Underwriting Agreement September 21, 2004
Exhibit 1.1
September 21, 2004
JMP Securities LLC
Xxxxxxxxx & Company, Inc.
as the Representatives of the several Underwriters
c/o JMP Securities LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-25643), which contains a form of prospectus, subject to completion, to be used in connection with the public offering and sale of the 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, as amended, and the rules and regulations promulgated thereunder (collectively, the “Securities Act”), including all documents incorporated or deemed to be incorporated by reference therein (the “Incorporated Documents”) 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, as amended, 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 Underwriters to confirm sales of the Shares, is called the “Prospectus.” All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, the Prospectus, 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 (“XXXXX”). All references in this Agreement to financial statements and schedules and
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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 Underwriters as follows:
Section 1. Representations and Warranties of the Company. The Company hereby represents, warrants and covenants to each Underwriter as follows:
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 XXXXX (except as may be permitted by Regulation S-T under the Securities Act), was identical to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Shares. Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment thereto, at the time it became effective and at all subsequent times, complied and will comply in all material respects with the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date and at all subsequent times did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter expressly for use therein. There are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required.
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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 the Xxxxxxxx-Xxxxx Act of 2002, as amended (the “Xxxxxxxx-Xxxxx 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 First Closing Date and Second Closing Date (as defined in Section 2 below) will not contain any untrue statement of a material fact or omit to state any 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. The Company and its subsidiaries are in compliance with all statutes, laws, rules, regulations, judgments, orders and decrees of all courts, regulatory bodies, administrative agencies, governmental bodies, arbitrators or other authorities having jurisdiction over the Company or such subsidiaries or any of their respective properties, as applicable, including, without limitation, the provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations of the National Association of Securities Dealers, Inc. (“NASD”) and the New York Stock Exchange.
(g) 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.
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sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have been duly waived.
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recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. In addition, the Company has received from PricewaterhouseCoopers LLP confirmation that PricewaterhouseCoopers LLP’s review of the Company’s system of internal accounting controls, to the extent they deemed necessary in establishing the scope of their examination of the Company’s consolidated financial statements as of December 31, 2003, did not disclose any weaknesses in internal controls that they considered to be material weaknesses.
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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 or incorporated into the Prospectus, accurately and fairly describes such plans, arrangements, options and rights.
(r) Stock Exchange Listing. The Common Shares (including the Shares) are registered pursuant to Section 12 of the Exchange Act and are or will be upon issuance listed on the New York Stock Exchange and the Company has taken no action designed to, or likely to have the effect of, causing the termination of the registration of the Common Shares under the Exchange Act or the delisting of the Common Shares from the New York Stock Exchange, nor has the Company received any notification that the Commission or the New York Stock Exchange is contemplating terminating such registration or effecting such delisting.
(s) No Consents, Approvals or Authorizations Required. No consent, approval, authorization, filing with or order of any court or governmental agency or regulatory body is required in connection with the transactions contemplated herein, except such as have been obtained or made under the Securities Act and such as may be required (i) under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Shares by the Underwriters in the manner contemplated herein and in the Prospectus, (ii) by the NASD or the New York Stock Exchange and (iii) by the federal and provincial laws of Canada.
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properties, as applicable, except any such violation or default which would not, singly or in the aggregate, result in a Material Adverse Change except as otherwise disclosed in the Prospectus.
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received any notice of, and has no knowledge of, any infringement of or conflict with asserted rights of the Company by others with respect to any patent, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names or copyrights; and the Company has not received any notice of, and has no knowledge of, any infringement of or conflict with asserted rights of others with respect to any patent, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names or copyrights which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, might have a Material Adverse Effect. There is no claim being made against the Company regarding patents, patent rights or licenses, inventions, collaborative research, trade secrets, know-how, trademarks, service marks, trade names or copyrights. The Company and its subsidiaries do not in the conduct of their business as now or proposed to be conducted as described in the Prospectus infringe or conflict with any right or patent of any third party, or any discovery, invention, product or process which is the subject of a patent application filed by any third party, known to the Company or any of its subsidiaries, which such infringement or conflict is reasonably likely to result in a Material Adverse Change.
(cc) 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 Shares will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act and will conduct its business in a manner so that it will not become subject to the Investment Company Act.
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would not result in a Material Adverse Change. Neither the Company nor any subsidiary has been denied any insurance coverage which it has sought or for which it has applied.
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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.
