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EXHIBIT 10.31
RWT HOLDINGS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
MARCH 1, 1998
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RWT HOLDINGS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of March 1, 1998, by and among RWT HOLDINGS, INC., a Delaware
corporation (the "Company"), and REDWOOD TRUST, INC., a Maryland corporation
(the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance on the terms and
conditions set forth herein of an aggregate of One Thousand Nine Hundred Eighty
(1,980) shares of its Series A Preferred Stock, par value One Cent ($0.01) per
share (the "Series A Preferred Stock") and may authorize from time to time
additional shares of Series A Preferred Stock for issuance and sale pursuant to
the terms and conditions hereof (all shares of Series A Preferred Stock to be
issued and sold hereunder, the "Shares").
WHEREAS, Purchaser desires to purchase the Shares on the terms and conditions
set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchaser on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), the Company shall have
authorized the sale and issuance to Purchaser of the
Shares. The Shares shall have the rights, preferences,
privileges and restrictions set forth in the Certificate
of Incorporation of the Company in the form attached
hereto as Exhibit A (the "Charter").
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, the Company hereby agrees to issue and sell to
Purchaser, and Purchaser agrees, severally and not
jointly, to purchase from the Company at the Closing the
Shares being acquired at the Closing, at a purchase price
of Five Thousand and 00/100 Dollars ($5,000.00) per share.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The initial closing of the sale and purchase of
the Shares under this Agreement shall take place at 10:00
a.m. on April 1, 1998, and subsequent closings shall take
place at such time and place as the Company and Purchaser
may mutually agree orally or in writing (each such closing
is herein referred to as the "Closing" and each such date
is herein referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser
certificates representing the number of Shares to be
purchased at the Closing by Purchaser, against payment of
the purchase price therefor by check or wire transfer
payable to the order of the Company, cancellation of
indebtedness or any combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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Except as set forth on a Schedule of Exceptions delivered by the Company
to Purchaser at the Closing, the Company hereby represents and warrants
to Purchaser as of the Closing Date as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to
own and operate its properties and assets, to execute and
deliver this Agreement, to issue and sell the Shares and
to carry out the provisions of this Agreement and to carry
on its business as presently conducted and as presently
proposed to be conducted. The Company is duly qualified
and is authorized to transact business and is in good
standing as a foreign corporation in each jurisdiction in
which the failure to so qualify would have a material
adverse effect on its business, properties, prospects or
financial condition.
3.2 SUBSIDIARIES. The Company owns no equity securities of any
other corporation, limited partnership or similar entity.
The Company is not a participant in any joint venture,
partnership or similar arrangement.
3.3 CAPITALIZATION; VOTING RIGHTS. As of the initial Closing
Date, the authorized capital stock of the Company,
immediately prior to the Closing, will consist of Ten
Thousand (10,000) shares of Common Stock, par value One
Cent ($0.01) per share, One Thousand (1,000) shares of
which are issued and outstanding, and Ten Thousand
(10,000) shares of Preferred Stock, par value One Cent
($0.01) per share, which are designated Series A Preferred
Stock (the "Series A Preferred Stock"), none of which are
issued and outstanding. All issued and outstanding shares
of Common Stock (a) have been duly authorized and validly
issued, (b) are fully paid and nonassessable, and (c) were
issued in compliance with all applicable state and federal
laws concerning the issuance of securities. The rights,
preferences, privileges and restrictions of the Shares are
as stated in the Charter and this Agreement. There are no
outstanding options, warrants, rights (including
conversion or preemptive rights and rights of refusal),
proxy or stockholder agreements, or agreements of any kind
for the purchase or acquisition from the Company of any of
its securities. When issued in compliance with the
provisions of this Agreement and the Charter, the Shares
will be duly and validly issued, fully paid and
nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Shares may be
subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is
proposed.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of the Company, its officers, directors and
stockholders necessary for the authorization of this
Agreement, the performance of all obligations of the
Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares
pursuant hereto and pursuant to the Charter has been taken
or will be taken prior to the Closing. This Agreement,
when executed and delivered by the Company, will be a
valid and binding obligation of the Company enforceable in
accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting
enforcement of creditors' rights; (b) general principles
of equity that restrict the availability of equitable
remedies; and (c) to the extent that the enforceability of
the indemnification provisions may be limited by
applicable laws. The sale of the Shares is not and will
not be subject to any preemptive right or rights of first
refusal that have not been properly waived or complied
with.
