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EXHIBIT 1.1
750,000 SHARES
REDWOOD TRUST, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
January 23, 1997
XXXXXXXXXX SECURITIES
As Representative of the several Underwriters
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Redwood Trust, Inc., a Maryland
corporation (the "Company"), proposes to issue and sell 750,000 shares of its
authorized but unissued Common Stock, $.01 par value (the "Shares or the "Firm
Shares") to the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as Representative.
You have advised the Company that the Underwriters propose to
make a public offering of their respective portions of the Shares on the
effective date of the registration statement hereinafter referred to, or as soon
thereafter as in your judgment is advisable.
The Company confirms its agreement with respect to the
purchase of the Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the several Underwriters that:
(a) The Company meets the requirements for use of Form S-3 and
a registration statement on Form S-3 (File No. 333-11665) with respect
to the Shares, including a prospectus (the "Base Prospectus"), has been
carefully prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and filed with the
Commission and has become effective. Such registration statement may
have been amended prior to the date of this Agreement; any such
amendment was so prepared and filed, and any such amendment filed after
the effective date of such registration statement has become effective.
No stop order suspending the effectiveness of the registration
statement has been issued, and no proceeding for that purpose has been
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instituted or, to the Company's knowledge, threatened by the
Commission. A final prospectus containing information permitted to be
omitted at the time of effectiveness by Rule 430A of the Rules and
Regulations has been or will be so prepared and filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations on or
before the second business day after the date hereof (or such earlier
time as may be required by the Rules and Regulations); and the Rules
and Regulations do not require the Company to, and, without your
consent, the Company will not, file a post-effective amendment after
the time of execution of this Agreement and prior to the filing of such
final form of prospectus. Copies of such registration statement and any
such amendments have been delivered to the Underwriters and your
counsel. The term "Registration Statement" means such registration
statement as amended at the time it becomes or became effective (the
"Effective Date"), including financial statements and all exhibits and
any information deemed by virtue of Rule 430A of the Rules and
Regulations to be included in such Registration Statement at the
Effective Date and any prospectus supplement filed thereafter with the
Commission and shall include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
term "Prospectus" means, collectively, the Base Prospectus together
with any prospectus supplement, in the respective forms they are filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Base
Prospectus or the Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the Effective
Date, or the date of the Prospectus, as the case may be, that is
incorporated therein by reference.
(b) The Commission has not issued any order preventing or
suspending the use of the Prospectus, and the Prospectus conforms in
all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date and as of each Closing Date (as
hereinafter defined), has not included (or will not include) any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the
Prospectus, and any amendments or supplements thereto, will contain all
material statements and information required to be included therein by
the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material
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fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, no representation or
warranty contained in this Section 2(b) shall be applicable to
information contained in or omitted from the Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished pursuant to Section 3
hereof to the Company by or on behalf of any Underwriter, directly or
through the Representative, specifically for use in the preparation
thereof.
(c) The Company has been duly formed and is validly existing
as a corporation, is in good standing under the laws of the State of
Maryland, with full corporate power and authority to own and lease its
properties and conduct its business as currently conducted or as
described in the Prospectus. The Company does not own or control,
directly or indirectly, any corporation, association or other entity.
(d) Except as set forth in the Prospectus, the Company is in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of its business, all of which are valid and in full force and
effect; the Company is duly qualified to do business and in good
standing as a foreign corporation or partnership, as applicable, in
each jurisdiction in which 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,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material
adverse change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company, (a
"Material Adverse Effect"); and no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(e) The Company has authorized and outstanding Capital Stock
as set forth under the heading "Capitalization" in the Prospectus. The
issued and outstanding shares of Capital Stock have been duly
authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all 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 securities, and conform to
the description thereof contained in the Prospectus. Except as
disclosed in or contemplated by the Prospectus, the Company has no
outstanding options to purchase, or preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
shares of its
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Capital Stock or any such options, rights, convertible securities or
obligations.
(f) The Shares to be sold by the Company in the public
offering contemplated by this Agreement, when issued, delivered and
paid for in the manner set forth in this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, have been
registered pursuant to Section 12 of the Exchange Act, have been duly
authorized for quotation by the Nasdaq National Market upon official
notice of issuance and will conform to the description thereof
contained in the Prospectus. No preemptive rights or other rights to
subscribe for or purchase Shares exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No
shareholder of the Company has any right which has not been waived to
require the Company to register the sale of any shares owned by such
shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Shares to be sold by the Company as contemplated herein.
The description of the Company's share option, share bonus and other
share plans or arrangements, and the options or other rights granted
and exercised 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.
