UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Pillarstone Capital REIT
(Name of Issuer)
Common Shares of Beneficial Interest, $0.01 par value
(Title of Class of Securities)
721491 108
(CUSIP Number)
2600 South Gessner
Suite 555
Houston, Texas
77063
(Name, Address and Telephone Number
of Person
Authorized to Receive Notices and Communications)
March 29, 2019
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. 69912Y305
1 | NAME OF REPORTING PERSONS.
Kathy M. Jassem | |
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) ¨ (b) x* | |
3 | SEC USE ONLY
| |
4 | SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO | |
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) ¨
| |
6 | CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey |
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH |
7 | SOLE VOTING POWER
25,000** | ||
|
8 | SHARED VOTING POWER
0 | ||
|
9 | SOLE DISPOSITIVE POWER
25,000** | ||
|
10 | SHARED DISPOSITIVE POWER
0 |
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,000** | |
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) ¨
| |
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.81%*** | |
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN |
* | This Schedule 13D is filed by Kathy M. Jassem (the “Reporting Person”). |
** | 25,000 aggregate common shares of beneficial interest (the “Common Shares”) of Pillarstone Capital REIT (the “Issuer”) consists of 25,000 Common Shares issuable upon the conversion of 2,500 Class C Preferred Shares, par value $0.01 per share (each Class C Preferred Share is convertible into Common Shares at any time by dividing the sum of $10.00 and any accrued but unpaid dividends on the Class C Preferred Shares by the conversion price of $1.00). |
*** | The percentage is calculated based upon 430,169 outstanding shares of beneficial interest, as reported on the Issuer’s Form 10-K, as filed with the Securities and Exchange Commission on April 1, 2019, as adjusted to reflect the conversion of the Class C Preferred Shares. |
Item 1. Security and Issuer
This Schedule 13D relates to the common shares of beneficial interest, $0.01 par value per share (the “Common Shares”), of Pillarstone Capital REIT, a Maryland real estate investment trust (the “Issuer”). The address of the Issuer’s principal executive offices is 2600 South Gessner Road, Suite 555, Houston, Texas 77063.
Item 2. Identity and Background
This Schedule 13D is filed by Kathy M. Jassem (the “Reporting Person”). The business address of the Reporting Person is 2600 South Gessner Road, Suite 555, Houston, Texas 77063.
During the last five years, the Reporting Person (i) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On August 8, 2018, Daryl J. Carter (“Carter”) resigned from his position as a Class III Trustee on the Board of Trustees of the Issuer. On March 29, 2019, Carter entered into a Stock Purchase Agreement with the Reporting Person, pursuant to which Carter conveyed, sold, and assigned 2,500 Class C Preferred Shares (the “Shares”) to the Reporting Person. The Reporting Person purchased all such Shares from Carter, free and clear of all liens, restrictions and encumbrances, for an aggregate purchase price of $10,000.00.
Item 4. Purpose of Transaction
The Reporting Person intends to review the investment in the Issuer on a continuing basis and may, from time to time, depending on various factors, including the Issuer’s financial position and strategic direction, the price of the Shares, laws and regulations applicable to the Issuer and its industry, and general economic and industry conditions, take such actions with respect to its investment in the Issuer as the Reporting Person may deem appropriate at such time, including changing intentions with respect to matters required to be disclosed in this Schedule 13D. The Reporting Person may (i) acquire or dispose of Common Shares or other securities of the Issuer, including derivative or other instruments that are based upon or relate to the value of the Common Shares of the Issuer (collectively, “Securities”) in the open market or otherwise; (ii) nominate or recommend candidates to serve on the Issuer’s board of directors; (iii) enter into or amend agreements with respect to voting, holding or disposing of Securities; (iv) engage in discussions with management, the board of directors, other shareholders and other relevant parties about, or take other actions concerning, corporate transactions or the Issuer’s business, strategy, plans, prospects, structure, board composition, management, capitalization, dividend policy or corporate documents; or (v) propose or consider any one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) | The information set forth on rows 11 and 13 of the cover pages of this Schedule 13D is incorporated by reference. The percentage set forth in row 13 is based upon 430,169 outstanding shares, as reported on the Issuer’s Form 10-K, as filed with the Securities and Exchange Commission on April 1, 2019, as adjusted to reflect the conversion of the Class C Preferred Shares. |
(b) | The information set forth in rows 7 through 10 of the cover pages to this Schedule 13D is incorporated by reference. |
(c) | None. |
(d) | No person (other than the Reporting Person) is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Shares subject to this Schedule 13D. |
(e) | Not applicable. |
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
Reference is made to Items 3, 4 and 5 herein and is hereby incorporated by reference.