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Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
(nn) Taxable REIT Subsidiaries. RWT Holdings, Inc., Redwood Financial Services, Inc., Sequoia Residential Funding, Inc., Redwood Commercial Funding, Inc., Acacia CDO 1, Ltd., Acacia CDO 2, Ltd., Acacia CDO 3, Ltd., Acacia CDO 4, Ltd. and Acacia CDO 5, Ltd. are wholly-owned subsidiaries of the Company and are “taxable REIT subsidiaries” within the meaning of Section 856(l) of the Code. The Company has no other “taxable REIT subsidiaries” other than (i) wholly-owned subsidiaries of the foregoing and (ii) other offshore issuers of asset backed securities that are not wholly-owned but as to which the Company owns more than 10% by vote or value of its equity.
(qq) Director Independence. Each of the directors of the Company who is designated as an “Independent Director” in the Company’s Definitive Proxy Statement on Schedule 14A filed April 2, 2004 satisfies the requirements for independence under the rules of the New York Stock Exchange and a member of the Audit Committee of the Board of Directors of the Company meets the requirements for an “audit committee financial expert” (as such term is defined in Item 401(h) of Regulation S-K);
Any certificate signed by an officer of the Company and delivered to the Underwriters or to counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Shares.
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agreed to purchase. The Representatives 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 the Representatives by the First Closing or the Second Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations under this Agreement.
Section 3. Additional Covenants of the Company. The Company further covenants and agrees with the Underwriters as follows:
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purpose. The Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
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(regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after receipt by the Company of written notice from the Underwriters advising the Company to the effect set forth above, forthwith consult with the Underwriters concerning the substance of and, if requested by the Underwriters, disseminate a press release or other public statement, reasonably satisfactory to the Underwriters, responding to or commenting on such rumor, publication or event.
(k) Periodic Reporting Obligations. During the Prospectus Delivery Period the Company shall file, on a timely basis, with the Commission and the New York Stock Exchange all reports and documents required to be filed under the Exchange Act, the Xxxxxxxx-Xxxxx Act and the rules of the New York Stock Exchange within the time periods required by the Exchange Act, the Xxxxxxxx-Xxxxx Act and the rules of the New York Stock Exchange.
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optional cash payments under the DRIP in excess of Ten Thousand Dollars ($10,000) (each, a “Waiver Request”) if as a result of such grant (i) the aggregate proceeds to the Company from all sales of Common Shares during the period beginning on the date of this Agreement and ending on the thirtieth (30th) day after the date of this Agreement pursuant to granted Waiver Requests would exceed Five Million Dollars ($5,000,000) or (ii) the aggregate proceeds to the Company from all sales of Common Shares during the period beginning on the thirty first (31st) day after the date of this Agreement and ending on the sixtieth (60th) day after (and including) the day the Firm Shares commence trading on the New York Stock Exchange pursuant to granted Waiver Requests would exceed Five Million Dollars ($5,000,000) These restrictions shall terminate at the close of trading on the sixtieth (60th) day after (and including) the day the Firm Shares commence trading on the New York Stock Exchange (the “Company Lock-Up Termination Date”) (unless waived earlier by JMP Securities LLC, in its sole discretion).
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Common Stock granted to the Underwriters in Section 2(c) hereof, the Company shall not take any of the following actions or declare its intention to take any of the following actions: (i) recapitalize the Company, or (ii) split, divide, merge or combine any of its capital stock or take any other similar action with respect to any of its capital stock.
The Underwriters may, in their sole and absolute discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants or extend the time for the performance by the Company thereof.
Section 4. Conditions of the Obligations of the Underwriters.
The obligations of the Underwriters to purchase and pay for the Shares as provided herein on the First Closing Date and, with respect to the Option Shares, the Second 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 First Closing Date as though then made and, with respect to the Option Shares, as of the Second 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:
(i) there shall not have been any Material Adverse Change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise from that set forth in the Registration Statement or Prospectus, which, in your sole judgment, is material and adverse and that makes it, in your sole judgment, impracticable or inadvisable to proceed with the public offering of the Shares as contemplated by the Prospectus; and
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(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 of the Company’s securities by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
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makes it, in your sole judgment, impracticable or inadvisable to proceed with the public offering of the Shares as contemplated by the Prospectus. The Original Letter from PricewaterhouseCoopers LLP shall be addressed to or for the use of the Underwriters in form and substance satisfactory to the Underwriters and shall (i) represent, to the extent true, that they are independent auditors with respect to the Company within the meaning of the Securities Act and the applicable published Rules and Regulations, (ii) set forth their opinion with respect to their examination of the consolidated balance sheet of the Company as of December 31, 2003 and 2002 and related consolidated statements of operations, stockholders’ equity, and cash flows for the twelve (12) months ended December 31, 2003, 2002 and 2001, (iii) state that PricewaterhouseCoopers LLP has performed the procedures set out in Statement on Auditing Standards (“SAS”) No. 100 for a review of interim financial information, (iv) state that in the course of such review, nothing came to their attention that leads them to believe that any material modifications need to be made to any of the interim financial information in order for them to be in compliance with generally accepted accounting principles consistently applied across the periods presented, (v) state that PricewaterhouseCoopers LLP has performed the procedures set forth in Statement on Standards for Attestation Engagements No. 8 on the information included or incorporated by reference in the Prospectus under the caption “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and describe or attach their report thereon (as described by SAS No. 86), and (vi) address other matters agreed upon by PricewaterhouseCoopers LLP and the Underwriters.
