| Item 1.01. | Entry into a Material Definitive Agreement. |
On February 26, 2023, Broadmark Realty Capital Inc., a Maryland
corporation (the “Company”), Ready Capital Corporation, a Maryland corporation (“Ready Capital”), and RCC Merger
Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Ready Capital (“Merger Sub”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the terms and conditions therein,
the Company will be merged with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”). The
Company’s board of directors unanimously approved the Company’s entry into the Merger Agreement.
Merger
Consideration. Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”),
each share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”) issued and outstanding immediately
prior to the Effective Time (excluding any shares held by Ready Capital, Merger Sub or by any subsidiary of Ready Capital, Merger Sub
or the Company) will automatically be converted into the right to receive from Ready Capital 0.47233 (such number, the “Exchange
Ratio”) shares of common stock, par value $ 0.0001 per share, of Ready Capital (“Ready Capital Common Stock”), subject
to adjustment as provided in the Merger Agreement (the “Merger Consideration”). Cash will be paid in lieu of any fractional
shares of Ready Capital Common Stock that would have been received as a result of the Merger.
Treatment
of Outstanding Equity Awards. Each award of performance restricted stock units (each a “Company Performance RSU Award”)
granted by the Company pursuant to its 2019 Stock Incentive Plan (the “Company Equity Plan”) will be cancelled as of immediately
prior to the Effective Time, with the holder thereof becoming entitled to receive a number of shares of Ready Capital Common Stock, equal
to the product of (i) the number of shares of Company Common Stock subject to such Company Performance RSU Award based on the achievement
of the applicable performance metric measured as of immediately prior to the Effective Time and (ii) the Exchange Ratio.
Each award of restricted stock units that is not a Company Performance
RSU Award granted pursuant to the Company Equity Plan (each a “Company RSU Award”) will be assumed by Ready Capital and converted
into an award of restricted stock units with respect to a number of shares of Ready Capital Common Stock, equal to the product of (i) the
total number of shares of Company Common Stock subject to such Company RSU Award as of immediately prior to the Effective Time and (ii) the
Exchange Ratio (rounded to the nearest whole share), on the same terms and conditions as were applicable to such Company RSU Award as
of immediately prior to the Effective Time.
Treatment
of Outstanding Warrants. Each holder of a warrant (whether designated as public warrants, private warrants or otherwise) representing
the right to purchase shares of Company Common Stock pursuant to that certain Warrant Agreement (the “Company Warrant Agreement”),
dated as of May 14, 2018, by and between Trinity Merger Corp. and Continental Stock Transfer & Trust Company, as amended
(each a “Company Warrant”), may exercise such Company Warrant at any time prior to the Effective Time in exchange for Company
Common Stock, in accordance with, and subject to, the terms and conditions of the Company Warrant Agreement. Following the Effective Time,
each Company Warrant that is outstanding as of the Effective Time shall remain outstanding and entitle each holder thereof to receive,
upon the exercise of such Company Warrant, the kind and amount of Merger Consideration that such holder would have been entitled to receive
had such holder exercised such Company Warrant immediately prior to the Effective Time.
Closing
Conditions. The obligation of each party to consummate the Merger is subject to a number of conditions, including, among others,
(a) the approval of the issuance of the Ready Capital Common Stock in connection with the Merger (the “Ready Capital Stock
Issuance”) by the affirmative vote of a majority of the votes cast at a meeting of Ready Capital stockholders (the “Ready
Capital Stockholder Approval”), (b) the approval of the Merger and the other transactions contemplated by the Merger Agreement
by the affirmative vote of the holders of shares of Company Common Stock entitled to cast a majority of all the votes entitled to be cast
on the Merger (the “Company Stockholder Approval”), (c) the registration and listing on the New York Stock Exchange of
the shares of Ready Capital Common Stock that will be issued in connection with the Merger, (d) the respective representations and
warranties of the parties being true and correct, subject to the materiality standards contained in the Merger Agreement, (e) each
party’s compliance in all material respects with their respective covenants and agreements set forth in the Merger Agreement, (f) the
absence of a material adverse effect with respect to either the Company or Ready Capital and (g) the delivery of certain documents
and certificates, including written opinions of each party’s counsel opining (i) as to the qualification of such party as a
real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) as to the qualification
of the Merger as a reorganization under, and with the meaning of, Section 368(a) of the Code.
Representations,
Warranties and Covenants. The Merger Agreement contains customary representations, warranties and covenants by each party.
The respective representations and warranties of the parties are subject to certain important qualifications and limitations set forth
in confidential disclosure letters delivered by the Company, on the one hand, and Ready Capital, on the other hand, and were made solely
for purposes of the contract among the parties and as of specific dates set forth therein. The subject matter of the representations and
warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s
or Ready Capital’s public disclosures. The representations and warranties are subject to a contractual standard of materiality that
may be different from what may be viewed as material to stockholders, and the representations and warranties are primarily used for the
purpose of allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. Further, the representations
and warranties in some cases were qualified by disclosures that were made by each party to the other, which disclosures are not reflected
in the Merger Agreement. Investors and security holders are not third-party beneficiaries of the representations and warranties under
the Merger Agreement and should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as
characterizations of the actual state of facts or condition of any party to the Merger Agreement. In addition, the Merger Agreement provides
that each of the Company and Ready Capital will, until the Effective Time, use commercially reasonable efforts to operate their respective
businesses in all material respects in the ordinary course, and preserve substantially intact its current business organization and preserve
key business relationships. Each of the Company and Ready Capital are subject to restrictions as specified in the Merger Agreement on
certain actions each company may take prior to the Effective Time, including, among other things, actions related to amending organizational
documents, declaring dividends, issuing or repurchasing capital stock, engaging in certain business transactions and incurring indebtedness.
No
Solicitation. The Merger Agreement provides for reciprocal “no-shop” provisions, which prohibit each of the Company,
Ready Capital and their respective subsidiaries from, among other things, (a) initiating, soliciting or knowingly encouraging the
making of a competing proposal; (b) engaging in any discussions or negotiations with any person with respect to a competing proposal;
(c) furnishing any non-public information regarding it or any of its subsidiaries, or access to its properties, assets or employees
in connection with a competing proposal; (d) entering into a letter of intent or agreement in principle or other agreement providing
for a competing proposal; or (e) effecting a change of recommendation. The no-shop provisions are subject to certain exceptions as
more fully described in the Merger Agreement, including the ability of Ready Capital or the Company to engage in the foregoing activities
under certain circumstances in the event that it receives a bona fide, unsolicited competing proposal.
Change
of Recommendation; Termination Rights; Termination Fees. At any time prior to obtaining the requisite stockholder approval,
under certain specified circumstances, the respective board of directors of each of the Company and Ready Capital may change its recommendation
to its respective stockholders regarding the Merger, or the Ready Capital Stock Issuance, as applicable, if such board of directors determines
in good faith after consulting with its legal and financial advisors that the failure to do so would reasonably be likely to be inconsistent
with such board of directors’ legal duties under applicable law, provided that the party intending to make the change of recommendation
complies with the procedures set forth in the Merger Agreement. With respect to the Company, if such change of recommendation is made
in response to a proposal that the board of directors of the Company has determined in good faith (after consultation with its legal and
financial advisors) is a “superior proposal”, after taking into account any adjustment to the terms and conditions of the
Merger proposed by Ready Capital, the Company may terminate the Merger Agreement to accept such superior proposal upon payment of the
termination fee described below.
The Merger Agreement contains certain termination rights for both the
Company and Ready Capital, including if the Merger is not completed on or before August 26, 2023, the failure to obtain the Company
Stockholder Approval or the Ready Capital Stockholder Approval, a change of recommendation of the other party’s board of directors
and breaches by the other party of certain covenants. In the event of a termination of the Merger Agreement under certain circumstances,
including a change of recommendation or, in the case of the Company, the acceptance of a superior proposal, the Company or Ready Capital,
as applicable, would be required to pay the other party a termination fee of, in the case of payment by the Company, $15,760,000 and,
in the case of payment by Ready Capital, $23,639,000. In addition, upon termination of the Merger Agreement by the Company or Ready Capital
under specified circumstances, the Company or Ready Capital, as applicable, would be required to pay the other party an agreed expense
amount of $5,000,000.
Ready
Capital Board of Directors. Pursuant to and subject to the requirements set forth in the Merger Agreement, no later than ten
business days prior to the closing of the Merger and after consultation with Ready Capital and considering in good faith any input Ready
Capital may have with respect to which individuals to designate, the Company will designate three individuals to serve as directors of
Ready Capital. In the Merger Agreement, Ready Capital has agreed to take all necessary corporate action so that upon and after the Effective
Time, the size of the board of directors of Ready Capital is increased by three members (for a total of not more than twelve members)
to include such Company director designees.
The Merger Agreement and the
above description have been included to provide investors with information regarding the terms of the Merger Agreement and are not intended
to provide any other factual information about the parties to the Merger Agreement or their respective subsidiaries or affiliates.
The foregoing description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed herewith as Exhibit 2.1
and incorporated in this Item 1.01 by reference.