asset management, and sports and entertainment. EAM is an entity owned by Terrence and Kim Pegula, owners of Pegula Sports & Entertainment, the management company streamlining key business areas across all Pegula family-owned sports and entertainment properties including the Buffalo Bills, Buffalo Sabres, Buffalo Bandits, Rochester Nighthawks, Rochester Americans, Harborcenter, Black River Entertainment and ADPRO Sports. EAM is a strategic investor in Callodine and its managed funds.

Each of Callodine’s and Aggregator’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

The name and material occupation, position, office or employment of the directors and officers of Callodine are listed below. During the past five years, none of the directors or officers listed below have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

 

Name:

   Title:

James Morrow

   Managing Member

Austin McClintock

   Chief Financial Officer & Chief Operating Officer

Callodine MN Holdings, Inc.

Callodine MidCo, Inc.

Callodine Merger Sub, Inc.

Callodine Merger Sub, LLC

c/o Callodine MN Holdings, Inc.

Two International Place, Suite 1830

Boston, MA 02110

Telephone: (617) 880-7480

Callodine MN Holdings, Inc., a Delaware corporation (“TopCo”), is currently a wholly-owned subsidiary of Aggregator, formed by Callodine solely for the purposes of engaging in the transactions contemplated by the merger agreement. Upon completion of the merger, TopCo will continue to be controlled by Aggregator, but will

 

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also have one or more minority shareholders (including Mr. Mayer). Callodine MidCo, Inc. (“Parent”), is a wholly-owned subsidiary of TopCo, Callodine Merger Sub, Inc. (“Corp Merger Sub”) is a wholly-owned subsidiary of Parent, and Callodine Merger Sub, LLC (“LLC Merger Sub”) is a wholly owned subsidiary of Corp Merger Sub. None of TopCo, Parent, Corp Merger Sub, or LLC Merger Sub have conducted any business operations other than in connection with the transactions contemplated by the merger agreement and the related agreements. Each of TopCo’s, Parent’s, Corp Merger Sub’s, and LLC Merger Sub’s principal executive offices are located at Two International Place, Suite 1830, Boston, MA 02110, and its telephone number is (617) 880-7480.

Marc O. Mayer

Marc O. Mayer

Chairman and Chief Executive Officer

Manning & Napier, Inc.

290 Woodcliff Drive

Fairport, New York 14450

Telephone: (585) 325-6880

Mr. Mayer has served as the Chairman of the Company Board since July 30, 2020 and as Chief Executive Officer of the Company since January 2019. Mr. Mayer has also served as the President of the Company’s affiliates Manning & Napier Advisors, LLC, Group LLC, and Rainier Investment Management, LLC, since January 2019. Mr. Mayer is responsible for the overall execution of the Company’s business plan.

Mr. Mayer has not been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors) and was not a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining him from future violations of, or prohibiting activities subject to, federal or state securities laws, or finding of any violation of federal or state securities laws. Mr. Mayer is a citizen of the United States.

 

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INFORMATION ABOUT THE SPECIAL MEETING

Time, Place and Purpose of the Special Meeting

The Company will hold the special meeting via live webcast on [●], 2022 at [●]. The special meeting can be accessed by visiting [●] where you will be able to attend the live meeting and vote online. Additionally, you will be able to vote up until 11:59 PM Eastern Time the day before the meeting date by visiting [●] and following the instructions. We encourage you to allow ample time for online check-in, which will open at [●] on [●]. Please note that you will not be able to attend the virtual special meeting in person. The purpose of the special meeting is to consider and vote on the merger agreement proposal, the non-binding named executive officer merger-related compensation proposal and the adjournment proposal.

Our stockholders must approve the merger agreement proposal in order for the mergers to occur. If our stockholders fail to approve the merger agreement proposal, the mergers will not occur. Approval of the non-binding named executive officer merger-related compensation proposal and the adjournment proposal are not conditions to completion of the mergers. A copy of the merger agreement is attached as Annex A to this proxy statement and is incorporated by reference in this proxy statement in its entirety. We encourage you to read the merger agreement carefully in its entirety.

The votes on the non-binding named executive officer merger-related compensation proposal and the adjournment proposal are separate and apart from the merger agreement proposal. Accordingly, a stockholder may vote against the non-binding named executive officer merger-related compensation proposal and/or the adjournment proposal and nevertheless vote to approve the merger agreement proposal (and vice versa).

Who Can Vote at the Special Meeting

Only holders of record of the Company common stock, as of the close of business on [●], which is the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. If you own shares that are registered in the name of someone else, such as a broker, bank or other nominee, you need to direct that person how to vote those shares or obtain an authorization from them and vote the shares yourself at the special meeting. As of the close of business on the record date, there were [●] shares of Company common stock outstanding, all of which were shares of Class A common stock.

Quorum

To conduct any business at the special meeting, a quorum must be present virtually or by proxies. The holders of at least a majority of the issued and outstanding shares of Company common stock entitled to vote at the special meeting, represented virtually or by proxy, will constitute a quorum for the transaction of business at the special meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. As of the close of business on the record date, there were [] shares of the Company common stock outstanding, all of which were shares of the Company’s Class A common stock. Accordingly, [] shares of the Company common stock must be represented virtually or by proxy at the special meeting to constitute a quorum.

If you are a Company stockholder of record and you vote by mail, by telephone or through the Internet or at the special meeting via the virtual meeting website, then your shares of Company common stock will be counted as part of the quorum. If you are a “street name” holder of shares of Company common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares of Company common stock will be counted in determining the presence of a quorum. If you are a “street name” holder of shares of Company common stock and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares of Company common stock will not be counted in determining the presence of a quorum.

 

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Once a share of Company common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum and any adjournment of the special meeting, unless the holder is present solely to object to the special meeting. However, if a new record date is set for an adjourned meeting, a new quorum will have to be established.

Votes Required; Treatment of Abstentions and Broker Non-Votes

Approval of the merger agreement proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Company common stock.

Approval of the non-binding named executive officer merger-related compensation proposal requires the affirmative vote of a majority of the votes entitled to be cast by all shares of Company common stock.

Approval of the adjournment proposal will require the affirmative vote of the holders of shares of Company common stock represented virtually or by proxy having a majority of the votes entitled to vote thereon at the special meeting.

A vote to abstain will have the same effect as voting against each proposal as to which you abstain.

If you are a holder of record, failure to submit a proxy or to vote via the virtual meeting website will have the same effect as a vote against each proposal, except with respect to the adjournment proposal, for which such failure to submit a proxy or vote shall have no effect.

If your shares of Company common stock are held in “street name” by your broker, you should instruct your broker how to vote your shares using the enclosed voting instruction card provided by your broker. Under applicable regulations, brokers, banks and other nominees who hold shares in “street name” for customers may not exercise their voting discretion with respect to non-routine matters such as the proposals to be voted upon at the special meeting. As a result, if you do not instruct your broker, bank or other nominee how to vote your shares of Company common stock, your shares will be treated as “broker non-votes” and will not be voted, which will have the same effect as voting against each proposal, except with respect to the adjournment proposal, for which broker non-votes not voted will have no effect.

How to Vote

Your vote is important. Stockholders have a choice of voting by proxy by completing a proxy card and mailing it in the prepaid envelope provided, by calling a toll-free telephone number or through the Internet. Please refer to your proxy card or the information forwarded by your bank, broker, trust or other nominee to see which options are available to you. The telephone and Internet voting facilities for stockholders of record will close at 11:59 p.m., Eastern Time on the day before the special meeting.

If you are a holder of record and sign and return a proxy card but do not include “FOR,” “AGAINST” or “ABSTAIN” on a proposal to be voted, your shares of Company common stock will be voted in favor of that proposal.

If you wish to vote by proxy and your shares of common stock are held by a bank, broker, trust or other nominee, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee. Unless you give your bank, broker, trust or other nominee instructions on how to vote your shares of Company common stock, your bank, broker, trust or other nominee will not be able to vote your shares on the proposals.

The stockholders of record as of the close of business on the record date for the special meeting, their duly appointed proxy holders, and the “street name” stockholders who beneficially owned shares of Company common stock as of the close of business on the record date are entitled to participate in the virtual meeting and

 

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will need their assigned control number to vote shares virtually at the special meeting. The control number can be found on your proxy card. If your shares are held in the name of a bank, broker or other nominee and you do not have the assigned control number, please follow the instructions on the voting instruction card, or other applicable proxy notices, furnished by your bank, broker or other nominee to vote your shares accordingly or contact your bank, broker or other nominee for instructions. If your shares are held in the name of a bank, broker or other nominee, in order to vote online at the virtual special meeting, you must first obtain a valid legal proxy from your broker, bank or other nominee and then register in advance to attend and vote at the special meeting.