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3.5 LIABILITIES. The Company has no material liabilities and,
to the best of its knowledge, knows of no material
contingent liabilities not disclosed in the financial
statements delivered under Section 6.1 that are required
to be disclosed therein pursuant to GAAP, except current
liabilities incurred in the ordinary course of business
subsequent to the date hereof which have not been, either
in any individual case or in the aggregate, materially
adverse.
3.6 OBLIGATIONS TO RELATED PARTIES. There are no material
obligations of the Company to officers, directors,
stockholders, or employees of the Company other than (a)
for payment of salary for services rendered during the
last month, (b) reimbursement for reasonable expenses
incurred on behalf of the Company not to exceed $50,000 in
the aggregate and (c) for other standard employee benefits
made generally available to all employees. Except as may
be disclosed in the financial statements, the Company is
not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
3.7 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company
has good and marketable title to its properties and
assets, including the properties and assets reflected in
the most recent balance sheet included in the financial
statements, and good title to its leasehold estates, in
each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (a) those resulting from
taxes which have not yet become delinquent, (b) minor
liens and encumbrances which do not materially detract
from the value of the property subject thereto or
materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of
business, including borrowing arrangements. All
facilities, machinery, equipment, fixtures and other
properties owned, leased or used by the Company are in
good operating condition and repair and are reasonably fit
and usable for the purposes for which they are being used.
The Company is in compliance with all material terms of
each lease to which it is a party or is otherwise bound.
3.8 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Charter or Bylaws,
or of any provision of any mortgage, indenture, agreement,
instrument or contract to which it is a party or by which
it is bound or of any judgment, decree, order, writ or, to
its knowledge, any statute, rule or regulation applicable
to the Company which violation or default would have a
material adverse effect on the business, assets,
liabilities, financial condition, operations or prospects
of the Company. The execution, delivery, and performance
of and compliance with this Agreement and the issuance and
sale of the Shares pursuant hereto will not, with or
without the passage of time or giving of notice, result in
any such violation or default, or be in conflict with or
constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance or
charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or
approval applicable to the Company, its business or
operations or any of its assets or properties.
3.9 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge
currently threatened in writing against the Company that
questions the validity of this Agreement or the right of
the Company to enter into any of such agreements, or to
consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in
the aggregate, in any material advance change in the
assets, business, property, condition, affairs or
prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor
is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation,
actions pending or threatened in writing (or any
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basis therefor known to the Company) involving the prior
employment of any of the Company's employees, their use in
connection with the Company's business of any information
or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which
the Company intends to initiate.
3.10 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns (federal, state and local) required to be filed by
it. These returns are true and correct in all material
respects. All taxes shown to be due and payable on such
returns, any assessments imposed, and to the Company's
knowledge all other taxes due and payable by the Company
on or before the Closing have been paid or will be paid
prior to the time they become delinquent. The Company has
no knowledge of any liability of any tax to be imposed
upon its properties or assets as of the date of this
Agreement that is not adequately provided for.
3.11 EMPLOYEES. The Company has no collective bargaining
agreements with any of its employees. There is no labor
union organizing activity pending or, to the Company's
knowledge, threatened with respect to the Company. To the
Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in
violation of any term of any employment contract,
proprietary information agreement or any other agreement
relating to the right of any such individual to be
employed by, or to contract with, the Company because of
the nature of the business conducted or to be conducted by
the Company or to the use by such individual of his or her
best efforts on behalf of the Company; and to the
Company's knowledge the continued employment by the
Company of its present employees, and the performance of
the Company's contracts with its independent contractors,
will not result in any such violation. The Company has not
received any notice alleging that any such violation has
occurred. No employee of the Company has been granted the
right to continued employment by the Company or to any
material compensation following termination of employment
with the Company. The Company is not aware that any
officer or key employee, or that any group of key
employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to
terminate the employment of any officer, key employee or
group of key employees.
