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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FBR ASSET INVESTMENT CORPORATION
------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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(Title of Class of Securities)
30241E303
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(CUSIP Number)
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WILLIAM GINIVAN, ESQ.
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
1001 NINETEENTH STREET NORTH
ARLINGTON, VIRGINIA 22209
(703) 312-9500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
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NOVEMBER 14, 2002
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(Date of Event Which Requires Filing of This
Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: |X|.
Page 1 of 20 Pages
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CUSIP No. 30241E303 Page 2 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
I.R.S. IDENTIFICATION NO. 54-1837743
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
VIRGINIA
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NUMBER OF 7
SOLE VOTING POWER
SHARES 2,844,700
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY -0-
----------------------------------------------------------------
EACH
9
REPORTING SOLE DISPOSITIVE POWER
2,844,700
PERSON WITH ----------------------------------------------------------------
10
SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,844,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.35%
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14 TYPE OF REPORTING PERSON*
HC
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CUSIP No. 30241E303 Page 3 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ORKNEY HOLDINGS, INC., A WHOLLY OWNED SUBSIDIARY OF
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
I.R.S. INDENTIFICATION NO. 51-0381410
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7
SOLE VOTING POWER
SHARES 1,784,195
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 1,060,205
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EACH 9
SOLE DISPOSITIVE POWER
REPORTING 1,784,195
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PERSON WITH 10
SHARED DISPOSITIVE POWER
1,060,205
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,844,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.35%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP No. 30241E303 Page 4 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
FRIEDMAN, BILLINGS, RAMSEY INVESTMENT MANAGEMENT, INC., A WHOLLY
OWNED SUBSIDIARY OF FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
I.R.S. INDENTIFICATION NO. 52-170813
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7
SOLE VOTING POWER
SHARES 815,505
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 2,029,195
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EACH 9
SOLE DISPOSITIVE POWER
REPORTING 815,505
----------------------------------------------------------------
PERSON WITH 10
SHARED DISPOSITIVE POWER
2,029,195
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,844,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.35%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP No. 30241E303 Page 5 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
FBR WESTON, LIMITED PARTNERSHIP
I.R.S. INDENTIFICATION NO. 52-1709381
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND
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NUMBER OF 7
SOLE VOTING POWER
SHARES 244,700
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 2,600,000
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EACH 9
SOLE DISPOSITIVE POWER
REPORTING 244,700
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PERSON WITH 10
SHARED DISPOSITIVE POWER
2,600,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,844,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.35%
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14 TYPE OF REPORTING PERSON
PN
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CUSIP No. 30241E303 Page 6 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ERIC F. BILLINGS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7
SOLE VOTING POWER
SHARES 11,900
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 2,844,700
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EACH 9
SOLE DISPOSITIVE POWER
REPORTING 11,900
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PERSON WITH 10
SHARED DISPOSITIVE POWER
2,844,700
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,856,600
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.40%
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14 TYPE OF REPORTING PERSON
IN
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CUSIP No. 30241E303 Page 7 of 20 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
EMANUEL J. FRIEDMAN
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7
SOLE VOTING POWER
SHARES 5,000
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BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 2,844,700
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EACH 9
SOLE DISPOSITIVE POWER
REPORTING 5,000
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PERSON WITH 10
SHARED DISPOSITIVE POWER
2,844,700
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,849,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.37%
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14 TYPE OF REPORTING PERSON
IN
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CUSIP No. 30241E303 Page 8 of 20 Pages
ITEM 1. SECURITY AND ISSUER.
--------------------
This statement on Schedule 13D relates to common shares, par value
$0.01 (the "Shares"), of FBR Asset Investment Corporation, a Virginia
corporation (the "Company"), and is being filed pursuant to Rule 13d-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The principal
executive offices of the Company are located at 1001 Nineteenth Street North,
Arlington, Virginia 22209.
ITEM 2. IDENTITY AND BACKGROUND.
