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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1997
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
REDWOOD TRUST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 591 REDWOOD HIGHWAY, SUITE 3100 68-0329422
(STATE OR OTHER JURISDICTION OF MILL VALLEY, CA 94941 (I.R.S. EMPLOYER I.D. NUMBER)
INCORPORATION OR ORGANIZATION) (415) 389-7373
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE OFFICES)
------------------------
GEORGE E. BULL, III
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
REDWOOD TRUST, INC.
591 REDWOOD HIGHWAY, SUITE 3100
MILL VALLEY, CA 94941
(415) 389-7373
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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DOUGLAS B. HANSEN PHILLIP R. POLLOCK, ESQ.
PRESIDENT AND CHIEF FINANCIAL OFFICER TOBIN & TOBIN
REDWOOD TRUST, INC. ONE MONTGOMERY STREET, 15TH FLOOR
591 REDWOOD HIGHWAY, SUITE 3100 SAN FRANCISCO, CA 94104
MILL VALLEY, CA 94941 (415) 433-1400
(415) 389-7373
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
At any time and from time to time after the effective date of this Registration
Statement in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
- ---------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
- ---------------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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============================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE AGGREGATE PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2)(6) FEE(3)(6)
- ----------------------------------------------------------------------------------------------------------------------------
Preferred Stock, $.01 per value per share(4)....
Preferred Stock Warrants(4).....................
Common Stock, $.01 per value per share(4)(5).... $300,000,000 $300,000,000 $90,909.09
Common Stock Warrants(4)(5).....................
Shareholders Rights.............................
- ----------------------------------------------------------------------------------------------------------------------------
Total.................................. $300,000,000 $300,000,000 $90,909.09
============================================================================================================================
</TABLE>
(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $300,000,000.00,
except as described in Footnote (6), below. Any securities registered
hereunder may be sold separately or as units with other securities
registered hereunder.
(2) The proposed maximum aggregate price per share will be determined, from time
to time, by the Registrant in connection with the issuance by the Registrant
of the securities registered hereunder.
(3) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended (the "Rule(s)").
(4) Subject to Footnote (1), there is being registered hereunder an
indeterminate number of shares of Preferred Stock and Common Stock as may be
sold, from time to time, by the Registrant, or as may be issued pursuant to
the conversion of Preferred Stock or the exercise of warrants or shareholder
rights.
(5) The aggregate amount of Common Stock registered hereunder is limited, solely
for purposes of any at the market offering, to that which is permissible
under Rule 415(a)(4).
(6) Pursuant to Rule 429(b), this offering shall also include $84,075,000.00,
the amount remaining under the Registrant's previous Universal Shelf
Registration Statement, Reg. No. 333-11665, the Registration Fee of
$28,991.38 for such amount having been previously paid with the earlier
registration. ------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
------------------------
Pursuant to Rule 429(b), the Prospectus contained in this Registration
Statement also relates to Registration No. 333-11665, filed by Registrant and
declared effective September 19, 1996.
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COMMON STOCK, PREFERRED STOCK, WARRANTS,
AND SHAREHOLDER RIGHTS TO PURCHASE COMMON STOCK AND PREFERRED STOCK
$300,000,000
RWT
REDWOOD TRUST, INC.
------------------------
Redwood Trust, Inc., a Maryland corporation ("Redwood Trust" or the
"Company"), specializes in acquiring and managing real estate mortgage loans.
Such loans are originated by others to the Company's specifications or to
specifications approved by the Company. The Company has acquired mortgage loans
secured by single-family real estate properties throughout the United States,
with a special emphasis on properties located in the State of California, and
may in the future acquire mortgage loans secured by multifamily and commercial
real estate properties. The Company's mortgage loans may be acquired as whole
loans or as mortgage securities evidencing interests in pools of mortgage loans
(collectively, "Mortgage Assets"). The Company is self-advised and self-managed
and its principal business objective is to generate net income for distribution
to stockholders. The Company has elected to be subject to tax as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"), and generally will not be subject to tax on its Federal income to
the extent that it distributes its earnings to its stockholders and it maintains
its qualification as a REIT.
The Company, directly or through agents, dealers or underwriters designated
from time to time, may issue and sell from to time one or more of the following
types of its securities (the "Securities"): (i) shares of its common stock, par
value $0.01 per share ("Common Stock"); (ii) shares of its preferred stock, in
one or more classes or series ("Preferred Stock"), (iii) warrants to purchase
shares of Common Stock ("Common Stock Warrants"); (iv) warrants to purchase
Preferred Stock ("Preferred Stock Warrants"); (v) rights to purchase shares of
Common Stock or Preferred Stock issued to shareholders ("Shareholders Rights");
and (vi) any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing types of Securities. The Securities
offered pursuant to this Prospectus may be issued in one or more classes or
series, in amounts, at prices and on terms to be determined at the time of the
offering of each such class or series and set forth in a supplement to this
Prospectus (a "Prospectus Supplement"). The Securities offered by the Company
pursuant to this Prospectus will be limited to $300,000,000 aggregate initial
public offering price, including the exercise price of any Common Stock
Warrants, Preferred Stock Warrants (collectively, "Securities Warrants") or
Shareholders Rights, plus the amount remaining under the Company's previous
Universal Shelf Registration Statement, Registration No. 333-11665.
The specific terms of each offering of Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement relating to such offering of Securities. Such specific terms include,
without limitation, to the extent applicable (1) in the case of any class or
series of Preferred Stock, the specific designations, rights, preferences,
privileges and restrictions of such class or series of Preferred Stock,
including the dividend rate or rates or the method for calculating same,
dividend payment dates, voting rights, liquidations preferences, and any
conversion, exchange, redemption or sinking fund provisions; (2) in the case of
the Securities Warrants, Preferred Stock or Common Stock, as applicable, for
which each such warrant is exercisable, the exercise price, duration,
detachability and call provisions of each such warrant; (3) in the case of
Shareholder Rights, which entitles the shareholder to purchase Preferred Stock
or Common Stock, as applicable, the subscription price, duration,
transferabilities and the over subscription privilege of each of the Shareholder
Rights; and (4) in the case of any offering of Securities, to the extent
applicable, the initial public offering price or prices, listing on any
securities exchange, certain federal income tax consequences and the agents,
dealers or underwriters, if any, participating in the offering and sale of the
Securities.
The Company's Common Stock is currently quoted on the Nasdaq National Market
("Nasdaq" or the "Nasdaq National Market") under the symbol "RWTI." On April 21,
1997, the last reported sales price for the Common Stock was $42.50 per share.
The Company also currently has one class of authorized, issued and outstanding
Preferred Stock, the Class B 9.74% Cumulative Convertible Preferred Stock (the
"Class B Preferred Stock"), which is quoted on the Nasdaq National Market under
the symbol "RWTIP," and an issue of Stock Purchase Warrants, quoted under the
symbol "RWTIW." On April 21, 1997, the last reported sales price for the Class B
Preferred Stock and Stock Purchase Warrants was $42.50 per share and $30.00 per
share, respectively. The shares of Common Stock and Class B Preferred Stock, and
the securities offered herein, are subject to repurchase by the Company under
certain conditions and are subject to certain restrictions on ownership and
transferability which prohibit any person (either alone or with others as a
group) from owning a number of shares in excess of 9.8% of the outstanding
shares of the Company's capital stock, subject to certain exceptions. See
"Description of Securities -- Repurchase of Shares and Restrictions on Transfer"
and "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement. The delivery in any jurisdiction of this
Prospectus together with a Prospectus Supplement relating to specific Securities
shall not constitute an offer in such jurisdiction of any other Securities
covered by this Prospectus but not described in such Prospectus Supplement.
------------------------
The date of this Prospectus is April , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission" or "SEC"). Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048, and at 500 West
Madison Street, Chicago, Illinois 60661. Copies may also be obtained from the
Public Reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock, Stock Purchase
Warrants and Class B Preferred Stock of the Company are currently quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. In
addition, holders of the Common Stock and Class B Preferred Stock will receive
annual reports containing audited financial statements with a report thereon by
the Company's independent certified public accountants, and quarterly reports
containing unaudited summary financial information for each of the first three
quarters of each fiscal year.
The Company files information electronically with the Commission, and the
Commission maintains a Web Site that contains reports, proxy and information
statements and other information regarding registrants (including the Company)
that file electronically with the Commission. The address of the Commission's
Web Site is <http://www.sec.gov>.
Copies of the Registration Statement on Form S-3 of which this Prospectus
forms a part and exhibits thereto are on file at the offices of the Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement for
further information with respect to the Company and the Securities offered
hereby. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to a copy of such contract or other document filed as
an exhibit to the Registration Statement or otherwise filed with the SEC and
incorporated by reference herein. Each such statement is qualified in its
entirety by such contract or other document reference.
The Company currently furnishes its shareholders with annual reports
containing financial statements audited by its independent auditors and with
quarterly reports containing unaudited summary financial information for each of
the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference the following documents
heretofore filed by the Company with the Commission:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 as amended by Form 10-K/A filed on April 3, 1997;
(b) The Company's Current Report on Form 8-K filed on January 7, 1997;
and
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, as amended (Reg. No.
0-26436), filed July 17, 1996, under the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities made hereby shall be deemed to
be incorporated by reference into this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained in the Registration Statement, this Prospectus, or
any other subsequently filed document that is also incorporated by reference
herein modifies or supersedes that
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statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered, upon written
or oral request of that person, a copy of any document incorporated herein by
reference (other than exhibits to those documents unless the exhibits are
specifically incorporated herein by reference into the documents that this
Prospectus incorporates by reference). Requests should be directed to Ms. Vickie
L. Rath, Vice-President, Treasurer and Controller, Redwood Trust, Inc., 591
Redwood Highway, Suite 3100, Mill Valley, California 94941, telephone (415)
389-7373.
3
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THE COMPANY
The Company was incorporated in the State of Maryland on April 11, 1994 and
commenced operations on August 19, 1994. It acquires and manages Mortgage Assets
financed by the proceeds of equity offerings and by borrowings. The Company
produces net interest income on Mortgage Assets qualifying as Qualified REIT
Real Estate Assets while maintaining strict cost controls in order to generate
net income for distribution to its stockholders. The Company intends to continue
operating in a manner that will permit it to maintain its qualification as a
REIT for Federal income tax purposes. Assuming it retains such REIT status, the
Company will generally not be subject to tax on its Federal income to the extent
that it distributes that income to stockholders in the form of dividends. The
principal executive offices of the Company are located at 591 Redwood Highway,
Suite 3100, Mill Valley, California 94941, telephone (415) 389-7373.
The Company is self-advised and self-managed. The management team of the
Company has considerable expertise in the acquisition and management of Mortgage
Assets, mortgage finance, asset/liability management and the management of
corporations in the real estate lending business, including banks, savings and
loans and life insurance companies. In addition to working with healthy real
estate assets and healthy real estate lending institutions, the management of
the Company also has experience managing the assets of several failed life
insurance companies during rehabilitation, managing and advising a number of
troubled savings and loans and banks, and overseeing the workout and liquidation
process for large portfolios of troubled commercial real estate mortgages and
equity investments. Reference to the "Company" herein shall include any taxable
or Qualified REIT Subsidiaries through which the Company may conduct its
business.
Additional information regarding the Company, including the audited
financial statements of the Company and descriptions of the Company's currently
outstanding common and preferred stock and warrants, is contained in the
documents incorporated by reference herein. See "Incorporation of Certain
Information by Reference," above.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement for any
offering of Securities, the net proceeds from the sale of Securities offered by
the Company will be available for the general corporate purposes of the Company.
These general corporate purposes may include, without limitation, repayment of
maturing obligations, redemption of outstanding indebtedness, financing future
acquisitions (including, but not limited to, acquisitions of Mortgage Assets and
other mortgage related products), capital expenditures and working capital.
Pending any such uses, the Company may invest the net proceeds from the sale of
any Securities or may use them to reduce short-term indebtedness. If the Company
intends to use the net proceeds from a sale of Securities to finance a
significant acquisition, a related Prospectus Supplement will describe the
material terms of such acquisition.
DESCRIPTION OF SECURITIES
The following is a brief description of the material terms of the Company's
Securities. This description does not purport to be complete and is subject in
all respects to applicable Maryland law and to the provision of the Company's
Articles of Incorporation and Bylaws, including any applicable amendments or
supplements thereto, copies of which are on file with the Commission as
described under "Available Information" and are incorporated by reference
herein.
GENERAL
The Company may offer under this Prospectus one or more of the following
categories of its Securities: (i) shares of its Common Stock, par value $0.01
per share; (ii) shares of its Preferred Stock, in one or more classes or series;
(iii) Common Stock Warrants; (iv) Preferred Stock Warrants; (v) Shareholder
Rights; and (vi) any combination of the foregoing, either individually or as
units consisting of one or more of the foregoing
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types of Securities. The terms of any specific offering of Securities, including
the terms of any units offered, will be set forth in a Prospectus Supplement
relating to such offering.
