UNDERWRITING AGREEMENT
April __, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
EVEREN SECURITIES, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Ocwen Asset Investment Corp. (the "Company") confirms its agreements with
Friedman, Billings, Xxxxxx & Co., Inc., EVEREN Securities, Inc., and each of the
other Underwriters listed on Schedule I hereto (collectively, the
"Underwriters"), for whom Friedman, Billings, Xxxxxx & Co., Inc. and EVEREN
Securities, Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to (i) the sale by the Company, and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $0.01 per share, of the
Company ("Common Stock") set forth in Schedule I hereto and (ii) the grant by
the Company to the Underwriters, acting severally and not jointly, of the option
described in Section 1(b) hereof to purchase all or any part of 1,875,000
additional shares of Common Stock to cover over-allotments, if any. The
12,500,000 shares of Common Stock (the "Initial Shares") to be purchased by the
Underwriters and all or any part of the 1,875,000 shares of Common Stock subject
to the option described in Section 1(b) hereof (the "Option Shares") are
hereinafter called, collectively, the "Shares".
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-11 (No. 333-21965) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including all information deemed to be
a part of the registration statement at the time it became effective
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pursuant to Rule 430A(b) of the Securities Act Regulations) is hereinafter
called the "Registration Statement," except that, if the Company files a
post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration
Statement" shall refer to such registration statement as so amended. Any
registration statement filed pursuant to Rule 462(b) of the Securities Act
Regulations is hereinafter called the "Rule 462(b) Registration Statement,"
and after such filing the term "Registration Statement" shall include the
462(b) Registration Statement. Each prospectus included in the registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the Company
with the consent of the Underwriters pursuant to Rule 424(a) of the
Securities Act Regulations is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first
filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of
the Securities Act Regulations. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase: (a) Initial Shares. Upon the basis of the
warranties and representations and other terms and conditions herein set forth,
the Company agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share of $____, that proportion of the number
of Initial Shares set forth opposite such Underwriter's name on Schedule I, plus
any additional number of Initial Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 8 hereof, subject to
such adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
The Underwriters may from time to time increase or decrease the public offering
price after the initial public offering to such extent as the Underwriters may
determine.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase from the Company that number of Option Shares up to the maximum number
of Option Shares of Common Stock at the purchase price per share set forth in
paragraph (a) above plus any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall
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be determined by the Representatives, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to
all or any portion of the Option Shares, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number
of Option Shares then being purchased which the number of Initial Shares set
forth in Schedule I opposite the name of such Underwriter bears to the total
number of Initial Shares, subject in each case to such adjustments as the
Representatives in their discretion shall make to eliminate any sales or
purchases of fractional shares. The Underwriters may from time to time
increase or decrease the public offering price after the initial public
offering to such extent as the Underwriters may determine.
2. Payment and Delivery: (a) Initial Shares. Payment of the purchase
price for the Initial Shares shall be made to the Company by wire transfer or
certified or official bank check payable in federal (same-day) funds at the
office of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (unless another place shall be agreed upon by the Representatives and the
Company) against delivery of the certificates for the Initial Shares to the
Representatives for the respective accounts of the Underwriters. Such payment
and delivery shall be made at 10:00 a.m., New York City time, on the third
(fourth, if pricing occurs after 4:30 p.m. (New York City time)) business day
after the date hereof (unless another time, not later than ten business days
after such date, shall be agreed to by the Representatives and the Company).
The time at which such payment and delivery are actually made is hereinafter
sometimes called the "Closing Time". Certificates for the Initial Shares shall
be delivered to the Representatives in definitive form registered in such names
and in such denominations as the Representatives shall specify. For the purpose
of expediting the checking of the certificates for the Initial Shares by the
Representatives, the Company agrees to make such certificates available to the
Representatives for such purpose at least one full business day preceding the
Closing Time.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer or certified or
official bank check payable in federal (same-day) funds at the office of Xxxxxxx
Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (unless
another place shall be agreed upon by the Representatives and the Company)
against delivery of the certificates for the Option Shares to the
Representatives for the respective accounts of the Underwriters. Such payment
and delivery shall be made at 10:00 a.m., New York City time, on each Date of
Delivery. Certificates for the Option Shares shall be delivered to the
Representatives in definitive form registered in such names and in such
denominations as the Representatives shall specify. For the purpose of
expediting the checking of the certificates for the Option Shares by the
Representatives, the Company agrees to make such certificates available to the
Representatives for such purpose at least one full business day preceding the
relevant Date of Delivery.