If you have any questions about how to vote or direct a vote in respect of your shares of Company common stock, you may contact our proxy solicitor, Alliance Advisors, LLC, toll-free at (866) 619-8917.

YOU SHOULD NOT SEND IN YOUR SHARE CERTIFICATE(S) WITH YOUR PROXY CARD. A letter of transmittal with instructions for the surrender of certificates representing shares or book-entry shares will be mailed to stockholders if the mergers are consummated.

IT IS IMPORTANT THAT YOU SUBMIT A PROXY FOR YOUR SHARES PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, AS PROMPTLY AS POSSIBLE, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY OVER THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS SET FORTH ON THE ENCLOSED PROXY CARD. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING ONLINE MAY REVOKE THEIR PROXIES AND VOTE ELECTRONICALLY AT THE SPECIAL MEETING.

Revocation of Proxies

Any proxy given by a Company stockholder may be revoked at any time before it is voted at the special meeting by doing any of the following:

 

   

submitting another proxy by telephone or through the Internet, in accordance with the instructions on the proxy card;

 

   

delivering a signed written notice of revocation bearing a date later than the date of the proxy to the Company’s Corporate Secretary at Manning & Napier, Inc., 290 Woodcliff Drive, Fairport, New York 14450 stating that the proxy is revoked;

 

   

submitting a later-dated proxy card relating to the same shares of Company common stock; or

 

   

attending the special meeting via the virtual meeting website and voting at the meeting (your attendance at the special meeting will not, by itself, revoke your proxy; you must vote at the special meeting via the virtual meeting website).

Street name” holders of shares of Company common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.

Only your last submitted proxy will be considered. Please cast your vote “FOR” each of the proposals, following the instructions in your proxy card or voting instruction form provided by your broker, bank or other nominee, as promptly as possible.

Adjournments

Although it is not currently expected, the special meeting may be adjourned one or more times in accordance with the merger agreement to a later day or time if necessary or appropriate, including to solicit additional proxies in favor of the merger agreement proposal. Your shares will be voted on any adjournment proposal in accordance with the instructions indicated in your proxy or voting instruction card. If a quorum is not present, the

 

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person presiding at the special meeting or the stockholders holding a majority of the Company common stock represented virtually or by proxy at the special meeting and entitled to vote thereat may adjourn the special meeting in accordance with the merger agreement until a quorum shall be present. If the adjournment is for more than 30 days after the date of this proxy statement, or if a new record date is set for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, stockholders who have already submitted their proxies or voting instructions will be able to revoke them at any time prior to the final vote on the proposals. If you are a holder of record and return a proxy without indicating how you wish to vote on the adjournment proposal, your shares will be voted in favor of the adjournment proposal.

Solicitation of Proxies; Payment of Solicitation Expenses

The Company has engaged Alliance Advisors, LLC (“Alliance”) to assist in the solicitation of proxies and provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not anticipated to exceed $40,000 in total (to be shared equally with Parent). The Company also will reimburse brokers, banks, other nominees, custodians and fiduciaries representing beneficial owners of the shares of Company common stock for their expenses in forwarding soliciting materials to beneficial owners of our shares of Company common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, over the Internet or in person. Our directors, officers and employees will not be paid any additional amounts for soliciting proxies.

Recommendation of the Company Board

After consideration, all of the members of the Company Board (with Mr. Mayer recused) (i) determined that the terms of the merger agreement and the transactions contemplated thereby, including the company merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) determined that the company merger is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the merger agreement, (iii) approved the execution and delivery by the Company of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the company merger and the other transactions upon the terms and subject to the conditions contained therein and (iv) recommended that the Company’s stockholders vote to adopt the merger agreement. Accordingly, the Company Board recommends:

 

   

FOR” the merger agreement proposal;

 

   

FOR” the binding named executive officer merger-related compensation proposal; and

 

   

FOR” the adjournment proposal.

Mr. Mayer, the Chairman of the Company Board and Chief Executive Officer of the Company, was recused from the foregoing determination, and did not participate in the related Company Board vote and approval, due to his potential interests in the transaction.

You should read “Special Factors—Purpose and Reasons of the Company for the Company Merger; Recommendation of the Company; Fairness of the Company Merger” for a discussion of the factors that the Company Board (other than Mr. Mayer who was recused) considered in deciding to recommend the approval of the merger agreement. See also Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers.

Voting Intentions of the Company’s Directors and Executive Officers

Our executive officers (including Mr. Mayer, who is also a member of the Company Board) have informed us that, as of the date of this proxy statement, they intend to vote all of the shares of Company common stock owned

 

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directly by them “FOR” the merger agreement proposal, “FOR” the non-binding named executive officer merger-related compensation proposal, and “FOR” the adjournment proposal. As of [●], 2022, the record date for the special meeting, our executive officers directly owned, in the aggregate, 1,896,167 shares of Company common stock entitled to vote at the special meeting, or collectively approximately 10% of the outstanding shares of Company common stock entitled to vote at the special meeting.

Mr. Mayer, the Company’s Chairman and Chief Executive Officer, and the other Section 16 officers of the Company, who collectively beneficially own approximately 10% of the voting power of the Company’s outstanding capital stock, have separately entered into support agreements, pursuant to which they have agreed to vote their shares in favor of the adoption and approval of the merger agreement and the transactions contemplated thereby, including the company merger, subject to and in accordance with the terms and conditions of the applicable support agreement. Copies of the Support Agreements are attached as Annex B to the accompanying proxy statement. The obligations of the Company supporting stockholders under the support agreements will automatically terminate without any further action required by any person upon the earliest to occur of (i) the closing of the transactions, (ii) the date on which the merger agreement is validly terminated in accordance with its terms, (iii) the completion of the Company stockholders meeting (regardless of whether the merger agreement is approved or not) and (iv) written notice of the termination of the Support Agreement by Parent to the Company supporting stockholders.

As of the date of the filing of this proxy statement, none of Parent, merger subs nor any of their respective affiliates (as defined under Rule 405 of the Securities Act) beneficially owns any shares of Company common stock.

Abstentions

An abstention will have the same effect as a vote cast “AGAINST” the merger agreement proposal, the non-binding named executive officer merger-related compensation proposal and the adjournment proposal, but will count for the purposes of determining if a quorum is present at the special meeting.

Anticipated Date of Completion of the Mergers

We are working to complete the mergers as promptly as practicable. Assuming timely satisfaction of necessary closing conditions, we anticipate that the mergers will be completed in the third quarter of 2022. If our stockholders vote to approve the merger agreement proposal, the mergers will become effective as promptly as practicable following the satisfaction or waiver of the other conditions to the mergers as set forth in the merger agreement.

Householding of the Proxy Statement

The SEC rules permit companies and intermediaries such as brokers, banks and other nominees to satisfy delivery requirements with respect to two or more stockholders sharing the same address by delivering a single proxy statement. This process is commonly referred to as “householding” and can result in significant cost savings for the Company. To take advantage of this opportunity, the Company, brokers, banks and other nominees who hold your shares may deliver only one proxy statement to multiple stockholders who share an address unless one or more of the stockholders has provided contrary instructions. The Company will deliver promptly, upon written or oral request, a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.

Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your bank or broker, and direct your written request to the Company at Manning & Napier, Inc.

 

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Attn: Investor Relations Department, 290 Woodcliff Drive, Fairport, New York 14450, or contact our Investor Relations Department toll-free at 1-800-983-3369. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their banker or broker. For more information, see Information about the Special Meeting—Questions and Additional Information below or Where You Can Find More Information.

Questions and Additional Information

If you have additional questions about the special meeting, the mergers or this proxy statement, need assistance in submitting your proxy or voting your shares of Company common stock, or need additional copies of the proxy statement or the enclosed proxy card or voting instructions, please contact the Company’s proxy solicitor in connection with the special meeting:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

Stockholders and brokers, banks and other nominees may call (866) 619-8917 (toll-free).

 

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THE MERGERS

(THE MERGER AGREEMENT PROPOSAL — PROPOSAL 1)

The Proposal

The Company is asking you to approve the proposal to adopt the Agreement and Plan of Merger, dated as of March 31, 2022, by and among the Company, Group LLC, Parent and the merger subs, pursuant to which Corp Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent, and LLC Merger Sub will be merged with and into Group LLC, with Group LLC surviving the merger as a wholly owned subsidiary of the Company. A copy of the merger agreement is attached as Annex A to this proxy statement and is incorporated by reference in this proxy statement in its entirety.

Vote Required and Board Recommendation

Approval of the merger agreement proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of common stock of the Company.

The Company Board (other than Mr. Mayer who was recused from the meeting of the Company Board at which such determination was made), on behalf of the Company, has determined that the merger agreement and the transactions contemplated by it, including the company merger, are fair, advisable to and in the best interests of the Company and is stockholders, and approved the merger agreement and the transactions contemplated by it, including the mergers, and recommends that you vote “FOR” the merger agreement proposal.

