<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
APRIL 4, 1997
(Date of Report)
REDWOOD TRUST, INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland 333-11665 68-0329422
(State of Incorporation (Commission File Number) (I.R.S. Employer
or Organization) Identification No.)
591 Redwood Highway,
Suite 3100
Mill Valley, California 94941
(Address of Principal Executive Offices) (Zip Code)
(415) 389-7373
(Registrant's Telephone Number,
Including Area Code)
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. OTHER EVENTS
Redwood Trust, Inc. (the "Company") has previously registered the
offer and sale of, among other securities, common stock of the
Company, par value $0.01 per share (the "Common Stock"), pursuant
to the Universal Shelf Registration Statement on Form S-3
(Registration No. 333-11665, filed September 10, 1996 and
declared effective by the Securities and Exchange Commission (the
"Commission") on September 19, 1996) (together with all the
exhibits thereto, the "Registration Statement").
The Company has entered into an underwriting agreement dated as
of April 3, 1997 for the sale of 1,100,000 shares of the above-
referenced Common Stock (the "Offering") to begin trading today,
April 4, 1997. In connection with the Offering, a supplemental
prospectus to the prospectus in the above-referenced Registration
Statement is being filed with the Commission pursuant to Rule
424(b)(5) under the Securities Act of 1933, as amended, and the
General Rules and Regulations promulgated thereunder.
With respect to the Offering, the following exhibits which relate
specifically to the Offering are included with this Current
Report:
Item 7(c). Exhibits
1.1 Underwriting Agreement.
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, a professional corporation
(included in Exhibit 5.1).
23.2 Consent of Piper & Marbury L.L.P. (included in
Exhibit 5.2).
23.9 Consent of Giancarlo & Gnazzo, A Professional
Corporation (included in Exhibit 8.1).
<PAGE> 3
SIGNATURE
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 4, 1997
Redwood Trust, Inc.
By: /s/ Vickie L. Rath
----------------------------
Vickie L. Rath
Vice President, Treasurer
and Controller
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Page Number
- -------------- -----------
<S> <C>
1.1 Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Opinion of Tobin & Tobin, a professional corporation,
as to legality (including consent of such firm) . . . . . . . . . . . 36
5.2 Opinion of Piper & Marbury L.L.P., as to legality
(including consent of such firm) . . . . . . . . . . . . . . . . . . . 39
8.1 Opinion of Giancarlo & Gnazzo, A Professional Corporation,
as to certain tax matters (including consent of such firm) . . . . . . 41
23.1 Consent of Tobin & Tobin, a professional corporation
(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) . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 1
EXHIBIT 1.1
1,100,000 SHARES
REDWOOD TRUST, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED APRIL 3, 1997
MONTGOMERY SECURITIES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . 2
(a) Compliance with Registration Requirements . . . . . . . . . . . . . . . . . . . . . . 2
(b) Exchange Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Offering Materials Furnished to Underwriter . . . . . . . . . . . . . . . . . . . . . 3
(d) Distribution of Offering Material By the Company . . . . . . . . . . . . . . . . . . 3
(e) The Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) Authorization of the Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . 3
(g) No Applicable Registration or Other Similar Rights . . . . . . . . . . . . . . . . . 3
(h) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(i) Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(j) Preparation of the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 4
(k) Incorporation and Good Standing of the Company and its Subsidiaries . . . . . . . . . 4
(l) Capitalization and Other Capital Stock Matters . . . . . . . . . . . . . . . . . . . 5
(m) Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(n) Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(o) Compliance with All Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . 6
(p) No Material Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 6
(q) Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(r) All Necessary Permits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(s) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(t) Tax Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(u) Company Not an "Investment Company" . . . . . . . . . . . . . . . . . . . . . . . . . 7
(v) REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(w) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(x) No Price Stabilization or Manipulation . . . . . . . . . . . . . . . . . . . . . . . 8
(y) Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(z) No Unlawful Contributions or Other Payments . . . . . . . . . . . . . . . . . . . . . 8
(aa) Company's Accounting System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ab) No Broker or Finder Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ac) Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Purchase, Sale and Delivery of the Common Shares . . . . . . . . . . . . . . . . . . . 9
(a) The Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) The Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Public Offering of the Common Shares . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Payment for the Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Delivery of the Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Delivery of Prospectus to the Underwriter . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Additional Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Underwriter's Review of Proposed Amendments and Supplements . . . . . . . . . . . . . 10
(b) Securities Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Exchange Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Copies of any Amendments and Supplements to the Prospectus . . . . . . . . . . . . . 11
(f) Blue Sky Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Earnings Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Periodic Reporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Future Reports to the Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(l) California and Canadian Blue Sky Compliance. . . . . . . . . . . . . . . . . . . . . 13
(m) Nasdaq Quotation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(n) REIT Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(o) Accounting and Tax Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(p) Commodity Exchange Act Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5. Conditions of the Obligations of the Underwriter . . . . . . . . . . . . . . . . . . . 14
(a) Accountants' Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) No Material Adverse Change or Ratings Agency Change . . . . . . . . . . . . . . . . . 15
(d) Opinion of Counsel for the Company . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Opinion of Special Maryland Counsel for the Company. . . . . . . . . . . . . . . . . 15
(f) Opinion of Special Tax Counsel for the Company . . . . . . . . . . . . . . . . . . . 15
