EXECUTION COPY
AGREEMENT OF MERGER
Dated as of July 25, 1999
Among
OCWEN FINANCIAL CORPORATION,
OCWEN ASSET INVESTMENT CORP.,
and
OCWEN ACQUISITION COMPANY
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TABLE OF CONTENTS
ARTICLE I........................................................................1
SECTION 1.1 THE MERGER...................................................1
SECTION 1.2 CLOSING......................................................1
SECTION 1.3 EFFECTIVE TIME...............................................2
SECTION 1.4 EFFECTS OF THE MERGER........................................2
SECTION 1.5 ARTICLES AND BY-LAWS.........................................2
ARTICLE II.......................................................................2
SECTION 2.1 EFFECT ON CAPITAL STOCK......................................2
SECTION 2.2 EXCHANGE PROCEDURES..........................................2
ARTICLE III......................................................................4
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF OCWEN......................4
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............11
ARTICLE IV......................................................................19
SECTION 4.1 FINANCING...................................................19
ARTICLE V.......................................................................19
SECTION 5.1 PREPARATION OF THE PROXY STATEMENT; SHAREHOLDERS MEETING....19
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY......................21
SECTION 5.3 BEST EFFORTS; NOTIFICATION..................................22
SECTION 5.4 NO SOLICITATION OF TRANSACTIONS.............................23
SECTION 5.5 PUBLIC ANNOUNCEMENTS........................................24
SECTION 5.6 TRANSFER AND GAINS TAXES....................................24
SECTION 5.7 INDEMNIFICATION.............................................24
SECTION 5.8 EFFORTS TO FULFILL CONDITIONS...............................25
SECTION 5.9 COOPERATION OF THE PARTIES..................................25
SECTION 5.10 CONDUCT OF BUSINESS BY OCWEN................................25
SECTION 5.11 CONDUCT OF BUSINESS BY PURCHASER............................26
SECTION 5.12 ADVERSE ACTIONS.............................................27
SECTION 5.13 OTS EXAMINATION REPORTS.....................................27
SECTION 5.14 TERMINATION OF OPTION.......................................27
SECTION 5.15 MANAGEMENT AGREEMENT........................................27
ARTICLE VI......................................................................27
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..27
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER..................28
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF OCWEN..........................29
ARTICLE VII.....................................................................30
SECTION 7.1 OCWEN BOARD ACTIONS.........................................30
ARTICLE VIII....................................................................30
SECTION 8.1 TERMINATION.................................................30
SECTION 8.2 EXPENSES....................................................32
SECTION 8.3 EFFECT OF TERMINATION.......................................33
SECTION 8.4 AMENDMENT...................................................33
SECTION 8.5 EXTENSION; WAIVER...........................................33
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ARTICLE IX......................................................................34
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES...............34
SECTION 9.2 NOTICES.....................................................34
SECTION 9.3 INTERPRETATION..............................................35
SECTION 9.4 COUNTERPARTS................................................35
SECTION 9.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES..............35
SECTION 9.6 GOVERNING LAW...............................................35
SECTION 9.7 ASSIGNMENT..................................................35
SECTION 9.8 ENFORCEMENT.................................................35
SECTION 9.9 INCORPORATION...............................................36
SECTION 9.10 FURTHER ASSURANCES..........................................36
ARTICLE X.......................................................................36
SECTION 10.1 CERTAIN DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT:........36
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AGREEMENT OF MERGER
AGREEMENT OF MERGER (the "Agreement"), dated as of July 25,1999, among
OCWEN FINANCIAL CORPORATION, a Florida corporation (the "Purchaser"), OCWEN
ASSET INVESTMENT CORP., a Virginia corporation ("Ocwen"), and OCWEN ACQUISITION
COMPANY ("Acquisition Sub"), a Virginia corporation and subsidiary of Ocwen
Properties, Inc., a New York corporation and direct subsidiary of Investors
Mortgage Insurance Holding Company, a Delaware corporation and direct subsidiary
of Purchaser.
RECITALS
(a) The Boards of Directors of the Purchaser and Ocwen have determined
that it is advisable and in the best interest of their respective companies and
their shareholders to consummate the business combination involving Ocwen and
the Purchaser described herein, pursuant to which Acquisition Sub will merge
with and into Ocwen and Ocwen will be the surviving corporation (the "Surviving
Corporation") in such merger (the "Merger") and each issued and outstanding
common share, $0.01 par value, of Ocwen (the "Ocwen Common Shares") will be
converted into the right to receive the Merger Consideration (as defined below);
(b) Purchaser and Ocwen intend for the Merger to be a taxable stock
purchase; and
(c) Certain terms used herein shall have the meanings assigned to them
in Article X.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
Article I
The Merger
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Virginia Stock
Corporation Act (the "VSCA"), Acquisition Sub shall be merged with and into
Ocwen at the Effective Time (as defined herein) in accordance with this
Agreement and a Plan of Merger (the "Plan of Merger") reflecting the terms of,
and consistent with, this Agreement, and in a form required by the VSCA, with
such completions, additions and substitutions conforming to the terms of this
Agreement as the parties shall approve, such approval to be conclusively
evidenced by their causing the Plan of Merger containing such completions,
additions or substitutions to be filed in accordance with law. Following the
Merger, the separate corporate existence of Acquisition Sub shall cease and
Ocwen shall continue as the surviving corporation and shall succeed to and
assume all of the rights and obligations of Acquisition Sub in accordance with
the VSCA.
SECTION 1.2 Closing. The closing of the Merger will take place at a
mutually agreeable time and place and on a date to be specified by the parties,
which (subject to satisfaction or waiver of the conditions set forth in Sections
6.2 and 6.3) shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Section 6.1 (the "Closing Date").
SECTION 1.3 Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the parties
shall file the articles of merger or other appropriate documents for the Merger
(the "Articles of Merger") executed in accordance with Section 13.1-720 of the
VSCA and shall make all other filings or recordings required under the VSCA to
effect the Merger. The Merger shall become effective at such time as the
Articles of Merger have been duly filed with the State Corporation Commission of
the Commonwealth of Virginia and the State Corporation Commission issues a
Certificate of Merger in connection therewith, or at such later time as the
Purchaser and Ocwen shall specify in the Articles of Merger (the time and the
day the Merger becomes effective being, respectively, the "Effective Time" and
the "Effective Date"), it being understood that the parties shall cause the
Effective Time to occur on the Closing Date.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the VSCA.
SECTION 1.5 Articles and By-Laws. On the Closing Date, the Articles of
Incorporation and By-Laws of Acquisition Sub and the Articles of Incorporation
of the Purchaser and the By-Laws of the Purchaser, in each case as in effect
immediately prior to the Effective Time, shall not be affected by the Merger,
and such Articles of Incorporation and By-Laws of Acquisition Sub shall be the
Articles of Incorporation and By-Laws of the Surviving Corporation, thereafter
to be amended, restated or repealed in accordance with their terms and
applicable law.
Article II
Effect of the Merger on the Capital Stock of Ocwen
SECTION 2.1 Effect on Capital Stock. By virtue of the Merger and
without any action on the part of the holder of any Ocwen Common Shares, at the
Effective Time (i) each issued and outstanding share of Common Stock, par value
$.01 per share, of Acquisition Sub shall be converted into one validly issued,
fully paid and nonassessable share of Common Stock of the Surviving Corporation,
(ii) all Ocwen Common Shares that are held in the treasury of Ocwen or by any
wholly owned Ocwen Subsidiary and any Ocwen Common Shares owned by Purchaser or
by any wholly owned Purchaser Subsidiary shall be cancelled and no capital stock
of Purchaser or other consideration shall be delivered in exchange therefor;
(iii) subject to the provisions of Section 2.2(h) each issued and outstanding
Ocwen Common Share shall be converted into the right to receive from the
Purchaser 0.71 (the "Conversion Number") validly issued, fully paid and
nonassessable Purchaser Common Shares (as defined below) (the "Merger
Consideration") issuable to the holder thereof upon surrender of the certificate
formerly representing such Ocwen Common Share and (iv) all such Ocwen Common
Shares shall no longer be outstanding and shall automatically be cancelled and
retired and all rights with respect thereto shall cease to exist, and each
holder of any such Ocwen Common Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d), in each case, without interest and less any required withholding
taxes.
SECTION 2.2 Exchange Procedures.
(a) Exchange Agent. Prior to the Effective Time, Purchaser shall
designate a bank or trust company to act as agent for the holders of Ocwen
Common Shares in connection with the Merger (the "Exchange Agent") to receive
the Merger Consideration to which holders of Ocwen Common Shares shall become
entitled pursuant to Section 2.1. At the Effective Time, Purchaser will provide
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to the Exchange Agent sufficient Purchaser Common Shares issuable in exchange
for the Ocwen Common Shares pursuant to Section 2.2(b).
(b) Surrender of Certificates. Promptly after the Effective Time,
Purchaser shall cause to be mailed to each record holder, as of the Effective
Time, of an outstanding certificate or certificates which immediately prior to
the Effective Time represented Ocwen Common Shares (the "Certificates"), a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates for issuance of the Merger
Consideration therefor. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each Ocwen
Common Share formerly represented by such Certificate, and such Certificate
shall then be cancelled. No interest shall be paid or accrued for the benefit of
holders of the Certificates on the Merger Consideration payable upon the
surrender of the Certificates. If the Merger Consideration is to be issued to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of issuance that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the issuance of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of Surviving
Corporation that such tax either has been paid or is not applicable.
(c) Stock Transfer Books. At the Effective Time, the stock transfer
books of Ocwen shall be closed and thereafter there shall be no further
registration of transfers of Ocwen Common Shares on the records of Ocwen. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Ocwen Common Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Ocwen Common Shares except as
otherwise provided for herein or by applicable law.
(d) Distributions with Respect to Ocwen Common Shares. Ocwen may, at
the election of its Board of Directors, declare, set aside and pay to the
holders of Ocwen Common Shares a dividend (the "1998 REIT Dividend") at such
rate and in such form and with such declaration, record and payment dates which
Ocwen determines is necessary for Ocwen to maintain its status as a real estate
investment trust for the year ended December 31, 1998.
(e) No Further Ownership Rights in Ocwen Common Shares. All Merger
Consideration issued upon exchange of Ocwen Common Shares in accordance with the
terms of this Article II shall be deemed to have been issued in full
satisfaction of all rights pertaining to the Ocwen Common Shares, subject,
however, to the obligation of the Surviving Corporation to pay, without interest
and no later than December 31, 1999, any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by Ocwen on such shares in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time and have not been paid prior to such exchange, and there shall be
no further registration of transfers on the stock transfer books of Ocwen of the
Ocwen Common Shares which were outstanding immediately prior to the Effective
Time.
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(f) No Liability. None of the Purchaser, Acquisition Sub, Ocwen or the
Exchange Agent shall be liable to any person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any portion of the Merger
Consideration delivered to the Exchange Agent pursuant to this Agreement that
remains unclaimed for twelve months after the Effective Time shall be
redelivered by the Exchange Agent to the Purchaser, upon demand, and any holders
of Ocwen Common Shares which have not been exchanged as contemplated by this
Section 2.2 shall thereafter look only to the Purchaser for delivery of the
Merger Consideration, subject to applicable abandoned property, escheat and
other similar laws.