The Company's current authorized equity capitalization consists of 50
million shares which may be comprised of Common Stock and Preferred Stock. The
Common Stock and the only currently issued, authorized and outstanding Preferred
Stock, the Class B Preferred Stock, are listed on the Nasdaq National Market,
and the Company intends to list any additional shares of its Common Stock which
are issued and sold hereunder, as described in the Prospectus Supplement
relating to such Common Stock on Nasdaq or a national securities exchange
subject to official notice of issuance. The Company may elect to list any future
class or series of securities on Nasdaq or an exchange, but is not obligated to
do so. The Company's sole outstanding issue of warrants is the series of Stock
Purchase Warrants issued in connection with the Company's 1994 private
placement. Such warrants are exercisable for Common Stock and are listed on the
Nasdaq National Market. As of April 21, 1997, 272,304 such warrants remained
outstanding.
COMMON STOCK
As of April 21, 1997, there were 13,005,957 outstanding shares of Common
Stock held by approximately 200 holders of record. Holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of
Directors, out of funds legally available therefor. In the case of the Class B
Preferred Stock and possibly in the event any future class or series of
Preferred Stock is issued, dividends on any outstanding shares of Preferred
Stock are required to be paid in full before payment of any dividends on the
Common Stock. Upon liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in assets available for
distribution after payment of all debts and other liabilities and subject to the
prior rights of any holders of any Preferred Stock then outstanding. There are
no preemptive or other subscription rights, conversion rights, or redemption or
sinking fund provisions with respect to shares of Common Stock.
Holders of Common Stock are entitled to one vote per share with respect to
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the Common Stock entitled
to vote in any election of directors may elect all of the directors standing for
election, subject to the voting rights (if any) of any class or series of
Preferred Stock that may be outstanding from time to time. The Company's Charter
and Bylaws contain no restrictions on the repurchase by the Company of shares of
the Common Stock. All the outstanding shares of Common Stock are, and additional
shares of Common Stock will be, validly issued, fully paid and nonassessable.
PREFERRED STOCK
Subject to the terms of the outstanding Class B Preferred Stock, the Board
of Directors is authorized to designate with respect to each class or series of
Preferred Stock the number of shares in each such class or series, the dividend
rates and dates of payment, voluntary and involuntary liquidation preferences,
redemption prices, if any, whether or not dividends shall be cumulative, and, if
cumulative, the date or dates from which the same shall be cumulative, the
sinking fund provisions if any, and the terms and conditions on which shares can
be converted into or exchanged for shares of another class or series, and the
voting rights, if any. As of April 21, 1997, there are 999,638 shares of Class B
Preferred Stock issued and outstanding.
Any Preferred Stock issued will rank prior to the Common Stock as to
dividends and as to distributions in the event of liquidations, dissolution or
winding up of the Company. The ability of the Board of Directors to issue
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting powers of holders of Common Stock. The Class B Preferred Stock
is, and any future shares of Preferred Stock will be, validly issued, fully paid
and nonassessable.
SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Common Stock
or Preferred Stock. Such warrants are referred to herein as Common Stock
Warrants and Preferred Stock Warrants, as appropriate. Securities Warrants may
be issued independently or together with any other Securities covered by the
Registration Statement offered by this Prospectus and any accompanying
Prospectus Supplement and may
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be attached to or separate from such other Securities. Each issuance of
Securities Warrants will be issued under a separate agreement ("Securities
Warrant Agreement") to be entered into between the Company and a bank or trust
company, as agent ("Securities Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. Each issue of Securities Warrants will be evidenced by warrant
certificates (the "Securities Warrant Certificates"). The Securities Warrant
Agent will act solely as an agent of the Company in connection with the
Securities Warrant Certificates and will not assume any obligation or
relationship of agency or trust for or with any holders of Securities Warrant
Certificates or beneficial owners of Securities Warrants.
If future Securities Warrants are offered pursuant to this prospectus, the
applicable Prospectus Supplement will describe the terms of such Securities
Warrants, including the following where applicable: (i) the offering price; (ii)
the aggregate number of shares purchasable upon exercise of such Securities
Warrants, and in the case of Securities Warrants for Preferred Stock, the
designation, aggregate number and terms of the class or series of Preferred
Stock purchasable upon exercise of such Securities Warrants; (iii) the
designation and terms of the Securities with which such Securities Warrants are
being offered and the number of such Securities Warrants being offered with each
such Security; (iv) the date on and after which such Securities Warrants and the
related Securities will be transferable separately; (v) the number of shares of
Preferred Stock or shares of Common Stock purchasable upon exercise of each such
Securities Warrant and the price at which such number of shares of Preferred
Stock of such class or series or shares of Common Stock may be purchased upon
such exercise; (vi) the date on which the right to exercise such Securities
Warrants shall commence and the expiration date on which such right shall
expire, (vii) certain Federal income tax consequences; and (viii) any other
material terms of such Securities Warrants.
No Rights as Stockholders. Holders of future Securities Warrants, if any,
will not be entitled by virtue of being such holders, to vote, to consent, to
receive dividends, to receive notice as shareholders with respect to any meeting
of stockholders for the election of directors of the Company or any other
matter, or to exercise any rights whatsoever as stockholders of the Company.
STOCKHOLDER RIGHTS
General. The Company may issue, as a dividend at no cost, Stockholder
Rights to holders of record of the Company's Securities or any class or series
thereof on the applicable record date. If Stockholder Rights are so issued to
existing holders of Securities each Stockholder Right will entitle the
registered holder thereof to purchase the Securities pursuant to the terms set
forth in the applicable Prospectus Supplement.
If Stockholder Rights are issued, the applicable Prospectus Supplement will
describe the terms of such Stockholder Rights including the following where
applicable: (i) record date; (ii) the subscription price; (iii) Subscription
Agent; (iv) the aggregate number of shares of Preferred Stock or shares of
Common Stock purchasable upon exercise of such Stockholder Rights and in the
case of Stockholder Rights for Preferred Stock, the designation, aggregate
number and terms of the class or series of Preferred Stock purchasable upon
exercise of such Stockholder Rights; (v) the date on and after which such
Stockholder Rights and the related Securities will be transferable separately;
(vi) the date on which the right to exercise such Stockholder Rights shall
commence and the expiration date on which such right shall expire; (vii) certain
Federal income tax consequences; and (viii) any other material terms of such
Stockholder Rights.
In addition to the terms of the Stockholder Rights and the Securities
issuable upon exercise thereof, the Prospectus Supplement will describe, for a
holder of such Stockholder Rights who validly exercises all Stockholder Rights
issued to such holder, how to subscribe for unsubscribed Securities (issuable
pursuant to unexercised Stockholder Rights issued to other holders) to the
extent such Stockholder Rights have not been exercised.
No Rights as Shareholders. Holders of Stockholder Rights will not be
entitled by virtue of being such holders, to vote, to consent, to receive
dividends, to receive notice as stockholders with respect to any meeting of
stockholders for the election of directors of the Company or any other matter,
or to exercise any rights whatsoever as stockholders of the Company.
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REPURCHASE OF SHARES AND RESTRICTIONS ON TRANSFER
In order that the Company may meet the requirements for qualification as a
REIT at all times, the Charter prohibits any person from acquiring or holding,
directly or constructively, ownership of a number of shares of Common Stock and
Preferred Stock (collectively, "Capital Stock") in excess of 9.8% (the
"Ownership Limit") of the outstanding shares. For this purpose the term
"ownership" generally means either direct ownership or constructive ownership in
accordance with the constructive ownership provisions of Section 544 of the
Code.
Under the constructive ownership provisions of Section 544 of the Code, a
holder of a warrant will be treated as owning the number of shares of Capital
Stock into which such warrant may be converted. In addition, the constructive
ownership rules generally attribute ownership of securities owned by a
corporation, partnership, estate or trust proportionately to its stockholders,
partners or beneficiaries, attribute ownership of securities owned by family
members to other members of the same family, and set forth rules as to when
securities constructively owned by a person are considered to be actually owned
for the application of such attribution provisions (i.e., "reattribution"). For
purposes of determining whether a person holds or would hold Capital Stock in
excess of the Ownership Limit, a person will thus be treated as owning not only
shares of Capital Stock actually owned, but also any shares of Capital Stock
attributed to such person under the attribution rules described above (including
any shares of Capital Stock attributed to such person by reason of such person's
ownership of warrants). Accordingly, a person who individually owns less than
9.8% of the shares outstanding may nevertheless be in violation of the Ownership
Limit.
Any transfer of shares of Capital Stock or warrants that would result in
disqualification of the Company as a REIT or that would (a) create a direct or
constructive ownership of shares of stock in excess of the Ownership Limit, (b)
result in the shares of stock being beneficially owned (within the meaning of
Section 856(a) of the Code) by fewer than 100 persons (determined without
reference to any rules of attribution), or (c) result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, will be null
and void, and the intended transferee will acquire no rights to such shares or
warrants. The foregoing restrictions on transferability and ownership will not
apply if the Board of Directors determines that it is no longer in the best
interests of the Company to continue to qualify as a REIT. The Company's Board
of Directors, upon receipt of a ruling from the IRS, an opinion of counsel or
other evidence satisfactory to the Board of Directors, may also waive the
Ownership Limit with respect to a purported transferee. As a condition to such
waiver the intended transferee must give written notice to the Company of the
proposed transfer no later than the fifteenth day prior to any transfer which,
if consummated, would result in the intended transferee owning shares in excess
of the Ownership Limit. The Board of Directors may also take such other action
as it deems necessary or advisable to protect the Company's status as a REIT.
Any purported transfer of shares or warrants that would result in a person
owning (directly or constructively) shares in excess of the Ownership Limit
(except as otherwise waived by the Board of Directors as set forth above) due to
the unenforceability of the transfer restrictions set forth above will
constitute "Excess Securities," which will be transferred by operation of law to
the Company as trustee for the exclusive benefit of the person or persons to
whom the Excess Securities are ultimately transferred, until such time as the
purported transferee retransfers the Excess Securities. While the Excess
Securities are held in trust, a holder of such securities will not be entitled
to vote or to share in any dividends or other distributions with respect to such
securities and will not be entitled to exercise or convert such securities into
shares of Capital Stock. Subject to the Ownership Limit, Excess Securities may
be transferred by the purported transferee to any person (if such transfer would
not result in Excess Securities) at a price not to exceed the price paid by the
purported transferee (or, if no consideration was paid by the purported
transferee, the fair market value of the Excess Securities on the date of the
purported transfer), at which point the Excess Securities will automatically be
exchanged for the stock or warrants, as the case may be, to which the Excess
Securities are attributable. If a purported transferee receives a higher price
for designating an ultimate transferee, such purported transferee shall pay, or
cause the ultimate transferee to pay, such excess to the Company. In addition,
such Excess Securities held in trust are subject to purchase by the Company at a
purchase price equal to the lesser of (a) the price per share or per warrant, as
the case may be, in the transaction that created such Excess Securities (or, in
the case of a devise or gift, the market price at the time of such devise or
gift),
7
<PAGE> 9
reduced by the amount of any distributions received in violation of the Charter
that have not been repaid to the Company, and (b) the market price as reflected
in the last reported sales price of such shares of stock or warrants on the
trading day immediately preceding the date of the purchase by the Company as
reported on any exchange or quotation system over which such shares of stock or
warrants may be traded, or if not then traded over any exchange or quotation
system, then the market price of such shares of stock or warrants on the date of
the purported transfer as determined in good faith by the Board of Directors of
the Company, reduced by the amount of any distributions received in violation of
the Charter that have not been repaid to the Company.
From and after a purported transfer to the transferee of the Excess
Securities, the purported transferee shall cease to be entitled to
distributions, voting rights and other benefits with respect to such shares of
the stock or warrants except the right to payment of the purchase price for the
shares of stock or warrants or the retransfer of securities as provided above.
Any dividend or distribution paid to a purported transferee on Excess Securities
prior to the discovery by the Company that such shares of stock or warrants have
been transferred in violation of the provisions of the Company's Charter shall
be repaid to the Company upon demand. If the foregoing transfer restrictions are
determined to be void, invalid or unenforceable by a court of competent
jurisdiction, then the purported transferee of any Excess Securities may be
deemed, at the option of the Company, to have acted as an agent on behalf of the
Company in acquiring such Excess Securities and to hold such Excess Securities
on behalf of the Company.
All certificates representing shares of stock and warrants will bear a
legend referring to the restrictions described above.
Any person who acquires shares or warrants in violation of the Charter, or
any person who is a purported transferee such that Excess Securities results,
must immediately give written notice or, in the event of a proposed or attempted
transfer that would be void as set forth above, give at least 15 days prior
written notice to the Company of such event and shall provide to the Company
such other information as the Company may request in order to determine the
effect, if any, of such transfer on the Company's status as a REIT. In addition,
every record owner of more than 5.0% (during any period in which the number of
stockholders of record is 2,000 or more) or 1.0% (during any period in which the
number of stockholders of record is greater than 200 but less than 2,000) or
1/2% (during any period in which the number of stockholders is 200 or less) of
the number or value of the outstanding shares of Capital Stock of the Company
must give an annual written notice to the Company by January 31, stating the
name and address of the record owner, the number of shares held and describing
how such shares are held. Further, each stockholder shall upon demand be
required to disclose to the Company in writing such information with respect to
the direct and constructive ownership of shares of Capital Stock as the Board of
Directors deems reasonably necessary to comply with the REIT Provisions of the
Code, to comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.