3.12 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the
Company is not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency
thereof in respect of the conduct of its business or the
ownership of its properties which violation would
materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects
of the Company. No governmental orders, permissions,
consents, approvals or authorizations are required to be
obtained and no registrations or declarations are required
to be filed in connection with the valid execution and
delivery of this Agreement and the issuance of the Shares,
except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made
after the Closing, as will be filed within the applicable
periods therefor. The Company has all franchises, permits,
licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the
lack of which could materially and adversely affect the
business, properties, prospects or financial condition of
the Company and believes it can obtain, without undue
burden or expense, any similar authority for the conduct
of its business as planned to be conducted.
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3.13 OFFERING VALID. Assuming the accuracy of the
representations and warranties of Purchaser contained in
Section 4.2 hereof, the offer, sale and issuance of the
Shares will be exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities
Act") and will have been registered or qualified (or are
exempt from registration and qualification) under the
registration, permit or qualification requirements of all
applicable state securities laws. Neither the Company nor
any agents on its behalf has solicited or will solicit any
offers to sell or has offered to sell or will offer to
sell all or any part of the Shares to any person or
persons so as to bring the sale of such Shares by the
Company within the registration provisions of the
Securities Act or the registration or permitting
requirements of any state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as of the
Closing Date as follows (such representations and warranties do not
lessen or obviate the representations and warranties of the Company set
forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law
to execute and deliver this Agreement and to carry out
their provisions. All actions on Purchaser's part required
for the lawful execution and delivery of this Agreement
have been or will be effectively taken prior to the
Closing. Upon its execution and delivery, assuming the due
authorization, execution and delivery hereof and thereof
by the Company, this Agreement will be a valid and binding
obligation of Purchaser, enforceable in accordance with
its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors'
rights, (b) general principles of equity that restrict the
availability of equitable remedies, and (c) to the extent
that the enforceability of the indemnification provisions
may be limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands the
Shares have not been registered under the Securities Act.
Purchaser also understands that the Shares are being
offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part
upon Purchaser's representations contained in the
Agreement. Purchaser hereby represents and warrants as
follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and
investing in private placement transactions of
securities in companies similar to the Company
so that it is capable of evaluating the merits
and risks of its investment in the Company and
has the capacity to protect its own interests.
Purchaser must bear the economic risk of this
investment indefinitely unless the Shares are
registered pursuant to the Securities Act, or
an exemption from registration thereunder is
available. Purchaser understands that the
Company has no present intention of registering
the Shares or any shares of its Common Stock.
Purchaser also understands that there is no
assurance that any exemption from registration
under the Securities Act will be available and
that, even if available, such exemption may not
allow Purchaser to transfer all or any portion
of the Shares under the circumstances, in the
amounts or at the times Purchaser might
propose.
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(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is
acquiring the Shares for Purchaser's own
account for investment only, and not with a
view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its
management's, business or financial experience,
Purchaser has the capacity to protect its own
interests in connection with the transactions
contemplated in this Agreement. Further,
Purchaser is aware of no publication of any
advertisement in connection with the
transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that
it is an accredited investor within the meaning
of Regulation D under the Securities Act.
(e) RULE 144. Purchaser acknowledges and agrees
that the Shares must be held indefinitely
unless they are subsequently registered under
the Securities Act or an exemption from such
registration is available. Purchaser has been
advised or is aware of the provisions of Rule
144 promulgated under the Securities Act as in
effect from time to time, which permits limited
resale of shares purchased in a private
placement subject to the satisfaction of
certain conditions, including, among other
things: the availability of certain current
public information about the Company, the
resale occurring following the required holding
period under Rule 144 and the number of shares
being sold during any three-month period not
exceeding specified limitations.
4.3 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees
that the Shares are subject to restrictions on transfer.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASER'S OBLIGATION AT THE CLOSING.
Purchaser's obligation to purchase Shares at the Closing
is subject to the satisfaction or waiver, at or prior to
the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE;
PERFORMANCE OF OBLIGATIONS. The representations
and warranties made by the Company in Section 3
hereof shall be true and correct in all
material respects as of the Closing Date with
the same force and effect as if they had been
made as of the Closing Date, and the Company
shall have performed all obligations and
conditions herein required to be performed or
observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale
and issuance of the Shares shall be legally
permitted by all laws and regulations to which
Purchaser and the Company are subject.
(c) CONSENTS, PERMITS AND WAIVERS. The Company
shall have obtained any and all authorizations,
consents, permits and waivers necessary or
appropriate for consummation of the
transactions contemplated by this Agreement
(except for such as may be properly obtained
subsequent to the Closing).