 

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MERGER RELATED EXECUTIVE COMPENSATION ARRANGEMENTS

(THE NON-BINDING NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION PROPOSAL — PROPOSAL 2)

The Proposal

Pursuant to Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, the Company is required to submit a proposal to the Company’s stockholders to approve a stockholder resolution, on a non-binding advisory basis, approving the payment of specified compensation that may be paid or become payable to the Company’s named executive officers in connection with the mergers. This proposal, commonly known as “say-on-golden parachutes” (the “non-binding named executive officer merger-related compensation proposal”), gives the Company’s stockholders the opportunity to vote on an advisory and non-binding basis, on the compensation that the named executive officers may be entitled to receive that is based on or otherwise relates to the mergers. This compensation is summarized in the table and the footnotes thereto under “Special Factors—Interests of Executive Officers and Directors of the Company in the Mergers—Named Executive Officer Merger-Related Compensation.”

The Company Board encourages you to review carefully the named executive officer merger-related compensation information disclosed in this proxy statement.

The Company Board recommends that the Company’s stockholders approve the following resolution:

RESOLVED, that the stockholders of Manning & Napier, Inc. hereby approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to its named executive officers that is based on or otherwise relates to the merger as disclosed in the Company’s proxy statement pursuant to Item 402(t) of Regulation S-K under the section titled “Named Executive Officer Merger-Related Compensation.”

The vote on the non-binding named executive officer merger-related compensation proposal is a vote separate and apart from the vote on the merger agreement proposal. Accordingly, you may vote to approve the merger agreement proposal and vote against the non-binding named executive officer merger-related compensation proposal and vice versa. Because the vote on the non-binding named executive officer merger-related compensation proposal is advisory only, it will not be binding on either the Company or Parent. Accordingly, if the merger agreement proposal is approved and the mergers are completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of the Company stockholders.

Vote Required

The above proposal approving, on an advisory and non-binding basis, the payment of specified compensation that may be paid or become payable to the Company’s named executive officers in connection with the mergers will require the affirmative vote by a majority of the votes entitled to be cast by all shares of Company common stock represented virtually or by proxy at the special meeting. A vote to abstain will have the same effect as voting against the non-binding named executive officer merger-related compensation proposal. If you fail to attend the virtual special meeting and vote via the virtual meeting website or fail to vote by proxy, or if you hold your shares of common stock through a brokerage firm, bank or other nominee and fail to give voting instructions to your brokerage firm, bank or other nominee, it will have the same effect as voting against the non-binding named executive officer merger-related compensation proposal.

The Company Board recommends that the stockholders vote “FOR” the non-binding named executive officer merger-related compensation proposal.

 

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ADJOURNMENT OF THE SPECIAL MEETING

(THE ADJOURNMENT PROPOSAL — PROPOSAL 3)

The Company stockholders are also being asked to consider and vote on a proposal whereby they may adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement. We refer to this proposal as the “adjournment proposal.”

Vote Required and Board Recommendation

Approval of the adjournment proposal will require the affirmative vote of the holders of shares of common stock represented virtually or by proxy having a majority of the votes entitled to vote thereon at the special meeting. If you fail to attend the virtual special meeting and vote via the virtual meeting website or fail to vote by proxy, or if you hold your shares of common stock through a brokerage firm, bank or other nominee and fail to give voting instructions to your brokerage firm, bank or other nominee, it will have no effect on the adjournment proposal. Votes to abstain will have the same effect as a vote against the adjournment proposal.

The Company Board recommends that the stockholders vote “FOR” the adjournment proposal.

 

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OTHER IMPORTANT INFORMATION REGARDING THE COMPANY

Selected Historical Consolidated Financial Data

Set forth below is certain selected historical consolidated financial data relating to the Company. The historical selected financial data as of and for the three month periods ended March 31, 2021 and March 31, 2022 is derived from the unaudited consolidated financial statements and from the Company’s audited consolidated financial statements for fiscal years ended December 31, 2020 and December 31, 2021.

This information is only a summary. The selected historical consolidated financial data as of December 31, 2021 and 2020 should be read in conjunction with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021 and the selected historical consolidated financial data as of and for the three months ended March 31, 2022 and 2021 should be read in conjunction with the Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022, each of which is incorporated by reference into this proxy statement in its entirety. More comprehensive financial information is included in such reports, including management’s discussion and analysis of financial condition and results of operations, and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. See “Where You Can Find More Information.” Results of interim periods are not necessarily indicative of the results expected for a full year or for future periods.

Statement of Operations Data and Balance Sheet Data

 

     Three Months Ended
March 31,
       Year Ended December 31,  
     2022        2021        2021        2020  
     (in thousands, except
per share information)
       (in thousands, except per
share info)
 

Revenue

   $ 35,549        $ 34,151        $ 145,581        $ 127,034  

Operating income (loss)

     1,085          6,209          32,526          13,812  
Net income (loss) attributable to controlling and noncontrolling interests      1,224          5,964          27,072          13,926  
Net income (loss) attributable to common stockholders      1,186          5,240          25,105          10,004  

Basic net income (loss) per share

   $ 0.06        $ 0.31        $ 1.41        $ 0.61  

Diluted net income (loss) per share

   $ 0.06        $ 0.26        $ 1.19        $ 0.29  

 

     March 31,      December 31,  
     2022      2021      2021      2020  
     (in thousands)      (in thousands)  

Consolidated Balance Sheet Data:

     

Cash and cash equivalents

   $ 51,738      $ 45,195      $ 73,489      $ 57,635  

Investment securities

     37,020        23,905        24,608        23,497  

Accounts receivable, net of allowances

     11,140        10,776        13,851        11,915  

Working capital

     76,847        61,064        77,953        59,056  

Property and equipment, net

     2,177        2,728        2,109        3,075  

Goodwill

     4,829        4,829        4,829        4,829  

Total assets

     158,568        143,206        171,423        156,085  

Long-term debt and finance lease liabilities

     72        138        86        160  

Total liabilities

     67,197        66,436        79,022        80,328  

Total shareholders’ equity

     92,333        83,555        93,363        82,957  

Non-controlling interests

     (962      (6,785      (962      (7,200
Total shareholders’ equity and noncontrolling interests      91,371        76,770        92,401        75,757  

 

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Book Value per Share

As of March 31, 2022, the book value per share of Company common stock was $4.83. Book value per share is computed by dividing total shareholders equity (excluding non-controlling interests) at March 31, 2022 by the total shares outstanding on that date.

Ratio of Earnings to Fixed Charges

The following table presents our ratio of earnings to fixed charges for the fiscal periods indicated.

 

     Three Months
Ended March 31,
     Year Ended
December 31
 
     2022      2021      2021      2020  
     (in thousands,
except per share
information)
     (in thousands, except
per share
info)
 

Earnings (losses)

           

Pre-tax net income (loss)

   $ 478      $ 6,667      $ 33,104      $ 13,820  

Add: Fixed charges

     19        20        94        114  

Less: Non-controlling interest income (loss)

     38        724        1,967        3,922  

Total earnings (losses)

   $ 459      $ 5,963      $ 31,231      $ 10,012  

Fixed charges

           

Interest expense

   $ 1      $ 2      $ 23      $ 11  

Payment of capital lease obligations

     18        18        71        103  

Total fixed charges

   $ 19      $ 20      $ 94      $ 114  
Ratio of earnings to fixed charges
Earnings (losses)
     24.2        298.2        332.2        87.8  

Market Price of Shares and Dividends

Our shares of Company common stock trade on the NYSE under the symbol “MN.” As of the close of business on [●], 2022, the most recent practicable date before this proxy statement was distributed to our stockholders, there were [●] shares of our common stock outstanding and entitled to vote, all of which were shares of our Class A common stock.

On [        ], the most recent practicable date before this proxy statement was distributed to our stockholders, the closing price for the Shares on the NYSE was $[        ] per share of Company Class A Common Stock. You are encouraged to obtain current market quotations for the shares of common stock in connection with voting your shares.

The following table sets forth, for the periods indicated, the high and low intraday sales prices of our shares as reported by the NYSE during such period, as well as the quarterly dividends per share.