Subject to certain limitations, the Board of Directors may increase or
decrease the Ownership Limit. In addition, to the extent consistent with the
REIT Provisions of the Code, the Board of Directors may waive the Ownership
Limit for and at the request of certain purchasers in an offering pursuant to
this Prospectus and any applicable Prospectus Supplement.
The provisions described above may inhibit market activity and the
resulting opportunity for the holders of the Company's Capital Stock and
Warrants to receive a premium for their shares or warrants that might otherwise
exist in the absence of such provisions. Such provisions also may make the
Company an unsuitable investment vehicle for any person seeking to obtain
ownership of more than 9.8% of the outstanding shares of Capital Stock.
CONTROL SHARE ACQUISITIONS
The Maryland General Corporation Law (the "Maryland GCL") provides that
"control shares" of a Maryland corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of
two-thirds of the votes entitled to be cast on the matter, excluding shares of
stock owned by the acquiror or by officers or directors who are employees of the
corporation. "Control shares" are voting
8
<PAGE> 10
shares of stock which, if aggregated with all other shares of stock previously
acquired by such a person, would entitle the acquiror to exercise voting power
in electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more of all voting power. "Control shares" do
not include shares of stock the acquiring person is then entitled to vote as a
result of having previously obtained stockholder approval. A "control share
acquisition" means, subject to certain exceptions, the acquisition of, ownership
of, or the power to direct the exercise of voting power with respect to, control
shares.
A person who has made or proposes to make a "control share acquisition,"
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the Board of Directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders' meeting. If voting rights are not
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the
"control shares" (except those for which voting rights have previously been
approved) for fair value determined, without regard to the absence of voting
rights, as of the date of the last control share acquisition or of any meeting
of stockholders at which the voting rights of such shares are considered and not
approved. If voting rights for "control shares" are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the stock as determined for purposes of such appraisal rights may not
be less than the highest price per share paid in the control share acquisition,
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of "control share acquisitions."
The "control share acquisition" statute does not apply to stock acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by a provision of the
Charter or Bylaws of the corporation adopted prior to the acquisition of the
shares.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, LLC is the transfer agent and registrar
with respect to the Common Stock, the Class B Preferred Stock and the Warrants.
9
<PAGE> 11
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of certain Federal income tax
considerations to the Company and to holders of the Securities. It is based on
existing Federal income tax law, which is subject to change, possibly
retroactively. PROSPECTIVE INVESTORS ARE ADVISED TO REVIEW THE MORE SPECIFIC
DISCLOSURE IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND TO CONSULT THEIR TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SECURITIES,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME
AND OTHER TAX LAWS.
GENERAL
The Company has elected to become subject to tax as a REIT, for Federal
income tax purposes, commencing with the taxable year ending December 31, 1994.
The Board of Directors of the Company currently expects that the Company will
continue to operate in a manner that will permit the Company to maintain its
qualifications as a REIT for the taxable year ending December 31, 1997, and in
each taxable year thereafter. This treatment will permit the Company to deduct
dividend distributions to its stockholders for Federal income tax purposes, thus
effectively eliminating the "double taxation" that generally results when a
corporation earns income and distributes that income to its stockholders.
In the opinion of Giancarlo & Gnazzo, A Professional Corporation, special
tax counsel to the Company ("Special Tax Counsel"), the Company has been
organized and operated in a manner which qualifies it as a REIT under the Code
since the commencing of its operations on August 19, 1994 through December 31,
1996, the date of the Company's latest audited financial statements received by
Special Tax Counsel, and the Company's current and contemplated methods of
operation, as represented by the Company, will enable it to continue to so
qualify. This opinion is based on various assumptions relating to the
organization and operation of the Company to date and in the future and is
conditioned upon certain representations made by the Company as to certain
factual matters. The continued qualification and taxation of the Company as a
REIT will depend upon the Company's ability to meet, on a continuing basis,
distribution levels and diversity of stock ownership, and various other
qualification tests imposed by the Code. This opinion is based on the law
existing and in effect on the date hereof which is subject to change, possibly
retroactively.
There can be no assurance that the Company will continue to qualify as a
REIT in any particular taxable year, given the highly complex nature of the
rules governing REITs, the ongoing importance of factual determinations and the
possibility of future changes in the circumstances of the Company. If the
Company were not to qualify as a REIT in any particular year, it would be
subject to Federal income tax as a regular domestic corporation, and its
stockholders would be subject to potentially substantial income tax liability in
respect of each taxable year that it fails to qualify as a REIT, and the amount
of earnings and cash available for distribution to its stockholders could be
significantly reduced or eliminated.
TAXATION OF THE COMPANY
In any year in which the Company qualifies as a REIT, the Company will
generally not be subject to Federal income tax on that portion of its REIT
taxable income or capital gain which is distributed to its stockholders. The
Company will, however, be subject to Federal income tax at normal corporate
income tax rates upon any undistributed taxable income or capital gain and may
also be subject to tax in certain other circumstances.
If the Company fails to qualify as a REIT in any taxable year and certain
relief provisions of the Code do not apply, the Company would be subject to
Federal income tax (including any applicable alternative minimum tax) on its
taxable income at the regular corporate income tax rates. Distributions to
stockholders in any year in which the Company fails to qualify as a REIT would
not be deductible by the Company, nor would they generally be required to be
made under the Code. Further, unless entitled to relief under certain other
provisions of the Code, the Company would also be disqualified from re-electing
REIT status for the four taxable years following the year during which it became
disqualified.
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<PAGE> 12
TAXATION OF SECURITIES HOLDERS
COMMON STOCK AND PREFERRED STOCK GENERALLY
Distributions (including constructive distributions) made to holders of
Common Stock or Preferred Stock, other than tax-exempt entities, will generally
be subject to tax as ordinary income to the extent of the Company's current and
accumulated earnings and profits as determined for Federal income tax purposes.
If the amount distributed exceeds a stockholder's allocable share of such
earnings and profits, the excess will be treated as a return of capital to the
extent of the stockholder's adjusted basis in its shares, which will not be
subject to tax, and thereafter as a taxable gain from the sale or exchange of a
capital asset.
Distributions designated by the Company as capital gain dividends will
generally be subject to tax as long-term capital gain to stockholders, to the
extent that the distribution does not exceed the Company's actual net capital
gain for the taxable year. Distributions by the Company, whether characterized
as ordinary income or as capital gain, are not eligible for the corporate
dividends received deduction. In the event that the Company realizes a loss for
the taxable year, stockholders will not be permitted to deduct any share of that
loss. Further, if the Company (or a portion of its assets) were to be treated as
a taxable mortgage pool, any "excess inclusion income" that is allocated to a
stockholder would not be allowed to be offset by a net operating loss of such
stockholder. Future Treasury Department regulations may require that the
stockholders take into account, for purposes of computing their individual
alternative minimum tax liability, certain tax preference items of the Company.
Dividends declared during the last quarter of a taxable year and actually
paid during January of the following taxable year are generally treated as if
received by the stockholder on the record date of the dividend payment and not
on the date actually received. In addition, the Company may elect to treat
certain other dividends distributed after the close of the taxable year as
having been paid during such taxable year, but stockholders still will be
treated as having received such dividend in the taxable year in which the
distribution is made.
Upon a sale or other disposition of either Common Stock or Preferred Stock,
a stockholder will generally recognize a capital gain or loss in an amount equal
to the difference between the amount realized and the stockholder's adjusted
basis in such stock, which gain or loss will be long-term if the stock has been
held for more than one year. Any loss on the sale or exchange of shares held by
a stockholder for six months or less will generally be treated as a long-term
capital loss to the extent of any long-term capital gain dividends received by
such stockholder. If either Common Stock or Preferred Stock is sold after a
record date but before a payment date for declared dividends on such stock, a
stockholder will nonetheless be required to include such dividend in income in
accordance with the rules above for distributions, whether or not such dividend
is required to be paid over to the purchaser.
The Company also maintains a Dividend Reinvestment and Stock Purchase Plan
(the "DRP" or "Plan"). DRP Participants will generally be treated as having
received a dividend distribution equal to the fair market value on the
Investment Date (as defined in the Plan) of the Plan Shares that are purchased
with the Participant's reinvested dividends and/or optional cash payments on
such date, plus the brokerage commissions, if any, allocable to the purchase of
such shares, and participants will have a tax basis in the shares equal to such
value. DRP Participants may not, however, receive any cash with which to pay the
resulting tax liability. Shares received pursuant to the DRP will have a holding
period beginning on the day after their purchase by the Plan Administrator.
The Company is required under Treasury Department regulations to demand
annual written statements from the record holders of designated percentages of
its Capital Stock disclosing the actual and constructive ownership of such stock
and to maintain permanent records showing the information it has received as to
the actual and constructive ownership of such stock and a list of those persons
failing or refusing to comply with such demand.
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<PAGE> 13
TAXATION OF TAX-EXEMPT ENTITIES
The Company does not expect to incur excess inclusion income and,
therefore, does not prohibit tax-exempt entities or "disqualified organizations"
from investing in its Securities. In general, a tax-exempt entity that is a
holder of the Company's Securities will not be subject to tax on distribution.
The Company does not intend to issue debt obligations with different
maturities secured by a single pool of Mortgage Assets and does not expect to
create or acquire taxable mortgage pools that can generate excess inclusion
income. In addition, the Company does not intend to create or acquire REMIC
residual interests that can generate excess inclusion income.
EXERCISE OF SECURITIES WARRANTS
Upon a holder's exercise of a Securities Warrant, the holder will, in
general, (i) not recognize any income, gain or loss for Federal income tax
purposes, (ii) receive an initial tax basis in the Security received equal to
the sum of the holder's tax basis in the exercised Securities Warrant and the
exercise price paid for such Security and (iii) have a holding period for the
Security received beginning on the date of exercise.
SALE OR EXPIRATION OF SECURITIES WARRANTS
If a holder of a Securities Warrant sells or otherwise disposes of such
Securities Warrant (other than by its exercise), the holder generally will
recognize capital gain or loss (long-term capital gain or loss if the holder's
holding period for the Securities Warrant exceeds twelve months on the date of
disposition; otherwise, short-term capital gain or loss) equal to the difference
between (i) the cash and fair market value of other property received, and (ii)
the holder's tax basis (on the date of disposition) in the Securities Warrant
sold. Such a holder generally will recognize a capital loss upon the expiration
of an unexercised Securities Warrant equal to the holder's tax basis in the
Securities Warrant on the expiration date.
TAXATION OF STOCKHOLDER RIGHTS
If the Company makes a distribution of Stockholder Rights ("Rights") with
respect to its Common Stock, such distribution generally will be tax-free and a
Stockholder's basis in the Rights received in such distribution will be zero. If
the fair market value of the Rights on the date of issuance is 15% or more of
the value of the Common Stock or, if the Stockholder so elects regardless of the
value of the Rights, the Stockholder will make an allocation between the
relative fair market values of the Rights and the Common Stock on the date of
issuance of the Rights. On exercise of the Rights, the Stockholder will
generally not recognize gain or loss. The Stockholder's basis in the shares
received from the exercise of the Rights will be the amount paid for the shares
plus the basis, if any, of the Rights exercised. Distribution of Rights with
respect to other classes of Securities holders generally would be taxable.
FOREIGN INVESTORS
In general, foreign investors will be subject to special withholding tax
requirements on income and capital gains distributions attributable to their
ownership of the Company's Securities subject to reduction pursuant to an
applicable income tax treaty.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through one or more underwriters or
dealers for public offering and sale, to one or more investors directly or
through agents, to existing holders of its Securities directly through the
issuance of Stockholders Rights as a dividend, or through any combination of
these methods of sale. Any such underwriter or agent involved in the offer and
sale of the Securities will be named in the applicable Prospectus Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such
12
<PAGE> 14
prevailing market prices, or at negotiated prices (any of which may represent a
discount from the prevailing market prices). The Company may also sell its
Securities from time to time through one or more agents in ordinary brokers'
transactions on Nasdaq or a national securities exchange. Such sales may be
effected during a series of one or more pricing periods at prices related to the
prevailing market prices reported on Nasdaq or a national securities exchange,
as shall be set forth in the applicable Prospectus Supplement.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities, for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concession or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters under the Securities Act, and any
discounts or commissions they receive from the Company and any profit on the
resale of Securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each class
or series of Securities will be a new issue with no established trading market,
other than the Common Stock which is currently listed on Nasdaq. Any shares of
Common Stock sold pursuant to a Prospectus Supplement will also be listed on the
Nasdaq or a national securities exchange, subject to official notice of
issuance. The Company may elect to list any future class or series of Securities
on Nasdaq or another exchange, but is not obligated to do so. It is possible
that one or more underwriters may make a market in a future class or series of
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of, or the trading market for, the Securities.
Under agreements into which the Company may enter, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act. Underwriters, dealers and agents may
engage in transactions with or perform services for the Company in the ordinary
course of business.