(g) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized by the Company, has
been duly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company in accordance with its terms. The
making and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate
any provisions of the charter, bylaws or other organizational documents
of the Company and will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under (i) any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company or any of its properties may be bound
or affected or (ii) any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the
Company or any of its properties. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body is required, including the satisfaction of any
requirements pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
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Improvements Act of 1976, as amended, for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by
this Agreement, except for compliance with the Act and the Blue Sky and
Canadian securities laws applicable to the public offering of the
Shares by the several Underwriters and the clearance of such offering
with the National Association of Securities Dealers, Inc. (the "NASD").
(h) Coopers & Xxxxxxx L.L.P. ("C&L"), who have expressed their
opinion with respect to the financial statements and schedules filed
with the Commission as a part of the Registration Statement and
included in the Prospectus and in the Registration Statement, are
independent accountants as required by the Act and the Rules and
Regulations.
(i) The financial statements of the Company, and the notes
thereto, set forth in the Registration Statement and Prospectus fairly
present the financial condition of the Company as of the dates
indicated and the results of operations and changes in financial
position for the periods presented. Such statements and notes, and the
related schedules contained in the Registration Statement, have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent
accountants named in Section 2(h). No other financial statements or
schedules are required to be included in the Registration Statement.
The selected financial data set forth in the Prospectus under the
captions "Capitalization", "Market Prices and Dividend Data" and
"Selected Financial Data" fairly present the information set forth
therein on the basis stated in the Registration Statement.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
which have not been described or filed as required. Each of the
agreements listed herein, in the Prospectus or as exhibits to the
Registration Statement has been duly authorized, executed and delivered
by the parties thereto (including obtaining all necessary consents) and
constitutes a valid and binding agreement; and neither the Company nor,
to the best of the Company's knowledge, any other party is in breach of
or in default under any such agreement except for any such breach or
default which would not have a Material Adverse Effect.
(k) Except as disclosed in the Prospectus, and except as to
defaults and events of default which individually or in the aggregate
would not have a Material Adverse Effect: (i) the Company is not in
violation of or in default under
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any provision of its charter or bylaws, or other organizational
documents, or in breach or default under any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it
is a party or by which it or any of its properties are bound; and (ii)
there does not exist any state of facts which constitutes an event of
default on the part of the Company as defined in any of such documents
or which, with notice or lapse of time or both, would constitute such
an event of default.
(l) Except as disclosed in the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the best
of the Company's knowledge, threatened to which the Company is or may
be a party or of which property owned or leased by the Company, is or
may be the subject of, or related to environmental or discrimination
matters, which actions, suits or proceedings might, individually or in
the aggregate, prevent or adversely affect the transactions
contemplated by this Agreement or have a Material Adverse Effect. The
Company is not a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(m) The Company owns no real property. The Company owns and
has good and marketable title to all of the properties and assets
reflected as owned in the financial statements hereinabove described
(or elsewhere in the Prospectus), subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except those disclosed in the
Prospectus and those which will not have a Material Adverse Effect. The
Company holds its leased properties under valid and binding leases,
with such exceptions as are not materially significant in relation to
the business of the Company. Except as disclosed in the Prospectus, the
Company owns or leases all such real and personal property as is
necessary to its operations as now conducted or as proposed to be
conducted.
(n) Since the respective dates as of which information is
given in the Registration Statement and Prospectus and except as
described in or specifically contemplated by the Prospectus: (i) the
Company has not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or
written agreement or other transaction which is not in the ordinary
course of business or which could result in a material reduction in the
future earnings of the Company; (ii) 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;
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(iii) the Company has not paid or declared any dividends or other
distributions with respect to its Capital Stock, shares or interests,
as applicable, and the Company is not in default in the payment of
principal or interest on any outstanding material debt obligations;
(iv) there has not been any change in the Shares (other than upon the
sale of the Shares hereunder) or indebtedness material to the Company
(other than in the ordinary course of business); and (v) there has not
been any Material Adverse Effect.
(o) Except as disclosed in the Prospectus, the Company has
sufficient trademarks, trade names, patent rights, copyrights, licenses
or other similar rights and proprietary knowledge (collectively,
"Intangibles"), approvals and governmental authorizations to conduct
its business as now conducted; there is no claim being made against the
Company regarding any Intangible or other infringement which could have
a Material Adverse Effect. The expiration of any trademark, tradename,
patent right, mask work, copyright, license, approval or government
authorization would not have a Material Adverse Effect. The Company has
no knowledge of any material infringement by it of trademarks,
tradename rights, patent rights, mask works, copyrights, licenses,
trade secrets, or other similar rights of others.
(p) The Company is conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable
local, state and federal environmental laws and regulations, except
where failure to be in compliance would not have a Material Adverse
Effect.