(g) Withholding Rights. The Purchaser or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Ocwen Common Shares such amounts as
the Purchaser or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by the
Purchaser or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Ocwen Common
Shares in respect of which such deduction and withholding was made by the
Purchaser or the Exchange Agent.
(h) Fractional Shares. No fraction of a share of Purchaser Common
Shares shall be issued in the Merger, and any Person otherwise entitled to
receive a fractional share of Purchaser Common Shares shall not be entitled
through such fractional share interest to any dividend, voting or other rights
of a holder of Purchaser Common Shares. In lieu of any such fractional shares,
each Person who would otherwise be entitled to receive shares of Purchaser
Common Shares in the Merger, shall be paid an amount in cash (without interest),
rounded to the nearest cent, determined by multiplying (i) the per share closing
price on the New York Stock Exchange, Inc. (the "NYSE") of Purchaser Common
Shares (as reported in the NYSE Composite Transactions) on the date of the
Effective Time (or if the Purchaser Common Shares do not trade on the NYSE on
such date, the first date of trading of Purchaser Common Shares on the NYSE
after the Effective Time) by (ii) the fractional interest in Purchaser Common
Shares to which such Person would otherwise be entitled (after taking into
account all Ocwen Common Shares then held of record by such Person).
Article III
Representations and Warranties
SECTION 3.1 Representations and Warranties of Ocwen. Except as set
forth in the Ocwen Disclosure Letter, Ocwen represents and warrants to the
Purchaser as follows:
(a) Organization, Standing and Corporate Power. Ocwen is a corporation
duly organized and validly existing under the laws of Virginia and has the
requisite corporate power and authority to carry on its business as now being
conducted. Ocwen is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
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ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not have a material adverse
effect on the business, properties, assets, financial condition or results of
operations of Ocwen and the Ocwen Subsidiaries (as defined below) taken as a
whole (an "Ocwen Material Adverse Effect," except that such term shall not
encompass any "xxxx to market" or other revaluation of the book value of Ocwen's
assets effected pursuant to GAAP). As used herein, "Ocwen Subsidiary" shall mean
any corporation, partnership, limited liability company, joint venture or other
legal entity of which Ocwen (either directly or through or together with another
Ocwen Subsidiary) owns 50% or more of the capital stock or other equity
interests of such entity. Each Ocwen Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate power (in the case of a subsidiary
that is a corporation) or other power and authority to carry on its business as
now being conducted, except where the failure to be so organized, existing or in
good standing or to have such power or authority would not, individually or in
the aggregate, have an Ocwen Material Adverse Effect. No amendment has been made
to the Third Amended and Restated Agreement of Limited Partnership (the "OPLP
Partnership Agreement") of Ocwen Partnership, L.P. ("OPLP").
(b) Capital Structure. The authorized capital stock of Ocwen consists
of 200,000,000 Ocwen Common Shares and 25,000,000 shares of Preferred Stock, par
value $.01 per share ("Ocwen Preferred Stock"). On the date hereof, (i)
18,965,000 Ocwen Common Shares were issued and outstanding, (ii) 3,087,500
options to purchase Ocwen Common Shares were available for issuance under
Ocwen's stock option plans (the "Ocwen Share Plans"), (iii) 5,000,000 Ocwen
Common Shares were reserved for issuance upon exercise of stock options to
purchase Ocwen Common Shares under the Ocwen Share Plans or otherwise (the
"Ocwen Common Shares Options") and (iv) 1,808,733 Ocwen Common Shares were
reserved for issuance pursuant to the conversion of 1,808,733 Partnership Units
(as defined in the OPLP Partnership Agreement). No shares of Ocwen Preferred
Stock are outstanding. On the date of this Agreement, except as set forth above
in this Section 3.1(b), no shares of capital stock or other voting securities of
Ocwen were issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of Ocwen are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except (A) for the Ocwen
Common Shares Options, (B) as set forth in Schedule 3.1(b) to the Ocwen
Disclosure Letter, and (C) as otherwise permitted under Section 5.10, there are
no outstanding securities, options, stock appreciation rights, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Ocwen or any Ocwen Subsidiary is a party or by which such entity is bound,
obligating Ocwen or any Ocwen Subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock, voting
securities or other ownership interests of Ocwen or any Ocwen Subsidiary or
obligating Ocwen or any Ocwen Subsidiary to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
(c) Authority; Noncontravention; Consents. On or prior to the date of
this Agreement, the Board of Directors of Ocwen has adopted this Agreement, has
recommended approval of this Agreement to its shareholders and has directed that
this Agreement be submitted to Ocwen's shareholders for approval, all in
accordance with the VSCA. Ocwen has the requisite corporate power and authority
to enter into this Agreement and, subject to approval of the Merger, this
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Agreement and the other transactions contemplated hereby by the requisite vote
of the holders of the Ocwen Common Shares (the "Ocwen Common Shareholder
Approval"), to consummate the Merger and the other transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Ocwen and the
consummation by Ocwen of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Ocwen, subject to
receipt of the Ocwen Common Shareholder Approval. This Agreement has been duly
executed and delivered by Ocwen and constitutes a valid and binding obligation
of Ocwen, enforceable against Ocwen in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity. The filing of the Proxy
Statement/Prospectus (as defined below) with the SEC has been duly authorized by
Ocwen's Board of Directors. Except as set forth in Schedule 3.1(c) to the Ocwen
Disclosure Letter, the execution and delivery of this Agreement by Ocwen do not,
and the consummation of the transactions contemplated hereby and compliance by
Ocwen with the provisions of this Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Ocwen or any
Ocwen Subsidiary under, (i) the charter or by-laws of Ocwen or the comparable
charter or organizational documents or partnership or similar agreement (as the
case may be) of any Ocwen Subsidiary, each as amended or supplemented to the
date of this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license applicable to Ocwen or any Ocwen
Subsidiary or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
(collectively, "Laws") applicable to Ocwen or any Ocwen Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have an Ocwen Material Adverse
Effect or (y) prevent the consummation of the Merger or the other transactions
contemplated hereby. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency (a "Governmental Entity"), is required by or
with respect to Ocwen or any Ocwen Subsidiary in connection with the execution
and delivery of this Agreement by Ocwen or the consummation by Ocwen of any of
the transactions contemplated hereby and thereby, except for (i) the filing with
the Securities and Exchange Commission (the "SEC") of (x) a proxy statement
relating to the approval by Ocwen shareholders of the Merger and the other
transactions contemplated hereby (as amended or supplemented from time to time,
the "Proxy Statement") and (y) such reports under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) the
filing of a notice under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx"), as may be required in connection with this Agreement, the
Merger and the other transactions contemplated by this Agreement, (iii) such
filings as may be required in connection with the payment of any Transfer and
Gains Taxes (as defined herein), and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) as are set
forth in Schedule 3.1(c) to the Ocwen Disclosure Letter or (B) as may be
required under federal, state, local or foreign Environmental Laws (as defined
herein) or (C) which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the Merger or the other transactions
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contemplated hereby or otherwise prevent Ocwen from performing its obligations
under this Agreement in any material respect or have, individually or in the
aggregate, an Ocwen Material Adverse Effect.
(d) SEC Documents; Financial Statements; Undisclosed Liabilities. Ocwen
has filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1998 (the "Ocwen SEC Documents"). Except as set
forth in the Ocwen Disclosure Letter, all of the Ocwen SEC Documents (other than
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
applicable to such Ocwen SEC Documents. None of the Ocwen SEC Documents at the
time of filing contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent such statements have been modified or
superseded by later filed Ocwen SEC Documents. Other than as set forth in
Schedule 3.1(d) to the Ocwen Disclosure Letter, there is no unresolved
violation, criticism or exception by any Governmental Entity of which Ocwen has
received written notice with respect to any Ocwen report or statement which, if
resolved in a manner unfavorable to Ocwen, could have an Ocwen Material Adverse
Effect. The consolidated financial statements of Ocwen included in the Ocwen SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") (except, in the case of interim financial
statements, as permitted by Forms 10-Q or 8-K of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented, in accordance with the applicable
requirements of GAAP, the consolidated financial position of Ocwen and the Ocwen
Subsidiaries taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in the
case of interim financial statements, to normal year-end adjustments).
(e) Absence of Certain Changes or Events. Except as disclosed in the
Ocwen SEC Documents or in Schedule 3.1(e) to the Ocwen Disclosure Letter, since
June 30, 1999 (the "Ocwen Financial Statement Date") and to the date of this
Agreement, but not thereafter with respect to clause (ii)(a) of this Section
3.1(e), (i) Ocwen and the Ocwen Subsidiaries have conducted their business only
in the ordinary course and (ii) there has not been (a) any material adverse
change in the business, financial condition or results of operations of Ocwen
and the Ocwen Subsidiaries taken as a whole, that has resulted or would result,
individually or in the aggregate, in Ocwen Economic Losses (as defined in
Section 6.2 below) of $10,000,000 or more (an "Ocwen Material Adverse Change"),
nor has there been any occurrence or circumstance that with the passage of time
would reasonably be expected to result in an Ocwen Material Adverse Change, (b)
except for distributions (in the case of Ocwen) the purpose of which is for
Ocwen to maintain its status as a real estate investment trust, any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the Ocwen Common Shares, (c) any split,
combination or reclassification of any Ocwen Common Shares, (d) any damage,
destruction or loss, whether or not covered by insurance, that has or would have
an Ocwen Material Adverse Effect, (e) any change in accounting methods,
principles or practices by Ocwen or any Ocwen Subsidiary materially affecting
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its assets, liabilities or business, except insofar as may have been disclosed
in Ocwen SEC Documents or required by a change in GAAP or (f) any amendment of
any employment, consulting, severance, retention or any other agreement between
Ocwen and any officer or director of Ocwen.
(f) Litigation. Except as disclosed in the Ocwen SEC Documents or in
Schedule 3.1(f) to the Ocwen Disclosure Letter, and other than personal injury
and other routine tort litigation arising from the ordinary course of operations
of Ocwen and the Ocwen Subsidiaries which is covered by adequate insurance, as
of the date hereof, there is no suit, action or proceeding pending or, to the
knowledge of Ocwen, threatened against or affecting Ocwen or any Ocwen
Subsidiary that, individually or in the aggregate, could reasonably be expected
to (i) have an Ocwen Material Adverse Effect or (ii) prevent the consummation of
the Merger or any of the other transactions contemplated hereby, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Ocwen or any Ocwen Subsidiary having, or which,
insofar as reasonably can be foreseen, in the future would have, any such
effect.
(g) Taxes. To the knowledge of Ocwen,
(i) Each of Ocwen and each Ocwen Subsidiary has timely filed all
material Tax Returns (as defined herein) and reports required to be
filed by it as of the date of this Agreement (after giving effect to
any filing extension properly granted by a Governmental Entity having
authority to do so). Each such Tax Return is true, correct and complete
in all material respects. Ocwen and each Ocwen Subsidiary have paid (or
Ocwen has paid on their behalf), within the time and manner prescribed
by law, all material Taxes (as defined herein) that are due and
payable. As used in this Agreement, "Taxes" shall mean any federal,
state, local or foreign income, gross receipts, license, payroll,
employment withholding, property, sales, excise or other tax or
governmental charges of any nature whatsoever, together with any
penalties, interest or additions thereto and "Tax Return" shall mean
any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(ii) Subject to the declaration, set aside and payment of the
1998 REIT Dividend, Ocwen (A) has been subject to taxation as a real
estate investment trust under the Code ("REIT") within the meaning of
Section 856 of the Code and has satisfied the requirements to qualify
as a REIT for all of its taxable years commencing with the year ending
December 31, 1997 through the most recent December 31, and (B) has not
taken or omitted to take any action which could reasonably be expected
to result in a challenge to its status as a REIT for such period, and,
to Ocwen's knowledge, no such challenge is pending or threatened. Each
Ocwen Subsidiary which is a partnership or files Tax Returns as a
partnership for federal income tax purposes has since its inception
been classified for federal income tax purposes as a partnership and
not as a corporation or as an association taxable as a corporation.