------------------------
This Schedule 13D is being filed by Friedman, Billings, Ramsey
Group, Inc., a Virginia corporation ("FBR Group"), Friedman, Billings, Ramsey
Investment Management, Inc. ("FBRIM"), a Delaware corporation, FBR Weston,
Limited Partnership ("Weston"), a Maryland limited partnership, Orkney Holdings,
Inc., a Delaware business trust ("Orkney"), and individuals Eric F. Billings and
Emanuel J. Friedman (together with FBR Group, FBRIM, Weston and Orkney the
"Reporting Persons"). Certain Reporting Persons have previously filed a
Schedule 13G pursuant to Rule 13d-1 under the Exchange Act, dated September 13,
1999, as amended by Amendment No. 1, dated December 31, 2000, Amendment No. 2,
dated April 30, 2001, Amendment No. 3, dated August 31, 2001, Amendment No. 4,
dated December 31, 2000, Amendment No. 5, dated June 30, 2002, and Amendment
No. 6, dated August 30, 2002, with respect to the Shares.
FBR Group's principal business is that of a financial holding
company for businesses that provide investment banking, institutional brokerage,
specialized asset management, and banking products and services. The principal
business address and the address of the principal office of FBR Group is 1001
Nineteenth Street North, Arlington, Virginia 22209. The name, business address,
present principal occupation or employment and citizenship of each director and
executive officer of FBR Group is set forth in Appendix A hereto and is
incorporated herein by reference.
Orkney's principal business is that of holding Shares and certain
other assets. The principal business address and the address of the principal
office of Orkney is 300 Delaware Avenue, Suite 550, Wilmington, Delaware 19801.
The name, business address, present principal occupation or employment and
citizenship of each director and executive officer of Orkney is set forth in
Appendix B hereto and is incorporated herein by reference.
FBRIM's principal business is that of a registered investment
advisor. The principal business address and the address of FBRIM's principal
office is 1001 19th Street North, Arlington, Virginia 22206. The name, business
address, present principal occupation or employment and citizenship of each
director and executive officer of FBRIM is set forth in Appendix C hereto and is
incorporated herein by reference.
Weston's principal business is that of purchasing, selling and
otherwise investing in securities. The principal business address and address
of Weston's principal office is 1001 19th Street North, Arlington, Virginia
22206. The name, business address, present principal occupation or employment
and citizenship of each director and executive officer of Weston is set forth in
Appendix D hereto and is incorporated herein by reference.
Mr. Friedman is the Chairman and Co-Chief Executive Officer of
FBR Group. Mr. Billings is the Vice Chairman and Co-Chief Executive Officer
of FBR Group. The business address for each of Messrs. Friedman and Billings
is c/o Friedman, Billings, Ramsey Group, Inc., 1001 Nineteenth Street North,
Arlington, Virginia 22209. Each of Messrs. Friedman and Billings is a
citizen of the United States of America.
During the last five years, none of the Reporting Persons, or, to
the knowledge of the Reporting Persons, any of the persons listed on Appendix A,
Appendix B, Appendix C, or Appendix D hereto, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been party to a proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining
CUSIP No. 30241E303 Page 9 of 20 Pages
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
The information contained in Items 4, 5 and 6 is hereby incorporated
by reference herein.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
On November 14, 2002, the Company, FBR Group and Forest Merger
Corporation, a Virginia corporation ("Newco") entered into an Agreement and Plan
of Merger (the "Merger Agreement"), whereby, on the terms and subject to the
conditions stated therein, the Company will merge with and into Newco (the
"Company Merger"), with Newco continuing as the surviving corporation, and,
immediately following the Company Merger, FBR Group will merge with and into
Newco (the "FBR Group Merger" and, together with the Company Merger, the
"Mergers"), with Newco continuing as the surviving corporation. In the Company
Merger, each issued and outstanding Share will be converted into the right to
receive 3.65 shares of Class A common stock, par value $0.01, of Newco ("Newco
Class A Common Stock") and cash in lieu of fractional shares. In the FBR Group
Merger, each issued and outstanding share of Class A common stock, par value
$0.01, of FBR Group ("FBR Group Class A Shares") will be converted into the
right to receive one share of Newco Class A Common Stock, and each issued and
outstanding share of Class B common stock, par value $0.01, of FBR Group ("FBR
Group Class B Shares") will be converted into the right to receive one share of
Class B common stock, par value $0.01, of Newco.