(q) The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened which could have a
Material Adverse Effect.
(r) Neither the Company nor its officers, directors, employees
and agents have distributed or will distribute prior to the First
Closing Date any offering material in connection with the offering and
sale of the Shares other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(s) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not
limited to, insurance covering real and personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risk customarily insured against, and business
interruption
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insurance, all of which insurance is in full force and effect.
(t) Neither the Company, any of its officers nor to the
knowledge of the Company, any of its directors has at any time during
the last five years (i) made any unlawful contribution to any candidate
for foreign office or failed to disclose fully any contribution in
violation of law 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.
(u) Neither the Company nor any of its affiliates has taken or
will 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 the Shares or of any securities of the
Company to facilitate the sale or resale of the Shares.
(v) The Company has not conducted its business in a manner
such that it would become, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(w) The description set forth under the heading "ERISA
Investors" is true and correct in all material respects.
(x) As of the First Closing Date, the Company will be
organized and will operate in a manner so as to qualify as a "real
estate investment trust" ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), and will elect
to, will be qualified to and intends to remain qualified to, be taxed
as a REIT under the Code and pursuant to any applicable state tax laws.
The Company does not know of any event which would cause or is likely
to cause the Company to fail to qualify as a REIT at any time.
(y) The Company maintains a system of internal 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 financial and corporate books and records is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with
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existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(z) 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.
(aa) Each certificate signed by an officer of the Company or
of any of its affiliates and delivered to the Representative or counsel
for the Underwriters shall be deemed to be a representation and
warranty by the Company, as to the matters covered thereby.
SECTION 3. Representations and Warranties of the Underwriters.
The Representative, on behalf of the several Underwriters, represents and
warrants to the Company that the information set forth (i) on the cover page of
the Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is correct
in all material respects. The Representative represents and warrants that they
have been authorized by each of the other Underwriters as the Representative to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 4. Purchase, Sale and Delivery of Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell to the Underwriters the Firm Shares. The Underwriters agree, severally and
not jointly, to purchase from the Company the number of Firm Shares as set forth
on Schedule A attached hereto. The purchase price per share to be paid by the
several Underwriters to the Company shall be $39.125 per share.
Delivery of certificates for the Firm Shares to be purchased
by the Underwriters and payment therefor shall be made at the location referred
to below at such time and date, not later than the third full business day
following the first date that any of the Shares are released by you for sale to
the public, as you shall designate by at least 48 hours' prior notice to the
Company (or at such other time and date, not later than one week after such
third full business day as may be agreed upon by the Company and the
Representative) (the "First Closing Date" or the "Closing Date"); provided,
however, that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third full business day following the first date that any of
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the Shares are released by you for sale to the public or the date that is 48
hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Shares shall be made by
or on behalf of the Company to you, for the respective accounts of the
Underwriters against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer in same-day funds
to the order of the Company. The certificates for the Firm Shares shall be
registered in such names and denominations as you shall have requested at least
two full business days prior to the First Closing Date, and shall be made
available for checking and packaging on the business day preceding the First
Closing Date at a location in New York, New York or such other location, as may
be designated by you. 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 Underwriters.
You have advised the Company that each Underwriter has
authorized you to accept delivery of its Shares, to make payment and to issue a
receipt therefor. Each of you, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Shares to
be purchased by any Underwriter whose funds shall not have been received by you
by the First Closing Date for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Shares as
soon after the date hereof as in the judgment of the Representative is advisable
and at the public offering price set forth on the cover page of and on the terms
set forth in the Prospectus.
Not later than 12:00 p.m. on the second business day following
the date the Common Shares are released by the Underwriters 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 Representative shall
request.
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SECTION 5. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective. If the Registration Statement has
become or becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Prospectus is otherwise required
under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable
paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such
timely filing. The Company will promptly advise you in writing (i) of
the receipt of any comments of the Commission, (ii) of any request of
the Commission for amendment of or supplement to the Registration
Statement (either before or after it becomes effective) or the
Prospectus or for additional information, (iii) when the Registration
Statement shall have become effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for
that purpose. 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. The Company will not file
any amendment or supplement to the Registration Statement (either
before or after it becomes effective) or the Prospectus of which you
have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in compliance
with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue
the distribution of the Shares and will use its best efforts to cause
the same to become effective as promptly as possible. The Company will
fully and completely comply with the provisions of Rule 430A of the
Rules and Regulations with respect to information omitted from the
Registration Statement in reliance upon such Rule.