 

     Intraday Market
Price
     Dividend per
common share
 

Fiscal Year

   High      Low  

2022

        

First Quarter

   $ 9.43      $ 7.46      $ 0.05  

Second Quarter(*)

   $ 12.91      $ 11.88      $ 0.05  

2021

        

First Quarter

   $ 8.04      $ 5.85     

Second Quarter

   $ 8.70      $ 6.07     

Third Quarter

   $ 10.25      $ 7.47      $ 0.05  

Fourth Quarter

   $ 9.76      $ 7.25      $ 0.05  

2020

        

First Quarter

   $ 2.07      $ 0.99      $ 0.02  

Second Quarter

   $ 3.94      $ 1.11      $ 0.02  

Third Quarter

   $ 4.65      $ 2.65     

Fourth Quarter

   $ 6.65      $ 3.75     

 

(*)

Second Quarter 2022 market price range reflects trading through May 31, 2022.

 

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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of our capital stock as of April 25, 2022 with respect to:

 

   

each person known to us to own beneficially more than 5% of any class of our outstanding shares

 

   

each of our named executive officers;

 

   

each of our current directors; and

 

   

all of our directors and executive officers as a group.

The following table does not include any shares of Class A common stock that may be outstanding within 60 days after April 25, 2022 pursuant to the right of holders of Class A units of Manning & Napier Group under the terms of the exchange agreement with M&N Group Holdings to exchange those units for shares of our Class A common stock because no final binding elections to tender units for exchange have been received by the Company as of April 25, 2022.

The information as to the number of shares beneficially owned by the individuals and entities listed below is derived from reports filed with the SEC by such persons and Company records. In accordance with the rules and regulations of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to stock options that are exercisable within 60 days of April 25, 2022. Shares issuable pursuant to stock options are deemed outstanding for computing the percentage of the person holding such options but are not outstanding for computing the percentage of any other person. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of our Class A common stock. Unless otherwise indicated, the address for each stockholder listed below is c/o Manning & Napier, Inc., 290 Woodcliff Drive, Fairport, New York 14450.

 

     Class A common stock(1)  
Beneficial Owner    Number of
Shares
Beneficially
Owned (#)(2)
     Percent of
Shares
Beneficially
Owned (%)(2)
 

Executive Officers and Directors

     

Marc Mayer(3)

     1,789,755        9.1

Ebrahim Busheri

     360,114        1.9

Paul Battaglia

     31,779        *  

Barbara Goodstein

     177,848        *  

Richard S. Goldberg

     145,137        *  

Lofton Holder

     —         

Kenneth A. Marvald

     130,966        *  

Edward J. Pettinella

     539,318        2.8

All executive officers and directors as a group (14 persons)

     3,389,436        17.3

5% Stockholders

     

QCI Asset Management Inc.(4)

     2,589,969        13.5

Renaissance Technologies LLC(5)

     1,040,968        5.4

 

*

Less than 1%.

(1)

Each share of our Class A common stock is entitled to one vote per share.

(2)

As of April 25, 2022, there were 19,124,332 shares of our common stock outstanding, all of which were shares of Class A common stock. The percentage of beneficial ownership as to any person as of that date is calculated by dividing the number of shares beneficially owned by the person, which includes the number of

 

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  shares as to which the person has the right to acquire voting or investment power as of or within 60 days of such date, by the sum of the number of shares outstanding as of the date plus the number of shares as to which the person as the right to acquire voting or investment power as of or within 60 days of such date. Consequently, the denominator for calculating beneficial ownership percentages may be different for each beneficial owner.
(3)

Number of shares beneficially owned includes 500,000 presently exercisable stock options.

(4)

Information obtained from a Schedule 13G/A filed with the SEC on February 22, 2022 by QCI Asset Management, Inc., 1040 Pittsford Victor Rd., Pittsford, NY 14534. According to the Schedule 13G/A, QCI Asset Management Inc. beneficially owns and has sole voting and dispositive power over 2,589,969 shares of our Class A common stock, and shared voting and dispositive power over zero shares of our Class A common stock.

(5)

Information obtained from a Schedule 13G/A filed with the SEC on February 11, 2022 by Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation, 800 Third Avenue, New York, NY 10022. According to the Schedule 13G/A, Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation beneficially own and have sole dispositive power over 1,040,968 shares of our Class A common stock, sole voting power over 1,004,568 shares of our Class A common stock and shared voting and dispositive power over zero shares of our Class A common stock.

Prior Public Offerings

None of the Company, Parent, merger subs nor any of their respective affiliates has made an underwritten public offering of shares of Company common stock for cash during the past three years that was registered under the Securities Act, or exempt from registration under Regulation A promulgated thereunder.

Certain Transactions in the Company Common Stock

Other than the merger agreement and agreements entered into in connection therewith, including the support agreements and the rollover agreement with Mr. Mayer (as described in “The Merger Agreement,” “—Support Agreement” and “—Rollover Agreement”), and certain activity related to the Company’s equity compensation awards discussed elsewhere in this proxy statement, the Company, Parent, merger subs and their respective affiliates have not executed any transactions with respect to the shares of Company common stock during the past sixty (60) days. In addition, no affiliates of Parent or the Rollover Holder have purchased any shares during the past two years, other than Mr. Mayer’s transactions described below (all of which were reported in Mr. Mayer’s Statements of Changes of Beneficial Ownership on Form 4 previously filed with the SEC).

 

Date

   Acquisition      Option
Exercise
     Share
Disposition
     Price  

August 21, 2020

     4,172            $ 4.06 per share (1) 

August 24, 2020

     328            $ 4.27 per share  

September 1, 2020

     2,500            $ 4.39 per share (2) 

September 21, 2020

        166,666         $ 2.01 per share  

September 21, 2020

        683,334         $ 2.01 per share  

September 21, 2020

           634,527      $ 4.30 per share (3) 

December 3, 2020

        200,000         $ 2.01 per share  

December 3, 2020

           141,458      $ 5.22 per share (3) 

December 16, 2020

        200,000         $ 2.01 per share  

December 16, 2020

           137,015      $ 5.94 per share (3) 

December 31, 2020

           65,501      $ 6.27 per share (3) 

January 4, 2021

        450,000         $ 2.01 per share  

January 4, 2021

           303,123      $ 6.50 per share (3) 

January 20, 2021

        150,000         $ 2.01 per share  

January 20, 2021

           102,050      $ 6.12 per share (3) 

 

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Date

   Acquisition      Option
Exercise
     Share
Disposition
     Price  

February 26, 2021

        161,666         $ 2.01 per share  

February 26, 2021

        38,334         $ 2.01 per share  

February 26, 2021

           130,451      $ 7.46 per share (3) 

March 15, 2021

        171,668         $ 2.01 per share  

March 15, 2021

        128,332         $ 2.01 per share  

March 15, 2021

           193,905      $ 7.82 per share (3) 

May 5, 2021

        250,000         $ 2.01 per share  

May 5, 2021

           163,193      $ 7.43 per share (3) 

May 24, 2021

        150,000         $ 2.01 per share  

May 24, 2021

           96,607      $ 7.97 per share (3) 

June 11, 2021

        250,000         $ 2.01 per share  

June 11, 2021

           160,862      $ 8.01 per share (3) 

 

(1)

Represents a weighted average price, with acquisitions at prices ranging from $4.04 to $4.09, inclusive.

(2)

Represents a weighted average price, with acquisitions at prices ranging from $4.35 to $4.41, inclusive.

(3)

Payment of exercise price or tax liability by delivering or withholding securities incident to the option exercise.

Directors and Executive Officers of the Company

The Company Board presently consists of six (6) members. The persons listed below are the directors and executive officers of the Company as of the date of this proxy statement.

The merger agreement provides that from and after the effective time of the company merger, (i) the directors of Corp Merger Sub immediately prior to the company merger effective time will be the directors of the Surviving Corporation, and such directors will serve until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the organizational documents of the Surviving Corporation, and (ii) the officers of the Company immediately prior to the company merger effective time will be the officers of the Surviving Corporation, and such officers will serve until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the organizational documents of the Surviving Corporation.

Neither the Company, nor any of the Company’s directors or executive officers listed below has, to the knowledge of the Company, been convicted in a criminal proceeding during the past five (5) years (excluding traffic violations or similar misdemeanors). In addition, neither the Company, nor any of the Company’s directors or executive officers listed below has, to the knowledge of the Company, during the past five (5) years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

The name, position, business address, present principal occupation or employment and material occupations, positions, offices or employment for the past five (5) years of each of the Company’s directors and executive officers are set forth below.

All of the Company’s directors and executive officers can be reached c/o Manning & Napier, Inc., 290 Woodcliff Drive, Fairport, NY, 14450, (585) 325-6880, and each of the directors and executive officers is a citizen of the United States.