(i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of the First Closing Date or the Second Closing Date, as the case may be, and 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 the First Closing Date or the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Securities Act;
(iii) When the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, (a) the Registration Statement and the Prospectus, and any amendments or supplements thereto and the Incorporated Documents, when such Incorporated Documents became effective or were filed with the Commission, contained all material information required to be included therein by the Securities Act, the Exchange Act and the Xxxxxxxx-Xxxxx Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act, the Exchange Act and the Xxxxxxxx-Xxxxx Act and the applicable rules and regulations of the Commission thereunder, as the case may be, (b) the
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Registration Statement, any amendments or supplements thereto and the Incorporated Documents, did not and do not include 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, (c) the Prospectus and any amendments or supplements thereto, did not and do not include 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, and (d) since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth;
(iv) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been (a) any material adverse change in the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise, (b) any transaction that is material to the Company and its subsidiaries considered as one enterprise, except transactions entered into in the ordinary course of business, (c) any obligation, direct or contingent, that is material to the Company and its subsidiaries considered as one enterprise, incurred by the Company or its subsidiaries, except obligations incurred in the ordinary course of business, (d) any change in the capital stock or outstanding indebtedness of the Company or any of its subsidiaries that is material to the Company and its subsidiaries considered as one enterprise, (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of its subsidiaries, or (f) any loss or damage (whether or not insured) to the property of the Company or any of its subsidiaries which has been sustained or will have been sustained which has a material adverse effect on the condition (financial or otherwise), earnings, operations, business or business prospects of the Company and its subsidiaries considered as one enterprise; and
(v) Such other matters as counsel to the Underwriter shall reasonably request.
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opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the 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.
If any condition specified in this Section 4 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Underwriters by notice to the Company at any time on or prior to the First Closing Date and, with respect to the Option Shares, at any time prior to the Second Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 5 (Payment of Expenses), Section 6 (Reimbursement of Underwriters’ Expenses), Section 7 (Indemnification and Contribution) and Section 10 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.
Section 5. Payment of Expenses.
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 Shares (including all printing and engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Common 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, independent auditors and other advisors, (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each preliminary prospectus and the Prospectus, and all amendments and supplements thereto, and this Agreement, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the 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 state securities or blue sky laws or the provincial securities laws of Canada or any other country, and, if requested by the Underwriters, preparing and printing a “Blue Sky Survey,” an “International Blue Sky Survey” or other memorandum, and any supplements thereto, advising the Underwriters of such qualifications, registrations and exemptions, (vii) the filing fees incident to, and the reasonable fees and expenses of counsel for the Underwriters in connection with, the NASD review and approval of the Underwriters’ participation in the offering and distribution of the Shares, (viii) the fees and expenses associated with listing the Shares on the New York Stock Exchange, (ix) all costs and expenses incident to the travel and accommodation of the Company’s employees on the “roadshow,” and (x) all other fees, costs and expenses referred to in Item 14 of Part II of the Registration Statement. Except as provided in this Section 5, Section 6, and Section 7 hereof, the Underwriters shall pay their own expenses, including the fees and disbursements of their counsel.
Section 6. Reimbursement of Underwriters’ Expenses.
If this Agreement is terminated by the Underwriters pursuant to Section 4, Section 8 or Section 9, or if the sale to the Underwriters of the Shares on the First 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 Underwriters (or such Underwriters as have terminated this Agreement with respect to themselves), severally, upon demand for all out-of-pocket expenses that shall have been reasonably incurred by the Underwriters in connection with the proposed purchase and the offering and sale of the Shares, including but not limited to fees and disbursements of counsel, printing expenses, travel and accommodation expenses, postage, facsimile and telephone charges. Notwithstanding anything herein, in the event that the offering as contemplated under this Agreement is terminated, the Company shall not be required to reimburse any underwriter in excess of the maximum fair amount allowed by NASD Rule 2710(c)(6)(B)(iv) (i.e., out-of-pocket accountable expenses actually incurred by the underwriter).
Section 7. Indemnification and Contribution.
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bad faith or willful misconduct; and to reimburse each Underwriter and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by JMP Securities LLC) 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 foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, that such loss, damage, liability or expense arises out of or is 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 Underwriters 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 from whom the person asserting any loss, claim, damage, liability or expense purchased Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, 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 7(a) shall be in addition to any liabilities that the Company may otherwise have.
