SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
THE WMF GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
929289106
(CUSIP Number)
James M. Better Drake S. Tempest, Esq.
Capricorn Investors II, L.P. O'Melveny & Myers LLP
c/o Capricorn Holdings, LLC The Citicorp Center
30 East Elm Street 153 East 53rd Street, 54th Floor
Greenwich, Connecticut 06830 New York, New York 10022-4611
(203) 861-6600 (212) 326-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
NOVEMBER 17, 1997
-----------------------------------------------------------
(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 which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
- -------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("ACT") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, SEE
the NOTES).
CUSIP Number 929289106
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capricorn Investors, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 421,844
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
----------------------------------
10 SHARED DISPOSITIVE POWER
421,844
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
421,844
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 2 of 15 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capricorn Holdings, G.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES ----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 421,844
EACH REPORT- ----------------------------------
ING PERSON 9 SOLE DISPOSITIVE POWER
WITH
----------------------------------
10 SHARED DISPOSITIVE POWER
421,844
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
421,844
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 3 of 15 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Winokur Holdings, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 421,844
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
----------------------------------
10 SHARED DISPOSITIVE POWER
421,844
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
421,844
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9*%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 4 of 15 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capricorn Investors II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 546,448
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
----------------------------------
10 SHARED DISPOSITIVE POWER
546,448
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
546,448
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.5%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 5 of 15 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capricorn Holdings, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 546,448
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
----------------------------------
10 SHARED DISPOSITIVE POWER
546,448
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
546,448
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.5%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 6 of 15 Pages
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Herbert S. Winokur, Jr.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH REPORT- 968,292
ING PERSON ----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
----------------------------------
10 SHARED DISPOSITIVE POWER
968,292
----------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
968,292
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.3%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
- --------
* Assumes 4,763,926 shares of Common Stock issued and outstanding, comprised of
(i) 4,217,478 shares of Common Stock issued and outstanding on November 17, 1997
and (ii) 546,448 shares of Common Stock to be purchased by Capricorn Investors
II, L.P. pursuant to the Purchase Agreement (as defined below).
Page 7 of 15 Pages
<PAGE>
ITEM 1. SECURITY AND THE ISSUER
The title of the class of equity securities to which this
statement relates is:
Common Stock, $.01 par value ("COMMON STOCK"), of
The WMF Group, Ltd., a Delaware corporation (the
"COMPANY")
The name of the issuer and address of its principal executive
offices are:
The WMF Group, Ltd.
1593 Spring Hill Road
Suite 400
Vienna, Virginia 22182
(703) 610-1400
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of Capricorn Investors,
L.P., a Delaware limited partnership ("CAPRICORN I"), Capricorn Holdings, G.P.,
a Delaware general partnership and the general partner of Capricorn I
("CAPRICORN HOLDINGS, G.P."), Winokur Holdings, Inc., a Delaware corporation
that holds an approximately 95% interest in Capricorn Holdings, G.P. ("WINOKUR
HOLDINGS"), and Herbert S. Winokur, Jr., the sole shareholder, director and
executive officer of Winokur Holdings ("WINOKUR"). Winokur may be deemed to
control Capricorn I, Capricorn Holdings, G.P. and Winokur Holdings,
respectively.
This statement is also filed on behalf of Capricorn Investors
II, L.P., a Delaware limited partnership ("CAPRICORN II"), Capricorn Holdings,
LLC, a Delaware limited liability company and sole general partner of Capricorn
II ("CAPRICORN HOLDINGS, LLC"), and Winokur, the manager of Capricorn Holdings.
Winokur may be deemed to control Capricorn II and Capricorn Holdings,
respectively.
The principal business address of the reporting persons is 30
East Elm Street, Greenwich, Connecticut 06830. Winokur is a citizen of the
United States of America.