As a result of the Mergers, both the Shares and the FBR Group Class
A Shares will cease to be publicly traded or listed, and Newco, as the surviving
corporation, will be the successor issuer to FBR Group for New York Stock
Exchange and Securities and Exchange Commission purposes. Under the terms of the
Merger Agreement, Newco, the surviving corporation to the Mergers, will elect to
be treated as a real estate investment trust ("REIT") for federal income tax
purposes.
The Merger Agreement provides that the initial board of directors of
Newco, as the surviving corporation to the Mergers, will include three current
independent directors of the Company (the "Continuing Directors"), and that,
subject to the requirements of applicable law and of any applicable self
regulatory organization, the Continuing Directors will be included in the
management slate of nominees for election to the board of directors of Newco at
the 2003 annual meeting of Newco shareholders. Messrs. Friedman and Billings
have entered into Shareholder Agreements pursuant to which they have agreed to
vote in favor of the election of the Continuing Directors to the Newco Board of
Directors at the 2003 annual meeting of Newco shareholders. The Shareholder
Agreements also contain provisions regarding the sale or transfer of Messrs.
Friedman's and Messrs. Billings's Shares.
CUSIP No. 30241E303 Page 10 of 20 Pages
The closing of the Mergers is conditioned upon approval of the
stockholders of both the Company and FBR Group as well as the receipt of all
regulatory approvals, and other customary conditions as described in the Merger
Agreement. If FBR Group's average stock price for the ten trading days prior to
the shareholder meeting is less that $8.75 per share, the Company may terminate
the merger, and FBR Group may terminate if that average stock price is greater
than $10.55.
Each of Messrs. Friedman and Billings has entered into a Voting
Agreement pursuant to which he has agreed to vote his FBR Group Class A Shares
and FBR Group Class B Shares in favor of the Mergers, unless the Merger
Agreement is terminated pursuant to its terms.
The preceding summaries of certain provisions of the Merger
Agreement, Shareholder Agreements and Voting Agreements are not intended to be
complete and are qualified in their entirety by reference to the full text of
such agreements. The Merger Agreement is attached as Exhibit 1 hereto, and is
incorporated herein by reference. The Shareholder Agreement and the Voting
Agreement of Mr. Friedman are attached hereto as Exhibits 2 and 3, respectively,
and are incorporated herein by reference. The Shareholder Agreement and the
Voting Agreement of Mr. Billings are attached hereto as Exhibits 4 and 5,
respectively, and are incorporated herein by reference.
The Reporting Persons believes that the Shares may be an attractive
investment opportunity, and, as such, and in no event earlier than 10 days
following the filing of this Schedule 13D, the Reporting Persons may, subject to
all appropriate legal requirements, acquire additional Shares on the open
market, in block trades or otherwise; provided that the Reporting Persons shall
not acquire more Shares than they are allowed to acquire or own by law or under
the Amended and Restated Articles of Incorporation of the Company.
* * * *
Except as set forth herein or otherwise relating to integration in
connection with the Mergers, none of the Reporting Persons or, to the knowledge
of the Reporting Persons, any of the persons listed in Appendix A, Appendix B,
Appendix C, or Appendix D hereto, has any plans or proposals which relate to or
would result in: (a) the acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (d) any change in the present Board of Directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g) any
changes in the Company's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person; (h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities ofthe Company becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any
action
CUSIP No. 30241E303 Page 11 of 20 Pages
similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
As of November 14, 2002, each of FBR Group, Orkney, FBRIM and Weston
may be deemed to beneficially own 2,844,700 Shares, representing 11.35% of the
outstanding Shares based on 25,054,332 Shares outstanding as of June 30, 2002,
as set forth in the Company's Form 10-Q for the quarter ended September 30,
2002.
As of November 14, 2002, Mr. Friedman directly beneficially owns
5,000 Shares, and may be deemed to beneficially own a total of 2,849,700 Shares
through his ownership of capital stock of FBR Group, representing 11.37% of the
outstanding Shares based on 25,054,332 Shares outstanding as of June 30, 2002,
as set forth in the Company's Form 10-Q for the quarter ended September 30,
2002.
As of November 14, 2002, Mr. Billings directly beneficially owns
11,900 Shares, and may be deemed to beneficially own an additional 2,856,600
Shares through his ownership of capital stock of FBR Group, representing 11.40%
of the outstanding Shares based on 25,054,332 Shares outstanding as of June 30,
2002, as set forth in the Company's Form 10-Q for the quarter ended September
30, 2002.