(d) CORPORATE DOCUMENTS. The Company shall have
delivered to Purchaser or its counsel, copies
of all corporate documents of the Company as
Purchaser shall reasonably request.
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(e) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the
transactions contemplated at the Closing hereby
and all documents and instruments incident to
such transactions shall be reasonably
satisfactory in substance and form to Purchaser
and Purchaser shall have received all such
counterpart originals or certified or other
copies of such documents as it may reasonably
request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the shares at the Closing is
subject to the satisfaction or waiver, on or prior to such
Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by
Purchaser in Section 4 hereof shall be true and
correct in all material respects at the date of
the Closing, with the same force and effect as
if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchaser shall
have performed and complied with all agreements
and conditions herein required to be performed
or complied with by Purchaser on or before the
Closing.
(c) CONSENTS, PERMITS AND WAIVERS. The Company
shall have obtained any and all consents,
permits and waivers necessary or appropriate
for consummation of the transactions
contemplated by this Agreement (except for such
as may be properly obtained subsequent to the
Closing).
6A. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Purchaser that, so long as any
of the Shares remain outstanding:
6.1 FINANCIAL STATEMENTS. The Company shall deliver to the
Purchaser as soon as available all financial statements it
prepares, including at a minimum the following:
(a) as soon as available and in any event within 20
days after the end of each of the first three
quarterly fiscal periods of each fiscal year of
the Company, the consolidated balance sheets of
the Company and its consolidated Subsidiaries
as at the end of such period and the related
unaudited consolidated statements of income and
retained earnings and of cash flows for the
Company and its consolidated Subsidiaries for
such period and the portion of the fiscal year
through the end of such period, setting forth
in each case in comparative form the figures
for the previous year, accompanied by a
certificate of a Responsible Officer of the
Company, which certificate shall state that
said consolidated financial statements fairly
present the consolidated financial condition
and results of operations of the Company and
its Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and
for, such period (subject to normal year-end
audit adjustments);
(b) as soon as available and in any event within 60
days after the end of each fiscal year of the
Company, the consolidated balance sheets of the
Company and its consolidated Subsidiaries as at
the end of such fiscal year and the related
consolidated statements of income and retained
earnings and of cash flows for the Company and
its consolidated Subsidiaries for such year,
setting forth in
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each case in comparative form the figures for
the previous year, accompanied by an opinion
thereon of independent certified accountants of
recognized national standing previously
approved by the Purchaser, which opinion shall
not be qualified as to scope of audit or going
concern and shall state that said consolidated
financial statements fairly present the
consolidated financial condition and results of
operations of the Company and its consolidated
Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP;
(c) from time to time such other information
regarding the financial condition, operations,
or business of the Company as the Purchaser may
reasonably request, including but not limited
to requesting quarterly audited financial
statements.
The Company agrees to cooperate fully and in a
timely fashion with its independent accountants
in connection with their audits. The Company
will furnish to the Purchaser, at the time it
furnishes each set of financial statements
pursuant to paragraphs (a) and (b) above, a
certificate of a Responsible Officer of the
Company to the effect that, to the best of such
Responsible Officer's knowledge, the Company
during such fiscal period or year has observed
or performed all of its covenants and other
agreements, and satisfied every condition,
contained in this Agreement and the Charter to
be observed, performed or satisfied by it,
except as specified in such certificate (and,
if any failure to observe, perform or satisfy
has occurred and is continuing, describing the
same in reasonable detail and describing the
action the Company has taken or proposes to
take with respect thereto).
6.2 LITIGATION. The Company will promptly, and in any event
within 10 days after service of process on any of the
following, give the Purchaser notice of all legal or
arbitrable proceedings affecting the Company or any of its
Subsidiaries that questions or challenges the validity or
enforceability of any of the provisions of this Agreement
or the Charter or as to which there is a reasonable
likelihood of adverse determination which would result in
a material adverse effect.
6.3 EXISTENCE, ETC. The Company will:
(a) preserve and maintain its legal existence and
all of its material rights, privileges,
licenses and franchises;
(b) comply with the requirements of all applicable
laws, rules, regulations and orders of
Government Authorities (including, without
limitation, all environmental laws) if failure
to comply with such requirements would be
reasonably likely (either individually or in
the aggregate) to have a material adverse
effect on its property, business or financial
condition, or prospects;
(c) keep adequate records and books of account, in
which complete entries will be made in
accordance with GAAP consistently applied; and
(d) not move its chief executive office from the
address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless it shall have
provided the Purchaser 30 days prior written
notice of such change.