If so indicated in the applicable Prospectus Supplement, the Company may
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
at regular intervals over a fixed period of time pursuant to negotiated
subscription commitments. Institutions with which such subscription commitments
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others,
but in all cases such institutions must be approved by the Company. The
obligations of any purchaser under any such subscription commitments will be
subject to certain conditions, including that the purchase of the Securities
shall not be prohibited under the laws of the jurisdiction to which such
purchaser is subject, as well as to the specific terms and conditions negotiated
that will be set forth in the applicable Prospectus Supplement. The underwriters
and such other agents will not have any responsibility in respect of the
validity or performance of such subscription commitments.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states Securities may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
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<PAGE> 15
ERISA INVESTORS
Because the Common Stock will qualify as a "publicly offered security,"
employee benefit plans and Individual Retirement Accounts may purchase shares of
Common Stock and treat such shares, and not the Company's assets, as plan assets
The status of Securities offered hereby other than the Common Stock will be
discussed in the relevant Prospectus Supplement. Fiduciaries of ERISA plans
should consider (i) whether an investment in the Common Stock and other
Securities offered hereby satisfies ERISA diversification requirements, (ii)
whether the investment is in accordance with the ERISA plan's governing
instruments and (iii) whether the investment is prudent.
LEGAL MATTERS
The validity of the Securities offered hereby and certain legal matters
will be passed on for the Company by Tobin & Tobin, a professional corporation,
San Francisco, California. Certain tax matters will be passed on by Giancarlo &
Gnazzo, A Professional Corporation, San Francisco, California. Tobin & Tobin and
Giancarlo & Gnazzo, A Professional Corporation, will rely as to all matters of
Maryland law upon the opinion of Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The Balance Sheets as of December 31, 1996 and 1995 and the Statements of
Operations, Stockholders' Equity and Cash Flows for the years ended December 31,
1996 and 1995 and for the period from August 19, 1994 (Commencement of
Operations) to December 31, 1994 incorporated by reference in this Prospectus
have been included therein in reliance on the report of Coopers & Lybrand,
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
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======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES, NOR SHALL ANY SALES OF THE SECURITIES BE
MADE PURSUANT TO THIS PROSPECTUS, IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION OR SALE IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Company........................... 4
Use of Proceeds....................... 4
Description of Securities............. 4
Certain Federal Income Tax
Considerations...................... 10
Plan of Distribution.................. 12
ERISA Investors....................... 14
Legal Matters......................... 14
Experts............................... 14
</TABLE>
======================================================
======================================================
$300,000,000
RWT
REDWOOD TRUST, INC.
(COMMON STOCK, PREFERRED STOCK, WARRANTS, AND
SHAREHOLDER RIGHTS TO PURCHASE COMMON STOCK
AND PREFERRED STOCK)
------------------------
PROSPECTUS
------------------------
APRIL , 1997
======================================================
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered are as set forth below. All such
expenses, except for the SEC registration and filing fees, are estimated:
<TABLE>
<S> <C>
SEC Registration................................................ $ 90,909.09
Legal Fees and Expenses......................................... $ 20,000.00
Accounting Fees and Expenses.................................... $ 5,000.00
Printing and Engraving Fees..................................... $ 10,000.00
Miscellaneous................................................... $ 4,090.91
-----------
Total................................................. $130,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Corporations and Associations Article of the Annotated
Code of Maryland provides that a Maryland corporation may indemnify any director
of the corporation and any person who, while a director of the corporation, is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise or employee benefit plan,
is made a party to any proceeding by reason of service in that capacity unless
it is established that the act or omission of the director was material to the
matter giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty; or the director actually received an
improper personal benefit in money, property or services; or, in the case of any
criminal proceeding, the director had reasonable cause to believe that the act
or omission was unlawful. Indemnification may be against judgments, penalties,
fines, settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding, but if the proceeding was one by or in the right
of the corporation, indemnification may not be made in respect of any proceeding
in which the director shall have been adjudged to be liable to the corporation.
Such indemnification may not be made unless authorized for a specific proceeding
after a determination has been made, in the manner prescribed by the law, that
indemnification is permissible in the circumstances because the director has met
the applicable standard of conduct. On the other hand, the director must be
indemnified for expenses if he has been successful in the defense of the
proceeding or as otherwise ordered by a court. The law also prescribes the
circumstances under which the corporation may advance expenses to, or obtain
insurance or similar protection for, directors.
The law also provides for comparable indemnification for corporate officers
and agents.
The Registrant's Articles of Incorporation provide that its directors and
officers shall, and its agents in the discretion of the Board of Directors may,
be indemnified to the fullest extent required or permitted from time to time by
the laws of Maryland.
The Maryland GCL permits the charter of a Maryland corporation to include a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except to the extent that (i)
it is proved that the person actually received an improper benefit or profit in
money, property or services for the amount of the benefit or profit in money,
property or services actually received, or (ii) a judgment or other final
adjudication is entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding. The
Company's Articles of Incorporation contain a provision providing for
elimination of the liability of its directors and officers to the Company or its
stockholders for money damages to the maximum extent permitted by Maryland law
from time to time.
II-1
<PAGE> 18
The form of underwriting agreement included as Exhibit 1.1 to the
Registration Statement, provides for indemnification of the Registrant, its
directors and certain of its officers against certain liabilities, including
liabilities under the Securities Act.
ITEM 16. EXHIBITS. *
<TABLE>
<C> <S>
1.1 Form of underwriting agreement, including forms of opinions related thereto
5.1 Opinion of Tobin & Tobin, a professional corporation, as to legality (including
consent of such firm)
5.2 Opinion of Piper & Marbury L.L.P. as to legality (including consent of such
firm)
8.1 Opinion of Giancarlo & Gnazzo, A Professional Corporation, as to certain tax
matters (including consent of such firm)
23.1 Consent of Tobin & Tobin (included in Exhibit 5.1)
23.2 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)
23.3 Consent of Giancarlo & Gnazzo, A Professional Corporation (included in Exhibit
8.1)
23.4 Consent of Coopers & Lybrand, L.L.P., independent accountants.
24.1 Power of Attorney (set forth on signature page)
</TABLE>
- ---------------
* Definitive exhibits with respect to specific issuances of Securities (other
than shares of Common Stock issued pursuant to an underwriting agreement
substantially in the form of Exhibit 1.1) covered by this Registration
Statement will be filed by amendment or incorporated by reference from reports
filed by the Company pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, at the time of issuance.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic reports filed by
the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of Prospectus filed as part of this
II-2
<PAGE> 19
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and (2) for the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of Prospectus shall be deemed to be a new
Registration Statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant, pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities begin registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and County of San Francisco, State of California, on
April 21, 1997.
REDWOOD TRUST, INC.
By: /s/ GEORGE E. BULL, III
------------------------------------
George E. Bull, III
(Chairman of the Board and
Chief Executive Officer)
POWER OF ATTORNEY
We, the undersigned directors and officers of Redwood Trust, Inc., do
hereby constitute and appoint George E. Bull III, Douglas B. Hansen, Frederick
H. Borden and Vickie L. Rath our true and lawful attorneys and agents, to do any
and all acts and things in our name and behalf in our capacities as directors,
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents may deem necessary
or advisable to enable said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission, in connection with this registration statement,
including specifically, but without limitation, power and authority to sign for
us or any of us in our names and in the capacities indicated below, any and all
amendments (including post-effective amendments) hereof; and we do hereby ratify
and confirm all that the said attorneys and agents shall do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Form S-3
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
- ------------------------------------------ ------------------------------ -------------------
<C> <S> <C>
/s/ GEORGE E. BULL, III Chairman of the Board, Chief April 21, 1997
- ------------------------------------------ Executive Officer and Director
George E. Bull, III (Principal Executive Officer)
/s/ DOUGLAS B. HANSEN President, Chief Financial April 21, 1997
- ------------------------------------------ Officer and Director
Douglas B. Hansen (Principal Financial Officer)
/s/ FREDERICK H. BORDEN Vice Chairman of the Board, April 21, 1997
- ------------------------------------------ Secretary and Director
Frederick H. Borden
/s/ VICKIE L. RATH Vice-President, Treasurer and April 21, 1997
- ------------------------------------------ Controller (Principal
Vickie L. Rath Accounting Officer)
/s/ DAN A. EMMETT Director April 21, 1997
- ------------------------------------------
Dan A. Emmett
</TABLE>
II-4
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
- ------------------------------------------ ------------------------------ -------------------
<C> <S> <C>
/s/ THOMAS F. FARB Director April 21, 1997
- ------------------------------------------
Thomas F. Farb
/s/ NELLO GONFIANTINI Director April 21, 1997
- ------------------------------------------
Nello Gonfiantini
/s/ CHARLES J. TOENISKOETTER Director April 21, 1997
- ------------------------------------------
Charles J. Toeniskoetter
</TABLE>
II-5
<PAGE> 22
EXHIBIT INDEX*
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ----------------------------------------------------------------------------- ------
<C> <S> <C>
1.1 Form of underwriting agreement, including forms of opinions related
thereto......................................................................
5.1 Opinion of Tobin and 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)..................
23.3 Consent of Giancarlo & Gnazzo, A Professional Corporation (included in
Exhibit 8.1).................................................................
23.4 Consent of Coopers & Lybrand, L.L.P., independent accountants................
24.1 Power of Attorney (set forth on signature page)..............................
</TABLE>
- ---------------
* Definitive exhibits with respect to specific issues of Securities (other than
shares of Common Stock issued pursuant to an underwriting agreement
substantially in the form of Exhibit 1.1) covered by this Registration
Statement will be filed by amendment or incorporated by reference from reports
filed by the Company pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, at the time of issuance.
<PAGE> 1
EXHIBIT 1.1
[AMOUNT] SHARES
REDWOOD TRUST, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED [DATE]
[UNDERWRITER(S) OR REPRESENTATIVE(S)]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <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(s) or Representative(s) . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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)' or Representative(s)' Review of Proposed Amendments and Supplements . . . 11
(b) Securities Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
(c) Exchange Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Copies of any Amendments and Supplements to the Prospectus . . . . . . . . . . . . . . . . 12
(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(s) or Representative(s) . . . . . . . . . . . . . . . . 12
(l) Nasdaq Quotation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(m) REIT Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(n) Accounting and Tax Advice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(o) Commodity Exchange Act Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5. Conditions of the Obligations of the Underwriter(s) or Representative(s) . . . . . . . . . 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(s) or Representative(s) . . . . . . . . . . . . . . 15
(h) Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(i) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(j) Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6. Reimbursement of Underwriter(s)' or Representative(s)' Expenses . . . . . . . . . . . . . 16
Section 7. Effectiveness of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Indemnification of the Underwriter(s) or Representative(s) . . . . . . . . . . . . . . . . 17
(b) Indemnification of the Company, its Directors and Officers . . . . . . . . . . . . . . . . 18
(c) Notifications and Other Indemnification Procedures . . . . . . . . . . . . . . . . . . . . 19
(d) Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10. Default of One or More of the Several Underwriters. . . . . . . . . . . . . . . . . . . . 21
Section 11. Termination of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12. Representations and Indemnities to Survive Delivery . . . . . . . . . . . . . . . . . . . 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 14. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 15. Partial Unenforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16. Governing Law Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 17. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
iii
<PAGE> 5
UNDERWRITING AGREEMENT
[DATE]
[NAME AND ADDRESS OF
UNDERWRITER(S) OR
REPRESENTATIVE(S)]
Ladies and Gentlemen:
INTRODUCTORY. Redwood Trust, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to [NAME OF UNDERWRITER(S) OR
REPRESENTATIVE(S)] (sometimes herein referred to as the "Underwriter(s)" or the
"Representative(s)") an aggregate of [AMOUNT] shares (the "Common Shares") of
its Common Stock, par value $0.01 per share (the "Common Stock") pursuant to
this Underwriting Agreement (the "Agreement").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
[REG. #], 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(s) or Representative(s) 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
<PAGE> 6
references in this Agreement to financial statements and schedules and other
information which is "contained," "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(s) or
Representative(s) as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents, warrants and covenants to the Underwriter(s) or
Representative(s) 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(s) or Representative(s) 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(s) or Representative(s) furnished to the Company in
writing by the Underwriter(s) or Representative(s) 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
2
<PAGE> 7
set forth in the Prospectus under the heading "ERISA Investors" is true and
correct in all material respects.
(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(s) or
Representative(s). The Company has delivered to the Underwriter(s) or
Representative(s) 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(s)
or Representative(s) 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)'
or Representative(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(s) or Representative(s) 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
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<PAGE> 8
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 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 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
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<PAGE> 9
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
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<PAGE> 10
"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 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
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<PAGE> 11
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.
(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 is 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
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<PAGE> 12
of any event which would cause or is likely to cause the Company to fail to
qualify as a REIT at any time.
(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.
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(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 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(s) or Representative(s) or to counsel for the Underwriter(s) or
Representative(s) shall be deemed to be a representation and warranty by the
Company to each Underwriter(s) or Representative(s) 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(s) or Representative(s) 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(s) or Representative(s) agrees, to purchase from
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<PAGE> 14
the Company the Common Shares. The purchase price per Common Share to be paid
by the Underwriter(s) or Representative(s) to the Company shall be $[AMOUNT]
per share.