(c) If at any time within the applicable period referred to in
Section 10(a)(3) of the Act or Rule 174 of the Rules and Regulations
during which a prospectus relating to the Shares is required to be
delivered under the Act any event occurs, as a result of which the
Prospectus, including any amendments or supplements, would include an
untrue
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statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements, to comply with the
Act or the Rules and Regulations, the Company will promptly advise you
thereof and will promptly prepare and file with the Commission, at its
own expense, an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect
such compliance and will use its best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after the applicable time period, the
Company upon request, but at the expense of such Underwriter, will
promptly prepare such amendment or amendments to the Registration
Statement and such Prospectus or Prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the Act
and Rule 174 of the Rules and Regulations, as applicable.
(d) As soon as practicable, but not later than 45 days (or 90
days if such quarter is the fiscal year end) after the end of the first
quarter ending after one year following the effective date of the
Registration Statement (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a
period of 12 consecutive months beginning after the effective date of
the Registration Statement which will satisfy the provisions of the
last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the applicable period referred to
in Section 10(a)(3) of the Act or Rule 174 of the Rules and
Regulations, will furnish to you or mail to your order copies of the
Registration Statement or the Prospectus and all amendments and
supplements to any such documents in each case as soon as available and
in such quantities as you may reasonably request, for the purposes
contemplated by the Act and the Rules and Regulations.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Shares for sale under (or obtain
exemptions from the application of) the Blue Sky and Canadian
securities laws of such jurisdictions as you designate, will comply
with such laws and will continue such qualifications, registrations and
exemptions in effect so long as reasonably required for the
distribution of the Shares. The Company will advise you promptly of the
suspension of the qualification or
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registration of (or any such exemption relating to) the Shares for the
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, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company
will furnish to the Representative and, upon request of the
Representative, to each of the other Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, shareholders'
equity and cash flows for the year then ended and the opinion thereon
of the Company's independent public 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, 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 Shares.
(h) During the period of 90 days after the first date that any
of the Shares are released by you for sale to the public, without the
prior written consent of the Representative (which consent may be
withheld at the sole discretion of Representative), other than the
option shares disclosed in the Prospectus, the Company will not issue,
offer, sell, grant options to purchase or otherwise dispose of any of
the Company's equity securities or any other securities convertible
into or exchangeable with its Shares or other equity security except
upon exercise of the Warrants described in the Prospectus or pursuant
to the dividend reinvestment program adopted by the Company (the
"Dividend Reinvestment Plan") or pursuant to the Company's Amended and
Restated Executive and Non-Employee Director Stock Option Plan (the
"Stock Option Plan").
(i) The Company will apply the net proceeds of the sale of the
Shares sold by it substantially in accordance with the statements under
the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or
register its Shares for sale in non-issuer transactions under (or
obtain exemptions from the application of) the Blue Sky laws of the
State of California and the provincial laws of Canada as specified by
the Representative (and thereby permit market making transactions and
secondary trading in the Company's Shares in California and such
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Canadian provinces as specified by the Representative), will comply
with such Blue Sky or Canadian provincial laws and will use its best
efforts to continue such qualifications, registrations and exemptions
in effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to effect the
quotation of the Shares on the Nasdaq National Market System.
(l) The Company will continue to meet the requirements to
qualify as a REIT and will not revoke its election to be a REIT,
effective for the year ending December 31, 1997.
(m) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of formation of the Company, a
registrar (which may be the same entity as the transfer agent).
(n) 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 First 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) 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, on behalf of the Underwriters, 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 6. Payment of Expenses. Whether or not the
transactions contemplated hereunder 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 limiting the generality of the foregoing, (i) all expenses
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incident to the issuance and delivery of the Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer agent
of the Shares, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Shares to the Underwriters, (iv)
all fees and expenses of the Company's counsel and the Company's independent
accountants, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Shares for offer and sale under the Blue Sky laws or the provincial securities
laws of Canada, (vii) the filing fee of the NASD and the related legal fees in
connection with such filing and (viii) all other fees, costs and expenses
referred to in Item 14 of the Registration Statement. Except as provided in this
Section 6, Section 8 and Section 10 hereof, the Underwriters shall pay all of
their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under the
Blue Sky and Canadian provincial securities laws and the Blue Sky memorandum and
the legal fees in connection with clearance of the offering with the NASD
referred to above).