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3. Representations and Warranties of the Company: The Company represents
and warrants to the Underwriters that:
(a) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement or
any Rule 462(b) Registration Statement has been issued under the Securities
Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information
has been complied with;
(b) the Registration Statement complies and the Prospectus and any
further amendments or supplements thereto will, when they become effective
or are filed with the Commission, as the case may be, comply in all
material respects with the requirements of the Securities Act and the
Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective
date, contain 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 not misleading; and the Prospectus and any amendment or
supplement thereto will not, as of the applicable filing date and at
Closing Time and on each Date of Delivery (if any), contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in reliance upon
and in conformity with information concerning the Underwriters and
furnished in writing by or on behalf of the Underwriters to the Company
expressly for use in the Registration Statement or the Prospectus;
(c) the Prospectus delivered to the Underwriters for use in connection
with this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T;
(d) the Company had at the date indicated the duly authorized and
outstanding capitalization set forth in the Prospectus under the caption
"Capitalization"; all of the issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; the Company is a corporation duly organized
and validly existing under the laws of the Commonwealth of Virginia, with
full corporate power and authority to own its properties and conduct its
business as described in the Registration Statement and the Prospectus, and
to execute and deliver this Agreement and the Management Agreement (as
defined below); each of Ocwen General, Inc. and Ocwen Limited, Inc.
(together, the "Corporate Subsidiaries")
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has been duly organized and is validly existing under the laws of the
Commonwealth of Virginia with full corporate power and authority to own its
properties and conduct its business as described in the Registration
Statement and the Prospectus; Ocwen Partnership, L.P. (the "Operating
Partnership", and together with the Corporate Subsidiaries, the
"Subsidiaries") has been duly organized and is validly existing as a limited
partnership under the Virginia Revised Uniform Limited Partnership Act with
full partnership power and authority to own its properties and conduct its
business as described in the Registration Statement and the Prospectus;
(e) the Company and each of its Subsidiaries is duly qualified or
licensed by and in good standing in each jurisdiction in which they conduct
their respective businesses or own or lease property and in which the
failure, individually or in the aggregate, to be so licensed or qualified
could have a material adverse effect on the operations, business or
condition of the Company and its Subsidiaries, taken as a whole; the
Company and each of its Subsidiaries is in compliance in all material
respects with the laws, orders, rules, regulations and directives issued or
administered by such jurisdictions;
(f) neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its
respective articles of incorporation, by-laws or other constituent
documents or in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
bank loan or credit agreement or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them is
bound, except for such breaches or defaults which would not have a material
adverse effect on the operations, business or condition of the Company and
its Subsidiaries, taken as a whole, and the execution, delivery and
performance of this Agreement and the Management Agreement (as defined
below) and consummation of the transactions contemplated hereby and thereby
will not conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would constitute a breach of, or default under), (i) any provision of the
articles of incorporation, by-laws or other constituent documents of the
Company or any of its Subsidiaries, or (ii) any provision of any license,
indenture, mortgage, deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of the Subsidiaries or any of their
respective properties may be bound or affected, or under any federal, state
or local law, regulation or rule or any decree, judgment or order
applicable to the Company or any of its Subsidiaries, except in the case of
this clause (ii) for such breaches or defaults which would not have a
material adverse effect on the operations, business or condition of the
Company and its Subsidiaries, taken as a whole;
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(g) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity,
and except to the extent that the indemnification provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof; the Management Agreement (the
"Management Agreement"), to be entered into at or prior to the Closing Time
between the Company and Ocwen Capital Corporation (the "Manager"), a form
of which has been filed as an exhibit to the Registration Statement, has
been duly authorized by the Company and the Manager and at the Closing Time
will have been duly executed and delivered by the Company and the Manager
and will constitute a valid and binding agreement of each of the Company
and the Manager enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, and by general principles of
equity;
(h) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and Prospectus;
(i) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the sale of the Shares
as contemplated hereby other than (A) such as have been obtained, or will
have been obtained at the Closing Time or the relevant Date of Delivery, as
the case may be, under the Securities Act, (B) such approvals as have been
obtained in connection with the approval of the quotation of the Shares on
the Nasdaq National Market System and the registration of the Company's
Common Stock under the Exchange Act, and (C) any necessary qualification
under the securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriters;
(j) Price Waterhouse LLP, whose report on the financial statements of
the Company are filed with the Commission as part of the Registration
Statement and Prospectus, are independent public accountants as required by
the Securities Act and the Securities Act Regulations;
(k) the Company and each of its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule,
and has obtained all necessary authorizations, consents and approvals from
other persons, required in order to conduct its respective business, except
to the extent that any failure to have any such licenses, authorizations,
consents or approvals, to make any such filings or to obtain any such
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authorizations, consents or approvals would not, alone or in the aggregate,
have a material adverse effect on the business, properties, prospects,
results of operations or condition of the Company and its Subsidiaries,
taken as a whole; neither the Company nor any of its Subsidiaries is in
violation of, or in default under, any such license, authorization, consent
or approval or any federal, state or local law, regulation or rule
or any decree, order or judgment applicable to the Company or any of the
Subsidiaries the effect of which could be material and adverse to the
business, properties, prospects, results of operations or condition of the
Company and its Subsidiaries, taken as a whole;
(l) all legal or governmental proceedings, contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required;
(m) there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened against the Company or any of the
Subsidiaries or any of their respective properties, at law or in equity, or
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency which could result
in a judgment, decree or order having a material adverse effect on the
business, condition, prospects or property of the Company and its
Subsidiaries, taken as a whole;
(n) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the financial
position of the Company as of the date indicated; such financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as indicated in the notes thereto);