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6.4 COOPERATION AND ACCESS TO RECORDS. The Company agrees to
cooperate fully and in a timely fashion with the
Purchaser's requests for information or access to data,
reports, records and personnel made for purposes of the
Purchaser's compliance with securities law reporting and
filing requirements, federal and state tax reporting and
filing requirements or any other legal or regulatory
reporting and filing requirements applicable to the
Purchaser. As part of this cooperation, the Company will
agree to provide the following information:
(a) keep proper books of record and account in
which full, true and correct entries in
conformity with GAAP and all Requirements of
Law shall be made of all dealings and
transactions in relation to its business and
activities; and
(b) permit: (1) representatives of the Purchaser to
(A) visit and inspect any of its properties and
examine and make abstracts from any of its
books and records at any reasonable time and as
often as may reasonably be desired by the
Purchaser (but, prior to the occurrence of a
default under this Agreement or the Charter,
only upon not less than two Business Days'
prior notice), and (B) discuss the business,
operations, properties and financial and other
condition of the Company with officers and
employees of the Company, and with its
independent certified public accountants, and
(ii) representatives of the Purchaser to
conduct periodic operational audits of the
Company's business and operations.
6.5 NOTICES. The Company shall give notice to the Purchaser
promptly of the occurrence of any default under this
Agreement or the Charter.
6.6 INSURANCE. The Company agrees to obtain and maintain
insurance with responsible companies in such amounts and
against such risks as are usually carried by corporations
engaged in similar businesses similarly situated, and
furnish the Purchaser on request full information as to
all such insurance, and to provide within five (5) days
after receipt, certificates or other documents evidencing
the renewal of each such policy. The Purchaser will file
claims and process recoveries under any such policy or any
policy of the Purchaser.
6B. NEGATIVE COVENANTS.
6.7 NEGATIVE COVENANTS. The Company covenants and agrees with
the Purchaser that, so long as any of the Shares remain
outstanding:
(a) TOTAL INDEBTEDNESS TO ADJUSTED NET WORTH RATIO.
The Company will not permit its ratio at any
date of Total Indebtedness to Adjusted Net
Worth to be more than 10.0:1.0.
(b) LOAN INDEBTEDNESS TO GAAP NET WORTH. The
Company will not permit its ratio at any date
of Loan Indebtedness to GAAP Net Worth to be
more than 2.0:1.0.
(c) MINIMUM GAAP NET WORTH. The Company will not
permit its GAAP Net Worth as of the last day of
any fiscal quarter to be less than the sum of
(1) $7,000,000, plus (2) fifty percent (50%) of
(A) the cash proceeds of any sale or issuance
of equity securities of the Company or any
Subsidiary of the Company (or of any options,
warrants or rights in respect of any such
equity securities) which issuance takes place
after the initial Closing Date, plus (B)
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cumulative after-tax earnings earned after the
date hereof less cumulative dividends paid
after the initial Closing Date.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such
laws are applied to agreements between California
residents entered into and performed entirely in
California.
7.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation
made by Purchaser and the closing of the transactions
contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall
be deemed to be representations and warranties by the
Company hereunder solely as of the date of such
certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof inure to the
benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by
each person who shall be a holder of the Shares from time
to time.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto, and the other documents delivered
pursuant hereto constitute the full and entire
understanding and agreement between the parties with
regard to the subjects hereof and no party shall be liable
or bound to any other in any manner by any
representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only
upon the written consent of the Company and
holders of at least fifty percent (50%) of the
Shares.
(b) The obligations of the Company and the rights
of the holders of the Shares under the
Agreement may be waived only with the written
consent of the holders of at least fifty
percent (50%) of the Shares.
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by
the other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or
any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or
approval of any kind or character on any party's part of
any breach, default or noncompliance under this Agreement
or any waiver on such party's part of any provisions or
conditions of the Agreement must be in writing and shall
be effective only to the extent specifically set forth in
such writing. All remedies under this Agreement by law, or
otherwise afforded to any party, shall be cumulative and
not alternative.