(b) The Closing Date. Delivery of certificates for the Common Shares
to be purchased by the Underwriter(s) or Representative(s) and payment therefor
shall be made at the offices of [NAME AND ADDRESS OF UNDERWRITER(S) OR
REPRESENTATIVE(S)] (or such other place as may be agreed to by the Company and
the Underwriter(s) or Representative(s)) at 6:00 a.m. San Francisco time, on
[DATE] 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(s) or
Representative(s) 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(s) or
Representative(s) 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(s) or Representative(s) 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(s) or
Representative(s) hereby advises the Company that the Underwriter(s) or
Representative(s) 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(s) or Representative(s), 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(s) or Representative(s) 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(s) or
Representative(s) 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(s)
or Representative(s) 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(s) or Representative(s).
(f) Delivery of Prospectus to the Underwriter(s) or
Representative(s). Not later than 12:00 p.m. on the second business day
following the date the Common Shares are released by the Underwriter(s) or
Representative(s) 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(s) or Representative(s) shall request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY. The Company further
covenants and agrees with the Underwriter(s) or Representative(s) as follows:
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(a) Underwriter(s)' or Representative(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(s) or Representative(s), the
Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter(s) or Representative(s) 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 filed under the
Exchange Act), the Company shall furnish to the Underwriter(s) or
Representative(s) 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(s) or Representative(s) reasonably
objects.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Underwriter(s) or Representative(s) 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(s) or
Representative(s) or counsel for the Underwriter(s) or Representative(s) 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
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<PAGE> 16
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(s) or Representative(s), 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(s) or
Representative(s) may request.
(f) Blue Sky Compliance. The Company shall cooperate with the
Underwriter(s) or Representative(s) and its counsel to qualify or register
the Common Shares for sale under (or obtain exemptions from the application
of) the Blue Sky or state or Canadian securities laws of those
jurisdictions designated by the Underwriter(s) or Representative(s), 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(s) or Representative(s) 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(s)
or Representative(s) 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(s) or Representative(s).
During the period of five years hereafter the Company will furnish to the
Underwriter(s) or Representative(s) at [NAME AND ADDRESS OF UNDERWRITER(S)
OR REPRESENTATIVE(S)], and to O'Melveny & Myers LLP at the address set
forth in Section 13 (i) as soon as practicable after
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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) Nasdaq Quotation. The Company will use its best efforts to
effect the quotation of the Common Shares on the Nasdaq National Market
System.
(m) 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 [DATE].
(n) 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.
(o) 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(s) or Representative(s), (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,
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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(s) or
Representative(s) in connection with qualifying or 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(s) or Representative(s), preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriter(s)
or Representative(s) of such qualifications, registrations and exemptions,
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriter(s) or Representative(s) in connection with, the
NASD's review and approval of the Underwriter(s)' or Representative(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(s) or
Representative(s) shall pay their own expenses, including the fees and
disbursements of its counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER(S) OR
REPRESENTATIVE(S). The obligations of the Underwriter(s) or Representative(s)
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(s) or Representative(s) 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(s) or
Representative(s), in form and substance satisfactory to the Underwriter(s)
or Representative(s), 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
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<PAGE> 19
Act and obtained the Underwriter(s)' or Representative(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
(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(s) or Representative(s)
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(s) or Representative(s) shall have received the favorable
opinion of Tobin & Tobin, a professional corporation, counsel for the
Company, addressed to the Underwriter(s) or Representative(s) 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(s) or Representative(s) shall have received
the favorable opinion of Piper & Marbury L.L.P., special Maryland counsel
for the Company, addressed to the Underwriter(s) or Representative(s) 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(s) or Representative(s) shall have received the
favorable opinion of Giancarlo & Gnazzo, A Professional Corporation,
special tax counsel for the Company, addressed to the Underwriter(s) or
Representative(s) and dated as of the Closing Date, the form of which is
attached as Exhibit C.
(g) Opinion of Counsel for the Underwriter(s) or Representative(s).
On the Closing Date, the Underwriter(s) or Representative(s) shall have
received the favorable opinion of O'Melveny & Myers LLP, counsel for the
Underwriter(s) or Representative(s), addressed to the Underwriter(s) or
Representative(s) and dated as of the Closing Date, with respect to certain
matters.
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(h) Officers' Certificate. On the Closing Date, the Underwriter(s)
or Representative(s) 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(s) or Representative(s) 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;
(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(s) or Representative(s) 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(s) or Representative(s), 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(s) or Representative(s) and counsel for the Underwriter(s) or
Representative(s) 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(s) or Representative(s) 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)' OR REPRESENTATIVE(S)'
EXPENSES. If this Agreement is terminated by the Underwriter(s) or
Representative(s) pursuant to Section 5, Section 7 or Section 11, or if the
sale to the Underwriter(s) or Representative(s) of the Common Shares on the
Closing Date is not consummated because of any refusal, inability or failure on
the part
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of the Company to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Underwriter(s) or Representative(s)
upon demand for all out-of-pocket expenses that shall have been reasonably
incurred by the Underwriter(s) or Representative(s) 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(s) or Representative(s) of the effectiveness of the Registration
Statement under the Securities Act. Prior to such effectiveness, this
Agreement may be 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(s) or Representative(s), except that the Company
shall be obligated to reimburse the expenses of the Underwriter(s) or
Representative(s) pursuant to Sections 4 and 6 hereof, (b) the Underwriter(s)
or Representative(s) 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(s) or Representative(s). The
Company agrees to indemnify and hold harmless the Underwriter(s) or
Representative(s), its officers and employees, and each person, if any, who
controls the Underwriter(s) or Representative(s) 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(s) or
Representative(s) 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(s) or Representative(s) 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
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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(s) or Representative(s) through its gross negligence or willful
misconduct; and to reimburse the Underwriter(s) or Representative(s) and
each such controlling person for any and all expenses (including the fees
and disbursements of counsel chosen by the Underwriter(s) or
Representative(s)) as such expenses are reasonably incurred by the
Underwriter(s) or Representative(s) 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(s) or Representative(s) expressly for use in 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(s) or Representative(s) from whom the
person asserting any loss, claim, damage, liability or expense purchased
Common Shares, or any person controlling such Underwriter(s) or
Representative(s), if copies of the Prospectus were timely delivered to the
Underwriter(s) or Representative(s) 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(s) or Representative(s) 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(s) or Representative(s) 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(s) or Representative(s)), 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
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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(s) or
Representative(s) 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(s) or Representative(s) 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(s) or Representative(s) and (B) as the final three
paragraphs under the caption "Underwriting" in the Prospectus; and the
Underwriter(s) or Representative(s) 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(s) or Representative(s)
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 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
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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 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(s) or
Representative(s), 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(s)
or Representative(s), 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(s) or Representative(s), 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(s) or Representative(s), 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
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<PAGE> 25
Shares as set forth on such cover. The relative fault of the Company, on the
one hand, and the Underwriter(s) or Representative(s), 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(s) or Representative(s), 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(s) or Representative(s) 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 Underwriter(s) or
Representative(s) 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(s) or
Representative(s) shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter(s) or Representative(s)
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(s) or
Representative(s) and each person, if any, who controls an Underwriter(s) or
Representative(s) within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Underwriter(s) or
Representative(s), 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. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS OR
REPRESENTATIVES. If, on the First Closing Date or the Second Closing Date, as
the case may be, any one or more of the several Underwriters or Representatives
shall fail or refuse to purchase Common Shares that it or they have agreed to
purchase hereunder on such date, and the aggregate number of Common Shares
which such defaulting Underwriter(s) or Representative(s) agreed but failed or
refused to purchase does not exceed 10% of the aggregate number of the Common
Shares to be purchased on such date, the other Underwriters or Representatives
shall be obligated, severally, in the proportions that the number of Firm
Common Shares set forth opposite their respective
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names on Schedule A bears to the aggregate number of Firm Common Shares set
forth opposite the names of all such non-defaulting Underwriters or
Representatives, or in such other proportions as may be specified by the
Representative with the consent of the non-defaulting Underwriters or
Representatives, to purchase the Common Shares which such defaulting
Underwriter(s) or Representative(s) agreed but failed or refused to purchase on
such date. If, on the First Closing Date or the Second Closing Date, as the
case may be, any one or more of the Underwriters or Representatives shall fail
or refuse to purchase Common Shares and the aggregate number of Common Shares
with respect to which such default occurs exceeds 10% of the aggregate number
of Common Shares to be purchased on such date, and arrangements satisfactory to
the Representative and the Company for the purchase of such Common Shares are
not made within 48 hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Section 4, Section 6, Section 8 and Section 9 shall at all times be effective
and shall survive such termination. In any such case either the Representative
or the Company shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, but in no event for longer than seven
days in order that the required changes, if any, to the Registration Statement
and the Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter(s) or
Representative(s)" shall be deemed to include any person substituted for a
defaulting Underwriter(s) or Representative(s) under this Section 10. Any
action taken under this Section 10 shall not relieve any defaulting
Underwriter(s) or Representative(s) from liability in respect of any default of
such Underwriter(s) or Representative(s) under this Agreement.]
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the Closing Date
this Agreement maybe terminated by the Underwriter(s) or Representative(s) 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 National Market, or trading in securities generally on either
the Nasdaq National 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(s) or Representative(s) 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(s) or
Representative(s) 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(s) or Representative(s) 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(s)
or Representative(s), except that the Company shall be obligated to reimburse
the expenses of the Underwriter(s) or Representative(s) pursuant to Sections 4
and 6
22
<PAGE> 27
hereof, (b) the Underwriter(s) or Representative(s) 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 officers and of the Underwriter(s) or
Representative(s) 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(s) or Representative(s) 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(s) or Representative(s):
[NAME AND ADDRESS OF UNDERWRITER(S)
OR REPRESENTATIVE(S)]
with a copy to both:
[NAME AND ADDRESS OF UNDERWRITER(S)
OR REPRESENTATIVE(S)]
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
23
<PAGE> 28
with a copy to:
Phillip R. Pollock, Esq.
Tobin & Tobin
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 Underwriter(s) or Representative(s)s 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,
24
<PAGE> 29
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 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(s) or Representative(s) in San Francisco, California as of the
date first above written.
[NAME OF UNDERWRITER(S) OR
REPRESENTATIVE(S)
By: ________________________________
Managing Director
25
<PAGE> 30
EXHIBIT A
Form of 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> 31
EXHIBIT A
[LETTERHEAD OF TOBIN & TOBIN]
[CLOSING DATE]
[NAME AND ADDRESS OF
UNDERWRITER(S) OR
REPRESENTATIVE(S)]
Re: Redwood Trust, Inc. Underwritten Public Offering
of [AMOUNT OF STOCK] Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Redwood Trust, Inc., a Maryland
corporation (the "Company"), in connection with the sale by the Company of
[AMOUNT OF STOCK] shares (the "Common Shares") of its common stock, par value
$0.01 per share (the "Common Stock"), pursuant to the Underwriting Agreement,
dated [DATE], (the "Underwriting Agreement"), by and among [NAME OF
REPRESENTATIVE(S), IF APPLICABLE], [THE REPRESENTATIVE OF THE SEVERAL
UNDERWRITERS PURSUANT TO THE UNDERWRITING AGREEMENT (THE "REPRESENTATIVE(S)"
AND THE "UNDERWRITER(S)" RESPECTIVELY)] -- OR -- [NAME OF UNDERWRITER(S) (THE
"UNDERWRITER(S)")], and the Company.
This opinion is being furnished to you at the request of the Company
pursuant to Section 5(d) of the Underwriting Agreement. Capitalized terms used
and not otherwise defined herein shall have the respective meanings set forth
in the Underwriting Agreement.
We have examined (i) the Company's Universal Shelf Registration
Statement on Form S-3 (Registration No. [REG.#]), including a prospectus (such
prospectus as amended and dated [DATE], the "Base Prospectus"), relating to,
among other securities, the Common Shares, filed with the Securities and
Exchange Commission (the "Commission") on [DATE] under the Securities Act of
1933, as amended (the "Securities Act"), and
<PAGE> 32
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 2
the General Rules and Regulations promulgated thereunder (the "Rules"), as
amended and declared effective by the Commission on [DATE] (together with all
exhibits thereto, the "Registration Statement"), (ii) the Prospectus
Supplement, dated [DATE], filed together with the Base Prospectus with the
Commission on [DATE], pursuant to Rule 424(b) of the Rules (together as filed,
the "Prospectus"); (iii) an executed copy of the Underwriting Agreement; (iv)
the Articles of Amendment and Restatement and Articles Supplementary of the
Company as filed with the State Department of Assessments and Taxation of
Maryland and in effect on the date hereof (together, the "Charter") and the
Bylaws of the Company in effect on the date hereof (the "Bylaws"); (v)
resolutions adopted by the Board of Directors of the Company at a meeting held
on [DATE], authorizing the transactions and appointing a Pricing Committee to
complete the details of each applicable transaction, and the resolutions
adopted by the Pricing Committee on [DATE], finalizing the transactions
contemplated by the Underwriting Agreement; (vi) specimen certificates
representing the Common Stock; and (vii) the Certificate of Incorporation of
Sequoia Mortgage Funding Corporation ("Sequoia") as filed with the Secretary of
State of the State of Delaware and the Bylaws of Sequoia in effect on the date
hereof. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon oral or written statements and representations of officers and
other representatives of the Company and others.