During the past five years, none of the reporting persons has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or has been a party to a civil 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 future
violations of, or prohibiting or
Page 8 of 15 Pages
<PAGE>
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Capricorn I is principally engaged making equity and debt
investments in, and controlling or otherwise influencing the operations of,
other companies, currently including companies involved in the provision of
engineering, scientific, technology, management and technical support to United
States and foreign government agencies and commercial clients, the ownership and
operation of multi-family rental housing in the Unites States, the design and
fabrication of oil field processing equipment and systems for domestic and
international oil and gas industry and the manufacture of wire screens and
related machinery for mining.
Capricorn II is principally engaged in making equity and debt
investments in, and controlling or otherwise influencing the operations of,
other companies, currently including companies involved in the manufacture of
adult incontinence products, the license and sale of branded baked goods and the
design and fabrication of oil field processing equipment and systems for
domestic and international oil and gas industry.
The reporting persons do not constitute, and are not filing
this statement, as a "group" within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934 (the "EXCHANGE ACT"), except that Capricorn I,
Capricorn Holdings, G.P., Winokur Holdings and Winokur may be deemed to be a
group with respect to the shares of Common Stock expected to be acquired by
Capricorn I pursuant to the Share Distribution (as defined in Item 4 below). For
purposes of Section 13(d) of the Exchange Act, each reporting person disclaims
beneficial ownership of shares of Common Stock beneficially owned by any other
reporting person, except that none of Capricorn Holdings, G.P., Winokur Holdings
and Winokur disclaim beneficial ownership of shares of Common Stock beneficially
owned by any other of such persons.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Capricorn I will acquire 421,844 shares of Common Stock in the
Share Distribution without the payment of any consideration.
Capricorn II has agreed to purchase 546,448 shares of Common
Stock at a purchase price of $9.15 per share, or $5,000,000 in the aggregate.
The funds will be provided by capital contributed to Capricorn II by its
partners.
Page 9 of 15 Pages
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION
On May 9, 1997, NHP Incorporated, a Delaware corporation
("NHP"), distributed to each holder of record of NHP Common Stock of NHP ("NHP
COMMON STOCK") at the close of business on May 2, 1997, one right (a "RIGHT")
for each outstanding share of NHP Common Stock (the "RIGHTS DISTRIBUTION"). Each
Right entitles the holder to receive from the Company, or any successor thereof,
a distribution (the "SHARE DISTRIBUTION" and, with the Rights Distribution, the
"DISTRIBUTION") of one-third of a share of Common Stock, subject to the terms of
a Rights Agreement (as amended, the "RIGHTS AGREEMENT") between NHP, the Company
and the First National Bank of Boston, as Rights Agent. The Rights distributed
on May 9, 1997 are evidenced by the certificates of NHP Common Stock then
outstanding. Subject to certain conditions, the rights will mature and NHP will
distribute shares of Common Stock at the effective time of the Merger
contemplated by an Amended and Restated Agreement and Plan of Merger dated as of
April 21, 1997, and amended as of October 14, 1997, among Apartment Investment
and Management Company ("AIMCO"), AIMCO/NHP Acquisition Corp., a wholly-owned
subsidiary of AIMCO, and NHP (such time being referred to as the "MATURITY
TIME"). The Maturity Time is currently scheduled to occur on December 8, 1997.
Pursuant to the Rights Agreement, NHP will distribute all of
the issued and outstanding shares of the Common Stock held by NHP to holders of
Rights as governed by the Rights Agreement. NHP Stockholders will receive cash
in respect of fractional shares of Common Stock that would otherwise be
distributed at the rate of $9.15 per share Of Company Common Stock. The NHP
stockholders will not be required to pay any consideration for the shares of
Common Stock they receive in the Share Distribution.
Capricorn I will acquire 421,844 shares of Common Stock in the
Share Distribution. It intends to distribute all such shares to its partners
promptly after the Share Distribution. Winokur Holdings, as a general partner of
Capricorn Holdings, G.P., which is the general partner of Capricorn I, is
expected to receive 78,925 shares of Common Stock in such distribution.