Item 7. Material to be Filed as Exhibits
Exhibit Number | Description of Exhibits | ||
7.1 | Stock Purchase Agreement, by and between Kathy M. Jassem and Daryl J. Carter, dated March 29, 2019 |
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: April 10, 2019
By: | /s/ Kathy M. Jassem | |
Name: | Kathy M. Jassem |
Exhibit 7.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “Agreement”), dated March 29, 2019, is made by and between Kathy M. Jassem (“Purchaser”) and Daryl J. Carter (“Seller”).
RECITALS
WHEREAS, as of the date of this Agreement Seller owns 25,000 shares of Class C Convertible Preferred Shares, par value $0.01 per share (the “Preferred Shares”), of Pillarstone Capital REIT, a Maryland real estate investment trust (the “Company”);
WHEREAS, on August 9, 2018, the Seller resigned (the “Resignation”) from his position as Class III Trustee on the Board of Trustees of the Company;
WHEREAS, in connection with the Resignation, Seller desires to sell and transfer the Preferred Shares reflected next to the Seller’s name on Schedule A to Purchaser, and the Purchaser desires to purchase the Preferred Shares from Seller, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions herein set forth, it is mutually agreed as follows:
1. Sale and Purchase of Preferred Shares. Seller conveys, sells, and assigns to the Purchaser, the Preferred Shares, and the Purchaser hereby redeems and agrees to purchase all such Preferred Shares from the Seller, free and clear of all liens, restrictions and encumbrances, for an aggregate purchase price of $10,000.00 (the “Purchase Price”).
2. Closing. The closing of the purchase and sale of the Preferred Shares (the “Closing”) shall take place on the date hereof. At or prior to the Closing, the following shall have occurred:
(a) Seller shall have delivered, and Purchaser shall have received, the original stock certificate representing the Preferred Shares and an executed stock power (attached hereto as Exhibit A), transferring all of Seller’s rights, title and interest in the Preferred Shares to Purchaser;
(b) Purchaser shall deliver to Seller a check in the amount of the Purchase Price.
3. Representations and Warranties of Seller. Seller represents and warrants to Purchaser, as of the date of this Agreement, as follows:
(a) This Agreement has been duly executed and delivered by Seller and constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms.
(b) Seller is not required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any person or entity in order for Seller to consummate the transactions contemplated hereby.
(c) Seller is the true, lawful record and beneficial holder and owner of the Preferred Shares, free and clear of any liens, restrictions or encumbrances.
(d) Upon and immediately after the Closing, Purchaser shall be the true, lawful record and beneficial holder and owner of the Preferred Shares, free and clear of any liens, restrictions or encumbrances.
(e) Seller is not in default with respect to the Preferred Shares.
(f) The execution, delivery and performance of this Agreement by Seller does not conflict with, result in a breach of or constitute a default under any agreement to which Seller is a party or by which Seller or any of Seller’s properties or assets may be bound.
These representations and warranties survive the Closing.
4. Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller, as of the date of this Agreement, as follows:
(a) This Agreement has been duly executed and delivered by Purchaser and constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms.
(b) Purchaser is not required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any person or entity in order for Purchaser to consummate the transactions contemplated hereby.
(c) The execution, delivery and performance of this Agreement by Purchaser does not conflict with, result in a breach of or constitute a default under any agreement to which Purchaser is a party or by which Purchaser or any of Purchaser’s properties or assets may be bound.
These representations and warranties survive the Closing.
5. Mutual Indemnification. Seller agrees to indemnify, defend and hold harmless Purchaser and his insurers, successors, representatives, attorneys and assigns, from and against any and all expenses, losses, costs, deficiencies, liabilities and damages (including related counsel fees and expenses) arising out of or due to (i) a breach of any of the representations, warranties or covenants of Seller contained in this Agreement or (ii) the default in the performance of any of the covenants or agreements made by Seller in this Agreement. Purchaser agrees to indemnify, defend and hold harmless Seller and his insurers, successors, representatives, attorneys and assigns, from and against any and all expenses, losses, costs, deficiencies, liabilities and damages (including related counsel fees and expenses) arising out of or due to (i) a breach of any of the representations, warranties or covenants of Purchaser contained in this Agreement or (ii) the default in the performance of any of the covenants or agreements made by Purchaser in this Agreement.