The Reporting Persons may be deemed to have shared voting power and
shared dispositive power over 2,844,700 Shares. FBR Group has sole voting power
and sole dispositive power over 2,844,700 Shares. FBRIM has sole voting power
and sole dispositive power over 815,505 Shares and shared voting power and
shared dsipositive power over 2,029,195 Shares. Weston has sole voting power and
sole dispositive power over 244,700 Shares and shared voting power and shared
dispositive power over 2,600,000 Shares. Orkney has sole voting power and sole
dispositive power over 1,784,195 Shares, and shared voting power and Orkney has
sole voting power and sole dispositive power over 1,784,195 Shares, and shared
voting power and shared dispositive power over 1,060,205 Shares. Mr. Friedman
has sole voting power and sole dispositive power over 5,000 Shares. Mr. Billings
has sole voting power and sole dispositive power over 11,900 Shares. Except as
set forth in this Item 5, no person other than each respective owner referred to
herein of the Shares is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
Shares.
Except as set forth in Item 4, none of the Reporting Persons or, to
the knowledge of the Reporting Persons, any of the persons listed in Appendix A,
Appendix B, Appendix C, or Appendix D hereto, has effected any transactions in
the Shares during the sixty days preceding the date of this report.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
-------------------------------------------------------------
RESPECT TO SECURITIES OF THE ISSUER.
------------------------------------
The information contained in Items 4 and 5 is hereby incorporated by
reference herein.
Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the
Reporting Persons have entered into an agreement on November 14, 2002, with
respect to the joint filing of this statement and any amendment or amendments
hereto (the "Joint Filing Agreement"). The Joint Filing Agreement is attached as
Exhibit 7 hereto and incorporated herein by reference.
CUSIP No. 30241E303 Page 12 of 20 Pages
The Company was created by FBR Group in 1997 and has been managed by
FBR Group since its creation through a management agreement with one of FBR
Group's investment adviser subsidiaries. At December 31, 2001, FBR Group held a
long-term investment in the Company representing 20.82% of the Company's equity.
FBR Group's long-term investment was 11.35% as of September 30, 2002, as a
result of dilution by three follow-on offerings by the Company in January, April
and June 2002. In addition, as of September 30, 2002, FBR Weston, Limited
Partnership, a hedge fund managed by a subsidiary of FBR Group and an affiliate
of the Company, held shares representing 0.98% of the Company's equity. Mr.
Billings, FBR Group's Vice Chairman and Co-Chief Executive Officer, also serves
as the Chairman and Chief Executive Officer of the Company. Mr. Friedman, FBR
Group's Chairman and Co-Chief Executive Officer, is a director of the Company.
Certain other officers of FBR Group are officers and directors of the Company.
FBR Group's principal broker-dealer subsidiary, Friedman, Billings,
Ramsey & Co., Inc. ("FBRC") has entered into an agreement with the Company,
regarding the Company's extension of credit to or investment in entities that
are or may be FBRC investment banking clients. The agreement provides that in
circumstances where FBRC determines that a commitment to make an extension of
credit to, or an investment in, an entity (each an "investment opportunity") by
the Company would facilitate a possible investment banking transaction, FBRC
presents the investment opportunity to the Company. The Investment Committee of
the Company reviews each investment opportunity and recommends whether or not to
make a loan or an investment based on its investment criteria. If recommended by
the Investment Committee, the Contracts Committee of the Company's Board of
Directors' (the three members of which are outside, independent directors of the
Company) reviews the investment opportunity and decides on the basis of the
Investment Committee's recommendation whether or not the investment opportunity
is appropriate. If the Company makes a determination to commit to making an
extension of credit or an investment, the commitment is not contingent on FBRC
being engaged to provide investment banking services. If, however, FBRC is
engaged to provide investment banking services, the Company's wholly owned
broker-dealer subsidiary will act as a financial advisor to FBRC in connection
with structuring the transaction and in return for its services it will receive
10% of the net cash investment banking fees received by FBRC for the engagement.