(g) Opinion of Counsel for the Underwriter . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(j) Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6. Reimbursement of Underwriter's Expenses . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7. Effectiveness of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Indemnification of the Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Indemnification of the Company, its Directors and Officers . . . . . . . . . . . . . 18
(c) Notifications and Other Indemnification Procedures . . . . . . . . . . . . . . . . . 19
(d) Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11. Termination of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12. Representations and Indemnities to Survive Delivery . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 14. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 15. Partial Unenforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16. Governing Law Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 17. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
iii
<PAGE> 5
UNDERWRITING AGREEMENT
April 3, 1997
MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
INTRODUCTORY. Redwood Trust, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to Montgomery Securities (sometimes
herein referred to as the "Underwriter") an aggregate of 1,100,000 shares (the
"Common Shares") of its Common Stock, par value $0.01 per share (the "Common
Stock").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-11665), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration
statement, as amended, including the financial statements, exhibits and
schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including all
documents incorporated or deemed to be incorporated by reference therein and
any information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430A or Rule 434 under the Securities Act or the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act") is called the "Registration Statement". Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement", and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriter to
confirm sales of the Common Shares, is called the "Prospectus"; provided,
however, if the Company has, with the consent of Montgomery Securities, elected
to rely upon Rule 434 under the Securities Act, the term "Prospectus" shall
mean the Company's prospectus subject to completion (each, a "preliminary
prospectus") (such preliminary prospectus is called the "Rule 434 preliminary
prospectus"), together with the applicable term sheet (the "Term Sheet")
prepared and filed by the Company with the Commission under Rules 434 and
424(b) under the Securities Act and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. All references
in this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"). All references in this Agreement to
financial statements and schedules and other information which is "contained,"
<PAGE> 6
"included" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the Exchange Act
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
The Company hereby confirms its agreements with the Underwriter as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents, warrants and covenants to the Underwriter as
follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation
S-T under the Securities Act), was identical to the copy thereof delivered
to the Underwriter for use in connection with the offer and sale of the
Common Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the
time it became effective and at all subsequent times, complied and will
comply in all material respects with the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date and at all subsequent times, did not and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post- effective
amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating
to any Underwriter furnished to the Company in writing by the Underwriter
expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to
the Registration Statement which have not been described or filed as
required. The description set forth in the Prospectus under the heading
"ERISA Investors" is true and correct in all material respects.
2
<PAGE> 7
(b) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at
the Closing Date (as herein defined) will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) Offering Materials Furnished to Underwriter. The Company has
delivered to the Underwriter one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed
as a part thereof, and conformed copies of the Registration Statement
(without exhibits) and preliminary prospectuses and the Prospectus, as
amended or supplemented, in such quantities and at such places as the
Underwriter has reasonably requested.
(d) Distribution of Offering Material By the Company. The Company
has not distributed and will not distribute, prior to the later of the
Closing Date (as defined below) and the completion of the Underwriter's
distribution of the Common Shares, any offering material in connection with
the offering and sale of the Common Shares other than a preliminary
prospectus, the Prospectus or the Registration Statement.
(e) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(f) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriter from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement, will be validly issued, fully
paid and nonassessable.
(g) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement, except for such
rights as have been duly waived.
(h) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or
any development that could reasonably be expected to result in a material
adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a
"Material Adverse Change"); (ii) the Company and its
3
<PAGE> 8
subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement
not in the ordinary course of business or which could result in a material
reduction in the future earnings of the Company; (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company
or, except for dividends paid to the Company or other subsidiaries, any of
its subsidiaries on any class of capital stock or repurchase or redemption
by the Company or any of its subsidiaries of any class of capital stock and
(iv) the Company has not sustained any material loss or interference with
its business or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance.
(i) Independent Accountants. Coopers & Lybrand L.L.P., who have
expressed their opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus, are independent
public or certified public accountants as required by the Securities Act.
(j) Preparation of the Financial Statements. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the consolidated
financial position of the Company and its subsidiaries as of and at the
dates indicated and the results of their operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
Such financial statements and supporting schedules have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Financial Information",
"Selected Financial Data" and "Capitalization" fairly present the
information set forth therein on a basis consistent with that of the
audited financial statements contained in the Registration Statement. The
Company's ratios of earnings to fixed charges and preferred stock
dividends, if required to be set forth in the Prospectus and in Exhibit 12
to the Registration Statement, have been calculated in compliance with Item
503(d) of Regulation S-K under the Securities Act.