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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 (y) an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding, and (z) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 7(e) were determined 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 above in this Section 7(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 7(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7(e), (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter and (ii) 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
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Section 8. Default of One or More of the Several Underwriters.
If, on the First Closing Date or the Second Closing Date, as the case may be, any one or more of the several Underwriters shall fail or refuse to purchase Shares that it or they have agreed to purchase hereunder on such date, and the aggregate number of Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated, severally, in the proportions that the number of Firm Shares set forth opposite their respective names on Schedule A attached hereto bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as may be specified by JMP Securities LLC with the consent of the non-defaulting Underwriters, to purchase the Shares which such defaulting Underwriter or Underwriters 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 shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which such default occurs exceeds 10% of the aggregate number of Shares to be purchased on such date, and arrangements satisfactory to JMP Securities LLC and the Company for the purchase of such Shares are not made within forty-eight (48) hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of
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Section 5, Section 6 and Section 7 shall at all times be effective and shall survive such termination. In any such case either JMP Securities LLC 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” shall be deemed to include any person substituted for a defaulting Underwriter under this Section 8. Any action taken under this Section 8 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
Section 9. Termination of this Agreement.
This Agreement may be terminated by the Underwriters by notice given to the Company if (a) at any time after the execution and delivery of this Agreement and prior to the First Closing Date (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the New York Stock Exchange, or trading in securities generally on either the Nasdaq Stock Market or the New York Stock Exchange shall have been suspended or limited (other than depository trading curbs automatically imposed with respect to the capital stock of a particular issuer, but not multiple issuers), 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, Maryland 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 change in United States’ or international political, financial or economic conditions, as in the judgment of the Underwriters is material and adverse and makes it impracticable or inadvisable to market the Shares in the manner and on the terms contemplated in the Prospectus or to enforce contracts for the sale of securities; (iv) in the judgment of the Representatives 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 Representatives 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; or (b) in the case of any of the events specified in Sections 9(a)(i)-(v) hereof, such event singly or together with any other event, makes it, in your judgment, impracticable or inadvisable to market the Shares in the manner and on the terms contemplated in the Prospectus. Any termination pursuant to this Section 9 shall be without liability on the part of (x) the Company to any Underwriter, except that the Company shall be obligated to reimburse the expenses of the Underwriters pursuant to Sections 5 and 6 hereof, (y) any Underwriter to the Company or any person controlling the Company, or (z) any party hereto to any other party except that the provisions of Section 7 shall at all times be effective and shall survive such termination.
Section 10. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other statements of the Company or any person controlling the Company, of its officers
27
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 or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Shares sold hereunder and any termination of this Agreement.
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 Underwriters:
JMP Securities LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Senior Managing Director
with a copy to:
O’Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company:
Redwood Trust, Inc.
Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx LLP
1800 Mercantile Bank & Trust Bldg.,
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Xx., Esq.
Any party hereto may change the address for receipt of communications by giving written notice to the others.
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This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 8 hereof, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 7, and to their respective successors, and no other person will have any right or obligation 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.
Section 13. 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 14. Governing Law Provisions.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the choice of law or conflict of laws principles thereof.
Section 15. 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. Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
Any action required or permitted to be taken by the Underwriters under this Agreement may be taken by them jointly or by the Representatives.
[The remainder of this page has been intentionally left blank.]
29
If the foregoing is in accordance with your understanding of our agreement, please 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: | /s/ Xxxxxx X. Xxxx | |||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives as of the date first above written.
JMP SECURITIES LLC
XXXXXXXXX & COMPANY, INC.
Acting as Representatives of the
several Underwriters named in
the Schedule A (the “List of the
Underwriters”) attached hereto.
By:
|
JMP SECURITIES LLC | |||
By: |
/s/ Xxxxxx X. Xxxx | |||
S-1
SCHEDULE A
Number of | ||||
Firm Shares | ||||
To be | ||||
Underwriters |
Purchased |
|||
JMP Securities LLC |
700,000 | |||
Xxxxxxxxx & Company, Inc. |
300,000 | |||
Total |
1,000,000 | |||
Schedule A
Exhibit A
Lock-Up Agreement
JMP Securities LLC
Xxxxxxxxx & Company, Inc.