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(iii) Except as may be set forth in Schedule 3.1(g)(iii) to the
Ocwen Disclosure Letter, neither Ocwen nor any of its Subsidiaries is a
party to any pending action or proceeding by any governmental authority
for assessment or collection of Taxes, and no claim for assessment or
collection of Taxes has been asserted against it.
(h) Certain Agreements. Neither Ocwen nor any Ocwen Subsidiary has any
employees. Except as set forth in Section 3.1(h) of the Ocwen Disclosure Letter,
neither Ocwen nor any Ocwen Subsidiary is a party to any oral or written
agreement or plan, including any employment agreement, severance agreement,
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to purchase Ocwen Common
Shares, or Ocwen Common Shares granted in connection with the performance of
services for Ocwen or any Ocwen Subsidiary, is or will be entitled to receive
cash from Ocwen or any Ocwen Subsidiary in lieu of or in exchange for such
option or shares as a result of the transactions contemplated by this Agreement.
(i) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than PaineWebber Incorporated
(the "Ocwen Advisor"), the fees and expenses of which, as set forth in a letter
agreement between the Ocwen Special Committee (as defined in Section 5.1(b)
below) and the Ocwen Advisor, have previously been disclosed to the Purchaser
and will be paid by Ocwen, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Ocwen or any
Ocwen Subsidiary.
(j) Compliance with Laws. Except as disclosed in the Ocwen SEC
Documents or as set forth in Schedule 3.1(j) to the Ocwen Disclosure Letter,
neither Ocwen nor any of the Ocwen Subsidiaries has violated or failed to comply
with any statute, law, ordinance, regulation, rule, judgment, decree or order of
any Governmental Entity applicable to its business, properties or operations,
except for violations and failures to comply that would not, individually or in
the aggregate, reasonably be expected to result in an Ocwen Material Adverse
Effect.
(k) Contracts; Debt Instruments. Neither Ocwen nor any Ocwen Subsidiary
is in violation of or in default under, in any material respect (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under), any material loan or
credit agreement, note, bond, mortgage, indenture, lease, or any agreement to
acquire real property, or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except as set forth in Schedule 3.1(k) to the Ocwen Disclosure
Letter, except as disclosed in the Ocwen SEC Documents and except for violations
or defaults that would not, individually or in the aggregate, result in an Ocwen
Material Adverse Effect.
(l) Environmental Matters. Except as disclosed in the Ocwen SEC
Documents or as set forth in Schedule 3.1(l) to the Ocwen Disclosure Letter or
in the environmental audits/reports listed therein, each of Ocwen and each Ocwen
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Subsidiary has obtained all licenses, permits, authorizations, approvals and
consents from Governmental Entities which are required in respect of its
business, operations, assets or properties under any applicable Environmental
Law (as defined below) and each of Ocwen and each Ocwen Subsidiary is in
compliance in all material respects with the terms and conditions of all such
licenses, permits, authorizations, approvals and consents and with any
applicable Law of any Governmental Entity relating to human health, safety or
protection of the environment ("Environmental Laws"), except for violations and
failures to comply which would not, individually or in the aggregate, have an
Ocwen Material Adverse Effect.
(m) Ocwen Properties. Except as listed in Schedule 3.1(m) to the Ocwen
Disclosure Letter or except as listed in the title insurance policies, reports
or the surveys, copies of which were made available for review to the Purchaser:
(i) Ocwen or an Ocwen Subsidiary owns fee simple title to each of the real
properties reflected on the most recent balance sheet of Ocwen included in the
Ocwen SEC Documents or as identified in Schedule 3.1(m) to the Ocwen Disclosure
Letter (the "Ocwen Properties"), which are all of the real estate properties
owned by them, free and clear of liens, mortgages or deeds of trust, claims
against title, charges which are liens, security interests or other encumbrances
on title ("Encumbrances"); (ii) the Ocwen Properties are not subject to any
rights of way, written agreements, laws, ordinances and regulations affecting
building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions"), except for (a) Property Restrictions
imposed or promulgated by law or any Governmental Entity with respect to real
property, including zoning regulations, provided they do not materially
adversely affect the current use of the Ocwen Properties, (b) mechanics',
carriers', workmen's, repairmen's liens and other Encumbrances, Property
Restrictions and other limitations of any kind, if any, which have heretofore
been bonded or which individually or in the aggregate do not exceed $200,000, do
not materially detract from the value of or materially interfere with the
present use of any of the Ocwen Properties subject thereto or affected thereby,
and do not otherwise materially impair business operations conducted by Ocwen
and the Ocwen Subsidiaries and which have arisen or been incurred only in its
construction or renovation activities or in the ordinary course of business;
(iii) valid policies of title insurance have been issued insuring Ocwen's or an
Ocwen Subsidiary's fee simple title to the Ocwen Properties except as noted
therein, and such policies are, at the date hereof, in full force and effect and
no claim has been made against any such policy; (iv) there is no certificate,
permit or license from any Governmental Entity having jurisdiction over any of
the Ocwen Properties or any agreement, easement or any other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Ocwen Properties or which is necessary to permit the
lawful use and operation of all driveways, roads and other means of egress and
ingress to and from any of the Ocwen Properties that has not been obtained and
is not in full force and effect, or any pending threat of modification or
cancellation of any of same, except where the failure to have such certificate,
permit, license, agreement, easement or other right, or such threat of
modification or cancellation thereof, would not, individually or in the
aggregate, have an Ocwen Material Adverse Effect; (v) neither Ocwen nor an Ocwen
Subsidiary has received written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement affecting any portion
of any of the Ocwen Properties issued by any Governmental Entity, except where
such violation cannot reasonably be expected to be material, individually or in
the aggregate to Ocwen; (vi) neither Ocwen nor an Ocwen Subsidiary has received
notice to the effect that there are (a) condemnation or rezoning proceedings
that are pending or threatened with respect to any of the Ocwen Properties or
(b) zoning, building or similar laws, codes, ordinances, orders or regulations
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that are or will be violated by the continued maintenance, operation or use of
any buildings or other improvements on any of the Ocwen Properties or by the
continued maintenance, operation or use of the parking areas, except where such
violation or proceeding cannot reasonably be expected to be material,
individually or in the aggregate to Ocwen.
(n) Opinion of Financial Advisor. Ocwen has received the opinion of
PaineWebber Incorporated, satisfactory to Ocwen, with regard to the fairness,
from a financial point of view, to the holders of Ocwen Common Shares (excluding
the Purchaser) of the consideration to be paid to such shareholders by the
Purchaser pursuant to the Merger.
(o) Control Share Statute. The Merger is an excepted acquisition under
Virginia's Control Share Acquisitions Statute.
SECTION 3.2 Representations and Warranties of the Purchaser. Except as
set forth on the Purchaser Disclosure Letter, Purchaser represents and warrants
to Ocwen as follows:
(a) Organization, Standing and Corporate Power of the Purchaser. Each
of the Purchaser and Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Purchaser is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, would not have a
material adverse effect on the business, properties, assets, financial condition
or results of operations of Purchaser and the Purchaser Subsidiaries (as defined
below) taken as a whole (an "Purchaser Material Adverse Effect" except that such
term shall not encompass any "xxxx to market" or other revaluation of the book
value of Purchaser's assets effected pursuant to GAAP). As used herein,
"Purchaser Subsidiary" shall mean any corporation, including Acquisition Sub,
partnership, limited liability company, joint venture or other legal entity of
which Purchaser (either directly or through or together with another Purchaser
Subsidiary) owns 50% or more of the capital stock or other equity interests of
such entity. Each Purchaser Subsidiary is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is organized and
has the requisite corporate power (in the case of a subsidiary that is a
corporation) or other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power or authority would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
(b) Capital Structure. The authorized capital stock of Purchaser
consists of 200,000,000 shares of Common Stock, par value $.01 per share
("Purchaser Common Shares") and 20,000,000 shares of Preferred Stock, par value
$.01 per share (the "Purchaser Preferred Stock"). At the close of business on
July 23, 1999, (i) 60,806,456 Purchaser Common Shares were issued and
outstanding, (ii) 10,607,135 options to purchase Purchaser Common Shares were
available for issuance under Purchaser's stock option plans, long-term incentive
plans, annual incentive plans and stock compensation plans (the "Purchaser Share
Plans") and (iii) 12,373,551 Purchaser Common Shares were reserved for issuance
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upon exercise of stock options to purchase Purchaser Common Shares under the
Purchaser Share Plans or otherwise (the "Purchaser Common Shares Options"). On
the date of this Agreement, except as set forth above in this Section 3.2(b), no
shares of capital stock or other voting securities of Purchaser were issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
Purchaser are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except (A) for the Purchaser Common Shares
Options and (B) as set forth in Schedule 3.2(b) to the Purchaser Disclosure
Letter, there are no outstanding securities, options, stock appreciation rights,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Purchaser or any Purchaser Subsidiary is a party or by
which such entity is bound, obligating Purchaser or any Purchaser Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock, voting securities or other ownership interests of
Purchaser or any Purchaser Subsidiary or obligating Purchaser or any Purchaser
Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
(c) Authority; Noncontravention; Consents. On or prior to the date of
this Agreement, the Board of Directors of Acquisition Sub has adopted this
Agreement and has recommended this Agreement to its sole shareholder, and the
sole shareholder of Acquisition Sub has approved this Agreement, all such
actions being taken in accordance with the VSCA. On or prior to the date of this
Agreement, the Board of Directors of Purchaser has adopted this Agreement, has
declared the Merger advisable and fair to and in the best interests of Purchaser
and its shareholders, has recommended approval of the issuance of Purchaser
Common Shares pursuant to this Agreement (the "Share Issuance") to its
shareholders and has directed that this Agreement be submitted to Purchaser's
shareholders for approval, all in accordance with the Florida Business
Corporation Act (the "FBCA"). Purchaser has the requisite corporate power and
authority to enter into this Agreement and, subject to approval of the Share
Issuance by the requisite vote of the holders of the Purchaser Common Shares
(the "Purchaser Common Shareholder Approval"), to consummate the Merger and the
other transactions contemplated by this Agreement. Acquisition Sub has the
requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser, subject to receipt
of the Purchaser Common Shareholder Approval. This Agreement has been duly
executed and delivered by Purchaser and Acquisition Sub and constitutes the
valid and binding obligation of each of Purchaser and Acquisition Sub,
enforceable against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity. The filing of the Form S-4
(as hereinafter defined) has been authorized by the Purchaser's Board of
Directors. Except as set forth in Schedule 3.2(c) to the Purchaser Disclosure
Letter, the execution and delivery of this Agreement by Purchaser and
Acquisition Sub do not, and the consummation of the transactions contemplated
hereby and compliance by Purchaser and Acquisition Sub with the provisions of
this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of Purchaser or any Purchaser Subsidiary under, (i)
the charter or by-laws of Purchaser or the comparable charter or organizational
documents or partnership or similar agreement (as the case may be) of any
Purchaser Subsidiary, each as amended or supplemented to the date of this
Agreement, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
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reciprocal easement agreement, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Purchaser or any Purchaser
Subsidiary or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any Laws applicable to Purchaser or any Purchaser Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Purchaser Material Adverse
Effect or (y) prevent the consummation of the Merger or the other transactions
contemplated hereby. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Purchaser or any Purchaser Subsidiary in connection with the
execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of any of the transactions contemplated hereby and thereby, except for
(i) the filing with the SEC of (x) the Form S-4 and the Proxy
Statement/Prospectus and (y) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and (ii) the filing of a
notice under the HSR Act, as may be required in connection with this Agreement,
the Merger and the other transactions contemplated by this Agreement, (iii) such
filings as may be required in connection with the payment of any Transfer and
Gains Taxes (as defined herein), and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) as are set
forth in Schedule 3.2(d) to the Purchaser Disclosure Letter or (B) as may be
required under federal, state, local or foreign Environmental Laws or (C) which,
if not obtained or made, would not prevent or delay in any material respect the
consummation of the Merger or the other transactions contemplated hereby or
otherwise prevent Purchaser or Acquisition Sub from performing their obligations
under this Agreement in any material respect or have, individually or in the
aggregate, a Purchaser Material Adverse Effect.
