<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1996
Registration No. 33-97398
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST-EFFECTIVE AMENDMENT NO. 1
On
Form S-3
To
Form S-11
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
REDWOOD TRUST, INC.
(Exact Name of Registrant as Specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 68-0329442
(State or other jurisdiction of 591 Redwood Highway, Suite 3100 (I.R.S. Employer I.D. Number)
incorporation or organization) Mill Valley, CA 94941
(415) 389-7373
</TABLE>
(Address, including zip code, and telephone number, including area code, of
Principal Executive offices)
----------------------
George E. Bull, III
Chairman of the Board and Chief Executive Officer
REDWOOD TRUST, INC.
591 Redwood Highway, Suite 3100
Mill Valley, CA 94941
(415) 389-7373
(Name, Address, including zip code, and telephone number, including area code,
of Agent for Service)
----------------------
COPIES TO:
Douglas B. Hansen Phillip R. Pollock, Esq.
President and Chief Financial Officer TOBIN & TOBIN
REDWOOD TRUST, INC. One Montgomery Street, 15th Floor
591 Redwood Highway, Suite 3100 San Francisco, CA 94104
Mill Valley, CA 94941 (415) 433-1400
(415) 389-7373
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AT ANY
TIME AND FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS POST-EFFECTIVE
AMENDMENT TO THE REGISTRATION STATEMENT IN LIGHT OF MARKET CONDITIONS AND OTHER
FACTORS.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / / _____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / / _________________________-
If delivery of the prospectus is to be made pursuant to Rule 434, please check
the following box: / /
----------------------
Pursuant to Rule 429, the Prospectus contained in this Registration
Statement also relates to Registration No. 33-92272 filed by Registrant and
declared effective on July 20, 1995.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
3,334,348 SHARES
COMMON STOCK
1,666,063 STOCK PURCHASE WARRANTS
RWT
REDWOOD TRUST, INC.
----------------------
Redwood Trust, Inc. ("Redwood Trust" or the "Company") specializes in
acquiring and managing real estate mortgage loans. Such loans are originated by
others to the Company's specifications or to specifications approved by the
Company. The Company acquires mortgage loans secured by single-family real
estate properties throughout the United States, with a special emphasis on
properties located in the State of California, and may in the future acquire
mortgage loans secured by multifamily and commercial real estate properties. The
Company's mortgage loans may be acquired as whole loans or as mortgage
securities evidencing interests in pools of mortgage loans (collectively,
"Mortgage Assets"). The Company is self-advised and self-managed and its
principal business objective is to generate net income for distribution to
stockholders. The Company has elected to be subject to tax as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"), and generally will not be subject to tax on its Federal income to
the extent that it distributes its earnings to its stockholders and it maintains
its qualification as a REIT.
This Prospectus relates to (i) 1,667,174 shares of the Company's Common
Stock, par value $.01 per share ("Common Stock") being offered by the Selling
Securityholders herein ("Offered Common Stock"), (ii) 1,666,063 Stock Purchase
Warrants ("Warrants"), each Warrant exercisable for 1.000667 shares of the
Company's Common Stock, par value $.01 per share, and (iii) 1,667,174 shares of
Common Stock issuable upon the exercise of Warrants ("Underlying Common Stock").
The Warrants are exercisable until 5:00 p.m. Pacific Standard Time on December
31, 1997 at an exercise price of $15.00 per Warrant, and are subject to certain
anti-dilution protections. See "Description of Warrants." For purposes of this
Prospectus, the Offered Common Stock, the Warrants and the Underlying Common
Stock issuable upon the exercise of Warrants are referred to hereinafter as the
"Securities" unless the context requires otherwise.
The Offered Common Stock, the Warrants and the Underlying Common Stock
subsequently acquired by the Selling Securityholders pursuant to the exercise of
Warrants, may be offered for sale from time to time by the Selling
Securityholders
(CONTINUED ON NEXT PAGE)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
----------------------
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
===============================================================================
Price to Underwriting Proceeds to
Public Discount Company(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Exercised Warrant........ $ 15.00 $0 $ 15.00
- -------------------------------------------------------------------------------
Total........................ $24,990,945 $0 $24,990,945
===============================================================================
</TABLE>
(1) Before deducting expenses payable by the Company estimated at $120,000.
----------------------
The date of this Prospectus is October __, 1996
<PAGE> 3
(CONTINUED FROM PREVIOUS PAGE)
other purchasers or through agents in one or more transactions in the
over-the-counter market, in one or more private transactions, named herein, or
by their pledgees, donees, transferees or other successors in interest, to or
through underwriters or directly to or in a combination of such methods of sale,
at prices and on terms then prevailing, at prices related to such prices, or at
negotiated prices. Under certain circumstances, the Selling Securityholders and
any broker-dealers that act in connection with the sales of such Common Stock or
Warrants may be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act, and any commissions or discounts and other compensation
paid to such persons may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Company will not receive any proceeds from the sale of Offered Common
Stock or Warrants by the Selling Securityholders. The Company will receive the
proceeds from the issuance and sale of the Underlying Common Stock pursuant to
the exercise of the Warrants. The Company will bear the costs relating to the
registration of the Common Stock or Warrants being offered hereby, estimated to
be approximately $120,000.
The Company's Common Stock is quoted on the Nasdaq National Market
("Nasdaq") under the symbol "RWTI." On October 11, 1996, the last reported sales
price for the Common Stock was $32.5 per share. The Company also currently has
one class of authorized and outstanding Preferred Stock, the Class B 9.74%
Cumulative Convertible Preferred Stock (the "Class B Preferred Stock"), which is
quoted on the Nasdaq National Market under the symbol "RWTIP," and an issue of
Stock Purchase Warrants, quoted under the symbol, "RWTIW." On October 11, 1996,
the last reported sales prices for the Class B Preferred Stock and Stock
Purchase Warrants were $34.5 per share and $17.25 per share, respectively.
The shares of Common Stock offered hereby are subject to repurchase by the
Company under certain conditions and are subject to certain restrictions on
ownership and transferability which prohibit any person (either alone or with
others as a group) from owning a number of shares in excess of 9.8% of the
outstanding shares of the Company's capital stock (by number or value). See
"Description of Capital Stock-Repurchase of Shares and Restrictions on Transfer"
and "Plan of Distribution."
<PAGE> 4
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934.
SEE "PLAN OF DISTRIBUTION."
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission" or "SEC"). Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048, and at 500 West
Madison Street, Chicago, Illinois 60661. Copies may also be obtained from the
Public Reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock, Stock Purchase
Warrants and Class B Preferred Stock of the Company are currently quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. In
addition, holders of the Common Stock and Class B Preferred Stock will receive
annual reports containing audited financial statements with a report thereon by
the Company's independent certified public accountants, and quarterly reports
containing unaudited summary financial information for each of the first three
quarters of each fiscal year.
Copies of the Registration Statement of which this Prospectus forms a part
and exhibits thereto are on file at the offices of the Commission pursuant to
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company and the Securities offered hereby. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to a copy of such contract or other document filed as an
exhibit to the Registration Statement or otherwise filed with the SEC and
incorporated by reference herein. Each such statement is qualified in its
entirety by such contract or other document reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference the following documents
heretofore filed by the Company with the Commission:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal quarters
ended March 31, 1996 and June 30, 1996;
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, as amended (Reg. No.
0-26436), filed July 17, 1996, under the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities made hereby shall be deemed to
be incorporated by reference into this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained in the Registration Statement, this Prospectus, or
any other subsequently filed document that is also incorporated by reference
herein modifies or supersedes that statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered, upon written
or oral request of that person, a copy of any document incorporated herein by
reference (other than exhibits to those documents unless the exhibits are
specifically incorporated herein by reference into the documents that this
Prospectus incorporates by reference). Requests should be directed to Ms. Vickie
L. Rath, Vice-President, Treasurer and Controller, Redwood Trust, Inc., 591
Redwood Highway, Suite 3100, Mill Valley, California 94941, telephone (415)
389-7373.