c/o JMP Securities LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re:
|
Redwood Trust, Inc. (the “Company”) |
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of common stock of the Company (“Common Stock”) or securities convertible into or exchangeable or exercisable for Common Stock. The Company proposes to carry out a public offering of Common Stock (the “Offering”) for which you will act as the representatives (the “Representatives”) of the several underwriters (the “Underwriters”). The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit the Company by, among other things, raising additional capital for its operations. The undersigned acknowledges that, in your capacity as the Representatives, you are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Offering and in entering into underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not offer to sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant any rights with respect to (collectively, a “Disposition”) any shares of Common Stock, any options or warrants to purchase any shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock (collectively, “Securities”) now owned or hereafter acquired directly by such person or with respect to which such person has or hereafter acquires the power of disposition, otherwise than: (i) as a bona fide gift or gifts, provided the donee or donees thereof agree in writing to be bound by this restriction; (ii) as a distribution to partners or shareholders of such person, provided that the distributees thereof agree in writing to be bound by the terms of this restriction; (iii) with respect to sales or purchases of Common Stock acquired on the open market after the date of this Agreement; (iv) with respect to the surrender of shares of Common Stock to the Company to the extent that the proceeds from such surrender are used solely to satisfy the undersigned’s current tax liabilities arising from the vesting or exercise of awards granted under the Company’s stock option plan; (v) with respect to sales of Common Stock pursuant to a Rule 10b5-1 sales plan entered into prior to the date hereof, or (vi) with the prior written consent of JMP Securities LLC. The foregoing restrictions shall terminate at the close of trading on the sixtieth (60th) day after (and including) the day the Common Stock issued in the Offering commences trading on the New York Stock Exchange (the “Lock-Up Period”). The foregoing restriction has been expressly agreed to preclude the holder of the Securities from engaging in any hedging or other transaction which is designed to or reasonably expected to lead to or result in a Disposition of Securities during the Lock-Up Period, even if such Securities would be disposed of by someone other than such holder. Such prohibited hedging or other transactions would include, without limitation, any short sale
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(whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any Securities or with respect to any security (other than a broad-based market basket or index) that included, relates to or derives any significant part of its value from Securities. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of shares of Common Stock or Securities held by the undersigned except in compliance with the foregoing restrictions.
With respect to the Offering, the undersigned waives any registration rights relating to registration under the Securities Act of 1933, as amended, of any Common Stock or Securities owned either of record or beneficially by the undersigned, including any rights to receive any notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned. In the event the Offering has not occurred on or before October 15, 2004, this Lock-Up Agreement shall be of no further force or effect.
Dated: _________, 2004
Printed Name of Holder
By: |
||
Signature |
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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Exhibit B
Matters to be Covered in the Opinion of Company Counsel
We have acted as counsel to Redwood Trust, Inc., a Maryland corporation (the “Company”), in connection with the sale and issuance by the Company of 1,000,000 shares (the “Firm Shares”) of its common stock, par value $.01 per share (the “Common Stock”), and the grant by the Company of the right to purchase up to 150,000 shares of its Common Stock pursuant to the exercise of the over-allotment option (the “Option Shares” and, together with the Firm Shares, the “Shares”), pursuant to the Underwriting Agreement, dated September , 2004 (the “Agreement”), by and between JMP Securities LLC and Xxxxxxxxx & Company, Inc., as the representatives (the “Representatives”) of the several Underwriters, and the Company.
This opinion is being furnished to you at the request of the Company pursuant to Section 4(d) of the Agreement. Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement.
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined (i) the Company’s Universal Shelf Registration Statement on Form S-3 (Registration Statement No. 333-25643), including a prospectus, relating to, among other securities, the Common Stock, filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), on April 22, 1997 and declared effective by the Commission on July 22, 1997, and Post-Effective Amendment No. 1 to such Registration Statement filed with the Commission under the Securities Act on March 2, 2001 and declared effective by the Commission on March 12, 2001 (such Registration Statement as so amended, together with all exhibits thereto, the “Registration Statement”); (ii) the prospectus, dated May 13, 2004, and the prospectus supplement, dated September , 2004, in the form first used by the Underwriters to confirm sales of the Shares and filed with the Commission pursuant to Rule 424(b)(5) of the general Rules and Regulations promulgated under the Securities Act (collectively, the “Prospectus”); (iii) an executed copy of the Agreement, dated September , 2004; (iv) the charter of the Company, as amended through the date hereof (the “Charter”); (v) the Bylaws of the Company, as amended, in effect on the date hereof (the “Bylaws”); (vi) resolutions adopted by the Board of Directors of the Company (the “Board”) at a meeting held on August 24, 2004, authorizing the transactions contemplated by the Agreement; (vii) resolutions adopted by a pricing committee of the Board at a meeting held on September , 2004; (viii) resolutions relating to the issuance of the Outstanding Shares (as defined herein); (ix) a specimen certificate representing the Common Stock (the “Common Stock Certificate”); and (x) organizational documents of the Subsidiaries (as defined herein).
We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and the Subsidiaries and such agreements, certificates of good standing and other 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
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upon oral or written statements and representations of officers and other representatives of the Company.
