REDWOOD TRUST, INC. 23,000,000 Shares of Common Stock Underwriting Agreement
EXHIBIT
1.1
REDWOOD
TRUST, INC.
23,000,000
Shares of Common Stock
January
21, 2009
▇.▇.
▇▇▇▇▇▇ Securities Inc.
As
Representative of the
several
Underwriters listed
in
Schedule 1 hereto
c/o ▇.▇.
▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Redwood Trust, Inc., a Maryland
corporation (the “Company”), proposes to issue and sell to the several
Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are
acting as representative (the “Representative”), an aggregate of 23,000,000
shares of common stock, par value $ 0.01 per share (the “Common Stock”), of the
Company (the “Underwritten Shares”) and, at the option of the Underwriters, up
to an additional 3,450,000 shares of Common Stock of the Company (the “Option
Shares”). The Underwritten Shares and the Option Shares are herein
referred to as the “Shares”. The shares of Common Stock of the
Company to be outstanding after giving effect to the sale of the Shares are
herein referred to as the “Stock”.
The Company hereby confirms its
agreement with the several Underwriters concerning the purchase and sale of the
Shares, as follows:
1. Registration
Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Securities Act”), a registration statement (File No.
333-147604) including a prospectus, relating to the Shares. Such
registration statement, as amended at the time it became effective, including
the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the
Securities Act to be part of the registration statement at the time of its
effectiveness (“Rule 430 Information”), is referred to herein as the
“Registration Statement”; and as used herein, the term “Preliminary Prospectus”
means each prospectus included in such registration statement (and any
amendments thereto) before it becomes effective, any prospectus filed with the
Commission pursuant to Rule 424(a) under the Securities Act and the prospectus
included in the Registration Statement at the time of its effectiveness that
omits Rule 430 Information, and the term “Prospectus” means the prospectus in
the form first used (or made available upon request of purchasers pursuant to
Rule 173 under the Securities Act) in connection with confirmation of sales of
the Shares. If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462
Registration Statement”), then any reference herein to the term “Registration
Statement” shall be deemed to include such Rule 462 Registration
Statement. Any reference in this Agreement to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the effective date of
the Registration Statement or the date of such Preliminary Prospectus or the
Prospectus, as the case may be and any reference to “amend”, “amendment” or
“supplement” with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “Exchange Act”) that are deemed to be incorporated by
reference therein. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Registration Statement and
the Prospectus.
At or prior to the time when sales of
the Shares were first made (the “Time of Sale”), the Company had prepared the
following information (collectively with the pricing information set forth on
Annex B, the “Time of Sale Information”): a Preliminary Prospectus dated January
14, 2009, and each “free-writing prospectus” (as defined pursuant to Rule 405
under the Securities Act) listed on Annex B hereto.
2. Purchase of the Shares by
the Underwriters. (a) The Company agrees to issue and sell the
Underwritten Shares to the several Underwriters as provided in this Agreement,
and each Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
number of Underwritten Shares set forth opposite such Underwriter’s name in
Schedule 1 hereto at a price per share (the “Purchase Price”) of
$10.715625.
In addition, the Company agrees to
issue and sell the Option Shares to the several Underwriters as provided in this
Agreement, and the Underwriters, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
shall have the option to purchase, severally and not jointly, from the Company
the Option Shares at the Purchase Price less an amount per share equal to any
dividends or distributions declared by the Company and payable on the
Underwritten Shares but not payable on the Option Shares.
If any Option Shares are to be
purchased, the number of Option Shares to be purchased by each Underwriter shall
be the number of Option Shares which bears the same ratio to the aggregate
number of Option Shares being purchased as the number of Underwritten Shares set
forth opposite the name of such Underwriter in Schedule 1 hereto (or such number
increased as set forth in Section 10 hereof) bears to the aggregate number of
Underwritten Shares being purchased from the Company by the several
Underwriters, subject, however, to such adjustments to eliminate any fractional
Shares as the Representative in its sole discretion shall make.
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The Underwriters may exercise the
option to purchase the Option Shares at any time in whole, or from time to time
in part, on or before the thirtieth day following the date of this Agreement, by
written notice from the Representative to the Company. Such notice
shall set forth the aggregate number of Option Shares as to which the option is
being exercised and the date and time when the Option Shares are to be delivered
and paid for which may be the same date and time as the Closing Date (as
hereinafter defined) but shall not be earlier than the Closing Date nor later
than the tenth full business day (as hereinafter defined) after the date of such
notice (unless such time and date are postponed in accordance with the
provisions of Section 10 hereof). Any such notice shall be given at
least two Business Days prior to the date and time of delivery specified
therein. Option Shares may be purchased by the Underwriters for the
purposes set forth under the caption “Underwriting” in the
Prospectus.
(b) The
Company understands that the Underwriters intend to make a public offering of
the Shares as soon after the effectiveness of this Agreement as in the judgment
of the Representative is advisable, and initially to offer the Shares on the
terms set forth in the Prospectus. The Company acknowledges and
agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) Payment
for the Shares shall be made by wire transfer in immediately available funds to
the account specified by the Company to the Representative in the case of the
Underwritten Shares, at the offices of ▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. New York City time on January 27,
2009, or at such other time or place on the same or such other date, not later
than the fifth business day thereafter, as the Representative and the Company
may agree upon in writing or, in the case of the Option Shares, on the date and
at the time and place specified by the Representative in the written notice of
the Underwriters’ election to purchase such Option Shares. The time
and date of such payment for the Underwritten Shares is referred to herein as
the “Closing Date” and the time and date for such payment for the Option Shares,
if other than the Closing Date, is herein referred to as the “Additional Closing
Date”.
Payment for the Shares to be purchased
on the Closing Date or the Additional Closing Date, as the case may be, shall be
made against delivery to the Representative for the respective accounts of the
several Underwriters of the Shares to be purchased on such date, with any
transfer taxes payable in connection with the sale of such Shares duly paid by
the Company. Delivery of the Shares shall be made through the
facilities of The Depository Trust Company (“DTC”) unless the Representative
shall otherwise instruct. The certificates for the Shares will be
made available for inspection and packaging by the Representative at the office
of DTC or its designated custodian not later than 1:00 P.M., New York City time,
on the business day prior to the Closing Date or the Additional Closing Date, as
the case may be.
(d) The
Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect
to the offering of Shares contemplated hereby (including in connection with
determining the terms of the offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any other
person. Additionally, neither the Representative nor any other
Underwriter is advising the Company or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The
Company shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Underwriters shall have no
responsibility or liability to the Company with respect thereto. Any
review by the Underwriters of the Company, the transactions contemplated hereby
or other matters relating to such transactions will be performed solely for the
benefit of the Underwriters and shall not be on behalf of the
Company.
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3. Representations and
Warranties of the Company. The Company represents and warrants
to each Underwriter that:
(a) Preliminary
Prospectus. No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus included in the Time of Sale Information, at the time of filing
thereof, complied in all material respects with the Securities Act, and no
Preliminary Prospectus, at the time of filing thereof, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in any Preliminary Prospectus, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 7(b)
hereof.