(d) SEC Documents; Financial Statements; Undisclosed Liabilities.
Purchaser has filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1998 (the "Purchaser SEC Documents").
All of the Purchaser SEC Documents (other than preliminary material), as of
their respective filing dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act and, in each
case, the rules and regulations promulgated thereunder applicable to such
Purchaser SEC Documents. None of the Purchaser SEC Documents at the time of
filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by later filed Purchaser SEC Documents. Other than as set forth in
Schedule 3.2(d) to the Purchaser Disclosure Letter, there is no unresolved
violation, criticism or exception by any Governmental Entity of which Purchaser
has received written notice with respect to any Purchaser report or statement
which, if resolved in a manner unfavorable to Purchaser, could have a Purchaser
Material Adverse Effect. The consolidated financial statements of Purchaser
included in the Purchaser SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
GAAP (except, in the case of interim financial statements, as permitted by Forms
10-Q or 8-K of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented,
in accordance with the applicable requirements of GAAP, the consolidated
financial position of Purchaser and the Purchaser Subsidiaries taken as a whole,
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as of the dates thereof and the consolidated results of operations and cash
flows for the periods then ended (subject, in the case of interim financial
statements, to normal year-end adjustments).
(e) Absence of Certain Changes or Events. Except as disclosed in the
Purchaser SEC Documents or in Schedule 3.2(e) to the Purchaser Disclosure
Letter, since the date of the most recent financial statements included in the
Purchaser SEC Documents (the "Purchaser Financial Statement Date") and to the
date of this Agreement, but not thereafter with respect to clause (ii)(a) of
this Section 3.2(e), (i) Purchaser and the Purchaser Subsidiaries have conducted
their business only in the ordinary course and (ii) there has not been (a) any
material adverse change in the business, financial condition or results of
operations of Purchaser and the Purchaser Subsidiaries taken as a whole, that
has resulted or would result, individually or in the aggregate, in Purchaser
Economic Losses (as defined in Section 6.3 below) of $ 20,000,000 or more (a
"Purchaser Material Adverse Change"), nor has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a Purchaser Material Adverse Change, (b) except for dividends in the
ordinary course of business consistent with past practice and having customary
record and payment dates, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the Purchaser Common Shares, (c) any split, combination or reclassification
of any Purchaser Common Shares, (d) any damage, destruction or loss, whether or
not covered by insurance, that has or would have a Purchaser Material Adverse
Effect, (e) any change in accounting methods, principles or practices by
Purchaser or any Purchaser Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been disclosed in Purchaser
SEC Documents or required by a change in GAAP or (f) any amendment of any
employment, consulting, severance, retention or any other agreement between
Purchaser and any officer or director of Purchaser.
(f) Litigation. Except as disclosed in the Purchaser SEC Documents or
in Schedule 3.2(f) of the Purchaser Disclosure Letter, and other than personal
injury and other routine tort litigation arising from the ordinary course of
operations of Purchaser and the Purchaser Subsidiaries which is covered by
adequate insurance, as of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of Purchaser or Acquisition Sub,
threatened against or affecting the Purchaser or Acquisition Sub that,
individually or in the aggregate, could reasonably be expected to (i) have a
Purchaser Material Adverse Effect or (ii) prevent the consummation of the Merger
or any of the other transactions contemplated hereby, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Purchaser or any Subsidiary of the Purchaser having, or
which, insofar as reasonably can be foreseen, in the future would have, any such
effect.
(g) Benefit Plans; ERISA Compliance.
(i) All employee benefits plans and other benefit arrangements
covering employees of Purchaser and the Purchaser Subsidiaries will be
listed in the Purchaser Disclosure Letter or are disclosed in the
Purchaser SEC Documents. True and complete copies of the Purchaser
Benefit Plans (as defined herein) have been made available to Ocwen.
Except as disclosed in the Purchaser SEC Documents or in Schedule
3.2(g)(i) to the Purchaser Disclosure Letter, since the date of the
most recent audited financial statements included in the Purchaser SEC
Documents, there has not been any adoption or amendment in any material
respect by Purchaser or any Purchaser Subsidiary of any bonus, pension,
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profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
medical or other employee benefit plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of Purchaser or any Purchaser
Subsidiary or any person affiliated with Purchaser under Section
414(b), (c), (m) or (o) of the Code (collectively, " Purchaser Benefit
Plans").
(ii) Except as described in the Purchaser SEC Documents or in
Schedule 3.2(g)(ii) to the Purchaser Disclosure Letter or as would not
have a Purchaser Material Adverse Effect, (A) all Purchaser Benefit
Plans, including any such plan that is an "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), are in compliance with all applicable
requirements of law, including ERISA and the Code, and (B) neither
Purchaser nor any Purchaser Subsidiary has any liabilities or
obligations with respect to any such Purchaser Benefit Plan, whether
accrued, contingent or otherwise (other than obligations to make
contributions and pay benefits and administrative costs incurred in the
ordinary course), nor to the knowledge of Purchaser are any such
liabilities or obligations expected to be incurred. Except as set forth
in Schedule 3.2(g)(ii) to the Purchaser Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or together with the occurrence of any
additional or subsequent events) constitute an event under any
Purchaser Benefit Plan, policy, arrangement or agreement, trust or loan
that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director. The only severance agreements or
severance policies applicable to Purchaser or the Purchaser
Subsidiaries are the agreement and policies specifically referred to in
Schedule 3.2(g)(ii) to the Purchaser Disclosure Letter or in the
Purchaser SEC Documents.
(iii) Except as may be set forth in Schedule 3.1(g)(iii) to the
Purchaser Disclosure Letter or in the Purchaser SEC Documents, there
are no pending or threatened claims against or otherwise involving any
of the Purchaser Benefit Plans and no suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of
Purchaser Benefit Plan activities) has been brought against or with
respect to any such Purchaser Benefit Plan, except for any of the
foregoing which would not have a Purchaser Material Adverse Effect.
(h) Taxes. To the knowledge of Purchaser,
(i) Each of Purchaser and each Purchaser Subsidiary has timely
filed all material Tax Returns (as defined herein) and reports required
to be filed by it as of the date of this Agreement (after giving effect
to any filing extension properly granted by a Governmental Entity
having authority to do so). Each such Tax Return is true, correct and
complete in all material respects. Purchaser and each Purchaser
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Subsidiary have paid (or Purchaser has paid on their behalf), within
the time and manner prescribed by law, all material Taxes (as defined
herein) that are due and payable.
(ii) Purchaser has not agreed to any extension of time for the
assessment or payment of any Tax due with respect to the period covered
by any such Tax Return. All Tax withholding requirements and all
requirements to pay Tax without regard to the filing of a Tax Return
imposed on or with respect to the Purchaser and each Purchaser
Subsidiary have been satisfied in full. The financial statements of
Purchaser reflect and include adequate provision for the payment in
full of any and all Taxes payable by or with respect to the Purchaser
and Purchaser Subsidiaries for any and all periods through the date of
this Agreement for which no Tax Return has yet been filed.
(iii) Except as may be set forth in the Purchaser Disclosure
Letter, there is no claim, audit, action, suit or proceeding related to
Taxes pending or threatened against or with respect to Purchaser or any
Purchaser Subsidiary.
(iv) Purchaser does not know or have reason to know of any
inaccuracy in any representation set forth in Section 3.1(g) of this
Agreement.
(i) Certain Agreements. Except as set forth in Section 3.2(i) of the
Purchaser Disclosure Letter, neither Purchaser nor any Purchaser Subsidiary is a
party to any oral or written agreement or plan, including any employment
agreement, severance agreement, stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. No holder of any option to
purchase Purchaser Common Shares, or Purchaser Common Shares granted in
connection with the performance of services for Purchaser or any Purchaser
Subsidiary, is or will be entitled to receive cash from Purchaser or any
Purchaser Subsidiary in lieu of or in exchange for such option or shares as a
result of the transactions contemplated by this Agreement.
(j) Brokers. No broker, investment banker, financial advisor or other
person, other than Xxxxxx Xxxxxxx & Co. Incorporated and Friedman, Billings,
Xxxxxx & Co., Inc. (the "Purchaser Advisors"), the fees and expenses of which,
as set forth in letter agreements between the Purchaser and the Purchaser
Advisors, have previously been disclosed to Ocwen and will be paid by the
Purchaser, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Purchaser or any
Purchaser Subsidiary.
(k) Compliance with Laws. Except as disclosed in the Purchaser SEC
Documents or as set forth in Schedule 3.2(k) to the Purchaser Disclosure Letter,
neither Purchaser nor any of the Purchaser Subsidiaries has violated or failed
to comply with any statute, law, ordinance, regulation, rule, judgment, decree
or order of any Governmental Entity applicable to its business, properties or
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operations, except for violations and failures to comply that would not,
individually or in the aggregate, reasonably be expected to result in a
Purchaser Material Adverse Effect.
(l) Regulatory Matters. Except as disclosed in the Purchaser SEC
Documents or as would not, individually or in the aggregate, reasonably be
expected to result in a material adverse change in the business, financial
condition or results of operations of Purchaser and the Purchaser Subsidiaries
taken as a whole, (i) neither Purchaser nor any Purchaser Subsidiary or any of
the properties of Purchaser or any Purchaser Subsidiary is a party to or is
subject to any order, decree, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or authority
charged with the supervision or regulation of financial institutions or issuers
of securities or engaged in the insurance of deposits, (including, without
limitation, the Officer of the Comptroller of the Currency, the Office of Thrift
Supervision ("OTS"), the Federal Reserve Board and the Federal Deposit Insurance
Corporation) or the supervision or regulation of it or any Purchaser Subsidiary
(collectively, the "Regulatory Authorities"); and (ii) neither Purchaser nor any
Purchaser Subsidiary has been advised by any Regulatory Authority that such
Regulatory Authority is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
(m) Contracts; Debt Instruments. Neither Purchaser nor any Purchaser
Subsidiary is in violation of or in default under, in any material respect (nor
does there exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under), any material
loan or credit agreement, note, bond, mortgage, indenture, lease, or any
agreement to acquire real property, or any other material contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except as set forth in Schedule 3.2(l) to the
Purchaser Disclosure Letter, except as disclosed in the Purchaser SEC Documents
and except for violations or defaults that would not, individually or in the
aggregate, result in a Purchaser Material Adverse Effect.