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 or the Subsidiaries, we have assumed that such parties had the power, corporate or otherwise, to enter into and perform all obligations thereunder, and we have also assumed the due authorization by all requisite action, corporate or otherwise, and the valid execution and delivery by such parties of such documents and the validity, binding effect and enforceability thereof with respect to such parties. We have further assumed that the Outstanding Shares (as defined herein) have not been issued in violation of the restrictions or limitations contained in Article XI of the Charter.
Members of our firm are admitted to the Bar in the State of Maryland and, subject to the following sentences, we do not express any opinion as to the laws of any jurisdiction other than the corporation laws of the States of Delaware and Maryland and the laws of the United States of America to the extent referred to specifically herein. For purposes of any matter governed by the laws of the Cayman Islands, insofar as such laws relate to matters covered by our opinion, we have relied, with your permission, on an opinion of Walkers (a copy of which is attached). We note that Section 14 of the Agreement provides that the Agreement shall be governed by the laws of the State of New York. For purposes of any matter governed by the laws of the State of New York, insofar as such laws relate to matters covered by our opinion, we have assumed, with your permission, that such laws of the State of New York are identical to the laws of the State of Maryland in all material respects.
The phrase “our knowledge” is limited to the actual knowledge, without independent inquiry, of the lawyers at our firm who have performed legal services in connection with the issuance of this opinion.
Based upon and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that:
1. Each of the Company and the Subsidiaries has been duly incorporated or otherwise formed and is validly existing in good standing under the laws of the jurisdiction of its incorporation or formation.
2. Each of the Company and the Subsidiaries has the requisite corporate or trust power to own, lease and operate its properties and to conduct its business as described in the Prospectus.
3. Each of the Company and the Subsidiaries is duly qualified to do business as a foreign corporation or other entity and is in good standing in each jurisdiction, if any, in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or to be in good standing would not have a Material Adverse Effect. The subsidiaries (the “Subsidiaries”) are RWT Holdings, Inc., Sequoia Mortgage Funding Corporation, Sequoia Mortgage Funding Company 2002-A, Sequoia Mortgage Funding Company 2002-B,
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Sequoia Mortgage Funding Trust 2003-A, Sequoia Mortgage Funding Trust 2004-A, Sequoia Mortgage Trust 2, Sequoia Mortgage Trust 5, Sequoia Mortgage Trust 6, Sequoia Mortgage Trust 7, Acacia CDO 1, Ltd., Acacia CDO 2, Ltd., Acacia CDO 3, Ltd., Acacia CDO 4 Ltd., Acacia CDO 5 Ltd., Redwood Commercial Funding, Inc., Redwood Financial Services, Inc. and Sequoia Residential Funding, Inc.
4. The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus under the caption “Capitalization” as of the date stated therein, the issued and outstanding shares of capital stock of the Company outstanding prior to the issuance of the Shares (the “Outstanding Shares”) have been duly and validly issued and are fully paid and nonassessable, and have not been issued in violation of or subject to any preemptive right arising under the Charter or the Maryland General Corporation Law (the “MGCL”), or, to our knowledge, any co-sale right, right of first refusal or other similar right. The Outstanding Shares conformed in all material respects to the description contained under the caption “Description of Securities” in the Prospectus.
5. All issued and outstanding shares of capital stock or other equity interest of each of the Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable, and have not been issued in violation of or subject to any preemptive right arising under the certificate of incorporation or other organizational documents or the laws of the jurisdiction of incorporation or formation of each such subsidiary, or, to our knowledge, any co-sale right, right of first refusal or other similar right, and are owned by the Company free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest.
6. The issuance of the Firm Shares or the Option Shares, as the case may be, pursuant to the terms of the Agreement has been duly authorized and, when duly countersigned by the Company’s transfer agent and registrar, and delivered to the Underwriters or upon the Underwriters’ order against payment of the agreed consideration therefor in accordance with the terms of the Agreement, the Firm Shares or the Option Shares, as the case may be, will be duly and validly issued and fully paid and nonassessable, and will not have been issued in violation of or subject to any preemptive right arising under the Charter, the Bylaws or the MGCL, or, to our knowledge, any co-sale right, right of first refusal or other similar right. The Common Stock Certificate is in due and proper form under the MGCL.
7. The Company has the corporate power and authority to enter into the Agreement and to issue, sell and deliver to the Underwriters the Shares to be issued and sold by it thereunder, and to consummate the other transactions contemplated thereby.
8. The Agreement has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms, except as rights to indemnification and contribution may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally or by general equitable principles (whether relief is sought in a proceeding at law or in equity).
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9. The Registration Statement has become effective under the Securities Act and, to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the Securities Act.