(b) Time of Sale
Information. The Time of Sale Information, at the Time of
Sale, did not, and at the Closing Date and as of the Additional Closing Date, as
the case may be, will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in such Time of Sale Information, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 7(b)
hereof. No statement of material fact included in the Prospectus has
been omitted from the Time of Sale Information and no statement of material fact
included in the Time of Sale Information that is required to be included in the
Prospectus has been omitted therefrom.
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(c) Issuer Free Writing
Prospectus. Other than the Registration Statement, the
Preliminary Prospectus and the Prospectus, the Company (including its agents and
representatives, other than the Underwriters in their capacity as such) has not
made, used, prepared, authorized, approved or referred to and will not prepare,
make, use, authorize, approve or refer to any “written communication” (as
defined in Rule 405 under the Securities Act) that constitutes an offer to sell
or solicitation of an offer to buy the Shares (each such communication by the
Company or its agents and representatives (other than a communication referred
to in clause (i) below) an “Issuer Free Writing Prospectus”) other than (i) any
document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the
Securities Act or Rule 134 under the Securities Act or (ii) the documents listed
on Annex B hereto, each electronic road show and any other written
communications approved in writing in advance by the
Representative. Each such Issuer Free Writing Prospectus complied in
all material respects with the Securities Act, has been or will be (within the
time period specified in Rule 433) filed in accordance with the Securities Act
(to the extent required thereby) and, when taken together with the Preliminary
Prospectus filed prior to the first use of such Issuer Free Writing Prospectus,
did not, and at the Closing Date and as of the Additional Closing Date, as the
case may be, 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; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in each such Issuer Free Writing Prospectus in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly for
use in such Issuer Free Writing Prospectus, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in Section 7(b) hereof. Each such
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares or until any
earlier date that the Company notified or notifies the Representative as
described in Section 4(e), did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein and any Preliminary Prospectus deemed
to be a part thereof that has not been superseded or modified.
(d) Registration Statement and
Prospectus. The Registration Statement is an “automatic shelf
registration statement” as defined under Rule 405 of the Securities Act that has
been filed with the Commission not earlier than three years prior to the date
hereof; and
no notice of objection of the Commission to the use of such registration
statement or any post-effective amendment thereto pursuant to Rule 401(g)(2)
under the Securities Act has been received by the Company. No
order suspending the effectiveness of the Registration Statement has been issued
by the Commission and no proceeding for that purpose or pursuant to Section 8A
of the Securities Act against the Company or related to the offering has been
initiated or threatened by the Commission; as of the applicable effective date
of the Registration Statement and any post-effective amendment thereto, the
Registration Statement 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 in order to make the statements therein not misleading; and as of the
date of the Prospectus and any amendment or supplement thereto and as of the
Closing Date and as of the Additional Closing Date, as the case may be, the
Prospectus does 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 in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in the Registration Statement and the
Prospectus and any amendment or supplement thereto, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in Section 7(b) hereof.
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(e) Incorporated
Documents. The documents incorporated by reference in the
Registration Statement, the Prospectus or the Time of Sale Information, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and none of such documents 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, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Registration Statement,
the Prospectus or the Time of Sale Information, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, 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, in the light of the circumstances under which they
were made, not misleading.
(f) Financial
Statements. The financial statements and the related notes
thereto of the Company and its consolidated subsidiaries included or
incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as
applicable, and present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with U.S. generally
accepted accounting principles (“GAAP”) applied on a consistent basis throughout
the periods covered thereby, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein (subject to normal year-end
adjustments, which adjustments, either individually or in the aggregate, will
not be material); the other financial information included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the
Prospectus has been derived from the accounting records of the Company and its
consolidated subsidiaries and presents fairly the information shown thereby; and
any pro forma financial
information and related notes thereto included or incorporated by reference in
the Registration Statement, the Time of Sale Information and the Prospectus have
been prepared in accordance with the applicable requirements of the Securities
Act and the Exchange Act, as applicable, and the assumptions underlying such
pro forma financial
information are reasonable and are set forth in the Registration Statement, the
Time of Sale Information and the Prospectus.
(g) No Material Adverse
Change. Except as otherwise described in the Registration
Statement, the Time of Sale Information or the Prospectus, since the date of the
most recent financial statements of the Company included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the
Prospectus, (i) there has been no material change in the capital stock,
long-term debt, notes payable or current portion of long-term debt of the
Company or any of the Significant Subsidiaries (defined below), or any dividend
or distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
business, management, financial position, stockholders’ equity, results of
operations or prospects of the Company and its subsidiaries taken as a whole;
(ii) neither the Company nor any of its subsidiaries has entered into any
transaction or agreement that is material to the Company and its subsidiaries
taken as a whole or incurred any liability or obligation, direct or contingent,
that is material to the Company and its subsidiaries taken as a whole; and (iii)
neither the Company nor any of its subsidiaries has sustained any material loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or
any action, order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in the
Registration Statement, the Time of Sale Information and the
Prospectus.
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(h) Organization and Good
Standing. The Company and each of the subsidiaries that is set
forth in Schedule 2 hereto (the “Significant Subsidiaries”) have been duly
organized and are validly existing and in good standing under the laws of their
respective jurisdictions of organization, are duly qualified to do business and
are in good standing in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or in good standing or have such
power or authority would not, individually or in the aggregate, have a material
adverse effect on the business, management, financial position, stockholders’
equity, results of operations or prospects of the Company and its subsidiaries
taken as a whole or on the performance by the Company of its obligations under
this Agreement (a “Material Adverse Effect”). The Significant
Subsidiaries are the only subsidiaries material to the business of the
Company.
(i)
Capitalization. The
Company has an authorized capitalization as set forth in the Registration
Statement, the Time of Sale Information and the Prospectus under the heading
“Capitalization”; all the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable and are not subject to any pre-emptive or similar rights; except
as described in or expressly contemplated by the Time of Sale Information and
the Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Company or any of its subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the issuance of
any capital stock of the Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options; the capital
stock of the Company conforms in all material respects to the description
thereof contained in the Registration Statement, the Time of Sale Information
and the Prospectus; and all the outstanding shares of capital stock or other
equity interests of each subsidiary owned, directly or indirectly, by the
Company (excluding, for purposes of this representation, each subsidiary set
forth in Schedule 3 hereto have been duly and validly authorized and issued, are
fully paid and non-assessable (except, in the case of any foreign subsidiary,
for directors’ qualifying shares) and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security interest,
restriction on voting or transfer or any other claim of any third
party.
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(j) Stock
Options. With respect to the stock options (the “Stock
Options”) granted pursuant to the stock-based compensation plans of the Company
(the “Company Stock Plans”), (i) each Stock Option intended to qualify as an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”), so qualifies, (ii) each grant of a Stock Option was
duly authorized no later than the date on which the grant of such Stock Option
was by its terms to be effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the board of directors of the
Company (or a duly constituted and authorized committee or delegatee thereof)
and any required stockholder approval by the necessary number of votes or
written consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto, (iii) each such grant of Stock
Options was made in accordance with the terms of the applicable Company Stock
Plans, the Exchange Act and all other applicable laws and regulatory rules or
requirements, including the rules of the New York Stock Exchange and any other
exchange on which Company securities are traded, (iv) the per share exercise
price of each Stock Option was equal to the fair market value of a share of
Common Stock on the applicable Grant Date and (v) each such grant was properly
accounted for in accordance with GAAP in the financial statements (including the
related notes) of the Company and disclosed in the Company’s filings with the
Commission in accordance with the Exchange Act and all other applicable
laws. The Company has not knowingly granted, and there is no and has
been no policy or practice of the Company of granting, Stock Options prior to,
or otherwise coordinated the grant of Stock Options with, the release or other
public announcement of material information regarding the Company or its
subsidiaries or their results of operations or prospects.
(k) Due
Authorization. The Company has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; and all action required to be taken for the due and proper
authorization, execution and delivery by it of this Agreement and the
consummation by it of the transactions contemplated hereby or by the Time of
Sale Information and the Prospectus has been duly and validly
taken.
(l)
Underwriting Agreement. This
Agreement has been duly authorized, executed and delivered by the
Company.
(m) The Shares. The
Shares have been duly authorized by the Company and, when issued and delivered
and paid for as provided herein, will be duly and validly issued and will be
fully paid and nonassessable and will conform to the descriptions thereof in the
Registration Statement, the Time of Sale Information and the Prospectus; and the
issuance of the Shares is not subject to any preemptive or similar
rights.
(n) Descriptions of the Underwriting
Agreement. This Agreement conforms in all material respects to
the description thereof contained in the Registration Statement, the Time of
Sale Information and the Prospectus.
(o) No Violation or
Default. (i) Neither the Company nor any of the
Significant Subsidiaries is in violation of its charter or by-laws or similar
organizational documents; (ii) neither the Company nor any of its
subsidiaries is in default, and no event has occurred that, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) neither the Company
nor any of its subsidiaries is in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of clauses (ii) and (iii) above,
for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
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(p) No Conflicts. The
execution, delivery and performance by the Company of this Agreement, the
issuance and sale of the Shares and the consummation of the transactions
contemplated by this Agreement or the Time of Sale Information and the
Prospectus will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result in any violation
of the provisions of the charter or by-laws or similar organizational documents
of the Company or any of the Significant Subsidiaries or (iii) result in the
violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority
except, in the case of clauses (i) and (iii) above, for any such breach or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(q) No Consents
Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated by this Agreement or the Time of
Sale Information and the Prospectus, except for the registration of the Shares
under the Securities Act and such consents, approvals, authorizations, orders
and registrations or qualifications as may be required under applicable state
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(r) Legal
Proceedings. Except as described in the Registration
Statement, the Time of Sale Information and the Prospectus, there are no legal,
governmental or regulatory investigations, actions, suits or proceedings pending
to which the Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its subsidiaries, could reasonably be expected to have a Material
Adverse Effect; to the knowledge of the Company, no such investigations,
actions, suits or proceedings are threatened or contemplated by any governmental
or regulatory authority or threatened by others; and (i) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are
required under the Securities Act to be described in the Registration Statement
or the Prospectus that are not so described in the Registration Statement, the
Time of Sale Information and the Prospectus and (ii) there are no statutes,
regulations or contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement, the Time of Sale Information or the
Prospectus that are not so filed as exhibits to the Registration Statement or
described in the Registration Statement, the Time of Sale Information and the
Prospectus.
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(s) Independent
Accountants. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain
financial statements of the Company and its subsidiaries, are an independent
registered public accounting firm with respect to the Company and its
subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board (United States) and
as required by the Securities Act.
(t) Investment Portfolio; Investment
Policies; Title to Real and Personal Property. As of the date
hereof, the investment portfolio (other than cash and cash equivalents) of the
Company consists of residential and commercial real estate loans, residential,
commercial and CDO real estate securities and a guaranteed investment contract
entered into by Acacia Option ARM 1 CDO, Ltd. As of the date hereof,
the derivative financial instruments held by the Company consist of interest
rate cap agreements, interest rate swap agreements and credit default swap
agreements. Except as otherwise described in the Registration
Statement, the Time of Sale Information or the Prospectus, the Company has no
plan or intention to materially alter its stated investment policies and
operating policies and strategies as such are described in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007 filed with the
Commission and the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 filed with the Commission. The Company is and at
all times has been in compliance with its risk-adjusted capital guidelines,
except as the Board of Directors of the Company shall have expressly approved
otherwise in each instance of non-compliance. The Company and its
subsidiaries have good and marketable title in fee simple to, or have valid
rights to lease or otherwise use, all items of real and personal property that
are material to the respective businesses of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries or (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Except for “real estate
owned” properties owned by the Company as a result of foreclosures on delinquent
loans, if any, the Company and its subsidiaries do not own any real
property. Any real property and buildings held under lease by the
Company and its subsidiaries are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus, or except as would not have a
Material Adverse Effect.
(u) Title to Intellectual
Property. To the Company’s best knowledge, (i) the Company and
its subsidiaries own or possess adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
their respective businesses; and (ii) the conduct of their respective businesses
will not conflict in any material respect with any such rights of others, and
the Company and its subsidiaries have not received any notice of any claim of
infringement or conflict with any such rights of others.
-10-
(v) No Undisclosed
Relationships. No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries, on the one hand, and
the directors, officers, stockholders, customers or suppliers of the Company or
any of its subsidiaries, on the other, that is required by the Securities Act to
be described in the Registration Statement and the Prospectus and that is not so
described in such documents and in the Time of Sale Information.
(w) Investment Company
Act. Neither the Company nor any of its subsidiaries is and,
after giving effect to the offering and sale of the Shares and the application
of the proceeds thereof as described in the Registration Statement, the Time of
Sale Information and the Prospectus, will be required to be registered as an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company Act”).
(x) Taxes. The Company
and its subsidiaries have paid all federal, state, local and foreign taxes and
filed all tax returns required to be paid or filed through the date hereof
(taking into account all permitted extensions); and except as otherwise
disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus, there is no material tax deficiency that has been, or could
reasonably be expected to be, asserted against the Company or any of its
subsidiaries or any of their respective properties or assets.
(y) REIT
Qualification. The
Company, commencing with its taxable year ended December 31, 1994, has
been organized and operated in conformity with the requirements for
qualification and taxation as a “real estate investment trust” (“REIT”) under
Sections 856 through 860 of the Code; its proposed method of operation as
described in the Registration Statement, the Time of Sale Information and the
Prospectus will enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code, and no actions have been taken (or not
taken which are required to be taken) which would cause such qualification to be
lost; and the Company intends to continue to operate in a manner which would
permit it to qualify as a REIT under the Code.
(z) Qualified REIT
Subsidiaries. Sequoia Mortgage Funding
Corporation, Juniper Trust, Inc. and Tanoak Commercial Capital Corporation
are “qualified REIT subsidiaries” within the meaning of Section 856(i) of
the Code. Any securitization trusts formed by the Company’s
“qualified REIT subsidiaries” are either (i) treated as real estate
mortgage investment conduits, or (ii) disregarded for tax purposes, with
such trust’s assets treated as assets of Sequoia Mortgage Funding
Corporation. The Company has no other “qualified REIT
subsidiaries”.
(aa)
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., Acacia CDO 5, Ltd., Acacia CDO 6, Ltd., Acacia
CDO 7, Ltd., Acacia CDO 8, Ltd., Acacia CDO 9, Ltd., Acacia CDO 10, Ltd., Acacia
CDO 11, Ltd., Acacia CDO 12, Ltd., Acacia Option ARM 1 CDO, Ltd., Acacia CRE CDO
1, Ltd., Acacia CRE CDO 2, Ltd., Acacia CDO 13, Ltd., RESIX Finance Limited,
Crest G−Star−2A, Ltd., Millstone III CDO, Ltd., GSAA 2006−NIM8, Ltd., Markov CDO
I, Ltd., Millstone IV CDO, Ltd., Juniper Holdings, Inc. (formerly known as
Cypres TRS, Inc.), Redwood Mortgage Funding, Inc., Redwood Asset Management,
Inc. and Tanoak Asset Management, Inc. have been or are “taxable REIT
subsidiaries” within the meaning of Section 856(l) of the Code. The Company has
had and has no other “taxable REIT subsidiaries” other than wholly-owned
subsidiaries of the foregoing.
-11-
(bb) Taxable Mortgage
Pool. Neither the Company nor any of its subsidiaries or asset
pools are treated as a taxable mortgage pool.
(cc) Licenses and
Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement, the Time of
Sale Information and the Prospectus, except where the failure to possess or make
the same would not, individually or in the aggregate, have a Material Adverse
Effect; except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, neither the Company nor any of its subsidiaries
has received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in the
ordinary course; and, to the knowledge of the Company, all third-party service
providers used, employed, hired or otherwise contracted with by the Company or
any of its subsidiaries have obtained all necessary licenses or other relevant
authorization to do business in all jurisdictions in which such third-party
service providers do business on behalf of the Company or its subsidiaries,
except where the failure of that service provider to obtain such license or
authorization would not, individually or in the aggregate, have a Material
Adverse Effect.
(dd) No Labor
Disputes. No labor disturbance by or dispute with employees of
the Company or any of its subsidiaries exists or, to the best knowledge of the
Company, is contemplated or threatened and the Company is not aware of any
existing or imminent labor disturbance by, or dispute with, the employees of any
of its or its subsidiaries’ principal suppliers, contractors or customers,
except, in each case, as would not have a Material Adverse Effect.
(ee) Compliance With Environmental
Laws. (i) The Company and its subsidiaries (x) are, and at all
prior times were, in compliance with any and all applicable federal, state,
local and foreign laws, rules, regulations, requirements, decisions and orders
relating to the protection of human health or safety, the environment, natural
resources, hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”), (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable Environmental Laws to conduct their respective
businesses, and (z) have not received notice of any actual or potential
liability under or relating to any Environmental Laws, including for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, and have no knowledge of any
event or condition that would reasonably be expected to result in any such
notice, and (ii) there are no costs or liabilities associated with
Environmental Laws of or relating to the Company or its subsidiaries, except in
the case of each of (i) and (ii) above, for any such failure to comply, or
failure to receive required permits, licenses or approvals, or cost or
liability, as would not, individually or in the aggregate, have a Material
Adverse Effect; and (iii) except as described in each of the Registration
Statement, the Time of Sale Information and the Prospectus, (x) there are no
proceedings that are pending, or that are known to be contemplated, against the
Company or any of its subsidiaries under any Environmental Laws in which a
governmental entity is also a party, other than such proceedings that would not
reasonably be expected to have a Material Adverse Effect, (y) the Company and
its subsidiaries are not aware of any issues regarding compliance with
Environmental Laws, or liabilities or other obligations under Environmental Laws
or concerning hazardous or toxic substances or wastes, pollutants or
contaminants, that could reasonably be expected to have a Material Adverse
Effect, and (z) none of the Company and its subsidiaries anticipates
capital expenditures relating to any Environmental Laws that would be material
to the Company and its subsidiaries taken as a whole.
-12-
(ff) Hazardous
Substances. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic wastes or hazardous substances, including, but not
limited to, any naturally occurring radioactive materials, brine, drilling mud,
crude oil, natural gas liquids and other petroleum materials, by, due to or
caused by the Company or any of its subsidiaries (or, to the best of the
Company’s knowledge, any other entity (including any predecessor) for whose acts
or omissions the Company or any of its subsidiaries is or could reasonably be
expected to be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other property, in
violation of any Environmental Laws or in a manner or to a location that could
reasonably be expected to give rise to any liability under the Environmental
Laws, except for any violation or liability which would not, individually or in
the aggregate, have a Material Adverse Effect.
(gg) Compliance With
ERISA. (i) Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Code would have any
liability (each, a “Plan”) has been maintained in material compliance with its
terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Code; (ii) no
Plan has failed to satisfy the minimum funding standard (within the meaning of
Section 412 of the Code or Section 302 of ERISA), whether or not waived, nor is
any such Plan in "at risk" status (as defined in Section 303(i)(4) of ERISA or
Section 430(i)(4) of the Code); (iii) no “reportable event” (within the meaning
of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur
which could reasonably be expected to result in a Material Adverse Effect; and
(iv) neither the Company nor any member of the Controlled Group has incurred,
nor reasonably expects to incur, any material liability under Title IV of ERISA
(other than contributions to the Plan or premiums to the Pension Benefit
Guaranty Corporation, in the ordinary course and without default) in respect of
a Plan (including a “multiemployer plan”, within the meaning of Section
4001(a)(3) of ERISA).
(hh) Disclosure
Controls. The Company and its subsidiaries maintain an
effective system of “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company and its
subsidiaries have carried out evaluations of the effectiveness of their
disclosure controls and procedures as required by Rule 13a-15 of the Exchange
Act.
-13-
(ii) Accounting
Controls. The Company and its subsidiaries maintain systems of
“internal control over financial reporting,” as defined in Rule 13a-15(f) of the
Exchange Act, that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, and
includes those policies and procedures that: (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company and its subsidiaries on a
consolidated basis; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures are being made only in accordance with authorizations of management
and directors of the Company and its subsidiaries; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the assets of the Company and its subsidiaries that could
have a material effect on the consolidated financial statements of the
Company. Except as disclosed in the Registration Statement, the Time
of Sale Information and the Prospectus, there are no material weaknesses in the
Company’s internal controls. The Company’s auditors and the Audit
Committee of the Board of Directors of the Company have been advised of: (i) all
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information; and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal controls over financial reporting.
(jj) Insurance. The
Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks as are prudent and customary in the businesses in which the
Company and its subsidiaries are engaged; and neither the Company nor any of its
subsidiaries has (i) received notice from any insurer or agent of such insurer
that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (ii) any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at reasonable cost from similar
insurers as may be necessary to continue its business.
(kk) No Unlawful
Payments. None of the Company or any of its subsidiaries or,
to the knowledge of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
-14-
(ll)
Compliance
with Money Laundering Laws. The operations of the Company and
its subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(mm) Compliance with
OFAC. None of the Company, any of its subsidiaries or, to the
knowledge of the Company, any director, officer, agent, employee or Affiliate of
the Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering of the Shares hereunder, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
(nn) No Restrictions on
Subsidiaries. No subsidiary of the Company (excluding, for
purposes of this representation, each subsidiary set forth in Schedule 4 hereto)
is currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary’s properties or
assets to the Company or any other subsidiary of the Company.
(oo) No Broker’s
Fees. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement and that certain engagement letter by and between the Company and
▇.▇. ▇▇▇▇▇▇ Securities, Inc., dated as of January 5, 2009) that would give rise
to a valid claim against the Company or any of its subsidiaries or any
Underwriter for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Shares.
(pp) No Registration
Rights. No person has the right to require the Company or any
of its subsidiaries to register any securities for sale under the Securities Act
by reason of the filing of the Registration Statement with the Commission or the
issuance and sale of the Shares.
-15-
(qq) No
Stabilization. The Company has not taken, directly or
indirectly, any action designed to or that could reasonably be expected to cause
or result in any stabilization or manipulation of the price of the
Shares.
(rr)
Margin
Rules. Neither the issuance, sale and delivery of the Shares
nor the application of the proceeds thereof by the Company as described in the
Registration Statement, the Time of Sale Information and the Prospectus will
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.
(ss) Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Registration Statement, the Time of Sale Information and the
Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith. The statements and financial
information (including the assumptions described herein) included in the
Registration Statement, the Time of Sale Information and the Prospectus under
the headings “Summary,” “Summary —
Recent Developments,” “Summary —
The Offering,” “Distribution Policy” and “Use of Proceeds” (collectively, the
“Projections”) (i) were made by the Company with a reasonable basis and in good
faith and reflect the Company's good faith best estimate of the matters
described therein, and (ii) have been prepared in accordance with Item 10 of
Regulation S-K under the Securities Act; the assumptions used in the preparation
of the Projections are reasonable; and the Company has taken into consideration
all factors, including any business, economic or industry developments affecting
the Company and its subsidiaries, in assessing the reasonableness of the
assumptions underlying the Projections.
(tt)
Statistical
and Market Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement, the Time of Sale
Information and the Prospectus is not based on or derived from sources that are
reliable and accurate in all material respects.
(uu) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. Except as otherwise disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, there is and has
been no failure on the part of the Company or any of the Company’s directors or
officers, in their capacities as such, to comply with any provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), including Section 402 related
to loans and Sections 302 and 906 related to certifications.
(vv) Status under the Securities
Act. At the time of filing the Registration Statement and any
post-effective amendments thereto, at the earliest time thereafter that the
Company or any offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Shares and at the
date hereof, the Company was not and is not an “ineligible issuer,” as defined
in Rule 405 under the Securities Act. At the time of filing the
Registration Statement and the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007, the Company was a well-known seasoned issuer, as
defined in Rule 405 under the Securities Act, and, at the date hereof, the
Company is, and, at the Closing Date and any Additional Closing Date, the
Company will be, eligible to use the Registration Statement in connection with
the offering and sale of the Shares. The Company has paid the
registration fee for this offering pursuant to Rule 456(b)(1) under the
Securities Act or will pay such fees within the time period required by such
rule (without giving effect to the proviso therein) and in any event prior to
the Closing Date.
-16-
4. Further Agreements of the
Company. The Company covenants and agrees with each
Underwriter that:
(a) Required
Filings. The Company will file the final Prospectus with the
Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B
or 430C under the Securities Act, will file any Issuer Free Writing Prospectus
to the extent required by Rule 433 under the Securities Act; and will file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; and the Company will furnish copies of the
Prospectus and each Issuer Free Writing Prospectus (to the extent not previously
delivered) to the Underwriters in New York City prior to 10:00 A.M., New York
City time, on the business day next succeeding the date of this Agreement in
such quantities as the Representative may reasonably request. The
Company will pay the registration fees for this offering within the time period
required by Rule 456(b)(1) under the Securities Act (without giving effect to
the proviso therein) and in any event prior to the Closing Date.
(b) Delivery of
Copies. The Company will deliver, without charge, (i) to the
Representative, two signed copies of the Registration Statement as originally
filed and each amendment thereto, in each case including all exhibits and
consents filed therewith and documents incorporated by reference therein; and
(ii) to each Underwriter (A) a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits) and (B) during
the Prospectus Delivery Period (as defined below), as many copies of the
Prospectus (including all amendments and supplements thereto and documents
incorporated by reference therein) and each Issuer Free Writing Prospectus as
the Representative may reasonably request. As used herein, the term
“Prospectus Delivery Period” means such period of time after the first date of
the public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to be
delivered (or required to be delivered but for Rule 172 under the Securities
Act) in connection with sales of the Shares by any Underwriter or
dealer.
(c) Amendments or Supplements, Issuer
Free Writing Prospectuses. During the Prospectus Delivery
Period, before making, preparing, using, authorizing, approving, referring to or
filing any Issuer Free Writing Prospectus, and before filing any amendment or
supplement to the Registration Statement or the Prospectus, whether before or
after the time that the Registration Statement becomes effective, the Company
will furnish to the Representative and counsel for the Underwriters a copy of
the proposed Issuer Free Writing Prospectus, amendment or supplement for review
and will not make, prepare, use, authorize, approve, refer to or file any such
Issuer Free Writing Prospectus or file any such proposed amendment or supplement
to which the Representative reasonably objects.
-17-
(d) Notice to the
Representative. The Company will advise the Representative
promptly, and confirm such advice in writing, (i) when the Registration
Statement has become effective; (ii) when any amendment to the Registration
Statement has been filed or becomes effective; (iii) when any supplement to the
Prospectus or any Issuer Free Writing Prospectus or any amendment to the
Prospectus has been filed; (iv) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or the receipt of any comments from the Commission relating to the
Registration Statement or any other request by the Commission for any additional
information; (v) of the issuance by the Commission of any order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any Preliminary Prospectus, any of the Time of Sale Information or the
Prospectus or the initiation or threatening of any proceeding for that purpose
or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any
event within the Prospectus Delivery Period as a result of which the Prospectus,
the Time of Sale Information or any Issuer Free Writing Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances existing
when the Prospectus, the Time of Sale Information or any such Issuer Free
Writing Prospectus is delivered to a purchaser, not misleading; (vii) of
the receipt by the Company of any notice of objection of the Commission to the
use of the Registration Statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act; and (viii) of the receipt
by the Company of any notice with respect to any suspension of the qualification
of the Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
best efforts to prevent the issuance of any such order suspending the
effectiveness of the Registration Statement, preventing or suspending the use of
any Preliminary Prospectus, any of the Time of Sale Information or the
Prospectus or suspending any such qualification of the Shares and, if any such
order is issued, will obtain as soon as possible the withdrawal
thereof.
(e) Ongoing
Compliance. (1) If during the Prospectus Delivery Period (i)
any event shall occur or condition shall exist as a result of which the
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to paragraph (c) above, file with the
Commission and furnish to the Underwriters and to such dealers as the
Representative may designate, such amendments or supplements to the Prospectus
as may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with law and (2) if at any time prior to the Closing Date (i) any
event shall occur or condition shall exist as a result of which the Time of Sale
Information as then amended or supplemented would include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances existing when the Time
of Sale Information is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Time of Sale Information to comply with
law, the Company will immediately notify the Underwriters thereof and forthwith
prepare and, subject to paragraph (c) above, file with the Commission (to the
extent required) and furnish to the Underwriters and to such dealers as the
Representative may designate, such amendments or supplements to the Time of Sale
Information as may be necessary so that the statements in the Time of Sale
Information as so amended or supplemented will not, in the light of the
circumstances, be misleading or so that the Time of Sale Information will comply
with law.
-18-
(f) Blue Sky
Compliance. The Company will qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualifications in
effect so long as required for distribution of the Shares; provided that the
Company shall not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(g) Earning
Statement. The Company will make generally available to its
security holders and the Representative as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the “effective date” (as defined in Rule 158) of the
Registration Statement.
(h) Clear Market. For
a period of 90 days after the date of this Agreement, the Company will not (i)
offer, pledge, announce the intention to sell, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Stock or any securities convertible into
or exercisable or exchangeable for Stock (for the avoidance of doubt, the filing
of either a post-effective amendment to the Company’s existing automatic shelf
registration statement, or a new shelf registration statement on Form S-3 to
replace such existing automatic shelf registration statement shall not be
considered an announcement of an intention to sell securities) or
(ii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Stock or such other securities, in cash or otherwise, without the
prior written consent of ▇.▇. ▇▇▇▇▇▇ Securities Inc., other than the (w) Shares
to be sold hereunder; (x) shares of Common Stock issued pursuant to the
Company’s Direct Stock Purchase and Dividend Reinvestment Plan; (y) shares of
Common Stock, options to purchase shares of Common Stock or other equity-based
awards granted under the Company’s existing equity incentive plans, including
the Employee Stock Purchase Plan or any replacement plan under a new
registration statement; and (z) any shares of Common Stock issued upon the
exercise of options or other awards (including deferred stock units) granted
under existing equity incentive plans, including the Employee Stock Purchase
Plan. Notwithstanding the foregoing, if (1) during the last 17 days of the
90-day restricted period, the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 90-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 90-day period, the restrictions imposed by this Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event.
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(i) Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Shares as described in the Registration Statement, the Time of Sale
Information and the Prospectus under the heading “Use of Proceeds”.
(j) No
Stabilization. The Company will not take, directly or
indirectly, any action designed to or that could reasonably be expected to cause
or result in any stabilization or manipulation of the price of the
Shares.
(k) Exchange
Listing. The Company will use its best efforts to list,
subject to notice of issuance, the Shares on the New York Stock Exchange (the
“Exchange”).
(l) Reports. During
the period of three years following the date of this Agreement, except for such
documents that are publicly available on ▇▇▇▇▇, the Company will furnish to the
Representative, as soon as they are available, copies of all reports or other
communications (financial or other) furnished to holders of the Shares, and
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or automatic quotation
system.
(m) Record
Retention. The Company will, pursuant to reasonable procedures
developed in good faith, retain copies of each Issuer Free Writing Prospectus
that is not filed with the Commission in accordance with Rule 433 under the
Securities Act.
(n) Taxes. The Company
and its subsidiaries will pay all federal, state, local and foreign taxes and
will file all tax returns required to be paid or filed for the current and
subsequent taxable years; and except as otherwise disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, there will be no
material tax deficiency asserted against the Company or any of its subsidiaries
or any of their respective properties or assets.
(o) REIT
Qualification. The
Company will continue to be organized and operated in conformity with the
requirements for qualification and taxation as a REIT under the Code, the
Company’s proposed method of operation will enable it to continue to meet
the requirements for qualification and taxation as a REIT under the Code
for its current and subsequent taxable years and the Company will not
change its operations or engage in activities which would cause it to fail to
qualify as a REIT under the Code. The Company shall also continue to
cause each of Sequoia Mortgage Funding Corporation, Juniper Trust, Inc. and
Tanoak Commercial Capital Corporation to be “qualified REIT subsidiaries” within
the meaning of Section 856(i) of the Code and continue to cause each of the
entities referred to in Section 3(aa) to be “taxable REIT subsidiaries” within
the meaning of Section 856(l) of the Code.
(p) Investment Company
Act. The Company will not be or become, at any time prior to
the expiration of six months after the date hereof,
an “investment company,” as such term is defined in the Investment Company Act.
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(q) Downgrade of
Securities. The Company shall provide prompt written notice to
the Representative if a downgrading shall have occurred in the rating accorded
any securities or preferred stock of or guaranteed by any of the Company’s
subsidiaries by any “nationally recognized statistical rating organization,” as
such term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act.
5. Certain Agreements of the
Underwriters. Each Underwriter hereby represents and agrees
that:
(a) It
has not and will not use, authorize use of, refer to, or participate in the
planning for use of, any “free writing prospectus”, as defined in Rule 405 under
the Securities Act (which term includes use of any written information furnished
to the Commission by the Company and not incorporated by reference into the
Registration Statement and any press release issued by the Company) other than
(i) a free writing prospectus that contains no “issuer information” (as defined
in Rule 433(h)(2) under the Securities Act) that was not included (including
through incorporation by reference) in the Preliminary Prospectus or a
previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing
Prospectus listed on Annex B or prepared pursuant to Section 3(c) or Section
4(c) above (including any electronic road show), or (iii) any free writing
prospectus prepared by such underwriter and approved by the Company in advance
in writing (each such free writing prospectus referred to in clauses (i) or
(iii), an “Underwriter Free Writing Prospectus”).
(b) It
has not and will not, without the prior written consent of the Company, use any
free writing prospectus that contains the final terms of the Shares unless such
terms have previously been included in a free writing prospectus filed with the
Commission.
(c) It
is not subject to any pending proceeding under Section 8A of the Securities Act
with respect to the offering (and will promptly notify the Company if any such
proceeding against it is initiated during the Prospectus Delivery
Period).
6. Conditions of Underwriters’
Obligations. The obligation of each Underwriter to purchase
the Underwritten Shares on the Closing Date or the Option Shares on the
Additional Closing Date, as the case may be, as provided herein is subject to
the performance by the Company of its covenants and other obligations hereunder
and to the following additional conditions:
(a) Registration Compliance; No Stop
Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose,
pursuant to Rule 401(g)(2) or pursuant to Section 8A under the Securities Act
shall be pending before or threatened by the Commission; the Prospectus and each
Issuer Free Writing Prospectus shall have been timely filed with the Commission
under the Securities Act (in the case of an Issuer Free Writing Prospectus, to
the extent required by Rule 433 under the Securities Act) and in accordance with
Section 4(a) hereof; and all requests by the Commission for additional
information shall have been complied with to the reasonable satisfaction of the
Representative.
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(b) Representations and
Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of
the Closing Date or the Additional Closing Date, as the case may be; and the
statements of the Company and its officers made in any certificates delivered
pursuant to this Agreement shall be true and correct on and as of the Closing
Date or the Additional Closing Date, as the case may be.
(c) No
Downgrade. Subsequent to the earlier of (A) the Time of Sale
and (B) the execution and delivery of this Agreement, (i) no downgrading shall
have occurred in the rating accorded any securities or preferred stock of or
guaranteed by the Company by any “nationally recognized statistical rating
organization,” as such term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review, or has changed its
outlook with respect to, its rating of any securities or preferred stock of or
guaranteed by the Company (other than an announcement with positive implications
of a possible upgrading).
(d) No Material Adverse
Change. No event or condition of a type described in Section
3(g) hereof shall have occurred or shall exist, which event or condition is not
described in the Time of Sale Information (excluding any amendment or supplement
thereto) and the Prospectus (excluding any amendment or supplement thereto) and
the effect of which in the judgment of the Representative makes it impracticable
or inadvisable to proceed with the offering, sale or delivery of the Shares on
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
(e) Officer’s
Certificate. The Representative shall have received on and as
of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of the chief financial officer or chief accounting officer of the
Company and one additional senior executive officer of the Company who is
satisfactory to the Representative (i) confirming that such officers have
carefully reviewed the Registration Statement, the Time of Sale Information and
the Prospectus and, to the best knowledge of such officers, the representations
set forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming
that the other representations and warranties of the Company in this Agreement
are true and correct and that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to such Closing Date and (iii) to the effect set forth in paragraphs
(a), (c) and (d) above.
(f) Comfort
Letters. On the date of this Agreement and on the Closing Date
or the Additional Closing Date, as the case may be, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall
have furnished to the Representative, at the request of the Company, letters,
dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representative, containing statements and information of the type customarily
included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained or incorporated
by reference in the Registration Statement, the Time of Sale
Information and the Prospectus; provided, that the letter delivered on the
Closing Date or the Additional Closing Date, as the case may be shall use a
“cut-off” date no more than three business days prior to such Closing Date or
such Additional Closing Date, as the case may be.
-22-
(g) Opinions and Negative Assurance
Letter for the Company. (i) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
counsel for the Company, shall have furnished to the Representative, at the
request of the Company, their written opinion and negative assurance letter,
dated the Closing Date or the Additional Closing Date, as the case may be, and
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representative, to the effect set forth in Annex A hereto; (ii) ▇▇▇▇▇▇▇
LLP, Maryland counsel for the Company, shall have furnished to the
Representative, at the request of the Company, their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex A-1 hereto; (iii) ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ LLP, tax counsel for the Company, shall have furnished to the
Representative, at the request of the Company, their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex A-2 hereto; (iv) Walkers,
Cayman Islands counsel for the Company, shall have furnished to the
Representative, at the request of the Company, their written opinions, dated the
Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex A-3 and Annex A-4 hereto; (v)
Dechert LLP, special counsel for the Company, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex A-5 hereto; and (vi) ▇▇▇▇▇
& ▇▇▇▇▇, special counsel for the Company, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in the form and substance reasonably satisfactory to the
Representatives, to the effect set forth in Annex A-6 hereto.
(h) Opinion and 10b-5 Statement of
Counsel for the Underwriters. The Representative shall have
received on and as of the Closing Date or the Additional Closing Date, as the
case may be, an opinion and 10b-5 statement of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel
for the Underwriters, with respect to such matters as the Representative may
reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.
(i) No Legal Impediment to
Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any
federal, state or foreign governmental or regulatory authority that would, as of
the Closing Date or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares; and no injunction or order of any federal, state
or foreign court shall have been issued that would, as of the Closing Date or
the Additional Closing Date, as the case may be, prevent the issuance or sale of
the Shares.
(j) Good Standing. The
Representative shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may be, satisfactory evidence of the good
standing of the Company and its subsidiaries in their respective jurisdictions
of organization and their good standing as foreign entities in such other
jurisdictions as the Representative may reasonably request, in each case in
writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdictions.
-23-
(k) Exchange
Listing. The Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved for
listing on the New York Stock Exchange, subject to official notice of
issuance.
(l)
Lock-up
Agreements. The “lock-up” agreements, each substantially in
the form of Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company relating to sales and certain other dispositions of
shares of Stock or certain other securities, delivered to you on or before the
date hereof, shall be full force and effect on the Closing Date or Additional
Closing Date, as the case may be.
(m) Additional
Documents. On or prior to the Closing Date or the Additional
Closing Date, as the case may be, the Company shall have furnished to the
Representative such further certificates and documents as the Representative may
reasonably request.
All opinions, letters, certificates and
evidence mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and
Contribution.
(a) Indemnification of the
Underwriters. The Company agrees to indemnify and hold
harmless each Underwriter, its affiliates, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), joint
or several, that arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, not misleading, (ii) or any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto), any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) or
any Time of Sale Information (including any Time of Sale Information that has
subsequently been amended), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, in each case except insofar as such losses,
claims, damages or liabilities arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representative expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
-24-
(b) Indemnification of the
Company. Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the indemnity set forth in paragraph (a)
above, but only with respect to any losses, claims, damages or liabilities that
arise out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any
information relating to such Underwriter furnished to the Company in writing by
such Underwriter through the Representative expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto),
any Issuer Free Writing Prospectus or any Time of Sale Information, it being
understood and agreed upon that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: the concession and reallowance figures appearing in
the second and third sentences of the third paragraph under the caption
“Underwriting”, and the information contained in the tenth paragraph relating to
passive market making under the caption “Underwriting”.
(c) Notice and
Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the “Indemnified
Person”) shall promptly notify the person against whom such indemnification may
be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have under paragraph (a) or (b) above except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the
failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under
paragraph (a) or (b) above. If any such proceeding shall be brought
or asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the
consent of the Indemnified Person, be counsel to the Indemnifying Person) to
represent the Indemnified Person in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying
Person; or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interest between
them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid or reimbursed as they are
incurred. Any such separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be
designated in writing by ▇.▇. ▇▇▇▇▇▇ Securities Inc. and any such separate firm
for the Company, its directors, its officers who signed the Registration
Statement and any control persons of the Company shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify each Indemnified Person from and against
any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of
such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
-25-
(d) Contribution. If
the indemnification provided for in paragraphs (a) and (b) above is unavailable
to an Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Underwriters, on the other, from the offering of the Shares or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of the Company,
on the one hand, and the Underwriters, on the other, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other, shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received
by the Company from the sale of the Shares and the total underwriting discounts
and commissions received by the Underwriters in connection therewith, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Shares. The relative fault of the
Company, on the one hand, and the Underwriters, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
-26-
(e) Limitation on
Liability. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 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 that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with any such action or
claim. Notwithstanding the provisions of this Section 7, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
such Underwriter with respect to the offering of the Shares exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.