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 or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder, and we have also assumed the due
authorization by all requisite action, corporate or other, and the valid
execution and delivery by such
<PAGE> 33
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 3
parties of such documents and the validity, binding effect and enforceability
thereof with respect to such parties.
Members of our firm are admitted to the Bar in the States of
California and New York and we do not express any opinion as to the laws of any
other jurisdiction other than the laws of the United States of America to the
extent referred to specifically herein and except for those matters of Maryland
law for which we have relied solely on the legal opinion of Piper & Marbury
L.L.P., Baltimore, Maryland, dated the date hereof, being delivered to you
pursuant to Section 5(e) of the Underwriting Agreement and attached thereto as
Exhibit B.
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, we are of the opinion that:
1. The Company has been duly formed and is validly existing as a
corporation, is in good standing under the laws of Maryland, and is duly
qualified to do business as a foreign corporation and is in good standing in
all other jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for jurisdictions
in which the failure to so qualify would not cause a Material Adverse Change,
and has the requisite corporate power and authority to own its properties and
conduct its business as described in the Registration Statement; and, except as
disclosed in the Prospectus, the Company does not own or control, directly or
indirectly, any corporation, association, partnership or other entity;
2. Sequoia has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, and is
duly qualified to do business as a foreign corporation and is in good standing
in all other jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for jurisdictions
where the failure to so qualify would not cause a Material Adverse Change;
3. All of the issued and outstanding capital stock of Sequoia has
been duly authorized and validly issued, is fully paid and non-assessable and
is owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance or, to our knowledge, any pending or threatened claim.
4. Prior to the Closing Date, the Company has authorized and
outstanding capital stock as set forth under the heading "Capitalization" in
the Prospectus; all necessary and proper corporate proceedings have been taken
in order to duly and validly authorize the Common Shares; all outstanding
shares of
<PAGE> 34
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 4
Common Stock have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with federal and state securities
laws, were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase any securities and conformed in all
material respects to the description thereof contained in the Registration
Statement and Prospectus;
5. The certificates representing the Common Shares are in due and
proper form under Maryland law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to you or upon your order against
payment of the agreed consideration therefor in accordance with the provisions
of the Underwriting Agreement, the Common Shares represented thereby will be
duly authorized and validly issued, fully paid and nonassessable, will not have
been issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities and will conform in all material
respects to the description thereof contained in the Registration Statement and
Prospectus;
6. Except for the Warrants and options granted under the Stock
Option Plan or the Class B 9.74% Cumulative Convertible Preferred Stock, to our
knowledge, there are no outstanding options, warrants or other rights calling
for the issuance of, and, except for the Dividend Reinvestment and Stock
Purchase Plan, no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company;
7. (a) The Registration Statement has become effective upon
filing under the Act, and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement or preventing the use of either the
Registration Statement or the Prospectus has been issued and no proceedings for
such purposes have been instituted or are pending or contemplated by the
Commission, and the filing of the Prospectus pursuant to Rule 424(b) of the
Rules and Regulations has been made in the manner and within the time period
required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and any
amendment or supplement thereto (except for the financial statements and
schedules included in such documents as to which
<PAGE> 35
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 5
we express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules;
(c) To our knowledge, there are no franchises, leases,
contracts, agreements or documents of a character required to be disclosed in
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not disclosed or filed, as required; and
(d) To our knowledge, there are no legal or governmental
actions, suits or proceedings pending or threatened against the Company which
are required to be described in the Registration Statement or the Prospectus
which are not described as required;
8. The Company has the corporate power and authority to enter
into the Underwriting Agreement, to sell and deliver the Common Shares to be
sold by it to the several Underwriters and to consummate the other transactions
contemplated therein; the Underwriting Agreement has been duly and validly
authorized by all necessary action by the Company, has been duly and validly
executed and delivered by the Company and is a valid and binding agreement of
the Company enforceable in accordance with its terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and except as to those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which we express no opinion; and no
approval, authorization, order, consent, registration, filing, qualification,
license or permit of or with any court, regulatory, administrative or other
governmental body is required for the execution and delivery of the
Underwriting Agreement by the Company or the consummation of the transactions
contemplated by the Underwriting Agreement, except such as have been obtained
and are in full force and effect under the Act and such as may be required
under applicable Blue Sky or Canadian securities laws in connection with the
purchase and distribution of the Common Shares by the Underwriters;
9. The execution and performance of the Underwriting Agreement
and the consummation of the transactions therein contemplated will not conflict
with, result in the breach of, or constitute, either by itself or upon notice
or the passage of time or both, a default under, any agreement, mortgage, deed
of
<PAGE> 36
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 6
trust, lease, franchise, license, indenture, permit or other instrument known
to us to which the Company is a party or by which the Company or its property
may be bound or affected which is material to the Company, violate any of the
provisions of the Charter or Bylaws, or other organizational documents of the
Company or, to our knowledge, violate any statute, judgment, decree, order,
rule or regulation of any court or governmental body having jurisdiction over
the Company or its property;
10. To our knowledge, the Company is not in violation of its
Charter or Bylaws, or other organizational documents and is not in breach of or
default with respect to any provision of any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument known
to us to which the Company is a party or by which it or its properties may be
bound or affected, except where such default would not cause a Material Adverse
Change; and, to our knowledge, the Company is not in violation of any laws,
rules, regulations, judgments, decrees, orders and statutes of any court or
jurisdiction to which it is subject, except where such violation would not
cause a Material Adverse Change;
11. To our knowledge, no holders of securities of the Company have
rights which have not been waived to register such securities because of the
filing of the Registration Statement and Prospectus by the Company or the
offering or other transactions contemplated by the Underwriting Agreement;
12. The Company is not and will not be an "investment company"
within the meaning of the 1940 Act;
13. The Common Shares have been duly designated for quotation by
the Nasdaq National Market upon official notice of issuance; and
14. The description set forth under the heading "ERISA Investors"
in the Registration Statement is true and correct in all material respects.
15. The statements (i) in the Prospectus under the captions [NAME
CAPTIONS] and (ii) in Item 14 and Item 15 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of legal
matters, the Company's charter or by-law provisions, documents or legal
proceedings, or legal conclusions, have been reviewed by us and fairly present
and summarize, in all material respects, the matters referred to therein.
In addition, we have participated in the preparation of the
Registration Statement and the Prospectus and conferences with officers and
representatives of the Company, representatives of the independent accountants
of the Company and you and your counsel at which the contents of the
Registration Statement and the Prospectus were reviewed and discussed and,
although we are
<PAGE> 37
[NAME OF UNDERWRITER(S) OR REPRESENTATIVE(S)]
[CLOSING DATE]
Page 7
not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and have made no independent check or verification
thereof except as specified in paragraph 12 above, on the basis of the
foregoing, no facts have come to our attention that have led us to believe that
the Registration Statement, at the time it became effective and at the date
hereof, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date and
the date hereof, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that we express no opinion or belief with respect to the financial statements,
schedules and other financial information included therein or excluded
therefrom or included or excluded from the exhibits to the Registration
Statement.
This opinion is furnished to you pursuant to Section 5(d) of the
Underwriting Agreement and may be used solely for your benefit in connection
with the closing under the Underwriting Agreement occurring today and is not to
be used, circulated, quoted or otherwise referred to for any other purpose
without our express written permission, provided, however, that this opinion
may be relied upon by your counsel in connection with any opinions rendered
pursuant to the Underwriting Agreement.
Very truly yours,
PRP/pt
<PAGE> 38
EXHIBIT B
Form of 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.
<PAGE> 39
EXHIBIT B
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH WASHINGTON
36 SOUTH CHARLES STREE NEW YORK
BALTIMORE, MARYLAND 21201 PHILADELPHIA
410 539 2530 EASTON
FAX: 410 539 0489
[Closing Date]
[Name of underwriter(s) or representative(s)]
[Address of underwriter(s) or representative(s)]
Redwood Trust, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel to Redwood Trust, Inc., a
Maryland corporation (the "Company"), in connection with the purchase by [Name
of underwriter(s) or "Representative(s)," as applicable] (the "Underwriter(s)"
or "Representatives," as applicable), from the Company, pursuant to the
Underwriting Agreement dated [date] (the "Underwriting Agreement"), of an
aggregate of [amount] shares (the "Shares") of its authorized but unissued
Common Stock, par value $0.01 per share (the "Common Stock"). All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Underwriting Agreement. This opinion is given at the request of the Company
pursuant to Section 5(e) of the Underwriting Agreement.
In our capacity as special Maryland counsel, we have reviewed the
following documents:
(a) The Charter of the Company, as amended to date, certified by
the Maryland State Department of Assessments and Taxation
("SDAT").
(b) A copy of the Amended and Restated By-Laws of the Company as in
effect on the date hereof, certified by an officer of the
Company (the "By-Laws").
<PAGE> 40
Piper & Marbury
L.L.P.
[Name of underwriter(s) or representative(s)]
[Closing Date]
Page 2
(c) A long-form [or short-form, as applicable] good standing
certificate for the Company, dated [date], issued by the SDAT.
(d) Resolutions of the Board of Directors of the Company and of the
Pricing Committee of the Board of Directors, as certified by an
officer of the Company, relating to, among other things, the
organization of the Company, the authorization and issuance of
the outstanding shares of its capital stock, the authorization
and issuance of the Shares, the preparation and filing of the
Registration Statement on Form S-3, as amended (File No. [reg.
#]) (the "Registration Statement"), the execution and delivery
of the Underwriting Agreement, and certain other related
matters.
(e) A specimen stock certificate evidencing shares of the Company's
Common Stock.
(f) A certificate of an officer of the Company dated the date
hereof as to certain factual matters (the "Officer's
Certificate").
(g) The Registration Statement and the related final Prospectus
dated [date] (the "Prospectus") and the Prospectus Supplement
dated [date] (the "Prospectus Supplement").
(h) The Underwriting Agreement.
(i) Such other documents as we have considered necessary to the
rendering of the opinions expressed below.
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 conformity of final documents
in all material respects to the versions thereof submitted to us in draft form,
the authenticity of all documents submitted to us as originals, the conformity
with originals of all documents submitted to us as copies, and that all public
records reviewed are accurate and complete. As to factual matters (including,
without limitation, the issuance of capital stock, the receipt of consideration
therefor, the execution of documents on behalf of the Company and the absence of
any violation by the Company of any applicable Maryland law), we have
<PAGE> 41
Piper & Marbury
L.L.P.
[Name of underwriter(s) or representative(s)]
[Closing Date]
Page 3
relied solely on the Officer's Certificate and have not independently verified
the matters stated therein.
In making our examination of the documents executed by parties other
than the Company, we have assumed that such parties had the power, corporate or
other, to enter into and perform all obligations thereunder, and we have also
assumed the due authorization by all requisite action, corporate or other, and
the valid execution and delivery by such parties of such documents.
Based upon the foregoing, having regard for such legal considerations
as we deem relevant, and limited in all respects to applicable Maryland law, we
are of the opinion and advise you as follows:
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State
of Maryland and has the requisite corporate power and authority
to own its properties and conduct its business as described in
the Prospectus Supplement under the caption "Business and
Strategy."
2. Prior to the date hereof, the Company had authorized and
outstanding capital stock as set forth under the heading
"Capitalization" in the Prospectus Supplement with the
exception of shares of Common Stock issued pursuant to (a)
warrants outstanding as of [date] (b) the Dividend Reinvestment
and Stock Purchase Plan, (c) Class B 9.74% Cumulative
Convertible Preferred Stock, par value $.01 per share,
outstanding as of [date], and (d) the public offering of
[amount] shares of Common Stock in [date]; all necessary and
proper corporate actions have been taken in order to duly and
validly authorize the Shares; all outstanding shares of capital
stock have been duly and validly issued and are fully paid and
non-assessable, were not issued in violation of or subject to
any preemptive rights or, to our knowledge, other rights to
subscribe for or purchase securities; and the outstanding
shares of capital stock conformed in all material respects to
the description contained under the caption "Description of
Securities" in the Prospectus.
<PAGE> 42
Piper & Marbury
L.L.P.
[Name of underwriter(s) or representative(s)]
[Closing Date]
Page 4
3. The certificates representing the Shares to be delivered
pursuant to the Underwriting Agreement are in due and proper
form under Maryland law, and when duly countersigned by the
Company's transfer agent and registrar, and delivered to you or
upon your order against payment of the agreed consideration
therefor in accordance with the provisions of the Underwriting
Agreement, the Shares represented thereby will be duly
authorized and validly issued, fully paid and non-assessable,
will not have been issued in violation of or subject to any
preemptive rights or, to our knowledge, other rights to
subscribe for or purchase securities and will conform in all
material respects to the description contained under the
caption "Description of Securities -- Common Stock" in the
Prospectus.