10. The Registration Statement and the Prospectus, and each amendment or supplement thereto (other than the financial statements (including supporting schedules) and financial data derived therefrom as to which we express no opinion), as of the effective date of the Registration Statement, complied as to form in all material respects with the requirements of the Securities Act and the applicable Rules and Regulations. Each of the Incorporated Documents (other than the financial statements (including supporting schedules) and the financial data derived therefrom as to which we express no opinion) complied when filed pursuant to the Exchange Act as to form in all material respects with the requirements of the Exchange Act, the Xxxxxxxx-Xxxxx Act and the Rules and Regulations of the Exchange Act and the Xxxxxxxx-Xxxxx Act and the applicable rules and regulations of the Commission thereunder.
11. The information in the Prospectus under the caption “Description of Securities,” to the extent that it constitutes matters of law or legal conclusions, has been reviewed by us and is a fair summary of such matters and conclusions.
12. The description in the Registration Statement and the Prospectus of the Charter and Bylaws and of Maryland statutes and federal securities laws are accurate and fairly present the information required to be presented by the Securities Act.
13. To our knowledge, there are no agreements, contracts, leases or documents to which the Company is a party of a character required to be described or referred to in the Registration Statement or Prospectus or any Incorporated Document or to be filed as an exhibit to the Registration Statement or any Incorporated Document which are not described or referred to therein or filed as required.
14. The performance of the Agreement and the consummation of the transactions herein contemplated (other than performance of the Company’s indemnification obligations thereunder, as to which we express no opinion) will not (a) result in any violation of the Charter or Bylaws or (b) 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 or result in a material breach or violation of any of the terms and provisions of, or constitute a default under, any bond, debenture, note or other evidence of indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument known to us to which the Company is a party or by which its properties are bound, or any applicable statute, rule or regulation known to us or, to our knowledge, any order, writ or decree of any court, government or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or over any of their properties or operations.
15. No consent, approval, authorization or order of or qualification with any court, government or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or over any of their properties or operations is necessary in connection with the execution, delivery and performance by the Company of the Agreement and the consummation by the Company of the transactions therein contemplated, except (i) such as have been obtained under the Securities Act, (ii) such as
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may be required under state or other securities or Blue Sky laws in connection with the purchase and the distribution of the Shares by the Underwriters, and (iii) such as may be required by the NASD or the New York Stock Exchange.
16. To our knowledge, there are no legal or governmental proceedings pending (in which service of process has been received by an employee or agent of the Company or an agent for service of process) or threatened against the Company or any of the Subsidiaries of a character required to be disclosed in the Registration Statement or the Prospectus or any Incorporated Document by the Securities Act or by the Exchange Act or the applicable rules and regulations of the Commission thereunder, other than those described therein. We call your attention to the fact that, in connection with the delivery of this opinion, we have not ordered or reviewed judgment, lien or any other searches of public or private records of the Company or its properties.
17. To our knowledge, neither the Company nor any of the Subsidiaries is presently (a) in material violation of its respective charter or bylaws, or (b) in material breach of any applicable statute, rule or regulation known to us or, to our knowledge, any order, writ or decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or over any of their properties or operations.
18. To our knowledge, no holders of shares of Common Stock or other securities of the Company have registration rights with respect to securities of the Company.
19. The Company is not and, after giving effect to the offering and the sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
20. To our knowledge, with respect to trademarks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”), the Company and the Subsidiaries own or possess such Intellectual Property Rights as are reasonably necessary to conduct their business as now conducted, and the expected expiration of any such Intellectual Property Rights would not result in a Material Adverse Effect. To our knowledge, the Company has not received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect. To our knowledge, any of the Company’s discoveries, inventions, products, or processes referred to in the Registration Statement or Prospectus do not infringe or conflict with any right or patent which is the subject of a patent application known to the Company. Our knowledge as to these matters is based on information received from the Company, without independent verification or any Intellectual Property Rights search.
21. To our knowledge, based solely on a review of the Company’s New York Stock Exchange listing application relating to the Shares, the Shares have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
In addition, we have participated in conferences with officials and other representatives of the Company, the Representatives, Underwriters’ Counsel and the
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independent auditors of the Company, at which such conferences the contents of the Registration Statement and Prospectus and related matters were discussed, and although we have not verified the accuracy or completeness of the statements contained in the Registration Statement or the Prospectus, nothing has come to our attention which leads us to believe that, at the date of the Prospectus and at the First Closing Date, the Registration Statement, the Prospectus and any Incorporated Document (other than the financial statements including supporting schedules and other financial and statistical information derived therefrom, as to which we express no comment) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
The conditions for the use of Form S-3 set forth in the General Instructions thereto were satisfied when the Registration Statement was filed, and the Company currently satisfies the conditions for use of Form S-3 set forth in the General Instructions thereto.
The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you solely for your benefit in connection with the closing under the Agreement occurring on the date hereof. Accordingly, it may not be relied upon by, quoted in any manner to, or delivered to any other person or entity without, in each instance, our prior written consent, except that O’Melveny & Xxxxx LLP, counsel for the Underwriters, may rely upon this opinion in connection with such firm’s opinion to be rendered pursuant to Section 4(f) of the Agreement.