3
<PAGE> 5
THE COMPANY
The Company is a real estate investment trust which specializes in
acquiring and managing real estate mortgage loans. Such loans are originated by
others to the Company's specifications or to specifications approved by the
Company. The Company has acquired mortgage loans secured by single-family real
estate properties throughout the United States, with a special emphasis on
properties located in the State of California, and may in the future acquire
mortgage loans secured by multifamily and commercial real estate properties. The
Company's mortgage loans may be acquired as whole loans or as mortgage
securities evidencing interests in pools of mortgage loans (collectively,
"Mortgage Assets"). The Company's principal business objective is to generate
net income for distribution to stockholders. The Company has elected to be
subject to tax as a real estate investment trust ("REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"), and will generally not be subject
to tax on its Federal income to the extent that it distributes its earnings to
its stockholders and it maintains its qualification as a REIT. The Company was
incorporated in the State of Maryland on April 11, 1994, commenced operations on
August 19, 1994 and is self-advised and self-managed. Reference to the "Company"
herein shall include any taxable or Qualified REIT Subsidiaries through which
the Company may conduct its business. The Company's principal executive office
is located at 591 Redwood Highway, Suite 3100, Mill Valley, California 94941.
Additional information regarding the Company, including the audited
financial statements of the Company and descriptions of the Company's currently
outstanding Common Stock, Class B Preferred Stock and Warrants, is contained in
the documents incorporated by reference herein. See "Incorporation of Certain
Information by Reference," above.
USE OF PROCEEDS
There will be no proceeds to the Company from the sale of Securities by the
Selling Securityholders. The net proceeds to the Company from the exercise of
Warrants, estimated to be $24,870,945.00 if all of the Warrants are exercised,
together with borrowings, will be used to purchase Mortgage Assets as described
herein. Pending use of the proceeds to purchase such Mortgage Assets, the net
proceeds may be used to reduce borrowings. The Company intends to increase its
investment in Mortgage Assets by borrowing against existing Mortgage Assets and
using the proceeds to acquire additional Mortgage Assets. The Company's
borrowings generally are secured by the Mortgage Assets owned by the Company.
Until the proceeds are fully utilized along with borrowings in this manner, the
Company's net earnings are expected to be lower than would be the case if this
financing strategy were fully implemented.
SELLING SECURITYHOLDERS
The number of shares of Offered Common Stock and Warrants which may be
offered pursuant to this Prospectus by the selling holders (the "Selling
Securityholders") is as set forth below. In addition, the Underlying Common
Stock may be issued to Selling Securityholders pursuant to the exercise of
Warrants, all of which Underlying Common Stock, to the extent acquired by such
Selling Securityholders, may be offered pursuant to this Prospectus.
<TABLE>
<CAPTION>
NO. SHARES NO. SHARES
OUTSTANDING UNDERLYING
NAME COMMON STOCK NO. WARRANTS COMMON STOCK(1)
- ---- ------------ ------------ ---------------
<S> <C> <C> <C>
5500 Fund 8,705 8,700 8,705
Mark S. Ain 1,000 1,000 1,000
American Medical International
Pension Plan 33,322 33,300 33,322
G. Thomas Baker 6,004 6,000 6,004
Baum Family Survivor Trust,
Benjamin Baum trustee 2,001 2,000 2,001
Susanne C. Baum 700 700 700
Daniel E. Baur 10 10 10
Jennifer A. Baur 10 10 10
Bay Pond Partners, L.P. 60,895 60,855 60,895
Robert J. Becker and
June G. Becker 16,677 16,666 16,677
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
NO. SHARES NO. SHARES
OUTSTANDING UNDERLYING
NAME COMMON STOCK NO. WARRANTS COMMON STOCK(1)
- ---- ------------ ------------ ---------------
<S> <C> <C> <C>
The Borden Living Trust(2) 5,003 5,000 5,003
Delanie S. Borden(3) 350 350 350
Frederick H. Borden(4) 140 140 140
Georgia J. Borden(5) 65 65 65
Holly E. Borden(5) 10 10 10
Madelyn H. Borden
TTEE of Survivors
Trust UAD 7/27/87(6) 667 667 667
Ross D. Borden(5) 65 65 65
Donald S. Brown 5,003 5,000 5,003
Bull Trust(7) 12,008 12,000 12,008
Edith H. Bull(8) 100 100 100
Elizabeth A. Bull(9) 500 500 500
George E. Bull III(10) 3,302 3,300 3,302
George E. Bull Jr.(9) 100 100 100
Jennifer S. Bull(9) 500 500 500
Stephanie N. Bull(9) 500 500 500
Suzanne H. Bull(9) 200 200 200
Robert T. Burke 6,504 6,500 6,504
Richard J. Cadenasso 1,501 1,500 1,501
Walter J. Carlson 6,670 6,666 6,670
Christina E. Carroll ttee
FBO Charlotte C. Carroll Trust 1,000 1,000 1,000
Christina E. Carroll ttee FBO
Cynthia L. Carroll Trust
dtd 4-20-84 1,000 1,000 1,000
Fred L. Carroll ttee
FBO Jacqueline Carroll Andrew
dtd 12-27-84 1,000 1,000 1,000
Christina E. Carroll ttee FBO
Janet A. Carroll Trust dtd
4-20-84 1,000 1,000 1,000
Christina E. Carroll ttee FBO
Katherine Orr Trust dtd 8/10/89 7,505 7,500 7,505
Christina E. Carroll & Kristin
O. Prescott ttees FBO Kristin
O. Prescott Trust dtd 1/5/84 7,505 7,500 7,505
Christina E. Carroll ttee FBO
Timothy Orr Trust dtd 3/26/86 1,501 1,500 1,501
Thomas A. Cohen 1,000 1,000 1,000
Jackson Courey 10 10 10
Cumberland Partners 164,464 164,355 164,464
Joseph G. Daher II and
Janet M. Daher 3,002 3,000 3,002
T. J. Day Family Trust 3,002 3,000 3,002
F. Burke Dempsey 1,668 1,667 1,668
Linda deSoto 65 65 65
Dan A. Emmett(11) 3,335 3,333 3,335
Charles H. Eshom and
Elizabeth J. Eshom 675 675 675
First Financial Fund, Inc. 160,983 160,876 160,983
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
NO. SHARES NO. SHARES
OUTSTANDING UNDERLYING
NAME COMMON STOCK NO. WARRANTS COMMON STOCK(1)
- ---- ------------ ------------ ---------------
<S> <C> <C> <C>
Peter Friedland 1,501 1,600 1,501
The Robert Friend Rev.
Trust DTD 3/5/82 3,335 3,333 3,335
Richard N. Garman 6,704 6,700 6,704
Robert H. Gersky and
Sue A. Gersky 26,684 26,667 26,684
Robert M. Gibb 750 750 750
Glenell Associates 6,670 6,666 6,670
Nello Gonfiantini III(11) 10,056 10,050 10,056
Jon D. Gruber IRA 33,355 33,333 33,355
James C. Hale III 3,335 3,333 3,335
Douglas B. Hansen, Jr.(12) 3,315 3,313 3,315
Douglas B. Hansen, M.D.(13) 10,006 10,000 10,006
Helen Hansen(14) 10 10 10
Joan B. Hansen(15) 700 700 700
Linda W. Hart and
Milledge A. Hart, III 3,670 3,668 3,670
Alfred Henderson 2,001 2,000 2,001
INCO Limited Partnership 16,678 16,667 16,678
Gerald L. Iseman and
Jacqueline C. Iseman 10,006 10,000 10,006
Richard Jacobson 6,685 6,666 6,685
Craig R. Johnson and
Nichola J. Johnson 10,006 10,000 10,016
Joseph A. Jolson(16) 101,682 101,750 101,682
Kathleen Rohan Jolson 1,000 1,000 1,000
Lois Jolson 723 723 723
Richard A. Jolson, IRA 32,021 32,000 32,021
Jim Joseph Revocable Trust
Dated January 19, 1990 33,355 33,333 33,355
JRO Associates, L.P. 70,046 70,000 70,046
Robert L. Kahan, Trustee
Kahan Family Trust 16,010 16,000 16,010
Kaufman Family Trust 2,001 2,000 2,001
John A. Krasznekewicz and
Sarah Krasznekewicz 3,335 3,333 3,335
Lagunitas Partners 16,678 16,667 16,678
David and Dawn Lehmann 1,000 1,000 1,000
William W. Liebeck 16,511 16,500 16,511
Donald G. Linker TTEE of
The Donald G. Linker &
Joyce B. Linker Rev.