The Company and Capricorn II entered into a Share Purchase
Agreement dated as of November 17, 1997 (in the form attached hereto as Exhibit
1, the "PURCHASE AGREEMENT"), pursuant to which Capricorn II has the right and
obligation to acquire 546,448 shares of Common Stock at a purchase price,
payable in cash, of $9.15 per Share, or $5,000,000 in the aggregate (the
"ACQUISITION"). The closing of the Acquisition is expected to occur promptly
following the consummation of the Distribution. The respective obligations
Page 10 of 15 Pages
<PAGE>
of the Company and Capricorn II are subject to the satisfaction of conditions
specified in the Purchase Agreement. Reference is made to the Purchase Agreement
for a complete statement of the terms thereof.
The Company and Capricorn II entered into a letter agreement
dated April 21, 1997 (in the form attached hereto as Exhibit 2, the "COMMITMENT
LETTER"), pursuant to which Capricorn II agreed as follows:
(a) if (i) Capricorn II acquires shares of Common Stock in
accordance with the Commitment Letter, (ii) at any time prior
to the first anniversary of the Share Distribution Capricorn
II and its Affiliates (as defined in Rule 144(a) under the
Securities Act of 1933, as amended; provided that for purposes
of the Commitment Letter, Capricorn I shall not be deemed an
"Affiliate" of Capricorn II) collectively own more than 20% of
the shares of Common Stock then outstanding and (iii) at such
time no other person or Group (as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) shall own
a number of shares of the Company that is greater than the
number of shares of Common Stock then owned by Capricorn II
and its Affiliates, then neither Capricorn II nor any such
Affiliate (each, a "STOCKHOLDER") shall transfer or agree to
transfer, in one or a series of related transactions
concluding prior to the first anniversary of the Share
Distribution, a number of shares equal to more than 50% of the
shares of Common Stock then owned by the Stockholders (a
"TRANSACTION"), without first requiring as a condition to any
such transaction (which condition such Stockholder may not
waive or amend) the person or Group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended)
acquiring shares from a Stockholder in a Transaction (the
"ACQUIROR") to either:
(i) commence a tender or exchange offer to all
stockholders of the Company offering to purchase the
shares of Common Stock held by all such stockholders
on substantially the terms and conditions offered to
such Stockholder; provided that the Acquiror may
offer to purchase less than all shares issued and
outstanding as long as the offer is for not less than
the number of shares that the Acquiror originally
offered to purchase from such Stockholder and the
Acquiror purchases from each person (including the
Stockholder) accepting the offer a pro rata portion
of the
Page 11 of 15 Pages
<PAGE>
shares with respect to which the offer is accepted,
or
(ii) propose a merger, consolidation or other business
combination involving the Company in which each
stockholder would be entitled, upon completion of
such transaction to receive the same consideration as
that offered to such Stockholder.
The foregoing provisions shall not apply to shares of Common
Stock transferred by any Stockholder in a registered offering,
through Rule 144 or any other open market transactions, in
connection with a tender or exchange offer which is made to
all shareholders other than as referred to in clause (i)
above, or with respect to transfers by Capricorn to any of its
Affiliates; and
(b) Capricorn II and its Affiliates shall not buy any shares of
Common Stock in open market transactions for a period of 90
days following the Share Distribution, except that Capricorn
II and its Affiliates shall be permitted to make any such
purchases during any portion of such 90 day period in which
Capricorn II shall have been advised by the Company in writing
that the Company itself will not be buying any shares of
Common Stock in open market transactions.
The obligations of Capricorn II set forth above are incorporated by reference in
the Purchase Agreement. Reference is made to the Commitment Letter for a
complete statement of the terms of such obligations.
At the closing of the Acquisition (the date of such closing,
the "CLOSING DATE"), the Company and Capricorn II will enter into a Registration
Rights Agreement (in the form attached hereto as Exhibit 3, the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which, among other things, Capricorn II will have
the right on one or more occasions (subject to certain exceptions, up to a
maximum of seven times) to cause the Company, on or after the Closing Date and
to and including the date that is the fourth anniversary of the Closing Date, to
register under the Securities Act of 1933, as amended, the sale by Capricorn II
of the shares of Common Stock purchased by Capricorn II pursuant to the Purchase
Agreement.
