| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 13, 2018, RAIT Financial Trust (“RAIT”), Pleasant Lake Apartments Limited Partnership, Laughlin Holdings LLC and Ramat Securities Ltd (collectively, the “Investors”) and Howard Amster (“Mr. Amster”), the principal of the Investors, entered in a Cooperation Agreement (the “Cooperation Agreement”).
The Cooperation Agreement sets forth defined restrictions for a restricted period commencing on the date of the Cooperation Agreement and lasting until the earlier of (i) the fourth day following RAIT’s 2019 Annual Meeting of Shareholders and (ii) September 30, 2019 (the “Restricted Period”), on the ability of the Investors, Mr. Amster and their respective affiliates or associates (the “Investor Group”) to transfer or acquire RAIT’s 7.75% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series A Preferred Shares”), RAIT’s 8.375% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series B Preferred Shares”) and RAIT’s 8.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series C Preferred Shares”, and, together with the Series A Preferred Shares and the Series B Preferred Shares, the “Preferred Shares”), and RAIT’s common shares of beneficial interest (the “Common Shares”, and, together with the Preferred Shares, the “Equity Securities”), and contains other restrictions.
Pursuant to the Cooperation Agreement, during the Restricted Period, the Investors and Mr. Amster will cause all Equity Securities owned by the Investor Group to be present for quorum purposes and to be voted in accordance with the recommendation of a majority of RAIT’s Board of Trustees (the “Board”) with respect to any matter at any meeting of RAIT’s shareholders for which proxies are solicited. With respect to any matter on which the consent of a member of the Investor Group is solicited by reason of such member’s holding of Equity Securities during the Restricted Period, the Cooperation Agreement provides that the Investors and Mr. Amster will cause such member of the Investor Group to provide its consent as a holder of such Equity Securities to such matter as recommended by a majority of the Board.
Pursuant to the Cooperation Agreement, in any calendar year, promptly following written notice from RAIT, Investors and/or Mr. Amster may, subject to certain conditions, cause the Investor Group to, transfer any Equity Securities owned by the Investor Group as necessary in order for RAIT to continue to qualify as a real estate investment trust for federal income tax purposes (“REIT”).
Subsequent to entering into the Cooperation Agreement, on August 13, 2018, the Investors, Mr. Amster and RAIT signed a letter agreement (the “Letter Agreement”) which provided that RAIT would exempt the Investors from the ownership limit (the “Ownership Limit”) set forth in RAIT’s Declaration of Trust (the “DOT”) providing that no person may own more than 9.8% of any series of Preferred Shares. The Letter Agreement exempts the Investors from this ownership limit for acquiring and holding Preferred Shares that the Investors intend to purchase on or after August 13, 2018 in amounts which, when added to the Preferred Shares owned by the Investors, Mr. Amster and certain affiliated entities of Mr. Amster at the time of any such acquisition, does not exceed an amount equal to 14.9% of the outstanding number of each series of Preferred Shares, at any time and from time to time.
The above summary of the Cooperation Agreement and the Letter Agreement does not purport to be complete and is qualified in its entirety by the Cooperation Agreement and the Letter Agreement attached to this Current Report onForm 8-K as Exhibits 10.1 and 10.2, respectively, and incorporated by reference herein.
| ITEM 9.01 | Financial Statements and Exhibits. |