Trust 3,335 3,333 3,335
James and Kerry Logan 11,673 11,666 11,673
Jerome L. Markowitz 10,006 10,000 10,006
F.E. Marschall, M.D., Inc.
Retirement Trust 3,002 3,000 3,002
Karl L. Matthies 13,008 13,000 13,008
Karl L. Matthies and
Deborah N. Matthies 13,008 13,000 13,008
Alexander L. Mazour in TR as
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
NO. SHARES NO. SHARES
OUTSTANDING UNDERLYING
NAME COMMON STOCK NO. WARRANTS COMMON STOCK(1)
- ---- ------------ ------------ ---------------
<S> <C> <C> <C>
TTEE of the Alexander L. Mazour
Sep Prop Rev Intervivos
TR dtd 10/14/93 6,504 6,500 6,504
James McMahon 3,502 3,500 3,502
Michael G. Mueller and
Christine E. Cullens 10,006 10,000 10,006
Michael G. Mueller,
Trustee of the Michael G.
Mueller Separate Property
Trust U/D/T dated July 8, 1993 7,004 7,000 7,004
Daniel J. Murphy 3,502 3,500 3,502
J. Steve Noonan 2,001 2,000 2,001
John M. Oppenheimer 6,670 6,666 6,670
Robert H. Osher 21,680 21,666 21,680
Pacific Corinthian Life Insurance Co. 16,678 16,667 16,678
Jeffrey P. Parker 16,677 16,666 16,677
The Jeffrey P. Parker Family
Charitable Remainder Unitrust 16,677 16,666 16,677
Harry J. Phillips, Jr. 1,501 1,500 1,501
Ray Pinion and Lynell Pinion 4,002 4,000 4,002
Guy C. Pinkerton and
Nancy J. Pinkerton 15,010 15,000 15,010
Pocantico Fund 18,012 18,000 18,012
Phillip R. Pollock(17) 1,000 1,000 1,000
Bruce G. Potter 14,009 14,000 14,009
Roxbury Partners Special Fund II 15,010 15,000 15,010
Russell Miller, Inc. Profit
Sharing and Salary Deferral
Plan Russell R. Miuller Account 6,671 6,667 6,671
Joseph M. Schell 10,006 10,000 10,006
Eli R. Secor 10 10 10
Zana J. Secor 10 10 10
O. Griffith Sexton 5,003 5,000 5,003
SH Trading Ltd. KEOGH 800 800 800
Joan Shea 10 10 10
Gregory P. Shlopak 16,677 16,666 16,677
Mia P. Smit 10 10 10
Scott S. Smit 10 10 10
Richard A. Smith 1,000 1,000 1,000
Kathleen Smythe de Urquieta(18) 377 377 377
State of Oregon Stock
Growth Fund 201,834 201,700 201,834
Alan Jay Swimmer and
Linda K. Swimmer 1,667 1,666 1,667
Temple Inland Master Trust 50,033 50,000 50,033
Charles J. Toeniskoetter(11) 660 660 660
Lucia W. Townsend ttee
FBO Town & Co.
Profit Sharing Plan 5,003 5,000 5,003
First Interstate Bank, FBO:
David Tyler IRA# FIP-007104 2,001 2,000 2,001
</TABLE>
7
<PAGE> 9
<TABLE>
<CAPTION>
NO. SHARES
OUTSTANDING UNDERLYING
NAME COMMON STOCK NO. WARRANTS COMMON STOCK(1)
- ---- ------------ ------------ ---------------
<S> <C> <C> <C>
Weitz Partners III Limited
Partnership 42,028 42,000 42,028
Weitz Partners, Inc. -
Partners Value Fund 35,023 35,000 35,023
Weitz Series Fund, Inc.-
Hickory Portfolio 8,005 8,000 8,005
Weitz Series Fund, Inc. -
Value Portfolio 65,043 65,000 65,043
--------- --------- ---------
Total 1,667,174 1,666,063 1,667,174(19)
</TABLE>
(1) Reflects shares of Common Stock issuable to such holder upon the exercise
of Warrants at the exercise ratio of 15.00/14.99 as required pursuant to
the terms of the Warrants. See "Description of Capital Stock" and
"Description of Warrants."
(2) Trust of which Frederick H. Borden, Vice Chairman, Secretary and Director
of the Company, is a trustee.
(3) Spouse of Frederick H. Borden, Vice Chairman, Secretary and Director of
the Company.
(4) Vice Chairman, Secretary and Director of the Company.
(5) Child of Frederick H. Borden, Vice Chairman, Secretary and Director of the
Company.
(6) Trust of which the mother of Frederick H. Borden, Vice Chairman, Secretary
and Director of the Company, is a trustee.
(7) Trust of which George E. Bull, III, Chairman of the Board and Chief
Executive Officer of the Company, is a trustee.
(8) Spouse of George E. Bull, III, Chairman of the Board and Chief Executive
Officer of the Company.
(9) Child of George E. Bull, III, Chairman of the Board and Chief Executive
Officer of the Company.
(10) Chairman of the Board and Chief Executive Officer of the Company
(11) Director of the Company.
(12) President, Chief Financial Officer and Director of the Company.
(13) Father of Douglas B. Hansen, President, Chief Financial Officer and
Director of the Company.
(14) Mother of Douglas B. Hansen, President, Chief Financial Officer and
Director of the Company.
(15) Spouse of Douglas B. Hansen, President, Chief Financial Officer and
Director of the Company.
(16) Managing Director of Montgomery Securities, placement agent in connection
with the Company's private offering of Units in 1994.
(17) Attorney with Tobin & Tobin, outside counsel to the Company.
(18) Principal of Montgomery Securities, placement agent in connection with the
Company's private offering of Units in 1994.
(19) Includes an additional 26 shares of Common Stock that may be acquired by
Selling Securityholders in the event a Selling Securityholder acquires
Warrants from another Selling Securityholder, thereby causing fractional
shares not previously issuable upon exercise thereof, to be combined into
whole shares of Common Stock issuable upon such exercise.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of certain Federal income
tax considerations to the Company and to holders of the Securities. It is based
on existing Federal income tax law, which is subject to change, possibly
retroactively. PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS
AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SECURITIES, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
LAWS. FOR A FULLER DISCUSSION OF FEDERAL INCOME TAX CONSIDERATIONS, SEE THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1995.
GENERAL
The Company has elected to become subject to tax as a REIT, for Federal
income tax purposes, commencing with the taxable year ending December 31, 1994.
The Board of Directors of the Company currently expects that the Company will
continue to operate in a manner that will permit the Company to maintain its
qualifications as a REIT for the taxable year ending December 31, 1996, and in
each taxable year thereafter. This treatment will permit the Company to deduct
dividend distributions to its stockholders for Federal income tax purposes, thus
effectively eliminating the "double taxation" that generally results when a
corporation earns income
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and distributes that income to its stockholders.