(k) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and, in the case of the
Company, to enter into and perform its obligations under this Agreement;
and no proceeding has been instituted or threatened in
4
<PAGE> 9
any such jurisdiction seeking to revoke, limit or curtail such power and
authority. Each of the Company and each subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in the
State of California and each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except for such jurisdictions where the failure to
so qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change; and no proceeding has been
instituted or threatened in any such jurisdiction seeking to revoke, limit
or curtail such qualification or good standing. All of the issued and
outstanding capital stock of each subsidiary has been duly authorized and
validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. Except as described in the
Prospectus, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 to the Registration Statement.
(l) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in
the Prospectus). The Common Stock (including the Common Shares) conforms
in all material respects to the description thereof contained in the
Prospectus. All of the issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable
and have been issued in compliance with federal and state securities laws.
No further approval or authority of the shareholders or the Board of
Directors is required for the issuance and sale of the Common Shares as
contemplated herein. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase securities of the
Company. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries other than
those accurately described in the Prospectus. The description of the
Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(m) Stock Exchange Listing. The Common Stock (including the Common
Shares) is registered pursuant to Section 12 of the Exchange Act and is
listed on the Nasdaq National Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act or delisting the Common Stock
from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the National Association of Securities
Dealers, Inc. (the "NASD") is contemplating terminating such registration
or listing.
(n) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default
(or, with the giving of notice or lapse of time, would be in default)
("Default") under any judgment, decree, order, indenture, mortgage, loan or
credit agreement, note, contract, franchise, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (each, an "Existing
Instrument"), except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby
5
<PAGE> 10
and by the Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions of
the charter or by-laws of the Company or any subsidiary, (ii) will not
conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, or require the consent
of any other party to, any Existing Instrument, except for such conflicts,
breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and
(iii) will not result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus, except such as have been obtained
or made by the Company and are in full force and effect under the Securities
Act, applicable state and Canadian securities or blue sky laws and from the
NASD. As used herein, a "Debt Repayment Triggering Event" means any event or
condition which gives, or with the giving of notice or lapse of time would
give, the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries.
(o) Compliance with All Applicable Laws. The Company is conducting
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, except where failure
to be in compliance, if the subject of an unfavorable decision, ruling or
finding, could result in a Material Adverse Change.
(p) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any
of its subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company or
such subsidiary and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement. No material labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the best
of the Company's knowledge, is threatened or imminent.
(q) Intellectual Property Rights. The Company and its subsidiaries
own or possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to
conduct their businesses as now conducted; and the expected expiration of
any of such Intellectual Property Rights would not result in a Material
Adverse Change. Neither the Company nor any of its subsidiaries has
received any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the subject
of an unfavorable decision, would result in a Material Adverse Change. The
Company has no knowledge of any material infringement by it of any
Intellectual Property Rights of others.
6
<PAGE> 11
(r) All Necessary Permits, etc. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits
issued by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct their respective businesses, and neither the
Company nor any subsidiary has received any notice of proceedings relating
to the revocation or modification of, or non- compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, could result in
a Material Adverse Change.
(s) Title to Properties. The Company owns no real property. The
Company and each of its subsidiaries has good and marketable title to all
the properties and assets reflected as owned in the financial statements
referred to in Section 1(j) above (or elsewhere in the Prospectus), in each
case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property,
improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases, with
such exceptions as are not material and do not materially interfere with
the use made or proposed to be made of such real property, improvements,
equipment or personal property by the Company or such subsidiary. The
Company owns or leases all such real and personal property as in necessary
to its operations as now conducted and as proposed to be conducted.
(t) Tax Law Compliance. The Company and its subsidiaries have filed
all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied against
any of them. The Company has made adequate charges, accruals and reserves
in the applicable financial statements referred to in Section 1(j) above
in respect of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined.
(u) Company Not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of
1940, as amended (the "Investment Company Act"). The Company is not, and
after receipt of payment for the Common Shares will not be, an "investment
company" within the meaning of Investment Company Act and will conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
(v) REIT Status. As of the Closing Date, the Company will be
organized and will operate in a manner so as to qualify as a "real estate
investment trust" ("REIT") under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"), and will elect to, will be
qualified to and intends to remain qualified to, be taxed as a REIT under
the Code and pursuant to any applicable state tax laws. The Company does
not know of any event which would cause or is likely to cause the Company
to fail to qualify as a REIT at any time.
7
<PAGE> 12
(w) Insurance. Each of the Company and its subsidiaries are insured
by recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses including, but
not limited to, policies covering the Company and its subsidiaries against
business interruptions and policies covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and earthquakes. The Company has no reason
to believe that it or any subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Change. Neither of the Company nor
any subsidiary has been denied any insurance coverage which it has sought or
for which it has applied.
(x) No Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Common Shares.
(y) Related Party Transactions. There are no business relationships
or related-party transactions involving the Company or any subsidiary or
any other person required to be described in the Prospectus which have not
been described as required.
(z) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has (i) made any
contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the
character required to be disclosed in the Prospectus or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi- public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(aa) Company's Accounting System. The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ab) No Broker or Finder Fees. Neither the Company nor any affiliate
has incurred any liability for a fee, commission or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement other than as disclosed in the
Registration Statement.