SECTION 7. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the Firm
Shares on the First Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company herein set forth as of
the date hereof and as of the First Closing Date to the accuracy of the
statements of the Company's officers, made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions:
(a) The Prospectus shall have been filed in the manner and
within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been instituted or shall
be pending or, to the best knowledge of the Company or you, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
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(b) You shall be satisfied that since the respective dates as
of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the capital
stock other than pursuant to the exercise of outstanding options
granted under the Stock Option Plan and Warrants disclosed in the
Prospectus or the Dividend Reinvestment Plan of the Company or any
material change in the indebtedness (other than in the ordinary course
of business) of the Company, (ii) except as set forth in or
contemplated by the Registration Statement or the Prospectus, no
material verbal or written agreement or other transaction shall have
been entered into by the Company which is not in the ordinary course of
business, (iii) no loss of damage (whether or not insured) to the
property of the Company or any of its subsidiaries shall have been
sustained which might have a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company or any of
its property which is material to the Company or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material
change in the condition (financial or otherwise), business, management,
results of operations or prospects of the Company and its subsidiaries
which makes it impractical or inadvisable in the judgment of the
Representative to proceed with the public offering or purchase the
Shares as contemplated hereby.
(c) There shall have been furnished to you, as Representative
of the Underwriters, on each Closing Date, in form and substance
satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of Xxxxx & Xxxxx, a professional
corporation, counsel for the Company, addressed to the Underwriters
and dated the First Closing Date to the effect 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 have a Material Adverse
Effect, and has the requisite corporate power and
authority to own its properties and conduct its business
as described in the Registration Statement; and the
Company does not own or control, directly or indirectly,
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any corporation, association, partnership or other entity;
(2) Prior to the First 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 Shares; all
outstanding shares of 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;
(3) The certificates representing the Shares to be
delivered hereunder 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 this
Agreement, the 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;
(4) Except for the Warrants and options granted under
the Stock Option Plan or the Class B 9.74% Cumulative
Convertible Preferred Stock, to such counsel's knowledge,
there are no outstanding options, warrants or other rights
calling for the issuance of, and, except for the Dividend
Reinvestment 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;
(5)(a) The Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated by
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the Commission and any required filing of the Prospectus
and any supplement thereto 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 therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the
Rules and Regulations;
(c) To such counsel's 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 such counsel's 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 Prospectus which are not
described as required;
(6) The Company has the corporate power and authority
to enter into this Agreement, to sell and deliver the
Shares to be sold by it to the several Underwriters and to
consummate the other transactions contemplated herein;
this Agreement has been duly and validly authorized by all
necessary action by the Company, has been duly and validly
executed and delivered by and on behalf of 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 no opinion need be expressed; 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 this
Agreement by the Company or the consummation of the
transactions contemplated by this Agreement, except such
as have been obtained and are in full force and effect
under the Act and
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such as may be required under applicable Blue Sky or
Canadian securities laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(7) The execution and performance of this Agreement
and the consummation of the transactions herein
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 trust, lease, franchise, license,
indenture, permit or other instrument known to such
counsel 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 certificate of incorporation or bylaws, or other
organizational documents of the Company or, to such
counsel's knowledge, violate any statute, judgment,
decree, order, rule or regulation of any court or
governmental body having jurisdiction over the Company or
its property;
(8) To such counsel's knowledge, the Company is not in
violation of its certificate of incorporation 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 such
counsel 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 have a Material Adverse Effect; and, to
such counsel's 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 have
a Material Adverse Effect;
(9) To such counsel's 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 by the Company or the
offering or other transactions contemplated hereby;
(10) The Company is not and will not be an "investment
company" within the meaning of the 1940 Act;
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(11) The Shares have been duly designated
for quotation by the Nasdaq National Market upon
official notice of issuance;
(12) The description set forth under the
heading "ERISA Investors" is true and correct in all
material respects.
In rendering such opinion, such counsel may rely as
to matters of local law, on opinions of local counsel, and as
to matters of fact, on certificates of officers of the
Company, and of governmental officials, in which case their
opinion is to state that they are so doing. Such counsel shall
also include a statement to the effect that nothing has come
to such counsel's attention that would lead such counsel to
believe that either at the effective date of the Registration
Statement or at the applicable Closing Date the Registration
Statement or the Prospectus, or any amendment or supplement
thereto, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading
(other than with respect to the financial statements and
related financial schedules and other financial data as to
which such counsel need express no opinion).
(ii) An opinion of Giancarlo & Xxxxxx, A Professional
Corporation, special tax counsel for the Company, addressed to
the Underwriters and dated the First Closing Date to the
effect 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
operation on August 19, 1994 and the Company's
current and contemplated method of operation, as
described in the Prospectus and as represented by the
Company will enable it to continue to so qualify.
(2) Although the discussion set forth in the
sections of the Prospectus entitled "Certain Federal
Income Tax Considerations" and "Federal Income Tax
Considerations" does not purport to discuss all
possible Federal income tax consequences of the
purchase, ownership and disposition of the Shares,
such discussion constitutes, in all material
respects, a fair and accurate summary of the Federal
income tax considerations that are likely to be
material to a purchaser of the Shares.