 

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Directors

 

Name

   Age     

Position(s)

Marc O. Mayer

     64     

Chief Executive Officer, Chairman of the Board

Richard S. Goldberg

     69     

Director

Barbara Goodstein

     61     

Director

Lofton Holder

     57     

Director

Kenneth A. Marvald

     59     

Director

Edward J. Pettinella

     70     

Lead Independent Director

Marc O. Mayer has served as our Chairman of the Board since July 30, 2020 and as our Chief Executive Officer since January 2019. Mr. Mayer has also served as the President of our affiliates Manning & Napier Advisors, LLC (“Manning & Napier Advisors”), Manning & Napier Group, LLC (“Manning & Napier Group”), and Rainier Investment Management, LLC, since January 2019. Prior to joining the Company, Mr. Mayer served as Head of North American Distribution for Schroders in New York, where he was responsible for leading all institutional and intermediary business initiatives from 2014 to 2018. Prior to Schroders, he served as Chief Executive Officer at GMO LLC, an investment management firm, with over $70 billion in assets under management (“AUM”), from 2009 to 2011. This was preceded by a 20-year tenure at AllianceBernstein and its predecessor firm, Sanford C. Bernstein, Inc. At AllianceBernstein, Mr. Mayer’s roles included Head of their $250 billion in AUM global institutional business, Head of their $150 billion in AUM global intermediary business, and Chief Investment Officer of Blend Strategies, overseeing $150 billion in AUM. Prior to Bernstein’s combination with Alliance Capital, Mayer was Chief Executive Officer and Director of Research of Sanford C. Bernstein & Co., LLC, Bernstein’s sell-side research subsidiary, and also a member of Bernstein’s board of directors. Mr. Mayer chairs the Board of Directors of the American Friends of the Hebrew University and he also chairs its investment committee. He also serves on the executive committee of the Hebrew University in Jerusalem. He serves on the board of Columbia Business School and is a trustee of Saint Ann’s School in Brooklyn, NY. Mr. Mayer earned a Bachelor’s degree from Yale University in 1978, and an M.B.A. from Columbia University School of Business in 1983.

Richard S. Goldberg served as our Co-Chief Executive Officer from March 2018 to January 2019, joined our Board of Directors in June 2014, and served as an advisor to Manning & Napier Advisors from 1998 through December 31, 2020. Mr. Goldberg has over 30 years of experience as an investment banker focusing on the global financial institution sector. His career included positions at Lehman Brothers, Lazard, Needham & Company (2009 to 2018) and Wasserstein Perella as head of the North American Financial Institutions Advisory practice. Mr. Goldberg is currently a faculty and board member of Columbia University’s School of International and Public Affairs since 2005 and 2009, respectively. In addition, Mr. Goldberg has been a published author, taught graduate courses at Brandeis University’s International Business School as a Senior Lecturer, provided industry commentary on Bloomberg TV and NPR, and guest lectured at prominent US and European universities. Mr. Goldberg earned a Bachelor’s degree from Boston College in 1975 and an M.B.A. from University of Pennsylvania’s Wharton Business School in 1978.

Barbara Goodstein joined our Board of Directors in November 2012. Ms. Goodstein is the Founder of BGreat, and has served as its Chief Executive Officer since 2018. She served as the Chief Executive Officer and President of Tiger 21 Holdings from May 2015 through January 2018, and served as the Chief Marketing Officer at Vonage from July 2012 through January 2015. Prior to joining Vonage, Ms. Goodstein held senior management positions at AXA Equitable, JP Morgan Chase, and Instinet.com. Ms. Goodstein currently serves on the board of directors of KushCo Holdings Inc, where she acts as Chair of the Nominating & Governance Committee. She also serves on the advisory board of FOX (Family Office Exchange), the premier global member network for enterprise families. In addition, Ms. Goodstein served as a member of the board of directors of AXA Advisors from 2006 through 2010 and Chase Investor Services Corp. from 2001 through 2005. Ms. Goodstein is a member of the Board of Directors of God’s Love We Deliver. Ms. Goodstein earned a Bachelor’s degree from Brown University in 1981 and an M.B.A. from Columbia University School of Business in 1983.

 

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Lofton Holder joined our Board of Directors in June 2021. From 2011 to 2019, Mr. Holder served as the co-founder and managing partner for Pine Street Alternative Asset Management Company, an investment management firm focused on providing seed capital to emerging hedge fund managers. Prior to co-founding Pine Street, Mr. Holder was a Partner and Managing Director at Investcorp International from 2004 to 2010, and a Managing Director at JP Morgan Investment Management from 1993 to 2004. Mr. Holder also held positions in the Investment Banking Department of The First Boston Corporation. Mr. Holder currently serves on the board of Golub Capital, where he is a member of the Nominating and Corporate Governance Committee and the Audit and Compensation Committees. Mr. Holder also serves on the boards of The Edwin Gould Foundation, Maimonides Medical Center, Pace University, and New York Gray’s Baseball Club. Mr. Holder earned a Bachelor’s degree from Columbia University in 1986, and an M.B.A from Yale University School of Management in 1990.

Kenneth A. Marvald joined our Board of Directors in April 2017. For over 25 years, Mr. Marvald has worked at Graywood Companies Inc., a global equity firm consisting of over 50 domestic and international operating companies across numerous industries, where he: (i) oversees all legal affairs as Vice President & General Counsel; and (ii) has P&L responsibility for a multimillion square foot commercial real estate portfolio. Mr. Marvald also serves as a board member on several boards, including the University of Rochester Medicine Highland Hospital Board, the Excellus Rochester Regional Advisory Board, and The Summers Foundation. Mr. Marvald earned a Bachelor’s degree in Political Science in 1984 from SUNY Binghamton, a J.D. from SUNY Buffalo Law School in 1987, and an LL.M. in Taxation from NYU Law School in 1988.

Edward J. Pettinella joined our Board of Directors in November 2011 and was named Lead Independent Director in July 2020. From January 2004 through October 2015, Mr. Pettinella served as President, CEO and Director of Home Properties, Inc., a real estate investment trust that was traded on the NYSE and acquired, developed and operated apartment communities in the northeast and mid-Atlantic markets. Prior to joining Home Properties in 2001, Mr. Pettinella served as President of Charter One Bank of New York and Executive Vice President of Charter One Financial, Inc. In addition, Mr. Pettinella held several management positions for Rochester Community Savings Bank, including Chief Operating Officer, Chief Financial Officer and Chief Investment Officer. Mr. Pettinella serves on the Board of Directors of Life Storage, Inc., a publicly traded real estate investment trust where he is the Chair of the Governance and Nominating Committee. Mr. Pettinella also serves on the Board of Directors of Royal Oak Realty Trust, a private non-traded real estate investment trust. Mr. Pettinella is also a member of the Syracuse University Board of Trustees, where he is the Vice Chair, serves on the Executive Committee and chairs the Audit and Risk Committee. Mr. Pettinella earned a B.S. in Business from SUNY Geneseo in 1973 and an M.B.A. in Finance from Syracuse University in 1976.

Executive Officers (other than, Marc O. Mayer, who is described above under the heading “—Directors”)

 

Name

  Age    

Position(s)

Paul J. Battaglia

    43    

Chief Financial Officer

Christopher Briley

    51    

Chief Technology Officer, Manning & Napier Advisors

Nicole Kingsley Brunner

    42    

Chief Marketing and Strategy Officer, Manning & Napier Advisors

Ebrahim Busheri

    56    

Director of Investments, Manning & Napier Advisors

Stacey Green

    47    

Head of Human Resources

Marc O. Mayer

    64    

Chief Executive Officer, Chairman of the Board

Aaron McGreevy

    47    

Chief Distribution Officer

Scott Morabito

    34    

Managing Director of Client Service and Business Operations

Sarah C. Turner

    39    

General Counsel & Corporate Secretary

Paul J. Battaglia, Jr. has served as our Chief Financial Officer since March 2018. Mr. Battaglia previously served as Manning & Napier’s Vice President of Finance, having joined the Company in 2004. Mr. Battaglia also serves as the President and Chairman of Manning & Napier Fund, Inc. Prior to joining Manning & Napier, Mr. Battaglia served as an Audit Associate at PricewaterhouseCoopers, LLP. Mr. Battaglia serves on the

 

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Program Committee of Junior Achievement of Western NY. Mr. Battaglia earned a B.B.A./M.B.A. in Accounting and Finance from St. Bonaventure University in 2001. He is also a Certified Public Accountant.

Christopher Briley has served as our Chief Technology Officer since March 2019. Prior to joining the Company, Mr. Briley served as Legg Mason’s Head of Technology Business Management from February 2016 to January 2018, and its Managing Director and Head of Corporate Application Solutions from January 2018 to March 2019. From February 2013 to January 2016, Mr. Briley served as Senior Director of Global Applications and Architecture at networking services firm Ciena. Mr. Briley earned a Bachelor’s degree in Economics in 1994 from The University of North Carolina at Greensboro, and a Master of Science in Project Management from Penn State University in 2012.