The purpose of Capricorn II, Capricorn Holdings and Winokur in
causing Capricorn II to enter into the Purchase Agreement and acquire the shares
of Common Stock from the Company is to acquire a significant equity position in
the
Page 12 of 15 Pages
<PAGE>
Company and to influence the management, policies and activities of the Company.
Capricorn II, Capricorn Holdings and Winokur believe that the issuance and sale
of the shares of Common Stock by the Company as contemplated by the Purchase
Agreement will enhance the capital structure of the Company and will better
position the Company to take advantage of acquisition and growth opportunities
in the mortgage origination and servicing business.
If Winokur Holdings acquires shares of Common Stock pursuant
to the Share Distribution and Capricorn II acquires shares of Common Stock in
the Acquisition, Winokur Holdings or Capricorn II, or both, as the case may be,
may thereafter sell or otherwise dispose of any or all of such shares. Winokur
Holdings or Capricorn II or both may acquire or dispose of other shares of
Common Stock or other equity securities of the Company.
The amount, timing and conditions of any such possible
purchase or sale of any shares of Common Stock or other equity securities of the
Company by Winokur Holdings or Capricorn II or both, as the case may be, will
depend upon the continuing assessment by Winokur Holdings and Winokur, on the
one part, or by Capricorn II, Capricorn Holdings and Winokur, on the other part,
of all relevant factors, including without limitation the following: the
Company's business and prospects; the attitude and actions of the management,
board of directors and other stockholders of the Company; other business and
investment opportunities available to Winokur Holdings or Capricorn II, as the
case may be; the business and prospects of Winokur Holdings or Capricorn II, as
the case may be; economic conditions generally and in the mortgage origination
and servicing business particularly; stock market, commodity market and money
market conditions; the availability and nature of opportunities to dispose of
the securities of the Company owned by Winokur Holdings or Capricorn II, as the
case may be; the availability and nature of opportunities for Winokur Holdings
or Capricorn II, as the case may be, to purchase additional securities of the
Company; and other plans and requirements of Winokur Holdings or Capricorn II,
as the case may be. Depending upon their assessment of these factors from time
to time, Winokur Holdings or Winokur, on the one part, or Capricorn II,
Capricorn Holdings or Winokur, on the other part, may change their present
intentions as stated above.
The determination of Capricorn II, Capricorn Holdings and
Winokur, as the case may be, to have Capricorn II make an equity investment in
the Company was made in the context of an overall review of the Company and its
subsidiaries, which included the possibility (which Capricorn II, Capricorn
Holdings and Winokur intend to
Page 13 of 15 Pages
<PAGE>
continue to consider) of seeking to acquire equity securities of the Company in
addition to the shares of Common Stock to be acquired pursuant to the Purchase
Agreement, although none of Capricorn II, Capricorn Holdings and Winokur have
any present plans in this regard.
Should Winokur Holdings or Capricorn II or both in the future
seek to acquire additional shares of Common Stock or other equity securities of
the Company (including, without limitation, by means of market or privately
negotiated purchases of securities of the Company, a tender offer, merger or
otherwise), the prior establishment of an equity position in the Company might
assist Winokur Holdings or Capricorn II, as the case may be, in reaching such
result.
Winokur expects that he will be elected as a director of the
Company at or shortly following the closing of the Acquisition.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Upon the effectiveness of the Share Distribution (and, in the
case of Winokur Holdings, the distribution by Capricorn I to its partners of the
shares of Common Stock acquired by Capricorn I in the Share Distribution) and
the closing of the Acquisition, in each case as described in Item 4 above, (i)
Winokur Holdings will be the direct beneficial owner, and Winokur will be the
indirect beneficial owner, of 78,925 shares of Common Stock and (ii) Capricorn
II will be the direct beneficial owner, and Capricorn Holdings and Winokur will
be the indirect beneficial owners, of 546,448 shares of Common Stock. Based upon
the number of shares of Common Stock that Winokur Holdings, Capricorn II,
Capricorn Holdings and Winokur believe will be issued and outstanding after the
Share Distribution and the Acquisition, determined without giving effect to the
exercise of any options to purchase shares or other rights to purchase or
receive shares, the shares are equal to approximately 1.7% and 11.5%,
respectively, of the number of shares of Common Stock that would then be
outstanding.