In 2001, pursuant to this agreement, the Company received $2.9 million in fees
from FBRC from three investment banking transactions and one commitment to a
loan that was ultimately unfunded. During the first three quarters of 2002,
ending September 30, 2002, the Company earned $5.9 million in fees from FBRC in
connection with four investment banking transactions. In FBRC investment banking
transactions in which the Company purchases securities, the Company purchases
the securities net of the underwriting discount or private placement fee
normally paid to FBRC. In 2001, the Company purchased securities in three
transactions for an aggregate price of $23.1 million. During the first three
quarters of 2002, ending September 30, 2002, the Company purchased securities in
three transactions for an aggregate price of $74.8 million.
FBR Group's management agreement with the Company currently provides
that FBR Group will receive base management fees of 0.25% per annum (0.20% per
annum beginning May 1, 2002) based on the value of mortgage related assets and
0.75% per annum based on the value of all other invested assets. For the years
ended December 31, 2001 and
CUSIP No. 30241E303 Page 13 of 20 Pages
2000, FBR Group received base management fees of $1.8 million and $1.1 million
respectively. In addition, FBR Group is entitled to receive incentive fees based
on performance above a benchmark. For the year ended December 31, 2001, FBR
Group received incentive fees of $1.7 million. During the first three quarters
of 2002, ending September 30, 2002, FBR Group received inventive fees of $8.7
million.
In connection with the execution of the Merger Agreement, the
Company and Friedman, Billings, Ramsey Investment Management, Inc., a wholly
owned subsidiary of FBR Group (the "Manager"), entered into an agreement, dated
as of November 14, 2002, to extend the management agreement for a one-year term
beginning on December 17, 2002 (the "Extension Agreement"). The Extension
Agreement provides that in the event that the Merger Agreement is terminated for
any reason by any party thereto, the Company shall have the right to terminate
the management agreement without penalty upon 60 days prior written notice to
the Manager. Upon consummation of the Mergers, the management agreement will
terminate automatically. The Extension Agreement is attached hereto as Exhibit
6, and incorporated herein by reference.
FBR Group accounts for its equity interest in the Company under the
equity method and for the years ended December 31, 2001 and 2000 and the three
quarters ended September 30, 2002, recorded $4.3 million, $7.1 million and $16.8
million, respectively, of net investment income for its proportionate share of
the Company's net income for those periods.
Except as referred to above, or described in Item 4 hereof, there
are no contracts, arrangements, understandings or relationships among the
persons named in Item 2 or between such persons and any other person with
respect to any securities of the Company.
CUSIP No. 30241E303 Page 14 of 20 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
1. Agreement and Plan of Merger, dated as of November 14, 2002, by and
among Friedman, Billings, Ramsey Group, Inc., FBR Asset
Investment Corporation and Forest Merger Corporation.
2. Shareholder Agreement, dated November 14, 2002, of Emanuel Friedman.
3. Voting Agreement, dated as of November 14, 2002, by and between FBR
Asset Investment Corporation and Emanuel J. Friedman.
4. Shareholder Agreement, dated November 14, 2002, of Eric Billings.
5. Voting Agreement, dated as of November 14, 2002, by and between FBR
Asset Investment Corporation and Eric F. Billings.
6. Agreement to Extend Management Agreement, dated as of November 14,
2002, by and between FBR Asset Investment Corporation and Friedman,
Billings, Ramsey Investment Management, Inc.
7. Joint Filing Agreement, dated November 14, 2002.
CUSIP No. 30241E303 Page 15 of 20 Pages
SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
FRIEDMAN, BILLING, RAMSEY GROUP, INC.
Dated: November 14, 2002 By: /s/ Emanuel J. Friedman
------------------------
Name: Emanuel J. Friedman
Title: Chairman
ORKNEY HOLDINGS, INC.
Dated: November 14, 2002 By: /s/ Kurt R. Harrington
-----------------------
Name: Kurt R. Harrington
Title: President
FRIEDMAN, BILLINGS, RAMSEY INVESTMENT
MANAGEMENT, INC.
Dated: November 14, 2002 By: /s/ Eric Billings
-----------------------
Name: Eric Billings
Title: Vice Chairman and Co-Chief
Executive Officer
FBR WESTON, LIMITED PARTNERSHIP
by Friedman, Billings, Ramsey Investment
Management, Inc., its General Partner
Dated: November 14, 2002 By: /s/ Eric Billings
-----------------------
Name: Eric Billings
Title: Vice Chairman and Co-Chief
Executive Officer
Dated: November 14, 2002 /s/ Eric. F. Billings
---------------------
Eric F. Billings
Dated: November 14, 2002 /s/ Emanuel J. Friedman
-----------------------
Emanuel J. Friedman
CUSIP No. 30241E303 Page 16 of 20 Pages
APPENDIX A
----------
The name and present principal occupation of each director and
executive officer of Friedman, Billings, Ramsey Group, Inc. are set forth below.