In the opinion of Giancarlo & Gnazzo, A Professional Corporation,
special tax counsel to the Company ("Special Tax Counsel"), the Company has been
organized and operated in a manner which qualifies it as a REIT under the Code
since the commencing of its operations on August 19, 1994 through June 30, 1996,
the date of the Company's last unaudited financials received by Special Tax
Counsel, and the Company's current and contemplated methods of operation, as
represented by the Company, will enable it to continue to so qualify. This
opinion is based on various assumptions relating to the organization and
operation of the Company to date and in the future and is conditioned upon
certain representations made by the Company as to certain factual matters. The
continued qualification and taxation of the Company as a REIT will depend upon
the Company's ability to meet, on a continuing basis, distribution levels and
diversity of stock ownership, and various other qualification tests imposed by
the Code. This opinion is based on the law existing and in effect on the date
hereof which is subject to change, possibly retroactively.
There can be no assurance that the Company will continue to qualify as
a REIT in any particular taxable year, given the highly complex nature of the
rules governing REITs, the ongoing importance of factual determinations and the
possibility of future changes in the circumstances of the Company. If the
Company were not to qualify as a REIT in any particular year, it would be
subject to Federal income tax as a regular domestic corporation, and its
stockholders would be subject to potentially substantial income tax liability in
respect of each taxable year that it fails to qualify as a REIT. In addition,
the amount of earnings and cash available for distribution to its stockholders
could be significantly reduced or eliminated.
TAXATION OF THE COMPANY
In any year in which the Company qualifies as a REIT, the Company will
generally not be subject to Federal income tax on that portion of its REIT
taxable income or capital gain which is distributed to its stockholders. The
Company will, however, be subject to Federal income tax at normal corporate
income tax rates upon any undistributed taxable income or capital gain and may
also be subject to tax in certain other circumstances.
If the Company fails to qualify as a REIT in any taxable year and
certain relief provisions of the Code do not apply, the Company would be subject
to Federal income tax (including any applicable alternative minimum tax) on its
taxable income at the regular corporate income tax rates. Distributions to
stockholders in any year in which the Company fails to qualify as a REIT would
not be deductible by the Company, nor would they generally be required to be
made under the Code. Further, unless entitled to relief under certain other
provisions of the Code, the Company would also be disqualified from re-electing
REIT status for the four taxable years following the year during which it became
disqualified.
TAXATION OF SECURITIES HOLDERS
COMMON STOCK GENERALLY
Distributions (including constructive distributions) made to holders of
Common Stock, other than tax-exempt entities, will generally be subject to tax
as ordinary income to the extent of the Company's current and accumulated
earnings and profits as determined for Federal income tax purposes. If the
amount distributed exceeds a stockholder's allocable share of such earnings and
profits, the excess will be treated as a return of capital to the extent of the
stockholder's adjusted basis in its shares, which will not be subject to tax,
and thereafter as a taxable gain from the sale or exchange of a capital asset.
Distributions designated by the Company as capital gain dividends will
generally be subject to tax as long-term capital gain to stockholders, to the
extent that the distribution does not exceed the Company's actual net capital
gain for the taxable year. Distributions by the Company, whether characterized
as ordinary income or as capital gain, are not eligible for the corporate
dividends received deduction. In the event that the Company realizes a loss for
the taxable year, stockholders will not be permitted to deduct any share of that
loss. Further, if the Company (or a portion of its assets) were to be treated as
a taxable mortgage pool, any "excess inclusion income" that is allocated to a
stockholder would not be allowed to be offset by a net operating loss of such
stockholder. Future Treasury Department regulations may require that the
stockholders take into account, for purposes of computing their individual
alternative minimum tax liability, certain tax preference items of the Company.
Dividends declared during the last quarter of a taxable year and
actually paid during January of the following taxable year are generally treated
as if received by the stockholder on the record date of the dividend payment and
not on the date actually received. In addition, the Company may elect to treat
certain other dividends distributed after the close of the taxable year as
having
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been paid during such taxable year, but stockholders still will be treated as
having received such dividend in the taxable year in which the distribution is
made.
Upon a sale or other disposition of Common Stock, a stockholder will
generally recognize a capital gain or loss in an amount equal to the difference
between the amount realized and the stockholder's adjusted basis in such stock,
which gain or loss will be long-term if the stock has been held for more than
one year. Any loss on the sale or exchange of shares held by a stockholder for
six months or less will generally be treated as a long-term capital loss to the
extent of any long-term capital gain dividends received by such stockholder. If
Common Stock is sold after a record date but before a payment date for declared
dividends on such stock, a stockholder will nonetheless be required to include
such dividend in income in accordance with the rules above for distributions,
whether or not such dividend is required to be paid over to the purchaser.
The Company also maintains a Dividend Reinvestment Plan (the "DRP" or
"Plan"). DRP Participants will generally be treated as having received a
dividend distribution equal to the fair value of the Plan Shares that are
purchased with the Participant's reinvested dividends generally on the date that
the Company credits such shares to the Participant's account, plus the brokerage
commissions, if any, allocable to the purchase of such shares, and participants
will have a tax basis in the shares equal to such value. DRP Participants may
not, however, receive any cash with which to pay the resulting tax liability.
Shares received pursuant to the DRP will have a holding period beginning on the
day after their purchase by the Plan Administrator.
The Company is required under Treasury Department regulations to demand
annual written statements from the record holders of designated percentages of
its Capital Stock disclosing the actual and constructive ownership of such stock
and to maintain permanent records showing the information it has received as to
the actual and constructive ownership of such stock and a list of those persons
failing or refusing to comply with such demand.
TAXATION OF TAX-EXEMPT ENTITIES
The Company does not expect to incur excess inclusion income (within
the meaning of Section 860E(c) of the Code) and therefore does not prohibit
tax-exempt entities or "disqualified organizations" from investing in its
Securities. In general, a tax-exempt entity that is a holder of the Company's
Securities will not be subject to tax on distribution.
The Company does not intend to issue debt obligations with different
maturities secured by a single pool of Mortgage Assets and does not expect to
create or acquire taxable mortgage pools that can generate excess inclusion
income. In addition, the Company does not intend to create or acquire REMIC
residual interests that can generate excess inclusion income.
EXERCISE OF WARRANTS
Upon a holder's exercise of a Warrant, the holder will, in general, (i)
not recognize any income, gain or loss for federal income tax purposes, (ii)
receive an initial tax basis in the Common Stock received equal to the sum of
the holder's tax basis in the exercised Warrant and the exercise price paid for
such Common Stock and (iii) have a holding period for the Common Stock received
beginning on the date of exercise.
SALE OR EXPIRATION OF WARRANTS
If a holder of a Warrant sells or otherwise disposes of such Warrant
(other than by its exercise), the holder generally will recognize capital gain
or loss (long-term capital gain or loss if the holder's holding period for the
Warrant exceeds twelve months on the date of disposition; otherwise, short-term
capital gain or loss) equal to the difference between (i) the cash and fair
market value of other property received and (ii) the holder's tax basis (on the
date of disposition) in the Warrant sold. Such a holder generally will recognize
a capital loss upon the expiration of an unexercised Warrant equal to the
holder's tax basis in the Warrant on the expiration date.
FOREIGN INVESTORS
In general, foreign investors will be subject to special withholding
tax requirements on income and capital gains distributions attributable to their
ownership of the Company's Securities subject to possible reduction pursuant to
an applicable income tax treaty.