Upon the effectiveness of the Share Distribution and the
closing of the Acquisition, in each case as described in Item 4 above, Winokur
Holdings and Winokur, on the one part, and Capricorn II, Capricorn Holdings and
Winokur, on the other part, may be deemed to share the power to vote and direct
the disposition of the shares of Common Stock so acquired. Winokur Holdings and
Winokur, on the one part, and Capricorn II, Capricorn Holdings and Winokur, on
the other part, may also be deemed to share the power both to vote and to direct
the disposition of the other shares of Common Stock and equity securities of the
Company referred to above if and
Page 14 of 15 Pages
<PAGE>
when beneficial ownership thereof is acquired by Winokur Holdings or Capricorn
II, as the case may be. Reference is made to Item 4 above for a summary of the
transactions pursuant to which Winokur Holdings or Capricorn II, as the case may
be, may acquire such beneficial ownership.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF ISSUER
Reference is made to Item 4 above and the Exhibits filed
herewith for a description of the Purchase Agreement, the Commitment Letter and
the Registration Rights Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Share Purchase Agreement dated as of
November 17, 1997 between The WMF Group,
Ltd. and Capricorn Investors II, L.P.
Exhibit 2 Letter agreement dated April 21, 1997
between The WMF Group, Ltd. (formerly known
as NHP Financial Services, Ltd.) and
Capricorn Investors II, L.P.
Exhibit 3 Draft of Registration Rights Agreement
between The WMF Group, Ltd. and Capricorn
Investors II, L.P.
Page 15 of 15 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
CAPRICORN INVESTORS, L.P.
By Capricorn Holdings, G.P.,
its General Partner
By Winokur Holdings, Inc.,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr., President
S-1
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
CAPRICORN HOLDINGS, G.P.
By Winokur Holdings, Inc.,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr., President
S-2
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
WINOKUR HOLDINGS, INC.
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr., President
S-3
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
CAPRICORN INVESTORS II, L.P.
By Capricorn Holdings, LLC,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr., Manager
S-4
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
CAPRICORN HOLDINGS, LLC
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr., Manager
S-5
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
November 17, 1997
Date
By: /s/ HERBERT S. WINOKUR, JR.
------------------------------------------
Herbert S. Winokur, Jr.
S-6
<PAGE>
EXHIBIT INDEX
Purchase Agreement dated as of November .....................Exhibit 1
17, 1997 between The WMF Group, Ltd. and
Capricorn Investors II, L.P.
Letter Agreement dated April 21, 1997 .......................Exhibit 2
between The WMF Group, Ltd. and Capricorn
Investors II, L.P.
Draft of Registration Rights Agreement ......................Exhibit 3
between The WMF Group, Ltd. and Capricorn
Investors II, L.P.
Ex. - 1
SHARE PURCHASE AGREEMENT
dated as of
November 17, 1997
between
CAPRICORN INVESTORS II, L.P.