(ac) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company nor any of its
8
<PAGE> 13
subsidiaries is in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum
products (collectively, "Materials of Environmental Concern"), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental
authorizations required for the operation of the business of the Company or
its subsidiaries under applicable Environmental Laws, or noncompliance with
the terms and conditions thereof, nor has the Company or any of its
subsidiaries received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges that the
Company or any of its subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company
has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated
by the Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could
result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or any of its subsidiaries
or against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law.
Any certificate signed by an officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) The Common Shares. The Company agrees to issue and sell to the
Underwriter the Common Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriter agrees,
to purchase from the Company the Common Shares. The purchase price per Common
Share to be paid by the Underwriter to the Company shall be $42 per share.
9
<PAGE> 14
(b) The Closing Date. Delivery of certificates for the Common Shares
to be purchased by the Underwriter and payment therefor shall be made at the
offices of Montgomery Securities, 600 Montgomery Street, San Francisco,
California (or such other place as may be agreed to by the Company and the
Underwriter) at 6:00 a.m. San Francisco time, on April 9, 1997 or such other
time and date not later than 10:30 a.m. San Francisco time, on the tenth
business day following said date as the Underwriter shall designate by notice
to the Company (the time and date of such closing are called the "Closing
Date"). The Company hereby acknowledges that circumstances under which the
Underwriter may provide notice to postpone the Closing Date as originally
scheduled include, but are in no way limited to, any determination by the
Company or the Underwriter to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of Section
10.
(c) Public Offering of the Common Shares. The Underwriter hereby
advises the Company that the Underwriter intends to offer for sale to the
public, as described in the Prospectus, the Common Shares as soon after this
Agreement has been executed and the Registration Statement has been declared
effective as the Underwriter, in its sole judgment, has determined is advisable
and practicable.
(d) Payment for the Common Shares. Payment for the Common Shares
shall be made at the Closing Date by wire transfer of immediately available
funds to the order of the Company.
(e) Delivery of the Common Shares. The Company shall deliver, or
cause to be delivered, to the Underwriter certificates for the Common Shares at
the Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and registered
in such names and denominations as the Underwriter shall have requested at
least two full business days prior to the Closing Date and shall be made
available for inspection on the business day preceding the Closing Date at a
location in New York City as the Underwriter may designate. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is
a further condition to the obligations of the Underwriter.
(f) Delivery of Prospectus to the Underwriter. Not later than 12:00
p.m. on the second business day following the date the Common Shares are
released by the Underwriter for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at
such places as the Underwriter shall request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY. The Company further
covenants and agrees with the Underwriter as follows:
(a) Underwriter's Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of
the Closing Date or such date, as in the opinion of counsel for the
Underwriter, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus (including any amendment or supplement
through incorporation by reference of any report
10
<PAGE> 15
filed under the Exchange Act), the Company shall furnish to the Underwriter
for review a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which
the Underwriter reasonably objects.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Underwriter in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information
from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the
time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of
any proceedings to remove, suspend or terminate from listing or quotation
the Common Stock from any securities exchange upon which it is listed for
trading or included or designated for quotation, or of the threatening or
initiation of any proceedings for any of such purposes. If the Commission
shall enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a
timely manner by the Commission.
(c) Exchange Act Compliance. During the Prospectus Delivery Period,
the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the
manner and within the time periods required by the Exchange Act.
(d) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if in the opinion of the Underwriter or counsel for the
Underwriter it is otherwise necessary to amend or supplement the Prospectus
to comply with law, the Company agrees promptly to prepare (subject to
Section 3(a) hereof), file with the Commission and furnish at its own
expense to the Underwriter and to dealers, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Underwriter, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto (including any documents incorporated by
reference therein) as the Underwriter may request.
(f) Blue Sky Compliance. The Company shall cooperate with the
Underwriter and its counsel to qualify or register the Common Shares for
sale under (or obtain exemptions from
11
<PAGE> 16
the application of) the Blue Sky or state or Canadian securities laws of
those jurisdictions designated by the Underwriter, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Common Shares. The
Company shall not be required to qualify as a foreign corporation or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Underwriter promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common Shares for offering, sale
or trading in any jurisdiction or any initiation or threat of any proceeding
for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall
use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.
(g) Use of Proceeds. The Company shall apply the net proceeds from
the sale of the Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(h) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(i) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Underwriter an
earnings statement (which need not be audited) covering the twelve-month
period ending on the final day of the Company's first quarter that ends at
least one year after the "effective date of the Registration Statement" (as
defined in Rule 158(c) under the Securities Act) that satisfies the
provisions of Section 11(a) of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act.