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DESCRIPTION OF WARRANTS
The Warrants were originally issued as part of the Units, each Unit
consisting of one share of Class A Convertible Preferred Stock ("Class A
Preferred Stock") and one Warrant. See also, "Description of Capital Stock -
General." At such time the Warrants were represented by a Class A Preferred
Stock certificate which bore an endorsement representing beneficial ownership of
the related Warrants on deposit with the Warrant Agent as custodian for the
registered holders of the Warrants. The Warrants became detachable from the
Class A Preferred Stock upon the effectiveness of the shelf registration
statement of which this Prospectus is a part (the Shelf Registration
Statement"), and all preferred shares were automatically converted to common
shares upon the closing of the initial public offering. Separate Common Stock
certificates and Warrant certificates will be issued upon the tender by holders
of Units of their Class A Preferred Stock certificates bearing the Warrant
legend. As of October 1, 1996, 1,076,431 Warrants remained outstanding.
The Warrants were issued pursuant to a warrant agreement (the "Warrant
Agreement") dated as of August 19, 1994 between the Company and the warrant
agent (the "Warrant Agent"). ChaseMellon Shareholder Services, LLC is the
Warrant Agent. The following summary of certain provisions of the Warrant
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Warrant Agreement including the definitions therein of certain
terms used below. A copy of the Warrant Agreement has been filed with the
Commission as an exhibit to the Shelf Registration Statement.
Each Warrant is exercisable at an exercise price of $15.00 and, upon
payment of such exercise price, will entitle the holder of the Warrant to
receive 1.000667 shares of Common Stock. The exercise price per Warrant was
established at the time of the Company's initial private placement of Units,
prior to its commencement of operations, and was fixed by management at the per
Unit offering price. The number of shares to be issued upon exercise of the
Warrants is subject to adjustment in certain cases referred to below. The
Warrants will be exercisable immediately and unless exercised, the Warrants will
automatically expire at 5:00 p.m. New York City time on December 31, 1997.
The Warrants may be exercised by surrendering to the Company or the
Warrant Agent the definitive Warrant Certificates evidencing such Warrants, if
any (or if a Warrant Certificate has not been issued in respect of such Warrant,
the related Class A Preferred Stock certificate), with the accompanying form of
election to purchase properly completed and executed, together with payment of
the exercise price (the "Exercise Price"). Payment of the Exercise Price may be
made by certified check, cashier's bank check or United States postal money
order payable to the order of the Company. Upon surrender of the Warrant
Certificate or related Class A Preferred Stock certificate and payment of the
Exercise Price and any other applicable amounts, the Warrant Agent will deliver
or cause to be delivered, to or upon the written order of such holder, stock
certificates representing the number of whole shares of Common Stock or other
securities or property to which such holder is entitled. If less than all of the
Warrants evidenced by a Warrant Certificate or related Class A Preferred Stock
certificate are to be exercised, a new Warrant Certificate will be issued for
the remaining number of Warrants.
No fractional shares of Common Stock will be issued upon exercise of
the Warrants; holders exercising Warrants will receive cash in lieu of
fractional shares of Capital Stock. The holders of the Warrants have no right to
vote on matters submitted to the stockholders of the Company and have no right
to receive dividends with respect to the shares of Capital Stock issuable upon
the exercise of the Warrants. The holders of the Warrants not yet exercised are
not entitled to share in the assets of the Company in the event of liquidation,
dissolution or the winding up of the affairs of the Company.
If the Company (i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock, (ii) subdivides its outstanding
shares of Common Stock into a greater number of shares, (iii) combines its
outstanding shares of Common Stock into a smaller number of shares or (iv)
issues by reclassification of its Common Stock any shares of its capital stock,
then the number of shares of Common Stock issuable upon exercise of the Warrant,
as the case may be, immediately prior to such action shall be proportionately
adjusted so that the holder of any Warrant thereafter exercised may receive the
aggregate number and kind of shares of Capital Stock that such holder would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action.
In case of certain consolidations or mergers of the Company, or the
sale of all or substantially all of the assets of the Company to another
corporation, each Warrant will thereafter be exercisable for the right to
receive the kind and amount of shares of stock or other securities or property
to which such holder would have been entitled as a result of such consolidation,
merger or sale had the Warrants been exercised immediately prior thereto.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 50,000,000
shares of Capital Stock, $.01 par value ("Capital Stock"). Of such shares of
Capital Stock, 48,993,750 shares are currently classified as Common Stock, and
1,006,250 shares of Capital Stock are currently classified as Class B Preferred
Stock. The Company's Charter authorizes the Board of Directors to reclassify any
of the unissued shares of authorized Capital Stock into a class or classes of
preferred stock. On August 11, 1994, the Company supplemented its Charter to
divide and classify 12,000,000 shares of the Capital Stock of the Company into a
series of preferred stock designated as the Company's Class A Preferred Stock.
See also, "Description of Warrants." The Class A Preferred Stock had the rights
and privileges of and was subject to the conditions set forth in the Articles
Supplementary establishing the terms of the Class A Preferred Stock. Pursuant to
the terms of the Class A Preferred Stock, all Class A Preferred Stock was
converted to Common Stock upon the closing of the initial public offering on
August 9, 1995, and there are currently no outstanding shares of Class A
Preferred Stock. Following such conversion, Articles Supplementary were filed to
reclassify all authorized and unissued shares as Common Stock. Recently, the
Company issued a new class of preferred stock, the Class B Preferred Stock.
Additional preferred stock may be issued again from time to time in one or more
classes or series, with such distinctive designations, rights and preferences as
shall be determined by the Board of Directors. Additional classes or series of
preferred stock would be available for possible future financing of, or
acquisitions by, the Company and for general corporate purposes without any
legal requirement that further stockholder authorization for issuance be
obtained. The issuance of additional series of preferred stock could have the
effect of making an attempt to gain control of the Company more difficult by
means of a merger, tender offer, proxy contest or otherwise. Additional series
of preferred stock, if issued, would have a preference on dividend payments
which could affect the ability of the Company to make dividend distributions to
the holders of Common Stock.
The following summary of the rights of the holders of Common Stock is
qualified in its entirety by reference to the Company's Charter, copies of which
have been filed with the Commission as exhibits to the Shelf Registration
Statement.
COMMON STOCK
Voting. Each holder of Common Stock is entitled to one vote for each
share held of record on each matter submitted to a vote of holders of Common
Stock of the Company. The Company's Charter does not provide for cumulative
voting and, accordingly, the holders of a majority of the outstanding shares of
Common Stock have the power to elect all directors to be elected each year.
The Company's bylaws provide that annual meetings of the stockholders
of the Company are to be held within 180 days after the last day of the
Company's fiscal year, and special meetings may be called by a majority of the
Board of Directors, by the Chairman of the Board of Directors, by a majority of
the Independent Directors, by the President or generally by stockholders
entitled to cast at least 25% of the votes which all stockholders are entitled
to cast at the meeting. The Charter of the Company may be amended in accordance
with Maryland law, subject to certain limitations set forth in the Charter.
Dividends; Liquidation; Other Rights. The holders of shares of Common
Stock are entitled to receive dividends when, as, and if declared by the Board
of Directors out of funds legally available therefor. Presently, the Class B
Preferred Stock has certain rights prior to the Common Stock. For example, in
the event of liquidation, dissolution or winding up of the Company, the holders
of Common Stock will share ratably in all assets of the Company remaining after
the payment of liabilities and after payment of a liquidation preference for the
currently outstanding Class B Preferred Stock and any subsequent issuance of
another class or series of preferred stock, if any. There are no preemptive or
other subscription rights, conversion rights, or redemption or sinking fund
provisions with respect to shares of Common Stock.
As of October 1, 1996, there were 9,069,653 outstanding shares of
Common Stock held by 179 holders of record.