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7.8 WAIVER OF CONFLICTS. Each party to this Agreement
acknowledges that legal counsel for the Company, ▇▇▇▇▇ &
▇▇▇▇▇, has also acted for Purchaser in this transaction
and has, in the past and may continue in the future to
perform legal services for Purchaser and its affiliates in
matters unrelated to the transactions contemplated by this
Agreement. Each party to this Agreement hereby (a)
acknowledges that they have had an opportunity to ask for
and have obtained information relevant to such
representation, including disclosure of the reasonably
foreseeable adverse consequences of such representation;
(b) acknowledges that with respect to the transactions
contemplated herein, ▇▇▇▇▇ & ▇▇▇▇▇ has represented the
Company and Purchaser; and (c) gives its informed consent
to ▇▇▇▇▇ & ▇▇▇▇▇'▇ representation of the Company and
Purchaser in the transactions contemplated by this
Agreement and ▇▇▇▇▇ & ▇▇▇▇▇'▇ representation of Purchaser
and its affiliates in matters unrelated to such
transactions.
7.9 NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a)
upon personal delivery to the party to be notified; (b)
five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid;
or (c) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day
delivery, with written verification of receipt. All
communications shall be sent to the Company and Purchaser
at the address set forth on the signature page hereof or
at such other address as the Company or Purchaser may
designate by ten (10) days advance written notice to the
other parties hereto.
7.10 EXPENSES. Each party shall pay all costs and expenses that
it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement.
7.11 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or
with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys
and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
7.12 TITLES AND SUBTITLES. The titles of sections and
subsections of this Agreement are for convenience of
reference only and are not to be considered in construing
this Agreement.
7.13 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
7.14 PRONOUNS. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the
masculine, feminine or neutral, singular or plural, as to
the identity of the parties hereto may require.
8. DEFINITIONS.
"Adjustable Net Worth" shall mean at any date the sum of (1) GAAP Net
Worth, plus (2) the amount of reserves of the Company and its
consolidated Subsidiaries, if any, for credit losses (as reflected on
the financial statements referred to in 6.1 above), minus (3) the amount
of the unrealized gains on debt securities (as defined in FASB 115) of
the Company and its consolidated Subsidiaries, if any, plus (4) the
amount of unrealized losses on debt securities (as defined in FASB 115)
of the Company and its consolidated Subsidiaries, if any, plus (5) the
amount of Loan Indebtedness, minus (6) the excess of the amount of
assets securing nonrecourse indebtedness over the amount of such
nonrecourse indebtedness.
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"Agreement" shall mean this Series A Preferred Stock Purchase Agreement,
as may be amended, supplemented or otherwise modified from time to time.
"Business Day" shall mean any other than (i) a Saturday or Sunday, or
(ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or
executive order to be closed.
"Default" shall mean that the Company during such fiscal period or year
has not observed or not performed all of its covenants and other
agreements, and not satisfied every condition, contained in this
Agreement and the Charter to be observed, performed or satisfied by it.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"GAAP Net Worth" shall mean the excess of total assets of the Company
and its consolidated Subsidiaries, if any, over Total Liabilities of the
Company determined in accordance with GAAP.
"Government Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction
over the Company, any of its Subsidiaries or any of its properties.
"Loan" shall mean any loan made to the Company or any Subsidiary of the
Company from time to time under the Lending and Credit Support
Agreement, dated as of April 1, 1998, between the Company and the
Purchaser.
"Loan Indebtedness" shall mean, at any date, the principal amount of
Loans outstanding on such date.
"Requirements of Law" shall mean, as to any person, the Articles or
Certificate of Incorporation and Bylaws or other organization or
governing documents of such Person, and any law, treaty, rule or
regulation, or a final and binding determination of an arbitration or a
determination of a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such person or any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the chief executive
officer or, with respect to financial matters, the chief financial
officer of such Person.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
"Total Indebtedness" shall mean total indebtedness for borrowed monies
of the Company and its consolidated Subsidiaries, if any, determined in
accordance with GAAP, less the amount of any nonrecourse indebtedness of
the Company and its consolidated Subsidiaries.
"Total Liabilities" shall mean total liabilities of the Company and its
consolidated Subsidiaries, if any, determined in accordance with GAAP.
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IN WITNESS WHEREOF, the parties hereby have executed the SERIES A PREFERRED
STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY:
RWT HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
PURCHASER:
REDWOOD TRUST, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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