Nicole Kingsley Brunner has served as our Chief Marketing and Strategy Officer since July 2021. Ms. Brunner has previously served as Manning & Napier’s Chief Marketing Officer from August 2018 to July 2021, Director of Marketing Strategy from March 2016 to August 2018, and as our Marketing Manager from May 2002 to March 2016. Ms. Brunner is a member of the Board of Trustees for the National Susan B. Anthony Museum and House, the Advisory Board for Make-A-Wish of Metro/Western NY, and she also serves on the Grant Making Committee for the Rochester Women’s Giving Circle. Ms. Brunner earned a Bachelor’s degree in Public Relations and Marketing Communication from Simmons College in 2002.

Ebrahim Busheri, having rejoined the Company in 2011, is a member of the Senior Research Group and was named Director of Investments in March 2015. Previously, Mr. Busheri worked as the Director of Investments at W.P. Stewart and as a Consultant for Heritage Capital. From 1988 to 2001, Mr. Busheri worked at Manning & Napier Advisors in various roles, including as a Director of Research. Mr. Busheri earned a Bachelor’s degree in Accounting & Economics from Muskingum College in 1986 and an M.B.A. in Finance from the University of Rochester in 1988. Mr. Busheri is also a Chartered Financial Analyst.

Stacey Green has served as our Head of Human Resources since April 2021. Ms. Green previously served as HR Director and Assistant HR Director from January 2020 to April 2021 and January 2018 to January 2020, respectively. She joined the Company in 1997 and held various roles focusing on benefits and payroll within the Human Resources department before being promoted to Assistant HR Director in 2018. Ms. Green earned both a Bachelor’s degree in Business Management with a concentration in Human Resources and her MBA from St. John Fisher College in 1996 and 2001, respectively. Ms. Green also holds a certificate in Industrial Labor Relations from Cornell University and is a member of the Society for Human Resource Management.

Aaron McGreevy has served as our Chief Distribution Officer since July 2021. Mr. McGreevy previously served as Manning & Napier’s Managing Director of Institutional and Intermediary Sales, Director of Taft-Hartley Services, Vice President and Portfolio Strategist, and Senior Risk Management Analyst. Prior to joining Manning & Napier in 2004, Mr. McGreevy served as an Investment Officer at Fifth Third Bank. Mr. McGreevy earned a Bachelor’s degree in Business Administration from the University of Findlay in 2002. Mr. McGreevy is also a Chartered Retirement Plan Specialist and an Accredited Asset Management Specialist.

Scott Morabito has served as our Managing Director of Client Service and Business Operations since April 2021. Mr. Morabito also serves as the President of Exeter Trust Company, Vice President of the Manning & Napier Fund, Inc., and President and Director of Manning & Napier Investor Services, Inc., the fund’s distributor. Mr. Morabito originally joined the Company in 2011, and previously served as Manning & Napier’s Managing Director of Operations from July 2019 to April 2021, Director of the Funds Group from January 2017 to July 2019, and held various roles as a strategy analyst or manager from September 2011 to January 2017. Mr. Morabito earned a Bachelor’s degree in Financial Economics from the University of Rochester in 2010 and his MBA in Finance from the Rochester Institute of Technology in 2011.

 

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Sarah C. Turner rejoined the Company in May 2018 to serve as the Company’s General Counsel and Corporate Secretary. Ms. Turner also serves as Chief Legal Officer of Manning & Napier Fund, Inc. Ms. Turner served as Counsel in the Securities and Capital Markets practice group at the law firm Harter Secrest & Emery from October 2017 to April 2018, and prior to that she served as Legal Counsel to the Company since 2010. Prior to joining the Company in 2010, Ms. Turner served as an Associate in the Real Estate practice group at Mayer Brown LLP. Ms. Turner sits on the Board of Directors of the Rochester City Ballet. Ms. Turner earned a Bachelor’s degree in Political Science from Allegheny College in 2004 and her Juris Doctor from Fordham University School of Law in 2007.

 

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APPRAISAL RIGHTS

If the company merger is consummated, stockholders who continuously hold shares of Company common stock through the effective time, who do not vote such shares in favor of the adoption of the merger agreement, who properly demand appraisal of such shares and who do not effectively withdraw their demands or otherwise lose their rights of appraisal, will be entitled to an appraisal of such shares in connection with the company merger under Section 262 of the DGCL (“Section 262”). The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex E, and is incorporated by reference in this proxy statement in its entirety. The following summary does not constitute any legal or other advice, and does not constitute a recommendation that stockholders exercise their appraisal rights under Section 262. All references in Section 262 and in this summary to a “stockholder” are to the record holder of shares unless otherwise expressly noted herein. Only a holder of record of shares of Company common stock is entitled to demand appraisal of such shares registered in that holder’s name. A person having a beneficial interest in shares of Company common stock held of record in the name of another person, such as a broker, bank or other nominee, must act promptly to cause the record holder to follow the steps set forth in Section 262 (and summarized below) properly and in a timely manner to perfect appraisal rights. If you hold your shares of Company common stock through a broker, bank or other nominee, and if you wish to exercise appraisal rights, you should consult with such broker, bank or other nominee.

Under Section 262, if the company merger is completed, holders of shares of Company common stock who: (i) submit a written demand for appraisal to the Company before the vote is taken on the adoption of the merger agreement; (ii) do not submit a proxy with respect to, or otherwise vote, the shares for which such holders seek appraisal in favor of the proposal to adopt the merger agreement; (iii) continue to hold such shares of record on and from the date of the making of the demand through the company merger effective time; and (iv) strictly comply with all other procedures for exercising appraisal rights under Section 262 of the DGCL, will be entitled to have such shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of such shares, exclusive of any element of value arising from the accomplishment or expectation of the company merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court. The Court of Chancery will dismiss appraisal proceedings with respect to the Company Class A common stock unless: (a) the total number of shares of Company Class A common stock held by stockholders who have complied with Section 262 and who have become entitled to appraisal rights exceeds 1% of the outstanding shares of Company Class A common stock; or (b) the value of the aggregate per share merger consideration in respect of the shares of Company Class A common stock held by stockholders who have complied with Section 262 and who have become entitled to appraisal rights exceeds $1,000,000 (conditions (a) and (b) referred to as the “ownership thresholds”). Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the company merger effective time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period. However, at any time before the Delaware Court of Chancery enters judgment in the appraisal proceedings, the Surviving Corporation may voluntarily pay to each stockholder entitled to appraisal an amount in cash pursuant to subsection (h) of Section 262, in which case, such interest will accrue after the time of such payment only on an amount that equals the difference, if any, between the amount so paid and the “fair value” of the shares of Company common stock as determined by the Delaware Court of Chancery, in addition to any interest accrued prior to the time of such voluntary cash payment, unless paid at such time. The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than twenty (20) days prior to the meeting, must notify each of its stockholders, who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available, that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes the Company’s notice to stockholders that appraisal rights are available in connection with the

 

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company merger, and the full text of Section 262 is attached to this proxy statement as Annex E, in compliance with the requirements of Section 262. In connection with the company merger, any holder of shares of Company common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex E carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner will result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her, its or their appraisal rights will be entitled to receive the per share merger consideration described in the merger agreement, without interest thereon. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of any shares, that if a stockholder considers exercising such rights, that stockholder is encouraged to seek the advice of legal counsel. To the extent there are any inconsistencies between the summary of Section 262 contained herein and Section 262, Section 262 will govern.

Stockholders wishing to exercise the right to an appraisal of their shares must do ALL the following:

 

   

NOT vote the shares for which appraisal is sought in favor of the proposal to adopt the merger agreement;

 

   

deliver to the Company a written demand for appraisal of such shares before the vote on the merger agreement at the special meeting, which written demand must reasonably inform the Company of the identity of the stockholder who intends to demand appraisal of his, her, its or their shares, and that such stockholder intends thereby to demand appraisal of such shares;

 

   

continuously hold such shares on and from the date of making the demand through the company merger effective time (a stockholder will lose appraisal rights if the stockholder transfers the shares before the company merger effective time);

 

   

file a petition in the Delaware Court of Chancery requesting a determination of the fair value of such shares within 120 days after the company merger effective time. This may be undertaken by the stockholder (or any person who is the beneficial owner of shares held either in a voting trust or by a broker, bank or other nominee on behalf of such person) or the Surviving Corporation. The Surviving Corporation is under no obligation to file any petition and has no intention of doing so; and

 

   

otherwise comply fully with the conditions established by Section 262.

In addition, with respect to the Company Class A common stock, one of the ownership thresholds must be met.

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement or abstain from voting.