REGISTRATION RIGHTS
Holders of the Securities are entitled to certain rights with respect
to registration under the Securities Act. Pursuant to a Registration Rights
Agreement between the Company and the Placement Agent, the Company has agreed to
(i) file with the Commission the Shelf Registration Statement with respect to
the Securities, and (ii) use its best efforts to keep the Common Stock and
Warrants quoted on the Nasdaq National Market or listed on a stock exchange
and/or to qualify the Securities under the various state securities laws. The
Company is required to keep the Shelf Registration Statement effective until the
earlier to occur of (i)
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December 31, 1997 or (ii) such time as all of the Warrants have been exercised
and, in the opinion of counsel to the Company, such registration is not required
for the unrestricted resale of shares entitled to registration rights under the
Registration Rights Agreement. Under the Registration Rights Agreement, the
holders of the Securities are restricted from selling or distributing the
Company's securities during certain underwritten offerings by the Company. See
"Plan of Distribution."
Certain holders of the Common Stock are entitled to certain rights with
respect to registration under the Securities Act of such Common Stock. Under the
terms of a registration rights agreement with such holders, such holders are
entitled to include within any registration statement under the Securities Act
proposed by the Company with respect to a firm commitment underwritten public
offering of Common Stock (either for its own account or for the account of other
security holders) shares of Common Stock held by such holders, subject to
certain conditions. See "Principal Securityholders."
REPURCHASE OF SHARES AND RESTRICTIONS ON TRANSFER
In order that the Company may meet the requirements for qualification
as a REIT at all times, the Charter prohibits any person from acquiring or
holding, directly or constructively, ownership of shares of Capital Stock in
excess of 9.8% (the "Ownership Limit") of the outstanding shares (by number or
value). For this purpose the term "ownership" generally means either direct
ownership or constructive ownership in accordance with the constructive
ownership provisions of section 544 of the Code.
Under the constructive ownership provisions of section 544 of the Code,
a holder of a Warrant will be treated as owning the number of shares of Capital
Stock into which such Warrant may be converted. In addition, the constructive
ownership rules generally attribute ownership of securities owned by a
corporation, partnership, estate or trust proportionately to its stockholders,
partners or beneficiaries, attribute ownership of securities owned by family
members to other members of the same family, and set forth rules as to when
securities constructively owned by a person are considered to be actually owned
for the application of such attribution provisions (i.e., "reattribution"). For
purposes of determining whether a person holds or would hold Capital Stock in
excess of the Ownership Limit, a person will thus be treated as owning not only
shares of Capital Stock actually owned, but also any shares of Capital Stock
attributed to such person under the attribution rules described above (including
any shares of Capital Stock attributed to such person by reason of such person's
ownership of Warrants). Accordingly, a person who individually owns less than
9.8% of the shares outstanding may nevertheless be in violation of the Ownership
Limit.
Any transfer of shares of Capital Stock or Warrants that would result
in disqualification of the Company as a REIT or that would (a) create a direct
or constructive ownership of shares of stock in excess of the Ownership Limit,
(b) result in the shares of stock being beneficially owned (within the meaning
of section 856(a) of the Code) by fewer than 100 persons (determined without
reference to any rules of attribution), or (c) result in the Company being
"closely held" within the meaning of section 856(h) of the Code, will be null
and void, and the intended transferee will acquire no rights to such shares or
warrants. The foregoing restrictions on transferability and ownership will not
apply if the Board of Directors determines that it is no longer in the best
interests of the Company to continue to qualify as a REIT. The Company's Board
of Directors, upon receipt of a ruling from the IRS, an opinion of counsel or
other evidence satisfactory to the Board of Directors, may also waive the
Ownership Limit with respect to a purported transferee. As a condition to such
waiver the intended transferee must give written notice to the Company of the
proposed transfer no later than the fifteenth day prior to any transfer which,
if consummated, would result in the intended transferee owning shares in excess
of the Ownership Limit. The Board of Directors may also take such other action
as it deems necessary or advisable to protect the Company's status as a REIT.
Any purported transfer of shares or warrants that would result in a
person owning (directly or constructively) shares in excess of the Ownership
Limit (except as otherwise waived by the Board of Directors as set forth above)
due to the unenforceability of the transfer restrictions set forth above will
constitute "Excess Securities," which will be transferred by operation of law to
the Company as trustee for the exclusive benefit of the person or persons to
whom the Excess Securities are ultimately transferred, until such time as the
purported transferee retransfers the Excess Securities. While the Excess
Securities are held in trust, a holder of such securities will not be entitled
to vote or to share in any dividends or other distributions with respect to such
securities and will not be entitled to exercise or convert such securities into
shares of Capital Stock. Subject to the Ownership Limit, Excess Securities may
be transferred by the purported transferee to any person (if such transfer would
not result in Excess Securities) at a price not to exceed the price paid by the
purported transferee (or, if no consideration was paid by the purported
transferee, the fair market value of the Excess Securities on the date of the
purported transfer), at which point the Excess Securities will automatically be
exchanged for the stock or warrants, as the case may be, to which the Excess
Securities are attributable. If a purported transferee receives a higher price
for designating an ultimate transferee, such purported transferee shall pay, or
cause the ultimate transferee to pay, such excess to the Company. In addition,
such Excess Securities held in trust are subject to purchase by the Company at a
purchase price equal
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to the lesser of (a) the price per share or per warrant, as the case may be, in
the transaction that created such Excess Securities (or, in the case of a devise
or gift, the market price at the time of such devise or gift), reduced by the
amount of any distributions received in violation of the Charter that have not
been repaid to the Company, and (b) the market price as reflected in the last
reported sales price of such shares of stock or warrants on the trading day
immediately preceding the date of the purported transfer as reported on any
exchange or quotation system over which such shares of stock or warrants may be
traded, or if not then traded over any exchange or quotation system, then the
market price of such shares of stock or warrants on the date of the purported
transfer as determined in good faith by the Board of Directors of the Company,
reduced by the amount of any distributions received in violation of the Charter
that have not been repaid to the Company.
From and after a purported transfer to the transferee of the Excess
Securities, the purported transferee shall cease to be entitled to
distributions, voting rights and other benefits with respect to such shares of
the stock or warrants except the right to payment of the purchase price for the
shares of stock or warrants or the retransfer of securities as provided above.
Any dividend or distribution paid to a purported transferee on Excess Securities
prior to the discovery by the Company that such shares of stock or warrants have
been transferred in violation of the provisions of the Company's Charter shall
be repaid to the Company upon demand. If the foregoing transfer restrictions are
determined to be void, invalid or unenforceable by a court of competent
jurisdiction, then the purported transferee of any Excess Securities may be
deemed, at the option of the Company, to have acted as an agent on behalf of the
Company in acquiring such Excess Securities and to hold such Excess Securities
on behalf of the Company.
All certificates representing shares of stock and warrants will bear a
legend referring to the restrictions described above.
Any person who acquires shares or warrants in violation of the Charter,
or any person who is a purported transferee such that Excess Securities results,
must immediately give written notice or, in the event of a proposed or attempted
transfer that would be void as set forth above, give at least 15 days prior
written notice to the Company of such event and shall provide to the Company
such other information as the Company may request in order to determine the
effect, if any, of such transfer on the Company's status as a REIT. In addition,
every record owner of more than 5.0% (during any period in which the number of
stockholders of record is 2,000 or more) or 1.0% (during any period in which the
number of stockholders of record is greater than 200 but less than 2,000) or
1/2% (during any period in which the number of stockholders is 200 or less) of
the number or value of the outstanding shares of Capital Stock of the Company
must give an annual written notice to the Company by January 31, stating the
name and address of the record owner, the number of shares held and describing
how such shares are held. Further, each stockholder shall upon demand be
required to disclose to the Company in writing such information with respect to
the direct and constructive ownership of shares of Capital Stock as the Board of
Directors deems reasonably necessary to comply with the REIT Provisions of the
Code, to comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.
Subject to certain limitations, the Board of Directors may increase or
decrease the Ownership Limit. In addition, to the extent consistent with the
REIT Provisions of the Code, the Board of Directors may waive the Ownership
Limit for and at the request of certain purchasers in this Offering.