(k) Future Reports to the Underwriter. During the period of five
years hereafter the Company will furnish to the Underwriter at 600
Montgomery Street, San Francisco, CA 94111, Attention: Ms. Kathleen
Smythe, and to O'Melveny & Myers LLP at the address set forth in Section 13
(i) as soon as practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of the Company as
of the close of such fiscal year and statements of income, shareholders'
equity and cash flows for the year then ended and the opinion thereon of
the Company's independent public or certified public accountants; (ii) as
soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(l) California and Canadian Blue Sky Compliance. The Company will
use its best efforts to qualify or register the Common Shares for sale in
non-issuer transactions under (or obtain exemptions from the application
of) the Blue Sky laws of the State of California and
12
<PAGE> 17
the provincial laws of Canada as specified by the Underwriter (and thereby
permit market making transactions and secondary trading in the Company's
Common Shares in California and such Canadian provinces), will comply with
such Blue Sky or Canadian provincial laws and will use its best efforts to
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(m) Nasdaq Quotation. The Company will use its best efforts to
effect the quotation of the Common Shares on the Nasdaq National Market
System.
(n) REIT Qualification. The Company will continue to meet the
requirements to qualify as a REIT and will not revoke its election to be a
REIT, effective for the year ending December 31, 1997.
(o) Accounting and Tax Advice. The Company will continue to retain a
"Big 6" Accounting Firm as its qualified accountants and such qualified tax
experts as the Company may identify for a period of not less than two years
beginning on the Closing Date. The Company will use its best efforts to
comply with the representations made as support for the opinion by the
Company's tax counsel under the REIT provisions of the Code, the form of
which opinion was filed as an exhibit to the Registration Statement.
(p) Commodity Exchange Act Matters. The Company will not invest in
futures contracts, options on futures contracts or options on commodities
unless the Company is exempt from the registration requirements of the
Commodity Exchange Act, as amended, or otherwise complies with the
Commodity Exchange Act, as amended. In addition, the Company will not
engage in any activities which might be subject to the Commodity Exchange
Act unless such activities are exempt from the Commodity Exchange Act or
otherwise comply with that Act or with an applicable no-action letter to
the Company from the Commodities Futures Trading Commission.
You may, in your sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 4. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated herein are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriter, (iv) all fees and expenses of the Company's counsel,
independent public or certified pubic accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments
and supplements thereto, and this Agreement, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriter in connection with
qualifying or
13
<PAGE> 18
registering (or obtaining exemptions from the qualification or registration of)
all or any part of the Common Shares for offer and sale under the Blue Sky
laws, and, if requested by the Underwriter, preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriter of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the
Underwriter in connection with, the NASD's review and approval of the
Underwriter's participation in the offering and distribution of the Common
Shares, (viii) the fees and expenses associated with including the Common
Shares on the Nasdaq National Market, and (ix) all other fees, costs and
expenses referred to in Item 14 of Part II of the Registration Statement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9
hereof, the Underwriter shall pay their own expenses, including the fees and
disbursements of its counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter to purchase and pay for the Common Shares as
provided herein on the Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section
1 hereof as of the date hereof and as of the Closing Date as though then made,
to the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Underwriter
shall have received from Coopers & Lybrand L.L.P., independent public or
certified public accountants for the Company, a letter dated the date
hereof addressed to the Underwriter, in form and substance satisfactory to
the Underwriter, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any
successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed
a post-effective amendment to the Registration Statement containing
the information required by such Rule 430A, and such post- effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Underwriter's consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
14
<PAGE> 19
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the
period from and after the date of this Agreement and prior to the Closing
Date:
(i) in the judgment of the Underwriter there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On the Closing Date, the
Underwriter shall have received the favorable opinion of Tobin & Tobin, a
professional corporation, counsel for the Company, addressed to the
Underwriter and dated as of the Closing Date, the form of which is attached
as Exhibit A.
(e) Opinion of Special Maryland Counsel for the Company. On the
Closing Date, the Underwriter shall have received the favorable opinion of
Piper & Marbury L.L.P., special Maryland counsel for the Company, addressed
to the Underwriter and dated as of the Closing Date, the form of which is
attached as Exhibit B.
(f) Opinion of Special Tax Counsel for the Company. On the Closing
Date, the Underwriter shall have received the favorable opinion of
Giancarlo & Gnazzo, A Professional Corporation, special tax counsel for the
Company, addressed to the Underwriter and dated as of the Closing Date, the
form of which is attached as Exhibit C.
(g) Opinion of Counsel for the Underwriter. On the Closing Date, the
Underwriter shall have received the favorable opinion of O'Melveny & Myers
LLP, counsel for the Underwriter, addressed to the Underwriter and dated as
of the Closing Date, with respect to certain matters.
(h) Officers' Certificate. On the Closing Date, the Underwriter
shall have received a written certificate executed by the Chairman of the
Board, Chief Executive Officer or President of the Company and the Chief
Financial Officer, Treasurer or Chief Accounting Officer of the Company,
dated as of the Closing Date, certifying as to such matters as the
Underwriter or its counsel shall have reasonably requested, including,
without limitation, certification to the effect set forth in subsections
(b)(ii) and (c)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement
and prior to such Closing Date, there has not occurred any Material
Adverse Change;
15
<PAGE> 20
(ii) the representations, warranties and covenants of the
Company set forth in Section 1 of this Agreement are true and correct
with the same force and effect as though expressly made on and as of
such Closing Date; and
(iii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date.