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(iii) Such opinion or opinions of O'Melveny &
Xxxxx LLP, counsel for the Underwriters dated the First
Closing Date with respect to the formation of the Company,
legal matters relating to this Agreement, the validity of the
Shares, the Registration Statement and the Prospectus and
other related matters as you may reasonably require, and the
Company shall have furnished to such counsel such documents
and shall have exhibited to them such papers and records as
they may reasonably request for the purpose of enabling them
to pass upon such matters. In connection with such opinions,
such counsel may rely on representations or certificates of
officers of the Company and governmental officials.
(iv) A certificate of the Company, executed by the
Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing
Date to the effect that:
(1) The representations and warranties of
the Company set forth in Section 2 of this Agreement
are true and correct as of the date of this Agreement
and as of the First Closing Date and the Company has
complied with all the agreements and satisfied all of
the conditions on its part to be performed or
satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus
filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the
respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated
under the Act;
(3) Each of the respective signers of each
certificate has carefully examined the Registration
Statement and the Prospectus; in his opinion and to
the best of his knowledge, the Registration Statement
and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated
therein; and neither the Registration Statement nor
the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material
fact or omits to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading;
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(4) Since the initial date on which the
Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement
and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been
any change or development which would have a Material
Adverse Effect; and no legal or governmental action,
suit or proceeding is pending or threatened against
the Company which would have a Material Adverse
Effect; since such dates and except as so disclosed,
the Company has not entered into any verbal or
written agreement or other transaction which is not
in the ordinary course of business or which could
result in a material reduction in the future earnings
of the Company or (other than in the ordinary course
of business) incurred any material liability or
obligation, direct, contingent or indirect or made
any change in its capital stock, made any material
adverse change in its short-term debt (other than in
the ordinary course of business) or funded debt or
repurchased or otherwise acquired any of the
Company's capital stock; and the Company has not
declared or paid any dividend, or made any other
distribution, upon its capital stock payable to
shareholders of record on a date prior to the First
Closing Date;
(6) Since the respective dates as of which
information is given in the Registration Statement
and the Prospectus and except as disclosed in or
contemplated by the Prospectus, none of the personal
or real property of the Company has sustained a
material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not
insured).
(v) On or before the First Closing Date, letters from
each director and officer of the Company, in form and
substance satisfactory to you, confirming that for a period of
90f 90 days after the first date that any of the Shares are
released by you for sale to the public, such person will not
directly or indirectly sell or offer to sell or otherwise
dispose of any shares of Shares or any right to acquire such
Shares
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without the prior written consent of Xxxxxxxxxx
Securities, which consent may be withheld at the sole
discretion of Xxxxxxxxxx Securities.
(vi) On the date that this Agreement is executed and also
on the First Closing Date a letter addressed to you, as
Representative of the Underwriters, from C&L, independent
accountants, the first one to be dated the day of this
Agreement, the second one to be dated the First Closing Date,
in form and substance satisfactory to the Representative, to
the effect that:
(1) C&L are independent certified public
accountants with respect to the Company within the
meaning of the Act and the Rules and Regulations;
(2) It is their opinion that the financial
statements, historical summaries and any
supplementary financial information and supporting
schedule included in the Registration Statement and
the Prospectus examined by them comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and
Regulations;
(3) Based upon procedures set forth in
detail in such letter, including a reading of the
latest available interim financial statements of the
Company and inquiries of officials of the Company
responsible for financial and accounting matters,
nothing has come to their attention which causes them
to believe that:
(A) the unaudited financial
information with respect to the results of
operations for and at the end of the period
ended September 30, 1996, and any subsequent
quarters included in the Registration
Statement (or incorporated by reference
therein) do not comply as to form in all
material respects with the applicable
accounting requirements of the Act and the
Rules and Regulations or are not presented
in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the
audited financial statements included in the
Registration Statement, or do not agree with
the corresponding amounts in the audited
financial statements for each of the years
then ended, or that with respect to the
unaudited pro forma financial statements,
such financial statements do not comply as
to form in all material respects with the
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applicable accounting requirements of the
Act and the Rules and Regulations and the
pro forma adjustments have not been properly
applied to the historical amounts in the
compilation of such statements, or
(B) at a specified date not more
than five days prior to the date of this
Agreement, there has been any change in the
assets or shareholders' equity of the
Company (other than the issuance of the
Shares to be sold by the Company) as
compared with the amounts shown in the
September 30, 1996 balance sheet of the
Company included in the Registration
Statement (or incorporated therein by
reference), except for changes which the
Prospectus discloses have occurred or may
occur or which are described in such letter;
and
(4) In addition to the examination referred
to in their opinions and the procedures referred to
above, they have carried out certain specified
procedures, not constituting an audit, in accordance
with generally accepted auditing standards, with
respect to certain amounts, percentages and financial
information which are included in the Registration
Statement and Prospectus and which were specified by
you, and have found such amounts, percentages and
financial information to be in agreement with, or
derived from, the relevant accounting, financial and
other records of the Company.