The provisions described above may inhibit market activity and the
resulting opportunity for the holders of the Company's Capital Stock and
Warrants to receive a premium for their shares or warrants that might otherwise
exist in the absence of such provisions. Such provisions also may make the
Company an unsuitable investment vehicle for any person seeking to obtain
ownership of more than 9.8% of the outstanding shares of Capital Stock.
CONTROL SHARE ACQUISITIONS
The Maryland General Corporation Law (the "Maryland GCL") provides that
"control shares" of a Maryland corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of
two-thirds of the votes entitled to be cast on the matter, excluding shares of
stock owned by the acquiror or by officers or directors who are employees of the
corporation. "Control shares" are voting shares of stock which, if aggregated
with all other shares of stock previously acquired by such a person, would
entitle the acquiror to exercise voting power in electing directors within one
of the following ranges of voting power: (i) one-fifth or more but less than
one-third, (ii) one-third or more but less than a majority, or (iii) a majority
or more of all voting power. "Control shares" do not include shares of stock the
acquiring person is then entitled to vote as a result of having previously
obtained stockholder approval. A "control share acquisition" means, subject to
certain exceptions, the acquisition of, ownership of, or the power to direct the
exercise of voting power with respect to, control shares.
A person who has made or proposes to make a "control share
acquisition," upon satisfaction of certain conditions (including
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an undertaking to pay expenses), may compel the Board of Directors to call a
special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any stockholders' meeting. If
voting rights are not approved at the meeting or if the acquiring person does
not deliver an acquiring person statement as permitted by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the "control shares" (except those for which voting rights have
previously been approved) for fair value determined, without regard to voting
rights, as of the date of the last control share acquisition or of any meeting
of stockholders at which the voting rights of such shares are considered and not
approved. If voting rights for "control shares" are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the stock as determined for purposes of such appraisal rights may not
be less than the highest price per share paid in the control share acquisition,
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of "control share acquisitions."
The "control share acquisition" statute does not apply to stock
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction, or to acquisitions approved or exempted by a provision
of the Charter or bylaws of the corporation adopted prior to the acquisition of
the shares.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, LLC is the transfer agent and
registrar with respect to the Common Stock and the Warrants.
ERISA INVESTORS
Because the Securities will qualify as a "publicly offered security,"
employee benefit plans and Individual Retirement Accounts may purchase shares of
Securities and treat such shares, and not the Company's assets, as plan assets.
Fiduciaries of ERISA plans should consider (i) whether an investment in the
Securities offered hereby satisfies ERISA diversification requirements, (ii)
whether the investment is in accordance with the ERISA plans' governing
instruments and (iii) whether the investment is prudent.
PLAN OF DISTRIBUTION
The Offered Common Stock, the Warrants and the Underlying Common Stock
subsequently acquired by the Selling Securityholders pursuant to the exercise of
outstanding Warrants, may be offered for sale from time to time by the Selling
Securityholders named herein, or by their pledgees, donees, transferees or other
successors in interest, to or through underwriters or directly to other
purchasers or through agents in one or more transactions in the over-the-counter
market, in one or more private transactions, or in a combination of such methods
of sale, at prices and on terms then prevailing, at prices related to such
prices, or at negotiated prices. Under certain circumstances, the Selling
Securityholders and any broker-dealers that act in connection with the sales of
such Securities may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions or discounts and other
compensation paid to such persons may be deemed to be underwriting discounts and
commissions under the Securities Act. At any time a particular offer of Offered
Common Stock, Warrants or Underlying Common Stock is made, if required, a
Prospectus Supplement will be distributed that will set forth the aggregate
amount of such Securities being offered and the terms of the offering, including
the name or names of any underwriters, dealers or agents, any discounts,
commissions and other items constituting compensation from the Selling
Securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such Prospectus Supplement and, if necessary,
another post-effective amendment to the Shelf Registration Statement, will be
filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of such Securities.
The Common Stock offered hereby issuable upon exercise of the Warrants
will be sold directly by the Company to the Warrantholder at the exercise price
of the Warrants and pursuant to the terms and conditions of the Warrant
Agreement governing the Warrants, a copy of which has been filed as an exhibit
to the Shelf Registration Statement. The exercise price per Warrant was
established at the time of the Company's initial private placement of Units,
prior to its commencement of operations, and was fixed by management at the per
Unit offering price.
To comply with the securities laws of certain jurisdictions, the
Securities offered hereby may be offered or sold in such
15
<PAGE> 17
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the securities offered hereby may not be
offered or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with.
Pursuant to the Registration Rights Agreement entered into in
connection with the Company's private placement of Units, the holders of the
Securities covered by this Prospectus have agreed not to effect any public sale
or distribution of any of the Company's securities for a period beginning 10
days prior to, and ending 90 days following, the closing of an underwritten
public offering by the Company.
LEGAL MATTERS
The validity of the Securities offered hereby and certain legal matters
will be passed on for the Company by Tobin & Tobin, a professional corporation,
San Francisco, California. Certain tax matters will be passed on by Giancarlo &
Gnazzo, A Professional Corporation, San Francisco, California. Tobin & Tobin and
Giancarlo & Gnazzo, A Professional Corporation, will rely as to all matters of
Maryland law upon Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The Balance Sheets as of December 31, 1994 and December 31, 1995,
and the Statements of Operations, Stockholders' Equity and Cash Flows for the
period from August 19, 1994 (Commencement of Operations) to December 31, 1994
and for the year ended December 31, 1995, all incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand, L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
16
<PAGE> 18
===============================================================================-
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Company
or any other person. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy such securities, nor shall any sales of the Securities be
made pursuant to this Prospectus, in any circumstances in which such offer or
solicitation or sale is unlawful.
--------------------
TABLE OF CONTENTS
Page
Available Information.........................................................3
Incorporation of Certain Information by Reference.............................3
The Company.................................................................. 4
Use of Proceeds.............................................................. 4
Selling Security-Holders......................................................4
Certain Federal Income Tax Considerations.....................................8
Description of Warrants......................................................11
Description of Capital Stock.................................................12
ERISA Investors..............................................................15
Plan of Distribution.........................................................15
Legal Matters................................................................16
Experts......................................................................16
================================================================================
================================================================================
3,334,348 Shares of Common Stock
1,666,063 Stock Purchase Warrants
RWT
REDWOOD TRUST, INC.
-------------
PROSPECTUS
-------------
October __, 1996
================================================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the
issuance and distribution of the securities being registered are as set forth
below. All such expenses, except for the SEC registration and filing fees, are
estimated:
<TABLE>
<S> <C>
SEC Registration................................... $17,931
Legal Fees and Expenses............................ $65,000
Accounting Fees and Expenses....................... $15,000
Printing and Engraving Fees........................ $10,000
Miscellaneous...................................... $12,069
Total.............................................. $120,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 2-418 of the Corporations and Associations
Article of the Annotated Code of Maryland provides that a
Maryland corporation may indemnify any director of the
corporation and any person who, while a director of the
corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise or
employee benefit plan, is made a party to any proceeding by
reason of service in that capacity unless it is established
that the act or omission of the director was material to the
matter giving rise to the proceeding and was committed in bad
faith or was the result of active and deliberate dishonesty;
or the director actually received an improper personal benefit
in money, property or services; or, in the case of any
criminal proceeding, the director had reasonable cause to
believe that the act or omission was unlawful. Indemnification
may be against judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the director in
connection with the proceeding, but if the proceeding was one
by or in the right of the corporation, indemnification may not
be made in respect of any proceeding in which the director
shall have been adjudged to be liable to the corporation. Such
indemnification may not be made unless authorized for a
specific proceeding after a determination has been made, in
the manner prescribed by the law, that indemnification is
permissible in the circumstances because the director has met
the applicable standard of conduct. On the other hand, the
director must be indemnified for expenses if he has been
successful in the defense of the proceeding or as otherwise
ordered by a court. The law also prescribes the circumstances
under which the corporation may advance expenses to, or obtain
insurance or similar protection for, directors.