(o) subsequent to the effective date of the Registration Statement and
the date of the Prospectus, and except as may be otherwise stated in the
Registration Statement or Prospectus, there has not been (A) any material
and unfavorable change, financial or otherwise, in the business,
properties, prospects, results of operations or condition (financial or
otherwise), present or prospective, of the Company and its Subsidiaries,
taken as a whole, (B) any transaction, other than in the ordinary course of
business, which is material to the Company and its Subsidiaries, taken as a
whole, contemplated or entered into by the Company or any of its
Subsidiaries or (C) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of its Subsidiaries, other than
in the ordinary course of business, which is material to the Company and
its Subsidiaries, taken as a whole;
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(p) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"); the
transactions contemplated by the Registration Statement and the conduct of
the Company of its business as set forth in the Registration Statement will
not cause the Company to become an "investment company" subject to
registration under the Investment Company Act;
(q) Other than pursuant to the Registration Rights Agreement (the
"Registration Rights Agreement"), to be entered into at or prior to the
Closing Time among the Company, the Manager and Ocwen Financial
Corporation, a form of which has been filed as an exhibit to the
Registration Statement, there are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act;
(r) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the
Underwriters pursuant to or in connection with this Agreement shall be
deemed a representation and warranty by the Company to each Underwriter as
to the matters covered thereby; and
(s) the Company is organized in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and the present and
contemplated method of operation of the Company as set forth in the
Registration Statement does and will enable the Company to meet the
requirements for taxation as a REIT under the Code.
4. Certain Covenants of the Company: The Company hereby agrees with each
Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Representatives may
designate and to maintain such qualifications in effect as long as required
for the distribution of the Shares, provided that the Company shall not be
required to qualify as a foreign corporation or to consent to the service
of process under the laws of any such state (except service of process with
respect to the offering and sale of the Shares);
(b) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) not
later than 10:00 a.m. (New York City time), on the second business day
following the execution and delivery of this Agreement and to furnish
promptly (and with respect to the initial delivery of such
9
Prospectus, not later than 10:00 a.m. (New York City time) on the second
business day following the execution and delivery of this Agreement) to the
Underwriters as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement)
as the Underwriters may reasonably request for the purposes contemplated by
the Securities Act Regulations, which Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T;
(c) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment
thereto becomes effective under the Securities Act Regulations;
(d) to advise the Representatives promptly, confirming such advice in
writing, of (i) any request by the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information
with respect thereto, or (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or threatening
of any proceedings for any of such purposes and, if the Commission or any
other government agency or authority should issue any such order, to make
every reasonable effort to obtain the lifting or removal of such order as
soon as possible; to advise the Representatives promptly of any proposal to
amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representatives shall reasonably
object in writing;
(e) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) copies of all annual, quarterly and current
reports supplied to holders of shares of Common Stock, (ii) copies of all
reports filed by the Company with the Commission, and (iii) such other
information as the Underwriters may reasonably request regarding the
Company;
(f) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Securities Act Regulations
which, in the judgment of the Company, would require the making of any
change in the Prospectus then being used so that the Prospectus would 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
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therein, in light of the circumstances under which they are made, not
misleading, and, during such time, to prepare and furnish, at the Company's
expense, to the Underwriters promptly such amendments or supplements to
such Prospectus as may be necessary to reflect any such change and to
furnish to the Underwriters a copy of such proposed amendment or supplement
before filing any such amendment or supplement with the Commission;
(g) to furnish promptly to the Representatives a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and such number of
conformed copies of the foregoing as the Underwriters may reasonably
request;
(h)to pay all expenses, fees and taxes (other than any transfer taxes
and the fees and disbursements of counsel for the Underwriters except as
set forth under Section 5 hereof and clauses (iii) and (iv) below) in
connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) the preparation, issuance and delivery of the certificates
for the Shares to the Underwriters, including any stock or other transfer
taxes or duties payable upon the sale of the Shares to the Underwriters,
(iii) the word processing and/or printing of this Agreement and any dealer
agreements, and the reproduction and/or printing and furnishing of copies
of each thereof to the Underwriters and to dealers (including costs of
mailing and shipment), (iv) the qualification of the Shares for offering
and sale under state laws and the determination of their eligibility for
investment under state law as aforesaid (including the legal fees and
filing fees and other disbursements of counsel for the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any filing for
review of the public offering of the Shares by the NASD, (vi) the fees and
expenses of any transfer agent or registrar for the Shares, (vii) the fees
and expenses incurred in connection with the inclusion of the Shares in the
Nasdaq National Market System and (viii) the performance of the Company's
other obligations hereunder;
(i) to furnish to the Underwriters, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy
of any document proposed to be filed with the Commission pursuant to
Section 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(j) to make generally available to its security holders as soon as
practicable after the effective date of the Registration Statement an
earning statement (in form, at the
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option of the Company, complying with the provisions of Rule 158 under the
Securities Act) covering a period of 12 months beginning after the effective
date of the Registration Statement;
(k) to use its best efforts to effect and maintain the quotation of
the Shares on the Nasdaq National Market System and to file with the Nasdaq
National Market System all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market System;
(l) except as provided in the Prospectus, to refrain during a period
of 120 days from the date of the Prospectus, without the prior written
consent of the Representatives, from (i) offering, pledging, selling,
contracting to sell, selling any option or contract to purchase, purchasing
any option or contract to sell, granting any option for the sale of, or
otherwise disposing of or transferring, directly or indirectly, any share
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under
the Securities Act with respect to any of the foregoing or (ii) entering
into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise;
(m) except as otherwise expressly permitted by its articles of
incorporation or by-laws, the Company will continue to conduct its
operations in a manner that will meet the requirements to qualify as a
REIT under the Code and that will not subject it to registration as an
"investment company" under the Investment Company Act.