(i) Bring-down Comfort Letter. On the Closing Date, the Underwriter
shall have received from Coopers & Lybrand L.L.P., independent public or
certified public accountants for the Company, a letter dated such date, in
form and substance satisfactory to the Underwriter, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred
to therein for the carrying out of procedures shall be no more than three
business days prior to the Closing Date.
(j) Additional Documents. On or before the Closing Date, the
Underwriter and counsel for the Underwriter shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Common
Shares as contemplated herein, or in order to evidence the accuracy of any
of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
(k) Nasdaq Quotation. The Common Shares shall have been approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Underwriter
by notice to the Company at any time on or prior to the Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 4, Section 6, Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If this
Agreement is terminated by the Underwriter pursuant to Section 5, Section 7 or
Section 11, or if the sale to the Underwriter of the Common Shares on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Underwriter upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Underwriter in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall not
become effective until the later of (i) the execution of this Agreement by the
parties hereto and (ii) notification by the Commission to the Company and the
Underwriter of the effectiveness of the Registration Statement under the
Securities Act. Prior to such effectiveness, this Agreement may be
16
<PAGE> 21
terminated by any party by notice to each of the other parties hereto, and any
such termination shall be without liability on the part of (a) the Company to
the Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Underwriter pursuant to Sections 4 and 6 hereof, (b) the
Underwriter to the Company, or (c) of any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriter. The Company agrees to
indemnify and hold harmless the Underwriter, its officers and employees,
and each person, if any, who controls the Underwriter within the meaning of
the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which the Underwriter or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state or Canadian statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based
(i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A
or Rule 434 under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole
or in part upon any inaccuracy in the representations and warranties of the
Company contained herein; or (iv) in whole or in part upon any failure of
the Company to perform its obligations hereunder or under law; or (v) any
act or failure to act or any alleged act or failure to act by the
Underwriter in connection with, or relating in any manner to, the Common
Stock or the offering contemplated hereby, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) or (ii) above, provided
that the Company shall not be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by the Underwriter through its gross negligence or willful
misconduct; and to reimburse the Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by the Underwriter) as such expenses are reasonably incurred
by the Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use
in
17
<PAGE> 22
the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto); and provided, further, that with
respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased Common
Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2
and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. The
Underwriter agrees, to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use therein; and to reimburse the
Company, or any such director, officer or controlling person for any legal
and other expense reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company hereby acknowledges that the only
information that the Underwriter furnished to the Company expressly for use
in the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) is that contained in the
statements set forth (A) as the first paragraph on the inside front cover
page of the Prospectus concerning stabilization by the Underwriter and (B)
as the final three paragraphs under the caption "Underwriting" in the
Prospectus; and the Underwriter confirms that such statements are correct.
The indemnity agreement set forth in this Section 8(b) shall be in addition
to any liabilities that the Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such
18
<PAGE> 23
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is
not prejudiced as a proximate result of such failure. In case any such
action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with local counsel), approved by the
indemnifying party, representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement, compromise or consent to
the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been
a party and indemnity was or could have been sought
19
<PAGE> 24
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the offering of the Common Shares pursuant to this Agreement
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one
hand, and the Underwriter, on the other hand, in connection with the offering
of the Common Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Common Shares pursuant to this Agreement (before deducting expenses) received
by the Company, and the total underwriting discount received by the
Underwriter, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding
location on the Term Sheet) bear to the aggregate initial public offering price
of the Common Shares as set forth on such cover. The relative fault of the
Company, on the one hand, and the Underwriter, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company, on
the one hand, or the Underwriter, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply
if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the
20
<PAGE> 25
Underwriter were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each officer and
employee of an Underwriter and each person, if any, who controls an Underwriter
within the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company with the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
SECTION 10. [Intentionally Omitted]
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the Closing Date
this Agreement maybe terminated by the Underwriter by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York or
California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States' or international political, financial or economic conditions, as
in the judgment of the Underwriter is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities;
(iv) in the judgment of the Underwriter there shall have occurred any Material
Adverse Change; or (v) the Company shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the
judgment of the Underwriter may interfere materially with the conduct of the
business and operations of the Company regardless of whether or not such loss
shall have been insured. Any termination pursuant to this Section 11 shall be
without liability on the part of (a) the Company to the Underwriter, except
that the Company shall be obligated to reimburse the expenses of the
Underwriter pursuant to Sections 4 and 6 hereof, (b) the Underwriter to the
Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its
21
<PAGE> 26
officers and of the Underwriter set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by
or on behalf of the Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Common Shares sold hereunder and any
termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Underwriter:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-249-5558
Attention: Richard A. Smith
with a copy to both:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 249-5553
Attention: David A. Baylor, Esq.
and
Peter T. Healy, Esq.