Making a Written Demand

Any holder of shares of Company common stock wishing to exercise appraisal rights must deliver to the Company, before the vote on the adoption of the merger agreement at the special meeting at which the proposal to adopt the merger agreement will be submitted to stockholders, a written demand for the appraisal of the stockholder’s shares, and that stockholder must not vote such shares or submit a proxy for such shares in favor of the adoption of the merger agreement. A holder of shares exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the company merger effective time. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights for such stockholder’s shares must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting, with respect to such shares. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself,

 

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constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote against the adoption of the merger agreement. A proxy or vote against the adoption of the merger Agreement will not constitute a demand. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting will constitute a waiver of appraisal rights.

Only a holder of record of shares of Company common stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of Company common stock must be executed by or on behalf of the holder of record, and must reasonably inform the Company of the identity of the holder and state that the person intends thereby to demand appraisal of the holder’s shares in connection with the company merger. If the shares are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if the shares are owned of record by more than one (1) person, as in a joint tenancy and tenancy in common, the demand must be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two (2) or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners. A record holder such as a broker, bank or other nominee who holds shares as nominee for several beneficial owners may exercise appraisal rights with respect to the shares held for one or more beneficial owners. In such case, the written demand should set forth the number of shares as to which appraisal is sought, and where no number of shares is expressly mentioned it will be presumed to cover all shares held in the name of the record owner. If a stockholder holds shares through a broker who in turn holds the shares through a central securities depositary nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder.

STOCKHOLDERS WHO HOLD THEIR SHARES THROUGH A BROKER, BANK OR OTHER NOMINEE AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BROKER, BANK OR OTHER NOMINEE, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BROKER, BANK OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER, BANK OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to the Company at 290 Woodcliff Drive, Fairport, New York 14450, and may not be submitted by electronic submission. Such written demand must be delivered to and received by the Company before the vote on the adoption of the merger agreement at the special meeting.

Any holder of shares of Company common stock who has delivered a written demand to the Company and who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her, its or their demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to the Company a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than sixty (60) days after the company merger effective time will require written approval of the Surviving Corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this does not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the per share merger consideration, without interest thereon, less any applicable withholding taxes, within sixty (60) days after the company merger effective time. If an appraisal proceeding is commenced and the Company, as the Surviving Corporation, does not approve a request to withdraw a demand for appraisal when that approval is required, or,

 

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except with respect to any stockholder who withdraws such stockholder’s demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the per share merger consideration being offered pursuant to the merger agreement.

Notice by the Surviving Corporation

If the company merger is completed, within ten (10) days after the company merger effective time, the Surviving Corporation will notify each holder of shares of Company common stock who has properly made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the company merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the company merger effective time, but not thereafter, the Surviving Corporation or any holder of shares who has complied with Section 262 and is otherwise entitled to seek appraisal under Section 262 (including for this purpose any beneficial owner of the relevant shares) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the Surviving Corporation in the case of a petition filed by a stockholder (or beneficial owner), demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The Surviving Corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the Surviving Corporation will file a petition or initiate any negotiations with respect to the fair value of the shares. Accordingly, any holders of shares of Company common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares within the time and in the manner prescribed in Section 262. The failure of a holder of shares to file such a petition within the period specified in Section 262 could nullify the stockholder’s previous written demand for appraisal.

Within 120 days after the company merger effective time, any holder of shares who has complied with the requirements of Section 262 and who is otherwise entitled to appraisal rights thereunder will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which the Company has received demands for appraisal, and the aggregate number of holders of such shares. The Surviving Corporation must give this statement to the requesting stockholder within ten (10) days after receipt by the Surviving Corporation of the written request for such a statement or within ten (10) days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares held either in a voting trust or by a broker, bank or other nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the Surviving Corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.

If a petition for an appraisal is duly filed by a holder of shares of Company common stock and a copy thereof is served upon the Surviving Corporation, the Surviving Corporation will then be obligated, within twenty (20) days after such service, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order that notice of the time and place fixed for the hearing on the petition be mailed to the Surviving Corporation and all of the stockholders shown on the written statement described above at the addresses stated therein. Such notice will also be published at least one (1) week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware, or in another publication determined by the court. The costs of these notices are borne by the Surviving Corporation. After notice to stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have

 

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become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded payment for their shares to submit their stock certificates (if any) to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings and, if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss that stockholder from the proceedings. The Delaware Court of Chancery will dismiss appraisal proceedings as to all stockholders who have asserted appraisal rights if neither of the ownership thresholds is met.

Determination of Fair Value

The appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares, exclusive of any element of value arising from the accomplishment or expectation of the company merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, interest from the company merger effective time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the company merger effective time and the date of payment of the judgment. However, at any time before the Delaware Court of Chancery enters judgment in the appraisal proceedings, the Surviving Corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case such interest will accrue after the time of such payment only on an amount that equals the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery, in addition to any interest accrued prior to the time of such voluntary payment, unless paid at such time.

In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the company merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the mergers and not the product of speculation, may be considered.”

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the company merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262. No representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither the Company nor Parent anticipate offering more than the merger consideration to any stockholder exercising appraisal rights, the Company reserves the right to make a voluntary cash payment pursuant to subsection (h) of Section 262 and each of the Company and Parent reserve the right to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share is less than the per share merger consideration. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and charged

 

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upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by a stockholder in connection with an appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to be appraised. In the absence of such determination or assessment, each party bears its own expenses.

If any stockholder who demands appraisal of his, her, its or their shares under Section 262 fails to perfect, or effectively loses or withdraws, such holder’s right to appraisal, the stockholder’s shares will be deemed to have been converted at the company merger effective time into the right to receive the merger consideration, without interest thereon, less any applicable withholding taxes, subject to and in accordance with the terms and conditions of the merger agreement. A stockholder will fail to perfect, or effectively lose or withdraw, the holder’s right to appraisal if no petition for appraisal is filed within 120 days after the company merger effective time or if the stockholder delivers to the Surviving Corporation an effective written withdrawal of the holder’s demand for appraisal and an acceptance of the merger consideration in accordance with Section 262.

From and after the company merger effective time, no stockholder who has demanded appraisal rights will be entitled to vote such shares for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions on the holder’s shares, if any, payable to stockholders as of a time prior to the company merger effective time. If no petition for an appraisal is filed or if the stockholder delivers to the Surviving Corporation a written withdrawal of the demand for an appraisal and an acceptance of the company merger, either within sixty (60) days after the company merger effective time or thereafter with the written approval of the Surviving Corporation, then the right of such stockholder to an appraisal will cease. Once a petition for appraisal is filed with the Delaware Court of Chancery, however, the appraisal proceeding may not be dismissed as to any stockholder without the approval of the court, and such approval may be conditioned upon such terms as the court deems just; provided, however, that the foregoing will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the company merger within sixty (60) days after the company merger effective time.

Failure to comply strictly with all of the procedures set forth in Section 262 will result in the loss of a stockholder’s statutory appraisal rights. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

 

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DELISTING AND DEREGISTRATION OF COMMON STOCK

If the mergers are completed, there will be no further market for the shares of Company common stock and, as promptly as practicable following the company merger effective time and in compliance with applicable law, the Company’s securities will be delisted from the NYSE and deregistered under the Exchange Act.

OTHER MATTERS

As of the date of this proxy statement, the Company Board knows of no matters that will be presented for consideration at the special meeting other than as described in this proxy statement.

STOCKHOLDER PROPOSALS AND NOMINATIONS

If the mergers are completed, we will not have public stockholders and there will be no public participation in any future meeting of stockholders.

However, if the mergers are not completed, or if we are otherwise required to do so under applicable law, we will hold a 2023 annual meeting of stockholders. Any stockholder nominations or proposals for other business intended to be presented at our next annual meeting must be submitted to us as set forth below.

In order for a stockholder proposal to be eligible to be considered for inclusion in the Company’s proxy statement and proxy card for the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) under Rule 14a-8 of the Exchange Act, the proposal must be received by the Company at its principal executive offices, 290 Woodcliff Drive, Fairport, New York 14450, Attn: Corporate Secretary, no later than December 30, 2022, and must otherwise comply with Rule 14a-8 of the Exchange Act.

A stockholder wishing to present other proposals at the 2023 Annual Meeting, including any nomination of persons for election to the Company Board, must provide proper written notice such that the proposal must: (1) be received by the Company at the address set forth in the preceding sentence not less than 90 days nor more than 120 days prior to June 22, 2023; provided that if the date of the 2023 Annual Meeting of Stockholders is changed by more than 30 days from the anniversary date of the 2022 Annual Meeting of Stockholders, the proposal must be received by the Company in accordance with its Amended and Restated Bylaws and applicable law no later than the close of business on the 10th day following the earlier of the date on which notice of the date of the meeting was mailed and the date on which public disclosure of the meeting date was made; and (2) concern a matter that may be properly considered and acted upon at the annual meeting in accordance with applicable laws, regulations and the Company’s Amended and Restated Bylaws and policies. A stockholder notice to the Company of any such proposal must include the information required by the Company’s Amended and Restated Bylaws.