5. Reimbursement of the Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the first two paragraphs of Section 7 hereof or the default by one or more of
the Underwriters in its or their respective obligations hereunder, the Company
shall reimburse the Underwriters for all of their reasonable out-of-pocket
expenses relating to the transactions contemplated hereby, including the fees
and disbursements of their counsel.
6. Conditions of the Underwriters' Obligations: The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company on the date hereof and at the Closing Time
and on each Date of Delivery, the performance by the Company of its obligations
hereunder and to the following conditions:
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(a) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Hunton & Xxxxxxxx, counsel for
the Company, addressed to the Underwriters and dated the Closing Time and
each Date of Delivery substantially in the form of Exhibit B hereto.
(b) The Representatives shall have received from Price Waterhouse LLP,
letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, and addressed to the
Representatives as representatives of the Underwriters in the forms
heretofore approved by the Underwriters.
(c) The Underwriters shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx,
counsel for the Underwriters, dated the Closing Time or such Date of
Delivery, in form and substance satisfactory to the Underwriters.
(d) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have
objected in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus has been issued by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes,
has occurred; and (ii) the Registration Statement and all amendments
thereto, or modifications thereof, if any, and the Prospectus and all
amendments or supplements thereto, or modifications thereof, if any, shall
not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
(f) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no material and unfavorable
change, financial or otherwise (other than as disclosed in the Registration
Statement and Prospectus), in the business, condition or prospects of the
Company and its Subsidiaries, taken as a whole, shall occur or become known
and (ii) no transaction which is material and unfavorable to the Company
shall have been entered into by the Company or any of the Subsidiaries.
(g) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of two of its executive
officers to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth
13
in this Agreement and the conditions set forth in paragraph (e) and
paragraph (f) have been met and are true and correct as of such date.
(h) At the Closing Time, the Shares shall have been approved for
inclusion on the Nasdaq National Market System.
(i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(j) At or prior to the date of this Agreement, the Underwriters shall
have received an agreement substantially in the form of Exhibit A hereto
signed by Ocwen Financial Corporation.
(k) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus or any amendment
or supplement thereto as of the Closing Time or any Date of Delivery as the
Underwriters may reasonably request.
(l) The Company shall have performed such of its respective
obligations under this Agreement as are to be performed by the terms hereof
at or before the Closing Time or the relevant Date of Delivery.
7. Termination: The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of Delivery,
if trading in securities on the New York Stock Exchange shall have been
suspended or minimum prices shall have been established on the New York Stock
Exchange, or if a banking moratorium shall have been declared either by the
United States or New York State authorities, or if the United States shall have
declared war in accordance with its constitutional processes or there shall have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in the judgment of the
Representatives, to make it impracticable to market the Shares.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(h), 5 and 9 hereof) and the Underwriters shall be
14
under no obligation or liability to the Company under this Agreement (except
to the extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall
default at Closing Time or on a Date of Delivery in its obligation to take up
and pay for the Shares to be purchased by it under this Agreement on such date
and if the total number of Shares which such Underwriter shall have agreed but
failed to take up and pay for does not exceed 10% of the total number of Shares
to be purchased on such date, each non-defaulting Underwriter shall take up and
pay for (in addition to the number of Shares which it is obligated to purchase
on such date pursuant to this Agreement) the portion of the total number of
Shares agreed to be purchased by the defaulting Underwriter on such date in the
proportion that its underwriting obligations hereunder bears to the underwriting
obligations of all non-defaulting Underwriters. Without relieving any
defaulting Underwriter from its obligations hereunder, the Company agrees with
the non-defaulting Underwriters that it will not sell any Shares hereunder on
such date unless all of the Shares to be purchased on such date are purchased on
such date by the Underwriters (or by substituted Underwriters selected by the
Representatives with the approval of the Company or selected by the Company with
the approval of the Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with the like effect as if such
substituted Underwriter had originally been named in this Agreement.
