UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 12,
2006
_______________
REDWOOD
TRUST, INC.
(Exact
name of Registrant as specified in its charter)
Maryland
|
1-13759
|
68-0329422
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
One
Belvedere Place, Suite 300
Mill
Valley, California 94941
(Address
of Principal Executive Offices)
Registrant’s
telephone number, including area code:
(415)
389-7373
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions:
[
]
Written
communications pursuant to Rule 425 under the Securities Act
[
]
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
[
]
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
[
]
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
Item
1.01.
Entry
into a Material Definitive Agreement.
On
December 12, 2006, Redwood Trust, Inc., a Maryland corporation (the “Company”),
completed the sale of 100,000 preferred securities with an aggregate liquidation
amount of $100,000,000 (the “Preferred Securities”) through Redwood Capital
Trust I, a newly formed wholly-owned Delaware statutory trust (the “Trust”), in
a private placement transaction. The Company intends to use the proceeds from
the sale for general corporate purposes, including asset acquisitions consistent
with the Company’s investment strategy.
The
Preferred Securities, which represent preferred undivided beneficial interests
in the assets of the Trust, were sold pursuant to Purchase Agreements, each
dated December 12, 2006, among the Company, the Trust and, respectively, Merrill
Lynch International and Bear, Stearns & Co. Inc., as purchasers
(collectively, the “Purchase Agreements”). The Preferred Securities require
quarterly distributions by the Trust to the holders of the Preferred Securities
at a floating rate equal to the three-month London Interbank Offered Rate
(“LIBOR”) plus 2.25% through the maturity date of January 30, 2037.
The
Trust
simultaneously sold 3,100 shares of its common securities (the “Common
Securities”) to the Company for $3,100,000, the aggregate liquidation amount of
the Common Securities. The 3,100 Common Securities constitute all of the issued
and outstanding Common Securities of the Trust. The Trust used the proceeds
from
the sales of the Preferred Securities and the Common Securities to purchase
$103,100,000 aggregate principal amount of the unsecured Junior Subordinated
Notes of the Company due 2037 (the “Junior Subordinated Notes”). The terms of
the unsecured Junior Subordinated Notes are substantially the same as the terms
of the Preferred Securities and require the Company to make quarterly interest
payments to the Trust at a floating rate equal to LIBOR plus 2.25% through
the
maturity date of January 30, 2037. The interest payments on the Junior
Subordinated Notes will be used by the Trust to pay quarterly distributions
to
the holders of the Preferred Securities. The Company may redeem the Junior
Subordinated Notes, in whole or in part, on or after January 30, 2012 at par.
If
the Junior Subordinated Notes are redeemed, the Trust must redeem a Like Amount
(as defined in the Trust Agreement (as defined below)) of the Preferred
Securities.
The
Preferred Securities and the Common Securities were issued pursuant to, and
their respective terms are governed by, an Amended and Restated Trust Agreement
(the “Trust Agreement”), dated as of December 12, 2006, among the Company, as
depositor, The Bank of New York Trust Company, National Association as property
trustee, The Bank of New York (Delaware), as Delaware trustee, the individual
Administrative Trustees named in the Trust Agreement and the several holders
of
the Preferred Securities from time to time. The Junior Subordinated Notes were
issued pursuant to, and the terms of the Junior Subordinated Notes are governed
by, a Junior Subordinated Indenture (the “Indenture”), dated as of December 12,
2006, between the Company and The Bank of New York Trust Company, National
Association, as trustee (the “Trustee”).
Upon
the
occurrence of an Event of Default (as defined in the Indenture), either the
Trustee or the holders of at least 25% of the aggregate principal amount of
the
Junior Subordinated Notes may declare the principal amount of, and all accrued
interest on, the Junior Subordinated Notes to be due and payable immediately
or,
if the Trustee and the holders of the Junior Subordinated Notes fail to make
the
declaration, the holders of at least 25% in aggregate liquidation amount of
the
outstanding Preferred Securities may make the declaration. In addition, each
holder of Preferred Securities has the right, upon the occurrence of an Event
of
Default arising from the failure to pay interest on or the principal amount
of
the Junior Subordinated Notes, to institute suit directly against the Company
for enforcement of the payment to the holder of the principal of and any premium
and interest on the Junior Subordinated Notes having a principal amount equal
to
the aggregate liquidation amount of the Preferred Securities held by that
holder.
A
copy of
the Purchase Agreements, the Trust Agreement and the Indenture are attached
as
exhibits hereto and are incorporated herein by reference.
Item
2.03.
Creation
of a Direct Financial Obligation or an Obligation under an
Off-
Balance
Sheet Arrangement of a Registrant.
The
information set forth in Item 1.01 above is incorporated herein by
reference.
Item
9.01.
Financial
Statements and Exhibits.
(d)
Exhibits.
|
1.1
|
Purchase
Agreement, dated December 12, 2006, among Redwood Trust, Inc., Redwood
Capital Trust I and Merrill Lynch
International.
|
|
1.2
|
Purchase
Agreement, dated December 12, 2006, among Redwood Trust, Inc., Redwood
Capital Trust I and Bear, Stearns & Co.
Inc.
|
|
1.3
|
Amended
and Restated Trust Agreement, dated December 12, 2006, among Redwood
Trust, Inc., The Bank of New York Trust Company, National Association,
The
Bank of New York (Delaware), the Administrative Trustees (as named
therein) and the several holders of the Preferred Securities from
time to
time.
|
|
1.4
|
Junior
Subordinated Indenture, dated as of December 12, 2006, between Redwood
Trust, Inc. and The Bank of New York Trust Company, National
Association.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
December 12, 2006
|
REDWOOD
TRUST, INC.
|
|
By:
|
/s/
Martin S. Hughes
|
|
|
Martin
S. Hughes
|
|
|
Vice
President, Chief Financial Officer, Treasurer
and Secretary
|
EXHIBIT
INDEX
Exhibit
Number
|
Description
of Document
|
|
|
1.1
|
Purchase
Agreement, dated December 12, 2006, among Redwood Trust, Inc., Redwood
Capital Trust I and Merrill Lynch International.
|
|
|
1.2
|
Purchase
Agreement, dated December 12, 2006, among Redwood Trust, Inc., Redwood
Capital Trust I and Bear, Stearns & Co. Inc.
|
1.3
|
Amended
and Restated Trust Agreement, dated December 12, 2006, among Redwood
Trust, Inc., The Bank of New York Trust Company, National Association,
The
Bank of New York (Delaware), the Administrative Trustees (as named
therein) and the several holders of the Preferred Securities from
time to
time.
|
|
|
1.4
|
Junior
Subordinated Indenture, dated as of December 12, 2006, between
Redwood
Trust, Inc. and The Bank of New York Trust Company, National
Association.
|
|
|
Exhibit
1.1
PURCHASE
AGREEMENT
among
REDWOOD
TRUST, INC.
REDWOOD
CAPITAL TRUST I
and
MERRILL
LYNCH INTERNATIONAL
________________
Dated
as
of December 12, 2006
________________
PURCHASE
AGREEMENT
($25,000,000
Aggregate Liquidation Amount of Trust Preferred Securities)
THIS
PURCHASE AGREEMENT, dated as of December 12, 2006 (this “
Purchase
Agreement
”),
is
entered into among Redwood Trust, Inc., a Maryland corporation
(the
“
Company
”),
and
Redwood Capital Trust I, a Delaware statutory trust (the “
Trust
”,
and
together with the Company, the “
Sellers
”),
and
Merrill Lynch International or its assignee (the “
Purchaser
”).
WITNESSETH
:
WHEREAS,
the Sellers propose to issue and sell Twenty-Five Thousand (25,000)
Floating Rate Preferred Securities of the Trust, having a stated liquidation
amount of $1,000 per security, bearing a variable rate, reset quarterly, equal
to LIBOR (as defined in the Indenture (as defined below)) plus 2.25% per
annum
(the
“
Preferred
Securities
”);
WHEREAS,
the proceeds from the sale of the Preferred Securities will be combined with
proceeds from the sale by the Trust to the Company of its common securities
(the
“
Common
Securities
”),
and
will be used by the Trust to purchase Twenty-Five Million Seven
Hundred Seventy-Five Thousand Dollars ($25,775,000) in principal amount of
the
unsecured junior subordinated notes of the Company (the “
Junior
Subordinated Notes
”);
WHEREAS,
the Preferred Securities and the Common Securities for the Trust will be issued
pursuant to the Amended and Restated Trust Agreement (the “
Trust
Agreement
”),
dated
as of the Closing Date, among the Company, as depositor, The Bank of New York
Trust Company, National Association, a national banking association, as property
trustee (in such capacity, the “
Property
Trustee
”),
The
Bank of New York (Delaware), a national banking association, as Delaware trustee
(in such capacity, the “
Delaware
Trustee
”),
the
Administrative Trustees named therein (in such capacities, the “
Administrative
Trustees
”)
and
the holders from time to time of undivided beneficial interests in the assets
of
the Trust; and
WHEREAS,
the Junior Subordinated Notes will be issued pursuant to a Junior Subordinated
Indenture, dated as of the Closing Date (the “
Indenture
”),
between the Company and The Bank of New York Trust Company, National
Association, a national banking association, as indenture trustee (in such
capacity, the “
Indenture
Trustee
”).
NOW,
THEREFORE, in consideration of the mutual agreements and subject to the terms
and conditions herein set forth, the parties hereto agree as
follows:
1.
Definitions
.
The
Preferred Securities, the Common Securities and the Junior Subordinated Notes
are collectively referred to herein as the “
Securities
.”
This
Purchase Agreement, the Indenture, the Trust Agreement and the Securities are
collectively referred to herein as the “
Operative
Documents
.”
All
other capitalized terms used but not defined in this Purchase Agreement shall
have the respective meanings ascribed thereto in the Indenture.
2.
Purchase
and Sale of the Preferred Securities
.
(a)
The
Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase
from the Sellers the Preferred Securities for an aggregate amount (the
“
Purchase
Price
”)
equal
to Twenty-Five Million Dollars ($25,000,000). The Purchaser shall be responsible
for the rating agency costs and expenses. The Sellers shall use the Purchase
Price, together with the proceeds from the sale of the Common Securities, to
purchase the Junior Subordinated Notes.
(b)
Delivery
or transfer of, and payment for, the Preferred Securities shall be made at
11:00
A.M. New York time, on December 12, 2006 or such later date (not later than
January 10, 2007) as the parties may designate (such date and time of delivery
and payment for the Preferred Securities being herein called the “
Closing
Date
”).
The
Preferred Securities shall be transferred and delivered to the Purchaser against
the payment of the Purchase Price to the Sellers made by wire transfer in
immediately available funds on the Closing Date to a U.S. account designated
in
writing by the Company at least two business days prior to the Closing
Date.
(c)
Delivery
of the Preferred Securities shall be made at such location, and in such names
and denominations, as the Purchaser shall designate at least two business days
in advance of the Closing Date. The Company and the Trust agree to have the
Preferred Securities available for inspection and checking by the Purchaser
in
New York, New York, not later than 2:00 P.M. New York time on the business
day
prior to the Closing Date. The closing for the purchase and sale of the
Preferred Securities shall occur at the offices of Thelen Reid Brown Raysman
& Steiner LLP, 900 Third Avenue, New York, New York 10022 or such other
place as the parties hereto shall agree.
3.
Conditions
.
The
obligations of the parties under this Purchase Agreement are subject to the
following conditions:
(a)
The
representations and warranties contained herein shall be accurate as of the
date
of delivery of the Preferred Securities.
(b)
Reserved
.
(c)
Mayer
Brown Rowe & Maw LLP, counsel for the Company and the Trust (the
“
Company
Counsel
”),
shall
have delivered an opinion, dated the Closing Date, addressed to the Purchaser
and The Bank of New York Trust Company, National Association, in substantially
the form set out in
Annex
A-I
hereto
and the Company shall have furnished to the Purchaser a certificate signed
by
the Company’s Chief Executive Officer, President, an Executive Vice President,
Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing
Date, addressed to the Purchaser, in substantially the form set out in
Annex
A-II
hereto.
In rendering its opinion, the Company Counsel may rely as to factual matters
upon certificates or other documents furnished by officers, directors and
trustees of the Company and the Trust and by government officials (provided,
however, that copies of any such certificates or documents are delivered to
the
Purchaser) and by and upon such other documents as such counsel may, in its
reasonable opinion, deem appropriate as a basis for the Company Counsel’s
opinion. The Company Counsel may specify the jurisdictions in which it is
admitted to practice and that it is not admitted to practice in any other
jurisdiction and is not an expert in the law of any other jurisdiction. Such
Company Counsel Opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
(d)
The
Purchaser shall have been furnished the opinion of Chapman and Cutler LLP,
dated
the Closing Date, addressed to the Purchaser and The Bank of New York Trust
Company, National Association, in substantially the form set out in
Annex
B
hereto.
(e)
The
Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing
Date,
addressed to the Purchaser, The Bank of New York Trust Company, National
Association, the Delaware Trustee and the Company, in substantially the form
set
out in
Annex
C
hereto.
(f)
The
Purchaser shall have received the opinion of Gardere Wynne Sewell LLP, special
counsel for the Property Trustee and the Indenture Trustee, dated the Closing
Date, addressed to the Purchaser, in substantially the form set out in
Annex
D
hereto.
(g)
The
Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing
Date,
addressed to the Purchaser and The Bank of New York Trust Company, National
Association, in substantially the form set out in
Annex
E
hereto.
(h)
The
Company shall have furnished to the Purchaser a certificate of the Company,
signed by the Chief Executive Officer, President or an Executive Vice President,
and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company,
and the Trust shall have furnished to the Purchaser a certificate of the Trust,
signed by an Administrative Trustee of the Trust, in each case dated the Closing
Date, and, in the case of the Company, as to (i) and (ii) below and, in the
case
of the Trust, as to (i) below:
(i)
the
representations and warranties in this Purchase Agreement are true and correct
on and as of the Closing Date with the same effect as if made on the Closing
Date, and the Company and the Trust have complied with all the agreements and
satisfied all the conditions on either of their part to be performed or
satisfied at or prior to the Closing Date; and
(ii)
since
the
date of the Interim Financial Statements (as defined below), there has been
no
material adverse change in the condition (financial or other), earnings,
business or assets of the Company and its subsidiaries, whether or not arising
from transactions occurring in the ordinary course of business (a “
Material
Adverse Change
”).
(i)
Subsequent
to the execution of this Purchase Agreement, there shall not have been any
change, or any development involving a prospective change, in or affecting
the
condition (financial or other), earnings, business or assets of the Company
and
its subsidiaries, whether or not occurring in the ordinary course of business,
the effect of which is, in the Purchaser’s judgment, so material and adverse as
to make it impractical or inadvisable to proceed with the purchase of the
Preferred Securities.
(j)
Prior
to
the Closing Date, the Company and the Trust shall have furnished to the
Purchaser and its counsel such further information, certificates and documents
as the Purchaser or its counsel may reasonably request.
If
any of
the conditions specified in this
Section 3
shall
not have been fulfilled when and as provided in this Purchase Agreement, or
if
any of the opinions, certificates and documents mentioned above or elsewhere
in
this Purchase Agreement shall not be reasonably satisfactory in form and
substance to the Purchaser or its counsel, this Purchase Agreement and all
the
Purchaser’s obligations hereunder may be canceled at, or at any time prior to,
the Closing Date by the Purchaser. Notice of such cancellation shall be given
to
the Company and the Trust in writing or by telephone or facsimile confirmed
in
writing.
Each
certificate signed by any trustee of the Trust or any officer of the Company
and
delivered to the Purchaser or the Purchaser’s counsel in connection with the
Operative Documents and the transactions contemplated hereby and thereby shall
be deemed to be a representation and warranty of the Trust and/or the Company,
as the case may be, and not by such trustee or officer in any individual
capacity.
4.
Representations
and Warranties of the Company and the Trust
.
The
Company and the Trust jointly and severally represent and warrant to, and agree
with the Purchaser, as follows:
(a)
Neither
the Company nor the Trust, nor any of their “Affiliates” (as defined in Rule
501(b) of Regulation D (“
Regulation
D
”)
under
the Securities Act (as defined below)), nor any person acting on its or their
behalf, has, directly or indirectly, made offers or sales of any security,
or
solicited offers to buy any security, under circumstances that would require
the
registration of any of the Securities under the Securities Act of 1933, as
amended (the “
Securities
Act
”).
(b)
Neither
the Company nor the Trust, nor any of their Affiliates, nor any person acting
on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer
or
sale of any of the Securities.
(c)
The
Securities (i) are not and have not been listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934,
as
amended (the “
Exchange
Act
”),
or
quoted on a U.S. automated inter-dealer quotation system and (ii) are not of
an
open-end investment company, unit investment trust or face-amount certificate
company that are, or are required to be, registered under Section 8 of the
Investment Company Act of 1940, as amended (the “
Investment
Company Act
”),
and
the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act (“
Rule
144A(d)(3)
”).
(d)
Neither
the Company nor the Trust, nor any of their Affiliates, nor any person acting
on
its or their behalf, has engaged, or will engage, in any “directed selling
efforts” within the meaning of Regulation S under the Securities Act with
respect to the Securities.
(e)
Neither
the Company nor the Trust is, and, immediately following consummation of the
transactions contemplated hereby and the application of the net proceeds
therefrom, will not be, an “investment company” within the meaning of Section
3(a) of the Investment Company Act.
(f)
Neither
the Company nor the Trust has paid or agreed to pay to any person any
compensation for soliciting another to purchase any of the Securities, except
for the preferred securities commission and/or the sales commission of three
percent (3%) the Company has agreed to pay to Taberna Securities, LLC (or to
the
Company’s introducing agent on behalf of Taberna Securities, LLC) pursuant to
the letter agreement between the Company and Taberna Securities, LLC, dated
November 21, 2006.
(g)
The
Trust
has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801,
et
seq
.
(the
“
Statutory
Trust
Act
”)
with
all requisite power and authority to own property and to conduct the business
it
transacts and proposes to transact and to enter into and perform its obligations
under the Operative Documents to which it is a party. The Trust is duly
qualified to transact business as a foreign entity and is in good standing
in
each jurisdiction in which such qualification is necessary, except where the
failure to so qualify or be in good standing would not reasonably be expected
to
have a material adverse effect on the condition (financial or otherwise),
earnings, business, liabilities or assets (taken as a whole) of the Company
and
its subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business (a “
Material
Adverse Effect
”).
The
Trust is not a party to or otherwise bound by any agreement other than the
Operative Documents.
(h)
The
Trust
Agreement has been duly authorized by the Company and, on the Closing Date
specified in
Section
2(b)
hereof,
will have been duly executed and delivered by the Company and the Administrative
Trustees of the Trust, and, assuming due authorization, execution and delivery
by the Property Trustee and the Delaware Trustee, will be a legal, valid and
binding obligation of the Company and the Administrative Trustees, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principles of equity. Each of the Administrative Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to execute
and deliver the Trust Agreement.
(i)
The
Indenture has been duly authorized by the Company and, on the Closing Date,
will
have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Indenture Trustee, will be a legal,
valid and binding obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of
equity.
(j)
The
Preferred Securities and the Common Securities have been duly authorized by
the
Trust and, when issued and delivered against payment therefor on the Closing
Date in accordance with this Purchase Agreement, in the case of the Preferred
Securities, and in accordance with the Common Securities Subscription Agreement,
in the case of the Common Securities, will be validly issued, fully paid and
non-assessable and will represent undivided beneficial interests in the assets
of the Trust entitled to the benefits of the Trust Agreement, enforceable
against the Trust in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity. The issuance of the Securities is not
subject to any preemptive or other similar rights. On the Closing Date, all
of
the issued and outstanding Common Securities will be directly owned by the
Company free and clear of any pledge, security interest, claim, lien or other
encumbrance of any kind (each, a “
Lien
”).
(k)
The
Junior Subordinated Notes have been duly authorized by the Company and, on
the
Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the Indenture and, when
authenticated in the manner provided for in the Indenture and delivered to
the
Trust against payment therefor in accordance with that certain Junior
Subordinated Note Purchase Agreement of even date herewith between the Company
and the Trust (the “
Junior
Subordinated Note Purchase Agreement
”),
will
constitute legal, valid and binding obligations of the Company entitled to
the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of
equity.
(l)
This
Purchase Agreement has been duly authorized, executed and delivered by the
Company and the Trust.
(m)
Neither
the issue and sale of the Common Securities, the Preferred Securities or the
Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes
by
the Trust, nor the execution and delivery of and compliance with the Operative
Documents by the Company or the Trust, nor the consummation of the transactions
contemplated herein or therein, (i) will conflict with or constitute a violation
or breach of the Trust Agreement or the charter or bylaws or similar
organizational documents of the Company, (ii) will conflict with or constitute
a
violation or breach of the charter or bylaws or similar organizational documents
of any subsidiary of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, governmental
authority, agency or instrumentality or court, domestic or foreign, having
jurisdiction over the Trust or the Company or any of its subsidiaries or their
respective properties or assets (collectively, the “
Governmental
Entities
”),
(iii)
will conflict with or constitute a violation or breach of, or a default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any Lien upon any property or assets of the Trust, the Company
or
any of the Company’s subsidiaries pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which (A) the
Trust, the Company or any of its subsidiaries is a party or by which it or
any
of them may be bound, or (B) any of the property or assets of any of them is
subject, or any judgment, order or decree of any court, Governmental Entity
or
arbitrator, except, in the case of this clauses (ii) or (iii), for such
conflicts, breaches, violations, defaults, Repayment Events (as defined below)
or Liens which (X) would not, singly or in the aggregate, adversely affect
the
consummation of the transactions contemplated by the Operative Documents and
(Y)
would not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (iv) require the consent, approval, authorization or order
of
any court or Governmental Entity (collectively, the “
Consents
”),
except any such Consent as has already been received or obtained. As used
herein, a “
Repayment
Event
”
means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion
of
such indebtedness by the Trust or the Company or any of its subsidiaries prior
to its scheduled maturity.
(n)
The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of Maryland, with all requisite
corporate
power
and
authority to own, lease and operate its properties and conduct the business
it
transacts and proposes to transact, and is duly qualified to transact business
and is in good standing in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be
so
qualified would not, singly or in the aggregate, reasonably be expected to
have
a Material Adverse Effect.
(o)
The
Company has no subsidiaries that are material to its business, financial
condition or earnings other than those subsidiaries listed in
Schedule
1
attached
hereto (which
Schedule
1
includes
each of the Company’s “significant subsidiaries” as defined in Securities and
Exchange Commission Regulation S-X) (collectively, the “
Significant
Subsidiaries
”).
The
Significant Subsidiary is a corporation duly incorporated or organized or
formed, as the case may be, validly existing and in good standing under the
laws
of the jurisdiction in which it is chartered or organized or formed, with all
requisite corporate, partnership or limited liability company, as the case
may
be, power and authority to own, lease and operate its properties and conduct
the
business it transacts and proposes to transact. The Significant Subsidiary
is
duly qualified to transact business as a foreign corporation and is in good
standing in each jurisdiction where the nature of its activities requires such
qualification, except where the failure to be so qualified would not, singly
or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The
Significant Subsidiary (other than a taxable REIT subsidiary, if any) is not
currently prohibited, directly or indirectly, under any agreement or other
instrument, other than as required by applicable law, to which it is a party
or
is subject, from paying any dividends to the Company, from making any other
distribution on such Significant Subsidiary’s capital stock or other Equity
Interests, from repaying to the Company any loans or advances to such
Significant Subsidiary from the Company or from transferring any of such
Significant Subsidiary’s properties or assets to the Company or any other
subsidiary of the Company. As used herein, the term “
Equity
Interests
”
means
the shares or stock interests (both common stock and preferred stock) in a
corporation.
(p)
Each
of
the Trust, the Company and each of the Company’s subsidiaries holds all
necessary approvals, authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “
Governmental
Licenses
”)
of and
from Governmental Entities necessary to conduct its business as now being
conducted, and neither the Trust, the Company nor any of the Company’s
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Government License, except where the failure to
be
so licensed or approved or the receipt of an unfavorable decision, ruling or
finding, would not, singly or in the aggregate, reasonably be expected to have
a
Material Adverse Effect; all of the Governmental Licenses are valid and in
full
force and effect, except where the invalidity or the failure of such
Governmental Licenses to be in full force and effect, would not, singly or
in
the aggregate, reasonably be expected to have a Material Adverse Effect; and
the
Company and its subsidiaries are in compliance with all applicable laws, rules,
regulations, judgments, orders, decrees and consents, except where the failure
to be in compliance would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(q)
All
of
the issued and outstanding Equity Interests of the Company and its Significant
Subsidiary are validly issued, fully paid and non-assessable; all of the issued
and outstanding Equity Interests of the Significant Subsidiary are owned by
the
Company, directly or through subsidiaries, free and clear of any Lien, claim
or
equitable right; and none of the issued and outstanding Equity Interests of
the
Company or the Significant Subsidiary were issued in violation of any preemptive
or similar rights arising by operation of law, under the charter or by-laws
or
similar organizational documents of such entity or under any agreement to which
the Company or its Significant Subsidiary is a party.
(r)
Neither
the Company nor any of its subsidiaries is (i) in violation of its respective
charter or by-laws or similar organizational documents or (ii) in default in
the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease
or
other agreement or instrument to which the Company or any such subsidiary is
a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, reasonably
be
expected to have a Material Adverse Effect.
(s)
There
is
no action, suit or proceeding before or by any Governmental Entity, arbitrator
or court, domestic or foreign, now pending or, to the knowledge of the Company
or the Trust after due inquiry, threatened against or affecting the Trust or
the
Company or any of the Company’s subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated
by
the Operative Documents or reasonably be expected to have a Material Adverse
Effect; and the aggregate of all pending legal or governmental proceedings
to
which the Trust or the Company or any of its subsidiaries is a party or of
which
any of their respective properties or assets is subject, including ordinary
routine litigation incidental to the business, are not reasonably expected
to
result in a Material Adverse Effect.
(t)
The
accountants of the Company who certified the Financial Statements (as defined
below) are independent public accountants of the Company and its subsidiaries
within the meaning of the Securities Act, and the rules and regulations of
the
Securities and Exchange Commission (the “
Commission
”)
thereunder.
(u)
The
audited consolidated financial statements (including the notes thereto) and
schedules of the Company and its consolidated subsidiaries for the fiscal year
ended December 31, 2005 (the “
Financial
Statements
”)
and
the interim unaudited consolidated financial statements of the Company and
its
consolidated subsidiaries for the quarter ended September 30, 2006 (the
“
Interim
Financial Statements
”)
provided to the Purchaser are the most recent available audited and unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles (“
GAAP
”),
the
financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and
for
the periods therein specified, subject, in the case of Interim Financial
Statements, to year-end adjustments (which are expected to consist solely of
normal recurring adjustments). Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted
therein).
(v)
None
of
the Trust, the Company nor any of the Company’s subsidiaries has any material
liability required to be reflected in the Financial Statements and Interim
Financial Statements in accordance with GAAP, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, including any liability
for
taxes (and there is no past or present fact, situation, circumstance, condition
or other basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against the Company or its subsidiaries
that
could give rise to any such liability), except for (i) liabilities set
forth in the Financial Statements or the Interim Financial Statements and
(ii) normal fluctuations in the amount of the liabilities referred to in
clause (i) above occurring in the ordinary course of business of the Trust,
the Company and/or its subsidiaries since the date of the most recent balance
sheet included in such Financial Statements.
(w)
Since
the
respective dates of the Financial Statements and the Interim Financial
Statements, there has not been (A) any Material Adverse Change or (B) any
dividend or distribution of any kind declared, paid or made by the Company
on
any class of its capital stock other than regular quarterly or yearly special
dividends on the Company’s common stock.
(x)
The
documents of the Company filed with the Commission in accordance with the
Exchange Act, from and including the commencement of the fiscal year covered
by
the Company’s most recent Annual Report on Form 10-K, at the time they were or
hereafter are filed by the Company with the Commission (collectively, the
“
1934
Act Reports
”),
complied and will comply in all material respects with the requirements of
the
Exchange Act and the rules and regulations of the Commission thereunder (the
“
1934
Act Regulations
”),
and,
at the date of this Purchase Agreement and on the Closing Date, do not and
will
not include an 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;
and other than such instruments, agreements, contracts and other documents
as
are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments,
agreements, contracts or documents of a character described in Item 601 of
Regulation S-K promulgated by the Commission to which the Company or any of
its subsidiaries is a party. The Company is in compliance with all currently
applicable requirements of the Exchange Act that were added by the
Sarbanes-Oxley Act of 2002, except as would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(y)
No
labor
dispute with the employees of the Trust, the Company or the Significant
Subsidiary exists or, to the knowledge of the executive officers of the Trust
or
the Company, is imminent, except those which would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(z)
No
filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that
have
been made or obtained, is necessary or required for the performance by the
Trust
or the Company of their respective obligations under the Operative Documents,
as
applicable, or the consummation by the Trust and the Company of the transactions
contemplated by the Operative Documents.
(aa)
Reserved
.
(bb)
Reserved
.
(cc)
Commencing
with its taxable year ended December 31, 1994 the Company has been, and upon
the
completion of the transactions contemplated hereby, the Company will continue
to
be, organized and operated in conformity with the requirements for qualification
and taxation as a real estate investment trust (a “
REIT
”)
under
sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
“
Code
”),
and
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, and
no
actions have been taken (or not taken which are required to be taken) which
would cause such qualification to be lost. The Company expects to continue
to be
organized and to operate in a manner so as to qualify as a REIT in the taxable
year ending December 31, 2006 and succeeding taxable years for so long as the
Company determines that it is in its best interest to remain qualified as a
REIT.
(dd)
Each
of
the Company and the Significant Subsidiary has timely and duly filed all Tax
Returns (as defined below) required to be filed by them, and all such Tax
Returns are true, correct and complete in all material respects. The Company
and
the Significant Subsidiary have timely and duly paid in full all material Taxes
(as defined below) required to be paid by them (whether or not such amounts
are
shown as due on any Tax Return). There are no federal, state, or other Tax
audits or deficiency assessments proposed or pending with respect to the Company
or the Significant Subsidiary, and no such audits or assessments are threatened.
As used herein, the terms “
Tax
”
or
“
Taxes
”
mean
(i) all federal, state, local, and foreign taxes, and other assessments of
a
similar nature (whether imposed directly or through withholding), including
any
interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term “
Tax
Returns
”
means
all federal, state, local, and foreign Tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto
filed or required to be filed with any Governmental Entity.
(ee)
Interest
payable by the Company on the Junior Subordinated Notes is deductible by the
Company, in whole or in part, for U.S. federal income tax purposes, and the
Trust is not, or will not be within ninety (90) days of the date hereof, subject
to more than a
de
minimis
amount
of other taxes, duties or other governmental charges. To the knowledge of the
Company, there are no rulemaking or similar proceedings before the U.S. Internal
Revenue Service or comparable federal, state, local or foreign government bodies
which involve or affect the Company or any subsidiary, which, if the subject
of
an action unfavorable to the Company or any subsidiary, would reasonably be
expected to result in a Material Adverse Effect.
(ff)
The
books, records and accounts of the Company and its subsidiaries accurately
and
fairly reflect, in reasonable detail, the transactions in, and dispositions
of,
the assets of, and the results of operations of, the Company and its
subsidiaries. The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(gg)
The
Company and the Significant Subsidiary are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
in
all material respects as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the transactions
contemplated hereby including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against. All policies of insurance and fidelity
or surety bonds insuring the Company or the Significant Subsidiary or the
Company’s or Significant Subsidiary’s respective businesses, assets, employees,
officers and directors are in full force and effect. The Company and each of
the
subsidiaries are in compliance with the terms of such policies and instruments
in all material respects. Neither the Company nor the Significant Subsidiary
has
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 from
similar insurers as may be necessary to continue its business at a cost that
would not reasonably be expected to have a Material Adverse Effect. Within
the
past twelve months, neither the Company nor the Significant Subsidiary has
been
denied any insurance coverage that it has sought or for which it has
applied.
(hh)
None
of
the Company, any of its subsidiaries or any person acting on behalf of the
Company or any of its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or any of its subsidiaries has,
directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful payment.
5.
Representations
and Warranties of the Purchaser
.
The
Purchaser represents and warrants to, and agrees with, the Company and the
Trust
as follows:
(a)
The
Purchaser is aware that the Preferred Securities have not been and will not
be
registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements
of
the Securities Act.
(b)
The
Purchaser is an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.
(c)
Neither
the Purchaser, nor any of the Purchaser’s Affiliates, nor any person acting on
the Purchaser’s or any Purchaser’s Affiliate’s behalf has engaged, or will
engage, in any form of “general solicitation or general advertising” (within the
meaning of Regulation D under the Securities Act) in connection with any offer
or sale of the Preferred Securities.
(d)
The
Purchaser understands and acknowledges that (i) no public market exists for
any
of the Preferred Securities and that it is unlikely that a public market will
ever exist for the Securities, (ii) the Purchaser is purchasing the Preferred
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of
the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Preferred Securities pursuant to
an
effective registration statement under the Securities Act or pursuant to an
exemption therefrom or in a transaction not subject thereto, and the Purchaser
agrees to the legends and transfer restrictions applicable to the Preferred
Securities contained in the Indenture, and (iii) the Purchaser has had the
opportunity to ask questions of, and receive answers and request additional
information from, the Company and is aware that it may be required to bear
the
economic risk of an investment in the Preferred Securities.
(e)
The
Purchaser is duly formed, validly existing and in good standing under the laws
of the jurisdiction in which it is organized with all requisite (i) power and
authority to execute, deliver and perform the Operative Documents to which
it is
a party, to make the representations and warranties specified herein and therein
and to consummate the transactions contemplated herein and (ii) right and power
to purchase the Preferred Securities.
(f)
This
Purchase Agreement has been duly authorized, executed and delivered by the
Purchaser and no filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any governmental body, agency
or
court having jurisdiction over the Purchaser, other than those that have been
made or obtained, is necessary or required for the performance by the Purchaser
of its obligations under this Purchase Agreement or to consummate the
transactions contemplated herein.
(g)
The
Purchaser is a “Qualified Purchaser” as such term is defined in Section 2(a)(51)
of the Investment Company Act.
6.
Covenants
and Agreements of the Company and the Trust
.
The
Company and the Trust jointly and severally agree with the Purchaser as
follows:
(a)
During
the period from the date of this Agreement to the Closing Date, the Company
and
the Trust shall use their best efforts and take all action necessary or
appropriate to cause their representations and warranties contained in
Section
4
hereof
to be true as of the Closing Date, after giving effect to the transactions
contemplated by this Purchase Agreement, as if made on and as of the Closing
Date.
(b)
Reserved.
(c)
Neither
the Company nor the Trust will, nor will either of them permit any of its
Affiliates to, nor will either of them permit any person acting on its or their
behalf (other than the Purchaser) to, resell any Securities that have been
acquired by any of them.
(d)
Neither
the Company nor the Trust will, nor will either of them permit any of their
Affiliates or any person acting on their behalf to, engage in any “directed
selling efforts” within the meaning of Regulation S under the Securities Act
with respect to the Securities.
(e)
Neither
the Company nor the Trust will, nor will either of them permit any of their
Affiliates or any person acting on their behalf to, directly or indirectly,
make
offers or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of any of the Securities
under
the Securities Act.
(f)
Neither
the Company nor the Trust will, nor will either of them permit any of its
Affiliates or any person acting on their behalf to, engage in any form of
“general solicitation or general advertising” (within the meaning of Regulation
D) in connection with any offer or sale of the any of the
Securities.
(g)
So
long
as any of the Securities are outstanding, (i) the Securities shall not be listed
on a national securities exchange registered under Section 6 of the Exchange
Act
or quoted in a U.S. automated inter-dealer quotation system and (ii) neither
the
Company nor the Trust shall be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the Securities
shall otherwise satisfy the eligibility requirements of Rule
144A(d)(3).
(h)
Each
of
the Company and the Trust shall furnish to (i) the holders, and subsequent
holders, of the Preferred Securities, (ii) Taberna Capital Management, LLC
(at
450 Park Avenue, 11th Floor, New York, New York 10022, or such other address
as
designated by Taberna Capital Management, LLC) and (iii) any beneficial owner
of
the Securities reasonably identified to the Company and the Trust (which
identification may be made by either such beneficial owner or by Taberna Capital
Management, LLC), a duly completed and executed certificate in the form attached
hereto as
Annex
F
,
including the financial statements referenced in such Annex, which certificate
and financial statements shall be so furnished by the Company and the Trust
not
later than forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company and not later than ninety (90)
days
after the end of each fiscal year of the Company.
(i)
Each
of
the Company and the Trust will, during any period in which it is not subject
to
and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not
exempt from such reporting requirements pursuant to and in compliance with
Rule
12g3-2(b) under the Exchange Act, provide to each holder of the Securities
and
to each prospective purchaser (as designated by such holder) of the Securities,
upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Securities Act. If the
Company and the Trust are required to register under the Exchange Act, such
reports filed in compliance with Rule 12g3-2(b) shall be sufficient information
as required above. This covenant is intended to be for the benefit of the
Purchaser, the holders of the Securities, and the prospective purchasers
designated by the Purchaser and such holders, from time to time, of the
Securities.
(j)
Neither
the Company nor the Trust will, until one hundred eighty (180) days following
the Closing Date, without the Purchaser’s prior written consent, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of, directly
or indirectly, (i) any Preferred Securities or other securities substantially
similar to the Preferred Securities other than as contemplated by this Purchase
Agreement or (ii) any other securities convertible into, or exercisable or
exchangeable for, any Preferred Securities or other securities substantially
similar to the Preferred Securities, unless the Company, upon the request of
the
Purchaser, provides the Purchaser with an opinion of counsel (such counsel
to
have experience and sophistication in the matters addressed in such opinion)
addressed to the Purchaser stating that any such offer, sale, contract, option
or other disposition will not result in the Preferred Securities being required
to be registered under the Securities Act. For the avoidance of doubt, the
parties hereto agree that any preferred securities issued by a statutory trust
other than the Trust with an interest rate, interest payment dates and maturity
date that is different from the Preferred Securities would not be deemed to
be
substantially similar to the Preferred Securities.
(k)
The
Company will use its best efforts to meet the requirements to qualify as a
REIT
under sections 856 through 860 of the Code, effective for the taxable year
ending December 31, 2006 (and each fiscal quarter of such year) and succeeding
taxable years for so long as the Company determines that it is in its best
interest to remain qualified as a REIT.
(l)
Neither
the Company nor the Trust will identify any of the Indemnified Parties (as
defined below) in a press release or any other public statement without the
prior written consent of such Indemnified Party. For purposes of clarification,
none of the Company's or Trust's financial statements, press releases or other
statements may disclose the identity of the Indemnified Parties, but may
identify the Trustee;
provided,
however,
that
nothing to the contrary in this Agreement, in no event shall the Company be
precluded from filing any 1934 Act Reports or any other filings with the
Commission under the Securities Act, which the Company believes are reasonably
and legally necessary to be filed with the Commission.
(m)
The
Purchaser is granted the right under the Indenture and the Trust Agreement
to
request the substitution of new notes for all or a portion of the Junior
Subordinated Notes held by the Trust. The Trust is required under the terms
of
the Indenture and the Trust Agreement to accept such newly issued notes (the
“
Replacement
Notes
”)
from
the Company and surrender a like amount of Junior Subordinated Notes to the
Company. The Replacement Notes shall bear terms identical to the Junior
Subordinated Notes with the sole exception of interest payment dates (and
corresponding redemption date and maturity date), which will be specified by
the
Purchaser. In no event will the interest payment dates (and corresponding
redemption date and maturity date) on the Replacement Notes vary by more than
sixty (60) calendar days from the original interest payment dates (and
corresponding redemption date and maturity date) in effect on the Closing Date
under the Junior Subordinated Notes. Each of the Company and the Trust
acknowledges and agrees that, to the extent of the principal amount of the
Replacement Notes issued to the Trust under the Indenture, the Purchaser (and
each successor to Purchaser’s interest in the Preferred Securities) will require
the Trust to issue a new series of Preferred Securities having a principal
amount related to the principal amount of the Replacement Notes (the
“
Replacement
Securities
”)
to
designated holders of Preferred Securities, provided that any such Replacement
Securities, and any distributions from the Trust to the holders of Replacement
Securities, must relate solely to the Trust’s interest in the Replacement Notes
and in no event will the Preferred Securities other than the Replacement
Securities share in the returns from any Replacement Notes. The Replacement
Securities shall have payment dates (and corresponding redemption date and
maturity date) that relate to the Replacement Notes. Each of the Company and
the
Trust agrees to cooperate with all reasonable requests of the Purchaser in
connection with any of the foregoing, provided that no action requested of
the
Company or the Trust in connection with such cooperation shall materially
increase the obligations or materially decrease the rights of the Company
pursuant to such documents.
7.
Payment
of Expenses
.
The
Company, as depositor of the Trust, agrees to pay all costs and expenses
incident to the performance of the obligations of the Company and the Trust
under this Purchase Agreement, whether or not the transactions contemplated
herein are consummated or this Purchase Agreement is terminated, including
all
costs and expenses incident to (i) the authorization, issuance, sale and
delivery of the Preferred Securities and any taxes payable in connection
therewith; (ii) the fees and expenses of qualifying the Preferred
Securities under the securities laws of the several jurisdictions as provided
in
Section
6(b)
;
(iii) the fees and expenses of the counsel, the accountants and any other
experts or advisors retained by the Company or the Trust; (iv) the fees and
all
reasonable expenses of the Property Trustee, the Delaware Trustee, the Indenture
Trustee and any other trustee or paying agent appointed under the Operative
Documents, including the fees and disbursements of counsel for such trustees,
which fees shall not exceed a $2,000 acceptance fee, $3,500 for the fees and
expenses of Richards, Layton & Finger, P.A., special Delaware counsel
retained by the Delaware Trustee in connection with the Closing, and
$4,000
in
administrative fees annually; and (v) $50,000 for the fees and expenses of
Thelen Reid Brown Raysman & Steiner LLP, special counsel retained by Taberna
Capital Management, LLC.
If
the
sale of the Preferred Securities provided for in this Purchase Agreement is
not
consummated because any condition set forth in
Section
3
hereof
to be satisfied by either the Company or the Trust is not satisfied, because
this Purchase Agreement is terminated pursuant to
Section
9
or
because of any failure, refusal or inability on the part of the Company or
the
Trust to perform all obligations and satisfy all conditions on its part to
be
performed or satisfied hereunder other than by reason of a default by the
Purchaser, the Company will reimburse the Purchaser upon demand for all
reasonable out-of-pocket expenses (including the fees and expenses of each
of
the Purchaser’s counsel specified in subparagraphs (iv) and (v) of the
immediately preceding paragraph) that shall have been incurred by the Purchaser
in connection with the proposed purchase and sale of the Preferred Securities.
The Company shall not in any event be liable to the Purchaser for the loss
of
anticipated profits from the transactions contemplated by this Purchase
Agreement
.
8.
Indemnification
.
1)
The
Sellers agree, jointly and severally, to indemnify and hold harmless the
Purchaser, the Purchaser’s affiliates, Taberna Capital Management, LLC, Taberna
Securities, LLC, and their respective affiliates (collectively, the
“
Indemnified
Parties
”)
each
person, if any, who controls any of the Indemnified Parties within the meaning
of the Securities Act or the Exchange Act, and the Indemnified Parties’
respective directors, officers, employees and agents against any losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties
may
become subject, under the Securities Act, the Exchange Act or other federal
or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out
of or are connected with the execution and delivery by Sellers, and the
consummation thereby of the transactions contemplated by, this Purchase
Agreement or any other Operative Document. Sellers agree, jointly and severally,
to reimburse the Indemnified Parties for any legal or other expenses reasonably
incurred by the Indemnified Parties in connection with investigating or
defending any such loss, claim, damage or liability or action arising out of
or
being connected with the execution and delivery by the Sellers, and the
consummation by the Sellers of the transactions contemplated by, this Purchase
Agreement or the other Operative Documents. This indemnity agreement will be
in
addition to any liability that any of the Sellers may otherwise
have.
(b)
The
Company agrees to indemnify the Trust against all loss, liability, claim, damage
and expense whatsoever due from the Trust under paragraph (a)
above.
(c)
Promptly
after receipt by an Indemnified Party under this
Section 8
of
notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under
this
Section 8
,
promptly notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve
the indemnifying party from liability under paragraph (a) above unless and
to
the extent that such failure results in the forfeiture by the indemnifying
party
of material rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any Indemnified Party. Purchaser
shall be entitled to appoint counsel to represent the Indemnified Party in
any
action for which indemnification is sought. An indemnifying party may
participate at its own expense in the defense of any such action;
provided
,
that
counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel
for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, unless an Indemnified Party believes
that
its interests are not aligned with the interests of another Indemnified Party
or
that a conflict of interest might result. An indemnifying party will not,
without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.
9.
Termination;
Representations and Indemnities to Survive
.
This
Purchase Agreement shall be subject to termination in the absolute discretion
of
the Purchaser, by notice given to the Company and the Trust prior to delivery
of
and payment for the Preferred Securities, if prior to such time (i) a
downgrading shall have occurred in the rating accorded the Company’s debt
securities or preferred stock by any “nationally recognized statistical rating
organization,” as that term is used by the Commission in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company’s debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser
at
least $25,000,000 in stated liquidation value of Preferred Securities, (iii)
a
suspension or material limitation in trading in securities generally shall
have
occurred on the New York Stock Exchange, (iv) a suspension or material
limitation in trading in any of the Company’s securities shall have occurred on
the exchange or quotation system upon which the Company’ securities are traded,
if any, (v) a general moratorium on commercial business activities shall
have been declared either by federal, California or Maryland authorities or
(vi) there shall have occurred any outbreak or escalation of hostilities,
or declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the Purchaser’s judgment, impracticable or inadvisable to proceed with
the offering or delivery of the Preferred Securities. The respective agreements,
representations, warranties, indemnities and other statements of the Company
and
the Trust or their respective officers or trustees and of the Purchaser set
forth in or made pursuant to this Purchase Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the
Purchaser, the Company or the Trust or any of the their respective officers,
directors, trustees or controlling persons, and will survive delivery of and
payment for the Preferred Securities. The provisions of
Sections
7
and
8s
shall
survive the termination or cancellation of this Purchase Agreement.
10.
Amendments
.
This
Purchase Agreement may not be modified, amended, altered or supplemented, except
upon the execution and delivery of a written agreement by each of the parties
hereto.
11.
Notices
.
All
communications hereunder will be in writing and effective only on receipt,
and,
if sent to the Purchaser, will be mailed, delivered by hand or courier or sent
by facsimile and confirmed to the Purchaser c/o Taberna Capital Management,
LLC,
450 Park Avenue, 11th Floor, New York, New York 10022, Attention: Thomas
Bogal, Facsimile: (212) 735-1499; with a copy to Thelen Reid Brown Raysman
& Steiner LLP, 900 Third Avenue, New York, New York 10022, Attention: Sarah
Hewitt, Esq., Facsimile: (212) 895-2900 or other address as the Purchaser shall
designate for such purpose in a notice to the Company and the Trust; and if
sent
to the Company or the Trust, will be mailed, delivered by hand or courier or
sent by facsimile and confirmed to it at Redwood Trust, Inc., One Belvedere
Place, Suite 300, Mill Valley, California 94941,
Attention:
Martin S. Hughes, Facsimile: (415) 381-1773.
12.
Successors
and Assigns
.
This
Purchase Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing expressed
or mentioned in this Purchase Agreement is intended or shall be construed to
give any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in
Section
8
hereof
and their successors, assigns, heirs and legal representatives, any right or
obligation hereunder. None of the rights or obligations of the Company or the
Trust under this Purchase Agreement may be assigned, whether by operation of
law
or otherwise, without the Purchaser’s prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned
by
the Purchaser without the Company’s or the Trust’s consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase
Agreement.
13.
Applicable
Law
.
THIS
PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW).
14.
Submission
To Jurisdiction
.
ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO
OR
ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE
COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE
AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND
COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS PURCHASE AGREEMENT.
15.
Counterparts
and Facsimile
.
This
Purchase Agreement may be executed by any one or more of the parties hereto
in
any number of counterparts, each of which shall be deemed to be an original,
but
all such counterparts shall together constitute one and the same instrument.
This Purchase Agreement may be executed by any one or more of the parties hereto
by facsimile.
[Signature
Page Follows]
IN
WITNESS WHEREOF, this Purchase Agreement has been entered into as of the date
first written above.
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Redwood
Trust,
Inc.
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By:
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Name:
Martin
S. Hughes
Title:
Chief
Financial Officer,
Treasurer,
Vice
President and Secretary
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Redwood
Capital Trust I
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By:
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Redwood
Trust, Inc.
,
as Depositor
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By:
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Name:
Martin
S. Hughes
Title:
Chief
Financial Officer,
Treasurer,
Vice President and
Secretary
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Merrill
Lynch
International
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By:
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Name:
Title:
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List
of Significant Subsidiaries
RWT
Holdings, Inc.
Pursuant
to Section 3(c) of the Purchase Agreement, Mayer Brown Rowe & Maw, LLP,
counsel for the Company, shall deliver an opinion to the effect
that:
(i)
each
of
the Company and the Significant Subsidiary is validly existing as an entity
in
good standing under the laws of the jurisdiction in which it is incorporated;
each of the Company and the Significant Subsidiary has full power and authority
to own or lease its properties and to conduct its business as such business
is
currently conducted in all material respects; the Company has corporate power
and authority to (i) execute and deliver, and to perform its obligations under,
the Operative Documents to which it is a party and (iii) issue and perform
its
obligations under the Notes;
(ii)
neither
the issue and sale of the Common Securities, the Preferred Securities or the
Junior Subordinated Notes, nor the purchase by the Trust of the Junior
Subordinated Notes, nor the execution and delivery of and compliance with the
Operative Documents by the Company or the Trust nor the consummation of the
transactions contemplated thereby will constitute a breach or violation of
the
Trust Agreement or the charter or by-laws or similar organizational documents
of
the Company;
(iii)
the
Trust
Agreement has been duly authorized, executed and delivered by the Company and
duly executed and delivered by the Administrative Trustees;
(iv)
the
Indenture has been duly authorized, executed and delivered by the Company and,
assuming it has been duly authorized, executed and delivered by the Indenture
Trustee, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity;
(v)
the
Junior Subordinated Notes have been duly authorized and executed by the Company
and delivered to the Indenture Trustee for authentication in accordance with
the
Indenture and, when authenticated in accordance with the provisions of the
Indenture and delivered to the Trust against payment therefor, will constitute
legal, valid and binding obligations of the Company entitled to the benefits
of
the Indenture and enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity;
(vi)
the
Trust
is not, and, following the issuance of the Preferred Securities and the
consummation of the transactions contemplated by the Operative Documents and
the
application of the proceeds therefrom, the Trust will not be, an “investment
company” within the meaning of Section 3(a) of the Investment Company Act;
(vii)
assuming
the truth and accuracy of the representations and warranties of the Purchaser
in
the Purchase Agreement, it is not necessary in connection with the offer, sale
and delivery of the Common Securities, the Preferred Securities and the Junior
Subordinated Notes to register the same under the Securities Act of 1933, as
amended, under the circumstances contemplated in the Purchase Agreement and
the
Trust Agreement, or to require qualification of the Indenture under the Trust
Indenture Act of 1939, as amended;
(viii)
the
Purchase Agreement has been duly authorized, executed and delivered by each
of
the Company and the Trust; and
(ix)
except
for filings, registrations or qualifications that may be required by applicable
securities laws, no authorization, approval, consent or order of, or filing,
registration or qualification with, any person (including, without limitation,
any court, governmental body or authority) is required under the laws of the
State of Maryland in connection with the transactions contemplated by the
Operative Documents;
Pursuant
to Section 3(c) of the Purchase Agreement, the Company shall provide an
Officers’ Certificate, to the effect that:
(i)
all
of
the issued and outstanding equity interests of the Significant Subsidiary have
been duly authorized and validly issued, and are fully paid and nonassessable
and are owned of record and beneficially, directly or indirectly, by the
Company, and the issuance of the Preferred Securities and the Common Securities
is not subject to any contractual preemptive rights known to such
officer;
(ii)
no
consent, approval, authorization or order of any court or Governmental Entity
is
required for the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, the purchase by the Trust of the
Junior Subordinated Notes, the execution and delivery of and compliance with
the
Operative Documents by the Company or the Trust or the consummation of the
transactions contemplated in the Operative Documents, except such approvals
(specified in such certificate) as have been obtained;
(iii)
to
the
knowledge of such officer, there is no action, suit or proceeding before or
by
any government, governmental instrumentality, arbitrator or court, domestic
or
foreign, now pending or threatened against or affecting the Trust or the Company
or the Significant Subsidiary that could adversely affect the consummation
of
the transactions contemplated by the Operative Documents or could reasonably
be
expected to have a Material Adverse Effect.
(iv)
neither
the Company, the Trust, nor the Significant Subsidiary is in breach or violation
of, or default under, with or without notice or lapse of time or both, it
articles of incorporation or charter, by-laws or other governing documents
(including, without limitation, the Trust Agreement); the execution, delivery
and performance of the Operative Documents and the consummation of the
transactions contemplated by the Purchase Agreement and the Operative Documents
do not and will not (A) result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or assets
of
the Company or the Significant Subsidiary, or (B) conflict with, constitute
a
material breach or violation of, or constitute a material default under, with
or
without notice or lapse of time or both, any of the terms, provisions or
conditions of (x) the articles of incorporation or charter, by-laws or other
governing documents of the Company or its Significant Subsidiary, or (y) to
the
best of our knowledge, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, franchise, license or any other agreement or
instrument (collectively, “Agreements”) to which the Company or its Significant
Subsidiary is a party or by which any of them or any of their respective
properties may be bound, which is included as an exhibit to the Company’s 2005
10-K as a material Agreement or (z) any material order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or its Significant Subsidiary
or any of their respective properties which, in the case of each of (A) or
(B)
above, would reasonably be expected to have a Material Adverse
Effect.
(v)
neither
the Company nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation
D under the Securities Act (“Regulation D”) has directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of any of the Junior
Subordinated Notes, the Preferred Securities or the Common Securities being
issued pursuant to this transaction under the Securities Act, engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the Securities,
or
engaged, nor will engage, in any “directed selling efforts” within the meaning
of Regulation S under the Securities Act with respect to the
Securities.
Pursuant
to Section 3(d) of the Purchase Agreement, Chapman and Cutler LLP shall deliver
an opinion to the effect that:
(i)
the
Trust
will be classified for U.S. federal income tax purposes as a grantor trust
or
other disregarded entity and not as an association or a publicly traded
partnership taxable as a corporation;
(ii)
for
U.S.
federal income tax purposes, the Junior Subordinated Notes should constitute
indebtedness of the Company; and
(iii)
beginning
with the Company’s initial taxable year ended December 31, 1994, the Company has
been organized in conformity with the requirements for qualification as a REIT
under the Code, and the Company’s actual method of operation through September
30, 2006 (the date of the most recent unaudited financial statements and
management reports reviewed by us) has enabled, and its proposed method of
operation (as represented in the attached Officer’s Certificate) should enable,
the Company to satisfy the requirements for qualification and taxation as a
REIT.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
REDWOOD
TRUST, INC.
REIT
BACK-UP OFFICER’S CERTIFICATE
Redwood
Trust, Inc. Officer’s Certificate
(Regarding
Tax Matters)
The
undersigned officers of
Redwood
Trust, Inc.
,
a
Maryland corporation (
“Redwood
Trust”
),
each
hereby certify the following information on behalf of Redwood Trust and its
affiliates (collectively, the
“Company”
),
after
due inquiry and with the knowledge that Chapman and Cutler LLP has relied on
these certifications for the purpose of rendering its opinion (the “
Chapman
Opinion
”)
with
respect to the qualification of Redwood Trust as a “real estate investment
trust” under the provisions of the Internal Revenue Code of 1986, as amended
(the
“Code”
),
1
and on
certain other federal income tax matters. To the extent that any of the
following representations relate to future events, such representations
constitute results that the Company anticipates achieving based on the business
plans and operational methods that the Company has followed and intends to
follow. Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Chapman Opinion.
REIT
Related Matters:
1.
I
am
familiar with the Company’s corporate and financial affairs, its methods of
operation, and its books and records and tax filings. I am also familiar with
the income, asset and stock ownership requirements applicable to real estate
investment trusts under Section 856 of the Code and the distribution
requirements applicable to real estate investment trusts under Section 857
of
the Code, that, in each case, must be satisfied in order for the
REIT
2
to
maintain its classification as a real estate investment trust.
2.
The
Company and each of its subsidiaries has at all times been and will continue
to
be operated in accordance with (i) its respective organizational documents
and
(ii) the laws of the jurisdiction under which it is organized.
3.
The
Company adopted and has maintained December 31 as its year-end for all fiscal
and tax purposes.
4.
The
REIT
made a timely election to be subject to tax as a real estate investment trust
under the Code commencing with its taxable year ended December 31, 1994 and
has
not revoked, or received any notice of termination, of such
election.
5.
Redwood
Trust has no agreements regarding its stock other than: (i) the 2002
Redwood Trust Incentive Plan (as amended through May 2006, the
“Stock
Option Plan”
),
(ii) the Dividend Reinvestment and Stock Purchase Plan (as amended through
May 5, 2004, the
“DRP”
),
and
(iii) the 2002 Employee Stock Purchase Plan (the
“ESPP”
and,
together with the Stock Option Plan and the DRP, the
“Stock
Plans”
),
and
there have been no changes to the Stock Plans or Redwood Trust’s
(i) Articles of Amendment and Restatement (the
“Charter”
),
(ii) Articles Supplementary, (iii) Bylaws (as modified through
November 2005), or (iv) Executive Deferred Compensation Plan (as modified
through November 2006), since their respective dates of adoption or the last
amendment noted herein. The copies of the corporate and shareholder minutes
of
Redwood Trust and its subsidiaries provided to you are true and complete copies
of such minutes through date hereof and there have been no modifications or
additions since such date.
1
All
section references to the Code set forth herein shall include references
to the
applicable Treasury regulations promulgated thereunder.
2
All
references to “the REIT” made herein are references solely to Redwood Trust,
Inc. and its qualified REIT subsidiaries, Sequoia Mortgage Funding Corporation
and Cypress Trust, Inc., whereas references to “the Company” are intended to
include taxable REIT subsidiaries as well.
6.
At
all
times since December 31, 1994, (i) beneficial ownership of the stock
of Redwood Trust has been, and will continue to be, held by 100 or more persons
or entities, determined without reference to any rules of attribution or
look-through, (ii) Redwood Trust has requested written statements of actual
stock ownership from all shareholders of record holding 1 percent or more
of Redwood Trust’s stock and has maintained its records as required under
section 1.857-8 of the Treasury regulations, and (iii) based on all
information available to Redwood Trust in its stock register, stock ownership
records obtained from the Depository Trust Corporation, 13D filings, written
statements from Redwood Trust’s shareholders of record, and other information
available to it, no more than 50 percent in value of the capital stock of
Redwood Trust is owned, directly or indirectly, by five or fewer individuals
determined using the applicable rules of attribution as required under the
Code.
7.
The
beneficial ownership of Redwood Trust has been, and will continue to be,
evidenced by transferable shares. Redwood Trust has not, and will not, impose,
and it is not aware of, any transfer restrictions on its common stock, other
than restrictions (i) contained in Redwood Trust’s Charter,
(ii) imposed by applicable federal and state securities laws, and
(iii) imposed under the Stock Plans. The restrictions contained in the
Charter were adopted to enable Redwood Trust to comply with certain requirements
set forth in sections 856(a)(5), (a)(6), and (h) of the Code which are necessary
for its qualification as a real estate investment trust.
8.
The
REIT
does not own more than 10 percent of the equity of, or control, directly or
indirectly, any corporation, association or other entity other than those listed
on
Exhibit
A
.
9.
For
all
tax years commencing prior to 1998, less than 30 percent of the gross income
of
the REIT in any taxable year was derived from the sale or other disposition
of
(i) stock or securities held for less than one year, (ii) property
(other than Foreclosure Property (as defined herein)) that was (a) held by
the REIT primarily for sale to customers in the ordinary course of the REIT’s
trade or business or (b) properly included in inventory of the REIT, and
(iii) real property (including interests in mortgages on real property)
held for less than four years, other than property compulsorily or involuntarily
converted as a result of its destruction in whole or in part, seizure, or
requisition or condemnation or threat or imminence thereof and property that
was
Foreclosure Property.
10.
At
least
75 percent of the gross income derived by the REIT in any taxable year has
consisted, and will consist, of (i) interest on obligations secured by
mortgages on real property or on interests in real property, (ii) amounts
derived from the rental of real property, (iii) gain realized upon the sale
or other disposition of real property (including interests in mortgages on
real
property) that is not property held by the REIT primarily for sale to customers
in the ordinary course of a business of being a dealer in, or making a market
in, such property and that is not included in inventory of the REIT,
(iv) dividends or other distributions on, and gain from the sale or other
distribution of, shares (or certificates of beneficial interests) in other
real
estate investment trusts, (v) abatements and refunds of taxes on real
property, (vi) income and gain derived from real property (including
interests in real property) and any personal property incident to such real
property, acquired by the REIT through a default by the obligor on the lease
of
such property or on the indebtedness secured by such property (
“Foreclosure
Property”
),
(vii) amounts (other than amounts the determination of which depends in
whole or in part on the income or profits of any person) received or accrued
as
consideration for entering into agreements to make loans secured by mortgages
on
real property or on interests in real property, or to purchase or lease real
property, (viii) gain from the sale or disposition of real property (or
interests in real property and interests in mortgages on real property) and
shares in other real estate investment trusts, which were treated as held for
sale or as inventory but that were not subjected to a prohibited transaction
tax, and (ix) qualified temporary investment income.
11.
At
least
95 percent of the gross income derived by the REIT in any taxable year has
consisted, and will consist, of (i) the items of income described in
Paragraph 10 above, (ii) with respect to tax years ending before 2005,
payments to the REIT under any interest rate swaps or cap agreements entered
into by the REIT to hedge any variable rate indebtedness incurred or to be
incurred by the REIT to acquire or carry real estate assets (
“Qualifying
Interest Rate Agreements”
)
and any
gain from the termination or disposition of such agreements, (iii) gain
from the sale or other disposition of stock or securities that are not held
for
sale to customers or treated as inventory, and (iv) interest and dividends,
including interest and dividends from subsidiaries.
12.
At
the
end of each calendar quarter, at least 75 percent of the total value of the
assets of the REIT has consisted, and will consist, of real property (including
interests in real property and interests in mortgages on real property) and
shares (or certificates of beneficial interest) in other real estate investment
trusts, cash and cash items (including receivables that arise in the ordinary
course of operations but excluding receivables purchased from another person),
and United States government securities.
13.
At
the
end of each calendar quarter ending on or before December 31, 2000,
(a) not more than 25 percent of the total value of the assets of the REIT
consisted of securities (other than those securities taken into account for
purposes of Paragraph 12 above) and (b) the REIT did not beneficially
own any such securities of any one issuer (i) having an aggregate value in
excess of 5 percent of the value of the total assets of the REIT or
(ii) representing in excess of 10 percent of the outstanding voting power
of securities of such issuer.
14.
At
the
end of each calendar quarter beginning on or after January 1, 2001,
(a) not more than 25 percent of the total value of the assets of the REIT
has or will be attributable to securities (other than those securities taken
into account for purposes of Paragraph 12 above), (b) not more than 20
percent of the value of the REIT’s total assets has or will be attributable to
one or more taxable REIT subsidiaries and (c) other than securities of a
taxable REIT subsidiary or securities taken into account for purposes of
Paragraph 12 above, the REIT has not beneficially owned any securities of
any one issuer (i) having an aggregate value in excess of 5 percent of the
value of the total assets of the REIT or (ii) representing in excess of 10
percent of the outstanding voting power or value of securities of such issuer.
In particular, it is my understanding that the securities held by the REIT
in
each of Duke Funding I, Ltd., MKB CBO II, Ltd., Crest 2000-1, Ltd., and
Trainer Wortham Republic CBO II, Limited
3
represent less than 10 percent of the total vote and value of such issuers’
securities.
15.
The
REIT
has closely monitored, and will continue to closely monitor, its income,
including income from intercompany transactions, hedging transactions and sales
of mortgage related assets and securities, and the purchase, holding, and
disposition of its assets in order to comply with the representations set forth
in Paragraphs 9, 10, 11, 12, 13 and 14 hereof. Specifically, the REIT will
continue to monitor its earnings from interest rate caps and other hedging
instruments for purposes of determining whether such income constitutes income
from Qualifying Interest Rate Agreements and the proper characterization of
such
arrangements for purposes of the income and asset tests described above. If
it
is anticipated that the REIT may not be able to comply with such
representations, the REIT will take appropriate measures, including the
disposition of non-qualifying assets and/or assets generating non-qualifying
income, to comply with such representations.
16.
The
REIT
has not earned, and does not expect to earn, income from mortgage servicing
rights with respect to mortgage loans beneficially owned by others.
17.
The
REIT
has held 100 percent of the capital stock of Sequoia and Cypress, respectively,
at all times since their respective dates of formation and will hold 100 percent
of the capital stock of any other entity intended to be treated as a “qualified
REIT subsidiary” at all times during the period such entity is in existence.
Neither Sequoia nor Cypress has issued or will issue any securities or incur
any
indebtedness without first seeking the advice of tax counsel.
18.
Effective
January 1, 2001, Redwood Trust and Holdings elected to treat Holdings as a
taxable REIT subsidiary of the REIT. Holdings does not own stock of any entities
other than (i) Sequoia Residential Funding, Inc. and Madrona LLC (collectively,
the
“Holdings
Subsidiaries”
)
and
(ii) certain of the Acacia subsidiaries. The Holdings Subsidiaries are
wholly-owned by Holdings.
19.
The
REIT
has made a valid election to treat as a “taxable REIT subsidiary” (“TRS”) any
corporation (other than a qualified REIT subsidiary or another REIT) in which
it
owns in excess of 10% of the securities (by vote or value) and shall not consent
to the revocation of any such election. Part II of
Exhibit
A
sets
forth a complete list of all “taxable REIT subsidiaries” of the REIT (each,
individually, a
“TRS”
).
Since
January 1, 2001, the total value of the securities of all TRS held by the
REIT (including the value of any loans made by the REIT to any TRS) has not,
and
will not, exceed 20 percent of the total value of the REIT’s assets. The total
value of the securities of Holdings held by the REIT prior to January 1,
2001 did not exceed 5 percent of the value of the REIT’s total assets.
3
Those
entities listed on
Exhibit
A
and in
#14 above together constitute the complete list of all entities in which the
REIT owns equity securities.
20.
No
TRS,
directly or indirectly, operates or manages, or will operate or manage, a
lodging or healthcare facility or provide to any person rights to any brand
name
under which a lodging facility or healthcare facility is operated. All
transactions between the REIT and each TRS have been conducted on an arm’s
length basis at terms believed to approximate market rate prices.
21.
The
REIT
at all times has complied, and will continue to comply, with the record-keeping
requirements prescribed by the provisions of the Code applicable to REITs and,
specifically, sections 1.856-2(d)(3) and 1.857-8 of the Treasury
regulations.
22.
With
respect to each tax year prior to 2001, the REIT distributed to its shareholders
with respect to each such taxable year amounts equal in the aggregate to at
least 95 percent of its “real estate investment trust taxable income”
(determined without regard to the deduction for dividends paid and by excluding
any net capital gain) plus at least 95 percent of the excess of any “net income
from foreclosure property” over the tax imposed by the Code on such net income,
if any, as such terms are defined in sections 857(b)(2) and 857(b)(4)(B),
respectively, of the Code, during the relevant taxable year or during the spill
over period immediately thereafter as described in section 858 of the Code.
For
tax years beginning after December 31, 2000, the REIT has and will continue
to timely distribute to its shareholders amounts in the aggregate equal to
at
least 90 percent of such income.
23.
For
each
tax year, the REIT has either (i) distributed (taking into consideration
distributions permitted under section 857(b)(9) of the Code) (a) 85 percent
of its ordinary income for the calendar year, (b) 95 percent of its capital
gain net income for that calendar year and (c) all amounts from earlier
years that are not treated as having been distributed under section 4981 of
the
Code, or (ii) paid all applicable excise taxes for such calendar
year.
24.
Redwood
Trust will neither modify its existing dividend reinvestment plan to allow,
nor
adopt a dividend reinvestment plan that permits, its shareholders to reinvest
their cash distributions in shares of Redwood Trust at a purchase price less
than 95 percent of the fair market value of such shares on the distribution
date. Such discount shall be computed to include all brokerage charges until
advised otherwise by counsel. In addition, Redwood Trust generally only grants
“waiver discounts” at the same price as is generally available to other
participants in the plan unless there is a demonstrated cost savings to Redwood
Trust that justifies a different discount rate.
25.
The
REIT
has at all times beneficially held, and will continue to beneficially hold,
its
assets, including its mortgage related assets and securities for investment
purposes and not as property held primarily for sale to customers in the
ordinary course of a trade or business of the REIT. At no time has the REIT
held
itself out to third parties as willing to make a market or act as a dealer
in
mortgage related assets or securities. The REIT has not originated any mortgage
loans and has acquired all of its mortgage related assets from third parties
after origination and funding thereof.
26.
The
REIT
does not hold any mortgages with respect to which the interest is dependent
upon
appreciation or the income or profits of any person.
27.
Redwood
Trust intends that the representations made by it herein regarding its mortgage
related assets and securities will be true with respect to any mortgage related
assets and securities acquired by the REIT after the date hereof.
28.
The
information set forth in the quarterly management reports provided to you
regarding computation of the REIT’s asset and income tests and compliance with
its distribution requirements are true and correct as of the date
thereof.
29.
The
Company has timely filed all tax returns required to be filed by it or its
affiliates. To my knowledge, neither the REIT, nor any of its affiliates, is
the
subject of any pending or threatened audit or investigation by the Internal
Revenue Service or other taxing authority.
Other
Matters:
1.
I
have
reviewed and am familiar with the contents of the Chapman Opinion, the
Subordinated Indenture and the other Transaction Documents. I am aware of no
inaccuracy in the assumptions made in the Chapman Opinion (as set forth in
the
section labeled “Assumptions”).
2.
I
am
familiar with the Company’s current financial condition and capital structure
and its business plan, including projected assets, income, expense and capital
structure for the foreseeable future.
3.
Taking
into account the issuance of the Subordinated Notes, the Company currently
has a
net worth of approximately $1.15 billion and a ratio of total debt to net worth
of approximately 10.2:1.
4.
Although
the Transaction Documents do not impose a limit on the Company’s ability to
incur debt that is senior to the Subordinated Note or to incur additional
leverage generally, the Company’s business plan does not contemplate issuing
debt or incurring liabilities that would or could impair the Company’s ability
to pay accrued interest on the Subordinated Notes quarterly or repay principal
by maturity.
5.
The
Company intends to treat the Subordinated Notes as debt for all tax, accounting
and other purposes.
IN
WITNESS WHEREOF, we have, on behalf of Redwood Trust, Inc., signed this
Certificate as of the ____ day of December, 2006.
|
Redwood Trust, Inc.
|
|
|
|
|
|
Martin
S. Hughes
Chief
Financial Officer
|
|
|
|
|
|
|
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Harold
F. Zagunis
Vice
President
|
Exhibit
A
Part
I
Sequoia
Mortgage Funding Corporation (“
Sequoia
”)
Cypress
Trust, Inc. (“
Cypress
”)
Sequoia
Mortgage Trust 4
Sequoia
Mortgage Trust 5
Sequoia
Mortgage Trust 6
Sequoia
Mortgage Funding Trust 2003-A
Sequoia
Mortgage Funding Trust 2004-A
Sequoia
Heloc Trust 2004-1
Part
II
RWT
Holdings, Inc. (“
Holdings
”)
Sequoia
Residential Funding, Inc.
Madrona
LLC
Redwood
Asset Management, Inc. (“
RAM
”)
Redwood
Mortgage Funding, Inc., (“
RMF
”)
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
CRE CDO 1, Ltd.
Acacia
CDO 10, Ltd.
Acacia
CDO 11, Ltd.
Acacia
CDO 4, Inc.
Acacia
CDO 5, Inc.
Acacia
CDO 6, Inc.
Acacia
CDO 7, Inc.
Acacia
CDO 8, Inc.
Acacia
CDO 9, Inc.
Acacia
CRE CDO 1, Inc.
Acacia
CDO 10, Inc.
Crest
G-Star 2001-2, Ltd.
RESIX
Finance Limited
Millstone
III CDO, Ltd.
ANNEX
C
Pursuant
to Section 3(e) of the Purchase Agreement, Richards, Layton & Finger, P.A.,
special Delaware counsel for the Delaware Trustee, shall deliver an
opinion to
the effect that:
(i)
the
Trust
has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act, and all filings required under
the
laws of the State of Delaware with respect to the creation and valid existence
of the Trust as a statutory trust have been made;
(ii)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the Trust has the trust
power and authority (A) to own property and conduct its business, all as
described in the Trust Agreement, (B) to execute and deliver, and to perform
its
obligations under, each of the Purchase Agreement, the Common Securities
Subscription Agreement, the Junior Subordinated Note Purchase Agreement and
the
Preferred Securities and the Common Securities and (C) to purchase and hold
the
Junior Subordinated Notes;
(iii)
under
the
Delaware Statutory Trust Act, the certificate attached to the Trust Agreement
as
Exhibit C
is an
appropriate form of certificate to evidence ownership of the Preferred
Securities; the Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered against payment of the consideration
as
set forth in the Purchase Agreement, the Preferred Securities will be validly
issued and (subject to the qualifications set forth in this paragraph) fully
paid and nonassessable and will represent undivided beneficial interests in
the
assets of the Trust; the holders of the Preferred Securities will be entitled
to
the benefits of the Trust Agreement and, as beneficial owners of the Trust,
will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; and such counsel may note that the
holders of the Preferred Securities may be obligated, pursuant to the Trust
Agreement, to (A) provide indemnity and/or security in connection with and
pay
taxes or governmental charges arising from transfers or exchanges of Preferred
Securities certificates and the issuance of replacement Preferred Securities
certificates and (B) provide security or indemnity in connection with requests
of or directions to the Property Trustee to exercise its rights and remedies
under the Trust Agreement;
(iv)
the
Common Securities have been duly authorized by the Trust Agreement and, when
issued and delivered by the Trust to the Company against payment therefor as
described in the Trust Agreement and the Common Securities Subscription
Agreement, will be validly issued and fully paid and will represent undivided
beneficial interests in the assets of the Trust entitled to the benefits of
the
Trust Agreement;
(v)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the issuance of the
Preferred Securities and the Common Securities is not subject to preemptive
or
other similar rights;
(vi)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the execution and delivery
by the Trust of the Purchase Agreement, the Common Securities Subscription
Agreement and the Junior Subordinated Note Purchase Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust;
(vii)
the
Trust
Agreement constitutes a legal, valid and binding obligation of the Company
and
the Trustees, and is enforceable against the Company and the Trustees, in
accordance with its terms, subject, as to enforcement, to the effect upon the
Trust Agreement of (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or
at
law), and (iii) the effect of applicable public policy on the enforceability
of
provisions relating to indemnification or contribution;
(viii)
the
issuance and sale by the Trust of the Preferred Securities and the Common
Securities, the purchase by the Trust of the Junior Subordinated Notes, the
execution, delivery and performance by the Trust of the Purchase Agreement,
the
Common Securities Subscription Agreement and the Junior Subordinated Note
Purchase Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement and compliance by the Trust with its
obligations thereunder do not violate (i) any of the provisions of the
Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any
applicable Delaware law, rule or regulation;
(ix)
no
filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Delaware court or Delaware Governmental Entity
or Delaware agency is necessary or required solely in connection with the
issuance and sale by the Trust of the Common Securities or the Preferred
Securities, the purchase by the Trust of the Junior Subordinated Notes, the
execution, delivery and performance by the Trust of the Purchase Agreement,
the
Common Securities Subscription Agreement and the Junior Subordinated Note
Purchase Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement and compliance by the Trust with its
obligations thereunder; and
(x)
the
holders of the Preferred Securities (other than those holders who reside or
are
domiciled in the State of Delaware) will have no liability for income taxes
imposed by the State of Delaware solely as a result of their participation
in
the Trust and the Trust will not be liable for any income tax imposed by the
State of Delaware.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware, (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers
of
the Company and public officials and (C) take customary assumptions and
exceptions as to enforceability and other matters.
Pursuant
to Section 3(f) of the Purchase Agreement, Gardere Wynne Sewell LLP, special
counsel for the Property Trustee and the Indenture Trustee, shall deliver an
opinion to the effect that:
(i)
The
Bank
of New York Trust Company, National Association (the “Bank”) is a national
banking association with trust powers, duly and validly existing under the
laws
of the United States of America, with corporate power and authority to execute,
deliver and perform its obligations under the Indenture and to authenticate
and
deliver the Securities, and is duly eligible and qualified to act as Trustee
under the Indenture pursuant to Section 6.1
thereof
and as Property Trustee under the Trust Agreement pursuant to Section 8.2
thereof. (The Indenture and the Trust Agreement are each, an “Agreement” and
together, the “Agreements”).
(ii)
Each
Agreement has been duly authorized, executed and delivered by the Bank and
constitutes the valid and binding obligation of the Bank, enforceable against
it
in accordance with its terms except (A) as may be limited by bankruptcy,
fraudulent conveyance, fraudulent transfer, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws now or hereafter
in
effect relating to creditors’ rights generally, and by general equitable
principles, regardless of whether considered in a proceeding in equity or at
law
and (B) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(iii)
Neither
the execution or delivery by the Bank of the Agreements, the authentication
and
delivery of the Preferred Securities (as defined in the Trust Agreement) and
junior subordinated notes (issued under the Indenture, and together with the
Preferred Securities, the “Securities”) by the Trustee pursuant to the terms of
the Agreements, nor the performance by the Bank of its obligations under the
Agreements (A) requires the consent or approval of, the giving of notice to
or
the registration or filing with, any governmental authority or agency under
any
existing law of the United States of America governing the banking or trust
powers of the Bank or (B) violates or conflicts with the Articles of Association
or By-laws of the Bank or any law or regulation of the State of New York or
the
United States of America governing the banking or trust powers of the
Bank.
(iv)
The
Securities have been authenticated and delivered by a duly authorized officer
of
the Bank.
In
rendering such opinions, such counsel may (A) state that its opinion is limited
to the laws of the State of New York and the laws of the United States of
America, (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of The Bank of New York Trust Company,
National Association, the Company and public officials, and (C) make customary
assumptions and exceptions as to enforceability and other matters.
Pursuant
to Section 3(g) of the Purchase Agreement, Richards, Layton & Finger, P.A.,
counsel for the Delaware Trustee, shall deliver an opinion to the effect
that:
(i)
The
Bank
of New York (Delaware) (the “Delaware Trustee”) is duly incorporated and validly
existing as a banking corporation under the laws of the State of
Delaware;
(ii)
The
Delaware Trustee has the corporate power and authority to execute, deliver
and
perform its obligations under, and has taken all necessary corporate action
to
authorize the execution, delivery and performance of, the Trust Agreement and
to
consummate the transactions contemplated thereby;
(iii)
The
Trust
Agreement has been duly authorized, executed and delivered by the Delaware
Trustee and constitutes a legal, valid and binding obligation of the Delaware
Trustee, and is enforceable against the Delaware Trustee, in accordance with
its
terms subject, as to enforcement, to the effect upon the Trust Agreement of
(i)
applicable bankruptcy, insolvency, reorganization, moratorium, receivership,
fraudulent conveyance or transfer and similar laws relating to or affecting
the
rights and remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution;
(iv)
The
execution, delivery and performance by the Delaware Trustee of the Trust
Agreement do not conflict with or result in a violation of (A) articles of
association or by-laws of the Delaware Trustee
or
(B)
any law or regulation of the State of Delaware or the United States of America
governing the trust powers of the Delaware Trustee or, to our knowledge, without
independent investigation, of any indenture, mortgage, bank credit agreement,
note or bond purchase agreement, long-term lease, license or other agreement
or
instrument to which the Delaware Trustee is a party or by which it is bound
or,
to our knowledge, without independent investigation, of any judgment or order
applicable to the Delaware Trustee; and
(v)
No
approval, authorization or other action by, or filing with, any Governmental
Entity of the State of Delaware or the United States of America governing the
trust powers of the Delaware Trustee is required in connection with the
execution and delivery by the Delaware Trustee
of
the
Trust Agreement or the performance by the Delaware Trustee of its obligations
thereunder, except for the filing of the Certificate of Trust with the Secretary
of State of the State of Delaware, which Certificate of Trust has been filed
with the Secretary of State of the State of Delaware.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the
United States governing the trust powers of the Delaware Trustee,
(B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials and
(C)
take customary assumptions and exceptions.
Officer’s
Financial Certificate
The
undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice
President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
certifies pursuant to Section 6(h) of the Purchase Agreement, dated as of
December 12, 2006, among Redwood Trust, Inc. (the “Company”), Redwood Capital
Trust I (the “Trust”) and Merrill Lynch International, that, as of [date],
[20__], the Company had the following ratios and balances:
As
of
[Quarterly/Annual Financial Date], 20__
Senior
secured indebtedness for borrowed money (“Debt”)
|
$
_____
|
|
|
Senior
unsecured Debt
|
$
_____
|
|
|
Subordinated
Debt
|
$
_____
|
|
|
Total
Debt
|
$
_____
|
|
|
Ratio
of (x) senior secured and unsecured Debt to (y) total Debt
|
_____%
|
*
A table
describing the officer’s financial certificate calculation procedures is
provided on page 3
[FOR
FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of
cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended _______, 20___].]
[FOR
FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [date], 20__.]
The
financial statements fairly present in all material respects, in accordance
with
U.S. generally accepted accounting principles (“GAAP”), the financial position
of the Company and its consolidated subsidiaries, and the results of operations
and changes in financial condition as of the date, and for the
[quarter]
[annual]
period
ended
[date]
,
20__,
and such financial statements have been prepared in accordance with GAAP
consistently applied throughout the period involved (expect as otherwise noted
therein).
There
has
been no monetary default with respect to any indebtedness owed by the Company
and/or its subsidiaries (other than those defaults cured within 30 days of
the
occurrence of the same).
IN
WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this _____ day of _____________, 20__.
|
|
|
|
Redwood
Trust, Inc.
|
|
|
|
|
By:
|
|
|
Name:
Title:
|
|
|
|
|
|
|
|
Redwood
Trust, Inc.
One
Belvedere Place
Suite
300
Mill
Valley, California 94941
Telephone:
(415) 389-7373
|
Exhibit
1.2
Execution
Version
PURCHASE
AGREEMENT
among
REDWOOD
TRUST, INC.
REDWOOD
CAPITAL TRUST I
and
BEAR,
STEARNS & CO. INC.
_______________
Dated
as
of December 12, 2006
________________
PURCHASE
AGREEMENT
($75,000,000
Aggregate Liquidation Amount of Trust Preferred Securities)
THIS
PURCHASE AGREEMENT, dated as of December 12, 2006 (this “
Purchase
Agreement
”),
is
entered into among Redwood Trust, Inc., a Maryland corporation
(the
“
Company
”),
and
Redwood Capital Trust I, a Delaware statutory trust (the “
Trust
”,
and
together with the Company, the “
Sellers
”),
and
Bear, Stearns & Co. Inc. or its assignee (the “
Purchaser
”).
WITNESSETH
:
WHEREAS,
the Sellers propose to issue and sell Seventy-Five Thousand (75,000)
Floating Rate Preferred Securities of the Trust, having a stated liquidation
amount of $1,000 per security, bearing a variable rate, reset quarterly, equal
to LIBOR (as defined in the Indenture (as defined below)) plus 2.25% per
annum
(the
“
Preferred
Securities
”);
WHEREAS,
the proceeds from the sale of the Preferred Securities will be combined with
proceeds from the sale by the Trust to the Company of its common securities
(the
“
Common
Securities
”),
and
will be used by the Trust to purchase Seventy-Seven Million Three
Hundred Twenty-Five Thousand Dollars ($77,325,000) in principal amount of
the unsecured junior subordinated notes of the Company (the “
Junior
Subordinated Notes
”);
WHEREAS,
the Preferred Securities and the Common Securities for the Trust will be issued
pursuant to the Amended and Restated Trust Agreement (the “
Trust
Agreement
”),
dated
as of the Closing Date, among the Company, as depositor, The Bank of New York
Trust Company, National Association, a national banking association, as property
trustee (in such capacity, the “
Property
Trustee
”),
The
Bank of New York (Delaware), a national banking association, as Delaware trustee
(in such capacity, the “
Delaware
Trustee
”),
the
Administrative Trustees named therein (in such capacities, the “
Administrative
Trustees
”)
and
the holders from time to time of undivided beneficial interests in the assets
of
the Trust; and
WHEREAS,
the Junior Subordinated Notes will be issued pursuant to a Junior Subordinated
Indenture, dated as of the Closing Date (the “
Indenture
”),
between the Company and The Bank of New York Trust Company, National
Association, a national banking association, as indenture trustee (in such
capacity, the “
Indenture
Trustee
”).
NOW,
THEREFORE, in consideration of the mutual agreements and subject to the terms
and conditions herein set forth, the parties hereto agree as
follows:
1.
Definitions
.
The
Preferred Securities, the Common Securities and the Junior Subordinated Notes
are collectively referred to herein as the “
Securities
.”
This
Purchase Agreement, the Indenture, the Trust Agreement and the Securities are
collectively referred to herein as the “
Operative
Documents
.”
All
other capitalized terms used but not defined in this Purchase Agreement shall
have the respective meanings ascribed thereto in the Indenture.
2.
Purchase
and Sale of the Preferred Securities
.
(a)
The
Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase
from the Sellers the Preferred Securities for an aggregate amount (the
“
Purchase
Price
”)
equal
to Seventy-Five Million Dollars ($75,000,000). The Purchaser shall be
responsible for the rating agency costs and expenses. The Sellers shall use
the
Purchase Price, together with the proceeds from the sale of the Common
Securities, to purchase the Junior Subordinated Notes.
(b)
Delivery
or transfer of, and payment for, the Preferred Securities shall be made at
11:00
A.M. New York time, on December 12, 2006 or such later date (not later than
January 10, 2007) as the parties may designate (such date and time of delivery
and payment for the Preferred Securities being herein called the “
Closing
Date
”).
The
Preferred Securities shall be transferred and delivered to the Purchaser against
the payment of the Purchase Price to the Sellers made by wire transfer in
immediately available funds on the Closing Date to a U.S. account designated
in
writing by the Company at least two business days prior to the Closing
Date.
(c)
Delivery
of the Preferred Securities shall be made at such location, and in such names
and denominations, as the Purchaser shall designate at least two business days
in advance of the Closing Date. The Company and the Trust agree to have the
Preferred Securities available for inspection and checking by the Purchaser
in
New York, New York, not later than 2:00 P.M. New York time on the business
day
prior to the Closing Date. The closing for the purchase and sale of the
Preferred Securities shall occur at the offices of Thelen Reid Brown Raysman
& Steiner LLP, 900 Third Avenue, New York, New York 10022 or such other
place as the parties hereto shall agree.
3.
Condition
s
.
The
obligations of the parties under this Purchase Agreement are subject to the
following conditions:
(a)
The
representations and warranties contained herein shall be accurate as of the
date
of delivery of the Preferred Securities.
(b)
Reserved
.
(c)
Mayer
Brown Rowe & Maw LLP, counsel for the Company and the Trust (the
“
Company
Counsel
”),
shall
have delivered an opinion, dated the Closing Date, addressed to the Purchaser
and The Bank of New York Trust Company, National Association, in substantially
the form set out in
Annex
A-I
hereto
and the Company shall have furnished to the Purchaser a certificate signed
by
the Company’s Chief Executive Officer, President, an Executive Vice President,
Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing
Date, addressed to the Purchaser, in substantially the form set out in
Annex
A-II
hereto.
In rendering its opinion, the Company Counsel may rely as to factual matters
upon certificates or other documents furnished by officers, directors and
trustees of the Company and the Trust and by government officials (provided,
however, that copies of any such certificates or documents are delivered to
the
Purchaser) and by and upon such other documents as such counsel may, in its
reasonable opinion, deem appropriate as a basis for the Company Counsel’s
opinion. The Company Counsel may specify the jurisdictions in which it is
admitted to practice and that it is not admitted to practice in any other
jurisdiction and is not an expert in the law of any other jurisdiction. Such
Company Counsel Opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
(d)
The
Purchaser shall have been furnished the opinion of Chapman and Cutler LLP,
dated
the Closing Date, addressed to the Purchaser and The Bank of New York Trust
Company, National Association, in substantially the form set out in
Annex
B
hereto.
(e)
The
Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing
Date,
addressed to the Purchaser, The Bank of New York Trust Company, National
Association, the Delaware Trustee and the Company, in substantially the form
set
out in
Annex
C
hereto.
(f)
The
Purchaser shall have received the opinion of Gardere Wynne Sewell LLP, special
counsel for the Property Trustee and the Indenture Trustee, dated the Closing
Date, addressed to the Purchaser, in substantially the form set out in
Annex
D
hereto.
(g)
The
Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing
Date,
addressed to the Purchaser and The Bank of New York Trust Company, National
Association, in substantially the form set out in
Annex
E
hereto.
(h)
The
Company shall have furnished to the Purchaser a certificate of the Company,
signed by the Chief Executive Officer, President or an Executive Vice President,
and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company,
and the Trust shall have furnished to the Purchaser a certificate of the Trust,
signed by an Administrative Trustee of the Trust, in each case dated the Closing
Date, and, in the case of the Company, as to (i) and (ii) below and, in the
case
of the Trust, as to (i) below:
(i)
the
representations and warranties in this Purchase Agreement are true and correct
on and as of the Closing Date with the same effect as if made on the Closing
Date, and the Company and the Trust have complied with all the agreements and
satisfied all the conditions on either of their part to be performed or
satisfied at or prior to the Closing Date; and
(ii)
since
the
date of the Interim Financial Statements (as defined below), there has been
no
material adverse change in the condition (financial or other), earnings,
business or assets of the Company and its subsidiaries, whether or not arising
from transactions occurring in the ordinary course of business (a “
Material
Adverse Change
”).
(i)
Subsequent
to the execution of this Purchase Agreement, there shall not have been any
change, or any development involving a prospective change, in or affecting
the
condition (financial or other), earnings, business or assets of the Company
and
its subsidiaries, whether or not occurring in the ordinary course of business,
the effect of which is, in the Purchaser’s judgment, so material and adverse as
to make it impractical or inadvisable to proceed with the purchase of the
Preferred Securities.
(j)
Prior
to
the Closing Date, the Company and the Trust shall have furnished to the
Purchaser and its counsel such further information, certificates and documents
as the Purchaser or its counsel may reasonably request.
If
any of
the conditions specified in this
Section 3
shall
not have been fulfilled when and as provided in this Purchase Agreement, or
if
any of the opinions, certificates and documents mentioned above or elsewhere
in
this Purchase Agreement shall not be reasonably satisfactory in form and
substance to the Purchaser or its counsel, this Purchase Agreement and all
the
Purchaser’s obligations hereunder may be canceled at, or at any time prior to,
the Closing Date by the Purchaser. Notice of such cancellation shall be given
to
the Company and the Trust in writing or by telephone or facsimile confirmed
in
writing.
Each
certificate signed by any trustee of the Trust or any officer of the Company
and
delivered to the Purchaser or the Purchaser’s counsel in connection with the
Operative Documents and the transactions contemplated hereby and thereby shall
be deemed to be a representation and warranty of the Trust and/or the Company,
as the case may be, and not by such trustee or officer in any individual
capacity.
4.
Representations
and Warranties of the Company and the Trust
.
The
Company and the Trust jointly and severally represent and warrant to, and agree
with the Purchaser, as follows:
(a)
Neither
the Company nor the Trust, nor any of their “Affiliates” (as defined in Rule
501(b) of Regulation D (“
Regulation
D
”)
under
the Securities Act (as defined below)), nor any person acting on its or their
behalf, has, directly or indirectly, made offers or sales of any security,
or
solicited offers to buy any security, under circumstances that would require
the
registration of any of the Securities under the Securities Act of 1933, as
amended (the “
Securities
Act
”).
(b)
Neither
the Company nor the Trust, nor any of their Affiliates, nor any person acting
on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer
or
sale of any of the Securities.
(c)
The
Securities (i) are not and have not been listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934,
as
amended (the “
Exchange
Act
”),
or
quoted on a U.S. automated inter-dealer quotation system and (ii) are not of
an
open-end investment company, unit investment trust or face-amount certificate
company that are, or are required to be, registered under Section 8 of the
Investment Company Act of 1940, as amended (the “
Investment
Company Act
”),
and
the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act (“
Rule
144A(d)(3)
”).
(d)
Neither
the Company nor the Trust, nor any of their Affiliates, nor any person acting
on
its or their behalf, has engaged, or will engage, in any “directed selling
efforts” within the meaning of Regulation S under the Securities Act with
respect to the Securities.
(e)
Neither
the Company nor the Trust is, and, immediately following consummation of the
transactions contemplated hereby and the application of the net proceeds
therefrom, will not be, an “investment company” within the meaning of Section
3(a) of the Investment Company Act.
(f)
Neither
the Company nor the Trust has paid or agreed to pay to any person any
compensation for soliciting another to purchase any of the Securities, except
for the preferred securities commission and/or the sales commission of three
percent (3%) the Company has agreed to pay to Taberna Securities, LLC (or to
the
Company’s introducing agent on behalf of Taberna Securities, LLC) pursuant to
the letter agreement between the Company and Taberna Securities, LLC, dated
November 21, 2006.
(g)
The
Trust
has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801,
et
seq
.
(the
“
Statutory
Trust
Act
”)
with
all requisite power and authority to own property and to conduct the business
it
transacts and proposes to transact and to enter into and perform its obligations
under the Operative Documents to which it is a party. The Trust is duly
qualified to transact business as a foreign entity and is in good standing
in
each jurisdiction in which such qualification is necessary, except where the
failure to so qualify or be in good standing would not reasonably be expected
to
have a material adverse effect on the condition (financial or otherwise),
earnings, business, liabilities or assets (taken as a whole) of the Company
and
its subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business (a “
Material
Adverse Effect
”).
The
Trust is not a party to or otherwise bound by any agreement other than the
Operative Documents.
(h)
The
Trust
Agreement has been duly authorized by the Company and, on the Closing Date
specified in
Section
2(b)
hereof,
will have been duly executed and delivered by the Company and the Administrative
Trustees of the Trust, and, assuming due authorization, execution and delivery
by the Property Trustee and the Delaware Trustee, will be a legal, valid and
binding obligation of the Company and the Administrative Trustees, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principles of equity. Each of the Administrative Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to execute
and deliver the Trust Agreement.
(i)
The
Indenture has been duly authorized by the Company and, on the Closing Date,
will
have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Indenture Trustee, will be a legal,
valid and binding obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of
equity.
(j)
The
Preferred Securities and the Common Securities have been duly authorized by
the
Trust and, when issued and delivered against payment therefor on the Closing
Date in accordance with this Purchase Agreement, in the case of the Preferred
Securities, and in accordance with the Common Securities Subscription Agreement,
in the case of the Common Securities, will be validly issued, fully paid and
non-assessable and will represent undivided beneficial interests in the assets
of the Trust entitled to the benefits of the Trust Agreement, enforceable
against the Trust in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity. The issuance of the Securities is not
subject to any preemptive or other similar rights. On the Closing Date, all
of
the issued and outstanding Common Securities will be directly owned by the
Company free and clear of any pledge, security interest, claim, lien or other
encumbrance of any kind (each, a “
Lien
”).
(k)
The
Junior Subordinated Notes have been duly authorized by the Company and, on
the
Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the Indenture and, when
authenticated in the manner provided for in the Indenture and delivered to
the
Trust against payment therefor in accordance with that certain Junior
Subordinated Note Purchase Agreement of even date herewith between the Company
and the Trust (the “
Junior
Subordinated Note Purchase Agreement
”),
will
constitute legal, valid and binding obligations of the Company entitled to
the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of
equity.
(l)
This
Purchase Agreement has been duly authorized, executed and delivered by the
Company and the Trust.
(m)
Neither
the issue and sale of the Common Securities, the Preferred Securities or the
Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes
by
the Trust, nor the execution and delivery of and compliance with the Operative
Documents by the Company or the Trust, nor the consummation of the transactions
contemplated herein or therein, (i) will conflict with or constitute a violation
or breach of the Trust Agreement or the charter or bylaws or similar
organizational documents of the Company, (ii) will conflict with or constitute
a
violation or breach of the charter or bylaws or similar organizational documents
of any subsidiary of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, governmental
authority, agency or instrumentality or court, domestic or foreign, having
jurisdiction over the Trust or the Company or any of its subsidiaries or their
respective properties or assets (collectively, the “
Governmental
Entities
”),
(iii)
will conflict with or constitute a violation or breach of, or a default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any Lien upon any property or assets of the Trust, the Company
or
any of the Company’s subsidiaries pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which (A) the
Trust, the Company or any of its subsidiaries is a party or by which it or
any
of them may be bound, or (B) any of the property or assets of any of them is
subject, or any judgment, order or decree of any court, Governmental Entity
or
arbitrator, except, in the case of this clauses (ii) or (iii), for such
conflicts, breaches, violations, defaults, Repayment Events (as defined below)
or Liens which (X) would not, singly or in the aggregate, adversely affect
the
consummation of the transactions contemplated by the Operative Documents and
(Y)
would not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (iv) require the consent, approval, authorization or order
of
any court or Governmental Entity (collectively, the “
Consents
”),
except any such Consent as has already been received or obtained. As used
herein, a “
Repayment
Event
”
means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion
of
such indebtedness by the Trust or the Company or any of its subsidiaries prior
to its scheduled maturity.
(n)
The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of Maryland, with all requisite
corporate
power
and
authority to own, lease and operate its properties and conduct the business
it
transacts and proposes to transact, and is duly qualified to transact business
and is in good standing in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be
so
qualified would not, singly or in the aggregate, reasonably be expected to
have
a Material Adverse Effect.
(o)
The
Company has no subsidiaries that are material to its business, financial
condition or earnings other than those subsidiaries listed in
Schedule
1
attached
hereto (which
Schedule
1
includes
each of the Company’s “significant subsidiaries” as defined in Securities and
Exchange Commission Regulation S-X) (collectively, the “
Significant
Subsidiaries
”).
The
Significant Subsidiary is a corporation duly incorporated or organized or
formed, as the case may be, validly existing and in good standing under the
laws
of the jurisdiction in which it is chartered or organized or formed, with all
requisite corporate, partnership or limited liability company, as the case
may
be, power and authority to own, lease and operate its properties and conduct
the
business it transacts and proposes to transact. The Significant Subsidiary
is
duly qualified to transact business as a foreign corporation and is in good
standing in each jurisdiction where the nature of its activities requires such
qualification, except where the failure to be so qualified would not, singly
or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The
Significant Subsidiary (other than a taxable REIT subsidiary, if any) is not
currently prohibited, directly or indirectly, under any agreement or other
instrument, other than as required by applicable law, to which it is a party
or
is subject, from paying any dividends to the Company, from making any other
distribution on such Significant Subsidiary’s capital stock or other Equity
Interests, from repaying to the Company any loans or advances to such
Significant Subsidiary from the Company or from transferring any of such
Significant Subsidiary’s properties or assets to the Company or any other
subsidiary of the Company. As used herein, the term “
Equity
Interests
”
means
the shares or stock interests (both common stock and preferred stock) in a
corporation.
(p)
Each
of
the Trust, the Company and each of the Company’s subsidiaries holds all
necessary approvals, authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “
Governmental
Licenses
”)
of and
from Governmental Entities necessary to conduct its business as now being
conducted, and neither the Trust, the Company nor any of the Company’s
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Government License, except where the failure to
be
so licensed or approved or the receipt of an unfavorable decision, ruling or
finding, would not, singly or in the aggregate, reasonably be expected to have
a
Material Adverse Effect; all of the Governmental Licenses are valid and in
full
force and effect, except where the invalidity or the failure of such
Governmental Licenses to be in full force and effect, would not, singly or
in
the aggregate, reasonably be expected to have a Material Adverse Effect; and
the
Company and its subsidiaries are in compliance with all applicable laws, rules,
regulations, judgments, orders, decrees and consents, except where the failure
to be in compliance would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(q)
All
of
the issued and outstanding Equity Interests of the Company and its Significant
Subsidiary are validly issued, fully paid and non-assessable; all of the issued
and outstanding Equity Interests of the Significant Subsidiary are owned by
the
Company, directly or through subsidiaries, free and clear of any Lien, claim
or
equitable right; and none of the issued and outstanding Equity Interests of
the
Company or the Significant Subsidiary were issued in violation of any preemptive
or similar rights arising by operation of law, under the charter or by-laws
or
similar organizational documents of such entity or under any agreement to which
the Company or its Significant Subsidiary is a party.
(r)
Neither
the Company nor any of its subsidiaries is (i) in violation of its respective
charter or by-laws or similar organizational documents or (ii) in default in
the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease
or
other agreement or instrument to which the Company or any such subsidiary is
a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, reasonably
be
expected to have a Material Adverse Effect.
(s)
There
is
no action, suit or proceeding before or by any Governmental Entity, arbitrator
or court, domestic or foreign, now pending or, to the knowledge of the Company
or the Trust after due inquiry, threatened against or affecting the Trust or
the
Company or any of the Company’s subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated
by
the Operative Documents or reasonably be expected to have a Material Adverse
Effect; and the aggregate of all pending legal or governmental proceedings
to
which the Trust or the Company or any of its subsidiaries is a party or of
which
any of their respective properties or assets is subject, including ordinary
routine litigation incidental to the business, are not reasonably expected
to
result in a Material Adverse Effect.
(t)
The
accountants of the Company who certified the Financial Statements (as defined
below) are independent public accountants of the Company and its subsidiaries
within the meaning of the Securities Act, and the rules and regulations of
the
Securities and Exchange Commission (the “
Commission
”)
thereunder.
(u)
The
audited consolidated financial statements (including the notes thereto) and
schedules of the Company and its consolidated subsidiaries for the fiscal year
ended December 31, 2005 (the “
Financial
Statements
”)
and
the interim unaudited consolidated financial statements of the Company and
its
consolidated subsidiaries for the quarter ended September 30, 2006 (the
“
Interim
Financial Statements
”)
provided to the Purchaser are the most recent available audited and unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles (“
GAAP
”),
the
financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and
for
the periods therein specified, subject, in the case of Interim Financial
Statements, to year-end adjustments (which are expected to consist solely of
normal recurring adjustments). Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted
therein).
(v)
None
of
the Trust, the Company nor any of the Company’s subsidiaries has any material
liability required to be reflected in the Financial Statements and Interim
Financial Statements in accordance with GAAP, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, including any liability
for
taxes (and there is no past or present fact, situation, circumstance, condition
or other basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against the Company or its subsidiaries
that
could give rise to any such liability), except for (i) liabilities set
forth in the Financial Statements or the Interim Financial Statements and
(ii) normal fluctuations in the amount of the liabilities referred to in
clause (i) above occurring in the ordinary course of business of the Trust,
the Company and/or its subsidiaries since the date of the most recent balance
sheet included in such Financial Statements.
(w)
Since
the
respective dates of the Financial Statements and the Interim Financial
Statements, there has not been (A) any Material Adverse Change or (B) any
dividend or distribution of any kind declared, paid or made by the Company
on
any class of its capital stock other than regular quarterly or yearly special
dividends on the Company’s common stock.
(x)
The
documents of the Company filed with the Commission in accordance with the
Exchange Act, from and including the commencement of the fiscal year covered
by
the Company’s most recent Annual Report on Form 10-K, at the time they were or
hereafter are filed by the Company with the Commission (collectively, the
“
1934
Act Reports
”),
complied and will comply in all material respects with the requirements of
the
Exchange Act and the rules and regulations of the Commission thereunder (the
“
1934
Act Regulations
”),
and,
at the date of this Purchase Agreement and on the Closing Date, do not and
will
not include an 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;
and other than such instruments, agreements, contracts and other documents
as
are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments,
agreements, contracts or documents of a character described in Item 601 of
Regulation S-K promulgated by the Commission to which the Company or any of
its subsidiaries is a party. The Company is in compliance with all currently
applicable requirements of the Exchange Act that were added by the
Sarbanes-Oxley Act of 2002, except as would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(y)
No
labor
dispute with the employees of the Trust, the Company or the Significant
Subsidiary exists or, to the knowledge of the executive officers of the Trust
or
the Company, is imminent, except those which would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(z)
No
filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that
have
been made or obtained, is necessary or required for the performance by the
Trust
or the Company of their respective obligations under the Operative Documents,
as
applicable, or the consummation by the Trust and the Company of the transactions
contemplated by the Operative Documents.
(aa)
Reserved
.
(bb)
Reserved
.
(cc)
Commencing
with its taxable year ended December 31, 1994 the Company has been, and upon
the
completion of the transactions contemplated hereby, the Company will continue
to
be, organized and operated in conformity with the requirements for qualification
and taxation as a real estate investment trust (a “
REIT
”)
under
sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
“
Code
”),
and
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, and
no
actions have been taken (or not taken which are required to be taken) which
would cause such qualification to be lost. The Company expects to continue
to be
organized and to operate in a manner so as to qualify as a REIT in the taxable
year ending December 31, 2006 and succeeding taxable years for so long as the
Company determines that it is in its best interest to remain qualified as a
REIT.
(dd)
Each
of
the Company and the Significant Subsidiary has timely and duly filed all Tax
Returns (as defined below) required to be filed by them, and all such Tax
Returns are true, correct and complete in all material respects. The Company
and
the Significant Subsidiary have timely and duly paid in full all material Taxes
(as defined below) required to be paid by them (whether or not such amounts
are
shown as due on any Tax Return). There are no federal, state, or other Tax
audits or deficiency assessments proposed or pending with respect to the Company
or the Significant Subsidiary, and no such audits or assessments are threatened.
As used herein, the terms “
Tax
”
or
“
Taxes
”
mean
(i) all federal, state, local, and foreign taxes, and other assessments of
a
similar nature (whether imposed directly or through withholding), including
any
interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term “
Tax
Returns
”
means
all federal, state, local, and foreign Tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto
filed or required to be filed with any Governmental Entity.
(ee)
Interest
payable by the Company on the Junior Subordinated Notes is deductible by the
Company, in whole or in part, for U.S. federal income tax purposes, and the
Trust is not, or will not be within ninety (90) days of the date hereof, subject
to more than a
de
minimis
amount
of other taxes, duties or other governmental charges. To the knowledge of the
Company, there are no rulemaking or similar proceedings before the U.S. Internal
Revenue Service or comparable federal, state, local or foreign government bodies
which involve or affect the Company or any subsidiary, which, if the subject
of
an action unfavorable to the Company or any subsidiary, would reasonably be
expected to result in a Material Adverse Effect.
(ff)
The
books, records and accounts of the Company and its subsidiaries accurately
and
fairly reflect, in reasonable detail, the transactions in, and dispositions
of,
the assets of, and the results of operations of, the Company and its
subsidiaries. The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(gg)
The
Company and the Significant Subsidiary are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
in
all material respects as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the transactions
contemplated hereby including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against. All policies of insurance and fidelity
or surety bonds insuring the Company or the Significant Subsidiary or the
Company’s or Significant Subsidiary’s respective businesses, assets, employees,
officers and directors are in full force and effect. The Company and each of
the
subsidiaries are in compliance with the terms of such policies and instruments
in all material respects. Neither the Company nor the Significant Subsidiary
has
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 from
similar insurers as may be necessary to continue its business at a cost that
would not reasonably be expected to have a Material Adverse Effect. Within
the
past twelve months, neither the Company nor the Significant Subsidiary has
been
denied any insurance coverage that it has sought or for which it has
applied.
(hh)
None
of
the Company, any of its subsidiaries or any person acting on behalf of the
Company or any of its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or any of its subsidiaries has,
directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful payment.
5.
Representations
and Warranties of the Purchaser
.
The
Purchaser represents and warrants to, and agrees with, the Company and the
Trust
as follows:
(a)
The
Purchaser is aware that the Preferred Securities have not been and will not
be
registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements
of
the Securities Act.
(b)
The
Purchaser is an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.
(c)
Neither
the Purchaser, nor any of the Purchaser’s Affiliates, nor any person acting on
the Purchaser’s or any Purchaser’s Affiliate’s behalf has engaged, or will
engage, in any form of “general solicitation or general advertising” (within the
meaning of Regulation D under the Securities Act) in connection with any offer
or sale of the Preferred Securities.
(d)
The
Purchaser understands and acknowledges that (i) no public market exists for
any
of the Preferred Securities and that it is unlikely that a public market will
ever exist for the Securities, (ii) the Purchaser is purchasing the Preferred
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of
the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Preferred Securities pursuant to
an
effective registration statement under the Securities Act or pursuant to an
exemption therefrom or in a transaction not subject thereto, and the Purchaser
agrees to the legends and transfer restrictions applicable to the Preferred
Securities contained in the Indenture, and (iii) the Purchaser has had the
opportunity to ask questions of, and receive answers and request additional
information from, the Company and is aware that it may be required to bear
the
economic risk of an investment in the Preferred Securities.
(e)
The
Purchaser is duly formed, validly existing and in good standing under the laws
of the jurisdiction in which it is organized with all requisite (i) power and
authority to execute, deliver and perform the Operative Documents to which
it is
a party, to make the representations and warranties specified herein and therein
and to consummate the transactions contemplated herein and (ii) right and power
to purchase the Preferred Securities.
(f)
This
Purchase Agreement has been duly authorized, executed and delivered by the
Purchaser and no filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any governmental body, agency
or
court having jurisdiction over the Purchaser, other than those that have been
made or obtained, is necessary or required for the performance by the Purchaser
of its obligations under this Purchase Agreement or to consummate the
transactions contemplated herein.
(g)
The
Purchaser is a “Qualified Purchaser” as such term is defined in Section 2(a)(51)
of the Investment Company Act.
6.
Covenants
and Agreements of the Company and the Trust
.
The
Company and the Trust jointly and severally agree with the Purchaser as
follows:
(a)
During
the period from the date of this Agreement to the Closing Date, the Company
and
the Trust shall use their best efforts and take all action necessary or
appropriate to cause their representations and warranties contained in
Section
4
hereof
to be true as of the Closing Date, after giving effect to the transactions
contemplated by this Purchase Agreement, as if made on and as of the Closing
Date.
(b)
Reserved.
(c)
Neither
the Company nor the Trust will, nor will either of them permit any of its
Affiliates to, nor will either of them permit any person acting on its or their
behalf (other than the Purchaser) to, resell any Securities that have been
acquired by any of them.
(d)
Neither
the Company nor the Trust will, nor will either of them permit any of their
Affiliates or any person acting on their behalf to, engage in any “directed
selling efforts” within the meaning of Regulation S under the Securities Act
with respect to the Securities.
(e)
Neither
the Company nor the Trust will, nor will either of them permit any of their
Affiliates or any person acting on their behalf to, directly or indirectly,
make
offers or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of any of the Securities
under
the Securities Act.
(f)
Neither
the Company nor the Trust will, nor will either of them permit any of its
Affiliates or any person acting on their behalf to, engage in any form of
“general solicitation or general advertising” (within the meaning of Regulation
D) in connection with any offer or sale of the any of the
Securities.
(g)
So
long
as any of the Securities are outstanding, (i) the Securities shall not be listed
on a national securities exchange registered under Section 6 of the Exchange
Act
or quoted in a U.S. automated inter-dealer quotation system and (ii) neither
the
Company nor the Trust shall be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the Securities
shall otherwise satisfy the eligibility requirements of Rule
144A(d)(3).
(h)
Each
of
the Company and the Trust shall furnish to (i) the holders, and subsequent
holders, of the Preferred Securities, (ii) Taberna Capital Management, LLC
(at
450 Park Avenue, 11th Floor, New York, New York 10022, or such other address
as
designated by Taberna Capital Management, LLC) and (iii) any beneficial owner
of
the Securities reasonably identified to the Company and the Trust (which
identification may be made by either such beneficial owner or by Taberna Capital
Management, LLC), a duly completed and executed certificate in the form attached
hereto as
Annex
F
,
including the financial statements referenced in such Annex, which certificate
and financial statements shall be so furnished by the Company and the Trust
not
later than forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company and not later than ninety (90)
days
after the end of each fiscal year of the Company.
(i)
Each
of
the Company and the Trust will, during any period in which it is not subject
to
and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not
exempt from such reporting requirements pursuant to and in compliance with
Rule
12g3-2(b) under the Exchange Act, provide to each holder of the Securities
and
to each prospective purchaser (as designated by such holder) of the Securities,
upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Securities Act. If the
Company and the Trust are required to register under the Exchange Act, such
reports filed in compliance with Rule 12g3-2(b) shall be sufficient information
as required above. This covenant is intended to be for the benefit of the
Purchaser, the holders of the Securities, and the prospective purchasers
designated by the Purchaser and such holders, from time to time, of the
Securities.
(j)
Neither
the Company nor the Trust will, until one hundred eighty (180) days following
the Closing Date, without the Purchaser’s prior written consent, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of, directly
or indirectly, (i) any Preferred Securities or other securities substantially
similar to the Preferred Securities other than as contemplated by this Purchase
Agreement or (ii) any other securities convertible into, or exercisable or
exchangeable for, any Preferred Securities or other securities substantially
similar to the Preferred Securities, unless the Company, upon the request of
the
Purchaser, provides the Purchaser with an opinion of counsel (such counsel
to
have experience and sophistication in the matters addressed in such opinion)
addressed to the Purchaser stating that any such offer, sale, contract, option
or other disposition will not result in the Preferred Securities being required
to be registered under the Securities Act. For the avoidance of doubt, the
parties hereto agree that any preferred securities issued by a statutory trust
other than the Trust with an interest rate, interest payment dates and maturity
date that is different from the Preferred Securities would not be deemed to
be
substantially similar to the Preferred Securities.
(k)
The
Company will use its best efforts to meet the requirements to qualify as a
REIT
under sections 856 through 860 of the Code, effective for the taxable year
ending December 31, 2006 (and each fiscal quarter of such year) and succeeding
taxable years for so long as the Company determines that it is in its best
interest to remain qualified as a REIT.
(l)
Neither
the Company nor the Trust will identify any of the Indemnified Parties (as
defined below) in a press release or any other public statement without the
prior written consent of such Indemnified Party. For purposes of clarification,
none of the Company's or Trust's financial statements, press releases or other
statements may disclose the identity of the Indemnified Parties, but may
identify the Trustee;
provided,
however,
that
nothing to the contrary in this Agreement, in no event shall the Company be
precluded from filing any 1934 Act Reports or any other filings with the
Commission under the Securities Act, which the Company believes are reasonably
and legally necessary to be filed with the Commission.
(m)
The
Purchaser is granted the right under the Indenture and the Trust Agreement
to
request the substitution of new notes for all or a portion of the Junior
Subordinated Notes held by the Trust. The Trust is required under the terms
of
the Indenture and the Trust Agreement to accept such newly issued notes (the
“
Replacement
Notes
”)
from
the Company and surrender a like amount of Junior Subordinated Notes to the
Company. The Replacement Notes shall bear terms identical to the Junior
Subordinated Notes with the sole exception of interest payment dates (and
corresponding redemption date and maturity date), which will be specified by
the
Purchaser. In no event will the interest payment dates (and corresponding
redemption date and maturity date) on the Replacement Notes vary by more than
sixty (60) calendar days from the original interest payment dates (and
corresponding redemption date and maturity date) in effect on the Closing Date
under the Junior Subordinated Notes. Each of the Company and the Trust
acknowledges and agrees that, to the extent of the principal amount of the
Replacement Notes issued to the Trust under the Indenture, the Purchaser (and
each successor to Purchaser’s interest in the Preferred Securities) will require
the Trust to issue a new series of Preferred Securities having a principal
amount related to the principal amount of the Replacement Notes (the
“
Replacement
Securities
”)
to
designated holders of Preferred Securities, provided that any such Replacement
Securities, and any distributions from the Trust to the holders of Replacement
Securities, must relate solely to the Trust’s interest in the Replacement Notes
and in no event will the Preferred Securities other than the Replacement
Securities share in the returns from any Replacement Notes. The Replacement
Securities shall have payment dates (and corresponding redemption date and
maturity date) that relate to the Replacement Notes. Each of the Company and
the
Trust agrees to cooperate with all reasonable requests of the Purchaser in
connection with any of the foregoing, provided that no action requested of
the
Company or the Trust in connection with such cooperation shall materially
increase the obligations or materially decrease the rights of the Company
pursuant to such documents.
7.
Payment
of Expenses
.
The
Company, as depositor of the Trust, agrees to pay all costs and expenses
incident to the performance of the obligations of the Company and the Trust
under this Purchase Agreement, whether or not the transactions contemplated
herein are consummated or this Purchase Agreement is terminated, including
all
costs and expenses incident to (i) the authorization, issuance, sale and
delivery of the Preferred Securities and any taxes payable in connection
therewith; (ii) the fees and expenses of qualifying the Preferred
Securities under the securities laws of the several jurisdictions as provided
in
Section
6(b)
;
(iii) the fees and expenses of the counsel, the accountants and any other
experts or advisors retained by the Company or the Trust; (iv) the fees and
all
reasonable expenses of the Property Trustee, the Delaware Trustee, the Indenture
Trustee and any other trustee or paying agent appointed under the Operative
Documents, including the fees and disbursements of counsel for such trustees,
which fees shall not exceed a $2,000 acceptance fee, $3,500 for the fees and
expenses of Richards, Layton & Finger, P.A., special Delaware counsel
retained by the Delaware Trustee in connection with the Closing, and
$4,000
in
administrative fees annually; and (v) $50,000 for the fees and expenses of
Thelen Reid Brown Raysman & Steiner LLP, special counsel retained by Taberna
Capital Management, LLC.
If
the
sale of the Preferred Securities provided for in this Purchase Agreement is
not
consummated because any condition set forth in
Section
3
hereof
to be satisfied by either the Company or the Trust is not satisfied, because
this Purchase Agreement is terminated pursuant to
Section
9
or
because of any failure, refusal or inability on the part of the Company or
the
Trust to perform all obligations and satisfy all conditions on its part to
be
performed or satisfied hereunder other than by reason of a default by the
Purchaser, the Company will reimburse the Purchaser upon demand for all
reasonable out-of-pocket expenses (including the fees and expenses of each
of
the Purchaser’s counsel specified in subparagraphs (iv) and (v) of the
immediately preceding paragraph) that shall have been incurred by the Purchaser
in connection with the proposed purchase and sale of the Preferred Securities.
The Company shall not in any event be liable to the Purchaser for the loss
of
anticipated profits from the transactions contemplated by this Purchase
Agreement
.
8.
Indemnification
.
(a)
The
Sellers agree, jointly and severally, to indemnify and hold harmless the
Purchaser, the Purchaser’s affiliates, Taberna Capital Management, LLC, Taberna
Securities, LLC, and their respective affiliates (collectively, the
“
Indemnified
Parties
”)
each
person, if any, who controls any of the Indemnified Parties within the meaning
of the Securities Act or the Exchange Act, and the Indemnified Parties’
respective directors, officers, employees and agents against any losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties
may
become subject, under the Securities Act, the Exchange Act or other federal
or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out
of or are connected with the execution and delivery by Sellers, and the
consummation thereby of the transactions contemplated by, this Purchase
Agreement or any other Operative Document. Sellers agree, jointly and severally,
to reimburse the Indemnified Parties for any legal or other expenses reasonably
incurred by the Indemnified Parties in connection with investigating or
defending any such loss, claim, damage or liability or action arising out of
or
being connected with the execution and delivery by the Sellers, and the
consummation by the Sellers of the transactions contemplated by, this Purchase
Agreement or the other Operative Documents. This indemnity agreement will be
in
addition to any liability that any of the Sellers may otherwise
have.
(b)
The
Company agrees to indemnify the Trust against all loss, liability, claim, damage
and expense whatsoever due from the Trust under paragraph (a)
above.
(c)
Promptly
after receipt by an Indemnified Party under this
Section 8
of
notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under
this
Section 8
,
promptly notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve
the indemnifying party from liability under paragraph (a) above unless and
to
the extent that such failure results in the forfeiture by the indemnifying
party
of material rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any Indemnified Party. Purchaser
shall be entitled to appoint counsel to represent the Indemnified Party in
any
action for which indemnification is sought. An indemnifying party may
participate at its own expense in the defense of any such action;
provided
,
that
counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel
for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, unless an Indemnified Party believes
that
its interests are not aligned with the interests of another Indemnified Party
or
that a conflict of interest might result. An indemnifying party will not,
without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.
9.
Termination;
Representations and Indemnities to Survive
.
This
Purchase Agreement shall be subject to termination in the absolute discretion
of
the Purchaser, by notice given to the Company and the Trust prior to delivery
of
and payment for the Preferred Securities, if prior to such time (i) a
downgrading shall have occurred in the rating accorded the Company’s debt
securities or preferred stock by any “nationally recognized statistical rating
organization,” as that term is used by the Commission in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company’s debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser
at
least $75,000,000 in stated liquidation value of Preferred Securities, (iii)
a
suspension or material limitation in trading in securities generally shall
have
occurred on the New York Stock Exchange, (iv) a suspension or material
limitation in trading in any of the Company’s securities shall have occurred on
the exchange or quotation system upon which the Company’ securities are traded,
if any, (v) a general moratorium on commercial business activities shall
have been declared either by federal, California or Maryland authorities or
(vi) there shall have occurred any outbreak or escalation of hostilities,
or declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the Purchaser’s judgment, impracticable or inadvisable to proceed with
the offering or delivery of the Preferred Securities. The respective agreements,
representations, warranties, indemnities and other statements of the Company
and
the Trust or their respective officers or trustees and of the Purchaser set
forth in or made pursuant to this Purchase Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the
Purchaser, the Company or the Trust or any of the their respective officers,
directors, trustees or controlling persons, and will survive delivery of and
payment for the Preferred Securities. The provisions of
Sections
7
and
8
shall
survive the termination or cancellation of this Purchase Agreement.
10.
Amendments
.
This
Purchase Agreement may not be modified, amended, altered or supplemented, except
upon the execution and delivery of a written agreement by each of the parties
hereto.
11.
Notices
.
All
communications hereunder will be in writing and effective only on receipt,
and,
if sent to the Purchaser, will be mailed, delivered by hand or courier or sent
by facsimile and confirmed to the Purchaser c/o Taberna Capital Management,
LLC,
450 Park Avenue, 11th Floor, New York, New York 10022, Attention: Thomas
Bogal, Facsimile: (212) 735-1499; with a copy to Thelen Reid Brown Raysman
& Steiner LLP, 900 Third Avenue, New York, New York 10022, Attention: Sarah
Hewitt, Esq., Facsimile: (212) 895-2900 or other address as the Purchaser shall
designate for such purpose in a notice to the Company and the Trust; and if
sent
to the Company or the Trust, will be mailed, delivered by hand or courier or
sent by facsimile and confirmed to it at Redwood Trust, Inc., One Belvedere
Place, Suite 300, Mill Valley, California 94941,
Attention:
Martin S. Hughes, Facsimile: (415) 381-1773.
12.
Successors
and Assigns
.
This
Purchase Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing expressed
or mentioned in this Purchase Agreement is intended or shall be construed to
give any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in
Section
8
hereof
and their successors, assigns, heirs and legal representatives, any right or
obligation hereunder. None of the rights or obligations of the Company or the
Trust under this Purchase Agreement may be assigned, whether by operation of
law
or otherwise, without the Purchaser’s prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned
by
the Purchaser without the Company’s or the Trust’s consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase
Agreement.
13.
Applicable
Law
.
THIS
PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW).
14.
Submission
To Jurisdiction
.
ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO
OR
ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE
COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE
AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND
COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS PURCHASE AGREEMENT.
15.
Counterparts
and Facsimile
.
This
Purchase Agreement may be executed by any one or more of the parties hereto
in
any number of counterparts, each of which shall be deemed to be an original,
but
all such counterparts shall together constitute one and the same instrument.
This Purchase Agreement may be executed by any one or more of the parties hereto
by facsimile.
[Signature
Page Follows]
IN
WITNESS WHEREOF, this Purchase Agreement has been entered into as of the date
first written above.
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Redwood
Trust, Inc.
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By:
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Name:
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Martin
S. Hughes
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Title:
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Chief
Financial Officer,
Treasurer,Vice
President and Secretary
|
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Redwood
Capital Trust I
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By:
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Redwood
Trust, Inc.
,
as Depositor
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By:
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Name:
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Martin
S. Hughes
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Title:
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Chief
Financial Officer, Treasurer,
Vice
President and Secretary
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Bear,
Stearns & Co. Inc.
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By:
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_____________________________________
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Name:
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Title:
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List
of Significant Subsidiaries
RWT
Holdings, Inc.
Pursuant
to Section 3(c) of the Purchase Agreement, Mayer Brown Rowe & Maw, LLP,
counsel for the Company, shall deliver an opinion to the effect
that:
(i)
each
of
the Company and the Significant Subsidiary is validly existing as an entity
in
good standing under the laws of the jurisdiction in which it is incorporated;
each of the Company and the Significant Subsidiary has full power and authority
to own or lease its properties and to conduct its business as such business
is
currently conducted in all material respects; the Company has corporate power
and authority to (i) execute and deliver, and to perform its obligations under,
the Operative Documents to which it is a party and (iii) issue and perform
its
obligations under the Notes;
(ii)
neither
the issue and sale of the Common Securities, the Preferred Securities or the
Junior Subordinated Notes, nor the purchase by the Trust of the Junior
Subordinated Notes, nor the execution and delivery of and compliance with the
Operative Documents by the Company or the Trust nor the consummation of the
transactions contemplated thereby will constitute a breach or violation of
the
Trust Agreement or the charter or by-laws or similar organizational documents
of
the Company;
(iii)
the
Trust
Agreement has been duly authorized, executed and delivered by the Company and
duly executed and delivered by the Administrative Trustees;
(iv)
the
Indenture has been duly authorized, executed and delivered by the Company and,
assuming it has been duly authorized, executed and delivered by the Indenture
Trustee, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity;
(v)
the
Junior Subordinated Notes have been duly authorized and executed by the Company
and delivered to the Indenture Trustee for authentication in accordance with
the
Indenture and, when authenticated in accordance with the provisions of the
Indenture and delivered to the Trust against payment therefor, will constitute
legal, valid and binding obligations of the Company entitled to the benefits
of
the Indenture and enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity;
(vi)
the
Trust
is not, and, following the issuance of the Preferred Securities and the
consummation of the transactions contemplated by the Operative Documents and
the
application of the proceeds therefrom, the Trust will not be, an “investment
company” within the meaning of Section 3(a) of the Investment Company Act;
(vii)
assuming
the truth and accuracy of the representations and warranties of the Purchaser
in
the Purchase Agreement, it is not necessary in connection with the offer, sale
and delivery of the Common Securities, the Preferred Securities and the Junior
Subordinated Notes to register the same under the Securities Act of 1933, as
amended, under the circumstances contemplated in the Purchase Agreement and
the
Trust Agreement, or to require qualification of the Indenture under the Trust
Indenture Act of 1939, as amended;
(viii)
the
Purchase Agreement has been duly authorized, executed and delivered by each
of
the Company and the Trust; and
(ix)
except
for filings, registrations or qualifications that may be required by applicable
securities laws, no authorization, approval, consent or order of, or filing,
registration or qualification with, any person (including, without limitation,
any court, governmental body or authority) is required under the laws of the
State of Maryland in connection with the transactions contemplated by the
Operative Documents;
Pursuant
to Section 3(c) of the Purchase Agreement, the Company shall provide an
Officers’ Certificate, to the effect that:
(i)
all
of
the issued and outstanding equity interests of the Significant Subsidiary have
been duly authorized and validly issued, and are fully paid and nonassessable
and are owned of record and beneficially, directly or indirectly, by the
Company, and the issuance of the Preferred Securities and the Common Securities
is not subject to any contractual preemptive rights known to such
officer;
(ii)
no
consent, approval, authorization or order of any court or Governmental Entity
is
required for the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, the purchase by the Trust of the
Junior Subordinated Notes, the execution and delivery of and compliance with
the
Operative Documents by the Company or the Trust or the consummation of the
transactions contemplated in the Operative Documents, except such approvals
(specified in such certificate) as have been obtained;
(iii)
to
the
knowledge of such officer, there is no action, suit or proceeding before or
by
any government, governmental instrumentality, arbitrator or court, domestic
or
foreign, now pending or threatened against or affecting the Trust or the Company
or the Significant Subsidiary that could adversely affect the consummation
of
the transactions contemplated by the Operative Documents or could reasonably
be
expected to have a Material Adverse Effect.
(iv)
neither
the Company, the Trust, nor the Significant Subsidiary is in breach or violation
of, or default under, with or without notice or lapse of time or both, it
articles of incorporation or charter, by-laws or other governing documents
(including, without limitation, the Trust Agreement); the execution, delivery
and performance of the Operative Documents and the consummation of the
transactions contemplated by the Purchase Agreement and the Operative Documents
do not and will not (A) result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or assets
of
the Company or the Significant Subsidiary, or (B) conflict with, constitute
a
material breach or violation of, or constitute a material default under, with
or
without notice or lapse of time or both, any of the terms, provisions or
conditions of (x) the articles of incorporation or charter, by-laws or other
governing documents of the Company or its Significant Subsidiary, or (y) to
the
best of our knowledge, any contract, indenture, mortgage, deed of trust, loan
or
credit agreement, note, lease, franchise, license or any other agreement or
instrument (collectively, “Agreements”) to which the Company or its Significant
Subsidiary is a party or by which any of them or any of their respective
properties may be bound, which is included as an exhibit to the Company’s 2005
10-K as a material Agreement or (z) any material order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or its Significant Subsidiary
or any of their respective properties which, in the case of each of (A) or
(B)
above, would reasonably be expected to have a Material Adverse
Effect.
(v)
neither
the Company nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation
D under the Securities Act (“Regulation D”) has directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of any of the Junior
Subordinated Notes, the Preferred Securities or the Common Securities being
issued pursuant to this transaction under the Securities Act, engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the Securities,
or
engaged, nor will engage, in any “directed selling efforts” within the meaning
of Regulation S under the Securities Act with respect to the
Securities.
Pursuant
to Section 3(d) of the Purchase Agreement, Chapman and Cutler LLP shall deliver
an opinion to the effect that:
(i)
the
Trust
will be classified for U.S. federal income tax purposes as a grantor trust
or
other disregarded entity and not as an association or a publicly traded
partnership taxable as a corporation;
(ii)
for
U.S.
federal income tax purposes, the Junior Subordinated Notes should constitute
indebtedness of the Company; and
(iii)
beginning
with the Company’s initial taxable year ended December 31, 1994, the Company has
been organized in conformity with the requirements for qualification as a REIT
under the Code, and the Company’s actual method of operation through September
30, 2006 (the date of the most recent unaudited financial statements and
management reports reviewed by us) has enabled, and its proposed method of
operation (as represented in the attached Officer’s Certificate) should enable,
the Company to satisfy the requirements for qualification and taxation as a
REIT.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
REDWOOD
TRUST, INC.
REIT
BACK-UP OFFICER’S CERTIFICATE
Redwood
Trust, Inc. Officer’s Certificate
(Regarding
Tax Matters)
The
undersigned officers of
Redwood
Trust, Inc.
,
a
Maryland corporation (
“Redwood
Trust”
),
each
hereby certify the following information on behalf of Redwood Trust and its
affiliates (collectively, the
“Company”
),
after
due inquiry and with the knowledge that Chapman and Cutler LLP has relied on
these certifications for the purpose of rendering its opinion (the “
Chapman
Opinion
”)
with
respect to the qualification of Redwood Trust as a “real estate investment
trust” under the provisions of the Internal Revenue Code of 1986, as amended
(the
“Code”
),
1
and on
certain other federal income tax matters. To the extent that any of the
following representations relate to future events, such representations
constitute results that the Company anticipates achieving based on the business
plans and operational methods that the Company has followed and intends to
follow. Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Chapman Opinion.
REIT
Related Matters:
1.
I
am
familiar with the Company’s corporate and financial affairs, its methods of
operation, and its books and records and tax filings. I am also familiar with
the income, asset and stock ownership requirements applicable to real estate
investment trusts under Section 856 of the Code and the distribution
requirements applicable to real estate investment trusts under Section 857
of
the Code, that, in each case, must be satisfied in order for the
REIT
2
to
maintain its classification as a real estate investment trust.
2.
The
Company and each of its subsidiaries has at all times been and will continue
to
be operated in accordance with (i) its respective organizational documents
and
(ii) the laws of the jurisdiction under which it is organized.
3.
The
Company adopted and has maintained December 31 as its year-end for all fiscal
and tax purposes.
4.
The
REIT
made a timely election to be subject to tax as a real estate investment trust
under the Code commencing with its taxable year ended December 31, 1994 and
has
not revoked, or received any notice of termination, of such
election.
5.
Redwood
Trust has no agreements regarding its stock other than: (i) the 2002
Redwood Trust Incentive Plan (as amended through May 2006, the
“Stock
Option Plan”
),
(ii) the Dividend Reinvestment and Stock Purchase Plan (as amended through
May 5, 2004, the
“DRP”
),
and
(iii) the 2002 Employee Stock Purchase Plan (the
“ESPP”
and,
together with the Stock Option Plan and the DRP, the
“Stock
Plans”
),
and
there have been no changes to the Stock Plans or Redwood Trust’s
(i) Articles of Amendment and Restatement (the
“Charter”
),
(ii) Articles Supplementary, (iii) Bylaws (as modified through
November 2005), or (iv) Executive Deferred Compensation Plan (as modified
through November 2006), since their respective dates of adoption or the last
amendment noted herein. The copies of the corporate and shareholder minutes
of
Redwood Trust and its subsidiaries provided to you are true and complete copies
of such minutes through date hereof and there have been no modifications or
additions since such date.
1
All
section references to the Code set forth herein shall include references
to the
applicable Treasury regulations promulgated thereunder.
2
All
references to “the REIT” made herein are references solely to Redwood Trust,
Inc. and its qualified REIT subsidiaries, Sequoia Mortgage Funding Corporation
and Cypress Trust, Inc., whereas references to “the Company” are intended to
include taxable REIT subsidiaries as well.
6.
At
all
times since December 31, 1994, (i) beneficial ownership of the stock
of Redwood Trust has been, and will continue to be, held by 100 or more persons
or entities, determined without reference to any rules of attribution or
look-through, (ii) Redwood Trust has requested written statements of actual
stock ownership from all shareholders of record holding 1 percent or more
of Redwood Trust’s stock and has maintained its records as required under
section 1.857-8 of the Treasury regulations, and (iii) based on all
information available to Redwood Trust in its stock register, stock ownership
records obtained from the Depository Trust Corporation, 13D filings, written
statements from Redwood Trust’s shareholders of record, and other information
available to it, no more than 50 percent in value of the capital stock of
Redwood Trust is owned, directly or indirectly, by five or fewer individuals
determined using the applicable rules of attribution as required under the
Code.
7.
The
beneficial ownership of Redwood Trust has been, and will continue to be,
evidenced by transferable shares. Redwood Trust has not, and will not, impose,
and it is not aware of, any transfer restrictions on its common stock, other
than restrictions (i) contained in Redwood Trust’s Charter,
(ii) imposed by applicable federal and state securities laws, and
(iii) imposed under the Stock Plans. The restrictions contained in the
Charter were adopted to enable Redwood Trust to comply with certain requirements
set forth in sections 856(a)(5), (a)(6), and (h) of the Code which are necessary
for its qualification as a real estate investment trust.
8.
The
REIT
does not own more than 10 percent of the equity of, or control, directly or
indirectly, any corporation, association or other entity other than those listed
on
Exhibit
A
.
9.
For
all
tax years commencing prior to 1998, less than 30 percent of the gross income
of
the REIT in any taxable year was derived from the sale or other disposition
of
(i) stock or securities held for less than one year, (ii) property
(other than Foreclosure Property (as defined herein)) that was (a) held by
the REIT primarily for sale to customers in the ordinary course of the REIT’s
trade or business or (b) properly included in inventory of the REIT, and
(iii) real property (including interests in mortgages on real property)
held for less than four years, other than property compulsorily or involuntarily
converted as a result of its destruction in whole or in part, seizure, or
requisition or condemnation or threat or imminence thereof and property that
was
Foreclosure Property.
10.
At
least
75 percent of the gross income derived by the REIT in any taxable year has
consisted, and will consist, of (i) interest on obligations secured by
mortgages on real property or on interests in real property, (ii) amounts
derived from the rental of real property, (iii) gain realized upon the sale
or other disposition of real property (including interests in mortgages on
real
property) that is not property held by the REIT primarily for sale to customers
in the ordinary course of a business of being a dealer in, or making a market
in, such property and that is not included in inventory of the REIT,
(iv) dividends or other distributions on, and gain from the sale or other
distribution of, shares (or certificates of beneficial interests) in other
real
estate investment trusts, (v) abatements and refunds of taxes on real
property, (vi) income and gain derived from real property (including
interests in real property) and any personal property incident to such real
property, acquired by the REIT through a default by the obligor on the lease
of
such property or on the indebtedness secured by such property (
“Foreclosure
Property”
),
(vii) amounts (other than amounts the determination of which depends in
whole or in part on the income or profits of any person) received or accrued
as
consideration for entering into agreements to make loans secured by mortgages
on
real property or on interests in real property, or to purchase or lease real
property, (viii) gain from the sale or disposition of real property (or
interests in real property and interests in mortgages on real property) and
shares in other real estate investment trusts, which were treated as held for
sale or as inventory but that were not subjected to a prohibited transaction
tax, and (ix) qualified temporary investment income.
11.
At
least
95 percent of the gross income derived by the REIT in any taxable year has
consisted, and will consist, of (i) the items of income described in
Paragraph 10 above, (ii) with respect to tax years ending before 2005,
payments to the REIT under any interest rate swaps or cap agreements entered
into by the REIT to hedge any variable rate indebtedness incurred or to be
incurred by the REIT to acquire or carry real estate assets (
“Qualifying
Interest Rate Agreements”
)
and any
gain from the termination or disposition of such agreements, (iii) gain
from the sale or other disposition of stock or securities that are not held
for
sale to customers or treated as inventory, and (iv) interest and dividends,
including interest and dividends from subsidiaries.
12.
At
the
end of each calendar quarter, at least 75 percent of the total value of the
assets of the REIT has consisted, and will consist, of real property (including
interests in real property and interests in mortgages on real property) and
shares (or certificates of beneficial interest) in other real estate investment
trusts, cash and cash items (including receivables that arise in the ordinary
course of operations but excluding receivables purchased from another person),
and United States government securities.
13.
At
the
end of each calendar quarter ending on or before December 31, 2000,
(a) not more than 25 percent of the total value of the assets of the REIT
consisted of securities (other than those securities taken into account for
purposes of Paragraph 12 above) and (b) the REIT did not beneficially
own any such securities of any one issuer (i) having an aggregate value in
excess of 5 percent of the value of the total assets of the REIT or
(ii) representing in excess of 10 percent of the outstanding voting power
of securities of such issuer.
14.
At
the
end of each calendar quarter beginning on or after January 1, 2001,
(a) not more than 25 percent of the total value of the assets of the REIT
has or will be attributable to securities (other than those securities taken
into account for purposes of Paragraph 12 above), (b) not more than 20
percent of the value of the REIT’s total assets has or will be attributable to
one or more taxable REIT subsidiaries and (c) other than securities of a
taxable REIT subsidiary or securities taken into account for purposes of
Paragraph 12 above, the REIT has not beneficially owned any securities of
any one issuer (i) having an aggregate value in excess of 5 percent of the
value of the total assets of the REIT or (ii) representing in excess of 10
percent of the outstanding voting power or value of securities of such issuer.
In particular, it is my understanding that the securities held by the REIT
in
each of Duke Funding I, Ltd., MKB CBO II, Ltd., Crest 2000-1, Ltd., and
Trainer Wortham Republic CBO II, Limited
3
represent less than 10 percent of the total vote and value of such issuers’
securities.
15.
The
REIT
has closely monitored, and will continue to closely monitor, its income,
including income from intercompany transactions, hedging transactions and sales
of mortgage related assets and securities, and the purchase, holding, and
disposition of its assets in order to comply with the representations set forth
in Paragraphs 9, 10, 11, 12, 13 and 14 hereof. Specifically, the REIT will
continue to monitor its earnings from interest rate caps and other hedging
instruments for purposes of determining whether such income constitutes income
from Qualifying Interest Rate Agreements and the proper characterization of
such
arrangements for purposes of the income and asset tests described above. If
it
is anticipated that the REIT may not be able to comply with such
representations, the REIT will take appropriate measures, including the
disposition of non-qualifying assets and/or assets generating non-qualifying
income, to comply with such representations.
16.
The
REIT
has not earned, and does not expect to earn, income from mortgage servicing
rights with respect to mortgage loans beneficially owned by others.
17.
The
REIT
has held 100 percent of the capital stock of Sequoia and Cypress, respectively,
at all times since their respective dates of formation and will hold 100 percent
of the capital stock of any other entity intended to be treated as a “qualified
REIT subsidiary” at all times during the period such entity is in existence.
Neither Sequoia nor Cypress has issued or will issue any securities or incur
any
indebtedness without first seeking the advice of tax counsel.
18.
Effective
January 1, 2001, Redwood Trust and Holdings elected to treat Holdings as a
taxable REIT subsidiary of the REIT. Holdings does not own stock of any entities
other than (i) Sequoia Residential Funding, Inc. and Madrona LLC (collectively,
the
“Holdings
Subsidiaries”
)
and
(ii) certain of the Acacia subsidiaries. The Holdings Subsidiaries are
wholly-owned by Holdings.
19.
The
REIT
has made a valid election to treat as a “taxable REIT subsidiary” (“TRS”) any
corporation (other than a qualified REIT subsidiary or another REIT) in which
it
owns in excess of 10% of the securities (by vote or value) and shall not consent
to the revocation of any such election. Part II of
Exhibit
A
sets
forth a complete list of all “taxable REIT subsidiaries” of the REIT (each,
individually, a
“TRS”
).
Since
January 1, 2001, the total value of the securities of all TRS held by the
REIT (including the value of any loans made by the REIT to any TRS) has not,
and
will not, exceed 20 percent of the total value of the REIT’s assets. The total
value of the securities of Holdings held by the REIT prior to January 1,
2001 did not exceed 5 percent of the value of the REIT’s total
assets.
3
Those
entities listed on
Exhibit
A
and in
#14 above together constitute the complete list of all entities in which
the
REIT owns equity securities.
20.
No
TRS,
directly or indirectly, operates or manages, or will operate or manage, a
lodging or healthcare facility or provide to any person rights to any brand
name
under which a lodging facility or healthcare facility is operated. All
transactions between the REIT and each TRS have been conducted on an arm’s
length basis at terms believed to approximate market rate prices.
21.
The
REIT
at all times has complied, and will continue to comply, with the record-keeping
requirements prescribed by the provisions of the Code applicable to REITs and,
specifically, sections 1.856-2(d)(3) and 1.857-8 of the Treasury
regulations.
22.
With
respect to each tax year prior to 2001, the REIT distributed to its shareholders
with respect to each such taxable year amounts equal in the aggregate to at
least 95 percent of its “real estate investment trust taxable income”
(determined without regard to the deduction for dividends paid and by excluding
any net capital gain) plus at least 95 percent of the excess of any “net income
from foreclosure property” over the tax imposed by the Code on such net income,
if any, as such terms are defined in sections 857(b)(2) and 857(b)(4)(B),
respectively, of the Code, during the relevant taxable year or during the spill
over period immediately thereafter as described in section 858 of the Code.
For
tax years beginning after December 31, 2000, the REIT has and will continue
to timely distribute to its shareholders amounts in the aggregate equal to
at
least 90 percent of such income.
23.
For
each
tax year, the REIT has either (i) distributed (taking into consideration
distributions permitted under section 857(b)(9) of the Code) (a) 85 percent
of its ordinary income for the calendar year, (b) 95 percent of its capital
gain net income for that calendar year and (c) all amounts from earlier
years that are not treated as having been distributed under section 4981 of
the
Code, or (ii) paid all applicable excise taxes for such calendar
year.
24.
Redwood
Trust will neither modify its existing dividend reinvestment plan to allow,
nor
adopt a dividend reinvestment plan that permits, its shareholders to reinvest
their cash distributions in shares of Redwood Trust at a purchase price less
than 95 percent of the fair market value of such shares on the distribution
date. Such discount shall be computed to include all brokerage charges until
advised otherwise by counsel. In addition, Redwood Trust generally only grants
“waiver discounts” at the same price as is generally available to other
participants in the plan unless there is a demonstrated cost savings to Redwood
Trust that justifies a different discount rate.
25.
The
REIT
has at all times beneficially held, and will continue to beneficially hold,
its
assets, including its mortgage related assets and securities for investment
purposes and not as property held primarily for sale to customers in the
ordinary course of a trade or business of the REIT. At no time has the REIT
held
itself out to third parties as willing to make a market or act as a dealer
in
mortgage related assets or securities. The REIT has not originated any mortgage
loans and has acquired all of its mortgage related assets from third parties
after origination and funding thereof.
26.
The
REIT
does not hold any mortgages with respect to which the interest is dependent
upon
appreciation or the income or profits of any person.
27.
Redwood
Trust intends that the representations made by it herein regarding its mortgage
related assets and securities will be true with respect to any mortgage related
assets and securities acquired by the REIT after the date hereof.
28.
The
information set forth in the quarterly management reports provided to you
regarding computation of the REIT’s asset and income tests and compliance with
its distribution requirements are true and correct as of the date
thereof.
29.
The
Company has timely filed all tax returns required to be filed by it or its
affiliates. To my knowledge, neither the REIT, nor any of its affiliates, is
the
subject of any pending or threatened audit or investigation by the Internal
Revenue Service or other taxing authority.
Other
Matters:
1.
I
have
reviewed and am familiar with the contents of the Chapman Opinion, the
Subordinated Indenture and the other Transaction Documents. I am aware of no
inaccuracy in the assumptions made in the Chapman Opinion (as set forth in
the
section labeled “Assumptions”).
2.
I
am
familiar with the Company’s current financial condition and capital structure
and its business plan, including projected assets, income, expense and capital
structure for the foreseeable future.
3.
Taking
into account the issuance of the Subordinated Notes, the Company currently
has a
net worth of approximately $1.15 billion and a ratio of total debt to net worth
of approximately 10.2:1.
4.
Although
the Transaction Documents do not impose a limit on the Company’s ability to
incur debt that is senior to the Subordinated Note or to incur additional
leverage generally, the Company’s business plan does not contemplate issuing
debt or incurring liabilities that would or could impair the Company’s ability
to pay accrued interest on the Subordinated Notes quarterly or repay principal
by maturity.
5.
The
Company intends to treat the Subordinated Notes as debt for all tax, accounting
and other purposes.
IN
WITNESS WHEREOF, we have, on behalf of Redwood Trust, Inc., signed this
Certificate as of the ____ day of December, 2006.
|
Redwood
Trust, Inc.
|
|
|
|
|
|
Martin
S. Hughes
|
|
Chief
Financial Officer
|
|
|
|
|
|
Harold
F. Zagunis
|
|
Vice
President
|
Exhibit
A
Part
I
Sequoia
Mortgage Funding Corporation (“
Sequoia
”)
Cypress
Trust, Inc. (“
Cypress
”)
Sequoia
Mortgage Trust 4
Sequoia
Mortgage Trust 5
Sequoia
Mortgage Trust 6
Sequoia
Mortgage Funding Trust 2003-A
Sequoia
Mortgage Funding Trust 2004-A
Sequoia
Heloc Trust 2004-1
Part
II
RWT
Holdings, Inc. (“
Holdings
”)
Sequoia
Residential Funding, Inc.
Madrona
LLC
Redwood
Asset Management, Inc. (“
RAM
”)
Redwood
Mortgage Funding, Inc., (“
RMF
”)
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
CRE CDO 1, Ltd.
Acacia
CDO 10, Ltd.
Acacia
CDO 11, Ltd.
Acacia
CDO 4, Inc.
Acacia
CDO 5, Inc.
Acacia
CDO 6, Inc.
Acacia
CDO 7, Inc.
Acacia
CDO 8, Inc.
Acacia
CDO 9, Inc.
Acacia
CRE CDO 1, Inc.
Acacia
CDO 10, Inc.
Crest
G-Star 2001-2, Ltd.
RESIX
Finance Limited
Millstone
III CDO, Ltd.
Pursuant
to Section 3(e) of the Purchase Agreement, Richards, Layton & Finger, P.A.,
special Delaware counsel for the Delaware Trustee, shall deliver an opinion
to
the effect that:
(i)
the
Trust
has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act, and all filings required under
the
laws of the State of Delaware with respect to the creation and valid existence
of the Trust as a statutory trust have been made;
(ii)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the Trust has the trust
power and authority (A) to own property and conduct its business, all as
described in the Trust Agreement, (B) to execute and deliver, and to perform
its
obligations under, each of the Purchase Agreement, the Common Securities
Subscription Agreement, the Junior Subordinated Note Purchase Agreement and
the
Preferred Securities and the Common Securities and (C) to purchase and hold
the
Junior Subordinated Notes;
(iii)
under
the
Delaware Statutory Trust Act, the certificate attached to the Trust Agreement
as
Exhibit C
is an
appropriate form of certificate to evidence ownership of the Preferred
Securities; the Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered against payment of the consideration
as
set forth in the Purchase Agreement, the Preferred Securities will be validly
issued and (subject to the qualifications set forth in this paragraph) fully
paid and nonassessable and will represent undivided beneficial interests in
the
assets of the Trust; the holders of the Preferred Securities will be entitled
to
the benefits of the Trust Agreement and, as beneficial owners of the Trust,
will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware; and such counsel may note that the
holders of the Preferred Securities may be obligated, pursuant to the Trust
Agreement, to (A) provide indemnity and/or security in connection with and
pay
taxes or governmental charges arising from transfers or exchanges of Preferred
Securities certificates and the issuance of replacement Preferred Securities
certificates and (B) provide security or indemnity in connection with requests
of or directions to the Property Trustee to exercise its rights and remedies
under the Trust Agreement;
(iv)
the
Common Securities have been duly authorized by the Trust Agreement and, when
issued and delivered by the Trust to the Company against payment therefor as
described in the Trust Agreement and the Common Securities Subscription
Agreement, will be validly issued and fully paid and will represent undivided
beneficial interests in the assets of the Trust entitled to the benefits of
the
Trust Agreement;
(v)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the issuance of the
Preferred Securities and the Common Securities is not subject to preemptive
or
other similar rights;
(vi)
under
the
Delaware Statutory Trust Act and the Trust Agreement, the execution and delivery
by the Trust of the Purchase Agreement, the Common Securities Subscription
Agreement and the Junior Subordinated Note Purchase Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust;
(vii)
the
Trust
Agreement constitutes a legal, valid and binding obligation of the Company
and
the Trustees, and is enforceable against the Company and the Trustees, in
accordance with its terms, subject, as to enforcement, to the effect upon the
Trust Agreement of (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or
at
law), and (iii) the effect of applicable public policy on the enforceability
of
provisions relating to indemnification or contribution;
(viii)
the
issuance and sale by the Trust of the Preferred Securities and the Common
Securities, the purchase by the Trust of the Junior Subordinated Notes, the
execution, delivery and performance by the Trust of the Purchase Agreement,
the
Common Securities Subscription Agreement and the Junior Subordinated Note
Purchase Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement and compliance by the Trust with its
obligations thereunder do not violate (i) any of the provisions of the
Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any
applicable Delaware law, rule or regulation;
(ix)
no
filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Delaware court or Delaware Governmental Entity
or Delaware agency is necessary or required solely in connection with the
issuance and sale by the Trust of the Common Securities or the Preferred
Securities, the purchase by the Trust of the Junior Subordinated Notes, the
execution, delivery and performance by the Trust of the Purchase Agreement,
the
Common Securities Subscription Agreement and the Junior Subordinated Note
Purchase Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement and compliance by the Trust with its
obligations thereunder; and
(x)
the
holders of the Preferred Securities (other than those holders who reside or
are
domiciled in the State of Delaware) will have no liability for income taxes
imposed by the State of Delaware solely as a result of their participation
in
the Trust and the Trust will not be liable for any income tax imposed by the
State of Delaware.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware, (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers
of
the Company and public officials and (C) take customary assumptions and
exceptions as to enforceability and other matters.
Pursuant
to Section 3(f) of the Purchase Agreement, Gardere Wynne Sewell LLP, special
counsel for the Property Trustee and the Indenture Trustee, shall deliver an
opinion to the effect that:
(i)
The
Bank
of New York Trust Company, National Association (the “Bank”) is a national
banking association with trust powers, duly and validly existing under the
laws
of the United States of America, with corporate power and authority to execute,
deliver and perform its obligations under the Indenture and to authenticate
and
deliver the Securities, and is duly eligible and qualified to act as Trustee
under the Indenture pursuant to Section 6.1
thereof
and as Property Trustee under the Trust Agreement pursuant to Section 8.2
thereof. (The Indenture and the Trust Agreement are each, an “Agreement” and
together, the “Agreements”).
(ii)
Each
Agreement has been duly authorized, executed and delivered by the Bank and
constitutes the valid and binding obligation of the Bank, enforceable against
it
in accordance with its terms except (A) as may be limited by bankruptcy,
fraudulent conveyance, fraudulent transfer, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws now or hereafter
in
effect relating to creditors’ rights generally, and by general equitable
principles, regardless of whether considered in a proceeding in equity or at
law
and (B) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(iii)
Neither
the execution or delivery by the Bank of the Agreements, the authentication
and
delivery of the Preferred Securities (as defined in the Trust Agreement) and
junior subordinated notes (issued under the Indenture, and together with the
Preferred Securities, the “Securities”) by the Trustee pursuant to the terms of
the Agreements, nor the performance by the Bank of its obligations under the
Agreements (A) requires the consent or approval of, the giving of notice to
or
the registration or filing with, any governmental authority or agency under
any
existing law of the United States of America governing the banking or trust
powers of the Bank or (B) violates or conflicts with the Articles of Association
or By-laws of the Bank or any law or regulation of the State of New York or
the
United States of America governing the banking or trust powers of the
Bank.
(iv)
The
Securities have been authenticated and delivered by a duly authorized officer
of
the Bank.
In
rendering such opinions, such counsel may (A) state that its opinion is limited
to the laws of the State of New York and the laws of the United States of
America, (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of The Bank of New York Trust Company,
National Association, the Company and public officials, and (C) make customary
assumptions and exceptions as to enforceability and other matters.
Pursuant
to Section 3(g) of the Purchase Agreement, Richards, Layton & Finger, P.A.,
counsel for the Delaware Trustee, shall deliver an opinion to the effect
that:
(i)
The
Bank
of New York (Delaware) (the “Delaware Trustee”) is duly incorporated and validly
existing as a banking corporation under the laws of the State of
Delaware;
(ii)
The
Delaware Trustee has the corporate power and authority to execute, deliver
and
perform its obligations under, and has taken all necessary corporate action
to
authorize the execution, delivery and performance of, the Trust Agreement and
to
consummate the transactions contemplated thereby;
(iii)
The
Trust
Agreement has been duly authorized, executed and delivered by the Delaware
Trustee and constitutes a legal, valid and binding obligation of the Delaware
Trustee, and is enforceable against the Delaware Trustee, in accordance with
its
terms subject, as to enforcement, to the effect upon the Trust Agreement of
(i)
applicable bankruptcy, insolvency, reorganization, moratorium, receivership,
fraudulent conveyance or transfer and similar laws relating to or affecting
the
rights and remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution;
(iv)
The
execution, delivery and performance by the Delaware Trustee of the Trust
Agreement do not conflict with or result in a violation of (A) articles of
association or by-laws of the Delaware Trustee
or
(B)
any law or regulation of the State of Delaware or the United States of America
governing the trust powers of the Delaware Trustee or, to our knowledge, without
independent investigation, of any indenture, mortgage, bank credit agreement,
note or bond purchase agreement, long-term lease, license or other agreement
or
instrument to which the Delaware Trustee is a party or by which it is bound
or,
to our knowledge, without independent investigation, of any judgment or order
applicable to the Delaware Trustee; and
(v)
No
approval, authorization or other action by, or filing with, any Governmental
Entity of the State of Delaware or the United States of America governing the
trust powers of the Delaware Trustee is required in connection with the
execution and delivery by the Delaware Trustee
of
the
Trust Agreement or the performance by the Delaware Trustee of its obligations
thereunder, except for the filing of the Certificate of Trust with the Secretary
of State of the State of Delaware, which Certificate of Trust has been filed
with the Secretary of State of the State of Delaware.
In
rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the
United States governing the trust powers of the Delaware Trustee,
(B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials and
(C)
take customary assumptions and exceptions.
Officer’s
Financial Certificate
The
undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice
President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
certifies pursuant to Section 6(h) of the Purchase Agreement, dated as of
December 12, 2006, among Redwood Trust, Inc. (the “Company”), Redwood Capital
Trust I (the “Trust”) and Bear, Stearns & Co. Inc., that, as of [date],
[20__], the Company had the following ratios and balances:
As
of
[Quarterly/Annual Financial Date], 20__
|
|
Senior
secured indebtedness for borrowed money (“Debt”)
|
$_____
|
Senior
unsecured Debt
|
$_____
|
Subordinated
Debt
|
$_____
|
Total
Debt
|
$
_____
|
Ratio
of (x) senior secured and unsecured Debt to (y) total Debt
|
_____%
|
*
A table
describing the officer’s financial certificate calculation procedures is
provided on page 3
[FOR
FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of
cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended _______, 20___].]
[FOR
FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [date], 20__.]
The
financial statements fairly present in all material respects, in accordance
with
U.S. generally accepted accounting principles (“GAAP”), the financial position
of the Company and its consolidated subsidiaries, and the results of operations
and changes in financial condition as of the date, and for the
[quarter]
[annual]
period
ended
[date]
,
20__,
and such financial statements have been prepared in accordance with GAAP
consistently applied throughout the period involved (expect as otherwise noted
therein).
There
has
been no monetary default with respect to any indebtedness owed by the Company
and/or its subsidiaries (other than those defaults cured within 30 days of
the
occurrence of the same).
IN
WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this _____ day of _____________, 20__.
|
Redwood
Trust, Inc.
|
|
|
|
|
|
|
|
By:
|
___________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
Redwood
Trust, Inc.
|
|
One
Belvedere Place
|
|
Suite
300
|
|
Mill
Valley, California 94941
|
|
Telephone:
(415) 389-7373
|
Execution
Version
AMENDED
AND RESTATED TRUST AGREEMENT
among
REDWOOD
TRUST, INC.,
as
Depositor
THE
BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION,
as
Property Trustee
THE
BANK OF NEW YORK (DELAWARE),
as
Delaware Trustee
and
THE
ADMINISTRATIVE TRUSTEES NAMED HEREIN
as
Administrative Trustees
________________
Dated
as
of December 12, 2006
_______________
REDWOOD
CAPITAL TRUST I
TABLE
OF CONTENTS
|
|
|
|
Clause
|
|
Page
|
|
|
|
ARTICLE
I.
Defined
Terms
|
1
|
|
|
|
SECTION
1.1.
|
Definitions.
|
1
|
|
|
|
ARTICLE
II.
The
Trust
|
11
|
|
|
|
SECTION
2.1.
|
Name.
|
11
|
SECTION
2.2.
|
Office
of the Delaware Trustee; Principal Place of Business.
|
12
|
SECTION
2.3.
|
Initial
Contribution of Trust Property; Fees, Costs and Expenses.
|
12
|
SECTION
2.4.
|
Purposes
of Trust.
|
12
|
SECTION
2.5.
|
Authorization
to Enter into Certain Transactions.
|
12
|
SECTION
2.6.
|
Assets
of Trust.
|
15
|
SECTION
2.7.
|
Title
to Trust Property.
|
15
|
|
|
|
ARTICLE
III.
Payment
Account; Paying Agents
|
15
|
|
|
|
SECTION
3.1.
|
Payment
Account.
|
15
|
SECTION
3.2.
|
Appointment
of Paying Agents.
|
16
|
|
|
|
ARTICLE
IV.
Distributions;
Redemption
|
16
|
|
|
|
SECTION
4.1.
|
Distributions.
|
16
|
SECTION
4.2.
|
Redemption.
|
18
|
SECTION
4.3.
|
Subordination
of Common Securities.
|
20
|
SECTION
4.4.
|
Payment
Procedures.
|
21
|
SECTION
4.5.
|
Withholding
Tax.
|
21
|
SECTION
4.6.
|
Tax
Returns and Other Reports.
|
22
|
SECTION
4.7.
|
Payment
of Taxes, Duties, Etc. of the Trust.
|
22
|
SECTION
4.8.
|
Payments
under Indenture or Pursuant to Direct Actions.
|
22
|
SECTION
4.9.
|
Exchanges.
|
22
|
SECTION
4.10.
|
Calculation
Agent.
|
23
|
SECTION
4.11.
|
Certain
Accounting Matters.
|
24
|
|
|
|
ARTICLE
V.
Securities
|
25
|
|
|
|
SECTION
5.1.
|
Initial
Ownership.
|
25
|
SECTION
5.2.
|
Authorized
Trust Securities.
|
25
|
SECTION
5.3.
|
Issuance
of the Common Securities; Subscription and Purchase
of
Notes.
|
|
SECTION
5.4.
|
The
Securities Certificates.
|
25
|
SECTION
5.5.
|
Rights
of Holders.
|
26
|
SECTION
5.6.
|
Book-Entry
Preferred Securities.
|
26
|
SECTION
5.7.
|
Registration
of Transfer and Exchange of Preferred Securities
Certificates.
|
28
|
SECTION
5.8.
|
Mutilated,
Destroyed, Lost or Stolen Securities Certificates.
|
30
|
SECTION
5.9.
|
Persons
Deemed Holders.
|
31
|
SECTION
5.10.
|
Cancellation.
|
31
|
SECTION
5.11.
|
Ownership
of Common Securities by Depositor.
|
31
|
SECTION
5.12.
|
Restricted
Legends.
|
32
|
SECTION
5.13.
|
Form
of Certificate of Authentication.
|
34
|
ARTICLE
VI.
Meetings;
Voting; Acts of Holders
|
35
|
|
|
|
SECTION
6.1.
|
Notice
of Meetings.
|
35
|
SECTION
6.2.
|
Meetings
of Holders of the Preferred Securities.
|
35
|
SECTION
6.3.
|
Voting
Rights.
|
35
|
SECTION
6.4.
|
Proxies,
Etc.
|
35
|
SECTION
6.5.
|
Holder
Action by Written Consent.
|
36
|
SECTION
6.6.
|
Record
Date for Voting and Other Purposes.
|
36
|
SECTION
6.7.
|
Acts
of Holders.
|
36
|
SECTION
6.8.
|
Inspection
of Records.
|
37
|
SECTION
6.9.
|
Limitations
on Voting Rights.
|
37
|
SECTION
6.10.
|
Acceleration
of Maturity; Rescission of Annulment; Waivers
of
Past Defaults.
|
|
|
|
|
ARTICLE
VII.
Representations
and Warranties
|
40
|
|
|
|
SECTION
7.1.
|
Representations
and Warranties of the Property Trustee and the Delaware
Trustee.
|
40
|
SECTION
7.2.
|
Representations
and Warranties of Depositor.
|
42
|
|
|
|
ARTICLE
VIII.
The
Trustees
|
43
|
|
|
|
SECTION
8.1.
|
Number
of Trustees.
|
43
|
SECTION
8.2.
|
Property
Trustee Required.
|
43
|
SECTION
8.3.
|
Delaware
Trustee Required.
|
43
|
SECTION
8.4.
|
Appointment
of Administrative Trustees.
|
44
|
SECTION
8.5.
|
Duties
and Responsibilities of the Trustees.
|
44
|
SECTION
8.6.
|
Notices
of Defaults and Extensions.
|
46
|
SECTION
8.7.
|
Certain
Rights of Property Trustee.
|
46
|
SECTION
8.8.
|
Delegation
of Power.
|
48
|
SECTION
8.9.
|
May
Hold Securities.
|
49
|
SECTION
8.10.
|
Compensation;
Reimbursement; Indemnity.
|
49
|
SECTION
8.11.
|
Resignation
and Removal; Appointment of Successor.
|
50
|
SECTION
8.12.
|
Acceptance
of Appointment by Successor.
|
51
|
SECTION
8.13.
|
Merger,
Conversion, Consolidation or Succession to Business.
|
52
|
SECTION
8.14.
|
Not
Responsible for Recitals, Issuance of Securities or
Representations.
|
52
|
SECTION
8.15.
|
Property
Trustee May File Proofs of Claim.
|
52
|
SECTION
8.16.
|
Reports
to the Property Trustee.
|
53
|
ARTICLE
IX.
Termination,
Liquidation and Merger
|
54
|
|
|
|
SECTION
9.1.
|
Dissolution
Upon Expiration Date.
|
54
|
SECTION
9.2.
|
Early
Termination.
|
54
|
SECTION
9.3.
|
Termination.
|
54
|
SECTION
9.4.
|
Liquidation.
|
55
|
SECTION
9.5.
|
Mergers,
Consolidations, Amalgamations or Replacements
of
Trust.
|
|
|
|
|
ARTICLE
X.
Miscellaneous
Provisions
|
57
|
|
|
|
SECTION
10.1.
|
Limitation
of Rights of Holders.
|
57
|
SECTION
10.2.
|
Agreed
Tax Treatment of Trust and Trust Securities.
|
58
|
SECTION
10.3.
|
Amendment.
|
58
|
SECTION
10.4.
|
Separability.
|
59
|
SECTION
10.5.
|
Governing
Law.
|
60
|
SECTION
10.6.
|
Successors.
|
60
|
SECTION
10.7.
|
Headings.
|
60
|
SECTION
10.8.
|
Reports,
Notices and Demands.
|
60
|
SECTION
10.9.
|
Agreement
Not to Petition.
|
61
|
SECTION
10.10.
|
Counterparts.
|
61
|
|
|
|
Exhibit
A
|
Certificate
of Trust of Redwood Capital Trust I
|
Exhibit
B
|
Form
of Common Securities Certificate
|
Exhibit
C
|
Form
of Preferred Securities Certificate
|
Exhibit
D
|
Junior
Subordinated Indenture
|
Exhibit
E
|
Form
of Certificate to be Executed for Transferees
|
Exhibit
F
|
Form
of Officer’s Financial Certificate
|
Schedule
A
|
Calculation
of LIBOR
|
This
Amended And Restated Trust Agreement
,
dated
as of December 12, 2006, among (i) Redwood Trust, Inc., a Maryland corporation
(including any successors or permitted assigns, the
“Depositor”
),
(ii)
The Bank of New York Trust Company, National Association, a national banking
association, as property trustee (in such capacity, the
“Property
Trustee”
),
(iii)
The Bank of New York (Delaware), a national banking association, as Delaware
trustee (in such capacity, the “
Delaware
Trustee”
),
(iv)
Martin S. Hughes, an individual, Harold F. Zagunis, an individual and Brett
D.
Nicholas, an individual, each of whose address is c/o Redwood Trust, Inc.,
One
Belvedere Place, Suite 300, Mill Valley, California 94941, as administrative
trustees (in such capacities, each an “
Administrative
Trustee”
and,
collectively, the “
Administrative
Trustees”
and,
together with the Property Trustee and the Delaware Trustee, the
“
Trustees”)
and (v) the several Holders, as hereinafter defined.
Witnesseth
Whereas,
the Depositor and the Delaware Trustee have heretofore created a Delaware
statutory trust pursuant to the Delaware Statutory Trust Act by entering into
a
Trust Agreement, dated as of December 7, 2006 (the
“Original
Trust Agreement”
)
,
and by
executing and filing with the Secretary of State of the State of Delaware the
Certificate of Trust, substantially in the form attached as
Exhibit A
;
and
Whereas,
the Depositor and the Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Trust to the
Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Purchase Agreement and (iii) the acquisition by the
Trust from the Depositor of all of the right, title and interest in and to
the
Notes;
Now,
therefore, in consideration of the agreements and obligations set forth herein
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Holders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees as follows:
ARTICLE
I
Defined
Terms
SECTION
1.1.
Definitions.
For
all
purposes of this Trust Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a)
the
terms
defined in this Article I have the meanings assigned to them in this Article
I;
(b)
the
words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”;
(c)
all
accounting terms used but not defined herein have the meanings assigned to
them
in accordance with United States generally accepted accounting
principles;
(d)
unless
the context otherwise requires, any reference to an “Article”, a “Section”, a
“Schedule” or an “Exhibit” refers to an Article, a Section, a Schedule or
an Exhibit, as the case may be, of or to this Trust Agreement;
(e)
the
words
“hereby”, “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Trust Agreement as a whole and not to any particular Article,
Section or other subdivision;
(f)
a
reference to the singular includes the plural and vice versa; and
(g)
the
masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.
“Act”
has the
meaning specified in
Section 6.7
.
“Additional
Interest”
has the
meaning specified in Section 1.1 of the Indenture.
“Additional
Interest Amount”
means,
with respect to Trust Securities of a given Liquidation Amount and/or a given
period, the amount of Additional Interest paid by the Depositor on a Like Amount
of Notes for such period.
“Additional
Taxes”
has the
meaning specified in Section 1.1 of the Indenture.
“Additional
Tax Sums”
has the
meaning specified in Section 10.5 of the Indenture.
“Administrative
Trustee”
means
each of the Persons identified as an
“
Administrative
Trustee” in the preamble to this Trust Agreement, solely in each such Person’s
capacity as Administrative Trustee of the Trust and not in such Person’s
individual capacity, or any successor Administrative Trustee appointed as herein
provided.
“Affiliate”
of any
specified Person means any other Person directly or indirectly controlling
or
controlled by or under direct or indirect common control with such specified
Person. For the purposes of this definition, “control” when used with respect to
any specified Person means the power to direct the management and policies
of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
“
Applicable
Depositary Procedures
”
means,
with respect to any transfer or transaction involving a Book-Entry Preferred
Security, the rules and procedures of the Depositary for such Book-Entry
Preferred Security, in each case to the extent applicable to such transaction
and as in effect from time to time.
“
Bankruptcy
Event
”
means,
with respect to any Person:
(a)
the
entry
of a decree or order by a court having jurisdiction in the premises (i) judging
such Person a bankrupt or insolvent, (ii) approving as properly filed a petition
seeking reorganization, arrangement, adjudication or composition of or in
respect of such Person under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, (iii) appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of such Person or of any substantial part of its property or (iv) ordering
the
winding up or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive days;
or
(b)
the
institution by such Person of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or the consent
by
it to the filing of any such petition or to the appointment of a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of
such Person or of any substantial part of its property, or the making by it
of
an assignment for the benefit of creditors, or the admission by it in writing
of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt or insolvent, or the taking of corporate action
by
such Person in furtherance of any such action.
“
Bankruptcy
Laws
”
means
all Federal and state bankruptcy, insolvency, reorganization and other similar
laws, including the United States Bankruptcy Code.
“
Book-Entry
Preferred Security
”
means
a
Preferred Security, the ownership and transfers of which shall be made through
book entries by a Depositary.
“
Business
Day
”
means
a
day other than (a) a Saturday or Sunday, (b) a day on which banking
institutions in the City of New York are authorized or required by law or
executive order to remain closed or (c) a day on which the Corporate Trust
Office is closed for business.
“
Calculation
Agent
”
has
the
meaning specified in
Section
4.10
.
“
Closing
Date
”
has
the
meaning specified in the Purchase Agreement.
“
Code
”
means
the United States Internal Revenue Code of 1986, as amended.
“
Commission
”
means
the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act or, if at any time after the execution of this
Trust Agreement such Commission is not existing and performing the duties
assigned to it, then the body performing such duties at such time.
“
Common
Securities Certificate
”
means
a
certificate evidencing ownership of Common Securities, substantially in the
form
attached as
Exhibit B
.
“
Common
Security
”
means
an undivided beneficial interest in the assets of the Trust, having a
Liquidation Amount of $1,000 and having the rights provided therefor in this
Trust Agreement.
“
Corporate
Trust Office
”
means
the principal office of the Property Trustee at which any particular time its
corporate trust business shall be administered, which office at the date of
this
Trust Agreement is located at 601 Travis, 16
th
Floor,
Houston, Texas 77002, Attention: Worldwide Securities Services—Redwood Capital
Trust I. Initially, all notices and correspondence shall be addressed to
Mudassir Mohamed, telephone number (713) 483-6029.
“
Definitive
Preferred Securities Certificates
”
means
Preferred Securities issued in certificated, fully registered form that are
not
Global Preferred Securities.
“
Delaware
Statutory Trust Act
”
means
Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., or any
successor statute thereto, in each case as amended from time to
time.
“
Delaware
Trustee
”
means
the Person identified as the
“
Delaware
Trustee” in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor Delaware Trustee
appointed as herein provided.
“
Depositary
”
means
an organization registered as a clearing agency under the Exchange Act that
is
designated as Depositary by the Depositor or any successor thereto. DTC will
be
the initial Depositary.
“
Depositary
Participant
”
means
a
broker, dealer, bank, other financial institution or other Person for whom
from
time to time the Depositary effects book-entry transfers and pledges of
securities deposited with the Depositary.
“
Depositor
”
has
the
meaning specified in the preamble to this Trust Agreement.
“
Depositor
Affiliate
”
has
the
meaning specified in
Section 4.9
.
“
Distribution
Date
”
has
the
meaning specified in
Section 4.1(a)(i)
.
“
Distributions
”
means
amounts payable in respect of the Trust Securities as provided in
Section 4.1.
“
DTC
”
means
The Depository Trust Company, a New York corporation, or any successor
thereto.
“
Early
Termination Event
”
has
the
meaning specified in
Section 9.2
.
“
EDGAR
”
has
the
meaning specified in
Section
4.11(c)
.
“
Event
of Default
”
means
any one of the following events (whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a)
the
occurrence of a Note Event of Default; or
(b)
default
by the Trust in the payment of any Distribution when it becomes due and payable,
and continuation of such default for a period of thirty (30) days;
or
(c)
default
by the Trust in the payment of any Redemption Price of any Trust Security when
it becomes due and payable; or
(d)
default
in the performance or breach, in any material respect, of any covenant or
warranty of the Trustees in this Trust Agreement (other than those specified
in
clause (b) or (c) above) and continuation of such default or breach for a period
of thirty (30) days after there has been given, by registered or certified
mail,
to the Trustees and to the Depositor by the Holders of at least twenty-five
percent (25%) in aggregate Liquidation Amount of the Outstanding Preferred
Securities a written notice specifying such default or breach and requiring
it
to be remedied and stating that such notice is a
“
Notice
of
Default” hereunder; or
(e)
the
occurrence of a Bankruptcy Event with respect to the Property Trustee if a
successor Property Trustee has not been appointed within ninety (90) days
thereof.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, and any successor statute thereto, in
each
case as amended from time to time.
“
Expiration
Date
”
has
the
meaning specified in
Section 9.1
.
“
Fiscal
Year
”
shall
be the fiscal year of the Trust, which shall be the calendar year, or such
other
period as is required by the Code.
“
Global
Preferred Security
”
means
a
Preferred Securities Certificate evidencing ownership of Book-Entry Preferred
Securities.
“
Holder
”
means
a
Person in whose name a Trust Security or Trust Securities are registered in
the
Securities Register; any such Person shall be deemed to be a beneficial owner
within the meaning of the Delaware Statutory Trust Act.
“
Indemnified
Person
”
has
the
meaning specified in
Section
8.10(c)
.
“
Indenture
”
means
the Junior Subordinated Indenture executed and delivered by the Depositor and
the Note Trustee contemporaneously with the execution and delivery of this
Trust
Agreement, for the benefit of the holders of the Notes, a copy of which is
attached hereto as
Exhibit
D
,
as
amended or supplemented from time to time.
“
Interest
Payment Date(s)
”
has
the
meaning specified in Section 1.1 of the Indenture.
“
Investment
Company Act
”
means
the Investment Company Act of 1940, or any successor statute thereto, in each
case as amended from time to time.
“
Investment
Company Event
”
has
the
meaning specified in Section 1.1 of the Indenture.
“
LIBOR
”
has
the
meaning specified in
Schedule
A
.
“
LIBOR
Business Day
”
has
the
meaning specified in
Schedule
A
.
“
LIBOR
Determination Date
”
has
the
meaning specified in
Schedule
A
.
“
Lien
”
means
any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse
ownership interest, hypothecation, assignment, security interest or preference,
priority or other security agreement or preferential arrangement of any kind
or
nature whatsoever.
“
Like
Amount
”
means
(a) with respect to a redemption of any Trust Securities, Trust Securities
having a Liquidation Amount equal to the principal amount of Notes to be
contemporaneously redeemed or paid at maturity in accordance with the Indenture,
the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, (b) with respect to a distribution of Notes to Holders of Trust
Securities in connection with a dissolution of the Trust, Notes having a
principal amount equal to the Liquidation Amount of the Trust Securities of
the
Holder to whom such Notes are distributed and (c) with respect to any
distribution of Additional Interest Amounts to Holders of Trust Securities,
Notes having a principal amount equal to the Liquidation Amount of the Trust
Securities in respect of which such distribution is made.
“
Liquidation
Amount
”
means
the stated amount of $1,000 per Trust Security.
“
Liquidation
Date
”
means
the date on which assets are to be distributed to Holders in accordance with
Section
9.4(a)
hereunder following dissolution of the Trust.
“
Liquidation
Distribution
”
has
the
meaning specified in
Section 9.4(d)
.
“
Majority
in Liquidation Amount
”
means
Common or Preferred Securities, as the case may be, representing more than
fifty
percent (50%) of the aggregate Liquidation Amount of all (or a specified group
of) then Outstanding Common or Preferred Securities, as the case may
be.
“
Note
Event of Default
”
means
any
“
Event
of
Default” specified in
Section
5.1
of the
Indenture.
“
Note
Redemption Date
”
means,
with respect to any Notes to be redeemed under the Indenture, the date fixed
for
redemption of such Notes under the Indenture.
“
Note
Trustee
”
means
the Person identified as the
“
Trustee”
in the Indenture, solely in its capacity as Trustee pursuant to the Indenture
and not in its individual capacity, or its successor in interest in such
capacity, or any successor Trustee appointed as provided in the
Indenture.
“
Notes
”
means
the Depositor’s Junior Subordinated Notes issued pursuant to the
Indenture.
“
Officers’
Certificate
”
means
a
certificate signed by the Chief Executive Officer, the President or an Executive
Vice President, and by the Chief Financial Officer, Treasurer or an Assistant
Treasurer, of the Depositor, and delivered to the Trustees. Any Officers’
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement (other than the certificate provided
pursuant to
Section
8.16
which is
not an Officers’ Certificate) shall include:
(a)
a
statement by each officer signing the Officers’ Certificate that such officer
has read the covenant or condition and the definitions relating
thereto;
(b)
a
brief
statement of the nature and scope of the examination or investigation undertaken
by such officer in rendering the Officers’ Certificate;
(c)
a
statement that such officer has made such examination or investigation as,
in
such officer’s opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d)
a
statement as to whether, in the opinion of such officer, such condition or
covenant has been complied with.
“
Operative
Documents
”
means
the Purchase Agreement, the Indenture, the Trust Agreement, the Notes and the
Trust Securities.
“
Opinion
of Counsel
”
means
a
written opinion of counsel, who may be counsel for, or an employee of, the
Depositor or any Affiliate of the Depositor.
“
Optional
Note Redemption Price
”
means,
with respect to any Note to be redeemed on any Redemption Date under the
Indenture, an amount equal to one hundred percent (100%) of the outstanding
principal amount of such Note, together with accrued interest, including any
Additional Interest (to the extent legally enforceable), thereon through but
not
including the date fixed as such Redemption Date.
“
Optional
Redemption Price
”
means,
with respect to any Trust Security, an amount equal to one hundred percent
(100%) of the Liquidation Amount of such Trust Security on the Redemption Date,
plus accumulated and unpaid Distributions to the Redemption Date, plus the
related amount of the premium, if any, and/or accrued interest, including
Additional Interest, if any, thereon paid by the Depositor upon the concurrent
redemption or payment at maturity of a Like Amount of Notes.
“
Original
Trust Agreement
”
has
the
meaning specified in the recitals to this Trust Agreement.
“
Outstanding
”,
when
used with respect to any Trust Securities, means, as of the date of
determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except
:
(a)
Trust
Securities theretofore canceled by the Property Trustee or delivered to the
Property Trustee for cancellation;
(b)
Trust
Securities for which payment or redemption money in the necessary amount has
been theretofore deposited with the Property Trustee or any Paying Agent in
trust for the Holders of such Trust Securities; provided
,
that if
such Trust Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c)
Trust
Securities that have been paid or in exchange for or in lieu of which other
Trust Securities have been executed and delivered pursuant to the provisions
of
this Trust Agreement, unless proof satisfactory to the Property Trustee is
presented that any such Trust Securities are held by Holders in whose hands
such
Trust Securities are valid, legal and binding obligations of the
Trust;
provided
,
that in
determining whether the Holders of the requisite Liquidation Amount of the
Outstanding Preferred Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Preferred Securities owned
by
the Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee
shall be disregarded and deemed not to be Outstanding, except that (i) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded and (ii) the foregoing shall not apply at any time when all of
the Outstanding Preferred Securities are owned by the Depositor, one or more
of
the Trustees and/or any such Affiliate. Preferred Securities so owned that
have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee’s
right so to act with respect to such Preferred Securities and that the pledgee
is not the Depositor, any Trustee or any Affiliate of the Depositor or of any
Trustee.
“
Owner
”
means
each Person who is the beneficial owner of Book-Entry Preferred Securities
as
reflected in the records of the Depositary or, if a Depositary Participant
is
not the beneficial owner, then the beneficial owner as reflected in the records
of the Depositary Participant.
“
Paying
Agent
”
means
any Person (other than the Depositor or any Affiliate of the Depositor)
authorized by the Administrative Trustee to pay Distributions or other amounts
in respect of any Trust Securities on behalf of the Trust.
“
Payment
Account
”
means
a
segregated non-interest-bearing corporate trust account maintained by the
Property Trustee for the benefit of the Holders in which all amounts paid in
respect of the Notes will be held and from which the Property Trustee, through
the Paying Agent, shall make payments to the Holders in accordance with
Sections
3.1
,
4.1
and
4.2
.
“
Person
”
means
a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, company, limited liability company,
trust, unincorporated association or government, or any agency or political
subdivision thereof, or any other entity of whatever nature.
“
Preferred
Security
”
means
an undivided beneficial interest in the assets of the Trust, having a
Liquidation Amount of $1,000 and having the rights provided therefor in this
Trust Agreement.
“
Preferred
Securities Certificate
”
means
a
certificate evidencing ownership of Preferred Securities, substantially in
the
form attached as
Exhibit
C
.
“
Property
Trustee
”
means
the Person identified as the
“
Property
Trustee” in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor Property Trustee
appointed as herein provided.
“
Purchase
Agreement
”
means
the Purchase Agreement or Purchase Agreements (whether one or more) executed
and
delivered contemporaneously with this Agreement by the Trust, the Depositor
and
the purchaser(s) named therein, as the same may be amended from time to
time.
“
QIB
”
means
a
“qualified institutional buyer” as defined in Rule 144A under the Securities Act
of 1933, as amended.
“
QP
”
means
a
“qualified purchaser” as defined in Section 2(a)(51) of the Investment Company
Act of 1940, as amended.
“
QIB/QP
”
means
a
QIB that is also a QP.
“
Redemption
Date
”
means,
with respect to any Trust Security to be redeemed, the date fixed for such
redemption by or pursuant to this Trust Agreement; provided
,
that
each Note Redemption Date and the stated maturity (or any date of principal
repayment upon early maturity) of the Notes shall be a Redemption Date for
a
Like Amount of Trust Securities.
“
Redemption
Price
”
means
the Special Redemption Price or Optional Redemption Price, as applicable. If
the
Depositor has redeemed the Notes at the Special Note Redemption Price, the
Trust
shall redeem the Trust Securities at the Special Redemption Price. If the
Depositor has redeemed the Notes at the Optional Note Redemption Price, the
Trust shall redeem the Trust Securities at the Optional Redemption
Price.
“Reference
Banks”
has the
meaning specified in
Schedule
A
.
“
Responsible
Officer
”
means,
with respect to the Property Trustee, the officer in the Worldwide Securities
Services department of the Property Trustee having direct responsibility for
the
administration of this Trust Agreement.
“
Securities
Act
”
means
the Securities Act of 1933, and any successor statute thereto, in each case
as
amended from time to time.
“
Securities
Certificate
”
means
any one of the Common Securities Certificates or the Preferred Securities
Certificates.
“
Securities
Register
”
and
“Securities
Registrar
”
have
the respective meanings specified in
Section 5.7
.
“
Special
Note Redemption Price
”
means,
with respect to any Note to be redeemed on any Redemption Date under the
Indenture, an amount equal to:
TIME
PERIOD
|
|
PERCENTAGE
|
|
December
12, 2006 - January 29, 2008
|
|
|
107.5
|
%
|
January
30, 2008 - January 29, 2009
|
|
|
105
|
%
|
January
30, 2009 - January 29, 2010
|
|
|
103.75
|
%
|
January
30, 2010 - January 29, 2011
|
|
|
102.5
|
%
|
January
30, 2011 - January 29, 2012
|
|
|
101.25
|
%
|
January
30, 2012 and thereafter
|
|
|
100
|
%
|
of
the
outstanding principal amount of such Note, together with accrued interest,
including Additional Interest, thereon through but not including the date fixed
as such Redemption Date.
“
Special
Redemption Price
”
means,
with respect to any Trust Security, an amount equal to:
TIME
PERIOD
|
|
PERCENTAGE
|
|
December
12, 2006 - January 29, 2008
|
|
|
107.5
|
%
|
January
30, 2008 - January 29, 2009
|
|
|
105
|
%
|
January
30, 2009 - January 29, 2010
|
|
|
103.75
|
%
|
January
30, 2010 - January 29, 2011
|
|
|
102.5
|
%
|
January
30, 2011 - January 29, 2012
|
|
|
101.25
|
%
|
January
30, 2012 and thereafter
|
|
|
100
|
%
|
of
the
Liquidation Amount of such Trust Security on the Redemption Date, plus
accumulated and unpaid Distributions to the Redemption Date, plus the related
amount of the premium, if any, and/or accrued interest, including Additional
Interest, if any, thereon paid by the Depositor upon the concurrent redemption
or payment at maturity of a Like Amount of Notes.
“
Successor
Securities
”
has
the
meaning specified in
Section 9.5(a)
.
“
Tax
Event
”
has
the
meaning specified in Section 1.1 of the Indenture.
“
Trust
”
means
the Delaware statutory trust known as “Redwood Capital Trust I”, which was
created on December 7, 2006 under the Delaware Statutory Trust Act pursuant
to
the Original Trust Agreement and the filing of the Certificate of Trust, and
continued pursuant to this Trust Agreement.
“
Trust
Agreement
”
means
this Amended and Restated Trust Agreement, as the same may be modified, amended
or supplemented from time to time in accordance with the applicable provisions
hereof, including all Schedules and Exhibits.
“
Trustees
”
means
the Administrative Trustees, the Property Trustee and the Delaware Trustee,
each
as defined in this
Article
I
.
“
Trust
Property
”
means
(a) the Notes, (b) any cash on deposit in, or owing to, the Payment
Account and (c) all proceeds and rights in respect of the foregoing and any
other property and assets for the time being held or deemed to be held by the
Property Trustee pursuant to the trusts of this Trust Agreement.
“
Trust
Security
”
means
any one of the Common Securities or the Preferred Securities.
ARTICLE
II
The
Trust
SECTION
2.1.
Name.
The
trust
continued hereby shall be known as “Redwood Capital Trust I”, as such name may
be modified from time to time by the Administrative Trustees following written
notice to the Holders of Trust Securities and the other Trustees, in which
name
the Trustees may conduct the business of the Trust, make and execute contracts
and other instruments on behalf of the Trust and sue and be sued.
SECTION
2.2.
Office
of the Delaware Trustee; Principal Place of Business.
The
address of the Delaware Trustee in the State of Delaware is The Bank of New
York
(Delaware), 100 White Clay Center, Route 273, Newark, DE 19711, or such other
address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Holders, the Depositor, the Property Trustee and the
Administrative Trustees. The principal executive office of the Trust is c/o
Redwood Trust, Inc., One Belvedere Place, Suite 300, Mill Valley, California
94941, as such address may be changed from time to time by the Administrative
Trustees following written notice to the Holders and the other
Trustees.
SECTION
2.3.
Initial
Contribution of Trust Property; Fees, Costs and Expenses.
The
Property Trustee acknowledges receipt from the Depositor in connection with
the
Original Trust Agreement of the sum of ten dollars ($10), which constituted
the
initial Trust Property. The Depositor shall pay all fees, costs and expenses
of
the Trust (except with respect to the Trust Securities) as they arise or shall,
upon request of any Trustee, promptly reimburse such Trustee for any such fees,
costs and expenses paid by such Trustee. The Depositor shall make no claim
upon
the Trust Property for the payment of such fees, costs or expenses.
SECTION
2.4.
Purposes
of Trust.
(a)
The
exclusive purposes and functions of the Trust are to (i) issue and sell
Trust Securities and use the proceeds from such sale to acquire the Notes and
(ii) engage in only those activities necessary or incidental thereto. The
Delaware Trustee, the Property Trustee and the Administrative Trustees are
trustees of the Trust, and have all the rights, powers and duties to the extent
set forth herein. The Trustees hereby acknowledge that they are trustees of
the
Trust.
(b)
So
long
as this Trust Agreement remains in effect, the Trust (or the Trustees acting
on
behalf of the Trust) shall not undertake any business, activities or transaction
except as expressly provided herein or contemplated hereby. In particular,
the
Trust (or the Trustees acting on behalf of the Trust) shall not (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off
or otherwise dispose of any of the Trust Property or interests therein,
including to Holders, except as expressly provided herein, (iii) incur any
indebtedness for borrowed money or issue any other debt, (iv) take or
consent to any action that would result in the placement of a Lien on any of
the
Trust Property, (v) take or consent to any action that would reasonably be
expected to cause the Trust to become taxable as a corporation or classified
as
other than a grantor trust for United States federal income tax purposes, (vi)
take or consent to any action that would cause the Notes to be treated as other
than indebtedness of the Depositor for United States federal income tax purposes
or (vii) take or consent to any action that would cause the Trust to be deemed
to be an “investment company” required to be registered under the Investment
Company Act.
SECTION
2.5.
Authorization
to Enter into Certain Transactions.
(a)
The
Trustees shall conduct the affairs of the Trust in accordance with and subject
to the terms of this Trust Agreement. In accordance with the following
provisions (i) and (ii), the Trustees shall have the authority to enter into
all
transactions and agreements determined by the Trustees to be appropriate in
exercising the authority, express or implied, otherwise granted to the Trustees,
under this Trust Agreement, and to perform all acts in furtherance thereof,
including the following:
(i)
As
among
the Trustees, each Administrative Trustee shall severally have the power and
authority to act on behalf of the Trust with respect to the following
matters:
(A)
the
issuance and sale of the Trust Securities;
(B)
to
cause
the Trust to enter into, and to execute, deliver and perform on behalf of the
Trust, such agreements as may be necessary or desirable in connection with
the
purposes and function of the Trust, including, without limitation, a common
securities subscription agreement and a junior subordinated note purchase
agreement;
(C)
assisting
in the sale of the Preferred Securities in one or more transactions exempt
from
registration under the Securities Act, and in compliance with applicable state
securities or blue sky laws;
(D)
assisting
in the sending of notices (other than notices of default) and other information
regarding the Trust Securities and the Notes to the Holders in accordance with
this Trust Agreement;
(E)
execution
of the Trust Securities on behalf of the Trust in accordance with this Trust
Agreement;
(F)
the
appointment of a Paying Agent and Securities Registrar in accordance with this
Trust Agreement;
(G)
execution
and delivery of closing certificates, if any, pursuant to the Purchase Agreement
and application for a taxpayer identification number for the Trust;
(H)
preparation
and filing of all applicable tax returns and tax information reports that are
required to be filed on behalf of the Trust;
(I)
establishing
a record date with respect to all actions to be taken hereunder that require
a
record date to be established, except as provided in
Section
6.10(a)
;
(J)
unless
otherwise required by the Delaware Statutory Trust Act to execute on behalf
of
the Trust (either acting alone or together with the other Administrative
Trustees) any documents that such Administrative Trustee has the power to
execute pursuant to this Trust Agreement; and
(K)
the
taking of any action incidental to the foregoing as such Administrative Trustee
may from time to time determine is necessary or advisable to give effect to
the
terms of this Trust Agreement.
(ii)
As
among
the Trustees, the Property Trustee shall have the power, duty and authority
to
act on behalf of the Trust with respect to the following matters:
(A)
the
receipt and holding of legal title of the Notes;
(B)
the
establishment of the Payment Account;
(C)
the
collection of interest, principal and any other payments made in respect of
the
Notes and the holding of such amounts in the Payment Account;
(D)
the
distribution through the Paying Agent of amounts distributable to the Holders
in
respect of the Trust Securities;
(E)
the
exercise of all of the rights, powers and privileges of a holder of the Notes
in
accordance with the terms of this Trust Agreement;
(F)
the
sending of notices of default and other information regarding the Trust
Securities and the Notes to the Holders in accordance with this Trust
Agreement;
(G)
the
distribution of the Trust Property in accordance with the terms of this Trust
Agreement;
(H)
to
the
extent provided in this Trust Agreement, the winding up of the affairs of and
liquidation of the Trust, provided that the Administrative Trustees shall have
the power, duty and authority to act on behalf of the Trust with respect to
the
preparation, execution and filing of the certificate of cancellation of the
Trust with the Secretary of State of the State of Delaware; and
(I)
the
taking of any action incidental to the foregoing as the Property Trustee may
from time to time determine is necessary or advisable to give effect to the
terms of this Trust Agreement and protect and conserve the Trust Property for
the benefit of the Holders (without consideration of the effect of any such
action on any particular Holder).
(b)
In
connection with the issue and sale of the Preferred Securities, the Depositor
shall have the right and responsibility to assist the Trust with respect to,
or
effect on behalf of the Trust, the following (and any actions taken by the
Depositor in furtherance of the following prior to the date of this Trust
Agreement are hereby ratified and confirmed in all respects):
(i)
the
negotiation of the terms of, and the execution and delivery of, the Purchase
Agreement providing for the sale of the Preferred Securities in one or more
transactions exempt from registration under the Securities Act, and in
compliance with applicable state securities or blue sky laws; and
(ii)
the
taking of any other actions necessary or desirable to carry out any of the
foregoing activities.
(c)
Notwithstanding
anything herein to the contrary, the Trustees are authorized and directed to
conduct the affairs of the Trust and authorized to operate the Trust so that
the
Trust will not be taxable as a corporation or classified as other than a grantor
trust for United States federal income tax purposes, so that the Notes will
be
treated as indebtedness of the Depositor for United States federal income tax
purposes and so that the Trust will not be deemed to be an “investment company”
required to be registered under the Investment Company Act. In respect thereof,
each Administrative Trustee is authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust or this Trust Agreement, that
such
Administrative Trustee determines in his or her discretion to be necessary
or
desirable for such purposes, as long as such action does not adversely affect
in
any material respect the interests of the Holders of the Outstanding Preferred
Securities. In no event shall the Administrative Trustees be liable to the
Trust
or the Holders for any failure to comply with this
Section
2.5
to the
extent that such failure results solely from a change in law or regulation
or in
the interpretation thereof.
(d)
Any
action taken by a Trustee in accordance with its powers shall constitute the
act
of and serve to bind the Trust. In dealing with any Trustee acting on behalf
of
the Trust, no Person shall be required to inquire into the authority of such
Trustee to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of any Trustee as set forth in this
Trust Agreement.
SECTION
2.6.
Assets
of Trust.
The
assets of the Trust shall consist of the Trust Property.
SECTION
2.7.
Title
to Trust Property.
(a)
Legal
title to all Trust Property shall be vested at all times in the Property Trustee
and shall be held and administered by the Property Trustee in trust for the
benefit of the Trust and the Holders in accordance with this Trust
Agreement.
(b)
The
Holders shall not have any right or title to the Trust Property other than
the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement.
ARTICLE
III
Payment
Account; Paying Agents
SECTION
3.1.
Payment
Account.
(a)
On
or
prior to the Closing Date, the Property Trustee shall establish the Payment
Account. The Property Trustee and the Paying Agent shall have exclusive control
and sole right of withdrawal with respect to the Payment Account for the purpose
of making deposits in and withdrawals from the Payment Account in accordance
with this Trust Agreement. All monies and other property deposited or held
from
time to time in the Payment Account shall be held by the Property Trustee in
the
Payment Account for the exclusive benefit of the Holders and for Distribution
as
herein provided.
(b)
The
Property Trustee shall deposit in the Payment Account, promptly upon receipt,
all payments of principal of or interest on, and any other payments with respect
to, the Notes. Amounts held in the Payment Account shall not be invested by
the
Property Trustee pending distribution thereof.
SECTION
3.2.
Appointment
of Paying Agents.
The
Paying Agent shall initially be the Property Trustee. The Paying Agent shall
make Distributions to Holders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds
from
the Payment Account solely for the purpose of making the Distributions referred
to above. The Administrative Trustees may revoke such power and remove the
Paying Agent in their sole discretion. Any Person acting as Paying Agent shall
be permitted to resign as Paying Agent upon thirty (30) days’ written notice to
the Administrative Trustees and the Property Trustee. If the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign
or
its authority to act be revoked, the Administrative Trustees shall appoint
a
successor (which shall be a bank or trust company) to act as Paying Agent.
Such
successor Paying Agent appointed by the Administrative Trustees shall execute
and deliver to the Trustees an instrument in which such successor Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
will hold all sums, if any, held by it for payment to the Holders in trust
for
the benefit of the Holders entitled thereto until such sums shall be paid to
such Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall return all
funds in its possession to the Property Trustee. The provisions of
Article
VIII
shall
apply to the Property Trustee also in its role as Paying Agent, for so long
as
the Property Trustee shall act as Paying Agent and, to the extent applicable,
to
any other Paying Agent appointed hereunder. Any reference in this Trust
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise. For the avoidance of doubt, the Depositor shall
not
be permitted to appoint itself or any Affiliate as a Paying Agent
hereunder.
ARTICLE
IV
Distributions;
Redemption
SECTION
4.1.
Distributions.
(a)
The
Trust
Securities represent undivided beneficial interests in the Trust Property,
and
Distributions (including any Additional Interest Amounts) will be made on the
Trust Securities at the rate and on the dates that payments of interest
(including any Additional Interest) are made on the Notes.
Accordingly:
(i)
Distributions
on the Trust Securities shall be cumulative, and shall accumulate whether
or not
there are funds of the Trust available for the payment of Distributions.
Distributions shall accumulate from December 12, 2006, and, except as provided
in clause (ii) below, shall be payable quarterly
in
arrears on January 30, April 30, July 30 and October 30 of each year, commencing
on January 30, 2007. If any date on which a Distribution is otherwise payable
on
the Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding Business Day (and no interest
shall accrue in respect of the amounts whose payment is so delayed for the
period from and after each such date until the next succeeding Business Day),
except that, if such Business Day falls in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in
each
case, with the same force and effect as if made on such date (each date on
which
Distributions are payable in accordance with this
Section 4.1(a)(i)
,
a
“Distribution
Date
”);
(ii)
Distributions
shall accumulate in respect of the Trust Securities at a variable rate equal
to
LIBOR plus 2.25
%
per
annum of the Liquidation Amount of the Trust Securities, such rate being the
rate of interest payable on the Notes. LIBOR shall be determined by the
Calculation Agent in accordance with
Schedule
A
.
The
amount of Distributions payable for any Distribution period shall be computed
on
the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution period. The amount of Distributions payable for any period
shall also include any Additional Interest Amounts in respect of such period;
and
(iii)
Distributions
on the Trust Securities shall be made by the Paying Agent from the Payment
Account and shall be payable on each Distribution Date only to the extent that
the Trust has funds then on hand and available in the Payment Account for the
payment of such Distributions.
(b)
Distributions
on the Trust Securities with respect to a Distribution Date shall be payable
to
the Holders thereof as they appear on the Securities Register for the Trust
Securities at the close of business on the relevant record date, which shall
be
at the close of business on the fifteenth day (whether or not a Business Day)
preceding the relevant Distribution Date, except that Distributions and any
Additional Interest Amounts payable on the stated maturity (or any date of
principal repayment upon early maturity) of the principal of a Trust Security
or
on a Redemption Date shall be paid to the Holder to whom principal is paid
pursuant to
Section
4.2(d)
.
Distributions payable on any Trust Securities that are not punctually paid
on
any Distribution Date as a result of the Depositor having failed to make an
interest payment under the Notes will cease to be payable to the Person in
whose
name such Trust Securities are registered on the relevant record date, and
such
defaulted Distributions and any Additional Interest Amounts will instead be
payable to the Person in whose name such Trust Securities are registered on
the
special record date, or other specified date for determining Holders entitled
to
such defaulted Distribution and Additional Interest Amount, established in
the
same manner, and on the same date, as such is established with respect to the
Notes under the Indenture.
(c)
As
a
condition to the payment of any principal of or interest on the Trust Securities
without the imposition of withholding tax, the Administrative Trustees shall
require the previous delivery of properly completed and signed applicable United
States federal income tax certifications (generally, an Internal Revenue Service
Form W-9 (or applicable successor form) in the case of a person that is a
“United States person” within the meaning of Section 7701(a)(30) of the Code or
an Internal Revenue Service Form W-8 (or applicable successor form) in the
case
of a person that is not a “United States person” within the meaning of Section
7701(a)(30) of the Code) and any other certification acceptable to it to enable
the Paying Agent to determine its duties and liabilities with respect to any
taxes or other charges that it may be required to pay, deduct or withhold in
respect of such Trust Securities.
SECTION
4.2.
Redemption.
(a)
On
each
Note Redemption Date and on the stated maturity (or any date of principal
repayment upon early maturity) of the Notes and on each other date on (or in
respect of) which any principal on the Notes is repaid, the Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption
Price.
(b)
Notice
of
redemption shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior
to
the Redemption Date to each Holder of Trust Securities to be redeemed, at such
Holder’s address appearing in the Securities Register. All notices of redemption
shall state:
(i)
the
Redemption Date;
(ii)
the
Redemption Price or, if the Redemption Price cannot be calculated prior to
the
time the notice is required to be sent, the estimate of the Redemption Price
provided pursuant to the Indenture, as calculated by the Depositor, together
with a statement that it is an estimate and that the actual Redemption Price
will be calculated by the Calculation Agent on the fifth (5
th
)
Business Day prior to the Redemption Date (and if an estimate is provided,
a
further notice shall be sent of the actual Redemption Price on the date that
such Redemption Price is calculated);
(iii)
if
less
than all the Outstanding Trust Securities are to be redeemed, the identification
(and, in the case of partial redemption, the respective amounts) and Liquidation
Amounts of the particular Trust Securities to be redeemed;
(iv)
that
on
the Redemption Date, the Redemption Price will become due and payable upon
each
such Trust Security, or portion thereof, to be redeemed and that Distributions
thereon will cease to accumulate on such Trust Security or such portion, as
the
case may be, on and after said date, except as provided in
Section
4.2(d)
;
(v)
the
place
or places where the Trust Securities are to be surrendered for the payment
of
the Redemption Price; and
(vi)
such
other provisions as the Property Trustee deems relevant.
(c)
The
Trust
Securities (or portion thereof) redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption or payment at maturity of Notes. Redemptions of the Trust Securities
(or portion thereof) shall be made and the Redemption Price shall be payable
on
each Redemption Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
Under
the
Indenture, the Notes may be redeemed by the Depositor on any Interest Payment
Date, at the Depositor’s option, on or after January 30, 2012,
in
whole
or in part, from time to time at the Optional Note Redemption Price. The Notes
may also be redeemed by the Depositor, at its option pursuant to the terms
of
the Indenture, in whole but not in part, upon the occurrence and during the
continuation of an Investment Company Event or a Tax Event, at the Special
Note
Redemption Price.
(d)
If
the
Property Trustee gives a notice of redemption in respect of any Preferred
Securities, then by 10:00 a.m., New York City time, on the Redemption Date,
the
Depositor shall deposit sufficient funds with the Property Trustee to pay the
Redemption Price. If such deposit has been made by such time, then by 12:00
noon, New York City time, on the Redemption Date, the Property Trustee will,
with respect to Book-Entry Preferred Securities, irrevocably deposit with the
Depositary for such Book-Entry Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will
give
such Depositary irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities. With respect to Preferred
Securities that are not Book-Entry Preferred Securities, the Property Trustee
will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will
give
the Paying Agent irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities upon surrender of their
Preferred Securities Certificates. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for any Trust Securities (or portion
thereof) called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of Holders holding Trust Securities (or portion thereof) so called
for redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust Securities
on or prior to the Redemption Date, but without interest, and, in the case
of a
partial redemption, the right of such Holders to receive a new Trust Security
or
Securities of authorized denominations, in aggregate Liquidation Amount equal
to
the unredeemed portion of such Trust Security or Securities, and such Securities
(or portion thereof) called for redemption will cease to be Outstanding. In
the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made
on
the next succeeding Business Day (and no interest shall accrue in respect of
the
amounts whose payment is so delayed for the period from and after each such
date
until the next succeeding Business Day), except that, if such Business Day
falls
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. In the event that payment of the Redemption Price
in
respect of any Trust Securities (or portion thereof) called for redemption
is
improperly withheld or refused and not paid either by the Trustee or the Paying
Agent, Distributions on such Trust Securities (or portion thereof) will continue
to accumulate, as set forth in
Section
4.1
,
from
the Redemption Date originally established by the Trust for such Trust
Securities (or portion thereof) to the date such Redemption Price is actually
paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
(e)
Subject
to
Section 4.3
(a),
if
less than all the Outstanding Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of Trust Securities
to be
redeemed shall be allocated
pro
rata
to the
Common Securities and the Preferred Securities based upon the relative aggregate
Liquidation Amounts of the Common Securities and the Preferred Securities.
Upon
such a partial redemption, the Preferred Securities to be redeemed from
each Holder of Preferred Securities shall be selected on a pro rata basis based
upon the respective Liquidation Amounts of the Preferred Securities then
held by each Holder of the Preferred Securities not more than sixty (60) days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption;
provided,
that
with
respect to Holders that would be required to hold less than one hundred (100)
but more than zero (0) Trust Securities as a result of such redemption, the
Trust shall redeem Trust Securities of each such Holder so that after such
redemption such Holder shall hold either one hundred (100) Trust Securities
or
such Holder no longer holds any Trust Securities, and shall use such method
(including, without limitation, by lot) as the Trust shall deem fair and
appropriate; and
provided,
further
,
that so
long as the Preferred Securities are Book-Entry Preferred Securities, such
selection shall be made in accordance with the Applicable Depositary Procedures
for the Preferred Securities by such Depositary. The Property Trustee shall
promptly notify the Securities Registrar in writing of the Preferred Securities
(or portion thereof) selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the Liquidation Amount thereof
to be
redeemed. For all purposes of this Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities
shall relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate Liquidation Amount of Preferred
Securities that has been or is to be redeemed.
(f)
The
Trust
in issuing the Trust Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Property Trustee shall indicate the “CUSIP” numbers of the
Trust Securities in notices of redemption and related materials as a convenience
to Holders; provided, that any such notice may state that no representation
is
made as to the correctness of such numbers either as printed on the Trust
Securities or as contained in any notice of redemption and related
materials.
SECTION
4.3.
Subordination
of Common Securities.
(a)
Payment
of Distributions (including any Additional Interest Amounts) on, the Redemption
Price of and the Liquidation Distribution in respect of, the Trust Securities,
as applicable, shall be made
pro
rata
among
the Common Securities and the Preferred Securities based on the Liquidation
Amount of the respective Trust Securities;
provided,
that if
on any Distribution Date, Redemption Date or Liquidation Date an Event of
Default shall have occurred and be continuing, no payment of any Distribution
(including any Additional Interest Amounts) on, Redemption Price of or
Liquidation Distribution in respect of, any Common Security and no other payment
on account of the redemption, liquidation or other acquisition of Common
Securities shall be made unless payment in full in cash of all accumulated
and
unpaid Distributions (including any Additional Interest Amounts) on all
Outstanding Preferred Securities for all Distribution periods terminating on
or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities then called
for
redemption, or in the case of payment of the Liquidation Distribution the full
amount of such Liquidation Distribution on all Outstanding Preferred Securities,
shall have been made or provided for, and all funds immediately available to
the
Property Trustee shall first be applied to the payment in full in cash of all
Distributions (including any Additional Interest Amounts) on, or the Redemption
Price of or the Liquidation Distribution in respect of, the Preferred Securities
then due and payable.
(b)
In
the
case of the occurrence of any Event of Default, the Holders of the Common
Securities shall have no right to act with respect to any such Event of Default
under this Trust Agreement until all such Events of Default with respect to
the
Preferred Securities have been cured, waived or otherwise eliminated. Until
all
such Events of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred Securities
and not on behalf of the Holders of the Common Securities, and only the Holders
of all the Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
SECTION
4.4.
Payment
Procedures.
Payments
of Distributions (including any Additional Interest Amounts), the Redemption
Price, Liquidation Amount or any other amounts in respect of the Preferred
Securities shall be made by wire transfer at such place and to such account
at a
banking institution in the United States as may be designated in writing at
least ten (10) Business Days prior to the date for payment by the Person
entitled thereto unless proper written transfer instructions have not been
received by the relevant record date, in which case such payments shall be
made
by check mailed to the address of such Person as such address shall appear
in
the Securities Register. If any Preferred Securities are held by a Depositary,
such Distributions thereon shall be made to the Depositary in immediately
available funds. Payments in respect of the Common Securities shall be made
in
such manner as shall be mutually agreed between the Property Trustee and the
Holder of all the Common Securities.
SECTION
4.5.
Withholding
Tax.
The
Trust, the Administrative Trustees and the Paying Agent shall comply with all
withholding and backup withholding tax requirements under United States federal,
state and local law. The Administrative Trustees on behalf of the Trust and
its
Paying Agent shall request, and the Holders shall provide to the Trust, such
forms or certificates as are necessary to establish an exemption from
withholding and backup withholding tax with respect to each Holder and any
representations and forms as shall reasonably be requested by the Administrative
Trustees on behalf of the Trust and its Paying Agent to assist it in determining
the extent of, and in fulfilling, its withholding and backup withholding tax
obligations. The Administrative Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding and backup
withholding tax is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent
that the Trust or any Paying Agent is required to withhold and pay over any
amounts to any jurisdiction with respect to Distributions or allocations to
any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction.
If
the amount required to be withheld was not withheld from actual Distributions
made, the Administrative Trustees or any Paying Agent on behalf of the Trust
may
reduce subsequent Distributions by the amount of such required
withholding.
SECTION
4.6.
Tax
Returns and Other Reports.
The
Administrative Trustees shall prepare (or cause to be prepared) at the principal
office of the Trust in the United States, as defined for purposes of Treasury
regulations section 301.7701-7, at the Depositor’s expense, and file, all United
States federal, state and local tax and information returns and reports required
to be filed by or in respect of the Trust. The Administrative Trustees shall
prepare at the principal office of the Trust in the United States, as defined
for purposes of Treasury regulations section 301.7701-7, and furnish (or cause
to be prepared and furnished) by January 31 in each taxable year of the Trust
to
each Holder all Internal Revenue Service forms and returns required to be
provided by the Trust. The Administrative Trustees shall provide the Depositor,
Taberna Capital Management, LLC and the Property Trustee with a copy of all
such
returns and reports promptly after such filing or furnishing.
SECTION
4.7.
Payment
of Taxes, Duties, Etc. of the Trust.
Upon
receipt under the Notes of Additional Tax Sums and upon the written direction
of
the Administrative Trustees, the Property Trustee shall promptly pay, solely
out
of monies on deposit pursuant to this Trust Agreement, any Additional Taxes
imposed on the Trust by the United States or any other taxing
authority.
SECTION
4.8.
Payments
under Indenture or Pursuant to Direct Actions.
Any
amount payable hereunder to any Holder of Preferred Securities shall be reduced
by the amount of any corresponding payment such Holder (or any Owner with
respect thereto) has directly received pursuant to Section 5.8 of the
Indenture or
Section 6.10(b)
of this
Trust Agreement.
SECTION
4.9.
Exchanges.
(a)
If
at any
time the Depositor or any of its Affiliates (in either case, a
“Depositor
Affiliate
”)
is the
Owner or Holder of any Preferred Securities, such Depositor Affiliate shall
have
the right to deliver to the Property Trustee all or such portion of its
Preferred Securities as it elects and, subject to compliance with Sections
2.2
and 3.5 of the Indenture, receive, in exchange therefor, a Like Amount of Notes.
Such election shall be exercisable effective on any Distribution Date by such
Depositor Affiliate delivering to the Property Trustee (i) at least ten (10)
Business Days prior to the Distribution Date on which such exchange is to occur,
the registration instructions and the documentation, if any, required pursuant
to Sections 2.2 and 3.5 of the Indenture to enable the Indenture Trustee to
issue the requested Like Amount of Notes, (ii) a written notice of such election
specifying the Liquidation Amount of Preferred Securities with respect to which
such election is being made and the Distribution Date on which such exchange
shall occur, which Distribution Date shall be not less than ten (10) Business
Days after the date of receipt by the Property Trustee of such election notice
and (iii) shall be conditioned upon such Depositor Affiliate having delivered
or
caused to be delivered to the Property Trustee or its designee the Preferred
Securities that are the subject of such election by 10:00 a.m. New York time,
on
the Distribution Date on which such exchange is to occur. After the exchange,
such Preferred Securities will be canceled and will no longer be deemed to
be
Outstanding and all rights of the Depositor Affiliate with respect to such
Preferred Securities will cease.
(b)
In
the
case of an exchange described in
Section
4.9(a)
,
the
Property Trustee on behalf of the Trust will, on the date of such exchange,
exchange Notes having a principal amount equal to a proportional amount of
the
aggregate Liquidation Amount of the Outstanding Common Securities, based on
the
ratio of the aggregate Liquidation Amount of the Preferred Securities exchanged
pursuant to
Section
4.9(a)
divided
by the aggregate Liquidation Amount of the Preferred Securities Outstanding
immediately prior to such exchange, for such proportional amount of Common
Securities held by the Depositor (which contemporaneously shall be canceled
and
no longer be deemed to be Outstanding);
provided
,
that
the Depositor delivers or causes to be delivered to the Property Trustee or
its
designee the required amount of Common Securities to be exchanged by 10:00
a.m.
New York time, on the Distribution Date on which such exchange is to
occur.
SECTION
4.10.
Calculation
Agent.
(a)
The
Calculation Agent may be removed by the Administrative Trustees at any time.
Notwithstanding the foregoing, the Property Trustee shall initially and, subject
to the immediately following sentence, for so long as it holds any of the Notes,
be the Calculation Agent for purposes of determining LIBOR for each Distribution
Date. If the Calculation Agent is unable or unwilling to act as such or is
removed by the Administrative Trustees, the Administrative Trustees will
promptly appoint as a replacement Calculation Agent the London office of a
leading bank which is engaged in transactions in three-month Eurodollar deposits
in the international Eurodollar market and which does not control or is not
controlled by or under common control with the Administrative Trustee or its
Affiliates. The Calculation Agent may not resign its duties without a successor
having been duly appointed.
(b)
The
Calculation Agent shall be required to agree that, as soon as possible after
11:00 a.m. (London time) on each LIBOR Determination Date, but in no event
later
than 11:00 a.m. (London time) on the Business Day immediately following each
LIBOR Determination Date, the Calculation Agent will calculate the interest
rate
(the Interest Payment shall be rounded to the nearest cent, with half a cent
being rounded upwards) for the related Distribution Date, and will communicate
such rate and amount to the Depositor, the Administrative Trustees, the Note
Trustee, each Paying Agent and the Depositary. The Calculation Agent will also
specify to the Administrative Trustees the quotations upon which the foregoing
rates and amounts are based and, in any event, the Calculation Agent shall
notify the Administrative Trustees before 5:00 p.m. (London time) on each LIBOR
Determination Date that either: (i) it has determined or is in the process
of determining the foregoing rates and amounts or (ii) it has not
determined and is not in the process of determining the foregoing rates and
amounts, together with its reasons therefor. The Calculation Agent’s
determination of the foregoing rates and amounts for any Distribution Date
will
(in the absence of manifest error) be final and binding upon all parties. For
the sole purpose of calculating the interest rate for the Trust Securities,
“Business Day” shall be defined as any day on which dealings in deposits in
Dollars are transacted in the London interbank market.
SECTION
4.11.
Certain
Accounting Matters.
(a)
At
all
times during the existence of the Trust, the Administrative Trustees shall
keep,
or cause to be kept at the principal office of the Trust in the United States,
as defined for purposes of Treasury Regulations section 301.7701-7, full books
of account, records and supporting documents, which shall reflect in reasonable
detail each transaction of the Trust. The books of account shall be maintained
on the accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied.
(b)
The
Administrative Trustees shall either (i) if the Depositor is then subject to
such reporting requirements, cause each Form 10-K and Form 10-Q prepared by
the
Depositor and filed with the Commission in accordance with the Exchange Act
to
be delivered to each Holder, with a copy to the Property Trustee, within thirty
(30) days after the filing thereof or (ii) cause to be prepared at the
principal office of the Trust in the United States, as defined for purposes
of
Treasury Regulations section 301.7701-7, and delivered to each of the Holders,
with a copy to the Property Trustee, within ninety (90) days after the end
of
each Fiscal Year, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.
(c)
If
the
Depositor intends to file its annual and quarterly information with the
Commission in electronic form pursuant to Regulation S-T of the Commission
using
the Commission’s Electronic Data Gathering, Analysis and Retrieval
(“
EDGAR
”)
system, the Administrative Trustees shall notify the Property Trustee in the
manner prescribed herein of each such annual and quarterly filing. The Property
Trustee is hereby authorized and directed to access the EDGAR system for
purposes of retrieving the financial information so filed. Compliance with
the
foregoing shall constitute delivery by the Administrative Trustees of its
financial statements to the Property Trustee in compliance with the provisions
of Section 314(a) of the Trust Indenture Act, if applicable. The Property
Trustee shall have no duty to search for or obtain any electronic or other
filings that the Depositor makes with the Commission, regardless of whether
such
filings are periodic, supplemental or otherwise. Delivery of reports,
information and documents to the Property Trustee pursuant to this
Section
4.11(c)
shall be
solely for purposes of compliance with this
Section
4.11
and, if
applicable, with Section 314(a) of the Trust Indenture Act. The Property
Trustee’s receipt of such reports, information and documents shall not
constitute notice to it of the content thereof or any matter determinable from
the content thereof, including the Depositor’s compliance with any of its
covenants hereunder, as to which the Property Trustee is entitled to rely upon
Officers’ Certificates.
(d)
The
Trust
shall maintain one or more bank accounts in the United States, as defined for
purposes of Treasury Regulations section 301.7701-7, in the name and for the
sole benefit of the Trust;
provided,
however,
that all
payments of funds in respect of the Notes held by the Property Trustee shall
be
made directly to the Payment Account and no other funds of the Trust shall
be
deposited in the Payment Account. The sole signatories for such accounts
(including the Payment Account) shall be designated by the Property
Trustee.
ARTICLE
V
Securities
SECTION
5.1.
Initial
Ownership.
Upon
the
creation of the Trust and the contribution by the Depositor referred to in
Section 2.3
and
until the issuance of the Trust Securities, and at any time during which no
Trust Securities are Outstanding, the Depositor shall be the sole beneficial
owner of the Trust.
SECTION
5.2.
Authorized
Trust Securities.
The
Trust
shall be authorized to issue one series of Preferred Securities having an
aggregate Liquidation Amount of One Hundred Million Dollars ($100,000,000)
and
one series of Common Securities having an aggregate Liquidation Amount of Three
Million One Hundred Thousand Dollars ($3,100,000).
SECTION
5.3.
Issuance
of the Common Securities; Subscription and Purchase of Notes.
On
the
Closing Date, an Administrative Trustee, on behalf of the Trust, shall execute
and deliver to the Depositor Common Securities Certificates, registered in
the
name of the Depositor, evidencing an aggregate of Three Thousand One Hundred
(3,100) Common Securities having an aggregate Liquidation Amount of Three
Million One Hundred Thousand Dollars ($3,100,000), against receipt by the Trust
of the aggregate purchase price of such Common Securities of Three Million
One
Hundred Thousand Dollars ($3,100,000). Contemporaneously therewith and with
the
sale by the Trust to the Holders of an aggregate of One Hundred Thousand
(100,000) Preferred Securities having an aggregate Liquidation Amount of One
Hundred Million Dollars ($100,000,000), an Administrative Trustee shall direct
the purchase, on behalf of the Trust, from the Depositor Notes, to be registered
in the name of the Property Trustee on behalf of the Trust and having an
aggregate principal amount equal to One Hundred Three Million One Hundred
Thousand Dollars ($103,100,000), and, in satisfaction of the purchase price
for
such Notes, the Property Trustee, on behalf of the Trust, shall deliver to
the
Depositor the sum of One Hundred Three Million One Hundred Thousand Dollars
($103,100,000) (being the aggregate amount paid by the Holders for the Preferred
Securities, and the amount paid by the Depositor for the Common
Securities).
SECTION
5.4.
The
Securities Certificates.
(a)
The
Preferred Securities Certificates shall be issued in minimum denominations
of
$100,000 Liquidation Amount and integral multiples of $1,000 in excess thereof,
and the Common Securities Certificates shall be issued in minimum denominations
of $10,000 Liquidation Amount and integral multiples of $1,000 in excess
thereof. The Securities Certificates shall be executed on behalf of the Trust
by
manual or facsimile signature of at least one Administrative Trustee. Securities
Certificates bearing the signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign such Securities
Certificates on behalf of the Trust shall be validly issued and entitled to
the
benefits of this Trust Agreement, notwithstanding that such individuals or
any
of them shall have ceased to be so authorized prior to the delivery of such
Securities Certificates or did not have such authority at the date of delivery
of such Securities Certificates.
(b)
On
the
Closing Date, upon the written order of an authorized officer of the Depositor,
the Administrative Trustees shall cause Securities Certificates to be executed
on behalf of the Trust and delivered, without further corporate action by the
Depositor, in authorized denominations.
(c)
The
Preferred Securities issued to QIBs/QPs shall be, except as provided in
Section
5.6
,
Book-Entry Preferred Securities issued in the form of one or more Global
Preferred Securities registered in the name of the Depositary, or its nominee
and deposited with the Depositary or a custodian for the Depositary for credit
by the Depositary to the respective accounts of the Depositary Participants
thereof (or such other accounts as they may direct). The Preferred Securities
issued to a Person other than a QIB/QP shall be issued in the form of Definitive
Preferred Securities Certificates.
(d)
A
Preferred Security shall not be valid until authenticated by the manual
signature of an authorized signatory of the Property Trustee. Such signature
shall be conclusive evidence that the Preferred Security has been authenticated
under this Trust Agreement. Upon written order of the Trust signed by one
Administrative Trustee, the Property Trustee shall authenticate the Preferred
Securities for original issue. The Property Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Preferred Securities. A Common Security need not be so
authenticated and shall be valid upon execution by one or more Administrative
Trustees. The form of this certificate of authentication can be found in
Section
5.13
.
SECTION
5.5.
Rights
of Holders.
(a)
The
Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Holders against payment of the purchase price therefor will be
fully paid and non-assessable by the Trust. Except as provided in
Section
5.11(b)
,
the
Holders of the Trust Securities, in their capacities as such, shall be entitled
to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State
of Delaware.
SECTION
5.6.
Book-Entry
Preferred Securities.
(a)
A
Global
Preferred Security may be exchanged, in whole or in part, for Definitive
Preferred Securities Certificates registered in the names of the Owners only
if
such exchange complies with
Section
5.7
and
(i) the Depositary advises the Administrative Trustees and the Property
Trustee in writing that the Depositary is no longer willing or able properly
to
discharge its responsibilities with respect to the Global Preferred Security,
and no qualified successor is appointed by the Administrative Trustees within
ninety (90) days of receipt of such notice, (ii) the Depositary ceases to
be a clearing agency registered under the Exchange Act and the Administrative
Trustees fail to appoint a qualified successor within ninety (90) days of
obtaining knowledge of such event, (iii) the Administrative Trustees at their
option advise the Property Trustee in writing that the Trust elects to terminate
the book-entry system through the Depositary or (iv) a Note Event of
Default has occurred and is continuing. Upon the occurrence of any event
specified in clause (i), (ii), (iii) or (iv) above, the Administrative Trustees
shall notify the Depositary and instruct the Depositary to notify all Owners
of
Book-Entry Preferred Securities, the Delaware Trustee and the Property Trustee
of the occurrence of such event and of the availability of the Definitive
Preferred Securities Certificates to Owners of the Preferred Securities
requesting the same. Upon the issuance of Definitive Preferred Securities
Certificates, the Trustees shall recognize the Holders of the Definitive
Preferred Securities Certificates as Holders. Notwithstanding the foregoing,
if
an Owner of a beneficial interest in a Global Preferred Security wishes at
any
time to transfer an interest in such Global Preferred Security to a Person
other
than a QIB/QP, such transfer shall be effected, subject to the Applicable
Depositary Procedures, in accordance with the provisions of this
Section
5.6
and
Section
5.7
,
and the
transferee shall receive a Definitive Preferred Securities Certificate in
connection with such transfer. A holder of a Definitive Preferred Securities
Certificate that is a QIB/QP may, upon request and in accordance with the
provisions of this
Section
5.6
and
Section
5.7
,
exchange such Definitive Preferred Securities Certificate for a beneficial
interest in a Global Preferred Security.
(b)
If
any
Global Preferred Security is to be exchanged for Definitive Preferred Securities
Certificates or canceled in part, or if any Definitive Preferred Securities
Certificate is to be exchanged in whole or in part for any Global Preferred
Security, then either (i) such Global Preferred Security shall be so surrendered
for exchange or cancellation as provided in this
Article
V
or (ii)
the aggregate Liquidation Amount represented by such Global Preferred Security
shall be reduced, subject to
Section
5.4
,
or
increased by an amount equal to the Liquidation Amount represented by that
portion of the Global Preferred Security to be so exchanged or canceled, or
equal to the Liquidation Amount represented by such Definitive Preferred
Securities Certificates to be so exchanged for any Global Preferred Security,
as
the case may be, by means of an appropriate adjustment made on the records
of
the Securities Registrar, whereupon the Property Trustee, in accordance with
the
Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender to the Administrative Trustees or the Securities
Registrar of any Global Preferred Security or Securities by the Depositary,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates
in
accordance with the instructions of the Depositary. None of the Securities
Registrar or the Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(c)
Every
Definitive Preferred Securities Certificate executed and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof shall be executed and delivered in
the
form of, and shall be, a Global Preferred Security, unless such Definitive
Preferred Securities Certificate is registered in the name of a Person other
than the Depositary for such Global Preferred Security or a nominee
thereof.
(d)
The
Depositary or its nominee, as registered owner of a Global Preferred Security,
shall be the Holder of such Global Preferred Security for all purposes under
this Trust Agreement and the Global Preferred Security, and Owners with respect
to a Global Preferred Security shall hold such interests pursuant to the
Applicable Depositary Procedures. The Securities Registrar and the Trustees
shall be entitled to deal with the Depositary for all purposes of this Trust
Agreement relating to the Global Preferred Securities (including the payment
of
the Liquidation Amount of and Distributions on the Book-Entry Preferred
Securities represented thereby and the giving of instructions or directions
by
Owners of Book-Entry Preferred Securities represented thereby and the giving
of
notices) as the sole Holder of the Book-Entry Preferred Securities represented
thereby and shall have no obligations to the Owners thereof. None of the
Trustees nor the Securities Registrar shall have any liability in respect of
any
transfers effected by the Depositary.
(e)
The
rights of the Owners of the Book-Entry Preferred Securities shall be exercised
only through the Depositary and shall be limited to those established by law,
the Applicable Depositary Procedures and agreements between such Owners and
the
Depositary and/or the Depositary Participants;
provided,
that
solely for the purpose of determining whether the Holders of the requisite
amount of Preferred Securities have voted on any matter provided for in this
Trust Agreement, to the extent that Preferred Securities are represented by
a
Global Preferred Security, the Trustees may conclusively rely on, and shall
be
fully protected in relying on, any written instrument (including a proxy)
delivered to the Property Trustee by the Depositary setting forth the Owners’
votes or assigning the right to vote on any matter to any other Persons either
in whole or in part. To the extent that Preferred Securities are represented
by
a Global Preferred Security, the initial Depositary will make book-entry
transfers among the Depositary Participants and receive and transmit payments
on
the Preferred Securities that are represented by a Global Preferred Security
to
such Depositary Participants, and none of the Depositor or the Trustees shall
have any responsibility or obligation with respect thereto.
(f)
To
the
extent that a notice or other communication to the Holders is required under
this Trust Agreement, for so long as Preferred Securities are represented by
a
Global Preferred Security, the Trustees shall give all such notices and
communications to the Depositary, and shall have no obligations to the
Owners.
SECTION
5.7.
Registration
of Transfer and Exchange of Preferred Securities Certificates.
(a)
The
Property Trustee shall keep or cause to be kept, at the Corporate Trust Office,
a register or registers (the
“Securities
Register
”)
in
which the registrar and transfer agent with respect to the Trust Securities
(the
“Securities
Registrar
”),
subject to such reasonable regulations as it may prescribe, shall provide for
the registration of Preferred Securities Certificates and Common Securities
Certificates and registration of transfers and exchanges of Preferred Securities
Certificates as herein provided. The Person acting as the Property Trustee
shall
at all times also be the Securities Registrar. The provisions of
Article
VIII
shall
apply to the Property Trustee in its role as Securities Registrar.
(b)
Subject
to
Section
5.7(d)
,
upon
surrender for registration of transfer of any Preferred Securities Certificate
at the office or agency maintained pursuant to
Section 5.7(f)
,
the
Administrative Trustees or any one of them shall execute by manual or facsimile
signature and deliver to the Property Trustee, and the Property Trustee upon
written order of the Trust signed by one Administrative Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Preferred Securities Certificates in authorized
denominations of a like aggregate Liquidation Amount as may be required by
this
Trust Agreement dated the date of execution by such Administrative Trustee
or
Trustees. At the option of a Holder, Preferred Securities Certificates may
be
exchanged for other Preferred Securities Certificates in authorized
denominations and of a like aggregate Liquidation Amount upon surrender of
the
Preferred Securities Certificate to be exchanged at the office or agency
maintained pursuant to
Section
5.7(f)
.
Whenever any Preferred Securities Certificates are so surrendered for exchange,
the Administrative Trustees or any one of them shall execute by manual or
facsimile signature and deliver to the Property Trustee, and the Property
Trustee upon written order of the Trust signed by one Administrative Trustee
shall authenticate and deliver, the Preferred Securities Certificates that
the
Holder making the exchange is entitled to receive.
(c)
The
Securities Registrar shall not be required, (i) to issue, register the
transfer of or exchange any Preferred Security during a period beginning at
the
opening of business fifteen (15) days before the day of selection for redemption
of such Preferred Securities pursuant to
Article
IV
and
ending at the close of business on the day of mailing of the notice of
redemption or (ii) to register the transfer of or exchange any Preferred
Security so selected for redemption in whole or in part, except, in the case
of
any such Preferred Security to be redeemed in part, any portion thereof not
to
be redeemed.
(d)
Every
Preferred Securities Certificate presented or surrendered for registration
of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar duly
executed by the Holder or such Holder’s attorney duly authorized in writing and
accompanied by a certificate of the transferee substantially in the form set
forth as
Exhibit
E
hereto.
(e)
No
service charge shall be made for any registration of transfer or exchange of
Preferred Securities Certificates, but the Property Trustee on behalf of the
Trust may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Preferred Securities Certificates.
(f)
The
Administrative Trustees shall designate an office or offices or agency or
agencies where Preferred Securities Certificates may be surrendered for
registration of transfer or exchange and initially designate the Corporate
Trust
Office as its office and agency for such purposes. The Administrative Trustees
shall give prompt written notice to the Depositor, the Property Trustee and
to
the Holders of any change in the location of any such office or
agency.
(g)
The
Preferred Securities may only be transferred to (i) the Depositor, (ii) a
QIB/QP, (iii) outside the United States in an offshore transaction in accordance
with Regulation S under the Securities Act, (iv) pursuant to an effective
registration statement under the Securities Act or (v) pursuant to another
exemption from registration under the Securities Act.
(h)
Neither
the Trustee nor the Securities Registrar shall be responsible for ascertaining
whether any transfer hereunder complies with the registration provisions of
or
any exemptions from the Securities Act, applicable state securities laws or
the
applicable laws of any other jurisdiction, ERISA, the Code or the Investment
Company Act; provided, that if a certificate is specifically required by the
express terms of this
Section
5.7
to be
delivered to the Property Trustee or the Securities Registrar by a Holder or
transferee of a Preferred Security, the Property Trustee and the Securities
Registrar shall be under a duty to receive and examine the same to determine
whether or not the certificate substantially conforms on its face to the
requirements of this Trust Agreement and shall promptly notify the party
delivering the same if such certificate does not comply with such
terms.
SECTION
5.8.
Mutilated,
Destroyed, Lost or Stolen Securities Certificates.
(a)
If
any
mutilated Securities Certificate shall be surrendered to the Securities
Registrar together with such security or indemnity as may be required by the
Securities Registrar to save each of the Trustees harmless, the Administrative
Trustees, or any one of them, on behalf of the Trust, shall execute and make
available for delivery and, with respect to Preferred Securities, the Property
Trustee or an authenticating agent shall authenticate, in exchange therefor
a
new Securities Certificate of like class, tenor and denomination.
(b)
If
the
Securities Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Securities Certificate and there shall be
delivered to the Securities Registrar such security or indemnity as may be
required by it to save each of the Trustees harmless, then in the absence of
notice that such Securities Certificate shall have been acquired by a protected
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust, shall execute and make available for delivery, and, with respect to
Preferred Securities, the Property Trustee upon written order of the Trust
signed by one Administrative Trustee shall authenticate, in exchange for or
in
lieu of any such destroyed, lost or stolen Securities Certificate, a new
Securities Certificate of like class, tenor and denomination.
(c)
In
connection with the issuance of any new Securities Certificate under this
Section 5.8
,
the
Administrative Trustees or the Securities Registrar may require the payment
of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
(d)
Any
duplicate Securities Certificate issued pursuant to this
Section 5.8
shall
constitute conclusive evidence of an undivided beneficial interest in the assets
of the Trust corresponding to that evidenced by the mutilated, lost, stolen
or
destroyed Securities Certificate, as if originally issued, whether or not the
lost, stolen or destroyed Securities Certificate shall be found at any
time.
(e)
If
any
such mutilated, destroyed, lost or stolen Securities Certificate has become
or
is about to become due and payable, the Depositor in its discretion may provide
the Property Trustee or Paying Agent, as applicable, with the funds to pay
such
Trust Security and upon receipt of such funds, the Property Trustee or Paying
Agent, as applicable, shall pay such Trust Security instead of issuing a new
Securities Certificate.
(f)
The
provisions of this
Section
5.8
are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement of mutilated, destroyed, lost or stolen
Securities Certificates.
SECTION
5.9.
Persons
Deemed Holders.
The
Trustees and the Securities Registrar shall each treat the Person in whose
name
any Securities Certificate shall be registered in the Securities Register as
the
owner of such Securities Certificate for the purpose of receiving Distributions
and for all other purposes whatsoever, and none of the Trustees and the
Securities Registrar shall be bound by any notice to the contrary.
SECTION
5.10.
Cancellation.
All
Preferred Securities Certificates surrendered for registration of transfer
or
exchange or for payment shall, if surrendered to any Person other than the
Property Trustee, be delivered to the Property Trustee, and any such Preferred
Securities Certificates and Preferred Securities Certificates surrendered
directly to the Property Trustee for any such purpose shall be promptly canceled
by it. The Administrative Trustees may at any time deliver to the Property
Trustee for cancellation any Preferred Securities Certificates previously
delivered hereunder that the Administrative Trustees may have acquired in any
manner whatsoever, and all Preferred Securities Certificates so delivered shall
be promptly canceled by the Property Trustee. No Preferred Securities
Certificates shall be executed and delivered in lieu of or in exchange for
any
Preferred Securities Certificates canceled as provided in this
Section
5.10
,
except
as expressly permitted by this Trust Agreement. All canceled Preferred
Securities Certificates shall be retained by the Property Trustee in accordance
with its customary practices.
SECTION
5.11.
Ownership
of Common Securities by Depositor.
(a)
On
the
Closing Date, the Depositor shall acquire, and thereafter shall retain,
beneficial and record ownership of the Common Securities. Neither the Depositor
nor any successor Holder of the Common Securities may transfer less than all
the
Common Securities, and the Depositor or any such successor Holder may transfer
the Common Securities only (i) in connection with a consolidation or merger
of the Depositor into another Person, or any conveyance, transfer or lease
by
the Depositor of its properties and assets substantially as an entirety to
any
Person (in which event such Common Securities will be transferred to such
surviving entity, transferee or lessee, as the case may be), pursuant to
Section 8.1 of the Indenture or (ii) to the Depositor or an Affiliate
of the Depositor, in each such case in compliance with applicable law (including
the Securities Act, and applicable state securities and blue sky laws). To
the
fullest extent permitted by law, any attempted transfer of the Common Securities
other than as set forth in the immediately preceding sentence shall be void.
The
Administrative Trustees shall cause each Common Securities Certificate issued
to
the Depositor to contain a legend stating substantially “THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE
TRUST AGREEMENT.”
(b)
Any
Holder of the Common Securities shall be liable for the debts and obligations
of
the Trust in the manner and to the extent set forth with respect to the
Depositor and agrees that it shall be subject to all liabilities to which the
Depositor may be subject and, prior to becoming such a Holder, shall deliver
to
the Administrative Trustees an instrument of assumption satisfactory to such
Trustees.
SECTION
5.12.
Restricted
Legends.
(a)
Each
Preferred Security Certificate shall bear a legend in substantially the
following form:
“
[
IF
THIS SECURITY IS A GLOBAL SECURITY INSERT:
THIS
PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC
OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT,
AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS
PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC
TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS
THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO
REDWOOD CAPITAL TRUST I
OR
ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
]
THE
PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND SUCH PREFERRED SECURITIES OR ANY INTEREST
THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY
PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED
SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF
THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE
HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR
THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES
MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, (II)
TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) AND A “QUALIFIED PURCHASER”
(AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED), (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) PURSUANT
TO
ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND (B) THE HOLDER
WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE
PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY
INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS
THAN
$100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED
SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
PRINCIPAL OF OR INTEREST ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN,
AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN
SUCH PREFERRED SECURITIES.
THE
HOLDER OF THIS PREFERRED SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN
EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF
1974, AS AMENDED (
“ERISA”
),
OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”
)
(EACH A
“PLAN”
),
OR AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY
ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN UNLESS SUCH
ACQUIROR OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-28,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS ACQUISITION AND HOLDING
OF
THIS PREFERRED SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION
406 OF ERISA OR SECTION 2975 OF THE CODE WITH RESPECT TO SUCH ACQUISITION OR
HOLDING. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR OTHER PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE
CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH
EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY
OTHER
PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH ACQUISITION OR HOLDING WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF
THE CODE FOR WHICH FULL EXEMPTION RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.”
THIS
OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE
“
FDIC
”
)”
(b)
The
above
legend shall not be removed from any of the Preferred Securities Certificates
unless there is delivered to the Property Trustee and the Depositor satisfactory
evidence, which may include an Opinion of Counsel, as may be reasonably required
to ensure that any future transfers thereof may be made without restriction
under the provisions of the Securities Act and other applicable law. Upon
provision of such satisfactory evidence, one or more of the Administrative
Trustees on behalf of the Trust shall execute and deliver to the Property
Trustee, and the Property Trustee shall deliver, at the written direction of
the
Administrative Trustees and the Depositor, Preferred Securities Certificates
that do not bear the legend.
SECTION
5.13.
Form
of Certificate of Authentication.
The
Property Trustee’s certificate of authentication shall be in substantially the
following form:
This
is
one of the Preferred Securities referred to in the within-mentioned Trust
Agreement.
|
|
|
Dated:
|
The
Bank of New
York Trust Company
,
National
Association
,
not in its individual capacity, but solely as Property
Trustee
|
|
|
|
|
By:
|
|
|
Authorized
signatory
|
ARTICLE
VI
Meetings;
Voting; Acts of Holders
SECTION
6.1.
Notice
of Meetings.
Notice
of
all meetings of the Holders of the Preferred Securities, stating the time,
place
and purpose of the meeting, shall be given by the Property Trustee pursuant
to
Section 10.8
to each
Holder of Preferred Securities, at such Holder’s registered address, at least
fifteen (15) days and not more than ninety (90) days before the meeting. At
any
such meeting, any business properly before the meeting may be so considered
whether or not stated in the notice of the meeting. Any adjourned meeting may
be
held as adjourned without further notice.
SECTION
6.2.
Meetings
of Holders of the Preferred Securities.
(a)
No
annual
meeting of Holders is required to be held. The Property Trustee, however, shall
call a meeting of the Holders of the Preferred Securities to vote on any matter
upon the written request of the Holders of at least twenty-five percent (25%)
in
aggregate Liquidation Amount of the Outstanding Preferred Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Preferred Securities to vote
on
any matters as to which such Holders are entitled to vote.
(b)
The
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of the Holders of the Preferred Securities.
(c)
If
a
quorum is present at a meeting, an affirmative vote by the Holders present,
in
person or by proxy, holding Preferred Securities representing at least a
Majority in Liquidation Amount of the Preferred Securities held by the Holders
present, either in person or by proxy, at such meeting shall constitute the
action of the Holders of the Preferred Securities, unless this Trust Agreement
requires a lesser or greater number of affirmative votes.
SECTION
6.3.
Voting
Rights.
Holders
shall be entitled to one vote for each $10,000 of Liquidation Amount represented
by their Outstanding Trust Securities in respect of any matter as to which
such
Holders are entitled to vote.
SECTION
6.4.
Proxies,
Etc.
At
any
meeting of Holders, any Holder entitled to vote thereat may vote by proxy,
provided
,
that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to
the
time at which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one
or
more officers of the Property Trustee. Only Holders of record shall be entitled
to vote. When Trust Securities are held jointly by several Persons, any one
of
them may vote at any meeting in person or by proxy in respect of such Trust
Securities, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Trust Securities. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. No proxy shall be
valid more than three years after its date of execution.
SECTION
6.5.
Holder
Action by Written Consent.
Any
action that may be taken by Holders at a meeting may be taken without a meeting
and without prior notice if Holders holding at least a Majority in Liquidation
Amount of all Preferred Securities entitled to vote in respect of such action
(or such lesser or greater proportion thereof as shall be required by any other
provision of this Trust Agreement) shall consent to the action in writing;
provided
,
that
notice of such action is promptly provided to the Holders of Preferred
Securities that did not consent to such action. Any action that may be taken
by
the Holders of all the Common Securities may be taken without a meeting and
without prior notice if such Holders shall consent to the action in
writing.
SECTION
6.6.
Record
Date for Voting and Other Purposes.
Except
as
provided in
Section
6.10(a)
,
for the
purposes of determining the Holders who are entitled to notice of and to vote
at
any meeting or to act by written consent, or to participate in any distribution
on the Trust Securities in respect of which a record date is not otherwise
provided for in this Trust Agreement, or for the purpose of any other action,
the Administrative Trustees may from time to time fix a date, not more than
ninety (90) days prior to the date of any meeting of Holders or the payment
of a
Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such
purposes.
SECTION
6.7.
Acts
of Holders.
(a)
Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Trust Agreement to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
thereof duly appointed in writing; and, except as otherwise expressly provided
herein, such action shall become effective when such instrument or instruments
are delivered to an Administrative Trustee. Such instrument or instruments
(and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the
“Act
”
of
the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any
purpose of this Trust Agreement and conclusive in favor of the Trustees, if
made
in the manner provided in this
Section
6.7
.
(b)
The
fact
and date of the execution by any Person of any such instrument or writing may
be
proved by the affidavit of a witness of such execution or by a certificate
of a
notary public or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a signer
acting in a capacity other than such signer’s individual capacity, such
certificate or affidavit shall also constitute sufficient proof of such signer’s
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that any Trustee receiving the same deems sufficient.
(c)
The
ownership of Trust Securities shall be proved by the Securities
Register.
(d)
Any
request, demand, authorization, direction, notice, consent, waiver or other
Act
of the Holder of any Trust Security shall bind every future Holder of the same
Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in
respect of anything done, omitted or suffered to be done by the Trustees, the
Administrative Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e)
Without
limiting the foregoing, a Holder entitled hereunder to take any action hereunder
with regard to any particular Trust Security may do so with regard to all or
any
part of the Liquidation Amount of such Trust Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such Liquidation Amount.
(f)
If
any
dispute shall arise among the Holders or the Trustees with respect to the
authenticity, validity or binding nature of any request, demand, authorization,
direction, notice, consent, waiver or other Act of such Holder or Trustee under
this
Article
VI
,
then
the determination of such matter by the Property Trustee shall be conclusive
with respect to such matter.
SECTION
6.8.
Inspection
of Records.
Upon
reasonable written notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by any Holder
during normal business hours for any purpose reasonably related to such Holder’s
interest as a Holder.
SECTION
6.9.
Limitations
on Voting Rights.
(a)
Except
as
expressly provided in this Trust Agreement and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to
vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Securities Certificates, be
construed so as to constitute the Holders from time to time as partners or
members of an association.
(b)
So
long
as any Notes are held by the Property Trustee on behalf of the Trust, the
Property Trustee shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee, or
exercise any trust or power conferred on the Property Trustee with respect
to
the Notes, (ii) waive any past default that may be waived under
Section 5.13 of the Indenture or waive compliance with any covenant or
condition under Section 10.7 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Notes shall be
due
and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Notes, where such consent shall be required, without,
in
each case, obtaining the prior approval of the Holders of at least a Majority
in
Liquidation Amount of the Preferred Securities;
provided,
that
where a consent under the Indenture would require the consent of each holder
of
Notes (or each Holder of Preferred Securities) affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent of
each
Holder of Preferred Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities, except by a subsequent vote of the Holders of the Preferred
Securities. In addition to obtaining the foregoing approvals of the Holders
of
the Preferred Securities, prior to taking any of the foregoing actions, the
Property Trustee shall, at the expense of the Depositor, obtain an Opinion
of
Counsel experienced in such matters to the effect that such action shall not
cause the Trust to be taxable as a corporation or classified as other than
a
grantor trust for United States federal income tax purposes.
(c)
If
any
proposed amendment to the Trust Agreement provides for, or the Trustees
otherwise propose to effect, (i) any action that would adversely affect in
any material respect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise
or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the terms of this Trust Agreement, then the Holders of Outstanding
Preferred Securities as a class will be entitled to vote on such amendment
or
proposal and such amendment or proposal shall not be effective except with
the
approval of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities. Notwithstanding any other provision of this Trust
Agreement, no amendment to this Trust Agreement may be made if, as a result
of
such amendment, it would cause the Trust to be taxable as a corporation or
classified as other than a grantor trust for United States federal income tax
purposes.
SECTION
6.10.
Acceleration
of Maturity; Rescission of Annulment; Waivers of Past
Defaults.
(a)
For
so
long as any Preferred Securities remain Outstanding, if, upon a Note Event
of
Default, the Note Trustee fails or the holders of not less than twenty-five
percent (25%) in principal amount of the outstanding Notes fail to declare
the
principal of all of the Notes to be immediately due and payable, the Holders
of
at least twenty-five percent (25%) in Liquidation Amount of the Preferred
Securities then Outstanding shall have the right to make such declaration by
a
notice in writing to the Property Trustee, the Depositor and the Note Trustee.
At any time after a declaration of acceleration with respect to the Notes has
been made and before a judgment or decree for payment of the money due has
been
obtained by the Note Trustee as provided in the Indenture, the Holders of at
least a Majority in Liquidation Amount of the Preferred Securities, by written
notice to the Property Trustee, the Depositor and the Note Trustee, may rescind
and annul such declaration and its consequences if:
(i)
the
Depositor has paid or deposited with the Note Trustee a sum sufficient to
pay:
(A)
all
overdue installments of interest on all of the Notes;
(B)
any
accrued Additional Interest on all of the Notes;
(C)
the
principal of and premium, if any, on any Notes that have become due otherwise
than by such declaration of acceleration and interest and Additional Interest
thereon at the rate borne by the Notes; and
(D)
all
sums
paid or advanced by the Note Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the Note Trustee, the
Property Trustee and their agents and counsel; and
(ii)
all
Note
Events of Default, other than the non-payment of the principal of the Notes
that
has become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
Upon
receipt by the Property Trustee of written notice requesting such an
acceleration, or rescission and annulment thereof, by Holders of any part of
the
Preferred Securities, a record date shall be established for determining Holders
of Outstanding Preferred Securities entitled to join in such notice, which
record date shall be at the close of business on the day the Property Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date;
provided
,
that
unless such declaration of acceleration, or rescission and annulment, as the
case may be, shall have become effective by virtue of the requisite percentage
having joined in such notice prior to the day that is ninety (90) days after
such record date, such notice of declaration of acceleration, or rescission
and
annulment, as the case may be, shall automatically and without further action
by
any Holder be canceled and of no further effect. Nothing in this paragraph
shall
prevent a Holder, or a proxy of a Holder, from giving, after expiration of
such
ninety (90)-day period, a new written notice of declaration of acceleration,
or
rescission and annulment thereof, as the case may be, that is identical to
a
written notice that has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to
the
provisions of this
Section 6.10(a)
.
(b)
For
so
long as any Preferred Securities remain Outstanding, to the fullest extent
permitted by law and subject to the terms of this Trust Agreement and the
Indenture, upon a Note Event of Default specified in paragraph (a) or (b) of
Section 5.1 of the Indenture, any Holder of Preferred Securities shall have
the right to institute a proceeding directly against the Depositor, pursuant
to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of
any amounts payable in respect of Notes having an aggregate principal amount
equal to the aggregate Liquidation Amount of the Preferred Securities of such
Holder. Except as set forth in
Section 6.10(a)
and this
Section 6.10(b)
,
the
Holders of Preferred Securities shall have no right to exercise directly any
right or remedy available to the holders of, or in respect of, the
Notes.
(c)
Notwithstanding
paragraphs (a) and (b) of this
Section
6.10
,
the
Holders of at least a Majority in Liquidation Amount of the Preferred Securities
may, on behalf of the Holders of all the Preferred Securities, waive any Note
Event of Default, except any Note Event of Default arising from the failure
to
pay any principal of or premium, if any, or interest (including any Additional
Interest) on the Notes (unless such Note Event of Default has been cured and
a
sum sufficient to pay all matured installments of interest and all principal
and
premium, if any, on all Notes due otherwise than by acceleration has been
deposited with the Note Trustee) or a Note Event of Default in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Note. Upon any such
waiver, such Note Event of Default shall cease to exist and any Note Event
of
Default arising therefrom shall be deemed to have been cured for every purpose
of the Indenture; but no such waiver shall affect any subsequent Note Event
of
Default or impair any right consequent thereon.
(d)
Notwithstanding
paragraphs (a) and (b) of this
Section
6.10
,
the
Holders of at least a Majority in Liquidation Amount of the Preferred Securities
may, on behalf of the Holders of all the Preferred Securities, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Trust Agreement, but
no
such waiver shall extend to any subsequent or other Event of Default or impair
any right consequent thereon.
(e)
The
Holders of a Majority in Liquidation Amount of the Preferred Securities shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee in respect of this Trust
Agreement or the Notes or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
provided,
that,
subject to
Sections
8.5
and
8.7
,
the
Property Trustee shall have the right to decline to follow any such direction
if
the Property Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Property Trustee in good faith
shall, by an officer or officers of the Property Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability
or
be unduly prejudicial to the rights of Holders not party to such direction,
and
provided,
further,
that
nothing in this Trust Agreement shall impair the right of the Property Trustee
to take any action deemed proper by the Property Trustee and which is not
inconsistent with such direction.
ARTICLE
VII
Representations
and Warranties
SECTION
7.1.
Representations
and Warranties of the Property Trustee and the Delaware
Trustee.
The
Property Trustee and the Delaware Trustee, each severally on behalf of and
as to
itself, hereby represents and warrants for the benefit of the Depositor and
the
Holders that:
(a)
the
Property Trustee is a national banking association, duly organized and validly
existing under the laws of the United States of America;
(b)
the
Property Trustee has full corporate power, authority and legal right to execute,
deliver and perform its obligations under this Trust Agreement and has taken
all
necessary action to authorize the execution, delivery and performance by it
of
this Trust Agreement;
(c)
the
Delaware Trustee is a Delaware banking corporation, duly incorporated and
validly existing under the laws of the State of Delaware;
(d)
the
Delaware Trustee has full corporate power, authority and legal right to execute,
deliver and perform its obligations under this Trust Agreement and has taken
all
necessary action to authorize the execution, delivery and performance by it
of
this Trust Agreement;
(e)
this
Trust Agreement has been duly authorized, executed and delivered by the Property
Trustee and the Delaware Trustee and constitutes the legal, valid and binding
agreement of each of the Property Trustee and the Delaware Trustee enforceable
against each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws affecting creditors’ rights generally and to general principles of
equity;
(f)
the
execution, delivery and performance of this Trust Agreement have been duly
authorized by all necessary corporate or other action on the part of the
Property Trustee and the Delaware Trustee and do not require any approval of
stockholders of the Property Trustee and the Delaware Trustee and such
execution, delivery and performance will not (i) violate the Certificate or
Articles of Incorporation or Articles of Association, as applicable, or By-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision
of,
or constitute, with or without notice or lapse of time, a default under, or
result in the imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or
(iii) violate any applicable law, governmental rule or regulation of the
United States or the State of Delaware, as the case may be, governing the
banking, trust or general powers of the Property Trustee or the Delaware Trustee
or any order, judgment or decree applicable to the Property Trustee or the
Delaware Trustee;
(g)
neither
the authorization, execution or delivery by the Property Trustee or the Delaware
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Property Trustee or the Delaware Trustee contemplated herein requires
the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to any governmental authority or agency
under any existing law of the United States or the State of Delaware governing
the banking, trust or general powers of the Property Trustee or the Delaware
Trustee, as the case may be; and
(h)
to
the
best of each of the Property Trustee’s and the Delaware Trustee’s knowledge,
there are no proceedings pending or threatened against or affecting the Property
Trustee or the Delaware Trustee in any court or before any governmental
authority, agency or arbitration board or tribunal that, individually or in
the
aggregate, would materially and adversely affect the Trust or would question
the
right, power and authority of the Property Trustee or the Delaware Trustee,
as
the case may be, to enter into or perform its obligations as one of the Trustees
under this Trust Agreement.
SECTION
7.2.
Representations
and Warranties of Depositor.
The
Depositor hereby represents and warrants for the benefit of the Holders and
the
Trustees that:
(a)
the
Depositor is a corporation
duly
organized, validly existing and in good standing under the laws of its state
of
incorporation;
(b)
the
Depositor has full corporate power, authority and legal right to execute,
deliver and perform its obligations under this Trust Agreement and has taken
all
necessary action to authorize the execution, delivery and performance by it
of
this Trust Agreement;
(c)
this
Trust Agreement has been duly authorized, executed and delivered by the
Depositor and constitutes the legal, valid and binding agreement of the
Depositor enforceable against the Depositor in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity;
(d)
the
Securities Certificates issued at the Closing Date on behalf of the Trust have
been duly authorized and will have been duly and validly executed, issued and
delivered by the applicable Trustees pursuant to the terms and provisions of,
and in accordance with the requirements of, this Trust Agreement and the Holders
will be, as of such date, entitled to the benefits of this Trust
Agreement;
(e)
the
execution, delivery and performance of this Trust Agreement have been duly
authorized by all necessary corporate or other action on the part of the
Depositor and do not require any approval of the stockholders of the Depositor
and such execution, delivery and performance will not (i) violate the
articles of incorporation (or other organizational documents) of the Depositor
or (ii) violate any applicable law, governmental rule or regulation
governing the Depositor or any material portion of its property or any order,
judgment or decree applicable to the Depositor or any material portion of its
property;
(f)
neither
the authorization, execution or delivery by the Depositor of this Trust
Agreement nor the consummation of any of the transactions by the Depositor
contemplated herein requires the consent or approval of, the giving of notice
to, the registration with or the taking of any other action with respect to
any
governmental authority or agency under any existing law governing the Depositor
or any material portion of its property; and
(g)
there
are
no proceedings pending or, to the best of the Depositor’s knowledge, threatened
against or affecting the Depositor or any material portion of its property
in
any court or before any governmental authority, agency or arbitration board
or
tribunal that, individually or in the aggregate, would materially and adversely
affect the Trust or would question the right, power and authority of the
Depositor, as the case may be, to enter into or perform its obligations under
this Trust Agreement.
ARTICLE
VIII
The
Trustees
SECTION
8.1.
Number
of Trustees.
The
number of Trustees shall be five (5);
provided,
that the
Property Trustee and the Delaware Trustee may be the same Person, in which
case
the number of Trustees shall be four (4). The number of Trustees may be
increased or decreased by Act of the Holder of the Common Securities subject
to
Sections
8.2
,
8.3
,
and
8.4
.
The
death, resignation, retirement, removal, bankruptcy, incompetence or incapacity
to perform the duties of a Trustee shall not operate to annul, dissolve or
terminate the Trust.
SECTION
8.2.
Property
Trustee Required.
There
shall at all times be a Property Trustee hereunder with respect to the Trust
Securities. The Property Trustee shall be a corporation or national banking
association organized and doing business under the laws of the United States
or
of any state thereof, authorized to exercise corporate trust powers, having
or
having a parent that has a combined capital and surplus of at least fifty
million dollars ($50,000,000), subject to supervision or examination by federal
or state authority and having an office within the United States. If any such
Person publishes reports of condition at least annually pursuant to law or
to
the requirements of its supervising or examining authority, then for the
purposes of this
Section
8.2
,
the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee shall cease to be eligible in
accordance with the provisions of this
Section
8.2
,
it
shall resign immediately in the manner and with the effect hereinafter specified
in this
Article
VIII
.
SECTION
8.3.
Delaware
Trustee Required.
(a)
If
required by the Delaware Statutory Trust Act, there shall at all times be a
Delaware Trustee with respect to the Trust Securities. The Delaware Trustee
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware or (ii) a legal entity that has its
principal place of business in the State of Delaware, otherwise meets the
requirements of applicable Delaware law and shall act through one or more
persons authorized to bind such entity. If at any time the Delaware Trustee
shall cease to be eligible in accordance with the provisions of this
Section
8.3
,
it
shall resign immediately in the manner and with the effect hereinafter specified
in this
Article
VIII
.
The
Delaware Trustee shall have the same rights, privileges and immunities as the
Property Trustee.
(b)
The
Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the Property
Trustee or the Administrative Trustees set forth herein. The Delaware Trustee
shall be one of the trustees of the Trust for the sole and limited purpose
of
fulfilling the requirements of Section 3807 of the Delaware Statutory Trust
Act and for taking such actions as are required to be taken by a Delaware
trustee under the Delaware Statutory Trust Act. The duties (including fiduciary
duties), liabilities and obligations of the Delaware Trustee shall be limited
to
(a) accepting legal process served on the Trust in the State of Delaware and
(b)
the execution of any certificates required to be filed with the Secretary of
State of the State of Delaware that the Delaware Trustee is required to execute
under Section 3811 of the Delaware Statutory Trust Act and there shall be no
other duties (including fiduciary duties) or obligations, express or implied,
at
law or in equity, of the Delaware Trustee.
SECTION
8.4.
Appointment
of Administrative Trustees.
(a)
There
shall at all times be one or more Administrative Trustees hereunder with respect
to the Trust Securities. Each Administrative Trustee shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more persons authorized to bind that entity. Each of the individuals
identified as an
“
Administrative
Trustee” in the preamble of this Trust Agreement hereby accepts his or her
appointment as such.
(b)
Except
where a requirement for action by a specific number of Administrative Trustees
is expressly set forth in this Trust Agreement, any act required or permitted
to
be taken by, and any power of the Administrative Trustees may be exercised
by,
or with the consent of, any one such Administrative Trustee. Whenever a vacancy
in the number of Administrative Trustees shall occur, until such vacancy is
filled by the appointment of an Administrative Trustee in accordance with
Section 8.11
,
the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Trust Agreement), shall have all
the
powers granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Trust Agreement.
SECTION
8.5.
Duties
and Responsibilities of the Trustees.
(a)
The
rights, immunities, duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and there shall be no other duties (including
fiduciary duties) or obligations, express or implied, at law or in equity,
of
the Trustees;
provided,
however
,
that if
an Event of Default known to the Property Trustee has occurred and is
continuing, the Property Trustee shall, prior to the receipt of directions,
if
any, from the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, exercise such of the rights and powers vested in it by
this Trust Agreement, and use the same degree of care and skill in its exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such person’s own affairs. Notwithstanding the foregoing, no provision of
this Trust Agreement shall require any of the Trustees to expend or risk its
own
funds or otherwise incur any financial liability in the performance of any
of
its duties hereunder, or in the exercise of any of its or their rights or
powers, if it or they shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this
Section
8.5
.
Nothing
in this Trust Agreement shall be construed to release any Administrative Trustee
from liability for his or her own negligent action, negligent failure to act;
or
his or her own willful misconduct. To the extent that, at law or in equity,
a
Trustee has duties and liabilities relating to the Trust or to the Holders,
such
Trustee shall not be liable to the Trust or to any Holder for such Trustee’s
good faith reliance on the provisions of this Trust Agreement. The provisions
of
this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Trustees otherwise existing at law or in equity, are agreed
by the Depositor and the Holders to replace such other duties and liabilities
of
the Trustees.
(b)
All
payments made by the Property Trustee or a Paying Agent in respect of the Trust
Securities shall be made only from the revenue and proceeds from the Trust
Property and only to the extent that there shall be sufficient revenue or
proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by
its
acceptance of a Trust Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security
or
for any other liability in respect of any Trust Security. This
Section 8.5(b)
does not
limit the liability of the Trustees expressly set forth elsewhere in this Trust
Agreement.
(c)
No
provisions of this Trust Agreement shall be construed to relieve the Property
Trustee from liability with respect to matters that are within the authority
of
the Property Trustee under this Trust Agreement for its own negligent action,
negligent failure to act or willful misconduct, except that:
(i)
the
Property Trustee shall not be liable for any error or judgment made in good
faith by an authorized officer of the Property Trustee, unless it shall be
proved that the Property Trustee was negligent in ascertaining the pertinent
facts;
(ii)
the
Property Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with the direction of the Holders
of at least a Majority in Liquidation Amount of the Preferred
Securities;
(iii)
the
Property Trustee’s sole duty with respect to the custody, safe keeping and
physical preservation of the Notes and the Payment Account shall be to deal
with
such Property in a similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Trust
Agreement;
(iv)
the
Property Trustee shall not be liable for any interest on any money received
by
it except as it may otherwise agree in writing with the Depositor; and money
held by the Property Trustee need not be segregated from other funds held by
it
except in relation to the Payment Account maintained by the Property Trustee
pursuant to
Section 3.1
and
except to the extent otherwise required by law; and
(v)
the
Property Trustee shall not be responsible for monitoring the compliance by
the
Administrative Trustees or the Depositor with their respective duties under
this
Trust Agreement, nor shall the Property Trustee be liable for the default or
misconduct of any other Trustee or the Depositor.
SECTION
8.6.
Notices
of Defaults and Extensions.
(a)
Within
ninety (90) days after the occurrence of a default actually known to the
Property Trustee, the Property Trustee shall transmit notice of such default
to
the Holders, the Administrative Trustees and the Depositor, unless such default
shall have been cured or waived. For the purpose of this
Section
8.6
,
the
term “
default”
means
any event that is, or after notice or lapse of time or both would become, an
Event of Default.
(b)
The
Property Trustee shall not be charged with knowledge of any default or Event
of
Default unless either (i) a Responsible Officer of the Property Trustee shall
have actual knowledge or (ii) the Property Trustee shall have received written
notice thereof from the Depositor, an Administrative Trustee or a
Holder.
(c)
The
Property Trustee shall notify all Holders of the Preferred Securities of any
notice of default received with respect to the Notes.
SECTION
8.7.
Certain
Rights of Property Trustee.
Subject
to the provisions of
Section 8.5
:
(a)
the
Property Trustee may conclusively rely and shall be protected in acting or
refraining from acting in good faith and in accordance with the terms hereof
upon any resolution, Opinion of Counsel, certificate, written representation
of
an Administrative Trustee, a Holder or transferee, certificate of auditors
or
any other resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, appraisal, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to
be
genuine and to have been signed or presented by the proper party or
parties;
(b)
if
(i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the
Property Trustee finds a provision ambiguous or inconsistent with any other
provisions contained herein or (iii) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then, except as to any
matter as to which the Holders of the Preferred Securities are entitled to
vote
under the terms of this Trust Agreement, the Property Trustee shall deliver
a
notice to the Depositor requesting the Depositor’s written instruction as to the
course of action to be taken and the Property Trustee shall take such action,
or
refrain from taking such action, as the Property Trustee shall be instructed
in
writing to take, or to refrain from taking, by the Depositor; provided, that
if
the Property Trustee does not receive such instructions of the Depositor within
ten (10) Business Days after it has delivered such notice or such reasonably
shorter period of time set forth in such notice, the Property Trustee may,
but
shall be under no duty to, take such action, or refrain from taking such action,
as the Property Trustee shall deem advisable and in the best interests of the
Holders, in which event the Property Trustee shall have no liability except
for
its own negligence, bad faith or willful misconduct;
(c)
any
direction or act of the Depositor contemplated by this Trust Agreement shall
be
sufficiently evidenced by an Officers’ Certificate unless otherwise expressly
provided herein;
(d)
any
direction or act of an Administrative Trustee contemplated by this Trust
Agreement shall be sufficiently evidenced by a certificate executed by such
Administrative Trustee and setting forth such direction or act;
(e)
the
Property Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any re-recording,
re-filing or re-registration thereof;
(f)
the
Property Trustee may consult with counsel (which counsel may be counsel to
the
Property Trustee, the Depositor or any of its Affiliates, and may include any
of
its employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in accordance with
such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g)
the
Property Trustee shall be under no obligation to exercise any of the rights
or
powers vested in it by this Trust Agreement at the request or direction of
any
of the Holders pursuant to this Trust Agreement, unless such Holders shall
have
offered to the Property Trustee reasonable security or indemnity against the
costs, expenses (including reasonable attorneys’ fees and expenses) and
liabilities that might be incurred by it in compliance with such request or
direction, including reasonable advances as may be requested by the Property
Trustee;
provided,
however,
that
nothing contained in this
Section
8.7(g)
shall be
construed to relieve the Property Trustee, upon the occurrence of an Event
of
Default (of which the Property Trustee has knowledge (as provided in
Section
8.6(b)
hereof)), of its obligation to exercise the rights and powers vested in it
by
this Trust Agreement; provided, further, that nothing contained in this
Section
8.7(g)
shall
prevent the Property Trustee from exercising its rights under
Section
8.11
hereof;
(h)
the
Property Trustee shall not be bound to make any investigation into the facts
or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval, bond, debenture,
note or other evidence of indebtedness or other paper or document, unless
requested in writing to do so by one or more Holders, but the Property Trustee
may make such further inquiry or investigation into such facts or matters as
it
may see fit, and, if the Property Trustee shall determine to make such inquiry
or investigation, it shall be entitled to examine the books, records and
premises of the Depositor, personally or by agent or attorney;
(i)
the
Property Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through its agents, attorneys,
custodians or nominees and the Property Trustee shall not be responsible for
any
negligence or misconduct on the part of any such agent, attorney, custodian
or
nominee appointed with due care by it hereunder;
(j)
whenever
in the administration of this Trust Agreement the Property Trustee shall deem
it
desirable to receive instructions with respect to enforcing any remedy or right
hereunder, the Property Trustee (i) may request instructions from the
Holders (which instructions may only be given by the Holders of the same
proportion in Liquidation Amount of the Trust Securities as would be entitled
to
direct the Property Trustee under this Trust Agreement in respect of such
remedy, right or action), (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received and
(iii) shall be protected in acting in accordance with such
instructions;
(k)
except
as
otherwise expressly provided by this Trust Agreement, the Property Trustee
shall
not be under any obligation to take any action that is discretionary under
the
provisions of this Trust Agreement;
(l)
without
prejudice to any other rights available to the Property Trustee under applicable
law, when the Property Trustee incurs expenses or renders services in connection
with a Bankruptcy Event, such expenses (including legal fees and expenses of
its
agents and counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally; and
(m)
whenever
in the administration of this Trust Agreement the Property Trustee shall deem
it
desirable that a matter be proved or established prior to taking, suffering
or
omitting any action hereunder, the Property Trustee (unless other evidence
be
herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely on an Officers’ Certificate which, upon receipt of
such request, shall be promptly delivered by the Depositor.
(n)
in
the
event that the Property Trustee is also acting as Paying Agent, Authenticating
Agent (as defined in the Indenture), Securities Registrar or Calculation Agent
hereunder, the rights and protections afforded the Property Trustee pursuant
to
this
Article
VIII
shall
also be afforded such Paying Agent, Authenticating Agent, Securities Registrar
or Calculation Agent.
No
provision of this Trust Agreement shall be deemed to impose any duty or
obligation on any Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which such Person shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts,
or to exercise any such right, power, duty or obligation.
SECTION
8.8.
Delegation
of Power.
Any
Trustee may, by power of attorney consistent with applicable law, delegate
to
any other natural person over the age of 21 its, his or her power for the
purpose of executing any documents contemplated in
Section 2.5
.
The
Trustees shall have power to delegate from time to time to such of their number
or to the Depositor the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the extent such delegation
is
not prohibited by applicable law or contrary to the provisions of this Trust
Agreement.
SECTION
8.9.
May
Hold Securities.
Any
Trustee or any other agent of any Trustee or the Trust, in its individual or
any
other capacity, may become the owner or pledgee of Trust Securities and except
as provided in the definition of the term
“Outstanding
”
in
Article
I
,
may
otherwise deal with the Trust with the same rights it would have if it were
not
a Trustee or such other agent.
SECTION
8.10.
Compensation;
Reimbursement; Indemnity.
The
Depositor agrees:
(a)
to
pay to
the Trustees from time to time such reasonable compensation for all services
rendered by them hereunder as may be agreed by the Depositor and the Trustees
from time to time (which compensation shall not be limited by any provision
of
law in regard to the compensation of a trustee of an express
trust);
(b)
to
reimburse the Trustees upon request for all reasonable expenses, disbursements
and advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the expenses
and disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their gross negligence, bad
faith or willful misconduct; and
(c)
to
the
fullest extent permitted by applicable law, to indemnify and hold harmless
(i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any Trustee
or any Affiliate of any Trustee and (iv) any employee or agent of the Trust
(referred to herein as an
“Indemnified
Person”
)
from
and against any loss, damage, liability, tax (other than income, franchise
or
other taxes imposed on amounts paid pursuant to
Section
8.10(a)
or
(b)
hereof),
penalty, expense or claim of any kind or nature whatsoever incurred without
negligence, bad faith or willful misconduct on its part, arising out of or
in
connection with the acceptance or administration of the Trust hereunder,
including the advancement of funds to cover the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The
Trust
shall have no payment, reimbursement or indemnity obligations to the Trustees
under this
Section
8.10
.
The
provisions of this
Section 8.10
shall
survive the termination of this Trust Agreement and the earlier removal or
resignation of any Trustee.
No
Trustee may claim any Lien on any Trust Property whether before or after
termination of the Trust as a result of any amount due pursuant to this
Section 8.10
.
To
the
fullest extent permitted by law, in no event shall the Administrative Trustees,
the Property Trustee and the Delaware Trustee be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form
of
action.
In
no
event shall the Property Trustee or the Delaware Trustee be liable for any
failure or delay in the performance of its obligations hereunder because of
circumstances beyond its control, including, but not limited to, acts of God,
flood, war (whether declared or undeclared), terrorism, fire, riot, embargo,
government action, including any laws, ordinances, regulations, governmental
action or the like which delay, restrict or prohibit the providing of the
services contemplated by this Trust Agreement.
SECTION
8.11.
Resignation
and Removal; Appointment of Successor.
(a)
No
resignation or removal of any Trustee and no appointment of a successor Trustee
pursuant to this
Article
VIII
shall
become effective until the acceptance of appointment by the successor Trustee
in
accordance with the applicable requirements of
Section 8.12
.
(b)
A
Trustee
may resign at any time by giving written notice thereof to the Depositor and,
in
the case of the Property Trustee and the Delaware Trustee, to the
Holders.
(c)
Unless
an
Event of Default shall have occurred and be continuing, the Property Trustee
or
the Delaware Trustee, or both of them, may be removed (with or without cause)
at
any time by Act of the Holder of Common Securities. If an Event of Default
shall
have occurred and be continuing, the Property Trustee or the Delaware Trustee,
or both of them, may be removed (with or without cause) at such time by Act
of
the Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, delivered to the removed Trustee (in its individual capacity and
on
behalf of the Trust). An Administrative Trustee may be removed (with or without
cause) only by Act of the Holder of the Common Securities at any
time.
(d)
If
any
Trustee shall resign, be removed or become incapable of acting as Trustee,
or if
a vacancy shall occur in the office of any Trustee for any reason, at a time
when no Event of Default shall have occurred and be continuing, the Holder
of
the Common Securities, by Act of the Holder of the Common Securities, shall
promptly appoint a successor Trustee or Trustees, and such successor Trustee
and
the retiring Trustee shall comply with the applicable requirements of
Section
8.12
.
If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when an Event of Default shall have occurred
and
be continuing, the Holders of the Preferred Securities, by Act of the Holders
of
a Majority in Liquidation Amount of the Preferred Securities, shall promptly
appoint a successor Property Trustee or Delaware Trustee, and such successor
Property Trustee or Delaware Trustee and the retiring Property Trustee or
Delaware Trustee shall comply with the applicable requirements of
Section
8.12
.
If an
Administrative Trustee shall resign, be removed or become incapable of acting
as
Administrative Trustee, at a time when an Event of Default shall have occurred
and be continuing, the Holder of the Common Securities by Act of the Holder
of
Common Securities shall promptly appoint a successor Administrative Trustee
and
such successor Administrative Trustee and the retiring Administrative Trustee
shall comply with the applicable requirements of
Section
8.12
.
If no
successor Trustee shall have been so appointed by the Holder of the Common
Securities or Holders of the Preferred Securities, as the case may be, and
accepted appointment in the manner required by
Section
8.12
within
thirty (30) days after the giving of a notice of resignation by a Trustee,
the
removal of a Trustee, or a Trustee becoming incapable of acting as such Trustee,
any Holder who has been a Holder of Preferred Securities for at least six (6)
months (or, if the Preferred Securities have been Outstanding for less than
six
(6) months, the entire period of such lesser time) may, on behalf of himself
and
all others similarly situated, and any resigning Trustee may, in each case,
at
the expense of the Depositor, petition any court of competent jurisdiction
for
the appointment of a successor Trustee
.
(e)
The
Depositor shall give notice of each resignation and each removal of the Property
Trustee or the Delaware Trustee and each appointment of a successor Property
Trustee or Delaware Trustee to all Holders in the manner provided in
Section
10.8
.
Each
notice shall include the name of the successor Property Trustee or Delaware
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(f)
Notwithstanding
the foregoing or any other provision of this Trust Agreement, in the event
any
Administrative Trustee or a Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holder of Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity
may
be filled by (i) the unanimous act of the remaining Administrative Trustees
if
there are at least two of them or (ii) otherwise by the Holder of the Common
Securities (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or Delaware Trustee, as
the
case may be, set forth in
Sections
8.3
and
8.4
).
(g)
Upon
the
appointment of a successor Delaware Trustee, such successor Delaware Trustee
shall file a Certificate of Amendment to the Certificate of Trust in accordance
with section 3810 of the Delaware Statutory Trust Act.
SECTION
8.12.
Acceptance
of Appointment by Successor.
(a)
In
case
of the appointment hereunder of a successor Trustee, each successor Trustee
shall execute and deliver to the Depositor and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request
of
the Trust or any successor Trustee such retiring Trustee shall, upon payment
of
its charges, duly assign, transfer and deliver to such successor Trustee all
Trust Property, all proceeds thereof and money held by such retiring Trustee
hereunder with respect to the Trust Securities and the Trust.
(b)
Upon
request of any such successor Trustee, the Trust (or the retiring Trustee if
requested by the Depositor) shall execute any and all instruments for more
fully
and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in the preceding paragraph.
(c)
No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article
VIII
.
SECTION
8.13.
Merger,
Conversion, Consolidation or Succession to Business.
Any
Person into which the Property Trustee or the Delaware Trustee may be merged
or
converted or with which it may be consolidated, or any Person resulting from
any
merger, conversion or consolidation to which such Trustee shall be a party,
or
any Person succeeding to all or substantially all the corporate trust business
of such Trustee, shall be the successor of such Trustee hereunder, without
the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided, that such Person shall be otherwise qualified and
eligible under this
Article
VIII
.
SECTION
8.14.
Not
Responsible for Recitals, Issuance of Securities or
Representations.
The
recitals contained herein and in the Securities Certificates shall be taken
as
the statements of the Trust and the Depositor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the title to, or value or condition of, the property of the Trust or
any
part thereof, nor as to the validity or sufficiency of this Trust Agreement,
the
Notes or the Trust Securities. The Trustees shall not be accountable for the
use
or application by the Depositor of the proceeds of the Notes. It is expressly
understood and agreed by the parties hereto that insofar as any document,
agreement or certificate is executed on behalf of the Trust by any Trustee
(i)
such document, agreement or certificate is executed and delivered by such
Trustee, not in its individual capacity but solely as Trustee under this Trust
Agreement in the exercise of the powers and authority conferred and vested
in
it, (ii) each of the representations, undertakings and agreements made on the
part of the Trust is made and intended not as representations, warranties,
covenants, undertakings and agreements by any Trustee in its individual capacity
but is made and intended for the purpose of binding only the Trust and (iii)
under no circumstances shall any Trustee in its individual capacity be
personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Trust Agreement
or any other document, agreement or certificate.
SECTION
8.15.
Property
Trustee May File Proofs of Claim.
(a)
In
case
of any Bankruptcy Event (or event that with the passage of time would become
a
Bankruptcy Event) relative to the Trust or any other obligor upon the Trust
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions
on
the Trust Securities shall then be due and payable and irrespective of whether
the Property Trustee shall have made any demand on the Trust for the payment
of
any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or
otherwise:
(i)
to
file
and prove a claim for the whole amount of any Distributions owing and unpaid
in
respect of the Trust Securities and to file such other papers or documents
as
may be necessary or advisable in order to have the claims of the Property
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel)
and
of the Holders allowed in such judicial proceeding; and
(ii)
to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute the same;
and
any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such proceeding is hereby authorized by each Holder
to
make such payments to the Property Trustee and, in the event the Property
Trustee shall consent to the making of such payments directly to the Holders,
to
pay to the Property Trustee first any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee,
its
agents and counsel, and any other amounts due the Property Trustee.
(b)
Nothing
herein contained shall be deemed to authorize the Property Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION
8.16.
Reports
to the Property Trustee.
(a)
The
Depositor and the Administrative Trustees shall deliver to the Property Trustee,
not later than forty-five (45) days after the end of each of the first three
fiscal quarters of the Depositor and not later than ninety (90) days after
the
end of each fiscal year of the Trust ending after the date of this Trust
Agreement, an Officers’ Certificate covering the preceding fiscal year, stating
whether or not to the knowledge of the signers thereof the Depositor and the
Trust are in default in the performance or observance of any of the terms,
provisions and conditions of this Trust Agreement (without regard to any period
of grace or requirement of notice provided hereunder) and, if the Depositor
or
the Trust shall be in default, specifying all such defaults and the nature
and
status thereof of which they have knowledge.
(b)
The
Depositor shall furnish (i) to the Property Trustee; (ii) Taberna Capital
Management, LLC (at 450 Park Avenue, 11
th
Floor,
New York, New York 10022, Attention: Thomas Bogal or such other address as
designated by Taberna Capital Management, LLC); and (iii) any Owner of the
Preferred Securities reasonably identified to the Depositor and the Trust (which
identification may be made either by such Owner or by Taberna Capital
Management, LLC) a duly completed and executed certificate substantively and
substantially in the form attached hereto as
Exhibit
F
,
including the financial statements referenced in such Exhibit, which certificate
and financial statements shall be so furnished by the Depositor not later than
forty-five (45) days after the end of each of the first three fiscal quarters
of
each fiscal year of the Depositor and not later than ninety (90) days after
the
end of each fiscal year of the Depositor.
The
Property Trustee shall obtain all reports, certificate and information, which
it
is entitled to obtain under each of the Operative Documents.
ARTICLE
IX
Termination,
Liquidation and Merger
SECTION
9.1.
Dissolution
Upon Expiration Date.
Unless
earlier dissolved, the Trust shall automatically dissolve on January 30, 2042
(the
“Expiration
Date
”),
and
the Trust Property shall be liquidated in accordance with
Section 9.4
.
SECTION
9.2.
Early
Termination.
The
first
to occur of any of the following events is an
“Early
Termination Event
”,
upon
the occurrence of which the Trust shall be dissolved:
(a)
the
occurrence of a Bankruptcy Event in respect of, or the dissolution or
liquidation of, the Depositor, in its capacity as the Holder of the Common
Securities, unless the Depositor shall have transferred the Common Securities
as
provided by
Section
5.11
,
in
which case this provision shall refer instead to any such successor Holder
of
the Common Securities;
(b)
the
written direction to the Property Trustee from the Holder of the Common
Securities at any time to dissolve the Trust and, after satisfaction of any
liabilities of the Trust as required by applicable law and in accordance with
written instructions of the Administrative Trustees, to distribute the Notes
to
Holders in exchange for the Preferred Securities (which direction is optional
and wholly within the discretion of the Holder of the Common
Securities);
(c)
the
redemption of all of the Preferred Securities in connection with the payment
at
maturity or redemption of all the Notes; and
(d)
the
entry
of an order for dissolution of the Trust by a court of competent
jurisdiction.
SECTION
9.3.
Termination.
(a)
The
respective obligations and responsibilities of the Trustees and the Trust shall
terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Holders of all amounts required to be distributed
hereunder upon the liquidation of the Trust pursuant to
Section 9.4
,
or upon
the redemption of all of the Trust Securities pursuant to
Section 4.2
;
(b) the satisfaction of any expenses owed by the Trust; and (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust
or
the Holders.
(b)
As
soon
as practicable thereafter, and after satisfaction of liabilities to creditors
of
the Trust as required by applicable law, including Section 3808 of the Delaware
Statutory Trust Act, the Delaware Trustee, when notified in writing of the
completion of the winding up of the Trust in accordance with the Delaware
Statutory Trust Act, shall terminate the Trust by filing, at the expense of
the
Depositor, a certificate of cancellation with the Secretary of State of the
State of Delaware.
SECTION
9.4.
Liquidation.
(a)
If
an
Early Termination Event specified in
Section
9.2(a)
,
(b)
or
(d)
occurs
or upon the Expiration Date, the Trust shall be liquidated by the Property
Trustee as expeditiously as the Property Trustee shall determine to be possible
by distributing, after satisfaction of liabilities to creditors of the Trust
as
provided by applicable law, to each Holder a Like Amount of Notes, subject
to
Section 9.4(d)
.
Notice
of liquidation shall be given by the Property Trustee not less than thirty
(30)
nor more than sixty (60) days prior to the Liquidation Date to each Holder
of
Trust Securities at such Holder’s address appearing in the Securities Register.
All such notices of liquidation shall:
(i)
state
the
Liquidation Date;
(ii)
state
that from and after the Liquidation Date, the Trust Securities will no longer
be
deemed to be Outstanding and (subject to
Section
9.4(d)
)
any
Securities Certificates not surrendered for exchange will be deemed to represent
a Like Amount of Notes; and
(iii)
provide
such information with respect to the mechanics by which Holders may exchange
Securities Certificates for Notes, or if
Section 9.4(d)
applies,
receive a Liquidation Distribution, as the Property Trustee shall deem
appropriate.
(b)
Except
where
Section
9.2(c)
or
9.4(d)
applies,
in order to effect the liquidation of the Trust and distribution of the Notes
to
Holders, the Property Trustee, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish a record date
for
such distribution (which shall not be more than forty-five (45) days prior
to
the Liquidation Date nor prior to the date on which notice of such liquidation
is given to the Holders) and establish such procedures as it shall deem
appropriate to effect the distribution of Notes in exchange for the Outstanding
Securities Certificates.
(c)
Except
where
Section
9.2(c)
or
9.4(d)
applies,
after the Liquidation Date, (i) the Trust Securities will no longer be
deemed to be Outstanding, (ii) certificates representing a Like Amount of
Notes will be issued to Holders of Securities Certificates, upon surrender
of
such Certificates to the exchange agent for exchange, (iii) the Depositor shall
use its best efforts to have the Notes listed on the New York Stock Exchange
or
on such other exchange, interdealer quotation system or self-regulatory
organization on which the Preferred Securities are then listed, if any, (iv)
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Notes bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Securities
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will
be
made to Holders of Securities Certificates with respect to such Notes) and
(v)
all rights of Holders holding Trust Securities will cease, except the right
of
such Holders to receive Notes upon surrender of Securities
Certificates.
(d)
Notwithstanding
the other provisions of this
Section 9.4
,
if
distribution of the Notes in the manner provided herein is determined by the
Property Trustee not to be permitted or practical, the Trust Property shall
be
liquidated, and the Trust shall be wound up by the Property Trustee in such
manner as the Property Trustee determines. In such event, Holders will be
entitled to receive out of the assets of the Trust available for distribution
to
Holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the
“Liquidation
Distribution
”).
If,
upon any such winding up the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro
rata
basis (based upon Liquidation Amounts). The Holder of the Common Securities
will
be entitled to receive Liquidation Distributions upon any such winding up pro
rata (based upon Liquidation Amounts) with Holders of all Trust Securities,
except that, if an Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common Securities as
provided in
Section
4.3
.
SECTION
9.5.
Mergers,
Consolidations, Amalgamations or Replacements of Trust.
The
Trust
may not merge with or into, consolidate, amalgamate, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety
to, any Person except pursuant to this
Article
IX
.
At the
request of the Holders of the Common Securities, without the consent of the
Holders of the Preferred Securities, the Trust may merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as
such
under the laws of any State;
provided,
that:
(a)
such
successor entity either (i) expressly assumes all of the obligations of the
Trust under this Trust Agreement with respect to the Preferred Securities or
(ii) substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (such other Securities,
the
“Successor
Securities”
)
so long
as the Successor Securities have the same priority as the Preferred Securities
with respect to distributions and payments upon liquidation, redemption and
otherwise;
(b)
a
trustee
of such successor entity possessing substantially the same powers and duties
as
the Property Trustee is appointed to hold the Notes;
(c)
if
the
Preferred Securities or the Notes are rated, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities or the Notes (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization that
then assigns a rating to the Preferred Securities or the Notes;
(d)
the
Preferred Securities are listed, or any Successor Securities will be listed
upon
notice of issuance, on any national securities exchange or interdealer quotation
system on which the Preferred Securities are
then
listed, if any;
(e)
such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the Holders
of the Preferred Securities (including any Successor Securities) in any material
respect;
(f)
such
successor entity has a purpose substantially identical to that of the
Trust;
(g)
prior
to
such merger, consolidation, amalgamation, replacement, conveyance, transfer
or
lease, the Depositor has received an Opinion of Counsel from a nationally
recognized, independent counsel to the Depositor experienced in such matters
to
the effect that (i) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect; (ii) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity will be required to register as an
“investment company” under the Investment Company Act and (iii) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
the Trust (or the successor entity) will continue to be classified as a grantor
trust for United States federal income tax purposes; and
(h)
the
Depositor or its permitted transferee owns all of the common securities of
such
successor entity.
Notwithstanding
the foregoing, the Trust shall not, except with the consent of Holders of all
of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other Person or permit any other entity to consolidate,
amalgamate, merge with or into, or replace, the Trust if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the
Trust or the successor entity to be taxable as a corporation or classified
as
other than a grantor trust for United States federal income tax purposes or
cause the Notes to be treated as other than indebtedness of the Depositor for
United States federal income tax purposes.
ARTICLE
X
Miscellaneous
Provisions
SECTION
10.1.
Limitation
of Rights of Holders.
Except
as
set forth in
Section
9.2
,
the
death, bankruptcy, termination, dissolution or incapacity of any Person having
an interest, beneficial or otherwise, in Trust Securities shall not operate
to
terminate this Trust Agreement, nor annul, dissolve or terminate the Trust
nor
entitle the legal representatives or heirs of such Person or any Holder for
such
Person, to claim an accounting, take any action or bring any proceeding in
any
court for a partition or winding up of the arrangements contemplated hereby,
nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
SECTION
10.2.
Agreed
Tax Treatment of Trust and Trust Securities.
The
parties hereto and, by its acceptance or acquisition of a Trust Security or
a
beneficial interest therein, the Holder of, and any Person that acquires a
beneficial interest in, such Trust Security intend and agree, unless otherwise
required by law, to treat the Trust as a grantor trust for United States
federal, state and local tax purposes, and to treat the Trust Securities
(including all payments and proceeds with respect to such Trust Securities)
as
undivided beneficial ownership interests in the Trust Property (and payments
and
proceeds therefrom, respectively) for United States federal, state and local
tax
purposes and to treat the Notes as indebtedness of the Depositor for United
States federal, state and local tax purposes. The provisions of this Trust
Agreement shall be interpreted to further this intention and agreement of the
parties.
SECTION
10.3.
Amendment.
(a)
This
Trust Agreement may be amended from time to time by the Property Trustee, the
Administrative Trustees and the Holder of all the Common Securities, without
the
consent of any Holder of the Preferred Securities, (i) to cure any
ambiguity, correct or supplement any provision herein that may be defective
or
inconsistent with any other provision herein, or to make or amend any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will neither be taxable as a corporation nor be classified as other than a
grantor trust for United States federal income tax purposes at all times that
any Trust Securities are Outstanding or to ensure that the Notes are treated
as
indebtedness of the Depositor for United States federal income tax purposes,
or
to ensure that the Trust will not be required to register as an “investment
company” under the Investment Company Act or (iii) to add to the covenants,
restrictions or obligations of the Depositor;
provided
,
that in
the case of clauses (i), (ii) or (iii), such action shall not adversely affect
in any material respect the interests of any Holder.
(b)
Except
as
provided in
Section
10.3(c)
,
any
provision of this Trust Agreement may be amended by the Property Trustee, the
Administrative Trustees and the Holder of all of the Common Securities and
with
(i) the consent of Holders of at least a Majority in Liquidation Amount of
the
Preferred Securities and (ii) receipt by the Trustees of an Opinion of Counsel
to the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not cause the Trust to be
taxable as a corporation or classified as other than a grantor trust or other
disregarded entity for United States federal income tax purposes or adversely
affect the treatment of the Notes as indebtedness of the Depositor for United
States federal income tax purposes or affect the Trust’s exemption from status
(or from any requirement to register) as an “investment company” under the
Investment Company Act. In addition to and subject to the foregoing, the
Distribution Dates, Redemption Date and Stated Maturity (as defined in the
Indenture) with respect to the Preferred Securities or a portion of the
Preferred Securities shall be conformed in connection with any modification
of
the Interest Payment Date, Redemption Date or Stated Maturity of the Junior
Subordinated Notes made by the Depositor and the Trust at the direction of
any
holder of the Preferred Securities or a portion of the Preferred Securities
as
set forth in Section 6 of the Purchase Agreement.
(c)
Notwithstanding
any other provision of this Trust Agreement, without the consent of each Holder,
this Trust Agreement may not be amended to (i) change the accrual rate,
amount, currency or timing of any Distribution on or the redemption price of
the
Trust Securities or otherwise adversely affect the amount of any Distribution
or
other payment required to be made in respect of the Trust Securities as of
a
specified date,
except
as
set forth in the last sentence of Section 10.3(b) above
,
(ii) restrict or impair the right of a Holder to institute suit for the
enforcement of any such payment on or after such date, (iii) reduce the
percentage of aggregate Liquidation Amount of Outstanding Preferred Securities,
the consent of whose Holders is required for any such amendment, or the consent
of whose Holders is required for any waiver of compliance with any provision
of
this Trust Agreement or of defaults hereunder or under the Indenture and their
consequences provided for in this Trust Agreement or Indenture; (iv) impair
or
adversely affect the rights and interests of the Holders in the Trust Property,
or permit the creation of any Lien on any portion of the Trust Property; or
(v)
modify the definition of “
Outstanding
,”
in
this
Section
10.3(c)
,
Sections
4.2
,
4.3
,
6.10
or
Article
IX
or
modify the definition of “
Note
Event of Default
”.
(d)
Notwithstanding
any other provision of this Trust Agreement, no Trustee shall enter into or
consent to any amendment to this Trust Agreement that would cause the Trust
to
be taxable as a corporation or to be classified as other than a grantor trust
or
other disregarded entity for United States federal income tax purposes or that
would cause the Notes to fail or cease to be treated as indebtedness of the
Depositor for United States federal income tax purposes or that would cause
the
Trust to fail or cease to qualify for the exemption from status (or from any
requirement to register) as an “investment company” under the Investment Company
Act.
(e)
If
any
amendment to this Trust Agreement is made, the Administrative Trustees or the
Property Trustee shall promptly provide to the Depositor and the Note Trustee
a
copy of such amendment.
(f)
No
Trustee shall be required to enter into any amendment to this Trust Agreement
that affects its own rights, duties or immunities under this Trust Agreement.
The Trustees shall be entitled to receive an Opinion of Counsel and an Officers’
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement and all conditions precedent herein provided for
relating to such action have been met.
(g)
No
amendment or modification to this Trust Agreement that adversely affects in
any
material respect the rights, duties, liabilities, indemnities or immunities
of
the Delaware Trustee hereunder shall be permitted without the prior written
consent of the Delaware Trustee.
SECTION
10.4.
Separability.
If
any
provision in this Trust Agreement or in the Securities Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of
the remaining provisions shall not in any way be affected or impaired thereby,
and there shall be deemed substituted for the provision at issue a valid, legal
and enforceable provision as similar as possible to the provision at
issue.
SECTION
10.5.
Governing
Law.
THIS
TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS, THE
TRUST, THE DEPOSITOR AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND
THE TRUST SECURITIES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICTS
OF LAWS PROVISIONS.
SECTION
10.6.
Successors.
This
Trust Agreement shall be binding upon and shall inure to the benefit of any
successor to the Depositor, the Trust and any Trustee, including any successor
by operation of law. Except in connection with a transaction involving the
Depositor that is permitted under
Article
VIII
of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Depositor’s obligations hereunder, the Depositor shall not assign its
obligations hereunder.
SECTION
10.7.
Headings.
The
Article and Section headings are for convenience only and shall not affect
the construction of this Trust Agreement
SECTION
10.8.
Reports,
Notices and Demands.
(a)
Any
report, notice, demand or other communication that by any provision of this
Trust Agreement is required or permitted to be given or served to or upon any
Holder or the Depositor may be given or served in writing delivered in person,
or by reputable, overnight courier, by telecopy or by deposit thereof,
first-class postage prepaid, in the United States mail, addressed, (a) in
the case of a Holder of Preferred Securities, to such Holder as such Holder’s
name and address may appear on the Securities Register; and (b) in the case
of the Holder of all the Common Securities or the Depositor, to Redwood Trust,
Inc., One Belvedere Place, Suite 300, Mill Valley, California 94941, Attention:
Martin S. Hughes, or to such other address as may be specified in a written
notice by the Holder of all the Common Securities or the Depositor, as the
case
may be, to the Property Trustee. Such report, notice, demand or other
communication to or upon a Holder or the Depositor shall be deemed to have
been
given when received in person, within one (1) Business Day following delivery
by
overnight courier, when telecopied with receipt confirmed, or within three
(3)
Business Days following delivery by mail, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address
of which no notice was given, such notice or other document shall be deemed
to
have been delivered on the date of such refusal or inability to
deliver.
(b)
Any
notice, demand or other communication that by any provision of this Trust
Agreement is required or permitted to be given or served to or upon the Property
Trustee, the Delaware Trustee, the Administrative Trustees or the Trust shall
be
given in writing by deposit thereof, first-class postage prepaid, in the U.S.
mail, personal delivery or facsimile transmission, addressed to such Person
as
follows: (i) with respect to the Property Trustee to The Bank of New York
Trust Company, National Association, 601 Travis, 16
th
Floor,
Houston, Texas 77002, Attention: Global Corporate Trust—Redwood Capital Trust I,
facsimile no. (713) 483-6001 (initially, all notices and correspondence shall
be
addressed to Mudassir Mohamed, telephone (713) 483-6029), (ii) with respect
to the Delaware Trustee, to The Bank of New York (Delaware), 100 White Clay
Center, Route 273, P.O. Box 6995, Newark, Delaware 19711, Attention: Corporate
Trust Administration—Redwood Capital Trust I, facsimile no. (302) 453-4400;
(iii) with respect to the Administrative Trustees, to them at the address
above for notices to the Depositor, marked “Attention: Administrative Trustees
of Redwood Capital Trust I”, and (iv) with respect to the Trust, to its
principal executive office specified in
Section
2.2
,
with a
copy to the Property Trustee. Such notice, demand or other communication to
or
upon the Trust, the Property Trustee or the Administrative Trustees shall be
deemed to have been sufficiently given or made only upon actual receipt of
the
writing by the Trust, the Property Trustee or the Administrative
Trustees.
SECTION
10.9.
Agreement
Not to Petition.
Each
of
the Trustees and the Depositor agree for the benefit of the Holders that, until
at least one year and one day after the Trust has been terminated in accordance
with
Article
IX
,
they
shall not file, or join in the filing of, a petition against the Trust under
any
Bankruptcy Law or otherwise join in the commencement of any proceeding against
the Trust under any Bankruptcy Law. If the Depositor takes action in violation
of this
Section 10.9
,
the
Property Trustee agrees, for the benefit of Holders, that at the expense of
the
Depositor, it shall file an answer with the applicable bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be estopped
and precluded therefrom and such other defenses, if any, as counsel for the
Property Trustee or the Trust may assert.
SECTION
10.10.
Counterparts.
This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Trust Agreement as of the day and year first above written.
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Redwood
Trust, Inc.,
as
Depositor
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By:
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Name:
Martin
S. Hughes
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Title:
Chief Financial Officer, Treasurer,
Vice
President and Secretary
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The
Bank of New York Trust Company,
National
Association,
as
Property Trustee
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By:
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Name:
Maria D. Calzado
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Title:
Vice President
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The
Bank of New York (Delaware),
as
Delaware Trustee
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By:
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Name:
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Title:
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By:
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Name:
Martin
S. Hughes
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Title:
Administrative
Trustee
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By:
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Name:
Harold
F. Zagunis
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Title:
Administrative
Trustee
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By:
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Name:
Brett
Nicholas
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Title:
Administrative
Trustee
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Exhibit
A
CERTIFICATE
OF TRUST
OF
REDWOOD
CAPITAL TRUST I
This
Certificate of Trust of Redwood Capital Trust I
(the
“Trust”
)
is
being duly executed and filed on behalf of the Trust by the undersigned, as
trustee, to form a statutory trust under the Delaware Statutory Trust Act (12
Del. C. §3801 et seq.) (the
“Act”
).
1.
Name
.
The
name of the statutory trust formed hereby is: Redwood Capital Trust
I.
2.
Delaware
Trustee
.
The
name and business address of the Trust meeting the requirements of Section
3807
of the Act are The Bank of New York (Delaware), 100 White Clay Center, Route
273, P.O. Box 6995, Newark, Delaware 19711.
3.
Effective
Date
.
This
Certificate of Trust shall be effective upon its filing with the Secretary
of
State of the State of Delaware.
IN
WITNESS WHEREOF, the undersigned trustee of the Trust has executed this
Certificate of Trust in accordance with of the Act.
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The
Bank of New
York (Delaware)
,
not in its individual capacity, but solely as Delaware
Trustee
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By:
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Name:
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Title:
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Exhibit
B
[FORM
OF COMMON SECURITIES CERTIFICATE]
THIS
COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT
IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT
Certificate
Number
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Number
of Common Securities
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C-1
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3,100
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Certificate
Evidencing Common Securities
of
Redwood
Capital Trust I
Common
Securities
(liquidation
amount $1,000 per Common Security)
Redwood
Capital Trust I, a statutory trust created under the laws of the State of
Delaware (the
“Trust”
),
hereby
certifies that Redwood Trust, Inc., a Maryland corporation (the
“Holder”
)
is the
registered owner of Three Thousand One Hundred (3,100) common securities
of the
Trust representing undivided common beneficial interests in the assets of
the
Trust and designated the Redwood Capital Trust I Common Securities (liquidation
amount $1,000 per Common Security) (the
“Common
Securities”
).
Except
in accordance with
Section 5.11
of the
Trust Agreement (as defined below), the Common Securities are not transferable
and, to the fullest extent permitted by law, any attempted transfer hereof
other
than in accordance therewith shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject
to
the terms and provisions of, the Amended and Restated Trust Agreement of
the
Trust, dated as of December 12, 2006 as the same may be amended from time
to
time (the
“Trust
Agreement”
),
among
the Holder, as Depositor, The Bank of New York Trust Company, National
Association, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee, the Administrative Trustees named therein and the Holders, from
time to
time, of the Trust Securities. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust
at its
principal place of business or registered office.
Upon
receipt of this certificate, the Holder is bound by the Trust Agreement and
is
entitled to the benefits thereunder.
This
Common Securities Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.
Terms
used but not defined herein have the meanings set forth in the Trust
Agreement.
In
Witness Whereof, one of the Administrative Trustees of the Trust has executed
on
behalf of the Trust this certificate this __ day of _______________,
200__.
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Redwood
Capital
Trust I
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By:
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Name:
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Title:
Administrative
Trustee
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Exhibit
C
[FORM
OF PREFERRED SECURITIES CERTIFICATE]
“
[
IF
THIS SECURITY IS A GLOBAL SECURITY INSERT:
THIS
PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS
EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST
AGREEMENT, AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER
OF
THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE
OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS
THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO
REDWOOD CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR
PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
]
THE
PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “
SECURITIES
ACT
”),
AND
SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN MAY NOT BE OFFERED, SOLD
OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF ANY PREFERRED SECURITIES IS HEREBY
NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A UNDER THE SECURITIES ACT.
THE
HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR
THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES
MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST OR THE
DEPOSITOR, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) AND A
“QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED), (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (IV)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR
(V)
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND
(B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT
OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE
PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY
INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS
THAN
$100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED
SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
PRINCIPAL OF OR INTEREST ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN,
AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN
SUCH PREFERRED SECURITIES.
THE
HOLDER OF THIS PREFERRED SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN
EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF
1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY,
AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS
PREFERRED SECURITY OR ANY INTEREST THEREIN UNLESS SUCH ACQUIROR OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-28, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION OR ITS ACQUISITION AND HOLDING OF THIS PREFERRED
SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA
OR
SECTION 2975 OF THE CODE WITH RESPECT TO SUCH ACQUISITION OR HOLDING. ANY
PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL
BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER
(i)
IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA,
OR OTHER PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON
OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE OR (ii) SUCH ACQUISITION OR HOLDING WILL NOT RESULT IN
A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
FOR WHICH FULL EXEMPTION RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY
OR ADMINISTRATIVE EXEMPTION.
Certificate
Number: G-1
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Up
to $100,000,000 Aggregate Liquidation
Amount
Preferred
Securities
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CUSIP
NO.
[REG
S: U75723 AA 1
ISIN
NUMBER: USU75723AA17
RULE
144A: 75777G AA 5
ISIN
NUMBER: US75777GAA58]
Certificate
Evidencing Preferred Securities
of
Redwood
Capital Trust I
Preferred
Securities
(liquidation
amount $1,000 per Preferred Security)
Redwood
Capital Trust I, a statutory trust created under the laws of the State of
Delaware (the
“Trust”
),
hereby
certifies that Cede & Co., as nominee on behalf of The Depositary Trust
Company (the
“Holder”
)
is the
registered owner of up to 100,000 Preferred Securities or such other number
of
Preferred Securities represented hereby as may be set forth in the records
of
the Securities Registrar hereinafter referred to in accordance with the Trust
Agreement (as defined below) of the Trust representing an undivided preferred
beneficial interest in the assets of the Trust and designated the Redwood
Capital Trust I
Preferred
Securities (liquidation amount $1,000 per Preferred Security) (the
“Preferred
Securities”
).
Subject to the terms of the Trust Agreement, the Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and
in
proper form for transfer as provided in
Section 5.7
of the
Trust Agreement. The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth
in, and
this certificate and the Preferred Securities represented hereby are issued
and
shall in all respects be subject to the terms and provisions of, the Amended
and
Restated Trust Agreement of the Trust, dated as of December 12, 2006, as
the
same may be amended from time to time (the
“Trust
Agreement”
),
among
Redwood Trust, Inc., as Depositor, The Bank of New York Trust Company, National
Association, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee, the Administrative Trustees named therein and the Holders, from
time to
time, of the Trust Securities. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Property
Trustee at its Corporate Trust Office.
Upon
receipt of this certificate, the Holder is bound by the Trust Agreement and
is
entitled to the benefits thereunder.
This
Preferred Securities Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
All
capitalized terms used but not defined in this Preferred Securities Certificate
are used with the meanings specified in the Trust Agreement, including the
Schedules and Exhibits thereto.
In
Witness Whereof
,
one of
the Administrative Trustees of the Trust has executed on behalf of the Trust
this certificate this __ day of December, 2006.
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Redwood
Capital
T
rust
I
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By:
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Name:
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Administrative
Trustee
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This
is
one of the Preferred Securities referred to in the within-mentioned Trust
Agreement.
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Dated:
December 12, 2006
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The
Bank of New York Trust Company
,
National
Association
,
not in its individual capacity, but solely as Property
Trustee
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By:
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Authorized
signatory
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[FORM
OF REVERSE OF SECURITY]
The
Trust
shall distribute Distributions from December 12, 2006, or from the most recent
Distribution Date to which Distributions have been paid or duly provided
for,
quarterly in arrears on January 30, April 30, July 30 and October 30 of each
year, commencing on January 30, 2007, at a variable rate equal to LIBOR plus
2.25% per annum of the Liquidation Amount of the Preferred Securities
represented by this Preferred Securities Certificate, together with any
Additional Interest Amounts, in respect to such period.
Distributions
on the Trust Securities shall be made by the Paying Agent from the Payment
Account and shall be payable on each Distribution Date only to the extent that
the Trust has funds then on hand and available in the Payment Account for the
payment of such Distributions.
Distributions
on the Securities must be paid on the dates payable to the extent that the
Trust
has funds available for the payment of such Distributions in the Payment Account
of the Trust. The Trust’s funds available for Distribution to the Holders of the
Preferred Securities will be limited to payments received from the Depositor
on
the Note.
During
an
Event of Default, the Depositor shall not (i) declare or pay any dividends
or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Depositor’s capital stock, except only to the extent
necessary to maintain its status as a real estate investment trust under the
Code, provided such distributions to maintain its status as a real estate
investment trust under the Code may not be made in any event if there has
occurred (x) an Event of Default described in clauses (a), (b), (e) or (f)
of
Section
5.1
of the
Indenture or (y) any Event of Default with respect to which acceleration of
principal has been triggered pursuant to
Section
5.2
of the
Indenture, or (z) an Event of Default triggered by a breach of
Section
10.9
of the
Indenture (ii) vote in favor of or permit or otherwise allow any of its
Significant Subsidiaries to declare or pay any dividends or distributions on,
or
redeem, purchase, acquire or make a liquidation payment with respect to or
otherwise retire, any shares of any such Significant Subsidiary’s preferred
stock or other equity interests entitling the holders thereof to a stated rate
of return (for the avoidance of doubt, whether such preferred stock or other
equity interests are perpetual or otherwise) if such proceeds are payable to
any
third party which is not the Depositor or an affiliate of the Depositor, or
(iii) make any payment of principal of or any interest or premium, if any,
on or
repay, repurchase or redeem any debt securities of the Depositor that rank
pari
passu
in all
respects with or junior in interest to the Preferred Securities (other than
with
respect to clauses (i) and (iii) above, (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Depositor or any Significant
Subsidiary in connection with (1) any employment contract, benefit plan or
other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, (2) a dividend reinvestment or stockholder
stock purchase plan or (3) the issuance of capital stock of the Depositor or
of
such Significant Subsidiary (or securities convertible into or exercisable
for
such capital stock) as consideration in an acquisition transaction entered
into
prior to the Event of Default, (b) as a result of an exchange or conversion
of
any class or series of the Depositor’s capital stock (or any capital stock of a
Significant Subsidiary) for any class or series of the Depositor’s capital stock
(or in the case of a Significant Subsidiary, any class or series of such
Significant Subsidiary’s capital stock) or any class or series of the
Depositor’s indebtedness for any class or series of the Depositor’s capital
stock (or in the case of indebtedness of a Significant Subsidiary, or any class
or series of such Significant Subsidiary’s indebtedness for any class or series
of such Significant Subsidiary’s capital stock), (c) the purchase of fractional
interests in shares of the Depositor’s capital stock (or the capital stock of a
Significant Subsidiary) pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan (as defined in
the
Indenture), the issuance of rights, stock or other property under any Rights
Plan, or the redemption or repurchase of rights pursuant thereto or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options
or
other rights is the same stock as that on which the dividend is being paid
or
ranks
pari
passu
with or
junior to such stock and any cash payments in lieu of fractional shares issued
in connection therewith).
On
each
Note Redemption Date, on the stated maturity (or any date of principal repayment
upon early maturity) of the Notes and on each other date on (or in respect
of)
which any principal on the Notes is repaid, the Trust will be required to redeem
a Like Amount of Trust Securities at the Redemption Price.
Under
the
Indenture, the Notes may be redeemed by the Depositor on any Interest Payment
Date, at the Depositor’s option, on or after January 30, 2012 in whole or in
part from time to time at the Optional Note Redemption Price of the principal
amount thereof or the redeemed portion thereof, as applicable, together, in
the
case of any such redemption, with accrued interest, including any Additional
Interest, to but excluding the date fixed for redemption. The Notes may also
be
redeemed by the Depositor, at its option, at any time, in whole but not in
part,
upon the occurrence of an Investment Company Event or a Tax Event at the Special
Note Redemption Price;
provided
,
that
such Investment Company Event or a Tax Event is continuing on the Redemption
Date.
The
Trust
Securities redeemed on each Redemption Date shall be redeemed at the Redemption
Price with the proceeds from the contemporaneous redemption or payment at
maturity of Notes. Redemptions of the Trust Securities (or portion thereof)
shall be made and the Redemption Price shall be payable on each Redemption
Date
only to the extent that the Trust has funds then on hand and available in the
Payment Account for the payment of such Redemption Price.
Payments
of Distributions (including any Additional Interest Amounts), the Redemption
Price, Liquidation Amount or any other amounts in respect of the Preferred
Securities shall be made
by
wire
transfer at such place and to such account at a banking institution in the
United States as may be designated in writing at least ten (10) Business Days
prior to the date for payment by the registered holder of this Certificate
unless proper written transfer instructions have not been received by the
relevant record date, in which case such payments shall be made by check mailed
to the address of such Person as such address shall appear in the Security
Register.
If
any
Preferred Securities are held by a Depositary, such Distributions shall be
made
to the Depositary in immediately available funds.
The
indebtedness evidenced by the Notes is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the prior payment in full of
all
Senior Debt (as defined in the Indenture), and this Security is issued subject
to the provisions of the Indenture with respect thereto.
ASSIGNMENT
For
Value
Received,
the
undersigned assigns and transfers this Preferred Securities Certificate
to:
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(Insert
assignee’s social security or tax identification
number)
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(Insert
address and zip code of assignee)
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and
irrevocably appoints
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agent
to
transfer this Preferred Securities Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:
_______________________
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Signature:
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________________________________________________________________
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(Sign
exactly as your name appears on the other side of this Preferred
Securities Certificate)
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The
signature(s) should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership
in
an approved signature guarantee medallion program), pursuant to S.E.C. Rule
17Ad-15.
[
Regulation
S Schedule A
The
initial amount of Preferred Securities held hereby is
[Amount
Sold Pursuant to Reg S on Closing Date]
.
The
amount of any Preferred Securities issued or canceled in exchange for a portion
of portions hereof, any portion or portions hereof exchanged for a definitive
certificated Preferred Securities Certificate or other global Preferred
Securities Certificate and any portion of portions of a definitive certificated
Preferred Securities Certificate or other global Preferred Securities
Certificate exchanged for a portion or portions hereof:
Date
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Amount
of Preferred Securities Issued, Canceled or
Exchanged
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Remaining
Amount of this Regulation S Global Preferred Securities
Certificate
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Notation
Made
by or on Behalf of
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[Closing
Date]
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[Amount
Sold Pursuant to Reg S on Closing Date]
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[
Rule
144A Schedule A
The
initial amount of Preferred Securities held hereby is
[Amount
Sold Pursuant to Rule 144A on Closing Date]
.
The
amount of any Preferred Securities issued or canceled in exchange for a portion
of portions hereof, any portion or portions hereof exchanged for a definitive
certificated Preferred Securities Certificate or other global Preferred
Securities Certificate and any portion of portions of a definitive certificated
Preferred Securities Certificate or other global Preferred Securities
Certificate exchanged for a portion or portions hereof:
Date
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Amount
of Preferred Securities Issued, Canceled or
Exchanged
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Remaining
Amount of this Rule 144A Global Preferred Securities
Certificate
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Notation
Made
by or on Behalf of
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[Closing
Date]
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[Amount
Sold Pursuant to Rule 144A on Closing Date]
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Exhibit
D
Junior
Subordinated Indenture
Exhibit
E
Form
of Transferee Certificate
to
be Executed by Transferees
__________,
[ ]
The
Bank
of New York Trust Company,
National
Association
601
Travis, 16
th
Floor
Houston,
Texas 77002
Attention:
Worldwide Securities Services — Redwood Capital Trust I
Redwood
Trust, Inc.
Redwood
Capital Trust I
One
Belvedere Place
Suite
300
Mill
Valley, California 94941
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Re:
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Purchase
of $____________ stated liquidation amount of Preferred
Securities
(the
“Preferred
Securities”)
of Redwood Capital Trust I
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Ladies
and Gentlemen:
In
connection with our purchase of the Preferred Securities we confirm
that:
1.
We
understand that the Preferred Securities (the “Preferred Securities”) of Redwood
Capital Trust I (the “Trust”) and the Junior Subordinated Notes due 2037 of
Redwood Trust, Inc. (the “Company”) executed in connection therewith (the
“Subordinated Notes”) (the entire amount of the Trust’s outstanding Preferred
Securities and the Subordinated Notes together being referred to herein as
the
“Offered Securities”), have not been registered under the Securities Act of
1933, as amended (the “Securities Act”), and may not be offered or sold except
as permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing the Offered Securities
that,
if we decide to offer, sell or otherwise transfer any such Offered Securities,
(i) such offer, sale or transfer will be made only (a) to the Trust, (b) to
a
person we reasonably believe is a “qualified purchaser” (a “QP”) (as defined in
Section 2(a)(51) of the Investment Company Act of 1940, as amended) and in
compliance with the Securities Act. We understand that the certificates for
any
Offered Security that we receive will bear a legend substantially to the effect
of the foregoing.
2.
We
are a
“qualified purchaser” within the meaning of section 2(a)(51) of the Investment
Company Act of 1940, as amended, and are purchasing for our own account or
for
the account of such a “qualified purchaser,” and we have such knowledge and
experience in financial and business matters as to be capable of evaluating
the
merits and risks of our investment in the Offered Securities, and we and any
account for which we are acting are each able to bear the economic risks of
our
or its investment.
3.
We
are
acquiring the Offered Securities purchased by us for our own account (or for
one
or more accounts as to each of which we exercise sole investment discretion
and
have authority to make, and do make, the statements contained in this letter)
and not with a view to any distribution of the Offered Securities, subject,
nevertheless, to the understanding that the disposition of our property will
at
all times be and remain within our control.
4.
In
the
event that we purchase any Preferred Securities or any Subordinated Notes,
we
will acquire such Preferred Securities having an aggregate stated liquidation
amount of not less than $100,000 or such Subordinated Notes having an aggregate
principal amount not less than $100,000, for our own account and for each
separate account for which we are acting.
5.
We
acknowledge that we are not a fiduciary of (i) an employee benefit, individual
retirement account or other plan or arrangement subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or
section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) (each
a “Plan”); or (ii) an entity whose underlying assets include “plan assets” by
reason of any Plan’s investment in the entity, and are not purchasing any of the
Offered Securities on behalf of or with “plan assets” by reason of any Plan’s
investment in the entity.
6.
We
acknowledge that the Trust and the Company and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations, warranties
and
agreements and agree that if any of the acknowledgments, representations,
warranties and agreements deemed to have been made by our purchase of any of
the
Offered Securities are no longer accurate, we shall promptly notify the Company.
If we are acquiring any Offered Securities as a fiduciary or agent for one
or
more investor accounts, we represent that we have sole discretion with respect
to each such investor account and that we have full power to make the foregoing
acknowledgments, representations and agreement on behalf of each such investor
account.
(Name
of
Purchaser)
By:______________________________________
Date:
____________________________________
Upon
transfer, the Preferred Securities (having a stated liquidation amount of
$_____________) would be registered in the name of the new beneficial owner
as
follows.
Name:
Address:____________________________
Taxpayer
ID Number: _________________
Officer’s
Financial Certificate
The
undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice
President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
certifies pursuant to Section 8.16(b) of the Amended and Restated Trust
Agreement, dated as of December 12, 2006 (the “Trust Agreement”), among Redwood
Trust, Inc. (the “Company”), The Bank of New York Trust Company, National
Association, as property trustee, The Bank of New York (Delaware), as Delaware
trustee, and the administrative trustees named therein, that, as of [date],
[20__], the Company had the following ratios and balances:
As
of
[Quarterly/Annual Financial Date], 20__
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Senior
secured indebtedness for borrowed money (“Debt”)
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$_____
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Senior
unsecured Debt
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$_____
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Subordinated
Debt
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$_____
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Total
Debt
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$
_____
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Ratio
of (x) senior secured and unsecured Debt to (y) total Debt
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_____%
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*
A table
describing the officer’s financial certificate calculation procedures is
provided on page 3
[FOR
FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of
cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended _______, 20___].]
[FOR
FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [date], 20__.]
The
financial statements fairly present in all material respects, in accordance
with
U.S. generally accepted accounting principles (“GAAP”), the financial position
of the Company and its consolidated subsidiaries, and the results of operations
and changes in financial condition as of the date, and for the
[quarter]
[annual]
period
ended
[date]
,
20__,
and such financial statements have been prepared in accordance with GAAP
consistently applied throughout the period involved (expect as otherwise noted
therein).
There
has
been no monetary default with respect to any indebtedness owed by the Company
and/or its subsidiaries (other than those defaults cured within 30 days of
the
occurrence of the same).
IN
WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this _____ day of _____________, 20__.
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Redwood
Trust,
Inc.
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Date:
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By:
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Name:
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Title:
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Redwood
Trust, Inc.
One
Belvedere Place
Suite
300
Mill
Valley, California 94941
Telephone:
(415) 389-7373
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Schedule
A
DETERMINATION
OF LIBOR
With
respect to the Trust Securities, the London interbank offered rate
(“
LIBOR
”)
shall
be determined by the Calculation Agent in accordance with the following
provisions (in each case rounded to the nearest .000001%):
(1)
On
the
second LIBOR Business Day (as defined below) prior to a Distribution Date
(except with respect to the first interest payment period such date shall be
December 8, 2006)
(each
such day, a “
LIBOR
Determination Date
”),
LIBOR
for any given security shall for the following interest payment period equal
the
rate (expressed as a percentage per annum) for U.S. dollar deposits in Europe,
for a three (3) month period, that appears on Dow Jones Telerate (as defined
in
the International Swaps and Derivatives Association, Inc. 2000 Interest Rate
and
Currency Exchange Definitions) Page 3750, or such other page as may replace
such
Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date,
as
reported by Bloomberg Financial Market Commodities News or any successor
service. If such rate is superseded on Telerate Page 3750 by a corrected rate
before 12:00 noon (London time) on such LIBOR Determination Date, the corrected
rate as so substituted will be LIBOR for such LIBOR Determination
Date.
(2)
If
on any
LIBOR Determination Date such rate does not appear on Dow Jones Telerate Page
3750 or such other page as may replace such Page 3750, the Calculation Agent
shall determine the arithmetic mean of the offered quotations (expressed as
a
percentage per annum) of the Reference Banks (as defined below) to leading
banks
in the London interbank market for U.S. dollar deposits in Europe, for a three
(3) month period, for an amount determined by the Calculation Agent (but not
less than U.S. $1,000,000) by reference to requests for quotations as of
approximately 11:00 A.M. (London time) on the LIBOR Determination Date made
by
the Calculation Agent to the Reference Banks. If on any LIBOR Determination
Date
at least two of the Reference Banks provide such quotations, LIBOR shall equal
such arithmetic mean of such quotations. If on any LIBOR Determination Date
only
one or none of the Reference Banks provide such quotations, LIBOR shall be
deemed to be the arithmetic mean of the offered quotations (expressed as a
percentage per annum) that two (2) leading banks in The City of New York
selected by the Calculation Agent are quoting on the relevant LIBOR
Determination Date for U.S. dollar deposits in Europe, for a three (3) month
period, for an amount determined by the Calculation Agent (but not less than
U.S. $1,000,000);
provided
,
that if
the Calculation Agent is required but is unable to determine a rate in
accordance with at least one of the procedures provided above, LIBOR shall
be
LIBOR as determined on the previous LIBOR Determination Date.
(3)
As
used
herein:
“Reference
Banks”
means
four major banks in the London interbank market selected by the Calculation
Agent; and
“LIBOR
Business Day”
means a
day (a) on which commercial banks are open for business (including dealings
in
foreign exchange and foreign currency deposits) in London and (b) is not a
Saturday, Sunday or other day on which commercial banking institutions in New
York, New York or Wilmington, Delaware are authorized or obligated by law or
executive order to be closed.
Exhibit
1.4
JUNIOR
SUBORDINATED INDENTURE
between
REDWOOD
TRUST, INC.
and
THE
BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION
,
as
Trustee
________________
Dated
as
of December 12, 2006
________________
TABLE
OF CONTENTS
Page
ARTICLE
I.
|
Definitions
and Other Provisions of General Application
|
1
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|
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SECTION
1.1.
|
|
Definitions.
|
1
|
SECTION
1.2.
|
|
Compliance
Certificate and Opinions.
|
10
|
SECTION
1.3.
|
|
Forms
of Documents Delivered to Trustee.
|
10
|
SECTION
1.4.
|
|
Acts
of Holders.
|
11
|
SECTION
1.5.
|
|
Notices,
Etc. to Trustee and Company.
|
13
|
SECTION
1.6.
|
|
Notice
to Holders; Waiver.
|
13
|
SECTION
1.7.
|
|
Effect
of Headings and Table of Contents.
|
13
|
SECTION
1.8.
|
|
Successors
and Assigns.
|
14
|
SECTION
1.9.
|
|
Separability
Clause.
|
14
|
SECTION
1.10.
|
|
Benefits
of Indenture.
|
14
|
SECTION
1.11.
|
|
Governing
Law.
|
14
|
SECTION
1.12.
|
|
Submission
to Jurisdiction.
|
14
|
SECTION
1.13.
|
|
Non-Business
Days.
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14
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ARTICLE
II.
|
Security
Forms
|
15
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SECTION
2.1.
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Form
of Security.
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15
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SECTION
2.2.
|
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Restricted
Legend.
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19
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SECTION
2.3.
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Form
of Trustee’s Certificate of Authentication.
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22
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SECTION
2.4.
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|
Temporary
Securities.
|
22
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SECTION
2.5.
|
|
Definitive
Securities.
|
22
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ARTICLE
III.
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The
Securities
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23
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SECTION
3.1.
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Payment
of Principal and Interest.
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23
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SECTION
3.2.
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Denominations.
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25
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SECTION
3.3.
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Execution,
Authentication, Delivery and Dating.
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25
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SECTION
3.4.
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Global
Securities.
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26
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SECTION
3.5.
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Registration,
Transfer and Exchange Generally.
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28
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SECTION
3.6.
|
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Mutilated,
Destroyed, Lost and Stolen Securities.
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29
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SECTION
3.7.
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Persons
Deemed Owners.
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30
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SECTION
3.8.
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Cancellation.
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30
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SECTION
3.9.
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Withholding
Tax.
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30
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SECTION
3.10.
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Reserved.
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31
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SECTION
3.11.
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|
Agreed
Tax Treatment.
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31
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SECTION
3.12.
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CUSIP
Numbers.
|
31
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ARTICLE
IV.
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Satisfaction
and Discharge
|
32
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SECTION
4.1.
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Satisfaction
and Discharge of Indenture.
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32
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SECTION
4.2.
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Application
of Trust Money.
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33
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ARTICLE
V.
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Remedies
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33
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SECTION
5.1.
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Events
of Default.
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33
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SECTION
5.2.
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Acceleration
of Maturity; Rescission and Annulment.
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34
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SECTION
5.3.
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Collection
of Indebtedness and Suits for Enforcement by Trustee.
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35
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SECTION
5.4.
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|
Trustee
May File Proofs of Claim.
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36
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SECTION
5.5.
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|
Trustee
May Enforce Claim Without Possession of Securities.
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36
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SECTION
5.6.
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|
Application
of Money Collected.
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36
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SECTION
5.7.
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Limitation
on Suits.
|
37
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SECTION
5.8.
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|
Unconditional
Right of Holders to Receive Principal, Premium,
if
any, and Interest; Direct Action by Holders of Preferred
Securities.
|
38
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SECTION
5.9.
|
|
Restoration
of Rights and Remedies.
|
38
|
SECTION
5.10.
|
|
Rights
and Remedies Cumulative.
|
38
|
SECTION
5.11.
|
|
Delay
or Omission Not Waiver.
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38
|
SECTION
5.12.
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Control
by Holders.
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39
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SECTION
5.13.
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Waiver
of Past Defaults.
|
39
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SECTION
5.14.
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|
Undertaking
for Costs.
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39
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SECTION
5.15.
|
|
Waiver
of Usury, Stay or Extension Laws.
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40
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ARTICLE
VI.
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The
Trustee
|
40
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SECTION
6.1.
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|
Corporate
Trustee Required.
|
40
|
SECTION
6.2.
|
|
Certain
Duties and Responsibilities.
|
40
|
SECTION
6.3.
|
|
Notice
of Defaults.
|
42
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SECTION
6.4.
|
|
Certain
Rights of Trustee.
|
43
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SECTION
6.5.
|
|
May
Hold Securities.
|
44
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SECTION
6.6.
|
|
Compensation;
Reimbursement; Indemnity.
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45
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SECTION
6.7.
|
|
Resignation
and Removal; Appointment of Successor.
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46
|
SECTION
6.8.
|
|
Acceptance
of Appointment by Successor.
|
46
|
SECTION
6.9.
|
|
Merger,
Conversion, Consolidation or Succession to Business.
|
47
|
SECTION
6.10.
|
|
Not
Responsible for Recitals or Issuance of Securities.
|
47
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SECTION
6.11.
|
|
Appointment
of Authenticating Agent.
|
47
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|
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ARTICLE
VII.
|
Holder’s
Lists and Reports by Company
|
49
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SECTION
7.1.
|
|
Company
to Furnish Trustee Names and Addresses of Holders.
|
49
|
SECTION
7.2.
|
|
Preservation
of Information, Communications to Holders.
|
49
|
SECTION
7.3.
|
|
Reports
by Company.
|
50
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|
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ARTICLE
VIII.
|
Consolidation,
Merger, Conveyance, Transfer or Lease
|
51
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|
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SECTION
8.1.
|
|
Company
May Consolidate, Etc., Only on Certain Terms.
|
51
|
SECTION
8.2.
|
|
Successor
Company Substituted.
|
51
|
|
|
|
|
ARTICLE
IX.
|
Supplemental
Indentures
|
52
|
|
|
|
|
SECTION
9.1.
|
|
Supplemental
Indentures without Consent of Holders.
|
52
|
SECTION
9.2.
|
|
Supplemental
Indentures with Consent of Holders.
|
53
|
SECTION
9.3.
|
|
Execution
of Supplemental Indentures.
|
54
|
SECTION
9.4.
|
|
Effect
of Supplemental Indentures.
|
54
|
SECTION
9.5.
|
|
Reference
in Securities to Supplemental Indentures.
|
54
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|
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ARTICLE
X.
|
Covenants
|
54
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|
|
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SECTION
10.1.
|
|
Payment
of Principal, Premium, if any, and Interest.
|
54
|
SECTION
10.2.
|
|
Money
for Security Payments to be Held in Trust.
|
54
|
SECTION
10.3.
|
|
Statement
as to Compliance.
|
55
|
SECTION
10.4.
|
|
Calculation
Agent.
|
56
|
SECTION
10.5.
|
|
Additional
Tax Sums.
|
56
|
SECTION
10.6.
|
|
Additional
Covenants.
|
57
|
SECTION
10.7.
|
|
Waiver
of Covenants.
|
58
|
SECTION
10.8.
|
|
Treatment
of Securities.
|
58
|
SECTION
10.9
|
|
Limitation
on Issuance of Securities
|
56
|
|
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ARTICLE
XI.
|
Redemption
of Securities
|
59
|
|
|
|
|
SECTION
11.1.
|
|
Optional
Redemption.
|
59
|
SECTION
11.2.
|
|
Special
Event Redemption.
|
59
|
SECTION
11.3.
|
|
Election
to Redeem; Notice to Trustee.
|
60
|
SECTION
11.4.
|
|
Selection
of Securities to be Redeemed.
|
60
|
SECTION
11.5.
|
|
Notice
of Redemption.
|
60
|
SECTION
11.6.
|
|
Deposit
of Redemption Price.
|
61
|
SECTION
11.7.
|
|
Payment
of Securities Called for Redemption.
|
61
|
|
|
|
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ARTICLE
XII.
|
Subordination
of Securities
|
62
|
|
|
|
SECTION
12.1.
|
|
Securities
Subordinate to Senior Debt.
|
62
|
SECTION
12.2.
|
|
No
Payment When Senior Debt in Default; Payment Over
of
Proceeds Upon Dissolution, Etc.
|
62
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|
|
Payment
Permitted If No
Default.
|
|
SECTION
12.4.
|
|
Subrogation
to Rights of Holders of Senior Debt.
|
64
|
SECTION
12.5.
|
|
Provisions
Solely to Define Relative Rights.
|
64
|
SECTION
12.6.
|
|
Trustee
to Effectuate Subordination.
|
65
|
SECTION
12.7.
|
|
No
Waiver of Subordination Provisions.
|
65
|
SECTION
12.8.
|
|
Notice
to Trustee.
|
65
|
SECTION
12.9.
|
|
Reliance
on Judicial Order or Certificate of Liquidating Agent.
|
66
|
SECTION
12.10.
|
|
Trustee
Not Fiduciary for Holders of Senior Debt.
|
66
|
SECTION
12.11.
|
|
Rights
of Trustee as Holder of Senior Debt; Preservation
of
Trustee’s Rights.
|
66
|
SECTION
12.12.
|
|
Article
Applicable to Paying Agents
|
67
|
SCHEDULES
Schedule
A—Determination of LIBOR
Exhibit
A—Form of Officer’s Financial Certificate
Junior
Subordinated Indenture
,
dated
as of December 12, 2006, between
Redwood
Trust, Inc.,
a
Maryland corporation (the “
Company”
),
and
The
Bank
of New York Trust Company,
National
Association
,
a
national banking association, as Trustee (in such capacity, the “
Trustee”
).
Recitals
of the Company
Whereas
,
the
Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance of its unsecured junior subordinated notes (the
“
Securities”
)
issued
to evidence loans made to the Company of the proceeds from the issuance by
Redwood Capital Trust I, a Delaware statutory trust (the “
Trust”
),
of
undivided preferred beneficial interests in the assets of the Trust (the
“Preferred
Securities”
)
and
undivided common beneficial interests in the assets of the Trust (the
“Common
Securities”
and,
together with the Preferred Securities, the
“Trust
Securities”
),
and to
provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and
Whereas
,
all
things necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.
Now,
Therefore
,
this
Indenture Witnesseth:
For
and
in consideration of the premises and the purchase of the Securities by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE
I
Definitions
and Other Provisions of General Application
SECTION
1.1.
Definitions.
For
all
purposes of this Indenture, except as otherwise expressly provided or unless
the
context otherwise requires:
(a)
the
terms
defined in this
Article
I
have the
meanings assigned to them in this
Article
I
;
(b)
the
words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”;
(c)
all
accounting terms not otherwise defined herein have the meanings assigned to
them
in accordance with GAAP;
(d)
unless
the context otherwise requires, any reference to an “Article” or a “Section”
refers to an Article or a Section, as the case may be, of this
Indenture;
(e)
the
words
“hereby”, “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or
other subdivision;
(f)
a
reference to the singular includes the plural and vice versa; and
(g)
the
masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.
“Act”
when
used with respect to any Holder, has the meaning specified in
Section
1.4
.
“
Administrative
Trustee
”
means,
with respect to the Trust, each Person identified as an “Administrative Trustee”
in the Trust Agreement, solely in its capacity as Administrative Trustee of
the
Trust under the Trust Agreement and not in its individual capacity, or its
successor in interest in such capacity, or any successor Administrative Trustee
appointed as therein provided.
“Additional
Interest”
means
the interest, if any, that shall accrue on any amounts payable on the
Securities, the payment of which has not been made on the applicable Interest
Payment Date and which shall accrue at the rate per annum specified or
determined as specified in such Security, in each case to the extent legally
enforceable.
“Additional
Tax Sums”
has the
meaning specified in
Section
10.5
.
“Additional
Taxes”
means
taxes, duties or other governmental charges imposed on the Trust as a result
of
a Tax Event (which, for the sake of clarity, does not include amounts required
to be deducted or withheld by the Trust from payments made by the Trust to
or
for the benefit of the Holder of, or any Person that acquires a beneficial
interest in, the Securities).
“Affiliate”
of any
specified Person means any other Person directly or indirectly controlling
or
controlled by or under direct or indirect common control with such specified
Person. For the purposes of this definition, “control,” when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
“Applicable
Depositary Procedures”
means,
with respect to any transfer or transaction involving a Global Security or
beneficial interest therein, the rules and procedures of the Depositary for
such
Security, in each case to the extent applicable to such transaction and as
in
effect from time to time.
“Authenticating
Agent”
means
any Person authorized by the Trustee pursuant to
Section
6.11
to act
on behalf of the Trustee to authenticate the Securities.
“Board
of Directors”
means
the board of directors of the Company or any duly authorized committee of that
board.
“Board
Resolution”
means a
copy of a resolution certified by the Secretary or an Assistant Secretary of
the
Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification.
“Business
Day”
means
any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in the City of New York are authorized or required by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office of the Trustee is closed for business.
“
Calculation
Agent
”
has
the
meaning specified in
Section
10.4
.
“
Code
”
means
the Internal Revenue Code of 1986, as amended.
“
Common
Securities
”
has
the
meaning specified in the first recital of this Indenture.
“Commission”
has the
meaning specified in
Section
7.3(c)
.
“Company”
means
the Person named as the “Company
”
in the
first paragraph of this Indenture until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
“Company
”
shall
mean such successor Person.
“Company
Request”
and
“
Company
Order”
mean,
respectively, the written request or order signed in the name of the Company
by
its Chairman of the Board of Directors, its Vice Chairman of the Board of
Directors, its Chief Executive Officer, President or a Vice President, and
by
its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
Notwithstanding the foregoing, a Company Order for the purposes of
authentication and delivery of the Securities pursuant to Section 3.3(a) shall
require the signature of only one of the above referenced officers of the
Company.
“Corporate
Trust Office”
means
the principal office of the Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of
this
Indenture is located at 601 Travis, 16
th
Floor,
Houston, Texas 77002 Attn: Worldwide Securities Services—Redwood Capital Trust
I. Initially, all notices and correspondence shall be addressed to Mudassir
Mohamed, telephone number (713) 483-6029.
“Debt”
means,
with respect to any Person, whether recourse is to all or a portion of the
assets of such Person, whether currently existing or hereafter incurred and
whether or not contingent and without duplication, (i) every obligation of
such
Person for money borrowed; (ii) every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of such Person with respect to letters
of
credit, bankers’ acceptances or similar facilities issued for the account of
such Person; (iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or other accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such Person, whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends
of
another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor or
otherwise; and (viii) any renewals, extensions, refundings, amendments or
modifications of any obligation of the type referred to in clauses (i) through
(vii).
“Defaulted
Interest”
has the
meaning specified in
Section
3.1(c)
.
“
Delaware
Trustee
”
means,
with respect to the Trust, the Person identified as the “Delaware Trustee” in
the Trust Agreement, solely in its capacity as Delaware Trustee of the Trust
under the Trust Agreement and not in its individual capacity, or its successor
in interest in such capacity, or any successor Delaware Trustee appointed as
therein provided.
“Depositary”
means an
organization registered as a clearing agency under the Exchange Act that is
designated as Depositary by the Company or any successor thereto. DTC will
be
the initial Depositary.
“Depositary
Participant”
means a
broker, dealer, bank, other financial institution or other Person for whom
from
time to time a Depositary effects book-entry transfers and pledges of securities
deposited with the Depositary.
“
Distributions”
means
amounts payable in respect of the Trust Securities as provided in the Trust
Agreement and referred to therein as “Distributions.”
“Dollar”
or
“$”
means
the
currency of the United States of America that, as at the time of payment, is
legal tender for the payment of public and private debts.
“DTC”
means
The Depository Trust Company, a New York corporation, or any successor
thereto.
“EDGAR”
has the
meaning specified in
Section
7.3(c)
.
“Equity
Interests
”
means
(a) the partnership interests (general or limited) in a partnership, (b) the
membership interests in a limited liability company and (c) the shares or stock
interests (both common stock and preferred stock) in a corporation.
“Event
of Default”
has the
meaning specified in
Section
5.1
.
“Exchange
Act”
means
the Securities Exchange Act of 1934 or any statute successor thereto, in each
case as amended from time to time.
“Expiration
Date”
has the
meaning specified in
Section
1.4(h)
.
“
GAAP
”
means
United States generally accepted accounting principles, consistently applied,
from time to time in effect.
“Global
Security”
means a
Security that evidences all or part of the Securities, the ownership and
transfers of which shall be made through book entries by a
Depositary.
“Government
Obligation”
means
(a)
any security that is (i) a direct obligation of the United States of America
of
which the full faith and credit of the United States of America is pledged
or
(ii) an obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the
United States of America, which, in either case (i) or (ii), is not callable
or
redeemable at the option of the issuer thereof, and (b) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any Government Obligation that is specified in clause
(a) above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest
on
any Government Obligation that is so specified and held, provided, that (except
as required by law) such custodian is not authorized to make any deduction
from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of principal or interest evidenced by such depositary
receipt.
“Holder”
means a
Person in whose name a Security is registered in the Securities
Register.
“Indenture”
means
this instrument as originally executed or as it may from time to time be amended
or supplemented by one or more amendments or indentures supplemental hereto
entered into pursuant to the applicable provisions hereof.
“Interest
Payment Date”
means
January 30, April 30, July 30 and October 30 of each year, commencing on January
30, 2007, during the term of this Indenture.
“Investment
Company Act”
means
the Investment Company Act of 1940 or any successor statute thereto, in each
case as amended from time to time.
“
Investment
Company Event”
means
the receipt by the Company of an Opinion of Counsel experienced in such matters
to the effect that, as a result of the occurrence of a change in law or
regulation (including any announced prospective change) or a written change
in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within ninety (90) days of the date
of
such opinion will be, considered an “investment company” that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after
the
date of the issuance of the Securities.
“LIBOR”
has the
meaning specified in
Schedule
A
.
“LIBOR
Business Day”
has the
meaning specified in
Schedule
A
.
“LIBOR
Determination Date”
has the
meaning specified in
Schedule
A
.
“
Liquidation
Amount
”
has
the
meaning specified in the Trust Agreement.
“Maturity”
means,
when used with respect to any Security, the date on which the principal of
such
Security or any installment of principal becomes due and payable as therein
or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
“Notice
of Default”
means
a
written notice of the kind specified in
Section
5.1(c)
.
“Officers’
Certificate”
means a
certificate signed by the Chairman of the Board, a Vice Chairman of the Board,
the Chief Executive Officer, the President or a Vice President, and by the
Chief
Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or
an
Assistant Secretary, of the Company and delivered to the Trustee.
“Opinion
of Counsel”
means a
written opinion of counsel, who may be counsel for or an employee of the Company
or any Affiliate of the Company.
“
Optional
Redemption Price
”
has
the
meaning set forth in Section 11.1.
“Original
Issue Date”
means
the
date of original issuance of each Security.
“Outstanding”
means,
when used in reference to any Securities, as of the date of determination,
all
Securities theretofore authenticated and delivered under this Indenture,
except:
(i)
Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
(ii)
Securities
for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; provided
,
that, if
such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii)
Securities
that have been paid or in substitution for or in lieu of which other Securities
have been authenticated and delivered pursuant to the provisions of this
Indenture, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided,
that in
determining whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be Outstanding unless the Company
shall hold all Outstanding Securities, except that, in determining whether
the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or
any
Affiliate of the Company or such other obligor. Notwithstanding anything herein
to the contrary, Securities initially issued to the Trust that are owned by
the
Trust shall be deemed to be Outstanding notwithstanding the ownership by the
Company or an Affiliate of any beneficial interest in the Trust.
“Paying
Agent
”
means
the
Trustee or any Person (other than the Company or any Affiliate of the Company)
authorized by the Company to pay the principal of or any premium or interest
on,
or other amounts in respect of, any Securities on behalf of the
Company.
“Person”
means
a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, company, limited liability company,
trust, unincorporated association, or government, or any agency or political
subdivision thereof, or any other entity of whatever nature.
“Place
of Payment”
means,
with respect to the Securities, the Corporate Trust Office of the
Trustee.
“Preferred
Securities”
has the
meaning specified in the first recital of this Indenture.
“Predecessor
Security”
of any
particular Security means every previous Security evidencing all or a portion
of
the same debt as that evidenced by such particular Security. For the purposes
of
this definition, any security authenticated and delivered under
Section
3.6
in lieu
of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Security.
“Proceeding”
has the
meaning specified in
Section
12.2(b)
.
“Property
Trustee”
means
the
Person identified as the “Property Trustee” in the Trust Agreement, solely in
its capacity as Property Trustee of the Trust under the Trust Agreement and
not
in its individual capacity, or its successor in interest in such capacity,
or
any successor Property Trustee appointed as therein provided.
“Purchase
Agreement”
means
the Purchase Agreement or Purchase Agreements (whether one or more) executed
and
delivered contemporaneously with this Indenture by the Trust, the Company and
the purchaser(s) named therein, as the same may be amended from time to
time.
“Redemption
Date”
means,
when used with respect to any Security to be redeemed, the date fixed for such
redemption by or pursuant to this Indenture.
“Redemption
Price”
means,
when used with respect to any Security to be redeemed, in whole or in part,
the
Special Redemption Price or the Optional Redemption Price, as applicable, at
which such Security or portion thereof is to be redeemed as fixed by or pursuant
to this Indenture.
“
Reference
Banks
”
has
the
meaning specified in
Schedule
A
.
“Regular
Record Date”
for the
interest payable on any Interest Payment Date with respect to the Securities
means the date that is fifteen (15) days preceding such Interest Payment Date
(whether or not a Business Day).
“Responsible
Officer”
means,
when used with respect to the Trustee, the officer in the Worldwide Securities
Services department of the Trustee having direct responsibility for the
administration of this Indenture.
“Rights
Plan”
means
a
plan of the Company providing for the issuance by the Company to all holders
of
its Equity Interests of rights entitling the holders thereof to subscribe for
or
purchase Equity Interests or any class or series of Equity Interests in the
Company which rights (i) are deemed to be transferred with such Equity Interests
and (ii) are also issued in respect of future issuances of such Equity
Interests, in each case until the occurrence of a specified event or
events.
“Securities”
or
“
Security
”
means
any debt securities or debt security, as the case may be, authenticated and
delivered under this Indenture.
“Securities
Act”
means
the Securities Act of 1933 or any successor statute thereto, in each case as
amended from time to time.
“Securities
Register”
and
“
Securities
Registrar”
have the
respective meanings specified in
Section
3.5
.
“Senior
Debt”
means
the principal of and any premium and interest on (including interest accruing
on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company, whether or not such claim for post-petition interest is allowed
in such proceeding) all Debt of the Company, whether incurred on or prior to
the
date of this Indenture or thereafter incurred, unless it is provided in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, that such obligations are not superior in right of payment to
the
Securities issued under this Indenture;
provided
,
that
Senior Debt shall not be deemed to include
any
(i)
debt or (ii) other debt securities (and guarantees, if any, in respect of such
debt securities) issued to any trust other than the Trust (or a trustee of
any
such trust), partnership or other entity affiliated with the Company that is
a
financing vehicle of the Company (a “financing entity”) in connection with the
issuance by such financing entity of equity securities or other securities,
in
each case of (i) or (ii) pursuant to an instrument that ranks
pari
passu
with or
junior in right of payment to this Indenture.
“Special
Event”
means
the occurrence of an Investment Company Event or a Tax Event.
“Special
Record Date”
for the
payment of any Defaulted Interest means a date fixed by the Trustee pursuant
to
Section
3.1(c)(i)
.
“
Special
Redemption Price
”
has
the
meaning set forth in
Section
11.2
.
“Stated
Maturity”
means
January 30, 2037.
“Subsidiary”
of a
Person means (a) any corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person and/or by one or more of its Subsidiaries
or (b) any partnership, limited liability company, association, joint venture
or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person and/or by one or more of its
Subsidiaries. Unless otherwise expressly provided, all references herein to
a
“Subsidiary” shall mean a Subsidiary of the Company.
“
Substantially
Similar Securities
”
has
the
meaning set forth in
Section
10.9
.
“Tax
Event”
means
the receipt by the Company of an Opinion of Counsel experienced in such matters
to the effect that, as a result of (a) any amendment to or change (including
any
announced prospective change) in the laws or any regulations thereunder of
the
United States or any political subdivision or taxing authority thereof or
therein or (b) any judicial decision or any official administrative
pronouncement (including any private letter ruling, technical advice memorandum
or field service advice) or regulatory procedure, including any notice or
announcement of intent to adopt any such pronouncement or procedure (an
“
Administrative
Action
”),
regardless of whether such judicial decision or Administrative Action is issued
to or in connection with a proceeding involving the Company or the Trust and
whether or not subject to review or appeal, which amendment, change, judicial
decision or Administrative Action is enacted, promulgated or announced, in
each
case, on or after the date of issuance of the Securities, there is more than
an
insubstantial risk that (i) the Trust is, or will be within ninety (90) days
of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Securities, (ii) interest payable
by the Company on the Securities is not, or within ninety (90) days of the
date
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (iii) the Trust is, or will
be
within ninety (90) days of the date of such opinion, subject to more than a
de
minimis
amount
of other taxes, duties or other governmental charges.
“Trust”
has the
meaning specified in the first recital of this Indenture.
“Trust
Agreement”
means
the Amended and Restated Trust Agreement executed and delivered by the Company,
the Trustee, The Bank of New York (Delaware), as Delaware Trustee and the
Administrative Trustees named therein, contemporaneously with the execution
and
delivery of this Indenture, for the benefit of the holders of the Trust
Securities, as amended or supplemented from time to time.
“Trustee”
means
the Person named as the “Trustee
”
in the
first paragraph of this instrument, solely in its capacity as such and not
in
its individual capacity, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and, thereafter,
“Trustee
”
shall
mean or include each Person who is then a Trustee hereunder.
“
Trust
Indenture Act
”
means
the
Trust Indenture Act of 1939, as amended and as in effect on the date as of
this
Indenture.
“Trust
Securities
”
has
the
meaning specified in the first recital of this Indenture.
SECTION
1.2.
Compliance
Certificate and Opinions.
(a)
Upon
any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall, if requested by the Trustee,
furnish to the Trustee an Officers’ Certificate stating that all conditions
precedent (including covenants compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent (including covenants
compliance with which constitutes a condition precedent), if any, have been
complied with.
(b)
Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than the certificate provided pursuant
to
Section
10.3
)
shall
include:
(i)
a
statement by each individual signing such certificate or opinion that such
individual has read such covenant or condition and the definitions herein
relating thereto;
(ii)
a
brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions of such individual contained in such
certificate or opinion are based;
(iii)
a
statement that, in the opinion of such individual, he or she has made such
examination or investigation as is necessary to enable him or her to express
an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(iv)
a
statement as to whether, in the opinion of such individual, such condition
or
covenant has been complied with.
SECTION
1.3.
Forms
of Documents Delivered to Trustee.
(a)
In
any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
(b)
Any
certificate or opinion of an officer of the Company may be based, insofar as
it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or after reasonable inquiry should
know,
that the certificate or opinion or representations with respect to matters
upon
which his or her certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer
or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or after reasonable inquiry should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
(c)
Where
any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one
instrument.
(d)
Whenever,
subsequent to the receipt by the Trustee of any Board Resolution, Officers’
Certificate, Opinion of Counsel or other document or instrument, a clerical,
typographical or other inadvertent or unintentional error or omission shall
be
discovered therein, a new document or instrument may be substituted therefor
in
corrected form with the same force and effect as if originally received in
the
corrected form and, irrespective of the date or dates of the actual execution
and/or delivery thereof, such substitute document or instrument shall be deemed
to have been executed and/or delivered as of the date or dates required with
respect to the document or instrument for which it is substituted. Without
limiting the generality of the foregoing, any Securities issued under the
authority of such defective document or instrument shall nevertheless be the
valid obligations of the Company entitled to the benefits of this Indenture
equally and ratably with all other Outstanding Securities.
SECTION
1.4.
Acts
of Holders.
(a)
Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given to or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent thereof duly appointed
in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments (including any appointment
of an agent) is or are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to
as the “
Act”
of
the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this
Section
1.4
.
(b)
The
fact
and date of the execution by any Person of any such instrument or writing may
be
proved by the affidavit of a witness of such execution or by the certificate
of
any notary public or other officer authorized by law to take acknowledgments
of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him or her the execution thereof. Where such execution is by
a
Person acting in other than his or her individual capacity, such certificate
or
affidavit shall also constitute sufficient proof of his or her authority. The
fact and date of the execution by any Person of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that the Trustee deems sufficient and in accordance with such
reasonable rules as the Trustee may determine.
(c)
The
ownership of Securities shall be proved by the Securities Register.
(d)
Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the
same
Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.
(e)
Without
limiting the foregoing, a Holder entitled to take any action hereunder with
regard to any particular Security may do so with regard to all or any part
of
the principal amount of such Security or by one or more duly appointed agents
each of which may do so pursuant to such appointment with regard to all or
any
part of such principal amount.
(f)
Except
as
set forth in paragraph (g) of this
Section
1.4
,
the
Company may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders
of
Securities. If any record date is set pursuant to this paragraph, the Holders
of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date;
provided
,
that no
such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date (as defined in
Section
1.4(h)
)
by
Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Company
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect). Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to
be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in
Section
1.6
.
(g)
The
Trustee may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to join in the giving or making
of
(i) any Notice of Default, (ii) any declaration of acceleration or rescission
or
annulment thereof referred to in
Section
5.2
,
(iii)
any request to institute proceedings referred to in
Section
5.7(b
)
or (iv)
any direction referred to in
Section
5.12
.
If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to
join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date;
provided,
that no
such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities on such record date. Nothing in this paragraph shall
be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect). Promptly after any record date
is
set pursuant to this paragraph, the Trustee, at the Company’s expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in
Section
1.6
.
(h)
With
respect to any record date set pursuant to paragraph (f) or (g) of this
Section
1.4
,
the
party hereto that sets such record date may designate any day as the “Expiration
Date
”
and
from
time to time may change the Expiration Date to any earlier or later day;
provided
,
that no
such change shall be effective unless notice of the proposed new Expiration
Date
is given to the other party hereto in writing, and to each Holder of Securities
in the manner set forth in
Section
1.6
,
on or
prior to the existing Expiration Date. If an Expiration Date is not designated
with respect to any record date set pursuant to this
Section
1.4
,
the
party hereto that set such record date shall be deemed to have initially
designated the ninetieth (90
th
)
day
after such record date as the Expiration Date with respect thereto, subject
to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the one
hundred eightieth (180
th
)
day
after the applicable record date.
SECTION
1.5.
Notices,
Etc. to Trustee and Company.
Any
request, demand, authorization, direction, notice, consent, waiver, Act of
Holders, or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with:
(a)
the
Trustee by any Holder, any holder of Preferred Securities or the Company shall
be sufficient for every purpose hereunder if made, given, furnished or filed
in
writing to or with and received by the Trustee at its Corporate Trust Office,
or
(b)
the
Company by the Trustee, any Holder or any holder of Preferred Securities shall
be sufficient for every purpose hereunder if in writing and mailed, first class,
postage prepaid, to the Company addressed to it at One Belvedere Place, Suite
300, Mill Valley, California 94941 or at any other address previously furnished
in writing to the Trustee by the Company.
SECTION
1.6.
Notice
to Holders; Waiver.
Where
this Indenture provides for notice to Holders of any event, such notice shall
be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first class, postage prepaid, to each Holder affected by such event
to the address of such Holder as it appears in the Securities Register, not
later than the latest date (if any), and not earlier than the earliest date
(if
any), prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when
said
notice is required to be given pursuant to any provision of this Indenture,
then
any manner of giving such notice as shall be satisfactory to the Trustee shall
be deemed to be a sufficient giving of such notice. In any case where notice
to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by
the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such
waiver.
SECTION
1.7.
Effect
of Headings and Table of Contents.
The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction of this
Indenture.
SECTION
1.8.
Successors
and Assigns.
This
Indenture shall be binding upon and shall inure to the benefit of any successor
to the Company and the Trustee, including any successor by operation of law.
Except in connection with a transaction involving the Company that is permitted
under
Article
VIII
and
pursuant to which the assignee agrees in writing to perform the Company’s
obligations hereunder, the Company shall not assign its obligations
hereunder.
SECTION
1.9.
Separability
Clause.
If
any
provision in this Indenture or in the Securities shall be invalid, illegal
or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and there
shall
be deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
SECTION
1.10.
Benefits
of Indenture.
Nothing
in this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors and assigns, the
holders of Senior Debt, the Holders of the Securities and, to the extent
expressly provided in
Sections
5.2
,
5.8
,
5.9
,
5.11
,
5.12
,
5.13
,
9.2
and
10.7
,
the
holders of Preferred Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION
1.11.
Governing
Law.
This
Indenture and the rights and obligations of each of the Holders, the Company
and
the Trustee shall be construed and enforced in accordance with and governed
by
the laws of the State of New York without reference to its conflict of laws
provisions (other than section 5-1401 of the General Obligations
Law).
SECTION
1.12.
Submission
to Jurisdiction.
ANY
LEGAL
ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR
ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF
THE
STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES
OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
INDENTURE.
SECTION
1.13.
Non-Business
Days.
If
any
Interest Payment Date, Redemption Date or Stated Maturity of any Security shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities) payment of interest, premium, if any, or principal
or other amounts in respect of such Security shall not be made on such date,
but
shall be made on the next succeeding Business Day (and no interest shall accrue
in respect of the amounts whose payment is so delayed for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, until such next succeeding Business Day) except that, if such
Business Day falls in the next succeeding calendar year, such payment shall
be
made on the immediately preceding Business Day, in each case with the same
force
and effect as if made on the Interest Payment Date or Redemption Date or at
the
Stated Maturity.
ARTICLE
II
Security
Forms
SECTION
2.1.
Form
of Security.
Any
Security issued hereunder shall be in substantially the following
form:
REDWOOD
TRUST, INC.
Junior
Subordinated Note due 2037
No.
_____________
|
$
____________
|
Redwood
Trust, Inc., a corporation organized and existing under the laws of the State
of
Maryland (hereinafter called the “
Company,”
which
term includes any successor Person under the Indenture hereinafter referred
to),
for value received, hereby promises to pay to The Bank of New York Trust
Company, National Association, not in its individual capacity, but solely
as
Property Trustee for Redwood Capital Trust I, or registered assigns, the
principal sum of ______________________________ or such other principal amount
represented hereby as may be set forth in the records of the Securities
Registrar hereinafter referred to in accordance with the Indenture on January
30, 2037. The Company further promises to pay interest on said principal
sum
from December 12, 2006, or from the most recent Interest Payment Date to
which
interest has been paid or duly provided for, quarterly in arrears on January
30,
April 30, July 30 and October 30 of each year, commencing on January 30,
2007,
or if any such day is not a Business Day, on the next succeeding Business
Day
(and no interest shall accrue in respect of the amounts whose payment is
so
delayed for the period from and after such Interest Payment Date until such
next
succeeding Business Day), except that, if such Business Day falls in the
next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if
made
on the Interest Payment Date, at a variable rate equal to LIBOR plus 2.25%
per
annum, together with Additional Tax Sums, if any, as provided in
Section
10.5
of the
Indenture, until the principal hereof is paid or duly provided for or made
available for payment;
provided
,
further
,
that
any overdue principal, premium, if any, or Additional Tax Sums and any overdue
installment of interest shall bear Additional Interest at a variable rate
equal
to LIBOR plus 2.25% per annum (to the extent that the payment of such interest
shall be legally enforceable), compounded quarterly, from the dates such
amounts
are due until they are paid or made available for payment, and such interest
shall be payable on demand.
The
amount of interest payable for any period shall be computed on the basis of
a
360-day year and the actual number of days elapsed in the relevant Interest
Payment Period.
The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date shall, as provided in the Indenture, be paid to the Person in
whose
name this Security (or one or more Predecessor Securities) is registered at
the
close of business on the Regular Record Date for such interest installment.
Any
such interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than ten (10) days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required
by
such exchange, all as more fully provided in the Indenture.
Payment
of principal of, premium, if any, and interest on this Security shall be made
in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. Payments of principal,
premium, if any, and interest due at the Maturity of this Security shall be
made
at the Place of Payment upon surrender of such Securities to the Paying Agent,
and payments of interest shall be made, subject to such surrender where
applicable,
by
wire
transfer
at
such
place and
to
such
account
at
a
banking institution in the United States as may be designated in writing to
the
Paying Agent at least ten (10) Business Days prior to the date for payment
by
the registered holder hereof
unless
proper written transfer instructions have not been received by the relevant
record date, in which case such payments shall be made by check mailed to the
address of such Person as such address shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Security is the
Trustee, the payment of the principal of (and premium, if any) and interest
(including any overdue installment of interest and Additional Tax Sums, if
any)
on this Security will be made at such place and to such account as may be
designated by the Trustee.
The
indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment
in
full of all Senior Debt, and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions
as
may be necessary or appropriate to effectuate the subordination so provided
and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said
provisions.
Unless
the certificate of authentication hereon has been executed by the Trustee by
manual signature, this Security shall not be entitled to any benefit under
the
Indenture or be valid or obligatory for any purpose.
[FORM
OF REVERSE OF SECURITY]
This
Security is one of a duly authorized issue of securities of the Company (the
“
Securities”
)
issued
under the Junior Subordinated Indenture, dated as of December 12, 2006 (the
“
Indenture”
),
between the Company and The Bank of New York Trust Company, National
Association, as Trustee (in such capacity, the “
Trustee
,”
which
term includes any successor trustee under the Indenture), to which Indenture
and
all indentures supplemental thereto reference is hereby made for a statement
of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Debt, the Holders of the
Securities and the holders of the Preferred Securities, and of the terms
upon
which the Securities are, and are to be, authenticated and
delivered.
All
terms
used in this Security that are defined in the Indenture or in the Amended
and
Restated Trust Agreement, dated as of December 12, 2006 (as modified, amended
or
supplemented from time to time, the “
Trust
Agreement”
),
relating to Redwood Capital Trust I (the “
Trust”
)
among
the Company, as Depositor, the Trustees named therein and the Holders from
time
to time of the Trust Securities issued pursuant thereto, shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case may
be.
The
Company may, on any Interest Payment Date, at its option, upon not less than
thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders
of the Securities (unless a shorter notice period shall be satisfactory to
the
Trustee) on or after January 30, 2012
and
subject to the terms and conditions of
Article
XI
of the
Indenture, redeem this Security in whole at any time or in part from time to
time at a Redemption Price equal to one hundred percent (100%) of the principal
amount hereof, together, in the case of any such redemption, with accrued
interest, including any Additional Interest, through but excluding the date
fixed as the Redemption Date.
In
addition, upon the occurrence and during the continuation of a Special Event,
the Company may, at its option and in accordance with the Indenture, redeem
this
Security, in whole but not in part, subject to the terms and conditions of
Article
XI
of the
Indenture at a Redemption Price equal to:
TIME
PERIOD
|
PERCENTAGE
|
December
12, 2006 - January 29, 2008
|
107.5%
|
January
30, 2008 - January 29, 2009
|
105%
|
January
30, 2009 - January 29, 2010
|
103.75%
|
January
30, 2010 - January 29, 2011
|
102.5%
|
January
30, 2011 - January 29, 2012
|
101.25%
|
January
30, 2012 and thereafter
|
100%
|
of
the
principal amount hereof, together, in the case of any such redemption, with
accrued interest, including any Additional Interest, through but excluding
the
date fixed as the Redemption Date.
In
the
event of redemption of this Security in part only, a new Security or Securities
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof. If less than all the Securities are to
be
redeemed, the particular Securities to be redeemed shall be selected not more
than sixty (60) days prior to the Redemption Date by the Trustee from the
Outstanding Securities not previously called for redemption, by such method
as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of a portion of the principal amount of any
Security.
The
Indenture permits, with certain exceptions as therein provided, the Company
and
the Trustee at any time to enter into a supplemental indenture or indentures
for
the purpose of modifying in any manner the rights and obligations of the Company
and of the Holders of the Securities, with the consent of the Holders of not
less than a majority in principal amount of the Outstanding Securities. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is
made upon this Security.
No
reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and any premium, if any, and
interest, including any Additional Interest (to the extent legally enforceable),
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is restricted to transfers to (i) the Company,
(ii) “Qualified Institutional Buyers” (as defined in Rule 144A under the
Securities Act of 1933, as amended (the “
Securities
Act
”))
who
are also “Qualified Purchasers” (as such term is defined in the Investment
Company Act of 1940, as amended), (iii) outside the United States in an offshore
transaction in accordance with Regulation S under the Securities Act, (iv)
pursuant to an effective registration statement under the Securities Act or
(v)
pursuant to another exemption from registration under the Securities Act and
is
registrable in the Securities Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company maintained
for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar and
duly executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, and thereupon one or more new Securities, of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the
designated transferee or transferees.
The
Securities are issuable only in registered form without coupons in minimum
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
The
Company, the Trustee and any agent of the Company or the Trustee shall treat
the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company,
the
Trustee nor any such agent shall be affected by notice to the
contrary.
The
Company and, by its acceptance of this Security or a beneficial interest herein,
the Holder of, and any Person that acquires a beneficial interest in, this
Security agree to treat this Security as indebtedness for United States federal,
state and local tax purposes, unless and until required otherwise by an
applicable taxing authority.
This
Security shall be construed and enforced in accordance with and governed by
the
laws of the State of New York, without reference to its conflict of laws
provisions (other than section 5-1401 of the General Obligations
Law).
IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed
on
this ____ day of __________, 20__.
|
|
|
|
Redwood
Trust, Inc.
|
|
|
|
|
By:
|
|
|
Name:
|
|
Title
|
SECTION
2.2.
Restricted
Legend.
(a)
Any
Security issued hereunder shall bear a legend in substantially the following
form:
“
[
IF
THIS SECURITY IS A GLOBAL SECURITY INSERT:
THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
(“
DTC
”)
OR A
NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE
NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE
OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS
THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
]
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “
SECURITIES
ACT
”),
AND
SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER
OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT.
THE
HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE
TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A OF THE
SECURITIES ACT) AND A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), (III) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, OR (V) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT
OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE
SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN,
IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND
MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL
EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY
PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST
ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE
SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE
HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF
OR
THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT
PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(
“ERISA”
),
OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”
)
(EACH A
“PLAN”
),
OR AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY
ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN UNLESS SUCH ACQUIROR
OR
HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U. S. DEPARTMENT
OF
LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-28, 90-1 OR 84-14
OR ANOTHER APPLICABLE EXEMPTION OR ITS ACQUISITION AND HOLDING OF THIS SECURITY,
OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
2975 OF THE CODE WITH RESPECT TO SUCH ACQUISITION AND HOLDING. ANY PURCHASER
OR
HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER
PLAN
TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN
ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR
(ii) SUCH ACQUISITION OR HOLDING WILL NOT RESULT IN A PROHBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTION
RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.”
(b)
The
above
legends shall not be removed from any Security unless there is delivered to
the
Company satisfactory evidence, which may include an Opinion of Counsel, as
may
be reasonably required to ensure that any future transfers thereof may be made
without restriction under or violation of the provisions of the Securities
Act
and other applicable law. Upon provision of such satisfactory evidence, the
Company shall execute and deliver to the Trustee, and the Trustee shall deliver,
upon receipt of a Company Order directing it to do so, a Security that does
not
bear the legend.
SECTION
2.3.
Form
of Trustee’s Certificate of Authentication.
The
Trustee’s certificate of authentication shall be in substantially the following
form:
This
is
one of the Securities referred to in the within-mentioned
Indenture.
Dated:
|
By:
|
|
|
Authenticating
Agent
|
|
|
|
|
By:
|
|
|
Authorized
Signatory
|
SECTION
2.4.
Temporary
Securities.
(a)
Pending
the preparation of definitive Securities, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities
that are printed, lithographed, typewritten, mimeographed or otherwise produced,
in any denomination, substantially of the tenor of the definitive Securities
in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may
determine, as evidenced by their execution of such Securities.
(b)
If
temporary Securities are issued, the Company will cause definitive Securities
to
be prepared without unreasonable delay. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the office or agency
of
the Company designated for that purpose without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Securities of any authorized denominations
having the same Original Issue Date and Stated Maturity and having the same
terms as such temporary Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture
as
definitive Securities.
SECTION
2.5.
Definitive
Securities.
The
Securities issued on the Original Issue Date shall be in definitive form. The
definitive Securities shall be printed, lithographed or engraved, or produced
by
any combination of these methods, if required by any securities exchange on
which the Securities may be listed, on a steel engraved border or steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined
by
the officers executing such Securities, as evidenced by their execution of
such
Securities.
ARTICLE
III
The
Securities
SECTION
3.1.
Payment
of Principal and Interest.
(a)
The
unpaid principal amount of the Securities shall bear interest at a variable
rate
of LIBOR plus 2.25% per annum until paid or duly provided for, such interest
to
accrue from the Original Issue Date or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, and any overdue
principal, premium, if any, or Additional Tax Sums and any overdue installment
of interest shall bear Additional Interest at the rate equal to a
variable
rate
of
LIBOR plus 2.25%
per
annum
compounded quarterly from the dates such amounts are due until they are paid
or
funds for the payment thereof are made available for payment.
(b)
Interest
and Additional Interest on any Security that is payable, and is punctually
paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, except that interest and any Additional Interest payable on the Stated
Maturity (or any date of principal repayment upon early maturity) of the
principal of a Security or on a Redemption Date shall be paid to the Person
to
whom principal is paid in accordance with
Section
3.1(e)
hereof.
The initial payment of interest on any Security that is issued between a Regular
Record Date and the related Interest Payment Date shall be payable as provided
in such Security.
(c)
Any
interest on any Security that is due and payable, but is not timely paid or
duly
provided for, on any Interest Payment Date for Securities (herein called
“
Defaulted
Interest”
)
shall
forthwith cease to be payable to the registered Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in
paragraph (i) or (ii) below:
(i)
The
Company may elect to make payment of any Defaulted Interest to the Persons
in
whose names the Securities (or their respective Predecessor Securities) are
registered at the close of business on a special record date for the payment
of
such Defaulted Interest (a “
Special
Record Date”
),
which
shall be fixed in the following manner. At least thirty (30) days prior to
the
date of the proposed payment, the Company shall notify the Trustee in writing
of
the amount of Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix
a
Special Record Date for the payment of such Defaulted Interest, which shall
be
not more than fifteen (15) days and not less than ten (10) days prior to the
date of the proposed payment and not less than ten (10) days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first
class, postage prepaid, to each Holder of a Security at the address of such
Holder as it appears in the Securities Register not less than ten (10) days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered on such
Special Record Date; or
(ii)
The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities may be listed, traded or quoted and,
upon such notice as may be required by such exchange or automated quotation
system (or by the Trustee if the Securities are not listed), if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such payment shall be deemed practicable by the Trustee.
(d)
Payments
of interest on the Securities shall include interest accrued to but excluding
the respective Interest Payment Dates. Interest payments for the Securities
shall be computed and paid on the basis of a 360-day year and the actual number
of days elapsed in the relevant interest period.
(e)
Payment
of principal of, premium, if any, and interest on the Securities shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. Payments of
principal, premium, if any, and interest due at the Maturity of such Securities
shall be made at the Place of Payment upon surrender of such Securities to
the
Paying Agent and payments of interest shall be made subject to such surrender
where applicable,
by
wire
transfer
at
such
place and
to
such
account
at
a
banking institution in the United States as may be designated in writing to
the
Paying Agent at least ten (10) Business Days prior to the date for payment
by
the registered holder thereof
unless
proper written transfer instructions have not been received by the relevant
record date, in which case such payments shall be made by check mailed to the
address of such Person as such address shall appear in the Security Register.
Notwithstanding the foregoing, so long as the holder of this Security is the
Trustee, the payment of the principal of (and premium, if any) and interest
(including any overdue installment of interest and Additional Tax Sums, if
any)
on this Security will be made at such place and to such account as may be
designated by the Trustee.
(f)
The
parties hereto acknowledge and agree that the holders of the Preferred
Securities have certain rights to direct the Company to modify the Interest
Payment Dates and corresponding Redemption Date and Stated Maturity of the
Securities or a portion of the Securities pursuant to the Purchase Agreement.
In
the event any such modifications are made to the Securities or a portion of
the
Securities, appropriate changes to the form of Security set forth in
Article
II
hereof
shall be made prior to the issuance and authentication of new or replacement
Securities. Any such modification of the Interest Payment Date and corresponding
Redemption Date and Stated Maturity with respect to any Securities or tranche
of
Securities shall not require or be subject to the consent of the
Trustee.
(g)
Subject
to the foregoing provisions of this
Section
3.1
,
each
Security delivered under this Indenture upon transfer of or in exchange for
or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, that were carried by such other Security.
SECTION
3.2.
Denominations.
The
Securities shall be in registered form without coupons and shall be issuable
in
minimum denominations of $100,000 and any integral multiple of $1,000 in excess
thereof.
SECTION
3.3.
Execution,
Authentication, Delivery and Dating.
(a)
At
any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Securities in an aggregate principal amount (including
all then Outstanding Securities) not in excess of One Hundred Three Million
One
Hundred Thousand Dollars ($103,100,000) executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon:
(i)
a
copy of
any Board Resolution relating thereto; and
(ii)
an
Opinion of Counsel stating that: (1) such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and subject
to
any conditions specified in such Opinion of Counsel, will constitute, and the
Indenture constitutes, valid and legally binding obligations of the Company,
each enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of
general applicability relating to or affecting creditors’ rights and to general
equity principles; (2) the Securities have been duly authorized and executed
by
the Company and have been delivered to the Trustee for authentication in
accordance with this Indenture; (3) the Securities are not required to be
registered under the Securities Act; and (4) the Indenture is not required
to be
qualified under the Trust Indenture Act.
(b)
The
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President or one of its Vice Presidents. The signature of any of these officers
on the Securities may be manual or facsimile. Securities bearing the manual
or
facsimile signatures of individuals who were at any time the proper officers
of
the Company shall bind the Company, notwithstanding that such individuals or
any
of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities.
(c)
No
Security shall be entitled to any benefit under this Indenture or be valid
or
obligatory for any purpose, unless there appears on such Security a certificate
of authentication substantially in the form provided for herein executed by
the
Trustee by the manual signature of one of its authorized signatories, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation
as
provided in
Section
3.8
,
for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
(d)
Each
Security shall be dated the date of its authentication.
SECTION
3.4.
Global
Securities.
(a)
Upon
the
election of the Holder after the Original Issue Date, which election need not
be
in writing, the Securities owned by such Holder shall be issued in the form
of
one or more Global Securities registered in the name of the Depositary or its
nominee. Each Global Security issued under this Indenture shall be registered
in
the name of the Depositary designated by the Company for such Global Security
or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(b)
Notwithstanding
any other provision in this Indenture, no Global Security may be exchanged
in
whole or in part for registered Securities, and no transfer of a Global Security
in whole or in part may be registered in the name of any Person other than
the
Depositary for such Global Security or a nominee thereof, unless (i) such
Depositary advises the Trustee and the Company in writing that such Depositary
is no longer willing or able to properly discharge its responsibilities as
Depositary with respect to such Global Security, and no qualified successor
is
appointed by the Company within ninety (90) days of receipt by the Company
of
such notice, (ii) such Depositary ceases to be a clearing agency registered
under the Exchange Act and no successor is appointed by the Company within
ninety (90) days after obtaining knowledge of such event, (iii) the Company
executes and delivers to the Trustee a Company Order stating that the Company
elects to terminate the book-entry system through the Depositary or (iv) an
Event of Default shall have occurred and be continuing. Upon the occurrence
of
any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall
notify the Depositary and instruct the Depositary to notify all owners of
beneficial interests in such Global Security of the occurrence of such event
and
of the availability of Securities to such owners of beneficial interests
requesting the same. The Trustee may conclusively rely, and be protected in
relying, upon the written identification of the owners of beneficial interests
furnished by the Depositary, and shall not be liable for any delay resulting
from a delay by the Depositary. Upon the issuance of such Securities and the
registration in the Securities Register of such Securities in the names of
the
Holders of the beneficial interests therein, the Trustees shall recognize such
holders of beneficial interests as Holders.
(c)
If
any
Global Security is to be exchanged for other Securities or canceled in part,
or
if another Security is to be exchanged in whole or in part for a beneficial
interest in any Global Security, then either (i) such Global Security shall
be
so surrendered for exchange or cancellation as provided in this
Article
III
or (ii)
the principal amount thereof shall be reduced or increased by an amount equal
to
(x) the portion thereof to be so exchanged or canceled, or (y) the principal
amount of such other Security to be so exchanged for a beneficial interest
therein, as the case may be, by means of an appropriate adjustment made on
the
records of the Securities Registrar, whereupon the Trustee, in accordance with
the Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Security by the Depositary,
accompanied by registration instructions, the Company shall execute and the
Trustee shall authenticate and deliver any Securities issuable in exchange
for
such Global Security (or any portion thereof) in accordance with the
instructions of the Depositary. The Trustee shall not be liable for any delay
in
delivery of such instructions and may conclusively rely on, and shall be fully
protected in relying on, such instructions.
(d)
Every
Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof shall
be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e)
Securities
distributed to holders of Book-Entry Preferred Securities (as defined in the
applicable Trust Agreement) upon the dissolution of the Trust shall be
distributed in the form of one or more Global Securities registered in the
name
of a Depositary or its nominee, and deposited with the Securities Registrar,
as
custodian for such Depositary, or with such Depositary, for credit by the
Depositary to the respective accounts of the beneficial owners of the Securities
represented thereby (or such other accounts as they may direct). Securities
distributed to holders of Preferred Securities other than Book-Entry Preferred
Securities upon the dissolution of the Trust shall not be issued in the form
of
a Global Security or any other form intended to facilitate book-entry trading
in
beneficial interests in such Securities.
(f)
The
Depositary or its nominee, as the registered owner of a Global Security, shall
be the Holder of such Global Security for all purposes under this Indenture
and
the Securities, and owners of beneficial interests in a Global Security shall
hold such interests pursuant to the Applicable Depositary Procedures.
Accordingly, any such owner’s beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Depositary
Participants. The Securities Registrar and the Trustee shall be entitled to
deal
with the Depositary for all purposes of this Indenture relating to a Global
Security (including the payment of principal and interest thereon and the giving
of instructions or directions by owners of beneficial interests therein and
the
giving of notices) as the sole Holder of the Security and shall have no
obligations to the owners of beneficial interests therein. Neither the Trustee
nor the Securities Registrar shall have any liability in respect of any
transfers effected by the Depositary.
(g)
The
rights of owners of beneficial interests in a Global Security shall be exercised
only through the Depositary and shall be limited to those established by law
and
agreements between such owners and the Depositary and/or its Depositary
Participants.
(h)
No
holder
of any beneficial interest in any Global Security held on its behalf by a
Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner of such Global Security
for all purposes whatsoever. None of the Company, the Trustee nor any agent
of
the Company or the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Security or maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depositary
or
impair, as between a Depositary and such holders of beneficial interests, the
operation of customary practices governing the exercise of the rights of the
Depositary (or its nominee) as Holder of any Security.
SECTION
3.5.
Registration,
Transfer and Exchange Generally.
(a)
The
Trustee shall cause to be kept at the Corporate Trust Office a register (the
“
Securities
Register”
)
in
which the registrar and transfer agent with respect to the Securities (the
“
Securities
Registrar”
),
subject to such reasonable regulations as it may prescribe, shall provide for
the registration of Securities and of transfers and exchanges of Securities.
The
Trustee shall at all times also be the Securities Registrar. The provisions
of
Article
VI
shall
apply to the Trustee in its role as Securities Registrar.
(b)
Subject
to compliance with
Section
2.2(b)
,
upon
surrender for registration of transfer of any Security at the offices or
agencies of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denominations of like tenor and aggregate principal amount.
(c)
At
the
option of the Holder, Securities may be exchanged for other Securities of any
authorized denominations, of like tenor and aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute,
and
the Trustee shall authenticate and deliver, the Securities that the Holder
making the exchange is entitled to receive.
(d)
All
Securities issued upon any transfer or exchange of Securities shall be the
valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such transfer
or exchange.
(e)
Every
Security presented or surrendered for transfer or exchange shall (if so required
by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities
Registrar, duly executed by the Holder thereof or such Holder’s attorney duly
authorized in writing.
(f)
No
service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover
any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
(g)
Neither
the Company nor the Trustee shall be required pursuant to the provisions of
this
Section
3.5
:
(i) to
issue, register the transfer of or exchange any Security during a period
beginning at the opening of business fifteen (15) days before the day of
selection for redemption of Securities pursuant to
Article
XI
and
ending at the close of business on the day of mailing of the notice of
redemption or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such
Security to be redeemed in part, any portion thereof not to be
redeemed.
(h)
The
Company shall designate an office or offices or agency or agencies where
Securities may be surrendered for registration of transfer or exchange. The
Company initially designates the Corporate Trust Office as its office and agency
for such purposes. The Company shall give prompt written notice to the Trustee
and to the Holders of any change in the location of any such office or
agency.
(i)
The
Securities may only be transferred to (i) the Company, (ii) a “qualified
institutional buyer” (as defined in Rule 144A of the Securities Act) who is also
a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the
Investment Company Act, (iii) outside the United States in an offshore
transaction in accordance with Regulation S under the Securities Act, (iv)
pursuant to an effective registration statement under the Securities Act or
(v)
pursuant to another exemption form registration under the Securities
Act.
(j)
Neither
the Trustee nor the Securities Registrar shall be responsible for ascertaining
whether any transfer hereunder complies with the registration provisions of
or
any exemptions from the Securities Act, applicable state securities laws or
the
applicable laws of any other jurisdiction, ERISA, the Code, or the Investment
Company Act; provided, that if a certificate is specifically required by the
express terms of this Section 3.5 to be delivered to the Trustee or the
Securities Registrar by a Holder or transferee of a Security, the Trustee and
the Securities Registrar shall be under a duty to receive and examine the same
to determine whether or not the certificate substantially conforms on its face
to the requirements of this Indenture and shall promptly notify the party
delivering the same if such certificate does not comply with such
terms.
SECTION
3.6.
Mutilated,
Destroyed, Lost and Stolen Securities.
(a)
If
any
mutilated Security is surrendered to the Trustee together with such security
or
indemnity as may be required by the Trustee to save the Company and the Trustee
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of like tenor and aggregate
principal amount and bearing a number not contemporaneously
outstanding.
(b)
If
there
shall be delivered to the Trustee (i) evidence to its satisfaction of the
destruction, loss or theft of any Security and (ii) such security or indemnity
as may be required by it to save each of the Company and the Trustee harmless,
then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a
bona
fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and aggregate principal amount as such
destroyed, lost or stolen Security, and bearing a number not contemporaneously
outstanding.
(c)
If
any
such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing
a
new Security, pay such Security.
(d)
Upon
the
issuance of any new Security under this
Section
3.6
,
the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
(e)
Every
new
Security issued pursuant to this
Section
3.6
in lieu
of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued
hereunder.
(f)
The
provisions of this
Section
3.6
are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.
SECTION
3.7.
Persons
Deemed Owners.
The
Company, the Trustee and any agent of the Company or the Trustee shall treat
the
Person in whose name any Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any interest on such
Security and for all other purposes whatsoever, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION
3.8.
Cancellation.
All
Securities surrendered for payment, redemption, transfer or exchange shall,
if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and Securities surrendered directly to the Trustee
for
any such purpose shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder that the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for
any
Securities canceled as provided in this
Section
3.8
,
except
as expressly permitted by this Indenture. All canceled Securities shall be
retained or disposed of by the Trustee in accordance with its customary
practices and the Trustee shall deliver to the Company a certificate of such
disposition.
SECTION
3.9.
Withholding
Tax.
The
Company and the Paying Agent shall comply with all withholding and backup
withholding tax requirements under United States federal, state and local law.
The Company and its Paying Agent shall request
,
and the
Holders shall provide to the Company, such forms or certificates as are
necessary to establish an exemption from withholding and backup withholding
tax
with respect to each Holder and any representations and forms as shall
reasonably be requested by the Company and its Paying Agent to assist it in
determining the extent of, and in fulfilling, its withholding and backup
withholding tax obligations. The Company shall file required forms with
applicable jurisdictions and, unless an exemption from withholding and backup
withholding tax is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent
that the Company or any Paying Agent is required to withhold and pay over any
amounts to any jurisdiction with respect to payment of interest, premium, if
any, or principal or other amounts in respect of such Security or allocations
to
any Holder, the amount withheld shall be deemed to be a payment of interest,
premium, if any, or principal or other amounts in respect of such Security
in
the amount of the withholding to the Holder. In the event of any claimed
overwithholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from actual
payments of interest, premium, if any, or principal or other amounts in respect
of such Security made, the Company or any Paying Agent may reduce subsequent
payments of interest, premium, if any, or principal or other amounts in respect
of such Security by the amount of such required withholding.
SECTION
3.10.
Reserved.
SECTION
3.11.
Agreed
Tax Treatment.
Each
Security issued hereunder shall provide that the Company and, by its acceptance
or acquisition of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a direct or indirect beneficial interest in, such
Security, intend and agree to treat such Security as indebtedness of the Company
for United States Federal, state and local tax purposes and to treat the
Preferred Securities (including but not limited to all payments and proceeds
with respect to the Preferred Securities) as an undivided beneficial ownership
interest in the Securities (and any other Trust property) (and payments and
proceeds therefrom, respectively) for United States Federal, state and local
tax
purposes. The provisions of this Indenture shall be interpreted to further
this
intention and agreement of the parties.
SECTION
3.12.
CUSIP
Numbers.
The
Company in issuing the Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
and other similar or related materials as a convenience to Holders;
provided
,
that
any such notice or other materials may state that no representation is made
as
to the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or other materials and that reliance
may
be placed only on the other identification numbers printed on the Securities,
and any such redemption shall not be affected by any defect in or omission
of
such numbers.
ARTICLE
IV
Satisfaction
and Discharge
SECTION
4.1.
Satisfaction
and Discharge of Indenture.
This
Indenture shall, upon Company Request, cease to be of further effect (except
as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for and as otherwise provided in this
Section
4.1
)
and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture,
when
(a)
either
(i)
all
Securities theretofore authenticated and delivered (other than (A) Securities
that have been mutilated, destroyed, lost or stolen and that have been replaced
or paid as provided in
Section
3.6
and (B)
Securities for whose payment money has theretofore been deposited in trust
or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust as provided in
Section
10.2
)
have
been delivered to the Trustee for cancellation; or
(ii)
all
such
Securities not theretofore delivered to the Trustee for
cancellation
(A)
have
become due and payable, or
(B)
will
become due and payable at their Stated Maturity within one year of the date
of
deposit, or
(C)
are
to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name,
and
at the expense, of the Company,
and
the
Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited
or
caused to be deposited with the Trustee as trust funds in trust for such purpose
(x) an amount in the currency or currencies in which the Securities are payable,
(y) Government Obligations which through the scheduled payment of principal
and
interest in respect thereof in accordance with their terms will provide, not
later than the due date of any payment, money in an amount or (z) a combination
thereof, in each case sufficient, in the opinion of a nationally recognized
firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest (including any Additional Interest)
to
the date of such deposit (in the case of Securities that have become due and
payable) or to the Stated Maturity (or any date of principal repayment upon
early maturity) or Redemption Date, as the case may be;
(b)
the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(c)
the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under
Section
6.6
,
the
obligations of the Company to any Authenticating Agent under
Section
6.11
and, if
money shall have been deposited with the Trustee pursuant to subclause (a)(ii)
of this
Section
4.1
,
the
obligations of the Trustee under
Section
4.2
and
Section
10.2(d)
shall
survive.
SECTION
4.2.
Application
of Trust Money.
Subject
to the provisions of
Section
10.2(d
),
all
money deposited with the Trustee pursuant to
Section
4.1
shall be
held in trust and applied by the Trustee, in accordance with the provisions
of
the Securities and this Indenture, to the payment in accordance with
Section
3.1
,
either
directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal and any premium and interest
(including any Additional Interest) for the payment of which such money or
obligations have been deposited with or received by the Trustee. Moneys held
by
the Trustee under this
Section
4.2
shall
not be subject to the claims of holders of Senior Debt under
Article
XII
.
ARTICLE
V
Remedies
SECTION
5.1.
Events
of Default.
“
Event
of Default
”
means,
wherever used herein with respect to the Securities, any one of the following
events (whatever the reason for such Event of Default and whether it shall
be
voluntary or involuntary or be effected by operation of law or pursuant to
any
judgment, decree or order of any court or any order, rule or regulation of
any
administrative or governmental body):
(a)
default
in the payment of any interest upon any Security, including any Additional
Interest in respect thereof, when it becomes due and payable, and continuance
of
such default for a period of thirty (30) days; or
(b)
default
in the payment in full of the principal of or any premium on any Security at
its
Maturity; or
(c)
default
in the performance, or breach, of any covenant or warranty of the Company in
this Indenture or the Purchase Agreement and continuance of such default or
breach for a period of thirty (30) days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder;
(d)
the
entry
by a court having jurisdiction in the premises of a decree or order adjudging
the Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or ordering the winding
up
or liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period
of sixty (60) consecutive days;
(e)
the
institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the Company of a petition
or
answer or consent seeking reorganization or relief under any applicable Federal
or state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors,
or
the admission by it in writing of its inability to pay its debts generally
as
they become due and its willingness to be adjudicated a bankrupt or insolvent,
or the taking of corporate action by the Company in furtherance of any such
action; or
(f)
the
Trust
shall have voluntarily or involuntarily liquidated, dissolved, wound-up its
business or otherwise terminated its existence, except in connection with
(1) the distribution of the Securities to holders of the Preferred
Securities in liquidation of their interests in the Trust, (2) the
redemption of all of the outstanding Preferred Securities or (3) certain
mergers, consolidations or amalgamations, each as and to the extent permitted
by
the Trust Agreement.
SECTION
5.2.
Acceleration
of Maturity; Rescission and Annulment.
(a)
If
an
Event of Default occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than twenty-five percent (25%) in aggregate
principal amount of the Outstanding Securities may declare the principal amount
of all the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), provided, that if,
upon
an Event of Default, the Trustee or the Holders of not less than twenty-five
percent (25%) in principal amount of the Outstanding Securities fail to declare
the principal of all the Outstanding Securities to be immediately due and
payable, the holders of at least twenty-five percent (25%) in aggregate
Liquidation Amount of the Preferred Securities then outstanding shall have
the
right to make such declaration by a notice in writing to the Property Trustee,
the Company and the Trustee; and upon any such declaration the principal amount
of and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable.
(b)
At
any
time after such a declaration of acceleration with respect to Securities has
been made and before a judgment or decree for payment of the money due has
been
obtained by the Trustee as hereinafter provided in this
Article
V
,
the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Indenture Trustee, or the holders of a
majority in aggregate Liquidation Amount of the Preferred Securities, by written
notice to the Property Trustee, the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(i)
the
Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A)
all
overdue installments of interest on all Securities,
(B)
any
accrued Additional Interest on all Securities,
(C)
the
principal of and any premium on any Securities that have become due otherwise
than by such declaration of acceleration and interest (including any Additional
Interest) thereon at the rate borne by the Securities, and
(D)
all
sums
paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, the Property Trustee and
their agents and counsel; and
(ii)
all
Events of Default with respect to Securities, other than the non-payment of
the
principal of Securities that has become due solely by such acceleration, have
been cured or waived as provided in
Section
5.13
;
provided
,
that if
the Holders of such Securities fail to annul such declaration and waive such
default, the holders of not less than a majority in aggregate Liquidation Amount
of the Preferred Securities then outstanding shall also have the right to
rescind and annul such declaration and its consequences by written notice to
the
Property Trustee, the Company and the Trustee, subject to the satisfaction
of
the conditions set forth in paragraph (b) of this
Section
5.2
.
No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
SECTION
5.3.
Collection
of Indebtedness and Suits for Enforcement by Trustee
.
(a)
The
Company covenants that if:
(i)
default
is made in the payment of any installment of interest (including any Additional
Interest) on any Security when such interest becomes due and payable and such
default continues for a period of thirty (30) days, or
(ii)
default
is made in the payment of the principal of and any premium on any Security
at
the Maturity thereof,
the
Company will, upon demand of the Trustee, pay to the Trustee, for the benefit
of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest (including any Additional
Interest) and, in addition thereto, all amounts owing the Trustee under
Section
6.6
.
(b)
If
the
Company fails to pay such amounts forthwith upon such demand, the Trustee,
in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Company or any other obligor upon such Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Securities, wherever
situated.
(c)
If
an
Event of Default with respect to any Securities occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and
the
rights of the Holders of such Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or
to
enforce any other proper remedy.
SECTION
5.4.
Trustee
May File Proofs of Claim.
In
case
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or similar judicial proceeding relative
to
the Company (or any other obligor upon the Securities), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in
such
proceeding or otherwise, to take any and all actions authorized hereunder in
order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to first pay to the Trustee any amount due
it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts owing the Trustee, any
predecessor Trustee and other Persons under
Section
6.6
.
SECTION
5.5.
Trustee
May Enforce Claim Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any
such proceeding instituted by the Trustee shall be brought in its own name
as
trustee of an express trust, and any recovery of judgment shall, subject to
Article
XII
and
after provision for the payment of all the amounts owing the Trustee, any
predecessor Trustee and other Persons under
Section
6.6
,
be for
the ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION
5.6
.
Application
of Money Collected.
Any
money
or property collected or to be applied by the Trustee with respect to the
Securities pursuant to this
Article
V
shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money or property on account of principal
or
any premium or interest (including any Additional Interest), upon presentation
of the Securities and the notation thereon of the payment if only partially
paid
and upon surrender thereof if fully paid:
FIRST:
To
the payment of all amounts due the Trustee, any predecessor Trustee and other
Persons under
Section
6.6
;
SECOND:
To the payment of all Senior Debt of the Company if and to the extent required
by
Article
XII
;
THIRD:
Subject to
Article
XII
,
to the
payment of the amounts then due and unpaid upon the Securities for principal
and
any premium and interest (including any Additional Interest) in respect of
which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable
on
the Securities for principal and any premium and interest (including any
Additional Interest), respectively; and
FOURTH:
The balance, if any, to the Person or Persons entitled thereto.
SECTION
5.7.
Limitation
on Suits.
Subject
to
Section
5.8
,
no
Holder of any Securities shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture or for the appointment
of
a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(a)
such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities;
(b)
the
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c)
such
Holder or Holders have offered to the Trustee reasonable indemnity against
the
costs, expenses and liabilities to be incurred in compliance with such
request;
(d)
the
Trustee after its receipt of such notice, request and offer of indemnity has
failed to institute any such proceeding for sixty (60) days; and
(e)
no
direction inconsistent with such written request has been given to the Trustee
during such sixty (60)-day period by the Holders of a majority in aggregate
principal amount of the Outstanding Securities;
it
being
understood and intended that no one or more of such Holders shall have any
right
in any manner whatever by virtue of, or by availing itself of, any provision
of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Securities, or to obtain or to seek to obtain priority or preference over
any
other of such Holders or to enforce any right under this Indenture, except
in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION
5.8.
Unconditional
Right of Holders to Receive Principal, Premium, if any, and Interest; Direct
Action by Holders of Preferred Securities.
Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the
right, which is absolute and unconditional, to receive payment of the principal
of and any premium on such Security at its Maturity and payment of interest
(including any Additional Interest) on such Security when due and payable and
to
institute suit for the enforcement of any such payment, and such right shall
not
be impaired without the consent of such Holder. Any registered holder of the
Preferred Securities shall have the right, upon the occurrence of an Event
of
Default described in
Section
5.1(a
)
or
Section
5.1(b
),
to
institute a suit directly against the Company for enforcement of payment to
such
holder of principal of and any premium and interest (including any Additional
Interest) on the Securities having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities held by such holder.
SECTION
5.9.
Restoration
of Rights and Remedies.
If
the
Trustee, any Holder or any holder of Preferred Securities has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, such Holder or such holder of Preferred
Securities, then and in every such case the Company, the Trustee, such Holders
and such holder of Preferred Securities shall, subject to any determination
in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee,
such
Holder and such holder of Preferred Securities shall continue as though no
such
proceeding had been instituted.
SECTION
5.10.
Rights
and Remedies Cumulative.
Except
as
otherwise provided in
Section
3.6(f)
,
no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition
to
every other right and remedy given hereunder or now or hereafter existing at
law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION
5.11.
Delay
or Omission Not Waiver.
No
delay
or omission of the Trustee, any Holder of any Securities or any holder of any
Preferred Security to exercise any right or remedy accruing upon any Event
of
Default shall impair any such right or remedy or constitute a waiver of any
such
Event of Default or an acquiescence therein. Every right and remedy given by
this
Article
V
or by
law to the Trustee or to the Holders and the right and remedy given to the
holders of Preferred Securities by
Section
5.8
may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee, the Holders or the holders of Preferred Securities, as the case may
be.
SECTION
5.12.
Control
by Holders.
The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities (or, as the case may be, the holders of a majority in
aggregate Liquidation Amount of Preferred Securities) shall have the right
to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee;
provided
,
that:
(a)
such
direction shall not be in conflict with any rule of law or with this
Indenture,
(b)
the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction, and
(c)
subject
to the provisions of
Section
6.2
,
the
Trustee shall have the right to decline to follow such direction if a
Responsible Officer or Officers of the Trustee shall, in good faith, reasonably
determine that the proceeding so directed would be unjustly prejudicial to
the
Holders not joining in any such direction or would involve the Trustee in
personal liability.
SECTION
5.13.
Waiver
of Past Defaults.
(a)
The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities or the holders of not less than a majority in aggregate
Liquidation Amount of the Preferred Securities may waive any past Event of
Default hereunder and its consequences except an Event of Default:
(i)
in
the
payment of the principal of or any premium or interest (including any Additional
Interest) on any Outstanding Security (unless such Event of Default has been
cured and the Company has paid to or deposited with the Trustee a sum sufficient
to pay all installments of interest (including any Additional Interest) due
and
past due and all principal of and any premium on all Securities due otherwise
than by acceleration), or
(ii)
in
respect of a covenant or provision hereof that under
Article
IX
cannot
be modified or amended without the consent of each Holder of any Outstanding
Security.
(b)
Any
such
waiver shall be deemed to be on behalf of the Holders of all the Outstanding
Securities or, in the case of a waiver by holders of Preferred Securities issued
by such Trust, by all holders of Preferred Securities.
(c)
Upon
any
such waiver, such Event of Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event
of
Default or impair any right consequent thereon.
SECTION
5.14.
Undertaking
for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his or
her
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of
an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but
the provisions of this
Section
5.14
shall
not apply to any suit instituted by the Trustee, to any suit instituted by
any
Holder, or group of Holders, holding in the aggregate more than ten percent
(10%) in aggregate principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of or any premium on the Security after the Stated Maturity or any
interest (including any Additional Interest) on any Security after it is due
and
payable.
SECTION
5.15.
Waiver
of Usury, Stay or Extension Laws.
The
Company covenants (to the extent that it may lawfully do so) that it will not
at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted,
now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any
power herein granted to the Trustee, but will suffer and permit the execution
of
every such power as though no such law had been enacted.
ARTICLE
VI
The
Trustee
SECTION
6.1.
Corporate
Trustee Required.
There
shall at all times be a Trustee hereunder with respect to the Securities. The
Trustee shall be a corporation or national banking association organized and
doing business under the laws of the United States or of any state thereof,
authorized to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or state authority and having an office within the United States. If
such entity publishes reports of condition at least annually, pursuant to law
or
to the requirements of such supervising or examining authority, then, for the
purposes of this
Section
6.1
,
the
combined capital and surplus of such entity shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this
Section
6.1
,
it
shall resign immediately in the manner and with the effect hereinafter specified
in this
Article
VI
.
SECTION
6.2.
Certain
Duties and Responsibilities.
Except
during the continuance of an Event of Default:
(i)
the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee;
and
(ii)
in
the
absence of bad faith on its part, the Trustee may conclusively rely, as to
the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture;
provided,
that in
the case of any such certificates or opinions that by any provision hereof
are
specifically required to be furnished to the Trustee, the Trustee shall be
under
a duty to examine the same to determine whether or not they substantially
conform on their face to the requirements of this Indenture.
(b)
If
an
Event of Default known to the Trustee has occurred and is continuing, the
Trustee shall, prior to the receipt of directions, if any, from the Holders
of
at least a majority in aggregate principal amount of the Outstanding Securities
(or, if applicable, from the holders of at least a majority in aggregate
Liquidation Amount of Preferred Securities), exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill
in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.
(c)
Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this
Section
6.2
.
To the
extent that, at law or in equity, the Trustee has duties and liabilities
relating to the Holders, the Trustee shall not be liable to any Holder or any
holder of Preferred Securities for the Trustee’s good faith reliance on the
provisions of this Indenture. The provisions of this Indenture, to the extent
that they restrict the duties and liabilities of the Trustee otherwise existing
at law or in equity, are agreed by the Company and the Holders and the holders
of Preferred Securities to replace such other duties and liabilities of the
Trustee.
(d)
No
provisions of this Indenture shall be construed to relieve the Trustee from
liability with respect to matters that are within the authority of the Trustee
under this Indenture for its own negligent action, negligent failure to act
or
willful misconduct, except that:
(i)
the
Trustee shall not be liable for any error or judgment made in good faith by
an
authorized officer of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(ii)
the
Trustee shall not be liable with respect to any action taken or omitted to
be
taken by it in good faith in accordance with the direction of the Holders of
at
least a majority in aggregate principal amount of the Outstanding Securities
(or, as the case may be, the holders of a majority in aggregate Liquidation
Amount of Preferred Securities); and
(iii)
the
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company and money
held
by the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law.
(e)
If
at any
time the Trustee hereunder is not the same Person as the Property Trustee under
the Trust Agreement:
(i)
whenever
a reference is made herein to the dissolution, termination or liquidation of
the
Trust, the Trustee shall be entitled to assume that no such dissolution,
termination, or liquidation has occurred so long as the Securities are or
continue to be registered in the name of such Property Trustee, and the Trustee
shall be charged with notice or knowledge of such dissolution, termination
or
liquidation only upon written notice thereof given to the Trustee by the
Depositor under the Trust Agreement; and
(ii)
the
Trustee shall not be charged with notice or knowledge that any Person is a
holder of Preferred Securities or Common Securities issued by the Trust or
whether any group of holders of Preferred Securities constitutes any specified
percentage of all outstanding Preferred Securities for any purpose under this
Indenture, unless and until the Trustee is furnished with a list of holders
by
such Property Trustee and the aggregate Liquidation Amount of the Preferred
Securities then outstanding. The Trustee may conclusively rely and shall be
protected in relying on such list.
(f)
Notwithstanding
Section
1.10
,
the
Trustee shall not, and shall not be deemed to, owe any fiduciary duty to the
holders of any of the Trust Securities issued by the Trust and shall not be
liable to any such holder (other than for the willful misconduct or negligence
of the Trustee) if the Trustee in good faith (i) pays over or distributes to
a
registered Holder of the Securities or to the Company or to any other Person,
cash, property or securities to which such holder of such Trust Securities
shall
be entitled or (ii) takes any action or omits to take any action at the request
of the Holder of such Securities. Nothing in this paragraph shall affect the
obligation of any other such Person to hold such payment for the benefit of,
and
to pay such amount over to, such holders of Preferred Securities or Common
Securities or their representatives.
SECTION
6.3.
Notice
of Defaults.
Within
ninety (90) days after the occurrence of any default actually known to the
Trustee, the Trustee shall give the Holders notice of such default unless such
default shall have been cured or waived;
provided,
that
except in the case of a default in the payment of the principal of or any
premium or interest on any Securities, the Trustee shall be fully protected
in
withholding the notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of
the
Trustee in good faith determines that withholding the notice is in the interest
of holders of Securities; and
provided,
further,
that in
the case of any default of the character specified in
Section
5.1(c)
,
no such
notice to Holders shall be given until at least thirty (30) days after the
occurrence thereof. For the purpose of this
Section
6.3
,
the
term “default” means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
SECTION
6.4.
Certain
Rights of Trustee.
Subject
to the provisions of
Section
6.2
:
(a)
the
Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting in good faith and in accordance with the terms hereof
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note or other
paper
or document believed by it to be genuine and to have been signed or presented
by
the proper party or parties;
(b)
if
(i) in
performing its duties under this Indenture the Trustee is required to decide
between alternative courses of action, (ii) in construing any of the provisions
of this Indenture the Trustee finds ambiguous or inconsistent with any other
provisions contained herein or (iii) the Trustee is unsure of the application
of
any provision of this Indenture, then, except as to any matter as to which
the
Holders are entitled to decide under the terms of this Indenture, the Trustee
shall deliver a notice to the Company requesting the Company’s written
instruction as to the course of action to be taken and the Trustee shall take
such action, or refrain from taking such action, as the Trustee shall be
instructed in writing to take, or to refrain from taking, by the Company;
provided, that if the Trustee does not receive such instructions from the
Company within ten Business Days after it has delivered such notice or such
reasonably shorter period of time set forth in such notice, the Trustee may,
but
shall be under no duty to, take such action, or refrain from taking such action,
as the Trustee shall deem advisable and in the best interests of the Holders,
in
which event the Trustee shall have no liability except for its own negligence,
bad faith or willful misconduct;
(c)
any
request or direction of the Company shall be sufficiently evidenced by a Company
Request or Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(d)
the
Trustee may consult with counsel (which counsel may be counsel to the Trustee,
the Company or any of its Affiliates, and may include any of its employees)
and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e)
the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
or any holder of Preferred Securities pursuant to this Indenture, unless such
Holders (or such holders of Preferred Securities) shall have offered to the
Trustee security or indemnity reasonably satisfactory to it against the costs,
expenses (including reasonable attorneys’ fees and expenses) and liabilities
that might be incurred by it in compliance with such request or direction,
including reasonable advances as may be requested by the Trustee;
(f)
the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, indenture, note or other
paper
or document, but the Trustee in its discretion may make such inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such inquiry or investigation, it shall be entitled
to
examine the books, records and premises of the Company, personally or by agent
or attorney;
(g)
the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, custodians or
nominees and the Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent, attorney, custodian or nominee
appointed with due care by it hereunder;
(h)
whenever
in the administration of this Indenture the Trustee shall deem it desirable
to
receive instructions with respect to enforcing any remedy or right or taking
any
other action with respect to enforcing any remedy or right hereunder, the
Trustees (i) may request instructions from the Holders (which instructions
may
only be given by the Holders of the same aggregate principal amount of
Outstanding Securities as would be entitled to direct the Trustee under this
Indenture in respect of such remedy, right or action), (ii) may refrain from
enforcing such remedy or right or taking such action until such instructions
are
received and (iii) shall be protected in acting in accordance with such
instructions;
(i)
except
as
otherwise expressly provided by this Indenture, the Trustee shall not be under
any obligation to take any action that is discretionary under the provisions
of
this Indenture;
(j)
without
prejudice to any other rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with any
bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e)
of
the definition of Event of Default, such expenses (including legal fees and
expenses of its agents and counsel) and the compensation for such services
are
intended to constitute expenses of administration under any bankruptcy laws
or
law relating to creditors rights generally;
(k)
whenever
in the administration of this Indenture the Trustee shall deem it desirable
that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively rely
upon
an Officers’ Certificate addressing such matter, which, upon receipt of such
request, shall be promptly delivered by the Company;
(l)
the
Trustee shall not be charged with knowledge of any Event of Default unless
either (i) a Responsible Officer of the Trustee shall have actual knowledge
or
(ii) the Trustee shall have received written notice thereof from the Company
or
a Holder; and
(m)
in
the
event that the Trustee is also acting as Paying Agent, Authenticating Agent
or
Securities Registrar hereunder, the rights and protections afforded to the
Trustee pursuant to this
Article
VI
shall
also be afforded such Paying Agent, Authenticating Agent, or Securities
Registrar.
SECTION
6.5.
May
Hold Securities.
The
Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar
or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Securities Registrar or such other
agent.
SECTION
6.6.
Compensation;
Reimbursement; Indemnity.
(a)
The
Company agrees:
(i)
to
pay to
the Trustee from time to time reasonable compensation for all services rendered
by it hereunder in such amounts as the Company and the Trustee shall agree
from
time to time (which compensation shall not be limited by any provision of law
in
regard to the compensation of a trustee of an express trust);
(ii)
to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and
the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith
or
willful misconduct; and
(iii)
to
the
fullest extent permitted by applicable law, to indemnify the Trustee and its
Affiliates, and their officers, directors, shareholders, agents, representatives
and employees for, and to hold them harmless against, any loss, damage,
liability, tax (other than income, franchise or other taxes imposed on amounts
paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind
or
nature whatsoever incurred without negligence, bad faith or willful misconduct
on its part arising out of or in connection with the acceptance or
administration of this trust or the performance of the Trustee’s duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its
powers or duties hereunder.
(b)
To
secure
the Company’s payment obligations in this
Section
6.6
,
the
Company hereby grants and pledges to the Trustee and the Trustee shall have
a
lien prior to the Securities on all money or property held or collected by
the
Trustee, other than money or property held in trust to pay principal and
interest on particular Securities. Such lien shall survive the satisfaction
and
discharge of this Indenture or the resignation or removal of the
Trustee.
(c)
The
obligations of the Company under this
Section
6.6
shall
survive the satisfaction and discharge of this Indenture and the earlier
resignation or removal of the Trustee.
(d)
In
no
event shall the Trustee be liable for any indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including, but not limited
to, lost profits, even if the Trustee has been advised of the likelihood of
such
loss or damage and regardless of the form of action.
(e)
In
no
event shall the Trustee be liable for any failure or delay in the performance
of
its obligations hereunder because of circumstances beyond its control,
including, but not limited to, acts of God, flood, war (whether declared or
undeclared), terrorism, fire, riot, embargo, government action, including any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Indenture.
SECTION
6.7.
Resignation
and Removal; Appointment of Successor.
(a)
No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this
Article
VI
shall
become effective until the acceptance of appointment by the successor Trustee
under
Section
6.8
.
(b)
The
Trustee may resign at any time by giving written notice thereof to the
Company.
(c)
Unless
an
Event of Default shall have occurred and be continuing, the Trustee may be
removed at any time by the Company by a Board Resolution. If an Event of Default
shall have occurred and be continuing, the Trustee may be removed by Act of
the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d)
If
the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any reason, at a time when no Event
of
Default shall have occurred and be continuing, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of
Section
6.8
.
If the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any reason, at a time when an Event
of
Default shall have occurred and be continuing, the Holders, by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of
Section
6.8
.
If no
successor Trustee shall have been so appointed by the Company or the Holders
and
accepted appointment within sixty (60) days after the giving of a notice of
resignation by the Trustee or the removal of the Trustee in the manner required
by
Section
6.8
,
any
Holder who has been a bona fide Holder of a Security for at least six months
(or, if the Securities have been Outstanding for less than six (6) months,
the
entire period of such lesser time) may, on behalf of such Holder and all others
similarly situated, and any resigning Trustee may, at the expense of the
Company, petition any court of competent jurisdiction for the appointment of
a
successor Trustee.
(e)
The
Company shall give notice to all Holders in the manner provided in
Section
1.6
of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
SECTION
6.8.
Acceptance
of Appointment by Successor.
(a)
In
case
of the appointment hereunder of a successor Trustee, each successor Trustee
so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of
the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee
hereunder.
(b)
Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all rights, powers and trusts referred to in paragraph (a)
of
this
Section
6.8
.
(c)
No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article
VI
.
SECTION
6.9.
Merger,
Conversion, Consolidation or Succession to Business.
Any
Person into which the Trustee may be merged or converted or with which it may
be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, without the execution or filing
of
any paper or any further act on the part of any of the parties hereto,
provided
,
that
such Person shall be otherwise qualified and eligible under this
Article
VI
.
In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation or as
otherwise provided above in this
Section
6.9
to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated, and in case any Securities shall not have been authenticated,
any successor to the Trustee may authenticate such Securities either in the
name
of any predecessor Trustee or in the name of such successor Trustee, and in
all
cases the certificate of authentication shall have the full force which it
is
provided anywhere in the Securities or in this Indenture that the certificate
of
the Trustee shall have.
SECTION
6.10.
Not
Responsible for Recitals or Issuance of Securities.
The
recitals contained herein and in the Securities, except the Trustee’s
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee
nor
any Authenticating Agent shall be accountable for the use or application by
the
Company of the Securities or the proceeds thereof.
SECTION
6.11.
Appointment
of Authenticating Agent.
(a)
The
Trustee may appoint an Authenticating Agent or Agents with respect to the
Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to
Section
3.6
,
and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee’s
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, or of any State or Territory thereof or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having
a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or state authority. If such Authenticating
Agent publishes reports of condition at least annually pursuant to law or to
the
requirements of said supervising or examining authority, then for the purposes
of this
Section
6.11
the
combined capital and surplus of such Authenticating Agent shall be deemed to
be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be
eligible in accordance with the provisions of this
Section
6.11
,
such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this
Section
6.11
.
(b)
Any
Person into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a party,
or any Person succeeding to all or substantially all of the corporate trust
business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder,
provided
such
Person shall be otherwise eligible under this
Section
6.11
,
without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
(c)
An
Authenticating Agent may resign at any time by giving written notice thereof
to
the Trustee and to the Company. The Trustee may at any time terminate the agency
of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this
Section
6.11
,
the
Trustee may appoint a successor Authenticating Agent eligible under the
provisions of this
Section
6.11
,
which
shall be acceptable to the Company, and shall give notice of such appointment
to
all Holders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent.
(d)
The
Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this
Section
6.11
in such
amounts as the Company and the Authenticating Agent shall agree from time to
time.
(e)
If
an
appointment of an Authenticating Agent is made pursuant to this
Section
6.11
,
the
Securities may have endorsed thereon, in addition to the Trustee’s certificate
of authentication, an alternative certificate of authentication in the following
form:
This
is
one of the Securities referred to in the within mentioned
Indenture.
Dated:
|
|
|
|
The
Bank of New York Trust Company,
National
Association, not in its individual
capacity,
but solely as Trustee
|
|
|
|
|
By:
|
|
|
Authenticating
Agent
|
ARTICLE
VII
Holder’s
Lists and Reports by Company
SECTION
7.1.
Company
to Furnish Trustee Names and Addresses of Holders.
The
Company will furnish or cause to be furnished to the Trustee:
(a)
semiannually,
on or before June 30 and December 31 of each year, a list, in such form as
the
Trustee may reasonably require, of the names and addresses of the Holders as
of
a date not more than fifteen (15) days prior to the delivery thereof,
and
(b)
at
such
other times as the Trustee may request in writing, within thirty (30) days
after
the receipt by the Company of any such request, a list of similar form and
content as of a date not more than fifteen (15) days prior to the time such
list
is furnished,
in
each
case to the extent such information is in the possession or control of the
Company and has not otherwise been received by the Trustee in its capacity
as
Securities Registrar.
SECTION
7.2.
Preservation
of Information, Communications to Holders.
(a)
The
Trustee shall preserve, in as current a form as is reasonably practicable,
the
names and addresses of Holders contained in the most recent list furnished
to
the Trustee as provided in
Section
7.1
and the
names and addresses of Holders received by the Trustee in its capacity as
Securities Registrar. The Trustee may destroy any list furnished to it as
provided in
Section
7.1
upon
receipt of a new list so furnished.
(b)
The
rights of Holders to communicate with other Holders with respect to their rights
under this Indenture or under the Securities, and the corresponding rights
and
privileges of the Trustee, shall be as provided in the Trust Indenture
Act.
(c)
Every
Holder of Securities, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee nor any agent of either
of them shall be held accountable by reason of the disclosure of information
as
to the names and addresses of the Holders made pursuant to the Trust Indenture
Act.
SECTION
7.3.
Reports
by Company.
(a)
The
Company shall furnish to the Holders and to prospective purchasers of
Securities, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement
set forth in the preceding sentence may be satisfied by compliance with
Section
7.3(b)
hereof.
(b)
The
Company shall furnish to each of (i) the Trustee, (ii) the Holders and to
subsequent holders of Securities, (iii) Taberna Capital Management, LLC,
450 Park Avenue, 11
th
Floor,
New York, New York 10022, Attn: Thomas Bogal (or such other address as
designated by Taberna Capital Management, LLC) and (iv) any beneficial owner
of
the Securities reasonably identified to the Company (which identification may
be
made either by such beneficial owner or by Taberna Capital Management, LLC), a
duly completed and executed certificate substantially and substantively in
the
form attached hereto as
Exhibit
A
,
including the financial statements referenced in such Exhibit, which certificate
and financial statements shall be so furnished by the Company not later than
forty-five (45) days after the end of each of the first three fiscal quarters
of
each fiscal year of the Company and not later than ninety (90) days after the
end of each fiscal year of the Company. The delivery requirements under this
Section 7.3(b) may be satisfied by compliance with Section 8.16(b) of the Trust
Agreement.
(c)
If
the
Company intends to file its annual and quarterly information with the Securities
and Exchange Commission (the “
Commission
”)
in
electronic form pursuant to Regulation S-T of the Commission using the
Commission’s Electronic Data Gathering, Analysis and Retrieval (“
EDGAR
”)
system, the Company shall notify the Trustee in the manner prescribed herein
of
each such annual and quarterly filing. The Trustee is hereby authorized and
directed to access the EDGAR system for purposes of retrieving the financial
information so filed. Compliance with the foregoing shall constitute delivery
by
the Company of its financial statements to the Trustee in compliance with the
provisions of Section 314(a) of the Trust Indenture Act, if applicable. The
Trustee shall have no duty to search for or obtain any electronic or other
filings that the Company makes with the Commission, regardless of whether such
filings are periodic, supplemental or otherwise. Delivery of reports,
information and documents to the Trustee pursuant to this
Section
7.3(c)
shall be
solely for purposes of compliance with this
Section
7.3(c)
and, if
applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s
receipt of such reports, information and documents shall not constitute notice
to it of the content thereof or any matter determinable from the content
thereof, including the Company’s compliance with any of its covenants hereunder,
as to which the Trustee is entitled to rely upon Officers’
Certificates.
ARTICLE
VIII
Consolidation,
Merger, Conveyance, Transfer or Lease
SECTION
8.1.
Company
May Consolidate, Etc., Only on Certain Terms.
The
Company shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to
any
Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(a)
if
the
Company shall consolidate with or merge into another Person or convey, transfer
or lease its properties and assets substantially as an entirety to any Person,
the entity formed by such consolidation or into which the Company is merged
or
the Person that acquires by conveyance or transfer, or that leases, the
properties and assets of the Company substantially as an entirety shall be
an
entity organized and existing under the laws of the United States of America
or
any State or Territory thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest (including any
Additional Interest) on all the Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or
observed;
(b)
immediately
after giving effect to such transaction, no Event of Default, and no event
that,
after notice or lapse of time, or both, would constitute an Event of Default,
shall have happened and be continuing; and
(c)
the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer
or
lease and, if a supplemental indenture is required in connection with such
transaction, any such supplemental indenture comply with this
Article
VIII
and that
all conditions precedent herein provided for relating to such transaction have
been complied with; and the Trustee may rely upon such Officers’ Certificate and
Opinion of Counsel as conclusive evidence that such transaction complies with
this
Section
8.1
.
SECTION
8.2.
Successor
Company Substituted.
(a)
Upon
any
consolidation or merger by the Company with or into any other Person, or any
conveyance, transfer or lease by the Company of its properties and assets
substantially as an entirety to any Person in accordance with
Section
8.1
and the
execution and delivery to the Trustee of the supplemental indenture described
in
Section
8.1(a)
,
the
successor entity formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed
to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; and in the event of any such conveyance or
transfer, following the execution and delivery of such supplemental indenture,
the Company shall be discharged from all obligations and covenants under the
Indenture and the Securities.
(b)
Such
successor Person may cause to be executed, and may issue either in its own
name
or in the name of the Company, any or all of the Securities issuable hereunder
that theretofore shall not have been signed by the Company and delivered to
the
Trustee; and, upon the order of such successor Person instead of the Company
and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
that
previously shall have been signed and delivered by the officers of the Company
to the Trustee for authentication, and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its
behalf. All the Securities so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture.
(c)
In
case
of any such consolidation, merger, sale, conveyance or lease, such changes
in
phraseology and form may be made in the Securities thereafter to be issued
as
may be appropriate to reflect such occurrence.
ARTICLE
IX
Supplemental
Indentures
SECTION
9.1.
Supplemental
Indentures without Consent of Holders.
Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form reasonably satisfactory to the Trustee,
for any of the following purposes:
(a)
to
evidence the succession of another Person to the Company, and the assumption
by
any such successor of the covenants of the Company herein and in the Securities;
or
(b)
to
evidence and provide for the acceptance of appointment hereunder by a successor
trustee; or
(c)
to
cure
any ambiguity, to correct or supplement any provision herein that may be
defective or inconsistent with any other provision herein, or to make or amend
any other provisions with respect to matters or questions arising under this
Indenture, which shall not be inconsistent with the other provisions of this
Indenture, provided, that such action pursuant to this clause (b) shall not
adversely affect in any material respect the interests of any Holders or the
holders of the Preferred Securities; or
(d)
to
comply
with the rules and regulations of any securities exchange or automated quotation
system on which any of the Securities may be listed, traded or quoted;
or
(e)
to
add to
the covenants, restrictions or obligations of the Company or to add to the
Events of Default, provided, that such action pursuant to this clause (e) shall
not adversely affect in any material respect the interests of any Holders or
the
holders of the Preferred Securities; or
(f)
to
modify, eliminate or add to any provisions of the Indenture or the Securities
to
such extent as shall be necessary to ensure that the Securities are treated
as
indebtedness of the Company for United States Federal income tax purposes,
provided, that such action pursuant to this clause (f) shall not adversely
affect in any material respect the interests of any Holders or the holders
of
the Preferred Securities.
SECTION
9.2.
Supplemental
Indentures with Consent of Holders.
(a)
Subject
to Section 9.1, with the consent of the Holders of not less than a majority
in aggregate principal amount of the Outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided
,
that
no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security,
(i)
change
the Stated Maturity of the principal or any premium of any Security or change
the date of payment of any installment of interest (including any Additional
Interest) on any Security, or reduce the principal amount thereof or the rate
of
interest thereon or any premium payable upon the redemption thereof or change
the place of payment where, or the coin or currency in which, any Security
or
interest thereon is payable, or restrict or impair the right to institute suit
for the enforcement of any such payment on or after such date, or
(ii)
reduce
the percentage in aggregate principal amount of the Outstanding Securities,
the
consent of whose Holders is required for any such supplemental indenture, or
the
consent of whose Holders is required for any waiver of compliance with any
provision of this Indenture or of defaults hereunder and their consequences
provided for in this Indenture, or
(iii)
modify
any of the provisions of this
Section
9.2
,
Section
5.1
,
Section
5.13
or
Section
10.7
,
except
to increase any percentage in aggregate principal amount of the Outstanding
Securities, the consent of whose Holders is required for any reason, or to
provide that certain other provisions of this Indenture cannot be modified
or
waived without the consent of the Holder of each Security;
provided,
further,
that, so
long as any Preferred Securities remain outstanding, no amendment under this
Section
9.2
shall be
effective until the holders of a majority in Liquidation Amount of the Preferred
Securities shall have consented to such amendment;
provided
,
further
,
that if
the consent of the Holder of each Outstanding Security is required for any
amendment under this Indenture, such amendment shall not be effective until
the
holder of each Outstanding Preferred Security shall have consented to such
amendment.
(b)
It
shall
not be necessary for any Act of Holders under this
Section
9.2
to
approve the particular form of any proposed supplemental indenture, but it
shall
be sufficient if such Act shall approve the substance thereof.
SECTION
9.3.
Execution
of Supplemental Indentures.
In
executing or accepting the additional trusts created by any supplemental
indenture permitted by this
Article
IX
or the
modifications thereby of the trusts created by this Indenture, the Trustee
shall
be entitled to receive, and shall be fully protected in conclusively relying
upon, an Officers’ Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture, and that all conditions precedent herein provided for relating to
such action have been complied with. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture that affects the Trustee’s own
rights, duties, indemnities or immunities under this Indenture or otherwise.
Copies of the final form of each supplemental indenture shall be delivered
by
the Trustee at the expense of the Company to each Holder, and, if the Trustee
is
the Property Trustee, to each holder of Preferred Securities, promptly after
the
execution thereof.
SECTION
9.4.
Effect
of Supplemental Indentures.
Upon
the
execution of any supplemental indenture under this
Article
IX
,
this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities and every holder of Preferred Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION
9.5.
Reference
in Securities to Supplemental Indentures.
Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this
Article
IX
may, and
shall if required by the Company, bear a notation in form approved by the
Company as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Company, to any such supplemental indenture may be prepared
and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE
X
Covenants
SECTION
10.1.
Payment
of Principal, Premium, if any, and Interest.
The
Company covenants and agrees for the benefit of the Holders of the Securities
that it will duly and punctually pay the principal of and any premium and
interest (including any Additional Interest) on the Securities in accordance
with the terms of the Securities and this Indenture.
SECTION
10.2.
Money
for Security Payments to be Held in Trust.
(a)
Whenever
the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m.,
New York City time, on each due date of the principal of or any premium or
interest (including any Additional Interest) on any Securities, deposit with
such Paying Agent a sum sufficient to pay such amount, such sum to be held
as
provided in the Trust Indenture Act and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure to so
act.
(b)
The
Company will cause each Paying Agent for the Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this
Section
10.2
,
that
such Paying Agent will (i) comply with the provisions of this Indenture and
the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon
the
written request of the Trustee, forthwith pay to the Trustee all sums held
in
trust by such Paying Agent for payment in respect of the
Securities.
(c)
The
Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the
same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such
money.
(d)
Any
money
deposited with the Trustee or any Paying Agent for the payment of the principal
of and any premium or interest (including any Additional Interest) on any
Security and remaining unclaimed for two years after such principal and any
premium or interest has become due and payable shall (unless otherwise required
by mandatory provision of applicable escheat or abandoned or unclaimed property
law) be paid on Company Request to the Company, or (if then held by the Company)
shall (unless otherwise required by mandatory provision of applicable escheat
or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided
,
that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty (30) days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION
10.3.
Statement
as to Compliance.
The
Company shall deliver to the Trustee, within ninety (90) days after the end
of
each fiscal year of the Company ending after the date hereof, an Officers’
Certificate covering the preceding calendar year, stating whether or not to
the
knowledge of the signers thereof the Company is in default in the performance
or
observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder), and if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge. The delivery
requirements of this Section 10.3 may be satisfied by compliance with Section
8.16(a) of the Trust Agreement.
SECTION
10.4.
Calculation
Agent.
(a)
The
Company hereby agrees that for so long as any of the Securities remain
Outstanding, there will at all times be an agent appointed to calculate LIBOR
in
respect of each Interest Payment Date in accordance with the terms of
Schedule
A
(the
“
Calculation
Agent
”).
The
Company has initially appointed the Property Trustee as Calculation Agent for
purposes of determining LIBOR for each Interest Payment Date. The Calculation
Agent may be removed by the Company at any time. Notwithstanding the foregoing,
so long as the Property Trustee holds any of the Securities, the Calculation
Agent shall be the Property Trustee. If the Calculation Agent is unable or
unwilling to act as such or is removed by the Company, the Company will promptly
appoint as a replacement Calculation Agent the London office of a leading bank
which is engaged in transactions in Eurodollar deposits in the international
Eurodollar market and which does not control or is not controlled by or under
common control with the Company or its Affiliates. The Calculation Agent may
not
resign its duties without a successor having been duly appointed.
(b)
The
Calculation Agent shall be required to agree that, as soon as possible after
11:00 a.m. (London time) on each LIBOR Determination Date (as defined in
Schedule
A
),
but in
no event later than 11:00 a.m. (London time) on the Business Day immediately
following each LIBOR Determination Date, the Calculation Agent will calculate
the interest rate (the Interest Payment shall be rounded to the nearest cent,
with half a cent being rounded upwards) for the related Interest Payment Date,
and will communicate such rate and amount to the Company, the Trustee, each
Paying Agent and the Depositary. The Calculation Agent will also specify to
the
Company the quotations upon which the foregoing rates and amounts are based
and,
in any event, the Calculation Agent shall notify the Company before 5:00 p.m.
(London time) on each LIBOR Determination Date that either: (i) it has
determined or is in the process of determining the foregoing rates and amounts
or (ii) it has not determined and is not in the process of determining the
foregoing rates and amounts, together with its reasons therefor. The Calculation
Agent’s determination of the foregoing rates and amounts for any Interest
Payment Date will (in the absence of manifest error) be final and binding upon
all parties. For the sole purpose of calculating the interest rate for the
Securities, “Business Day” shall be defined as any day on which dealings in
deposits in Dollars are transacted in the London interbank market.
SECTION
10.5.
Additional
Tax Sums.
So
long
as no Event of Default has occurred and is continuing, if (a) the Trust is
the
Holder of all of the Outstanding Securities and (b) a Tax Event described in
clause (i) or (iii) in the definition of Tax Event in
Section
1.1
hereof
has occurred and is continuing, the Company shall pay to the Trust (and its
permitted successors or assigns under the related Trust Agreement) for so long
as the Trust (or its permitted successor or assignee) is the registered holder
of the Outstanding Securities, such amounts as may be necessary in order that
the amount of Distributions (including any Additional Interest Amount (as
defined in the Trust Agreement)) then due and payable by the Trust on the
Preferred Securities and Common Securities that at any time remain outstanding
in accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes arising from such Tax Event (additional such amounts payable
by
the Company to the Trust, the “
Additional
Tax Sums”).
Whenever
in this Indenture or the Securities there is a reference in any context to
the
payment of principal of or interest on the Securities, such mention shall be
deemed to include mention of the payments of the Additional Tax Sums provided
for in this
Section
10.5
to the
extent that, in such context, Additional Tax Sums are, were or would be payable
in respect thereof pursuant to the provisions of this
Section
10.5
and
express mention of the payment of Additional Tax Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Tax Sums in
those provisions hereof where such express mention is not made.
SECTION
10.6.
Additional
Covenants.
(a)
The
Company covenants and agrees with each Holder of Securities that if an Event
of
Default shall have occurred and be continuing, it shall not (i) declare or
pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company’s Equity Interests,
except only to the extent necessary to maintain its status as a real estate
investment trust under the Code, provided such distributions to maintain its
status as a real estate investment trust under the Code may not be made in
any
event if there has occurred (x) an Event of Default described in clauses (a),
(b), (e) or (f) of Section 5.1 or (y) any Event of Default with respect to
which
acceleration of principal has been triggered pursuant to Section 5.2, or (z)
an
Event of Default triggered by a breach of Section 10.9, (ii) vote in favor
of or
permit or otherwise allow any of its Significant Subsidiaries to declare or
pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to or otherwise retire, any shares of any
such
Significant Subsidiary’s preferred stock or other Equity Interests entitling the
holders thereof to a stated rate of return (for the avoidance of doubt, whether
such preferred stock or other Equity Interests are perpetual or otherwise)
if
such proceeds are payable to any third party which is not the Company or an
affiliate of the Company, or (iii) make any payment of principal of or any
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank
pari
passu
in all
respects with or junior in interest to the Securities (other than with respect
to clauses (i) and (iii) above, (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company or any Significant
Subsidiary in connection with (1) any employment contract, benefit plan or
other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, (2) a dividend reinvestment or stockholder
stock purchase plan or (3) the issuance of capital stock of the Company or
of
such Significant Subsidiary (or securities convertible into or exercisable
for
such capital stock) as consideration in an acquisition transaction entered
into
prior to the Event of Default, (b) as a result of an exchange or conversion
of
any class or series of the Company’s capital stock (or any capital stock of a
Significant Subsidiary) for any class or series of the Company’s capital stock
(or in the case of a Significant Subsidiary, any class or series of such
Significant Subsidiary’s capital stock) or any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock (or in the
case of indebtedness of a Significant Subsidiary, or any class or series of
such
Significant Subsidiary’s indebtedness for any class or series of such
Significant Subsidiary’s capital stock), (c) the purchase of fractional
interests in shares of the Company’s capital stock (or the capital stock of a
Significant Subsidiary) pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, the issuance
of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks
pari
passu
with or
junior to such stock and any cash payments in lieu of fractional shares issued
in connection therewith).
(b)
The
Company also covenants with each Holder of Securities (i) to hold, directly
or
indirectly, one hundred percent (100%) of the Common Securities of the Trust,
provided,
that any
permitted successor of the Company hereunder may succeed to the Company’s
ownership of such Common Securities, (ii) as holder of such Common Securities,
not to voluntarily dissolve, wind-up or liquidate the Trust other than (A)
in
connection with a distribution of the Securities to the holders of the Preferred
Securities in liquidation of the Trust or (B) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement and
(iii) to use its reasonable commercial efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Trust to continue to be taxable
as a grantor trust and not as a corporation for United States Federal income
tax
purposes.
(c)
The
Company also agrees to use its reasonable best efforts to meet the requirements
to qualify, effective for the fiscal year ending December 31, 2006 and all
future fiscal years, as a real estate investment trust under the Internal
Revenue Code of 1986, as amended.
SECTION
10.7.
Waiver
of Covenants.
The
Company may omit in any particular instance to comply with any covenant or
condition contained in
Section
10.6
if,
before or after the time for such compliance, the Holders of at least a majority
in aggregate principal amount of the Outstanding Securities shall, by Act of
such Holders, and at least a majority of the aggregate Liquidation Amount of
the
Preferred Securities then outstanding, by consent of such holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until
such
waiver shall become effective, the obligations of the Company in respect of
any
such covenant or condition shall remain in full force and effect.
SECTION
10.8.
Treatment
of Securities.
The
Company will, unless and until required otherwise by an applicable taxing
authority, treat the Securities as indebtedness, and the amounts, other than
payments of principal, payable in respect of the principal amount of such
Securities as interest, for all United States federal income tax purposes.
All
payments in respect of the Securities will be made free and clear of United
States withholding tax to any beneficial owner thereof that has provided an
Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor
form) establishing its U.S. or non-U.S. status for United States federal income
tax purposes, or any other applicable form establishing a complete exemption
from United States withholding tax.
SECTION
10.9.
Limitation
of Issuance of Securities.
The
Company covenants and agrees with each Holder of Securities that the Company
will not, until the date that is four months following the date of this
Indenture, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Securities or other
unsecured debt securities substantially similar to the Securities (“
Substantially
Similar Securities
”),
or
(ii) any securities convertible into, or exercisable or exchangeable for, the
Securities any Substantially Similar Securities.
ARTICLE
XI
Redemption
of Securities
SECTION
11.1.
Optional
Redemption.
The
Company may, at its option, on any Interest Payment Date, on or after January
30, 2012, redeem the Securities in whole at any time or in part from time to
time, at a Redemption Price equal to one hundred percent (100%) of the principal
amount thereof (or of the redeemed portion thereof, as applicable), together,
in
the case of any such redemption, with accrued and unpaid interest, including
any
Additional Interest, through but excluding the date fixed as the Redemption
Date
(the “
Optional
Redemption Price
”).
SECTION
11.2.
Special
Event Redemption.
Prior
to
January 30, 2012, upon the occurrence and during the continuation of a Special
Event, the Company may, at its option, redeem the Securities, in whole but
not
in part, at a Redemption Price equal to:
TIME
PERIOD
|
PERCENTAGE
|
December
12, 2006 - January 29, 2008
|
107.5%
|
January
30, 2008 - January 29, 2009
|
105%
|
January
30, 2009 - January 29, 2010
|
103.75%
|
January
30, 2010 - January 29, 2011
|
102.5%
|
January
30, 2011 - January 29, 2012
|
101.25%
|
January
30, 2012 and thereafter
|
100%
|
of
the
principal amount thereof, together, in the case of any such redemption, with
accrued interest, including any Additional Interest, through but excluding
the
date fixed as the Redemption Date (the “
Special
Redemption Price
”).
SECTION
11.3.
Election
to Redeem; Notice to Trustee.
The
election of the Company to redeem any Securities, in whole or in part, shall
be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the
election of the Company, the Company shall, not less than forty-five (45) days
and not more than seventy-five (75) days prior to the Redemption Date (unless
a
shorter notice shall be satisfactory to the Trustee), notify the Trustee and
the
Property Trustee under the Trust Agreement in writing of such date and of the
principal amount of the Securities to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section
11.5
.
In the
case of any redemption of Securities, in whole or in part, (a) prior to the
expiration of any restriction on such redemption provided in this Indenture
or
the Securities or (b) pursuant to an election of the Company which is subject
to
a condition specified in this Indenture or the Securities, the Company shall
furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel
evidencing compliance with such restriction or condition.
SECTION
11.4.
Selection
of Securities to be Redeemed.
(a)
If
less
than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected and redeemed on a pro rata basis not more than sixty
(60) days prior to the Redemption Date by the Trustee from the Outstanding
Securities not previously called for redemption,
provided
,
that
the unredeemed portion of the principal amount of any Security shall be in
an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
(b)
The
Trustee shall promptly notify the Company in writing of the Securities selected
for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security that has been or is to be redeemed.
(c)
The
provisions of paragraphs (a) and (b) of this
Section
11.4
shall
not apply with respect to any redemption affecting only a single Security,
whether such Security is to be redeemed in whole or in part. In the case of
any
such redemption in part, the unredeemed portion of the principal amount of
the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
SECTION
11.5.
Notice
of Redemption.
(a)
Notice
of
redemption shall be given not later than the thirtieth (30
th
)
day,
and not earlier than the sixtieth (60
th
)
day,
prior to the Redemption Date to each Holder of Securities to be redeemed, in
whole or in part (unless a shorter notice shall be satisfactory to the Property
Trustee under the related Trust Agreement).
(b)
With
respect to Securities to be redeemed, in whole or in part, each notice of
redemption shall state:
(i)
the
Redemption Date;
(ii)
the
Redemption Price or, if the Redemption Price cannot be calculated prior to
the
time the notice is required to be sent, the estimate of the Redemption Price,
as
calculated by the Company, together with a statement that it is an estimate
and
that the actual Redemption Price will be calculated on the fifth Business Day
prior to the Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date that such Redemption
Price is calculated);
(iii)
if
less
than all Outstanding Securities are to be redeemed, the identification (and,
in
the case of partial redemption, the respective principal amounts) of the amount
of and particular Securities to be redeemed;
(iv)
that
on
the Redemption Date, the Redemption Price will become due and payable upon
each
such Security or portion thereof, and that any interest (including any
Additional Interest) on such Security or such portion, as the case may be,
shall
cease to accrue on and after said date; and
(v)
the
place
or places where such Securities are to be surrendered for payment of the
Redemption Price.
(c)
Notice
of
redemption of Securities to be redeemed, in whole or in part, at the election
of
the Company shall be given by the Company or, at the Company’s request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice if mailed in the manner provided above shall be conclusively presumed
to have been duly given, whether or not the Holder receives such notice. In
any
case, a failure to give such notice by mail or any defect in the notice to
the
Holder of any Security designated for redemption as a whole or in part shall
not
affect the validity of the proceedings for the redemption of any other
Security.
SECTION
11.6.
Deposit
of Redemption Price.
Prior
to
10:00 a.m., New York City time, on the Redemption Date specified in the notice
of redemption given as provided in
Section
11.5
,
the
Company will deposit with the Trustee or with one or more Paying Agents an
amount of money sufficient to pay the Redemption Price of, and any accrued
interest (including any Additional Interest) on, all the Securities (or portions
thereof) that are to be redeemed on that date.
SECTION
11.7.
Payment
of Securities Called for Redemption.
(a)
If
any
notice of redemption has been given as provided in
Section
11.5
,
the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment specified
in
such notice, the Securities or the specified portions thereof shall be paid
and
redeemed by the Company at the applicable Redemption Price, together with
accrued interest (including any Additional Interest) to the Redemption
Date.
(b)
Upon
presentation of any Security redeemed in part only, the Company shall execute
and the Trustee shall authenticate and deliver to the Holder thereof, at the
expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion
of
the Security so presented and having the same Original Issue Date, Stated
Maturity and terms.
(c)
If
any
Security called for redemption shall not be so paid upon surrender thereof
for
redemption, the principal of and any premium on such Security shall, until
paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
ARTICLE
XII
Subordination
of Securities
SECTION
12.1.
Securities
Subordinate to Senior Debt.
The
Company covenants and agrees, and each Holder of a Security, by its acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this
Article
XII
,
the
payment of the principal of and any premium and interest (including any
Additional Interest) on each and all of the Securities are hereby expressly
made
subordinate and subject in right of payment to the prior payment in full of
all
Senior Debt.
SECTION
12.2.
No
Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution,
Etc
.
(a)
In
the
event and during the continuation of any default by the Company in the payment
of any principal of or any premium or interest on any Senior Debt (following
any
grace period, if applicable) when the same becomes due and payable, whether
at
maturity or at a date fixed for prepayment or by declaration of acceleration
or
otherwise, then, upon written notice of such default to the Company by the
holders of such Senior Debt or any trustee therefor, unless and until such
default shall have been cured or waived or shall have ceased to exist, no direct
or indirect payment (in cash, property, securities, by set-off or otherwise)
shall be made or agreed to be made on account of the principal of or any premium
or interest (including any Additional Interest) on any of the Securities, or
in
respect of any redemption, repayment, retirement, purchase or other acquisition
of any of the Securities.
(b)
In
the
event of a bankruptcy, insolvency or other proceeding described in clause (d)
or
(e) of the definition of Event of Default (each such event, if any, herein
sometimes referred to as a “
Proceeding”
),
all
Senior Debt (including any interest thereon accruing after the commencement
of
any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made
to
any Holder of any of the Securities on account thereof. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least
to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior Debt
at
the time outstanding and to any securities issued in respect thereof under
any
such plan of reorganization or readjustment), which would otherwise (but for
these subordination provisions) be payable or deliverable in respect of the
Securities shall be paid or delivered directly to the holders of Senior Debt
in
accordance with the priorities then existing among such holders until all Senior
Debt (including any interest thereon accruing after the commencement of any
Proceeding) shall have been paid in full.
(c)
In
the
event of any Proceeding, after payment in full of all sums owing with respect
to
Senior Debt, the Holders of the Securities, together with the holders of any
obligations of the Company ranking on a parity with the Securities, shall be
entitled to be paid from the remaining assets of the Company the amounts at
the
time due and owing on account of unpaid principal of and any premium and
interest (including any Additional Interest) on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any Equity Interests or any
obligations of the Company ranking junior to the Securities and such other
obligations. If, notwithstanding the foregoing, any payment or distribution
of
any character on any security, whether in cash, securities or other property
(other than securities of the Company or any other entity provided for by a
plan
of reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior Debt
at
the time outstanding and to any securities issued in respect thereof under
any
such plan of reorganization or readjustment) shall be received by the Trustee
or
any Holder in contravention of any of the terms hereof and before all Senior
Debt shall have been paid in full, such payment or distribution or security
shall be received in trust for the benefit of, and shall be paid over or
delivered and transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt (including any interest thereon
accruing after the commencement of any Proceeding) in full. In the event of
the
failure of the Trustee or any Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Debt is hereby irrevocably
authorized to endorse or assign the same.
(d)
The
Trustee and the Holders, at the expense of the Company, shall take such
reasonable action (including the delivery of this Indenture to an agent for
any
holders of Senior Debt or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders
of a
majority in principal amount of the Senior Debt at the time outstanding, be
necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
(e)
The
provisions of this
Section
12.2
shall
not impair any rights, interests, remedies or powers of any secured creditor
of
the Company in respect of any security interest the creation of which is not
prohibited by the provisions of this Indenture.
(f)
The
securing of any obligations of the Company, otherwise ranking on a parity with
the Securities or ranking junior to the Securities, shall not be deemed to
prevent such obligations from constituting, respectively, obligations ranking
on
a parity with the Securities or ranking junior to the Securities.
SECTION
12.3.
Payment
Permitted If No Default.
Nothing
contained in this
Article
XII
or
elsewhere in this Indenture or in any of the Securities shall prevent (a) the
Company, at any time, except during the pendency of the conditions described
in
paragraph (a) of
Section
12.2
or of
any Proceeding referred to in
Section
12.2
,
from
making payments at any time of principal of and any premium or interest
(including any Additional Interest) on the Securities or (b) the application
by
the Trustee of any moneys deposited with it hereunder to the payment of or
on
account of the principal of and any premium or interest (including any
Additional Interest) on the Securities or the retention of such payment by
the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge (in accordance with
Section
12.8
)
that
such payment would have been prohibited by the provisions of this
Article
XII
,
except
as provided in
Section
12.8
.
SECTION
12.4.
Subrogation
to Rights of Holders of Senior Debt.
Subject
to the payment in full of all amounts due or to become due on all Senior Debt,
or the provision for such payment in cash or cash equivalents or otherwise
in a
manner satisfactory to the holders of Senior Debt, the Holders of the Securities
shall be subrogated to the extent of the payments or distributions made to
the
holders of such Senior Debt pursuant to the provisions of this
Article
XII
(equally
and ratably with the holders of all indebtedness of the Company that by its
express terms is subordinated to Senior Debt of the Company to substantially
the
same extent as the Securities are subordinated to the Senior Debt and is
entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Debt) to the rights of the holders
of such Senior Debt to receive payments and distributions of cash, property
and
securities applicable to the Senior Debt until the principal of and any premium
and interest (including any Additional Interest) on the Securities shall be
paid
in full. For purposes of such subrogation, no payments or distributions to
the
holders of the Senior Debt of any cash, property or securities to which the
Holders of the Securities or the Trustee would be entitled except for the
provisions of this
Article
XII
,
and no
payments made pursuant to the provisions of this
Article
XII
to the
holders of Senior Debt by Holders of the Securities or the Trustee, shall,
as
among the Company, its creditors other than holders of Senior Debt, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.
SECTION
12.5.
Provisions
Solely to Define Relative Rights.
The
provisions of this
Article
XII
are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of Senior Debt on
the
other hand. Nothing contained in this
Article
XII
or
elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as between the Company and the Holders of the Securities, the
obligations of the Company, which are absolute and unconditional, to pay to
the
Holders of the Securities the principal of and any premium and interest
(including any Additional Interest) on the Securities as and when the same
shall
become due and payable in accordance with their terms, (b) affect the relative
rights against the Company of the Holders of the Securities and creditors of
the
Company other than their rights in relation to the holders of Senior Debt or
(c)
prevent the Trustee or the Holder of any Security (or to the extent expressly
provided herein, the holder of any Preferred Security) from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, including filing and voting claims in any Proceeding, subject to
the
rights, if any, under this
Article
XII
of the
holders of Senior Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION
12.6.
Trustee
to Effectuate Subordination.
Each
Holder of a Security by his or her acceptance thereof authorizes and directs
the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination provided in this
Article
XII
and
appoints the Trustee his or her attorney-in-fact for any and all such
purposes.
SECTION
12.7.
No
Waiver of Subordination Provisions.
(a)
No
right
of any present or future holder of any Senior Debt to enforce subordination
as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or be otherwise charged
with.
(b)
Without
in any way limiting the generality of paragraph (a) of this
Section
12.7
,
the
holders of Senior Debt may, at any time and from to time, without the consent
of
or notice to the Trustee or the Holders of the Securities, without incurring
responsibility to such Holders of the Securities and without impairing or
releasing the subordination provided in this
Article
XII
or the
obligations hereunder of such Holders of the Securities to the holders of Senior
Debt, do any one or more of the following: (i) change the manner, place or
terms
of payment or extend the time of payment of, or renew or alter, Senior Debt,
or
otherwise amend or supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding,
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt, (iii) release any Person liable
in
any manner for the payment of Senior Debt and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION
12.8.
Notice
to Trustee.
(a)
The
Company shall give prompt written notice to a Responsible Officer of the Trustee
of any fact known to the Company that would prohibit the making of any payment
to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this
Article
XII
or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment to or by the Trustee in respect of the Securities, unless and until
a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder of Senior Debt or from any trustee, agent or
representative therefor;
provided,
that if
the Trustee shall not have received the notice provided for in this
Section
12.8
at least
two Business Days prior to the date upon which by the terms hereof any monies
may become payable for any purpose (including, the payment of the principal
of
and any premium on or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding,
the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary that may be received by it within two Business
Days prior to such date.
(b)
The
Trustee shall be entitled to rely on the delivery to it of a written notice
by a
Person representing himself or herself to be a holder of Senior Debt (or a
trustee, agent, representative or attorney-in-fact therefor) to establish that
such notice has been given by a holder of Senior Debt (or a trustee, agent,
representative or attorney-in-fact therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to
the
right of any Person as a holder of Senior Debt to participate in any payment
or
distribution pursuant to this
Article
XII
,
the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such Person is entitled to participate in such payment
or
distribution and any other facts pertinent to the rights of such Person under
this
Article
XII
,
and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION
12.9.
Reliance
on Judicial Order or Certificate of Liquidating Agent.
Upon
any
payment or distribution of assets of the Company referred to in this
Article
XII
,
the
Trustee and the Holders of the Securities shall be entitled to conclusively
rely
upon any order or decree entered by any court of competent jurisdiction in
which
such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders
of
the Senior Debt and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other
facts pertinent thereto or to this
Article
XII
.
SECTION
12.10.
Trustee
Not Fiduciary for Holders of Senior Debt.
The
Trustee, in its capacity as trustee under this Indenture, shall not be deemed
to
owe any fiduciary duty to the holders of Senior Debt and shall not be liable
to
any such holders if it shall in good faith mistakenly pay over or distribute
to
Holders of Securities or to the Company or to any other Person cash, property
or
securities to which any holders of Senior Debt shall be entitled by virtue
of
this
Article
XII
or
otherwise.
SECTION
12.11.
Rights
of Trustee as Holder of Senior Debt; Preservation of Trustee’s
Rights.
The
Trustee in its individual capacity shall be entitled to all the rights set
forth
in this
Article
XII
with
respect to any Senior Debt that may at any time be held by it, to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
SECTION
12.12.
Article
Applicable to Paying Agents
If
at any
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee
”
as used
in this
Article
XII
shall in
such case (unless the context otherwise requires) be construed as extending
to
and including such Paying Agent within its meaning as fully for all intents
and
purposes as if such Paying Agent were named in this
Article
XII
in
addition to or in place of the Trustee. For the avoidance of doubt, the Company
shall not be permitted to appoint itself or any Affiliate as a Paying Agent
hereunder.
*
* * *
This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
*
* * *
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.
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Redwood
Trust, Inc.
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By:
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Name:
Martin S. Hughes
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Title:
Chief
Financial Officer, Treasurer,
Vice
President and Secretary
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The
Bank of New York Trust Company,
National
Association, as Trustee
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By:
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Name:
Maria D. Calzado
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Title:
Vice
President
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Schedule
A
DETERMINATION
OF LIBOR
With
respect to the Securities, the London interbank offered rate (“
LIBOR
”)
shall
be determined by the Calculation Agent in accordance with the following
provisions (in each case rounded to the nearest .000001%):
(1)
On
the
second LIBOR Business Day (as defined below) prior to an Interest Payment Date
(except with respect to the first interest payment period such date shall be
December 8, 2006)
(each
such day, a “
LIBOR
Determination Date
”),
LIBOR
for any given security shall for the following interest payment period equal
the
rate (expressed as a percentage per annum) for U.S. dollar deposits in Europe,
for a three (3) month period, that appears on Dow Jones Telerate (as defined
in
the International Swaps and Derivatives Association, Inc. 2000 Interest Rate
and
Currency Exchange Definitions) Page 3750, or such other page as may replace
such
Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date,
as
reported by Bloomberg Financial Market Commodities News or any successor
service. If such rate is superseded on Telerate Page 3750 by a corrected rate
before 12:00 noon (London time) on such LIBOR Determination Date, the corrected
rate as so substituted will be LIBOR for such LIBOR Determination
Date.
(2)
If
on any
LIBOR Determination Date such rate does not appear on Dow Jones Telerate Page
3750 or such other page as may replace such Page 3750, the Calculation Agent
shall determine the arithmetic mean of the offered quotations (expressed as
a
percentage per annum) of the Reference Banks (as defined below) to leading
banks
in the London interbank market for U.S. dollar deposits in Europe, for a three
(3) month period, for an amount determined by the Calculation Agent (but not
less than U.S. $1,000,000) by reference to requests for quotations as of
approximately 11:00 A.M. (London time) on the LIBOR Determination Date made
by
the Calculation Agent to the Reference Banks. If on any LIBOR Determination
Date
at least two of the Reference Banks provide such quotations, LIBOR shall equal
such arithmetic mean of such quotations. If on any LIBOR Determination Date
only
one or none of the Reference Banks provide such quotations, LIBOR shall be
deemed to be the arithmetic mean of the offered quotations (expressed as a
percentage per annum) that two (2) leading banks in The City of New York
selected by the Calculation Agent are quoting on the relevant LIBOR
Determination Date for U.S. dollar deposits in Europe, for a three (3) month
period, for an amount determined by the Calculation Agent (but not less than
U.S. $1,000,000);
provided
,
that if
the Calculation Agent is required but is unable to determine a rate in
accordance with at least one of the procedures provided above, LIBOR shall
be
LIBOR as determined on the previous LIBOR Determination Date.
(3)
As
used
herein: “
Reference
Banks
”
means
four major banks in the London interbank market selected by the Calculation
Agent; and “
LIBOR
Business Day
”
means
a
day (a) on which commercial banks are open for business (including dealings
in
foreign exchange and foreign currency deposits) in London and (b) is not a
Saturday, Sunday or other day on which commercial banking institutions in New
York, New York or Wilmington, Delaware are authorized or obligated by law or
executive order to be closed.
Exhibit
A
Form
of Officer’s Financial Certificate
The
undersigned, the
[
Chairman/Vice
Chairman/Chief Executive Officer/President/Vice President
/
Chief
Financial Officer/Treasurer/Assistant Treasurer], hereby certifies, pursuant
to
Section 7.3(b) of the Junior Subordinated Indenture, dated as of December
12,
2006, among Redwood Trust, Inc. (the “Company”) and The Bank of New York Trust
Company, National Association, as trustee, that, as of [date], [20__], the
Company, if applicable, and its subsidiaries had the following ratios and
balances:
As
of
[Quarterly/Annual Financial Date], 20__
Senior
secured indebtedness for borrowed money (“Debt”)
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$
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_____
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Senior
unsecured Debt
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$
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_____
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Subordinated
Debt
|
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$
|
_____
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Total
Debt
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$
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_____
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Ratio
of (x) senior secured and unsecured Debt to (y) total Debt
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_____
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%
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*
A table
describing the quarterly report calculation procedures is provided on page
___
[FOR
FISCAL YEAR END:
Attached
hereto are the audited consolidated financial statements (including the balance
sheet, income statement and statement of cash flows, and notes thereto, together
with the report of the independent accountants thereon) of the Company and
its
consolidated subsidiaries for the three years ended [date], 20__ and all
required Financial Statements (as defined in the Purchase Agreement) for the
year ended [date], 20__]
[FOR
FISCAL QUARTER END:
Attached
hereto are the unaudited consolidated and consolidating financial statements
(including the balance sheet and income statement) of the Company and its
consolidated subsidiaries and all required Financial Statements (as defined
in
the Purchase Agreement) for the year ended [date], 20__] for the fiscal quarter
ended [date], 20__.]
The
financial statements fairly present in all material respects, in accordance
with
U.S. generally accepted accounting principles (“GAAP”), the financial position
of the Company and its consolidated subsidiaries, and the results of operations
and changes in financial condition as of the date, and for the
[
quarterly
]
[
annual
]
period
ended [date], 20__, and such financial statements have been prepared in
accordance with GAAP consistently applied throughout the period involved (expect
as otherwise noted therein).
There
has
been no monetary default with respect to any indebtedness owed by the Company
and/or its subsidiaries (other than those defaults cured within 30 days of
the
occurrence of the same).
IN
WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this _____ day of _____________, 20__.
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Redwood
Trust, Inc.
|
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By:
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/s/
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Name:
|
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Title
|
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Redwood
Trust, Inc.
One
Belvedere Place
Suite
300
Mill
Valley, California 94941
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