 

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public on the SEC website at www.sec.gov. You may also obtain free copies of the documents we file with the SEC, including this proxy statement, by going to our corporate website at www.manning-napier.com. The information provided on our website, other than the documents that the Company files with the SEC which are incorporated by reference in this proxy statement in their entirety, is not part of this proxy statement, and therefore is not incorporated herein by reference. You may also obtain a copy of these filings at no cost by writing or telephoning us at the following address:

Manning & Napier, Inc.

290 Woodcliff Drive

Fairport, New York 14450

Attention: Investor Relations

Telephone: (800) 551-0224

Any person, including any beneficial owner, to whom this proxy statement is delivered may request copies of this proxy statement or other information concerning us, without charge, by written or telephonic request directed to Manning & Napier, Inc., 290 Woodcliff Drive, Fairport, New York 14450, Attention: Corporate Secretary, Telephone (800) 551-0224; or from our proxy solicitor, Alliance Advisors, LLC toll free at (866) 619-8917; or from the SEC through the SEC website at the address provided above.

Because the company merger is a Rule 13e-3 “going private” transaction, the Company, the Callodine Filing Persons and Mr. Mayer have filed with the SEC a Transaction Statement on Schedule 13E-3 with respect to the proposed mergers. The Schedule 13E-3, including any amendments and exhibits filed or incorporated by reference as a part of it, is available for inspection as set forth above. The Schedule 13E-3 will be amended to report promptly any material changes in the information set forth in the most recent Schedule 13E-3 filed with the SEC.

We are incorporating by reference in this proxy statement specified documents that we file with the SEC, which means that we can disclose important information to you by referring you to those documents that are considered part of this proxy statement. We incorporate by reference the documents listed below (provided, that, we are not incorporating by reference any information furnished to, but not filed with, the SEC):

 

   

our annual report on Form 10-K for the fiscal year ended December 31, 2021;

 

   

our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022;

 

   

our current reports on Form 8-K as filed with the SEC on April 1, 2022, April 15, 2022 and April 22, 2022;

 

   

our definitive proxy statement under Regulation 14A in connection with our Annual Meeting of Stockholders, filed with the SEC on April 29, 2022.

Any statement contained in a document incorporated by reference into this proxy statement will be deemed to be modified or superseded for purposes of this proxy statement to the extent that a statement contained in this proxy statement modifies or supersedes the statement.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [●]. YOU SHOULD NOT ASSUME THAT

THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

 

119


Table of Contents

Annex A

STRICTLY CONFIDENTIAL

Execution Version

 

 

AGREEMENT AND PLAN OF MERGER

among

CALLODINE MIDCO, INC.

CALLODINE MERGER SUB, LLC

CALLODINE MERGER SUB, INC.

MANNING & NAPIER, INC.

and

MANNING & NAPIER GROUP, LLC

Dated as of March 31, 2022

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  

ARTICLE I THE MERGERS

     A-2  

Section 1.1

 

The Mergers

     A-2  

Section 1.2

 

Closing

     A-3  

Section 1.3

 

Effective Time

     A-3  

Section 1.4

 

Effects of the Mergers

     A-3  

Section 1.5

 

Certificate of Incorporation; Bylaws

     A-3  

Section 1.6

 

Directors

     A-4  

Section 1.7

 

Officers

     A-4  

ARTICLE II EFFECT ON THE CAPITAL STOCK AND LLC UNITS OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES

     A-4  

Section 2.1

 

Conversion of Capital Stock and LLC Units

     A-4  

Section 2.2

 

Treatment of Options and Other Equity-Based Awards

     A-5  

Section 2.3

 

Exchange and Payment

     A-5  

Section 2.4

 

Withholding Rights

     A-8  

Section 2.5

 

Dissenting Shares

     A-8  

Section 2.6

 

Tax Treatment

     A-9  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     A-9  

Section 3.1

 

Organization, Standing and Power

     A-9  

Section 3.2

 

Capital Stock

     A-9  

Section 3.3

 

Authority

     A-11  

Section 3.4

 

No Conflict; Consents and Approvals

     A-12  

Section 3.5

 

SEC Reports; Financial Statements

     A-12  

Section 3.6

 

No Undisclosed Liabilities

     A-13  

Section 3.7

 

Certain Information

     A-13  

Section 3.8

 

Absence of Certain Changes or Events

     A-14  

Section 3.9

 

Litigation

     A-14  

Section 3.10

 

Compliance with Laws

     A-14  

Section 3.11

 

Benefit Plans

     A-15  

Section 3.12

 

Labor Matters

     A-16  

Section 3.13

 

Environmental Matters

     A-18  

Section 3.14

 

Taxes

     A-19  

Section 3.15

 

Contracts

     A-20  

Section 3.16

 

Insurance

     A-22  

Section 3.17

 

Properties

     A-22  

Section 3.18

 

Intellectual Property

     A-23  

Section 3.19

 

Investment Adviser Matters

     A-24  

Section 3.20

 

Public Funds

     A-26  

Section 3.21

 

Broker-Dealer Matters

     A-28  

Section 3.22

 

State Takeover Statutes

     A-30  

Section 3.23

 

Affiliate Transactions

     A-30  

Section 3.24

 

Brokers

     A-30  

Section 3.25

 

Opinion of Financial Advisor

     A-30  

Section 3.26

 

Data Protection and Privacy

     A-30  

Section 3.27

 

No Debt

     A-31  

Section 3.28

 

Trust and Fiduciary Activities; Trust Company Capital

     A-31  

Section 3.29

 

No Other Representations or Warranties

     A-31  

 

A-i


Table of Contents

TABLE OF CONTENTS (Continued)

 

         Page  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS

     A-31  

Section 4.1

 

Organization, Standing and Power

     A-31  

Section 4.2

 

Authority

     A-32  

Section 4.3

 

No Conflict; Consents and Approvals

     A-32  

Section 4.4

 

Certain Information

     A-33  

Section 4.5

 

Litigation

     A-33  

Section 4.6

 

Ownership and Operations of Merger Subs

     A-33  

Section 4.7

 

Financing

     A-33  

Section 4.8

 

Limited Guarantee

     A-34  

Section 4.9

 

Vote/Approval Required

     A-34  

Section 4.10

 

Ownership of Shares

     A-34  

Section 4.11

 

Brokers

     A-34  

Section 4.12

 

Statutory Disqualification

     A-34  

Section 4.13

 

No Other Representations or Warranties

     A-35  

Section 4.14

 

Access to Information

     A-35  

Section 4.15

 

COVID-19 and Related Matters

     A-35  

ARTICLE V COVENANTS

     A-35  

Section 5.1

 

Conduct of Business of the Company

     A-35  

Section 5.2

 

No Control of Other Party’s Business

     A-37  

Section 5.3

 

Acquisition Proposals

     A-38  

Section 5.4

 

Preparation of Proxy Statement; Stockholders’ Meeting

     A-42  

Section 5.5

 

Access to Information; Confidentiality

     A-43  

Section 5.6

 

Further Action; Efforts

     A-44  

Section 5.7

 

Employment and Employee Benefits Matters; Other Plans

     A-46  

Section 5.8

 

Takeover Laws

     A-47  

Section 5.9

 

Client Consents

     A-47  

Section 5.10

 

Indemnification, Exculpation and Insurance

     A-49  

Section 5.11

 

Rule 16b-3

     A-50  

Section 5.12

 

Public Announcements

     A-50  

Section 5.13

 

Debt Financing

     A-51  

Section 5.14

 

Section 15(f) of the Investment Company Act

     A-55  

Section 5.15

 

Certain Tax Matters

     A-56  

ARTICLE VI CONDITIONS PRECEDENT

     A-56  

Section 6.1

 

Conditions to Each Party’s Obligation to Effect the Mergers

     A-56  

Section 6.2

 

Conditions to the Obligations of the Company and Group LLC

     A-57  

Section 6.3

 

Conditions to the Obligations of Parent and the Merger Subs

     A-57  

Section 6.4

 

Frustration of Closing Conditions

     A-58  

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER

     A-58  

Section 7.1

 

Termination

     A-58  

Section 7.2

 

Effect of Termination

     A-59  

Section 7.3

 

Fees and Expenses

     A-60  

Section 7.4

 

Amendment or Supplement

     A-62  

Section 7.5

 

Extension of Time; Waiver

     A-62  

 

A-ii


Table of Contents

TABLE OF CONTENTS (Continued)

 

         Page  

ARTICLE VIII GENERAL PROVISIONS

     A-63  

Section 8.1

 

Nonsurvival of Representations and Warranties

     A-63  

Section 8.2

 

Notices

     A-63  

Section 8.3