15
9. Indemnity by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in such
Registration Statement or necessary to make the statements made in the
Registration Statement not misleading or arises out of or is based on an
omission or alleged omission to state a material fact required to be stated in
the Prospectus or necessary to make the statements therein, in light of
circumstances under which they were made, not misleading, except insofar as any
such loss, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by the Underwriters through the
Representatives to the Company expressly for use in such Registration Statement
or such Prospectus, or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in either such Registration Statement or Prospectus or necessary to
make such information not misleading, provided, however, that the indemnity
agreement contained in this subsection (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) with respect to any person asserting
any such loss, expense, liability or claim which is the subject thereof if the
Prospectus corrected any such alleged untrue statement or omission and if such
Underwriter failed to send or give a copy of the Prospectus to such person at or
prior to the written confirmation of the sale of Shares to such person, unless
such failure resulted from non-compliance by the Company with Section 4(b).
If any action is brought against an Underwriter or controlling person in
respect of which indemnity may be sought against the Company pursuant to the
preceding paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action and the indemnifying party shall
assume the defense of such action, including the employment of counsel and
payment of expenses. Such Underwriter or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action or the indemnifying party shall not have employed counsel to have
charge
16
of the defense of such action within a reasonable time or such indemnified
party or parties shall have reasonably concluded (based on the advice of
counsel) that there may be defenses available to it or them which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any
of which events such fees and expenses shall be borne by the indemnifying
party and paid as incurred (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel for the Underwriters or controlling persons in any one
action or series of related actions in the same jurisdiction representing the
indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the indemnifying party shall not
be liable for any settlement of any such claim or action effected without the
written consent of the indemnifying party.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, its directors and officers and any person
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any loss, expense, liability
or claim (including the reasonable cost of investigation) which, jointly or
severally, the Company or any such person may incur under the Securities Act,
the Exchange Act or otherwise, insofar as such loss, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in and in conformity with information furnished in
writing by such Underwriter through the Representatives to the Company expressly
for use in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated either in such Registration Statement or Prospectus or necessary to make
such information not misleading.
If any action is brought against the Company or any such person in respect
of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The
Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by the Representatives in connection with the defense of
such action or the Representatives shall not have employed counsel to have
charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representatives shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall
17
be borne by such Underwriter and paid as incurred (it being understood,
however, that the Underwriters shall not be liable for the expenses of more
than one separate counsel in any one action or series of related actions in
the same jurisdiction representing the indemnified parties who are parties to
such action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of such Underwriter.
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 9 in respect
of any losses, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, expenses,
liabilities or claims, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bear to the underwriting
discounts and commissions received by the Underwriters. The relative fault of
the Company on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any claim
or action.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
18
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section 9
and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, or any person who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, or by or on behalf of the Company, its
directors and officers or any person who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the sale and delivery of the
Shares. The Company and each Underwriter agree promptly to notify the others of
the commencement of any litigation or proceeding against it and, in the case of
the Company, against any of the Company's officers and directors, in connection
with the sale and delivery of the Shares, or in connection with the Registration
Statement or Prospectus.
10. Default by the Company. If the Company shall fail at the Closing Time
or on any Date of Delivery to sell and deliver the number of Shares that Company
is obligated to sell hereunder on such date, then the Underwriters may, at the
option of the Representatives by notice from the Representatives to the Company,
terminate this Agreement without any liability on the part of any non-defaulting
party except that the provisions of Sections 4(h), 5 and 9 shall remain in full
force and effect. No action taken pursuant to this Section 10 shall relieve the
Company from liability, if any, in respect of such default.
In the event of a default by the Company as referred to in this Section 10,
the Representatives shall have the right to postpone the Closing Time or the
relevant Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or Prospectus or in any
other documents or arrangements.
11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
Friedman, Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Compliance Department; and if to the Company, shall
be sufficient in all respects if delivered to the Company at the offices of the
Company at 0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxxx, Xxxxxxx
00000 Attention: Secretary.
12. GOVERNING LAW; Headings: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
19
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Parties at Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Company and the
controlling persons, directors and officers referred to in Section 9 hereof, and
their respective successors, assigns, executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts: This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
OCWEN ASSET INVESTMENT CORP.
By ________________________
Title:
Accepted and agreed to as
of the date first above
written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By __________________________
Title:
EVEREN SECURITIES, INC.
By __________________________
Title:
For themselves and as Representatives
of the other Underwriters named on
Schedule I hereto.
Schedule I
Underwriters Number of Shares
------------ ----------------
Friedman, Billings, Xxxxxx
& Co., Inc.
EVEREN Securities, Inc.
Total 12,500,000
----------
Exhibit A
---------
_______ __, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
EVEREN SECURITIES, INC.
as Representatives of the several
Underwriters to be named in the
within-mentioned Underwriting Agreement
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Re: Proposed Public Offering by Ocwen Asset Investment Corp.