4. The Company has the corporate power and authority to enter into
the Underwriting Agreement, to sell and deliver the Shares to
be sold by it to the Underwriter and to consummate the other
transactions contemplated therein; the Underwriting Agreement
has been duly and validly authorized by all necessary corporate
action by the Company and, assuming that it has been executed
and delivered by the proper officers of the Company, has been
duly and validly executed by and on behalf of the Company; and
no approval, authorization, order, consent, registration,
filing, qualification, license, or permit of or with any court,
regulatory, administrative, or other governmental body of the
State of Maryland is required in connection with (a) the
execution and delivery of the Underwriting Agreement by the
Company or (b) the consummation of the transactions
contemplated by the Underwriting Agreement.
5. The execution and performance of the Underwriting Agreement and
the consummation of the transactions contemplated therein will
not violate any of the provisions of the Charter or the By-Laws
of the Company or, to our knowledge, violate any Maryland
statute or any decree or order of a court or governmental body
of the State of Maryland specifically applicable to the
Company.
<PAGE> 43
Piper & Marbury
L.L.P.
[Name of underwriter(s) or representative(s)]
[Closing Date]
Page 5
6. To our knowledge, the Company is not in violation of its
Charter or By- Laws.
7. To our knowledge and based upon the Officer's Certificate, the
Company is not in violation of any Maryland statute or any
decree or order of a court or governmental body of the State of
Maryland specifically applicable to the Company.
8. The statements in the Prospectus under the caption "Description
of Securities," and in the Registration Statement under Item 15
insofar as such statements constitute summaries of Maryland
corporate law, have been reviewed by us and are accurate and
fair in all material respects.
In addition to the qualifications set forth above, the foregoing
opinions are further qualified as follows:
(a) We have made no investigation as to, and we express no opinion
as to, the laws of any jurisdiction other than the State of
Maryland. The opinion expressed herein concerns only the effect
of the laws (excluding the principles of conflict of laws) of
the State of Maryland as currently in effect.
(b) We assume no obligation to supplement this opinion if any
applicable laws change after the date hereof or if we become
aware of any facts that might change the opinions expressed
herein after the date hereof.
(c) We express no opinion as to compliance with the securities or
"blue sky" laws or real estate syndication laws of the State of
Maryland.
(d) We express no opinion as to whether or not the indemnification
or contribution provisions of Section 8 of the Underwriting
Agreement could under certain circumstances be deemed to
violate the public policy of the State of Maryland.
<PAGE> 44
Piper & Marbury
L.L.P.
[Name of underwriter(s) or representative(s)]
[Closing Date]
Page 6
(e) In basing the opinions and other matters set forth herein on
"our knowledge," the words "our knowledge" signify that, in the
course of our representation of the Company in matters with
respect to which we have been engaged by the Company as special
Maryland counsel, no information has come to our attention that
would give us actual knowledge or actual notice that any such
opinions or other matters are not accurate or that any of the
foregoing documents, certificates, reports, and information on
which we have relied are not accurate and complete. Except as
otherwise stated herein, we have undertaken no independent
investigation or verification of such matters. The words "to
our knowledge" used herein are intended to be limited to the
knowledge of the lawyers within our firm who have represented
the Company in connection with the Registration Statement and
the Underwriting Agreement.
The opinion expressed in this letter is solely for (i) the use of the
Underwriter in connection with the transactions contemplated by the Underwriting
Agreement and (ii) the use of Tobin & Tobin, a professional corporation,
Giancarlo & Gnazzo, A Professional Corporation, and O'Melveny & Myers LLP in
giving their opinions under Sections 5(d), 5(f), and 5(g), respectively, of the
Underwriting Agreement. This opinion may not be relied upon by any other person
or in any other connection without our prior written approval. The opinion
expressed in this letter is limited to the matters set forth in this letter and
no other opinion should be inferred beyond the matters expressly stated.
Very truly yours,
<PAGE> 45
EXHIBIT C
Form of 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> 46
EXHIBIT C
[Letterhead of Giancarlo & Gnazzo]
[CLOSING DATE]
[NAME AND ADDRESS OF
UNDERWRITER(S) OR
REPRESENTATIVES(S)]
Re: Redwood Trust, Inc. Public Offering of [AMOUNT] shares of
Common Stock Pursuant to Shelf Registration
Ladies and Gentlemen:
We have acted as special tax counsel to Redwood Trust, Inc., a
Maryland corporation (the "Company"), in connection with the offer and sale
(the "Offering") on [DATE] by the Company of an aggregate of [AMOUNT] shares of
its common stock, par value of $0.01 per share (the "Common Stock") pursuant to
the Underwriting Agreement, dated as of [DATE] (the "Underwriting Agreement"),
by and between the Company and you.
This opinion is furnished to you at the request of the Company
pursuant to Section 5(f) of the Underwriting Agreement. Capitalized terms used
and not otherwise defined herein shall have the respective meanings set forth
in the Underwriting Agreement.
In connection with the Offering, we have assisted in the preparation
of the tax disclosure for (i) the Company's Universal Shelf Registration
Statement on Form S-3 (Registration Statement No. [REG. #]), including a
prospectus (the "Base Prospectus"), relating to, among other securities, the
Common Stock, filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on [DATE] (as thereafter amended through
the date hereof and together with all exhibits thereto, the "Registration
Statement") and (ii) the Prospectus Supplement, dated [DATE] (the "Prospectus
Supplement" and, together with the Base Prospectus, the "Prospectus"). In
formulating our opinions, we have reviewed (i) the Registration Statement and
the Prospectus, (ii) the Articles of Incorporation of the Company, as amended
and supplemented to date, (iii) the Bylaws, as amended, of the Company, (iv)
the Certificate of Incorporation of Sequoia Mortgage Funding Corporation
("Sequoia"), as filed with the Secretary of State of the State of Delaware and
the Bylaws of Sequoia as in effect on the date hereof, and (v) such
resolutions, certificates, records, and other documents provided by the Company
and Sequoia 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"), a copy of which is attached hereto,
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 and Sequoia. We have also reviewed the opinions of
Piper & Marbury L.L.P., and Tobin and Tobin, a professional corporation, dated
the date hereof, with respect to certain matters of Maryland and Delaware
law, respectively.
<PAGE> 47
[UNDERWRITERS/ REPRESENTATIVES]
[DATE]
Page 2
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) each of the Company and Sequoia have been and will continue
to be organized and operated in the manner described in the Officer's
Certificate, the Registration Statement, the Prospectus 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,
certain of 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 and Sequoia which may not be achievable
if there are future changes in the circumstances of either 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:
1. 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
[DATE], the date of the most recent [UN]audited financial statements of the
Company reviewed by us, and the Company's current and contemplated methods of
operation, as described in the Registration Statement, the Base Prospectus, and
the Prospectus Supplement, and as represented to us by the Company, will enable
it to continue to so qualify.
2. Sequoia is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
3. Although the discussions set forth under the captions "Certain
Federal Income Tax Considerations" in the Base Prospectus and "Federal Income
Tax Considerations" in the Prospectus Supplement do not purport to discuss all
possible Federal income tax consequences of the purchase, ownership and
disposition of the Common Stock, such discussions, taken together, constitute,
in all material respects, an accurate summary of the Federal income tax
considerations that are likely to be material to a purchaser of the Common
Stock.
<PAGE> 48
[UNDERWRITERS/ REPRESENTATIVES]
[DATE]
Page 3
Other than as expressly stated above, we express no opinion on any
issue relating to the Company, to Sequoia or to any investment therein or under
any other law.
This opinion is furnished to you solely for your benefit in connection
with the closing under the Underwriting Agreement occurring today. It is not
to be relied upon, used, circulated, quoted or otherwise referred to for any
other purpose without our express written permission; provided, however, that
this opinion may be disclosed to and relied upon by your counsel, O'Melveny &
Myers LLP in connection with any opinions they may render pursuant to the
Underwriting Agreement.
Very truly yours,
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF TOBIN & TOBIN]
April 22, 1997
The Board of Directors
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Re: Registration Statement on Form S-3;
filed April 22, 1997
Ladies and Gentlemen:
We have acted as your counsel in connection with the public offering
by Redwood Trust, Inc., a Maryland corporation (the "Company"), of an aggregate
of up to $300,000,000.00 worth of the following securities which the Company
may, from time to time, issue and sell, and may do so either directly or
through agents, dealers or underwriters: (i) shares of its common stock, par
value $0.01 per share ("Common Stock"); (ii) shares of its preferred stock, in
one or more class or series ("Preferred Stock"), (iii) warrants to purchase
shares of Common Stock ("Common Stock Warrants"); (iv) warrants to purchase
Preferred Stock ("Preferred Stock Warrants"); (v) rights to purchase shares of
Common Stock or Preferred Stock issued to shareholders ("Shareholders Rights");
and (vi) any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing types of securities (collectively,
the "Securities").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (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 Registration Statement on Form S-3, relating to the
Securities, filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act on April 22, 1997 (together with all
amendments
<PAGE> 2
The Board of Directors
Redwood Trust, Inc.
April 22, 1997
Page 2
thereof and exhibits thereto, the "Registration Statement"), (ii) the form of
underwriting agreement filed as an exhibit to the Registration Statement,
substantially in the form to be used in offerings pursuant to the Registration
Statement and including the forms of opinion of various counsel substantially
in the form to be used in such offerings (the "Underwriting Agreement"), (iii)
the Articles of Incorporation of the Company, including all amendments and
supplements thereto (collectively, the "Articles of Incorporation"), (iv) the
Bylaws, as amended, of the Company, (v) resolutions of the Board of Directors
of the Company relating to the filing of the Registration Statement and the
authorization for issuance of shares of Common Stock (the "Resolutions"), and
(vi) the opinion of Piper & Marbury L.L.P., related to the Securities, dated on
or about the date hereof. 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 of Maryland law for which we have relied
solely upon the legal opinion of Piper & Marbury L.L.P., Baltimore, Maryland.
Based upon and subject to the foregoing, we are of the opinion and
advise you that:
1. Upon the issuance, delivery and payment therefor in the manner
contemplated by the Underwriting Agreement and the Resolutions, the
Common Stock will be validly issued, fully paid and non-assessable.
<PAGE> 3
The Board of Directors
Redwood Trust, Inc.
April 22, 1997
Page 3
2. When appropriate corporate action has been taken by the Company to
authorize the issuance of the Preferred Stock, and when the Preferred
Stock has been duly established in accordance with the terms of the
Company's Articles of Incorporation, and applicable law, and, upon
issuance, delivery and payment therefor in the manner contemplated by
the Registration Statement and/or the applicable Prospectus
Supplement, the Preferred Stock will be validly issued, fully paid and
non-assessable.
3. When appropriate corporate action has been taken by the Company to
authorize applicable Warrant Agreements and the final terms thereof
have been duly established, the Warrant Agreements, when duly executed
and delivered by the Company, will constitute legally valid and
binding agreements of the Company, enforceable against the Company in
accordance with their terms.
4. When appropriate corporate action has been taken by the Company to
authorize the issuance of the Preferred Stock Warrants and the
applicable Securities issuable upon the exercise thereof, and when the
final terms thereof have been duly established and the Preferred Stock
Warrants have been duly executed and delivered by the Company and
countersigned by the Warrant Agent in accordance with the applicable
Warrant Agreement and delivered to and paid for by the Company in the
manner contemplated by the Registration Statement and/or the
applicable Prospectus Supplement, the Preferred Stock Warrants will
constitute legally valid and binding obligations of the Company in
accordance with their respective terms.
5. When appropriate corporate action has been taken by the Company to
authorize the issuance of the Common Stock Warrants and the applicable
Securities issuable upon the exercise thereof, and when the final
terms thereof have been duly established and the Common Stock Warrants
have been duly executed and delivered by the Company and countersigned
by the Warrant Agent in accordance with the applicable Warrant
Agreement and delivered to and paid for by the Company in the manner
contemplated by the Registration Statement and/or the
<PAGE> 4
The Board of Directors
Redwood Trust, Inc.
April 22, 1997
Page 4
applicable Prospectus Supplement, the Common Stock Warrants will
constitute legally valid and binding obligations of the Company in
accordance with their respective terms.
6. When appropriate corporate action has been taken by the Company to
authorize the issuance of Shareholder Rights and the applicable
Securities issuable upon the exercise thereof, and when the final
terms thereof have been duly established and the Shareholder Rights
have been duly executed and delivered by the Company and countersigned
by the Subscription Agent in accordance with the applicable Prospectus
Supplement and delivered to and paid for by the Company in the manner
contemplated by the Registration Statement and the applicable
Prospectus Supplement, the Shareholder Rights will constitute legally
valid and binding obligations of the Company in accordance with their
respective terms.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement and to the reference to our firm
under the heading "Legal Matters" in 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 Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
/s/ TOBIN & TOBIN
-------------------------
Tobin & Tobin
<PAGE> 1
EXHIBIT 5.2
[PIPER & MARBURY L.L.P. LETTERHEAD]
April 22, 1997
Redwood Trust, Inc.