O'Melveny & Myers LLP
Embarcadero Center West
275 Battery Street, Suite 2600
San Francisco, California 94111-3305
Facsimile: (415) 984-8701
If to the Company:
Redwood Trust, Inc.
591 Redwood Highway, Suite 3100
Mill Valley, California 94941
Facsimile: (415) 381-1773
Attention: Douglas B. Hansen
with a copy to:
Phillip R. Pollock, Esq.
Tobin & Tobin
22
<PAGE> 27
One Montgomery Street, 15th Floor
San Francisco, California 94104
Facsimile: (415) 433-3883
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 8 and
Section 9, and in each case their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Common
Shares as such from any of the Underwriters merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 17. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the
parties hereto further acknowledges that the provisions of Sections 8 and 9
hereto fairly allocate the risks in light of the ability of the parties to
investigate the Company, its affairs and its business in order to assure
23
<PAGE> 28
that adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon
this instrument, along with all counterparts hereof, shall become a binding
agreement in accordance with its terms.
Very truly yours,
REDWOOD TRUST, INC.
By: _______________________________
George E. Bull, III
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Underwriter in San Francisco, California as of the date first above
written.
MONTGOMERY SECURITIES
By: _______________________________
Managing Director
24
<PAGE> 29
EXHIBIT A
Opinion of Tobin & Tobin, counsel for the Company, to be delivered
pursuant to Section 5(d) of the Underwriting Agreement. References to the
Prospectus in this Exhibit A include any supplements thereto at the Closing
Date.
A-1
<PAGE> 30
EXHIBIT B
Opinion of Piper & Marbury L.L.P., special Maryland counsel for the
Company, to be delivered pursuant to Section 5(e) of the Underwriting
Agreement. References to the Prospectus in this Exhibit B include any
supplements thereto at the Closing Date.
B-1
<PAGE> 31
EXHIBIT C
Opinion of Giancarlo & Gnazzo, A Professional Corporation, special tax
counsel for the Company, to be delivered pursuant to Section 5(f) of the
Underwriting Agreement. References to the Prospectus in this Exhibit C include
any supplements thereto at the Closing Date.
C-1
<PAGE> 1
EXHIBIT 5.1
April 4, 1997
The Board of Directors
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Re: Supplemental Prospectus to Registration Statement
on Form S-3 (Registration No. 333-11665; declared
Effective September 19, 1996
Ladies and Gentlemen:
We have acted as counsel to Redwood Trust, Inc., a Maryland
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), and the sale by the
Company, of an aggregate of 1,100,000 shares of the Company's common stock, par
value $0.01 per share (the "Common Stock" or the "Shares") pursuant to an
Underwriting Agreement, dated April 3, 1997, between the Company and Montgomery
Securities (the "Underwriting Agreement").
This opinion is delivered in accordance with the requirements of Items
601(b)(5) and (23) of Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Universal Shelf Registration Statement on Form S-3,
relating, among other
<PAGE> 2
The Board of Directors
Redwood Trust, Inc.
April 4, 1997
Page 2
securities, to the Shares, filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act on September 10, 1996, as amended
and declared effective by the Commission on September 19, 1996 (together with
all exhibits thereto, the "Registration Statement"), (ii) the Supplemental
Prospectus to the Registration Statement pursuant to Rule 424(b)(5) of the
Rules and Regulations promulgated under the Securities Act, relating to the
Shares (the "Supplemental Prospectus"), (iii) the Charter of the Company, as
amended, (iv) the Bylaws of the Company in effect as of the date hereof, (v)
resolutions of the Board of Directors of the Company relating to the issuance
and sale of the Shares, the filing of the Supplemental Prospectus, and the
previous filing and effectiveness of the Registration Statement, adopted at a
meeting of the Board of Directors, and resolutions of the Pricing Committee
relating to the pricing of the Shares and the Underwriting Agreement, adopted
at a meeting on April 3, 1997, and (vi) a specimen of the certificates
representing the Shares. We have also examined such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinion set forth below.
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 photostatic copies, and
the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
oral or written statements and representations of officers and other
representatives of the Company and others.
Members of our firm are admitted to the practice of law in the State
of California and we do not express any opinion as to the laws of any other
jurisdiction, except for those matters
<PAGE> 3
The Board of Directors
Redwood Trust, Inc.
April 4, 1997
Page 3
of Maryland law for which we have relied solely upon the legal opinion of Piper
& Marbury L.L.P., Baltimore, Maryland, dated on or about the date hereof.
Based upon and subject to the foregoing, we are of the opinion that
the Shares to be issued by the Company in the offering, described in the
Supplemental Prospectus, have been duly and validly authorized for issuance,
and, upon issuance and delivery to the Underwriters against payment therefor in
accordance with the terms of the Underwriting Agreement, will be validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to Form 8-K, and its incorporation by reference as an exhibit to
the Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section
7 of the Securities Act or under the rules and regulations of the Commission
promulgated thereunder.