--------------------------------------------------------
Dear Sirs:
The undersigned understands that Friedman, Billings, Xxxxxx & Co.,
Inc. ("FBR") and EVEREN Securities, Inc., as representatives on behalf of the
underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Ocwen Asset Investment Corp., a Virginia corporation (the
"Company") providing for the public offering (the "Offering") of shares of the
Company's common stock, par value $0.01 per share (the "Common Stock").
Simultaneously with the Offering, the undersigned will purchase 1,875,000 shares
of Common Stock (the "OFC Stock"). In recognition of the benefit that such an
offering will confer upon the undersigned, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Underwriting
Agreement that, during a period of two years from the date of the Underwriting
Agreement, the undersigned will not, without the prior written consent of FBR,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option for the sale of or otherwise transfer or dispose of, directly or
indirectly, any shares of OFC Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or file, or cause the Company to
file, any registration
2
statement under the Securities Act of 1933, as amended, with respect to any
of the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the OFC Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of OFC Stock or such other securities, in cash or otherwise.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Time (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated. In addition, the agreement set
forth above shall terminate if at any time the Company shall terminate the
Management Agreement dated as of __________, 1997 between the Company and Ocwen
Capital Corporation.
Very truly yours,
Ocwen Financial Corporation
By: _____________________
Name:
Title:
Exhibit B [Form of Opinion of Hunton & Xxxxxxxx]
April __, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
EVEREN SECURITIES, INC.
As Representatives of the
Underwriters Named in Schedule I
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 2209
Ocwen Asset Investment Corp.
Ladies and Gentlemen:
We have acted as counsel to Ocwen Asset Investment Corp., a
Virginia corporation (the "Company"), Ocwen Partnership, L.P., a
Virginia limited partnership (the "Operating Partnership"), Ocwen
General, Inc., a Virginia corporation (the "General Partner"),
Ocwen Limited, Inc., a Virginia corporation (the "Limited
Partner") and Ocwen Capital Corporation, a Florida corporation
(the "Manager") in connection with the issuance of sale by the
Company of 12,500,000 shares (the "Initial Shares") of its shares
of common stock, par value $.01 per share (the "Common Shares"),
and the consummation of certain transactions in connection
therewith. This opinion is being delivered to you pursuant to
Section 6(a) of the Underwriting Agreement dated as of April __,
1997 by and among the Company and you, as Representatives of the
several underwriters (the "Underwriting Agreement"). Capitalized
terms used but not otherwise defined herein shall have the
meanings assigned to those terms in the Underwriting Agreement
or, if not defined therein, in the Prospectus.
In this connection, we have examined the Company's registration
statement on Form S-11 (No. 333-21965),
filed on February 18, 1997 with the Securities and Exchange
Commission (the "Commission) under the Securities Act of 1933, as
amended (the "Securities Act"); (ii) Amendment No. 1 thereto
filed with the Commission on March 31, 1997; (iii) Amendment No.
2 thereto filed with the Commission on April __, 1997; [ and (iv)
Amendment No. 3 thereto filed with the Commission on April __,
1997] (such
April __,1997
Page 2
registration statement, at the time it was declared
effective by the Commission being herein referred to as the
"Registration Statement"); and (iv) the prospectus, dated April __, 1997
filed with the Commission under Rule 424(b) (the
"Prospectus"). We also have examined each of the following
documents:
(a) the Underwriting Agreement;
(b) the Limited Partnership Agreement of the Operating
Partnership, dated as of March 3, 1997 (the "Operating
Partnership Agreement"), together with the certificate of limited
partnership filed with the State Corporation Commission of
Virginia on March 3, 1997;
(c) the articles of incorporation and bylaws of each of the
Company, the General Partner, the Limited Partner (collectively
with the Manager, the "Corporations"), together with good
standing certificates with respect to each such entity;
(d) resolutions of each of the Corporations (other than the
Manager) pertaining to the subject transactions, certified by the
Secretary or Assistant Secretary of the respective entity;
(e) the form of certificate evidencing the Common Shares;
and
(f) the management agreement by and between the Company and
the Manager (the "Management Agreement").
For purposes of the opinions expressed below, we have
assumed (i) the authenticity of all documents submitted to us as
originals, (ii) the conformity to the originals of all documents
submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies, (iii) the
genuineness of signatures not witnessed by us, (iv) the legal
capacity of natural persons and (v) the due authorization,
execution and delivery of all documents by all parties and the
validity and enforceability thereof (other than the authorization,
execution and delivery of documents by the Corporations and the
Operating Partnership, and the validity and enforceability of such
documents upon the Corporations and the Operating Partnership,
as to which we express our opinion below).