(n) Environmental Matters. Except as disclosed in the Purchaser SEC
Documents or as set forth in Schedule 3.2(m) to the Purchaser Disclosure Letter
or in the environmental audits/reports listed therein, each of Purchaser and
each Purchaser Subsidiary has obtained all licenses, permits, authorizations,
approvals and consents from Governmental Entities which are required in respect
of its business, operations, assets or properties under any applicable
Environmental Law (as defined below) and each of Purchaser and each Purchaser
Subsidiary is in compliance in all material respects with the terms and
conditions of all such licenses, permits, authorizations, approvals and consents
and with any applicable Law of any Governmental Entity relating to human health,
safety or protection of the environment ("Environmental Laws"), except for
violations and failures to comply which would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
(o) Purchaser Properties. Except as listed in Schedule 3.2(n) to the
Purchaser Disclosure Letter or except as listed in the title insurance policies,
reports or the surveys, copies of which were made available for review to the
Purchaser: (i) Purchaser or a Purchaser Subsidiary owns fee simple title to each
of the real properties reflected on the most recent balance sheet of Purchaser
included in the Purchaser SEC Documents or as identified in Schedule 3.2(n) to
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the Purchaser Disclosure Letter (the "Purchaser Properties"), and those that
have been purchased or otherwise acquired in the ordinary course of Purchaser's
business after the date of the most recent balance sheet of Purchaser included
in the Purchaser SEC Documents but excluding those that have been sold or
otherwise disposed of in the ordinary course of Purchaser's business, which are
all of the real estate properties owned by them, free and clear of liens,
mortgages or deeds of trust, claims against title, charges which are liens,
security interests or other encumbrances on title ("Encumbrances"); (ii) the
Purchaser Properties are not subject to any rights of way, written agreements,
laws, ordinances and regulations affecting building use or occupancy, or
reservations of an interest in title (collectively, "Property Restrictions"),
except for (a) Property Restrictions imposed or promulgated by law or any
Governmental Entity with respect to real property, including zoning regulations,
provided they do not materially adversely affect the current use of the
Purchaser Properties, (b) mechanics', carriers', workmen's, repairmen's liens
and other Encumbrances, Property Restrictions and other limitations of any kind,
if any, which have heretofore been bonded or which individually or in the
aggregate do not exceed $ 400,000, do not materially detract from the value of
or materially interfere with the present use of any of the Purchaser Properties
subject thereto or affected thereby, and do not otherwise materially impair
business operations conducted by Purchaser and the Purchaser Subsidiaries and
which have arisen or been incurred only in its construction or renovation
activities or in the ordinary course of business; (iii) valid policies of title
insurance have been issued insuring Purchaser's or a Purchaser Subsidiary's fee
simple title to the Purchaser Properties except as noted therein, and such
policies are, at the date hereof, in full force and effect and no claim has been
made against any such policy; (iv) there is no certificate, permit or license
from any Governmental Entity having jurisdiction over any of the Purchaser
Properties or any agreement, easement or any other right which is necessary to
permit the lawful use and operation of the buildings and improvements on any of
the Purchaser Properties or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the Purchaser Properties that has not been obtained and is not in
full force and effect, or any pending threat of modification or cancellation of
any of same, except where the failure to have such certificate, permit, license,
agreement, easement or other right, or such threat of modification or
cancellation thereof, would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect; (v) neither Purchaser nor a Purchaser
Subsidiary has received written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement affecting any portion
of any of the Purchaser Properties issued by any Governmental Entity, except, in
the case of clause (vi)(a) or (vi)(b) where such violation cannot reasonably be
expected to be material, individually or in the aggregate, to Purchaser; (vi)
neither Purchaser nor a Purchaser Subsidiary has received notice to the effect
that there are (a) condemnation or rezoning proceedings that are pending or
threatened with respect to any of the Purchaser Properties or (b) zoning,
building or similar laws, codes, ordinances, orders or regulations that are or
will be violated by the continued maintenance, operation or use of any buildings
or other improvements on any of the Purchaser Properties or by the continued
maintenance, operation or use of the parking areas, except where such violation
or proceeding cannot reasonably be expected to be material, individually or in
the aggregate to the Purchaser.
(p) Opinion of Financial Advisor. Purchaser has received the opinion of
Xxxxxx Xxxxxxx & Co. Incorporated, satisfactory to Purchaser, with regard to the
fairness, from a financial point of view, to Purchaser of the consideration to
be paid by Purchaser pursuant to the Merger.
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(q) Vote Required. The affirmative vote of a majority of the votes cast
on the Share Issuance is required to approve such issuance; provided that the
total votes cast on such proposal represent a majority of the outstanding shares
of Purchaser Common Shares. No other vote of the outstanding Purchaser Common
Shares is necessary (under applicable law or otherwise) to approve the Merger,
this Agreement and the other transactions contemplated hereby.
(r) Financing. The Purchaser has as of the date hereof and will have
available to it at the Effective Time, immediately available funds or
immediately available credit necessary to consummate the transactions
contemplated by this Agreement and operate Ocwen after the Closing, including
the financing contemplated by Article IV of this Agreement.
(s) Labor Matters. Neither Purchaser nor any Purchaser Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of Purchaser threatened against Purchaser or any Purchaser Subsidiary
relating to their business, except for any such proceeding as would not have a
Purchaser Material Adverse Effect. To the knowledge of Purchaser, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Purchaser or any
Purchaser Subsidiary.
Article IV
Financing
SECTION 4.1 Financing. If requested by the Board of Directors of Ocwen
following its reasonable good faith determination that incurring such
indebtedness is necessary, then Purchaser shall provide secured financing to
Ocwen in the amount of up to $25 million, such financing to be provided on an
arms' length basis and on terms consistent with market conditions and applicable
debt covenants at the time of incurrence; provided, however, that in connection
with the aforesaid determination, the Board of Directors of Ocwen shall have
considered in good faith the recommendation of the Manager under the First
Amended and Restated Management Agreement dated as of May 19, 1997, as amended
to the date of this Agreement (the "Management Agreement"), between Ocwen and a
subsidiary of Purchaser, as Manager (the "Manager"), regarding such financing,
including, without limitation, any alternatives recommended by the Manager,
including, without limitation, the sale of assets of Ocwen. Ocwen shall be
obligated to repay such financing immediately upon termination of this Agreement
pursuant to Sections 8.1(g) or (h) or upon the insolvency of Ocwen.
Article V
Covenants
SECTION 5.1 Preparation of the Proxy Statement; Shareholders Meeting.
(a) Purchaser and Ocwen shall cooperate and promptly prepare and Ocwen
shall file with the SEC the Proxy Statement and the Purchaser shall file with
the SEC as soon as practicable a registration statement on Form S-4 (the "Form
S-4") under the Securities Act, with respect to the Purchaser Common Shares
issuable in the Merger, a portion of which registration statement shall also
serve as the joint proxy statement with respect to the meetings of the
shareholders of Ocwen and Purchaser in connection with the Merger (the "Proxy
Statement/Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations promulgated thereunder. The Purchaser shall use
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all reasonable efforts, and Ocwen will cooperate with the Purchaser to have the
Form S-4 declared effective by the SEC as promptly as practicable. The Purchaser
shall use its reasonable best efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "Blue Sky" permits or
approvals required to carry out the transactions contemplated by this Agreement
and will pay all expenses incident thereto. The Purchaser agrees that the Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the respective meetings of shareholders of
the Purchaser and Ocwen, or, in the case of the Form S-4 and each amendment or
supplement thereto, at the time it is filed or becomes effective, 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
light of the circumstances under which they were made, not misleading. Ocwen
agrees that the written information provided by it specifically for inclusion in
the Proxy Statement/Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the respective meetings of
shareholders of the Purchaser and Ocwen, or, in the case of written information
provided by Ocwen specifically for inclusion in the Form S-4 or any amendments
or supplements thereto, at the time it is filed or becomes effective, 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
light of the circumstances under which they were made, not misleading. The
Purchaser will advise Ocwen, promptly after it receives notice thereof, of the
time when the Form S-4 has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Purchaser Common Shares issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for additional
information.
(b) Ocwen covenants that the Proxy Statement/Prospectus shall include
the recommendation of the Board of Directors of Ocwen in favor of the approval
of the Merger, this Agreement and the other transactions contemplated hereby;
provided, that such recommendations may not be included or may be withdrawn,
modified or amended if Ocwen shall approve or recommend a Superior Competing
Transaction (as defined herein) or enter into an agreement with respect to such
Superior Competing Transaction and the Board of Directors of Ocwen determines in
good faith that it is in compliance with Section 7.1. Purchaser covenants that
the Proxy Statement/Prospectus shall include the recommendation of the Board of
Directors of Purchaser in favor of the approval of the Share Issuance.
(c) Each of Ocwen and Purchaser will promptly take such action as is
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its shareholders (respectively, the "Ocwen
Common Shareholders Meeting" and the "Purchaser Common Shareholders Meeting") as
promptly as practicable to consider and vote upon or otherwise to obtain the
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consent of its shareholders, as required, to the transactions contemplated
hereby. The Board of Directors of Purchaser and, subject to Section 5.1(b), the
Board of Directors of Ocwen shall each take all lawful action to solicit such
consent, including, without limitation, timely mailing the Proxy
Statement/Prospectus. Ocwen and Purchaser shall coordinate and cooperate with
respect to the timing of such meetings and shall use their best efforts to hold
such meetings on the same day.
SECTION 5.2 Access to Information; Confidentiality.
(a) Subject to the requirements of confidentiality agreements with
third parties, Ocwen and Purchaser shall, and shall cause each of their
Subsidiaries to, afford to the other and the other's officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to all their properties, books, contracts, commitments, personnel and
records and, during such period, Ocwen and Purchaser shall, and shall cause each
of their Subsidiaries to, furnish promptly to the other (a) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
the other may reasonably request.
(b) As used herein, "Confidential Material" means, with respect to
either party hereto (the "Providing Party"), all information (written or oral)
furnished (whether before or after the date hereof) by the Providing Party and
its directors, officers, employees, affiliates or representatives of advisors,
including counsel, lenders and financial advisors (collectively, the "Providing
Party Representatives") to the other party hereto (the "Receiving Party") or the
Receiving Party's directors, officers, employees, affiliates or representative
of advisors, including counsel, lenders and financial advisors (collectively the
"Receiving Party Representatives") and all analyses, compilations, forecasts and
other studies or other documents prepared by the Providing Party or the
Providing Party Representatives in connection with its or their review of the
transactions contemplated by this Agreement which contain or reflect such
information. The term "Confidential Material" does not include, however,
information which (i) at the time of disclosure or thereafter is generally
available to and known by the public other than as a result of a disclosure
directly or indirectly by the Receiving Party or the Receiving Party
Representatives in violation of this Agreement, (ii) at the time of disclosure
was available on a nonconfidential basis from a source other than the Providing
Party or the Providing Party Representatives, provided, however, that such
source is not and was not bound by a confidentiality agreement with the
Providing Party, (iii) was known by the Receiving Party prior to receiving the
Confidential Material from the Providing Party or has been independently
acquired or developed by the Receiving Party without violating any of its
obligations under this Agreement, or (iv) is contained in any Ocwen SEC
Documents or Purchaser SEC Documents.
(c) Subject to paragraph (d) below or except as required by law, the
Confidential Material will be kept confidential and will not, without the prior
written consent of the Providing Party, be disclosed by the Receiving Party or
its Representatives, in whole or in part and will not be used by the Receiving
Party or its Representatives, directly or indirectly, for any purpose other than
in connection with this Agreement, the Merger or the evaluating, negotiating or
advising with respect to a transaction contemplated herein. Moreover, the
Receiving Party agrees to transmit Confidential Material to its Representatives
only if and to the extent that such Representatives need to know the
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Confidential Material for purposes of such transaction and are informed by the
Receiving Party of the confidential nature of the Confidential Material and of
the terms of this Section.
(d) In the event that the Receiving Party, any of the Receiving Party
Representatives or anyone to whom the Receiving Party or any of the Receiving
Party Representatives supply the Confidential Material, are requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand, any informal or formal
investigation by any government or governmental agency or authority or otherwise
in connection with legal processes) to disclose any Confidential Material, the
Receiving Party agrees (i) immediately to notify the Providing Party of the
existence, terms and circumstances surrounding such a request, (ii) to consult
with the Providing Party on the advisability of taking legally available steps
to resist or narrow such request and (iii) if disclosure of such information is
required, to furnish only that portion of the Confidential Material which, in
the opinion of the Receiving Party's counsel, the Receiving Party is legally
compelled to disclose and to cooperate with any action by the Providing Party to
obtain an appropriate protective order or otherwise reliable assurances that
confidential treatment will be accorded the Confidential Material (it being
agreed that the Providing Party shall reimburse the Receiving Party for all
reasonable out-of-pocket expenses incurred by the Receiving Party in connection
with such cooperation).
(e) In the event of the termination of this Agreement in accordance
with its terms, promptly upon request from either Providing Party, the Receiving
Party shall, except to the extent prevented by law, redeliver to the Providing
Party or destroy all tangible Confidential Material and will not retain any
copies, extracts or other reproductions thereof in whole or in part. Any such
destruction shall be certified in writing to the Providing Party by an
authorized officer of the Receiving Party supervising the same. Notwithstanding
the foregoing, each Receiving Party and one Receiving Party Representative
designated by each Receiving Party shall be permitted to retain one permanent
file copy of each document constituting Confidential Material.
SECTION 5.3 Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Purchaser and Ocwen agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other in doing, all things necessary, proper or
advisable to fulfill all conditions applicable to such party pursuant to this
Agreement and to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated hereby,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all reasonable steps as
may be necessary to obtain an approval, waiver or exemption from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals, waivers or exemption from non-governmental third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging the Merger, this Agreement or the
consummation of any of the other transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
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contemplated by and to fully carry out the purposes of, this Agreement.
Notwithstanding any provision of this Agreement to the contrary, Ocwen shall not
be required in connection with the efforts described in the first sentence of
this Section 5.3(a) to make any payments or incur any liabilities to any third
parties which in the aggregate exceed $500,000 other than payments which arise
from explicit contractual rights or obligations of Ocwen existing as of the date
of this Agreement.
(b) Ocwen shall use its reasonable best efforts to give prompt notice
to the Purchaser, and the Purchaser shall use its reasonable best efforts to
give prompt notice to Ocwen, if (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becomes untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becomes untrue or inaccurate in any material respect or (ii) it
fails to comply in a timely manner with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement or the
remedies available hereunder to the party receiving such notice.
SECTION 5.4 No Solicitation of Transactions. Ocwen, its affiliates and
their respective officers, directors, employees, representatives and agents
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any acquisition or exchange of
all or any material portion of the assets of, or any equity interest in, Ocwen
or any Ocwen Subsidiary or any business combination with Ocwen or any Ocwen
Subsidiary. Subject to Section 7.1, Ocwen shall not directly or indirectly,
through any officer, director, employee, agent, investment banker, financial
advisor, attorney, accountant, broker, finder or other representative, initiate
or solicit (including by way of furnishing nonpublic information or assistance)
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as defined herein), or
authorize or permit any of its officers, directors, employees, agents,
attorneys, investment bankers, financial advisors, accountants, brokers, finders
or other representatives to take any such action. Ocwen shall notify the
Purchaser in writing (as promptly as practicable) of all of the material details
relating to all inquiries and proposals which it or any such officer, director,
employee, agent, investment banker, financial advisor, attorney, accountant,
broker, finder or other representative may receive relating to any transaction
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined herein) and if such inquiry or proposal is in writing,
Ocwen shall deliver to the Purchaser a copy of such inquiry or proposal. For
purposes of this Agreement, "Competing Transaction" shall mean any of the
following (other than the transactions contemplated by this Agreement): (i) any
merger, consolidation, share exchange, business combination, or similar
transaction involving Ocwen (or any of its Subsidiaries); (ii) any tender offer
or exchange offer for 5% or more of the outstanding shares of capital stock of
Ocwen (or any of its Subsidiaries) or the filing of a registration statement
under the Securities Act in connection therewith; (iii) any proposal or offer to
acquire in any manner, directly or indirectly, an equity interest in, any voting
securities of, or all or substantially all of the assets of Ocwen or any Ocwen
Subsidiary; or (iv) any public announcements of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
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SECTION 5.5 Public Announcements. The Purchaser and Ocwen will consult
with each other before issuing, and provide the executive officers of each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the Merger or the other transactions contemplated
hereby, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the other party shall be advised and
the parties shall use their best efforts to cause a mutually agreeable release
or statement to be issued.
SECTION 5.6 Transfer and Gains Taxes. The Purchaser and Ocwen shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding (i) any withholding
tax obligations required pursuant to Section 897 of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder, and comparable
provisions of state or local law, (ii) any other real property transfer or
gains, sales, use, transfer, value added stock transfer and stamp taxes, and
(iii) any transfer, recording, registration and other fees and any similar taxes
which become payable in connection with the Merger (together with any related
interests, penalties or additions to tax, "Transfer and Gains Taxes").
SECTION 5.7 Indemnification.
(a) Indemnification Rights. For a period of six years from and after
the Effective Time, the Purchaser shall indemnify the directors, officers,
employees or agents of Ocwen who at any time prior to the Effective Time were
entitled to indemnification under the Articles of Incorporation and Bylaws of
Ocwen, employment agreements or indemnity agreements between Ocwen and its
officers or directors existing on the date hereof to the same extent as such
directors, officers, employees or agents are entitled to indemnification under
such Articles of Incorporation and Bylaws or existing employment agreements or
indemnity agreements in respect of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the transactions contemplated
by this Agreement).
(b) Liability Coverage. The Purchaser shall provide "run-off" or "tail"
director and officer liability coverage to the current and prior directors and
officers of Ocwen without reduction of existing coverage (both as to dollar
limits of coverage and as to the subject matter insured against) for a period of
six years after the Effective Time; provided, that if, at any time during such
six-year period, such coverage is not reasonably available in the insurance
market, the Purchaser shall provide such "run-off" or "tail" director and
officer liability coverage to such directors and officers as it is able to
purchase for an annual premium equal to twice the annual insurance premium paid
by Ocwen for director and officer liability insurance during the year 1999; and
provided, further, that in the sixth year, Purchaser shall not be obligated to
pay a premium for such insurance in excess of the premium paid in the fifth
year.
(c) Successors and Assigns. The provisions of this Section 5.7 are
intended to be for the benefit of, and shall be enforceable by, each indemnified
party, his or her heirs and his or her personal representatives and shall be
binding on all successors and assigns of the Purchaser and Ocwen.
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SECTION 5.8 Efforts to Fulfill Conditions. The Purchaser and Ocwen each
shall use commercially reasonable efforts to insure that all conditions
precedent to its obligations hereunder are fulfilled at or prior to the Closing
Date.
SECTION 5.9 Cooperation of the Parties. The Purchaser and Ocwen each
shall cooperate with the other in supplying such information as may be
reasonably requested by the other in connection with obtaining consents or
approvals to the transactions contemplated by this Agreement.
SECTION 5.10 Conduct of Business by Ocwen. During the period from the
date of this Agreement to the Effective Time, Ocwen shall, and shall cause the
Ocwen Subsidiaries to, carry on its businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use commercially reasonable efforts to preserve
intact its current business organization, goodwill, ongoing businesses and its
status as a REIT within the meaning of the Code. Without limiting the generality
of the foregoing, the following additional restrictions shall apply: During the
period from the date of this Agreement to the Effective Time, except as set
forth in Schedule 5.10 to the Ocwen Disclosure Letter or as otherwise
contemplated by this Agreement, Ocwen shall not and shall cause the Ocwen
Subsidiaries not to (and not to authorize or commit or agree to) without the
prior recommendation or consent of the Manager:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of Ocwen's capital shares, except that Ocwen
may declare, set aside and pay the dividends and distributions constituting the
1998 REIT Dividend, (ii) split, combine or reclassify any capital stock or
partnership interests or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of such capital stock or
partnership interests or (iii) purchase, redeem or otherwise acquire any shares
of capital stock of Ocwen or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(b) except as otherwise contemplated by this Agreement or in Schedule
5.10(b) of the Ocwen Disclosure Letter, amend the charter, by-laws, partnership
agreement or other comparable organizational documents of Ocwen or any Ocwen
Subsidiary;
(c) except for (i) dividends and distributions constituting the 1998
REIT Dividend and (ii) the issuance of Ocwen Common Shares pursuant to the terms
of the Third Amended and Restated Agreement of Limited Partnership of Ocwen
Partnership in exchange for partnership units in such partnership, issue,
deliver, sell, pledge, dispose of or otherwise encumber, or grant any option or
other right in respect of, any shares of capital stock or debt securities, any
other voting or redeemable securities of Ocwen or any Ocwen Subsidiary or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible or redeemable securities except to
Ocwen or an Ocwen Subsidiary;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof or
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(ii) any assets that are material, individually or in the aggregate, to Ocwen
and the Ocwen Subsidiaries, taken as a whole;
(e) prepare or file any Tax Return inconsistent with past practice or,
on any Tax Return, take any position, make any election, or adopt any method
that is inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax returns in prior periods (unless required by law
or necessary to preserve or terminate Ocwen's status as a REIT as contemplated
by this Agreement or the status of any Ocwen Subsidiary that is a partnership as
a partnership for federal tax purposes);
(f) (i) change in any material manner any of its methods, principles or
practices of accounting in effect at the Ocwen Financial Statement Date, or (ii)
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except in
the case of settlements or compromises in an amount not to exceed, individually
or in the aggregate, $250,000, or change any of its methods of reporting income
or deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 1998, except, in the case of clause (i), as may be required by the
SEC, applicable law or GAAP and with notice thereof to the Purchaser;
(g) without the Purchaser's consent, which shall not be unreasonably
withheld, settle any stockholder derivative or class action claims arising out
of or in connection with the Merger or the other transactions contemplated
hereby;
(h) without the consent of the Purchaser, enter into or amend or
otherwise modify any material agreement or arrangement with Persons that are
affiliates or, as of the date hereof, are officers, directors or employees of
Ocwen or any Ocwen Subsidiary;
(i) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of Ocwen or any
Ocwen Subsidiary, except that, notwithstanding the first part of this Section
5.10(i), Ocwen may no earlier than November 30, 1999 take such action in
connection with terminating its status as a real estate investment trust;
(j) incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or other
investments in, any other person, except (i) to the extent permitted by the
existing covenants within or the terms of those agreements and documents
evidencing indebtedness of Ocwen or any Ocwen Subsidiary as of the date of this
Agreement or (ii) any indebtedness, guarantees, loans, advances, capital
contributions or investments between Ocwen and any Ocwen Subsidiary or between
Ocwen Subsidiaries; or
(k) enter into, amend or terminate any agreement or contract material
to Ocwen and the Ocwen Subsidiaries, taken as a whole.
Notwithstanding any provision of this Agreement to the contrary, no
provision of this Agreement alters, amends or changes in any way the right of
Ocwen or any Ocwen Subsidiary (i) to choose under the Third Amended and Restated
Agreement of Limited Partnership of Ocwen Partnership, L.P. (the "Partnership")
whether to pay either cash or Ocwen Common Shares to a limited partner electing
to have its interests in the Partnership redeemed pursuant to the terms thereof
or (ii) to choose under the option dated May 19, 1997 granted to Ocwen Capital
Corporation under the Ocwen 1997 Stock Option Plan to acquire 1,912,500 Ocwen
Common Shares to deliver, or cause to be delivered, upon exercise of such option
either Partnership units or Ocwen Common Shares or to deliver, or cause to be
delivered, cash if required by the terms of such option or Plan.
SECTION 5.11 Conduct of Business by Purchaser. During the period from
the date of this Agreement to the Effective Time, Purchaser shall not (i)
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any capital stock of Purchaser or (ii) issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Purchaser's capital stock.
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SECTION 5.12 Adverse Actions. Purchaser agrees not to (i) knowingly
take any action that is intended or reasonably likely to result in a material
adverse effect on its ability to consummate the Merger, or (ii) knowingly take
any action that is intended or reasonably likely to result in any conditions to
the Merger set forth in Sections 6.1 or 6.3 not being satisfied or a material
violation of any provision of this Agreement.
SECTION 5.13 OTS Examination Reports. Purchaser agrees to use its
reasonable best efforts to obtain permission from the OTS and all other
applicable regulatory or other authorities to allow Ocwen to review, read and
examine as soon as possible after the date of this Agreement and prior to the
Closing Date those reports issued by OTS relating to, resulting from or setting
forth the results of the examination by OTS from time to time of Purchaser and
its federal savings bank operations.
SECTION 5.14 Termination of Option. Purchaser agrees to cause to be
terminated on or prior to the Closing Date the option dated May 19, 1997 granted
to Ocwen Capital Corporation under the Ocwen 1997 Stock Option Plan to acquire
1,912,500 Ocwen Common Shares.
SECTION 5.15 Management Agreement. So long as this Agreement has not
been terminated, Ocwen agrees not to terminate (except for cause as provided in
the Management Agreement) and, if the Closing Date shall not have occurred prior
to November 19, 1999, to extend the Management Agreement through December 31,
1999.
Article VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of Ocwen and the Purchaser to effect the Merger and to
consummate the other transactions contemplated hereby is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. The Ocwen Common Shareholder Approval and the
Purchaser Common Shareholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
(c) Certain Actions and Consents. All material actions by or in respect
of or filings with any Governmental Entity required for the consummation of the
Merger or any of the other transactions contemplated hereby shall have been
obtained or made.
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(d) Stock Exchange Listings. The Purchaser Common Shares issuable in
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(e) Form S-4. The Form S-4 shall have become effective in accordance
with the provisions of the Securities Act. No stop order suspending the
effectiveness of the Form S-4 shall have been initiated or to the Knowledge of
Purchaser or Ocwen, threatened by the SEC. All necessary state securities or
blue sky authorizations shall have been received.
SECTION 6.2 Conditions to Obligations of the Purchaser. The obligations
of the Purchaser to issue the Merger Consideration to the Ocwen Common
Shareholders and to consummate the other transactions contemplated hereby are
further subject to the following conditions, any one or more of which may be
waived by the Purchaser:
(a) Representations and Warranties. The representations and warranties
of Ocwen set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, as though
made on and as of the Closing Date, except to the extent the representation or
warranty is expressly limited by its terms to another date, and the Purchaser
shall have received a certificate (which certificate may be qualified by
knowledge to the same extent as such representations and warranties are so
qualified) signed on behalf of Ocwen by the Chairman or President of Ocwen to
such effect. This condition shall be deemed satisfied notwithstanding any
failure of a representation or warranty of Ocwen to be true and correct in all
material respects as of the Closing Date if the aggregate amount of Ocwen
Economic Losses (as defined herein) that would reasonably be expected to arise
as a result of the failures of such representations and warranties to be true
and correct in all material respects as of the Closing Date does not exceed
$10,000,000 (such amount to be calculated by counting in all cases from the
first dollar of such Ocwen Economic Losses without giving effect to the
$10,000,000 limitation set forth in Section 3.1(e)). "Ocwen Economic Losses," as
used in this Agreement, shall mean any and all net damage, net loss, net
liability or expense suffered by Ocwen and the Ocwen Subsidiaries taken as a
whole, but shall not include any claims, damages, loss, expense or other
liability resulting from any class action or shareholders' derivative lawsuits
relating to the Merger against Ocwen, if any, filed subsequent to the date of
this Agreement, any replacement, refinancing or extension of the maturity date
of any debt existing as of the date of this Agreement to the extent such
replacement, refinancing or extension does not result in any additional net
liability of Ocwen or the Ocwen Subsidiaries taken as a whole, any amounts paid
or expenses or liabilities incurred by Ocwen in fulfilling its obligations
under, or taking any action required or permitted by, this Agreement, or any
"xxxx to market" or other revaluation of the book value of Ocwen's assets
effected pursuant to GAAP.
(b) Performance of Obligations of Ocwen. Ocwen shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and the Purchaser shall have
received a certificate signed on behalf of Ocwen by the Chairman or President of
Ocwen to such effect.
(c) Consents. All consents and waivers from third parties necessary in
connection with the consummation of the Merger by Ocwen and the other
transactions contemplated hereby shall have been obtained, other than such
consents and waivers from third parties, which, if not obtained, would not
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result, individually or in the aggregate, in Ocwen Economic Losses of
$10,000,000 or more.
(d) 1998 REIT Dividend. The Board of Directors of Ocwen shall have
declared the 1998 REIT Dividend prior to September 15, 1999, having a record
date at least 14 days before the Merger, provided however, that this section
shall not apply if after giving effect to the 1998 REIT Dividend, the 1998 REIT
Dividend would have either of the effects set forth in VSCA Section 13.1-653 C.1
or C.2 or would otherwise be prohibited by law.
SECTION 6.3 Conditions to Obligations of Ocwen. The obligations of
Ocwen to effect the Merger and to consummate the other transactions contemplated
hereby are further subject to the following conditions, any one or more of which
may be waived by Ocwen:
(a) Representations and Warranties. The representations and warranties
of the Purchaser set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date,
as though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another date,
and Ocwen shall have received a certificate (which certificate may be qualified
by knowledge to the same extent as such representations and warranties are so
qualified) signed on behalf of the Purchaser by the chief executive officer or
the chief financial officer of the Purchaser to such effect. This condition
shall be deemed satisfied notwithstanding any failure of a representation or
warranty of Purchaser to be true and correct in all material respects as of the
Closing Date if the aggregate amount of Purchaser Economic Losses (as defined
herein) that would reasonably be expected to arise as a result of the failures
of such representations and warranties to be true and correct in all material
respects as of the Closing Date does not exceed $20,000,000 (such amount to be
calculated by counting in all cases from the first dollar of such Purchaser
Economic Losses without giving effect to the $20,000,000 limitation set forth in
Section 3.2(e)). "Purchaser Economic Losses," as used in this Agreement, shall
mean any and all net damage, net loss, net liability or expense suffered by
Purchaser and the Purchaser Subsidiaries taken as a whole, but shall not include
any claims, damages, loss, expense or other liability resulting from any class
action or shareholders' derivative lawsuits relating to the Merger against
Purchaser, if any, filed subsequent to the date of this Agreement, any
replacement, refinancing or extension of the maturity date of any debt existing
as of the date of this Agreement to the extent such replacement, refinancing or
extension does not result in any additional net liability of Purchaser or the
Purchaser Subsidiaries taken as a whole, or any amounts paid or expenses or
liabilities incurred by Purchaser in fulfilling its obligations under, or taking
any action required or permitted by, this Agreement.
(b) Performance of Obligations of the Purchaser. The Purchaser shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Ocwen shall
have received a certificate of the Purchaser signed on behalf of the Purchaser
by the chief executive officer or the chief financial officer of such party to
such effect.
(c) Consents. All consents and waivers from third parties necessary in
connection with the consummation of the Merger by Purchaser and the other
transactions contemplated hereby shall have been obtained, other than such
consents and waivers from third parties, which, if not obtained, would not
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result, individually or in the aggregate, in Purchaser Economic Losses of
$20,000,000 or more.
(d) Solvency of Purchaser. A bankruptcy event, as described in clause
(viii) of the definition of Event of Default in the Indenture, dated as of
September 30, 1996, between Purchaser and Bank One, Columbus, NA, shall not have
occurred and be continuing.
Article VII
Ocwen Board Actions
SECTION 7.1 Ocwen Board Actions. Notwithstanding Section 5.4 or any
other provision of this Agreement to the contrary, to the extent required by the
fiduciary obligations of the Board of Directors of Ocwen, as determined in good
faith by a majority of the members of the Board of Directors of Ocwen on the
advice of independent counsel, Ocwen may:
(a) disclose to its shareholders any information required to be
disclosed under applicable law;
(b) directly or indirectly furnish information and access to any
Person, pursuant to a confidentiality agreement no less favorable to Ocwen than
the provisions of Section 5.2 of this Agreement, in response to a request for
such information or access by such Person made after the date hereof which was
not encouraged, solicited or initiated after the date hereof by Ocwen or any of
its affiliates or any of its or their respective officers, directors, employees,
representatives or agents, and may participate in discussions and negotiate with
such Person concerning any Competing Transaction; and
(c) approve or recommend (and in connection therewith withdraw or
modify its approval or recommendation of this Agreement and the Merger) a
Superior Competing Transaction (as defined below) which is accompanied by, if
applicable, an appropriate financing commitment, or enter into an agreement with
respect to such Superior Competing Transaction (for purposes of this Agreement,
"Superior Competing Transaction" means a bona fide proposal of a Competing
Transaction made by a third party which a majority of the members of the Board
of Directors of Ocwen determines in good faith to be more favorable to its
shareholders than the Merger).
Article VIII
Termination, Amendment and Waiver
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the filing of the Articles of Merger for the Merger with the State
Corporation Commission of the Commonwealth of Virginia, whether before or after
the Ocwen Common Shareholder Approval is obtained:
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(a) by mutual written consent duly authorized by the respective Boards
of Directors of the Purchaser and Ocwen;
(b) by the Purchaser, upon a breach of any representation, warranty,
covenant or agreement on the part of Ocwen set forth in this Agreement which
breach cannot be cured within 30 days after the giving of written notice thereof
to Ocwen, provided that such breach would be reasonably likely, individually or
in the aggregate with other breaches, to result in an Ocwen Material Adverse
Effect;
(c) by Ocwen, upon a breach of any representation, warranty, covenant
or agreement on the part of Purchaser set forth in this Agreement which breach
cannot be cured within 30 days after the giving of written notice thereof to
Purchaser, provided that such breach would be reasonably likely, individually or
in the aggregate with other breaches, to result in a Purchaser Material Adverse
Effect;
(d) by either the Purchaser or Ocwen, if any judgment, injunction,
order, decree or action by any Governmental Entity of competent authority
preventing the consummation of the Merger shall have become final and
nonappealable;
(e) by either the Purchaser or Ocwen, if the Merger shall not have been
consummated before December 31, 1999; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1(e) shall not be available
to any party whose failure to fulfill any of its obligations contained in this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have occurred on or prior to the aforesaid date;
(f) by either the Purchaser or Ocwen if, upon a vote at a duly held
Ocwen Common Shareholders Meeting or any adjournment thereof, the Ocwen Common
Shareholder Approval shall not have been obtained;
(g) by Ocwen, if prior to the Ocwen Common Shareholders Meeting, the
Board of Directors of Ocwen shall have withdrawn or modified in compliance with
Section 7.1 hereof in any manner adverse to the Purchaser its approval or
recommendation of the Merger or this Agreement;
(h) by the Purchaser, if (i) prior to the Ocwen Common Shareholders
Meeting, the Board of Directors of Ocwen shall have withdrawn or modified in any
manner adverse to the Purchaser its approval or recommendation of the Merger or
this Agreement in connection with, or approved or recommended, any Superior
Competing Transaction, (ii) Ocwen shall have entered into any agreement with
respect to any Competing Transaction (other than a confidentiality agreement as
contemplated by Section 7.1(b)), or (iii) prior to the Ocwen Common Shareholders
Meeting, the Board of Directors of Ocwen shall have withdrawn or modified in any
manner adverse to the Purchaser its approval or recommendation of the Merger or
this Agreement for any reason other than as specified in Section (h)(i) above;
(i) by Ocwen, by action of its Board of Directors, at any time during
the five-day period prior to the fifth day prior to the Closing Date; if the
Average Closing Price as defined below of Purchaser Common Shares shall be $6.80
or less, provided, however, that during the five-day period following the
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provision by Ocwen of written notice of termination to Purchaser pursuant to
this Section 8.1(i), Purchaser shall have the option of postponing the Closing
Date for 15 trading days, during the first 10 trading days of which a new
Average Closing price of Purchaser Common Shares shall be determined based on
the closing sales price of Purchaser Common Stock as reported on the
consolidated tape on the New York Stock Exchange for each of such 10 trading
days (the "Adjusted Average Closing Price"). If the Adjusted Average Closing
Price is more than $6.80, no termination shall be deemed to have occurred
pursuant to this Section 8.1(i) and this Agreement shall remain in full force
and effect in accordance with its terms. If the Adjusted Average Closing Price
is $6.80 or less, Purchaser shall have the option of increasing the
consideration to be received by holders of Ocwen Common Shares hereunder by
adjusting the Conversion Number to equal a number equal to the quotient obtained
by dividing $4.83 by the Adjusted Average Closing Price, in which case Purchaser
shall give prompt written notice to Ocwen of such election and the revised
Conversion Number and no termination shall be deemed to have occurred pursuant
to this Section 8.1(i) and this Agreement shall remain in full force and effect
in accordance with its terms (except as the Conversion Number shall have been so
modified and any reference herein to " Conversion Number" shall thereafter be
deemed to refer to the Conversion Number as adjusted pursuant to this Section
8.1(i)). In no event shall the modified Conversion Number be less than 0.71
shares of Purchaser Common Shares for each Ocwen Common Share.
For purposes of this Section 8.1(i); the "Average Closing Price" shall
be the mean of the closing sales price of Purchaser Common Shares as reported on
the consolidated tape on the New York Stock Exchange for each of the 10 trading
days ending on the 10th day prior to the Closing Date established pursuant to
Section 1.2 of this Agreement.
SECTION 8.2 Expenses.
(a) Except as otherwise specified in this Section 8.2 or agreed in
writing by the parties, all out-of-pocket costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such cost or expense, provided that all printing
expenses associated with the Proxy Statement shall be divided equally between
Purchaser and Ocwen.
(b) Ocwen agrees that if this Agreement shall be terminated pursuant to
Section 8.1(g), 8.1(h)(i), 8.1(h)(ii) or 8.1(h)(iii), but in the case of
termination pursuant to Section 8.1(h)(iii), only if Ocwen agrees to a Competing
Transaction within 3 months after termination thereunder, then Ocwen will pay to
the Purchaser an amount equal to $3,000,000 (the "Purchaser Break-Up Fee").
Payment of the Purchaser Break Up Fee shall be made, as directed by the
Purchaser, by wire transfer of immediately available funds only and promptly
after Ocwen shall have entered into any agreement with respect to any Competing
Transaction.
(c) The Purchaser agrees that if this Agreement shall be terminated
pursuant to Section 8.1(c), then the Purchaser will pay to Ocwen an amount equal
to the Ocwen Break-Up Expenses (as defined herein) up to $1,000,000. Payment of
any of such amounts shall be made, as directed by Ocwen, by wire transfer of
immediately available funds promptly, after the amount is due as provided
herein. The "Ocwen Break-Up Expenses" shall be an amount equal to the Ocwen's
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out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, all attorneys',
accountants' and investment bankers' fees and expenses).
(d) Ocwen agrees that if this Agreement shall be terminated pursuant to
Section 8.1 (b) (other than by reason of a breach of Ocwen's representation
under Section 3.1(g)), then Ocwen will pay to the Purchaser an amount equal to
the Purchaser Break-Up Expenses (as defined herein) up to $1,000,000. Payment of
such amounts shall be made, as directed by the Purchaser, by wire transfer of
immediately available funds promptly, after the amount is due as provided
herein. The "Purchaser Break-Up Expenses" shall be an amount equal to
Purchaser's out-of-pocket expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including, without limitation, all
attorneys', accountants' and investment bankers' fees and expenses).
(e) In the event that the Purchaser or Ocwen is required to file suit
to seek all or a portion of the amounts payable under this Section 8.2, and such
party prevails in such litigation, such party shall be entitled to receive, in
addition to all amounts that it is otherwise entitled to receive under this
Section 8.2 all expenses, including attorney's fees and expenses which it has
incurred in enforcing its rights hereunder.
SECTION 8.3 Effect of Termination. In the event of termination of this
Agreement by either Ocwen or the Purchaser as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Purchaser, or Ocwen, other than Section 5.2,
Section 8.2, this Section 8.3 and Article IX and except to the extent that such
termination results from a breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement (it being
understood and agreed that such termination shall not otherwise affect any
obligations between Ocwen or any Ocwen Subsidiary and Purchaser or any Purchaser
Subsidiary, including the obligation of Ocwen to pay the termination fee to the
Manager under the Management Agreement).
SECTION 8.4 Amendment. This Agreement may be amended by the parties in
writing by action of their respective Boards of Directors at any time before or
after the Ocwen Shareholder Approval is obtained and prior to the filing of the
Articles of Merger with the State Corporation Commission of the Commonwealth of
Virginia; provided, however, that, after the Ocwen Shareholder Approval is
obtained, no such amendment, modification or supplement shall alter the amount
or change the form of the consideration to be delivered to Ocwen's shareholders.
SECTION 8.5 Extension; Waiver. At any time prior to the Effective Time,
each of Ocwen and the Purchaser may (a) extend the time for the performance of
any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 8.4, waive compliance with any of the
agreements or conditions of the other party contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
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Article IX
General Provisions
SECTION 9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) if to the Purchaser or Acquisition Sub, to:
Ocwen Financial Corporation
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Secretary
Fax: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to Ocwen, to:
Special Committee of Ocwen Asset Investment Corp.
c/o Secretary, Ocwen Asset Investment Corp.
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
McGuire, Woods, Xxxxxx & Xxxxxx XXX
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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SECTION 9.3 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
SECTION 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other agreements entered into in connection with the
transactions contemplated hereby (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement and,
(b) except for the provisions of Article II and Section 5.7 are not intended to
confer upon any person other than the parties hereto any rights or remedies.
SECTION 9.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia,
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws thereof.
SECTION 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise by any party without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns. Notwithstanding
anything to the contrary herein, at the election of Purchaser, any direct or
indirect wholly owned Purchaser Subsidiary may be substituted for Acquisition
Sub as a constituent corporation in the Merger. In such event, the parties agree
to execute an appropriate amendment to this Agreement, in form and substance
reasonably satisfactory to Purchaser and Ocwen, in order to reflect such
substitution.
SECTION 9.8 Enforcement. Each of the parties hereto (a) consents to
submit itself (without making such submission exclusive) to the personal
jurisdiction of any federal court located in the Commonwealth of Virginia or any
Virginia state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement and (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court.
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SECTION 9.9 Incorporation. The Ocwen Disclosure Letter and the
Purchaser Disclosure Letter and all Exhibits attached hereto and thereto and
referred to herein and therein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
SECTION 9.10 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the constituent corporations in the Merger, or (b) otherwise to carry
out the purpose of this Agreement, the Surviving Corporation and its proper
officers and directors or their designees shall be authorized to execute and
deliver, in the name and on behalf of either of the constituent corporations in
the Merger, all such deeds, bills of sale, assignments and assurances and to do,
in the name and on behalf of either such constituent corporation, all such other
acts and things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation's right, title or interest in, to or under any
of the rights, privileges, powers, franchises, properties or assets of such
constituent corporation and otherwise to carry out the purposes of this
Agreement.
Article X
Certain Definitions
SECTION 10.1 Certain Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Ocwen Disclosure Letter" means the letter dated July 25, 1999
previously delivered to the Purchaser by Ocwen disclosing certain information in
connection with this Agreement.
"Purchaser Disclosure Letter" means the letter dated July 25, 1999
previously delivered to Ocwen by the Purchaser disclosing certain information in
connection with this Agreement.
"Knowledge" where used herein with respect to either Ocwen or Purchaser
shall mean the actual knowledge of any of their respective directors or
officers. "Knowledge" shall not include the "constructive" or deemed knowledge
of any such persons, or the existence of facts or circumstances which might
constitute "reason to know" by such person or which might lead to the conclusion
that such person "should have known" unless, in any such case, such person has
actual knowledge of the matter in question.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Purchaser, Acquisition Sub and Ocwen have
caused this Agreement to be signed by their respective persons thereunto duly
authorized, all as of the date first written above.
OCWEN FINANCIAL CORPORATION
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------------
Title: Chairman and Chief Executive Officer
--------------------------------------
OCWEN ASSET INVESTMENT CORP.
By: /s/ XXXXX X. SMALL
-----------------------------------------
Name: Xxxxx X. Small
---------------------------------------
Title: Director
--------------------------------------
OCWEN ACQUISITION COMPANY
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------------
Title: Chairman and Chief Executive Officer
--------------------------------------
-37-