The business address for each person listed below is c/o Friedman, Billings,
Ramsey Group, Inc., 1001 Nineteenth Street North, Arlington, Virginia 22209. All
executive officers and directors listed on this Appendix A are United States
citizens.
Name Title
---- -----
Emanuel J. Friedman Director, Chairman and Co-Chief Executive
Officer
Eric F. Billings Director, Vice Chairman and Co-Chief
Executive Officer
Daniel J. Altobello Director
Former Chairman of Onex Food Services, Inc.
W. Russell Ramsey Director
Found and Managing General Partner of Capital
Crossover Partners, LP
Wallace L. Timmeny Director
Partner, Dechert
John T. Wall Director
Former President of Nasdaq International, Ltd.
Robert S. Smith Chief Operating Officer
Kurt R. Harrington Chief Financial Officer
CUSIP No. 30241E303 Page 17 of 20 Pages
APPENDIX B
----------
The name and present principal occupation of each director and
executive officer of Orkney Holdings, Inc. are set forth below. The business
address for each person listed below is Orkney Holdings, Inc., c/o Orkney
Holdings, Inc., 300 Delaware Avenue, Suite 550, Wilmington, Delaware 19801.
All executive officers and directors listed on this Appendix B are United
States citizens.
Name Title
---- -----
Kurt R. Harrington Director, President and Treasurer
John M. Blassingame, Jr. Director, Vice President
Kari L. Johnson Director, Corporate Secretary
Andrew T. Panaccione Assistant Treasurer
CUSIP No. 30241E303 Page 18 of 20 Pages
APPENDIX C
----------
The name and present principal occupation of each director and
executive officer of Friedman, Billings, Ramsey Investment Management, Inc. are
set forth below. The business address for each person listed below is Friedman,
Billings, Ramsey Investment Management, Inc., c/o Friedman, Billings, Ramsey
Investment Management, Inc., 1001 19th Street North, Arlington, Virginia 22206.
All executive officers and directors listed on this Appendix C are United States
citizens.
Name Title
---- -----
Emanuel J. Friedman Director, Chairman and Co-Chief Executive Officer
Eric F. Billings Vice Chairman and Co-Chief Executive Officer
Robert S. Smith Chief Operating Officer
Sothara Chin Chief Compliance Officer
Kurt R. Harrington Chief Financial Officer and Treasurer
William J. Ginivan General Counsel
Cathy Sigalas Corporate Secretary
CUSIP No. 30241E303 Page 19 of 20 Pages
APPENDIX D
----------
The name of the general partner of FBR Weston, Limited Partnership
is Friedman, Billings, Ramsey Investment Management, Inc. The business address
for the general partner is FBR Weston, Limited Partnership, c/o FBR Weston,
Limited partnership, 1001 19th Street North, Arlington, Virginia 22206. The
information included in Appendix C hereto is incorporated by reference herein.
CUSIP No. 30241E303 Page 20 of 20 Pages
INDEX OF EXHIBITS
1. Agreement and Plan of Merger, dated as of November 14, 2002, by and
among Friedman, Billings, Ramsey Group, Inc., FBR Asset Investment
Corporation and Forest Merger Corporation.
2. Shareholder Agreement, dated November 14, 2002, of Emanuel Friedman.
3. Voting Agreement, dated as of November 14, 2002, by and between FBR
Asset Investment Corporation and Emanuel J. Friedman.
4. Shareholder Agreement, dated November 14, 2002, of Eric Billings.
5. Voting Agreement, dated as of November 14, 2002, by and between FBR
Asset Investment Corporation and Eric F. Billings.
6. Agreement to Extend Management Agreement, dated as of November 14, 2002,
by and between FBR Asset Investment Corporation and Friedman, Billings,
Ramsey Investment Management, Inc.
7. Joint Filing Agreement, dated November 14, 2002.