and
THE WMF GROUP, LTD.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
TRANSACTIONS................................ 1
Section 1.1 Share Purchase............................................. 1
ARTICLE II
CLOSINGS.................................. 1
Section 2.1 The Closing................................................ 1
Section 2.2 Location of Closing........................................ 2
ARTICLE III
CONDITIONS OF CLOSING........................... 2
Section 3.1 Conditions Precedent to the Closing........................ 2
Section 3.2 Legends.................................................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY............................... 5
Section 4.1 Corporate Existence and Power.............................. 5
Section 4.2 Authorization; Contravention; Modifications................ 5
Section 4.3 Approvals.................................................. 6
Section 4.4 Binding Effect............................................. 6
Section 4.5 Financial Information...................................... 6
Section 4.6 Absence of Certain Changes or Events....................... 7
Section 4.7 Taxes...................................................... 7
Section 4.8 Litigation................................................. 7
Section 4.9 Compliance with Regulations................................ 8
Section 4.10 Subsidiaries.............................................. 8
Section 4.11 Insurance................................................. 8
Section 4.12 Debt...................................................... 9
Section 4.13 No Default................................................ 9
Section 4.14 Capitalization............................................ 9
Section 4.15 Material Contracts........................................10
Section 4.16 Books and Records.........................................12
Section 4.17 Fees for Brokers and Finders..............................12
Section 4.18 Misstatements.............................................12
Section 4.20 No Merger Agreements......................................13
Section 4.21 Board Actions.............................................13
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PAGE
Section 4.22 Stockholder Approval.......................................13
Section 4.23 Continuing Representations and Warranties..................14
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING LOANS AND SERVICING RIGHTS...................14
Section 5.1 Approved Issuer............................................14
Section 5.2 Past Securitizations; No Recourse..........................14
Section 5.3 Loan Documents; Mortgage Servicing Agreements..............15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............15
Section 6.2 Authorization; Contravention...............................15
Section 6.3 Approvals..................................................15
Section 6.4 Binding Effect.............................................16
Section 6.5 Litigation.................................................16
Section 6.6 Compliance with Laws.......................................16
Section 6.7 Investment Intent..........................................16
Section 6.8 Fees for Brokers and Finders...............................16
Section 6.9 Financial Ability..........................................17
Section 6.10 Continuing Representations and Warranties..................17
ARTICLE VII
COVENANTS.................................17
Section 7.1 Mutual Covenants...........................................17
Section 7.2 Affirmative Covenants of the Company.......................19
Section 7.3 Negative Covenants of the Company..........................20
ARTICLE VIII
TERMINATION................................21
Section 8.1 Termination................................................21
Section 8.2 Expenses and Fees..........................................21
ARTICLE IX
INDEMNIFICATION..............................22
Section 9.1 Indemnification by the Company.............................22
Section 9.2 No Limitation on Other Rights of Recovery..................25
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<PAGE>
PAGE
ARTICLE X
MISCELLANEOUS...............................25
Section 10.1 Notices...................................................25
Section 10.2 No Waivers; Remedies......................................26
Section 10.3 Amendments, Etc...........................................26
Section 10.4 Successors and Assigns....................................26
Section 10.5 Accounting Terms and Determinations.......................26
Section 10.6 Governing Law.............................................26
Section 10.7 Counterparts; Effectiveness...............................27
Section 10.8 Severability of Provisions................................27
Section 10.9 Headings and References...................................27
Section 10.10 Entire Agreement..........................................27
Section 10.11 Survival..................................................27
Section 10.12 Non-Exclusive Jurisdiction................................27
Section 10.13 Waiver of Jury Trial......................................28
Section 10.14 Affiliate.................................................28
Section 10.15 Non-Recourse..............................................28
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<PAGE>
ANNEX
Annex A - Definitions
EXHIBITS
Exhibit A - Form of Registration Rights Agreement
Exhibit 3.1(f)(1) - Certificate of Secretary of the Company
Exhibit 3.1(f)(2) - Certificate of Officer of the Company
Exhibit 3.1(f)(5) - Opinion of Counsel for the Company
Exhibit 3.1(g)(1) - Certificate of Secretary of the Purchaser
Exhibit 3.1(g)(2) - Certificate of Officer of the Purchaser
Exhibit 3.1(g)(4) - Opinion of Counsel for the Purchaser
SCHEDULES
Schedule 4.5(a) - Certain Financial Statements
Schedule 4.6(a) - Certain Changes
Schedule 4.6(b) - Certain Actions
Schedule 4.8 - Litigation
Schedule 4.10 - Subsidiaries
Schedule 4.12 - Certain Debt
Schedule 4.13 - