[Letterhead
of Richards, Layton & Finger, P.A.]
Redwood
Capital Trust II
c/o
Redwood Trust, Inc.
One
Belvedere Place, Suite 300
Mill
Valley, California 94941
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Re:
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Redwood Capital Trust
II
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Ladies
and Gentlemen:
We have
acted as special Delaware counsel to Redwood Capital Trust II (the "Trust"), a
Delaware statutory trust, in connection with the matters set forth
herein. At your request, this opinion is being furnished to
you.
For
purposes of giving the opinions hereinafter set forth, our examination of
documents has been limited to the examination of originals or copies of the
following:
(a) The
Certificate of Trust of the Trust, as filed in the office of the Secretary of
State of the State of Delaware (the "Secretary of State") on July 29, 2010 (the
"Certificate");
(b) The
Trust Agreement, dated as of July 29, 2010, between Redwood Trust Inc., a
Maryland corporation, as sponsor (the "Company") and Wells Fargo Delaware Trust
Company, N.A., a national banking association, as Delaware trustee;
(c) The
Registration Statement (the "Registration Statement") on Form S-3, including a
prospectus (the "Prospectus"), relating to the Trust Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Trust Preferred Security" and collectively, the "Trust Preferred
Securities"), as filed by the Company and the Trust with the Securities and
Exchange Commission on the date hereof;
(d) The
form of Amended and Restated Trust Agreement of the Trust (the "Trust
Agreement"), among the Company and the trustees of the Trust named therein,
attached as an exhibit to the Registration Statement; and
Redwood
Capital Trust II
August 6,
2010
Page
2
(e)
Certificate of Good Standing for the Trust, dated the date
hereof, obtained from the Secretary of State.
Capitalized
terms used herein and not otherwise defined are used as defined in the Trust
Agreement.
For
purposes of this opinion, we have not reviewed any documents other than the
documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no
provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With
respect to all documents examined by us, we have assumed (i) the authenticity of
all documents submitted to us as authentic originals, (ii) the conformity with
the originals of all documents submitted to us as copies or forms, and (iii) the
genuineness of all signatures.
For
purposes of this opinion, we have assumed (i) that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of each natural person who is a party to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents and that each party has complied with all of the obligations and
satisfied all of the conditions on its part to be performed or satisfied
pursuant to the documents examined by us, (v) the due authorization, execution
and delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Trust Preferred Security is to be issued by the
Trust (collectively, the "Preferred Security Holders") of an interest in the
Trust Preferred Securities Certificate for such Trust Preferred Security and the
payment for the interest in the Trust Preferred Security acquired by it, in
accordance with the Trust Agreement, and (vii) that the Trust Preferred
Securities are issued and sold in accordance with the Trust
Agreement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its
contents.
This
opinion is limited to the laws of the State of Delaware (excluding the
securities laws and blue sky laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating
thereto. Our opinions are rendered only with respect to Delaware laws
and rules, regulations and orders thereunder that are currently in
effect.
Redwood
Capital Trust II
August 6,
2010
Page
3
Based
upon the foregoing, and upon our examination of such questions of law and
statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1.
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.).
2.
The Trust Preferred Securities will
represent valid and, subject to the qualifications set forth in paragraph 3
below, fully paid and nonassessable undivided beneficial interests in the assets
of the Trust.
3. The
Preferred Security Holders, 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. We note that the Preferred Security Holders may be
obligated to make payments as set forth in the Trust Agreement.
We
consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and consent to the use of
our name under the heading "Validity of the Securities" therein. In
giving the foregoing consents, we do not thereby admit that we come within the
category of Persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder. Except as stated above, without our
prior written consent, this opinion may not be furnished or quoted to, or relied
upon by, any other Person for any purpose.
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Very
truly yours,
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/s/
Richards, Layton & Finger, P.A.
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TJH/rmc