Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On February 26, 2023, Ready Capital Corporation, a Maryland corporation
(“Ready Capital”), Broadmark Realty Capital Inc., a Maryland corporation (“Broadmark”), 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, Broadmark will
be merged with and into Merger Sub, with Merger Sub remaining as a wholly owned subsidiary of Ready Capital (such surviving company, the
“Surviving Company” and such transaction, the “Merger”).
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 Broadmark (the “Broadmark
Common Stock”) issued and outstanding immediately prior to the Effective Time (excluding any shares held by Ready Capital, Merger
Sub or any of their respective subsidiaries) will automatically be converted into the right to receive from Ready Capital 0.47233 shares
of common stock (subject to adjustment as provided in the Merger Agreement, the “Exchange Ratio”), par value $0.0001, of Ready
Capital (“Ready Capital Common Stock”). Cash will be paid in lieu of fractional shares of Ready Capital Common Stock that
would have been received as a result of the Merger.
Each award of performance restricted stock units (each a “Broadmark
Performance RSU Award”) granted by Broadmark under its 2019 Stock Incentive Plan (the “Broadmark Equity Plan”) will,
as of the Effective Time, automatically be cancelled in exchange for the right to receive a number of shares of Ready Capital Common Stock
equal to the product of (i) the number of shares of Broadmark Common Stock subject to such Broadmark 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 Broadmark Performance
RSU Award granted pursuant to the Broadmark Equity Plan (each a “Broadmark 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 Broadmark Common Stock subject to such Broadmark 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
Broadmark RSU Award as of immediately prior to the Effective Time.
Each holder of a warrant (whether designated as public warrants, private
warrants or otherwise) representing the right to purchase shares of Broadmark Common Stock (each a “Broadmark Warrant”)
may exercise such Broadmark Warrant at any time prior to the Effective Time in exchange for Broadmark Common Stock, in accordance with,
and subject to, the terms and conditions of the agreement governing such Broadmark Warrant. Following the Effective Time, each Broadmark
Warrant that is outstanding as of the Effective Time shall remain outstanding and entitle each holder thereof to receive, upon exercise
of such Broadmark Warrant, a number of shares of Ready Capital Common Stock equal to the product of (i) the total number of shares
of Broadmark Common Stock that such holder would have been entitled to receive had such holder exercised such Broadmark Warrant immediately
prior to the Effective Time and (ii) the Exchange Ratio.
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 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 Broadmark Common Stock entitled to cast a majority of all
the votes entitled to be cast on the Merger (the “Broadmark Stockholder Approval”), (c) the registration and
listing of the shares of Ready Capital Common Stock that will be issued in connection with the Merger, (d) the 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 Ready Capital or Broadmark, and
(g) the delivery of certain documents and certificates.
The Merger Agreement contains customary representations,
warranties and covenants by the parties. The representations and warranties of the parties are subject to certain important
qualifications and limitations set forth in confidential disclosure letters delivered by Ready Capital, on the one hand, and
Broadmark, on the other hand, and were made solely for purposes of the contract among the parties. 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 intended to establish circumstances in which either of the
parties may not be obligated to consummate the Merger, rather than establishing matters as facts. In addition, the Merger Agreement
provides that each of Ready Capital and Broadmark 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 Ready Capital and Broadmark are subject to
restrictions as specified in the Merger Agreement on certain actions each company may take prior to the Effective Time, including
related to amending organizational documents, declaring dividends, issuing or repurchasing capital stock, engaging in certain
business transactions and incurring indebtedness.
The Merger Agreement provides for reciprocal “no-shop”
provisions, which prohibit each of Ready Capital, Broadmark 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 Broadmark
to engage in the foregoing activities under certain circumstances in the event that it receives a bona fide, unsolicited competing proposal.
At any time prior to obtaining the requisite stockholder approval,
under certain specified circumstances, the board of directors of each of Ready Capital and Broadmark may change its recommendation to
its stockholders regarding the Merger or the issuance of shares of Ready Capital Common Stock, as applicable, if the 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 the company intending to make the change
of recommendation complies with the procedures set forth in the Merger Agreement. With respect to Broadmark, if such change of recommendation
is made in response to a proposal that the Broadmark board of directors 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, Broadmark 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 Ready
Capital and Broadmark, including if the Merger is not completed on or before August 26, 2023, the failure to obtain the Ready Capital
Stockholder Approval or the Broadmark 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 Broadmark, the acceptance of a superior proposal, Ready Capital or Broadmark, as applicable,
would be required to pay the other party a termination fee of, in the case of payment by Broadmark, $15,760,000 and, in the case of payment
by Ready Capital, $23,639,000. In addition, upon termination of the Merger Agreement by Ready Capital or Broadmark under specified circumstances,
Ready Capital or Broadmark, as applicable, would be required to pay the other party an agreed expense amount of $5,000,000.
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, and Broadmark, in consultation with Ready Capital and after considering in good faith any input Ready Capital may have with respect
to which individuals to designate, will designate three individuals to serve as directors of Ready Capital. If any such Broadmark designee
is unable or unwilling to serve on the board of directors of Ready Capital, then a substitute who is a director of Broadmark may be designated
by Broadmark as specified in the Merger Agreement.
The foregoing description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the text of the Merger Agreement, which is filed as Exhibit 2.1 hereto
and is incorporated herein by reference.