Very truly yours,
/s/ Tobin & Tobin
<PAGE> 1
EXHIBIT 5.2
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018 WASHINGTON
410-539-2530 NEW YORK
FAX: 410-539-0489 PHILADELPHIA
EASTON
April 4, 1997
Redwood Trust, Inc.
591 Redwood Highway, Suite 3100
Mill Valley, California 94941
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special Maryland counsel to Redwood Trust, Inc., a
Maryland corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), pursuant to a Registration
Statement on Form S-3 of the Company (Registration No. 333-11665) (the
"Registration Statement") filed with the Securities and Exchange Commission
(the "Commission") for offering by the Company from time to time of up to
$200,000,000 aggregate initial offering price of: (i) shares of common stock,
par value $0.01 per share (the "Common Stock"); (ii) shares of preferred stock,
par value $0.01 per share (the "Preferred Stock"); (iii) warrants to purchase
Common Stock or Preferred Stock (the "Warrants"); (iv) rights to purchase
shares of Common Stock or Preferred Stock (the "Shareholder Rights"); and (v)
any combination of the foregoing types of securities. The Common Stock, the
Preferred Stock, the Warrants and the Shareholder Rights are collectively
referred to herein as the "Securities." The Registration Statement provides
that the Securities may be offered separately or together, in separate series,
in amounts, at prices, and on terms to be set forth in one or more supplements
to the Prospectus dated September 19, 1996 (the "Prospectus"). This opinion is
being provided at your request in connection with the sale of up to 1,500,000
shares of the Common Stock (the "Shares") pursuant to a Prospectus Supplement
dated April 4, 1997 (the "Prospectus Supplement").
In this capacity, we have examined the Registration Statement, the
Prospectus, the Prospectus Supplement, Underwriting Agreement relating to the
Shares (the "Underwriting Agreement"), the Charter and By-Laws of the Company,
the proceedings of the Board of Directors of the Company or a committee thereof
relating to the issuance of the Shares, a Certificate of the Officer of the
Company dated April 4, 1997, and such other statutes,
<PAGE> 2
Redwood Trust, Inc. Piper & Marbury
April 4, 1997 L.L.P.
Page 2
certificates, instruments, and documents relating to the Company and matters of
law as we have deemed necessary to the issuance of this opinion. In such
examination, we have assumed, without independent investigation, the
genuineness of all signatures, the legal capacity of all individuals who have
executed any of the aforesaid documents, the authenticity of all documents
submitted to us as originals, the conformity with originals of all documents
submitted to us as copies (and the authenticity of the originals of such
copies), and all public records reviewed are accurate and complete. As to
factual matters, we have relied on the Certificate of Officer and have not
independently verified the matters stated therein.
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion and so advise you
that upon the issuance and delivery of the Shares in accordance with the terms
set forth in the Prospectus, the Prospectus Supplement, and the Underwriting
Agreement, the Shares will have been duly and validly authorized and will be
validly issued, fully paid, and non-assessable.
The opinion expressed herein is solely for (i) the use of the Company
in connection with the Registration Statement, and (ii) the use of Tobin &
Tobin in giving their legality opinion to be filed as an exhibit to the
Registration Statement or in a Current Report on Form 8-K. This opinion may
not be relied on by any other person or in any other connection without our
prior written approval. This opinion is limited to the matters set forth
herein, and no other opinion should be inferred beyond the matters expressly
stated.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement or in a Current Report on Form 8-K and to the reference
to us under the heading "Legal Matters" in the Prospectus and the Prospectus
Supplement included in the Registration Statement. In giving our consent, we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Giancarlo & Gnazzo]
April 4, 1997
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Re: Redwood Trust, Inc. Shelf Registration
Dear Ladies and Gentlemen:
You have requested our opinion in connection with the Prospectus
Supplement, dated April 4, 1997 (the "Prospectus Supplement"), to the Form
S-3 Shelf Registration Statement, dated September 19, 1996 (together, the
"Registration Statement") being filed by Redwood Trust, Inc. (the "Company")
with respect to up to 1,100,000 shares of its common stock, par value of $0.01
per share (the "Common Stock") .
We have acted as your special tax counsel in connection with the
Registration Statement and Prospectus Supplement, and have assisted in the
preparation of the tax summary for each such document. In formulating our
opinions, we have reviewed (i) the Registration Statement and the Prospectus
Supplement, (ii) the Articles of Incorporation of the Company, as amended and
supplemented to date, (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., dated on or about the date
hereof, 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.
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
<PAGE> 2
Redwood Trust, Inc.
April 4, 1997
Page 2
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 December 31, 1996,
the date of the most recent unaudited financial statements of the Company
reviewed by us, and the Company's current and contemplated methods of
operation, as described in the Registration Statement and the Prospectus
Supplement, and as represented to us 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 Supplement.
Very truly yours,
/s/ Giancarlo & Gnazzo,
A Professional
Corporation