As to factual matters, we have relied upon representations
included in the Underwriting Agreement and in documents delivered at
the closing, upon certificates of officers of the Corporations,
and upon certificates of public officials. Whenever the phrase
"to our knowledge" or "known to us" is used herein, it refers to
the actual knowledge of the attorneys of this firm involved in
the representation of the Corporations and the Operating
Partnership in connection with the transactions contemplated by
the Underwriting Agreement.
April __,1997
Page 3
The enforceability of the Management Agreement against the
parties thereto is subject to the provisions of bankruptcy,
insolvency, reorganization or moratorium laws or laws relating to
or affecting the rights of creditors generally and principles of
equity, whether considered at law or in equity. The opinion set
forth in Paragraph 12 is based in part upon no-action letters
issued by the staff of the Commission, which no-action letters
are not binding on the Commission. Accordingly, the opinion set
forth therein is subject to the ability of the Commission or its
staff to modify or narrow its interpretation of Section
3(c)(5)(C) of the Investment Company Act of 1940 with respect to
the Company at any time without notice or cure.
We do not purport to express an opinion on any laws other
than those of the States of Florida and Virginia, and the United
States of America. With respect to all matters of Florida law,
we have, with your consent, relied solely upon the opinion of
Xxxxx X. Xxxxx, Senior Counsel to Ocwen Financial Corporation, a
copy of which opinion has been delivered to you.
I.
Based upon, and subject to the foregoing and such other
documents and information as we have considered necessary for the
purposes hereof, we are of the opinion that:
1. Each of the Corporations (other than the Manager) has
been duly formed and is validly existing as a corporation in good
standing under the laws of the Commonwealth of Virginia, with
full corporate power and authority necessary to own its
properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Manager has been
duly formed and is validly existing as a corporation in good
standing under the laws of the State of Florida, with full
corporate power and authority necessary to own its properties and
to conduct its business as described in the Registration
Statement and the Prospectus.
2. The Operating Partnership has been duly formed and is
validly existing as a limited partnership under the laws of the
Commonwealth of Virginia, with full partnership power and
authority necessary to own its properties and to conduct its
business as described in the Registration Statement and the
Prospectus.
3. The Company has full corporate power and authority to
execute and deliver the Underwriting Agreement and Management
Agreement and the Manager has full corporate power and authority
to execute and deliver the Management Agreement. The Underwriting
Agreement has been duly and validly authorized, executed and
delivered by the Company. The Management Agreement has been duly
and validly authorized, executed and delivered by the Company and
the Manager, and constitutes a valid and binding agreement of each
of the Company and the Manager, enforceable in accordance with
its terms.
April __,1997
Page 4
4. The execution, delivery and performance of the
Underwriting Agreement and Management Agreement by the Company
and the consummation of the transactions contemplated thereby, do
not and will not conflict with, or result in a breach of, or
constitute a default under (or constitute any event which with
notice, lapse of time, or both, would constitute a breach of or
default under), (i) any provisions of the articles of
incorporation or bylaws of the Corporations or the Operating
Partnership Agreement, (ii) any provision of any license,
indenture, mortgage, deed of trust, bank loan, credit agreement
or other agreement or instrument known to us to which any of the
Corporations or the Operating Partnership is a party, or by which
their respective properties may be bound or affected, or (iii)
any federal or state law or regulation or any decree, judgment or
order known to us which is applicable to any of the Corporations
or the Operating Partnership, except with respect to clause (ii),
for such conflicts, breaches or defaults which individually or in
the aggregate would not have a material adverse effect on the
operations, business or condition of the Corporations and the
Operating Partnership, taken as a whole.
5. To our knowledge, neither any of the Corporations nor
the Operating Partnership is in breach of, or in default under
(nor has any event occurred which with notice, lapse of time, or
both, would constitute a breach of, or default under) any
license, indenture, mortgage, deed of trust, bank loan or credit
agreement or any other agreement or instrument known to us to
which any of the Corporations or the Operating Partnership is a
party, or by which their respective properties may be bound or
affected, or under any law, regulation or rule or any decree,
judgment or order known to us which is applicable to the Company,
except such breaches or defaults which would not have a material
adverse effect on the operations, business or condition of the
Corporations and the Operating Partnership, taken as a whole.
6. The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization," and
all of the issued shares of Common Stock (other than the Initial
Shares and the shares to be issued to Ocwen Financial Corporation
on the date hereof) have been duly and validly authorized and
issued and are fully paid and non-assessable.
7. The Initial Shares have been duly and validly
authorized and, when issued and delivered against payment
therefor as provided in the Underwriting Agreement, will be duly
and validly issued, fully paid and non-assessable. The terms of
the Common Shares conform in all material respects to the
statements and descriptions related thereto contained in the
Prospectus. The form of the certificates to be used to evidence
the Common Shares is in due and proper form and comply with all
applicable legal requirements, with any applicable requirements
of the articles of incorporation and by-laws of the Company and
the requirements of the NASDAQ National Market.