6. Miscellaneous.
(a) Entire Agreement; Assignment, Successors and Assigns. This Agreement contains the entire agreement of Purchaser and Seller with respect to the subject matter contained herein and supersedes all prior agreements or understandings with respect to the subject matter contained herein. This Agreement may not be assigned by either party without the prior written consent of the other party, but shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and assigns.
(b) Amendment. This Agreement may not be amended, modified or changed in any respect except in writing duly signed by Seller and Purchaser.
(c) Remedies. If any party to this Agreement obtains a judgment against any other party hereto by reason of any breach of this Agreement or the failure of such other party to comply with the provisions hereof, reasonable attorney’s fees as fixed by the court shall be included in such judgment. No remedy conferred upon any party to this Agreement is intended to be exclusive of any other remedy herein or by law provided or permitted, but each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now hereafter existing at law or in equity or by statute.
(d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW RULES OF THE STATE OF TEXAS OR ANY OTHER JURISDICTION.
(e) Severability. The invalidity or unenforceability of any particular provision of this Agreement will not affect the other provisions of this Agreement, and this Agreement will be construed in all respects as if those invalid or unenforceable provisions were omitted.
(f) Additional Documents. Each of the parties to this Agreement agree that at any time and from time to time upon the written request of any other party, he will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Agreement.
(g) Counterparts; Exchange by Electronic Transmission. This Agreement and the attached stock powers may be executed in any number of counterparts, each of which shall be deemed an original. Purchaser and Seller may execute and exchange this Agreement by means of a facsimile transmission or electronic mail and Purchaser and Seller agree that the receipt of such executed counterparts shall be binding on Purchaser and Seller and shall be construed as originals.
(h) Notice. Any notice, request, information or other document to be given hereunder shall be in writing and shall be deemed given four business days after it is sent by registered or certified mail, postage prepaid, to the intended recipient at the address shown on the signature page hereto. Any party hereto may send notice by other means (including personal delivery, courier, facsimile transmission or electronic mail) and such notice will be deemed given when received.
(i) Drafting. Each of the parties hereto acknowledges that Locke Lord LLP has participated in the drafting of this Agreement only as an accommodation to the parties in its capacity as counsel to the Company. Each of the parties hereto further acknowledges that Locke Lord LLP does not represent any party hereto, and Locke Lord LLP has not provided any counsel or advice to the parties hereto with respect to the terms hereof, the advisability of the execution hereof or the consummation of the transactions contemplated hereby.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
SELLER: | |||
Daryl J. Carter | |||
By: | /s/ Daryl J. Carter | ||
Address: 1920 Main Street | |||
Irvine, California 92614 | |||
PURCHASER: | |||
Kathy M. Jassem | |||
By: | /s/ Kathy M. Jassem | ||
Name: Kathy M. Jassem | |||
Its: Trustee | |||
Address: | c/o Pillarstone Capital REIT | ||
2600 S. Gessner Road – Suite 555 | |||
Houston, TX 77063 |
SCHEDULE A
Stockholders and Number of Redeemed Preferred Shares
Name/Address |
Number of Preferred Shares Purchase Price |
Purchase Price | ||
Daryl J. Carter |
2,500 Preferred Shares $10,000 ($4.00 per share) |
$10,000.00 |
EXHIBIT A
STOCK POWER - PREFERRED SHARES
See attached.
STOCK POWER (PREFERRED STOCK)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Kathy M. Jassem, 2,500 shares of Class C Convertible Preferred Shares, par value $0.01 per share, of Pillarstone Capital REIT, a Maryland real estate investment trust (the “Company”), standing in the undersigned’s name on the books of the Company represented by certificate number 2 herewith and does hereby irrevocably constitute and appoint any officer of the Company to transfer said shares on the books of the Company with full power of substitution in the premises.
Dated as of March 29, 2019.
/s/ Daryl J. Carter | |
Name: Daryl J. Carter |