(f) Non-Exclusive
Remedies. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.
8. Effectiveness of
Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9.
Termination. This
Agreement may be terminated in the absolute discretion of the Representative, by
notice to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date or, in the case of the Option Shares, prior to the
Additional Closing Date (i) trading generally shall have been suspended or
materially limited on or by any of the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Stock Market, the Chicago Board Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade; (ii) trading of
any securities issued or guaranteed by the Company shall have been suspended on
any exchange or in any over-the-counter market; (iii) a general moratorium
on commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or any calamity or crisis, either within or outside
the United States, that, in the judgment of the Representative, is material and
adverse and makes it impracticable or inadvisable to proceed with the offering,
sale or delivery of the Shares on the Closing Date or the Additional Closing
Date, as the case may be, on the terms and in the manner contemplated by this
Agreement, the Time of Sale Information and the Prospectus.
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10. Defaulting
Underwriter. (a) If, on the Closing Date or the
Additional Closing Date, as the case may be, any Underwriter defaults on its
obligation to purchase the Shares that it has agreed to purchase hereunder on
such date, the non-defaulting Underwriters may in their discretion arrange for
the purchase of such Shares by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such
default by any Underwriter, the non-defaulting Underwriters do not arrange for
the purchase of such Shares, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Underwriters to purchase such Shares on such terms. If
other persons become obligated or agree to purchase the Shares of a defaulting
Underwriter, either the non-defaulting Underwriters or the Company may postpone
the Closing Date or the Additional Closing Date, as the case may be, for up to
five full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any
such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise
requires, any person not listed in Schedule 1 hereto that, pursuant to this
Section 10, purchases Shares that a defaulting Underwriter agreed but failed to
purchase.
(b) If,
after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and
the Company as provided in paragraph (a) above, the aggregate number of Shares
that remain unpurchased on the Closing Date or the Additional Closing Date, as
the case may be, does not exceed one-tenth of the aggregate number of Shares to
be purchased on such date, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares that such
Underwriter agreed to purchase hereunder on such date plus such Underwriter’s
pro rata share (based on the number of Shares that such Underwriter agreed to
purchase on such date) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If,
after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and
the Company as provided in paragraph (a) above, the aggregate number of Shares
that remain unpurchased on the Closing Date or the Additional Closing Date, as
the case may be, exceeds one-eleventh of the aggregate amount of Shares to be
purchased on such date, or if the Company shall not exercise the right described
in paragraph (b) above, then this Agreement or, with respect to any Additional
Closing Date, the obligation of the Underwriters to purchase Shares on the
Additional Closing Date, as the case may be, shall terminate without liability
on the part of the non-defaulting Underwriters. Any termination of
this Agreement pursuant to this Section 10 shall be without liability on the
part of the Company, except that the Company will continue to be liable for the
payment of expenses as set forth in Section 11 hereof and except that the
provisions of Section 7 hereof shall not terminate and shall remain in
effect.
(d) Nothing
contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its
default.
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11. Payment of
Expenses. (a) Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder, including
without limitation, (i) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Shares and any taxes payable in that
connection; (ii) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the Preliminary
Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and
the Prospectus (including all exhibits, amendments and supplements thereto) and
the distribution thereof; (iii) the costs of reproducing and distributing
this Agreement; (iv) the fees and expenses of the Company’s counsel and
independent accountants; (v) the fees and expenses incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Shares under the laws of such jurisdictions as the
Representative may designate and the preparation, printing and distribution of a
Blue Sky Memorandum (including the related fees and expenses of counsel for the
Underwriters of up to $10,000); (vi) the cost of preparing stock
certificates; (vii) the costs and charges of any transfer agent and any
registrar; (viii) all expenses and application fees incurred in connection
with any filing with, and clearance of the offering by, the Financial Industry
Regulatory Authority; (ix) all expenses incurred by the Company in
connection with any “road show” presentation to potential investors, including
the cost of aircraft chartered in connection with the road show; and
(x) all expenses and application fees related to the listing of the Shares
on the Exchange.
(b) If
(i) this Agreement is terminated pursuant to Section 9(ii), (ii) the Company for
any reason fails to tender the Shares for delivery to the Underwriters or (iii)
the Underwriters decline to purchase the Shares for any reason permitted under
this Agreement (other than as a result of a termination pursuant to Section
9(i), 9(iii) or 9(iv)), the Company agrees to reimburse the Underwriters for all
documented out-of-pocket costs and expenses (including the fees and expenses of
their counsel) reasonably incurred by the Underwriters in connection with this
Agreement and the offering contemplated hereby.
12. Persons Entitled to Benefit
of Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and any controlling persons referred to in Section 7
hereof. Nothing in this Agreement is intended or shall be construed
to give any other person any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
13. Survival. The
respective indemnities, rights of contribution, representations, warranties and
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf of the Company or the Underwriters pursuant to this
Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Shares and shall remain in full force and
effect, regardless of any termination of this Agreement or any investigation
made by or on behalf of the Company or the Underwriters.
14. Certain Defined
Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term “affiliate” has the meaning set forth in
Rule 405 under the Securities Act; (b) the term “business day” means any day
other than a day on which banks are permitted or required to be closed in New
York City; and (c) the term “subsidiary” has the meaning set forth in Rule
405 under the Securities Act.
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15. Miscellaneous. (a) Authority of the
Representative. Any action by the Underwriters hereunder may
be taken by the Representative on behalf of the Underwriters, and any such
action taken by the Representative shall be binding upon the
Underwriters.
(b) Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any
standard form of telecommunication. Notices to the Underwriters shall
be given to the Representative c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: Equity Syndicate
Desk. Notices to the Company shall be given to it at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (fax:
▇▇▇-▇▇▇-▇▇▇▇); Attention: General Counsel, with a copy, which shall not
constitute notice, to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, fax (▇▇▇-▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Esq.
(c) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This
Agreement may be signed in counterparts (which may include counterparts
delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same
instrument.
(e) Amendments or
Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
(f) Headings. The
headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
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If the
foregoing is in accordance with your understanding, please indicate your
acceptance of this Agreement by signing in the space provided
below.
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Very
truly yours,
REDWOOD
TRUST, INC.
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Title: |
President,
Co-Chief Operating Officer
and
Chief Financial Officer
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Accepted:
January 21, 2009
▇.▇.
▇▇▇▇▇▇ SECURITIES INC.
For
itself and on behalf of the
several
Underwriters listed
in
Schedule 1 hereto.
▇.▇.
▇▇▇▇▇▇ SECURITIES INC.
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By:
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/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Authorized Signatory | ||
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