The law also provides for comparable indemnification
for corporate officers and agents.
The Registrant's Charter provides that its directors
and officers shall, and its agents in the discretion of the
Board of Directors may, be indemnified to the fullest extent
required or permitted from time to time by the laws of
Maryland.
The Maryland GCL permits the charter of a Maryland
corporation to include a provision limiting the liability of
its directors and officers to the corporation and its
stockholders for money damages except to the extent that (i)
it is proved that the person actually received an improper
benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services
actually received, or (ii) a judgment or other final
adjudication is entered in a proceeding based on a finding
that the person's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause
of action adjudicated in the proceeding. The Company's Charter
contains a provision providing for elimination of the
liability of its directors and officers to the Company or its
stockholders for money damages to the maximum extent permitted
by Maryland law from time to time.
<PAGE> 20
Item 16. Exhibits.
5.1* Opinion of Tobin & Tobin, a professional
corporation, as to legality (including
consent of such firm)
5.2* Opinion of Piper & Marbury L.L.P. as to
legality (including consent of such firm)
8.1 Opinion of Giancarlo & Gnazzo, A
Professional Corporation, as to certain tax
matters (including consent of such firm)
23.1* Consent of Tobin & Tobin (included in
Exhibit 5.1)
23.2* Consent of Piper & Marbury L.L.P.
(included in Exhibit 5.2)
23.3 Consent of Giancarlo & Gnazzo, A
Professional Corporation (included in
Exhibit 8.1)
23.4 Consent of Coopers & Lybrand L.L.P.,
independent accountants.
24.1* Power of Attorney
-------------------------
* Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs a(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of Prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this Registration Statement as of the time
it was declared effective; and (2) for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of Prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and
II-2
<PAGE> 21
controlling persons of the Registrant, pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities begin registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 on Form S-3 to Form S-11 Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City and County of San Francisco, State of California, on October 15, 1996.
REDWOOD TRUST, INC.
By: /s/ GEORGE E. BULL, III
------------------------------
George E. Bull, III
(Chairman of the Board and Chief Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3 TO FORM S-11 REGISTRATION STATEMENT
HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED:
<TABLE>
<CAPTION>
Signature Position Date
--------- -------- ----
<S> <C> <C>
/s/ GEORGE E. BULL, III Chairman of the Board, Chief October 15, 1996
- ---------------------------------- Executive Officer and Director
George E. Bull, III (Principal Executive Officer)
/s/ DOUGLAS B. HANSEN* President, Chief Financial Officer October 15, 1996
- ---------------------------------- and Director
Douglas B. Hansen (Principal Financial Officer)
/s/ FREDERICK H. BORDEN* Vice Chairman of the Board, October 15, 1996
- ---------------------------------- Secretary and Director
Frederick H. Borden
/s/ VICKIE L. RATH* Vice President, Treasurer and October 15, 1996
- ---------------------------------- Controller (Principal Accounting
Vickie L. Rath Officer)
/s/ DAN A. EMMETT* Director October 15, 1996
- ----------------------------------
Dan A. Emmett
/s/ THOMAS F. FARB* Director October 15, 1996
- ----------------------------------
Thomas F. Farb
/s/ NELLO GONFIANTINI* Director October 15, 1996
- ----------------------------------
Nello Gonfiantini
/s/ CHARLES J. TOENISKOETTER* Director October 15, 1996
- ----------------------------------
Charles J. Toeniskoetter
*By /s/ GEORGE E. BULL, III
------------------------------
George E. Bull, III
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF GIANCARLO & GNAZZO]
October 15, 1996
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Re: Redwood Trust, Inc. S-3 Secondary Shelf Registration
Dear Ladies and Gentlemen:
You have requested our opinion in connection with the Form S-3
Secondary Shelf Registration Statement, dated October 15, 1996 (the
"Registration Statement") being filed by Redwood Trust, Inc. (the "Company")
with respect to: (i) 1,667,174 shares of its common stock, par value of $0.01
per share, being offered by certain selling securityholders; (ii) 1,666,063
Stock Purchase Warrants, exercisable for 1.000667 shares of Common Stock each;
and (iii) 1,667,174 shares of Common Stock issuable upon the exercise of the
Stock Purchase Warrants (collectively, the "Securities").
In connection with the Registration Statement, we have acted as your
special tax counsel and have assisted in the preparation of the tax summary for
such Registration Statement. In formulating our opinions, we have reviewed (i)
the Registration Statement, (ii) the Articles of Incorporation of the Company,
as amended and supplemented, (iii) the Bylaws, as amended, of the Company, and
(iv) such resolutions, certificates, records, and other documents provided by
the Company as we have deemed necessary or appropriate as a basis for the
opinions set forth below. In addition, the Company has provided us with a
certificate (the "Officer's Certificate"), executed by a duly appointed and
knowledgeable officer of the Company, and upon which we have relied, setting
forth certain representations relating to various factual and other matters
including the prior, current and future methods of operation of the Company. We
have also relied upon the opinion of Piper & Marbury, L.L.P. with respect to
certain matters of Maryland law.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or other copies, and the
authenticity of the originals of such copies.
<PAGE> 2
Redwood Trust, Inc.
October 15, 1996
Page 2
In rendering our opinions, we have assumed that the transactions
described in or contemplated by the foregoing documents have been or will be
consummated in accordance with such operative documents, and that such documents
accurately reflect the material facts of such transactions. In addition, our
opinions are based on the correctness of the following specific assumptions: (i)
the Company has been and will continue to be organized and operated in the
manner described in the Officer's Certificate, the Registration Statement, and
the other relevant documents referred to above; and (ii) there have been no
changes in the applicable laws of the State of Maryland, the Internal Revenue
Code of 1986, as amended (the "Code"), the regulations promulgated thereunder by
the Treasury Department (the "Treasury Regulations"), and the interpretations of
the Code and the Treasury Regulations by the courts and the Internal Revenue
Service, all as they exist on the date of this letter. With respect to these
assumptions, it should be noted that (x) in the case of the former assumption,
the representations set forth in the Officer's Certificate are highly factual in
nature and reflect an intention with respect to the future conduct of the
business of the Company which may not be achievable if there are future changes
in the circumstances of the Company and (y) in the case of the latter
assumption, statutes, regulations, judicial decisions, and administrative
interpretations are subject to change at any time and, in some circumstances,
with retroactive effect. Any material change that is made after the date hereof
in any of the foregoing bases for our opinions could adversely affect our
conclusions.
Based on the foregoing, we are of the opinion that the Company has been
organized and operated in conformity with the requirements for qualification as
a "real estate investment trust" under the Code since the commencement of its
operations on August 19, 1994 through June 30, 1996, the date of the most recent
unaudited financials statements of the Company reviewed by us, and the Company's
current and contemplated methods of operation, as described in the Registration
Statement and as represented by the Company, will enable it to continue to so
qualify.
Other than as expressly stated above, we express no opinion on any
issue relating to the Company or to any investment therein or under any law
other than the Federal income tax laws.
We are furnishing this opinion to you solely in connection with the
filing of the Registration Statement and it is not to be relied upon, used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Giancarlo & Gnazzo, A
Professional Corporation under the caption "Certain Federal Income Tax
Considerations" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ GIANCARLO & GNAZZO
a professional corporation
<PAGE> 1
EXHIBIT 23.4
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 on Form S-3 to Form S-11 Registration Statement of Redwood Trust, Inc.
(File No. 33-97398) of our report dated March 1, 1996 on our audit of the
financial statements of Redwood Trust, Inc. We also consent to the reference to
our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
San Francisco, California
October 15, 1996