(vii) The Firm Shares shall have been approved for quotation
on the Nasdaq National Market, subject to official notice of issuance,
and the NASD, upon review of the terms of the public offering, shall
not have objected to such offering, such terms or the Underwriters'
participation in the same.
(viii) The Company shall have furnished to you such further
certificates and documents as you shall have reasonably requested.
(ix) There shall have been delivered to you the Firm Shares in
the manner required pursuant to Section 4 hereof.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are satisfactory to you
and to O'Melveny & Xxxxx LLP, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
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certificates, letters and documents as you request. Any certificate signed by
any officer of the Company and delivered to the Representative or to counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representative to the Company without liability on the part of any Underwriter
or the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 7, or if the sale to the Underwriters of
the Shares at the First Closing is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or to comply with any provision hereof, the Company agrees to reimburse you and
the other Underwriters upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by you and them in connection with the proposed
purchase and the sale of the Shares, including but not limited to fees and
disbursements of counsel relating directly to the offering contemplated by the
Prospectus. Any such termination shall be without liability of any party to any
other party except that the provisions of this Section 8, Section 6 and Section
10 shall at all times be effective and shall apply.
SECTION 9. Effectiveness of Registration Statement. You and
the Company will use your best efforts to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 10. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act, or other federal, 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 losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based
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upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained herein
or any failure of the Company to perform its obligations hereunder or under law;
and will reimburse each Underwriter and each such controlling person for any
legal and other expenses as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with the information furnished to the Company
pursuant to Section 3 hereof. In addition to its other obligations under this
Section 10(a), the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, or any inaccuracy in the representations and warranties of the
Company herein or failure to perform its obligations hereunder, all as described
in this Section 10(a), it will reimburse each Underwriter on a quarterly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse each
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company, together
with interest, compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by Bank of America NT&SA, San Francisco, California
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to an Underwriter within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter will severally 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 Act, against any losses, claims, damages, liabilities or
expenses to which the Company, or any such director, officer or controlling
person may
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become subject, under the Act, the Exchange Act, or other federal, 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 such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, the Prospectus or any amendment or supplement thereto, in reliance
upon and in conformity with the information furnished to the Company pursuant to
Section 3 hereof; and will reimburse the Company, or any such director, officer
or controlling person of the Company for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person of
the Company in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action. In
addition to its other obligations under this Section 10(b), each Underwriter
severally agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 10(b) which relates to information furnished to the Company
pursuant to Section 3 hereof, it will reimburse the Company (and, to the extent
applicable, each officer, director and controlling person) on a quarterly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company (and, to the extent applicable, each officer, director and
controlling person) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to have
been improper, the Company and, to the extent applicable, each officer, director
or controlling person of the Company shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
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(c) Promptly after receipt by an indemnified party under this
Section 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, notify the indemnifying party in writing of the commencement
thereof; but the omission 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 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 may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, that 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 there may be a conflict
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 its 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 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
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence or (ii) the indemnifying party
shall not have employed counsel reasonably 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) If the indemnification provided for in this Section 10 is
required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under Sections (a),
(b) or (c) of this Section 10 in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion
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as is appropriate to reflect the relative benefits received by the Company and
the Underwriters from the offering of the Shares 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 and the
Underwriters 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 respective relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion, in the case of the
Company as the total price paid to the Company, for the Shares sold by the
Company to the Underwriters (net of underwriting commissions, but before
deducting expenses), and in the case of the Underwriters as the underwriting
commissions received by them bears to the total of such amounts paid to the
Company and received by the Underwriters as underwriting commissions. The
relative fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
or the inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Company or the Underwriters 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 (c) of this Section 10, 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 (c) of this Section 10
with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 10 (d); provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section (c) of this Section 10 for purposes of
indemnification. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 10 were determined
solely by pro rata allocation (even if the Underwriters 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 10(d).
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The
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Underwriters' obligations to contribute pursuant to this Section 10 are several
in proportion to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 10(a)
and 10(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 10(a) and (b) hereof
and would not resolve the ultimate propriety or enforceability of the obligation
to reimburse expenses which is created by the provisions of such Sections 10(a)
and 10(b) hereof.