591 Redwood Highway, Suite 3100
Mill Valley, California 94941
Ladies and Gentlemen:
We have acted as 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 (the "Registration Statement") on Form S-3 of the Company expected to
be filed with the Securities and Exchange Commission (the "Commission") on April
22, 1997, including the prospectus included therein at the time the Registration
Statement is declared effective (the "Prospectus"), for offering by the Company
from time to time of up to $300,000,000 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 (the "Common Stock Warrants") or
Preferred Stock (the "Preferred Stock Warrants") (collectively, the "Warrants");
(iv) rights to purchase shares of Common Stock (the "Common Stock Shareholder
Rights") or Preferred Stock (the "Preferred Stock Shareholder Rights")
(collectively, 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 (each a
"Prospectus Supplement"). This opinion is being provided at your request in
connection with the filing of the Registration Statement.
<PAGE> 2
Redwood Trust Piper & Marbury
April 22, 1997
Page 2
In our capacity as Maryland counsel, we have reviewed the following:
(a) The Registration Statement.
(b) The Charter of the Company, certified by the Department of
Assessments and Taxation of the State of Maryland (the "Department").
(c) A copy of the By-Laws (the "By-Laws") of the Company, as amended
and restated and in effect on the date hereof.
(d) The Preliminary Prospectus, dated April 22, 1997 (the
"Preliminary Prospectus") relating to the issuance of the Securities,
which forms part of the Registration Statement.
(e) Certified resolutions of the Board of Directors of the Company
relating to the Company's organization and to the Board's authorization of
the filing of the Registration Statement.
(f) A short-form good standing certificate for the Company, dated
April 21, 1997, issued by the Department.
(g) An Officer's Certificate (the "Certificate") of the Company,
dated the date hereof, as to certain factual matters.
(h) Such other documents as we have considered necessary to the
rendering of the opinions expressed below.
In our examination of the aforesaid documents, 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, and the conformity
with originals of all documents submitted to us as copies (and the authenticity
of the originals of such copies), and that all public records reviewed are
accurate and complete. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder, and we
have also assumed the due authorization by all requisite action, corporate or
other, and the valid execution and delivery by such parties of such documents
and the validity, binding effect and enforceability thereof with respect to such
<PAGE> 3
Redwood Trust Piper & Marbury
April 22, 1997
Page 3
parties. As to any facts material to this opinion which we did not independently
establish or verify, we have relied solely upon the Certificate.
We assume that prior to the issuance of any shares of Preferred Stock or
Common Stock or of Warrants or Shareholder Rights, there will exist, under the
Charter of the Company, the requisite number of authorized but unissued shares
of Preferred Stock or Common Stock, as the case may be, and that all actions
necessary to the creation of any such Preferred Stock, whether by Charter
amendment or by classification or reclassification of existing capital stock and
the filing of Articles Supplementary, will have been taken. We further assume
that appropriate certificates representing shares of Preferred Stock or Common
Stock will be executed and delivered upon issuance and sale of any shares of
Preferred Stock or Common Stock, as the case may be, and will comply with all
applicable requirements of Maryland law. We further assume that any Common Stock
Warrants will be issued under a valid and legally binding warrant agreement (a
"Common Stock Warrant Agreement") that conforms to the description thereof set
forth in the Prospectus Supplement; that any Preferred Stock Warrants will be
issued under a valid and legally binding warrant agreement (a "Preferred Stock
Warrant Agreement") that conforms to the description thereof set forth in the
Prospectus Supplement; and that any Shareholder Rights will be evidenced by a
valid and legally binding subscription rights that conform to the description
thereof set forth in the Prospectus Supplement. Finally, we assume that the
underwriting agreements for offerings of the Common Stock, the Preferred Stock,
the Common Stock Warrants, and the Preferred Stock Warrants (each, an
"Underwriting Agreement," and collectively, the "Underwriting Agreements") will
be valid and legally binding contracts that conform to the description thereof
set forth in the applicable Prospectus Supplement.
We assume that the issuance, sale, amount and terms of the Securities to
be offered from time to time will be authorized and determined by proper action
of the Board of Directors of the Company (each, a "Board Action") in accordance
with the Company's Charter and By-Laws and with applicable Maryland law.
To the extent that the obligations of the Company under any Common Stock
Warrant Agreement or Preferred Stock Warrant Agreement (hereinafter,
collectively, a "Warrant Agreement") may be dependent upon such matters, we
assume for purposes of this opinion that the financial institution to be
identified in such Warrant Agreement as warrant agent (the "Warrant Agent") will
be duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization; that the Warrant Agent will be duly qualified to
engage in the activities contemplated by such Warrant Agreement; that
<PAGE> 4
Redwood Trust Piper & Marbury
April 22, 1997
Page 4
such Warrant Agreement will have been duly authorized, executed and delivered by
the Warrant Agent and will constitute the legally valid and binding obligation
of the Warrant Agent enforceable against the Warrant Agent in accordance with
its terms; that the Warrant Agent will be in compliance, generally, with respect
to acting as Warrant Agent under such Warrant Agreement, with all applicable
laws and regulations; and that the Warrant Agent will have the requisite
organizational and legal power and authority to perform its obligations under
such Warrant Agreement.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof:
1. Upon due authorization by Board Action of an issuance of Common
Stock, and upon issuance and delivery of certificates for shares of such
Common Stock against payment therefor in accordance with the terms and
provisions of such Board Action, the Registration Statement (as declared
effective under the Act), the Prospectus or the applicable Prospectus
Supplement and, if applicable, an Underwriting Agreement, or upon issuance
and delivery of certificates for shares of such Common Stock pursuant to
the exercise of one or more Common Stock Warrants or of one or more Common
Stock Shareholder Rights, the shares of Common Stock represented by such
certificates will be duly authorized, validly issued, fully paid and
non-assessable.
2. When a series of the Preferred Stock has been duly authorized and
established in accordance with the applicable Board Action, the terms of
the Company's Charter and applicable Maryland law, and, upon issuance and
delivery of certificates for shares of such series of Preferred Stock
against payment therefor in accordance with the terms and provisions of
such Board Action, the Registration Statement (as declared effective under
the Act), the Prospectus or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, or upon issuance and delivery of
certificates for shares of such series of Preferred Stock pursuant to the
exercise of one or more Preferred Stock Warrants or of one or more
Preferred Stock Shareholder Rights, the shares of Preferred Stock
represented by such certificates will be duly authorized, validly issued,
fully paid and non-assessable.
3. When the Common Stock Warrants have been duly established by the
related Common Stock Warrant Agreement, duly authenticated by
<PAGE> 5
Redwood Trust Piper & Marbury
April 22, 1997
Page 5
the Warrant Agent and duly authorized and established by the applicable
Board Action, and when warrant certificates representing the Common Stock
Warrants have been duly executed and delivered on behalf of the Company
against payment therefor in accordance with the terms and provisions of
such Board Action, the Common Stock Warrant Agreement, the Registration
Statement (as declared effective under the Act), the Prospectus or the
applicable Prospectus Supplement and, if applicable, an Underwriting
Agreement, the Common Stock Warrants will be duly authorized and will
constitute valid obligations of the Company.
4. When a series of the Preferred Stock has been duly authorized and
established in accordance with the applicable Board Action, the terms of
the Company's Charter and applicable Maryland law, when the Preferred
Stock Warrants for such series of Preferred Stock have been duly
established by the related Preferred Stock Warrant Agreement, duly
authenticated by the Warrant Agent and duly authorized and established by
the applicable Board Action, and when warrant certificates representing
the Preferred Stock Warrants have been duly executed and delivered on
behalf of the Company against payment therefor in accordance with the
terms and provisions of such Board Action, the Preferred Stock Warrant
Agreement, the Registration Statement (as declared effective under the
Act), the Prospectus or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, the Preferred Stock Warrants will
be duly authorized and will constitute valid obligations of the Company.
5. Upon due authorization by Board Action of an issuance of the
Common Stock Shareholder Rights, and upon the issuance of the Common Stock
Shareholder Rights in accordance with the terms and provisions of such
Board Action, the Registration Statement (as declared effective under the
Act), the Prospectus or the applicable Prospectus Supplement, the terms of
the Company's Charter and applicable Maryland law, the Common Stock
Shareholder Rights will be duly authorized and will constitute valid
obligations of the Company.
6. When a series of the Preferred Stock has been duly authorized and
established in accordance with the applicable Board Action, the terms of
the Company's Charter and applicable Maryland law, upon due authorization
by Board Action of an issuance of the Preferred Stock
<PAGE> 6
Redwood Trust Piper & Marbury
April 22, 1997
Page 6
Shareholder Rights for such series of Preferred Stock, and upon the
issuance of the Preferred Stock Shareholder Rights for such series of
Preferred Stock in accordance with the terms and provisions of such Board
Action, the Registration Statement (as declared effective under the Act),
the Prospectus or the applicable Prospectus Supplement, the terms of the
Company's Charter and applicable Maryland law, such Preferred Stock
Shareholder Rights will be duly authorized and will constitute valid
obligations of the Company.
The opinions stated herein relating to the validity and binding nature of
obligations of the Company are subject to (i) the effect of any applicable
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally and (ii) the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
The opinions expressed above are limited to the laws of the State of
Maryland, exclusive of the securities or "blue sky" laws of the State of
Maryland. All of the foregoing opinions are rendered as of the date hereof. We
assume no obligation to update such opinions to reflect any facts or
circumstances which may hereafter come to our attention or changes in the law
which may hereafter occur. To the extent that any documents referred to herein
are governed by the law of a jurisdiction other than Maryland, we have assumed
that the laws of such jurisdiction are the same as the law of Maryland.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.2 to the Registration Statement and to the reference to our firm under
the heading "Legal Matters" in the Registration Statement. We further consent to
the reliance on this opinion by Tobin & Tobin, a professional corporation, in
rendering their opinion in connection with the filing of the Registration
Statement. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinion should be inferred beyond the
matters expressly stated.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Giancarlo & Gnazzo]
April 22, 1997
Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, CA 94941
Re: Universal Shelf Registration Statement on Form S-3;
filed April 22, 1997
Dear Ladies and Gentlemen:
You have requested our opinion in connection with the Form S-3 Shelf
Registration Statement, dated April 22, 1997 (the "Registration Statement")
being filed by Redwood Trust, Inc. (the "Company") with respect to an
aggregate $300,000,000.00 worth of the following securities which the Company
may issue and sell from time to time: (i) shares of its common stock, par value
of $0.01 per share (the "Common Stock"); (ii) shares of its preferred stock, in
one or more classes or series (the "Preferred Stock"); (iii) warrants to
purchase shares of Common Stock or Preferred Stock; (iv) rights to purchase
shares of Common Stock or Preferred Stock issued to shareholders; and (v) any
combination of the foregoing, either individually or as units consisting of one
or more of the foregoing (collectively, the "Securities").
In connection with the Registration Statement, we have acted as your
special tax counsel and have assisted in the preparation of the tax summary for
such Registration Statement. In formulating our opinions, we have reviewed (i)
the Registration Statement, (ii) the Articles of Incorporation of the Company
and its wholly owned subsidiary, Sequoia Mortgage Funding Corporation
("Sequoia"), as amended and supplemented to date, (iii) the Bylaws, as amended,
of each of the Company and Sequoia, and (iv) such resolutions, certificates,
records, and other documents provided by the Company and Sequoia 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 and Sequoia. We have also reviewed
the opinions of Piper & Marbury L.L.P., and Tobin & Tobin, a professional
corporation, each dated the date hereof, with respect to certain matters of
Maryland and Delaware law, respectively.
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
<PAGE> 2
Redwood Trust, Inc.
April 22, 1997
Page 2
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) each of the Company and Sequoia have been and will continue
to be organized and operated in the manner described in the Officer's
Certificate, the Registration Statement, and the other relevant documents
referred to above; and (ii) there have been no changes in the applicable laws
of the State of Maryland, the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder by the Treasury Department (the
"Treasury Regulations"), and the interpretations of the Code and the Treasury
Regulations by the courts and the Internal Revenue Service, all as they exist
on the date of this letter. With respect to these assumptions, it should be
noted that (x) in the case of the former assumption, the representations set
forth in the Officer's Certificate are highly factual in nature and reflect an
intention with respect to the future conduct of the business of the Company and
Sequoia which may not be achievable if there are future changes in the
circumstances of either 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 audited 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 as represented by
the Company, will enable it to continue to so qualify.
Other than as expressly stated above, we express no opinion on any
issue relating to the Company, to Sequoia or to any investment therein or under
any law other than the Federal income tax laws.
We are furnishing this opinion to you solely in connection with the
filing of the Registration Statement and it is not to be relied upon, used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Giancarlo & Gnazzo, A
Professional Corporation under the caption "Certain Federal Income Tax
Considerations" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Giancarlo & Gnazzo, A Professional Corporation
--------------------------------------------------
<PAGE> 1
EXHIBIT 23.4
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 dated April 22, 1997 of our report dated February 21, 1997 on our
audits of the financial statements of Redwood Trust, Inc. as of December 31,
1996 and 1995 and for the years ended December 31, 1996 and 1995 and for the
period from August 19, 1994 to December 31, 1994. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
April 21, 1997