April __,1997
Page 5
8. To our knowledge, except as provided in the
Registration Rights Agreement, there are no persons with
registration or other similar rights to have any securities
registered pursuant to the Registration Statement, or otherwise
registered by the Company under the Securities Act.
9. No approval, authorization, consent or other order of
or filing with any federal or state governmental or regulatory
commission, board, body, authority or agency is required in
connection with the sale of the Initial Shares other than (i)
such as have been obtained under the Securities Act and the
Exchange Act, (ii) such approvals as have been obtained in
connection with the approval of the quotation of the Initial
Shares on the NASDAQ National Market and (iii) any necessary
qualification of the Initial Shares under the securities or blue
sky laws of the various jurisdictions in which the Initial Shares
are being offered by the Underwriters, as to which we express no
opinion.
10. The Registration Statement has been declared effective
under the Securities Act and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued and, to our knowledge, no proceeding for that purpose
is pending or threatened by the Commission.
11. The statements contained in the Prospectus under the
captions "Certain Provisions of Virginia Law and of OAIC's
Articles of Incorporation and Bylaws", "Description of Capital
Stock", "Federal Income Tax Considerations", "ERISA
Considerations" and "Operating Partnership Agreement," insofar as
those statements are descriptions of contracts, agreements or
other legal documents, or describe federal statutes, rules and
regulations, constitute a fair summary thereof.
12. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder. Section 3(c)(5)(C) of
the Investment Company Act provides an exception from the
definition of "investment company" for "any person...who is
primarily engaged in...purchasing or otherwise acquiring
mortgages and other liens on and interests in real estate." Rules
and regulations of the Commission and staff no-action letters
provide that a person is "primarily engaged" if at least 55% of
its assets consist of "mortgages and other liens on and interests
in real estate" and at least 25% of its total assets are invested
in real estate-related interests. The Company's acquisition,
either directly or through wholly-owned subsidiaries, of
Distressed Real Property or real property that is environmentally
distressed[, located outside the United States] or leased to a
third-party, will qualify as an "interest in real estate," as will
the acquisition or origination of the entire interest in a
Mortgage Loan secured by Real Property or the entire interest in
a pool of such Mortgage Loans. The Company's acquisition, either
directly or through wholly-owned subsidiaries, of various
Subordinated Interests
April __,1997
Page 6
or other classes of MBS, including IOs and
Inverse IOs, will not qualify for the 55% test (unless the
Company has a substantial interest and the unilateral right to
direct foreclosure actions with respect to the mortgage loans
underlying the MBS), but will qualify for the 25% test. The
Company has advised us that it intends to conduct its activities
in a manner that will satisfy the foregoing criteria and, assuming
that it does so, the Company will not be an "investment company"
or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
II.
We have participated in various conferences with the
officers and directors of the Company and its independent
certified public accountants. In some conferences you and your
counsel also participated. At those conferences, the contents of
the Registration Statement and Prospectus were discussed and
revised. Since the dates of those conferences, we have inquired
of certain officers whether there has been any material change in
the affairs of the Company.
Because of the inherent limitations in the independent
verification of factual matters, and the character of
determinations involved in the preparation of registration
statements under the Securities Act, we are not passing upon, and
do not assume any responsibility for, and make no representation
that we have independently verified the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Prospectus, except as specifically set forth in
paragraph 11 of Part I of our opinion above. Also, we do not
express any opinion or belief as to the financial statements or
other financial or statistical information contained or
incorporated by reference into the Registration Statement.
However, subject to the foregoing, on the basis of our
participation in the conferences referred to above and our
examination of the documents referred to herein, we advise you
that: (a) in our opinion, the Registration Statement, when it
became effective, and the Prospectus, as of its date and as of
the date hereof (other than the financial statements, schedules
and other financial data included therein or excluded therefrom
or included in or excluded from the exhibits to the Registration
Statement, as to which we express no opinion) comply as to form
in all material respects with the requirements of the Securities
Act and the rules and regulations promulgated thereunder; (b) we
do not know of any contracts or documents of a character required
to be described in the Registration Statement or Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required; and (c) we do not know of any
actions, suits or proceedings pending or threatened against the
Corporations or the Operating Partnership or any of their
respective properties, at law or in equity or before or by any
commission board, body, authority or agency which are required to
be described in the Prospectus but are not so described.
Further, nothing has come to our attention that leads us to
believe that the Registration Statement, when it became
effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
April __,1997
Page 7
therein or necessary to make the statements therein not misleading; or that
the Prospectus, as of its date and as of the date hereof, contained or
contains any untrue statement of a material fact or omitted or omits to state
any 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; except that we make no statement with respect to the financial
statements or other financial or statistical data included therein.
We consent to reliance by you upon our opinion delivered to
the Company and filed as Exhibit 5.1 to the Registration
Statement. This opinion letter may not be relied upon by, nor
may copies be delivered to, any person without our prior written
consent. We do not undertake to advise you of any changes in the
opinions expressed herein from matters that might hereafter arise or
be brought to our attention.
Very truly yours,