Very truly yours,
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Exhibit C
Matters to be Covered in the Opinion of
Special Tax Counsel for the Company
Opinion of Xxxxxxx and Xxxxxx LLP, special tax counsel for the Company, to be delivered pursuant to Section 4(e) of the Underwriting Agreement. References to the Prospectus in this Exhibit C include any supplements thereto as of the First Closing Date.
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 September , 2004 by the Company of an aggregate of 1,000,000 shares of its common stock, par value of $0.01 per share (the “Common Stock”) pursuant to the Underwriting Agreement, dated as of September , 2004 (the “Underwriting Agreement”), by and between JMP Securities LLC and Xxxxxxxxx & Company, Inc. (the “Representatives”) of the several Underwriters and the Company.
This opinion is being furnished to you at the request of the Company pursuant to Section 4(e) 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. 333-25643, including a prospectus (such prospectus dated March 12, 2001, as amended from time to time, the “Base Prospectus”), relating to, among other securities, the Common Stock, filed with the Securities and Exchange Commission under the Securities Act of 1933 on April 22, 1997 and declared effective by the Securities and Exchange Commission on July 22, 1997, and the Post-Effective Amendment No. 1 to such Registration Statement, filed with the Securities and Exchange Commission under the Securities Act of 1933 on March 2, 2001 and declared effective by the Securities and Exchange Commission on March 12, 2001 (together with all exhibits thereto, the “Registration Statement”), and (ii) the Prospectus Supplement, dated September , 2004 (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 Amendment and Restatement of the Company, as amended and supplemented to date, (iii) the Bylaws of the Company, as amended, and (iv) such resolutions, certificate, records, and other documents provided by the Company, RWT Holdings, Inc., 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, RWT Holdings, Inc., Sequoia and their subsidiaries. We have also reviewed the opinion of Xxxxxxx LLP, dated the date hereof, with respect to certain matters of Maryland and Delaware law.
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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, RWT Holdings, Inc. and their subsidiaries have been and will continue to be organized and operated in the manner described in the Officer’s Certificate, the Registration Statement, the Prospectus, the Prospectus Supplement 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, RWT Holdings, Inc. and their subsidiaries which may not be achievable if there are future changes in the circumstances of either and (y) in the case of the latter assumptions, 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 qualifications as a “real estate investment trust” under the Code since the commencement of its operations on August 19, 1994 through June 30, 2004, the date of the most recent unaudited financial statements and management reports 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 Mortgage Funding Corporation is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.
3. RWT Holdings, Inc., Sequoia Residential Funding, Inc., Redwood Financial Services, Inc., Redwood Commercial Funding, Inc., Acacia CDO 1, Ltd., Acacia CDO 2, Ltd., Acacia CDO 3, Ltd., Acacia CDO 4, Ltd. and Acacia CDO 5, Ltd. are “taxable REIT subsidiaries” within the meaning of Section 856(l) of the Code.
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4. To our knowledge, neither the Company nor any of its assets has been treated as a taxable mortgage pool by either the Company or any applicable taxing authority.
5. Although the discussions set forth under (i) the caption “Federal Income Tax Considerations” in both the Base Prospectus and in the Prospectus Supplement and (ii) the captions “Risk Factors–-Risks Related To Our Company Structure–-Failure to qualify as a REIT would adversely affect our operations and ability to make distributions” and “Risk Factors–-Risks Related To Our Company Structure–-Maintaining REIT status may reduce our flexibility. Changes in tax rules could adversely affect REITs” in the Prospectus Supplement, to do not purport to discuss all possible United States federal income tax consequences of the purchase, ownership and disposition of the Common Stock, such discussions, taken together, constitute an accurate summary of the United States federal income tax considerations that are likely to be material to a purchaser of the Common Stock.
6. In addition, we have participated in conferences with officials and other representatives of the Company, Underwriters’ counsel and the independent auditors of the Company, at which such conferences the contents of the Registration Statement and Prospectus and related matters were discussed, and although we have not verified the accuracy or completeness of the statements contained in the Registration Statement or the Prospectus, nothing has come to our attention which leads us to believe that, at the date of the Prospectus Supplement and as of the date hereof, the Registration Statement and the Prospectus (other than the financial statements including supporting schedules and other financial and statistical information derived therefrom, as to which we express no comment) contained, with respect to discussions of tax matters, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements with respect to tax matters therein not misleading.
Other than as expressly stated above, we express no opinion on any issue relating to the Company, RWT Holdings, Inc. and their subsidiaries 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 & Xxxxx LLP in connection with any opinions they may render pursuant to the Underwriting Agreement.
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