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SECTION 11. Default of Underwriters. It shall be a condition
to this Agreement and the obligation of the Company to sell and deliver the
Shares hereunder, and of each Underwriter to purchase the Shares in the manner
as described herein, that, except as hereinafter in this Section provided, each
of the Underwriters shall purchase and pay for all the Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Representative of all
such shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in its or their obligations to purchase Shares hereunder on
the First Closing Date and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Shares which the Underwriters are
obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Shares with respect to which such default
occurs is more than 10% of the total number of Shares which the Underwriters are
obligated to purchase on such Closing Date and arrangements satisfactory to the
Representative and the Company for the purchase of such Shares by other persons
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except for the expenses to be paid by the Company pursuant to Section 6 hereof
and except to the extent provided in Section 10 hereof.
In the event that Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the First Closing
Date for not more than five business days in order that the necessary changes in
the Registration Statement, Prospectus and any other documents, as well as any
other arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section . Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 12. Effective Date. This Agreement shall become
effective immediately as to Sections 6, 8, 10, 13 and 14, and as to all other
provisions, (i) if, at the time of execution of this Agreement, the Registration
Statement has not become effective, at 2:00 P.M., California time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii), if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you
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may determine on and by notice to the Company or by release of any of the Shares
for sale to the public. For the purposes of this Section 12, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams (i) advising Underwriters that the Shares are released for public
offering or (ii) offering the Shares for sale to securities dealers, whichever
may occur first.
SECTION 13. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to you or by you by notice to the Company at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company
to any Underwriter (except for the expenses to be paid or reimbursed by
the Company pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 10 hereof) or of any Underwriter to the
Company (except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum
or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally shall
have been suspended on either such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall have been
established by federal, New York or California authorities; (ii) if an
outbreak of major hostilities or other national or international
calamity or any substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the judgment of the Representative, to affect
adversely the marketability of the Shares; (iii) if any adverse event
shall have occurred or shall exist which makes untrue or incorrect in
any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not
misleading in any material respect; or (iv) if there shall be any
action, suit or proceeding pending or threatened, or there shall have
been any development involving particularly the business or properties
or securities of the Company or the transactions contemplated
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by this Agreement, which, in the reasonable judgment of the
Representative, may have a Material Adverse Effect or makes it
impracticable or inadvisable to offer or sell the Shares. Any
termination pursuant to this Subsection (b) shall be without liability
on the part of any Underwriter to the Company or on the part of the
Company to any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and
except to the extent provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Company's officers and of the
several Underwriters 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 any Underwriter or the Company or any of its officers, directors or
controlling persons, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder and any termination of this Agreement.
SECTION 15. Notices. All communications hereunder shall be in
writing and, if sent to the Representative shall be mailed, delivered,
telecopied or telegraphed and confirmed to Xxxxxxxxxx Securities at 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier: (000) 000-0000,
Attention: Xxxxxxxx Xxxxxx, with a copy to O'Melveny & Xxxxx LLP, Embarcadero
Center West 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Telecopier:
(000) 000-0000, Attention: Xxxxx X. Xxxxx; if sent to the Company, shall be
mailed, delivered, telecopied or telegraphed and confirmed to the Company at 000
Xxxxxxx Xxxxxxx, Xxxxx 0000, Xxxx Xxxxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxxx, President and Chief Financial Officer, with a copy to Xxxxx & Xxxxx, Xxx
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Telecopier: (415)
433-3883, Attention: Xxxxxxx X. Xxxxxxx. Any party may change the address for
receipt of communications hereunder by giving notice to the others.
SECTION 16. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 11 hereof, and to the benefit of the officers
and directors and controlling persons referred to in Section 10, and in each
case their respective successors, personal representatives and assigns, and no
other person will have any right or obligation hereunder. No such assignment
shall relieve any party of its obligations hereunder. The term "successors"
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
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SECTION 17. Underwriters' Representative. You will act as
Representative for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you, as
Representative, will be binding upon all of the Underwriters.
SECTION 18. 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 19. Applicable Law. This Agreement shall be
governed by and construed in accordance with the internal laws (and not the laws
pertaining to conflicts of laws) of the State of California.
SECTION 20. Knowledge. As used in this Agreement, the term
knowledge or best knowledge on the part of an entity shall include the knowledge
of such entity's officers and any other employees with managerial
responsibilities and such entity shall only make such statement after conducting
a diligent investigation on the subject matter thereof.
SECTION 21. General. 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
several counterparts, each one of which shall be an original, and all of which
shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company and you.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
REDWOOD TRUST, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx, III
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
Acting as Representative of
the several Underwriters named
in the attached Schedule A.
By XXXXXXXXXX SECURITIES
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Managing Director
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SCHEDULE A
Amount of
Securities
Underwriter to be Purchased
----------- ---------------
Xxxxxxxxxx Securities 750,000
Total 750,000
A-1
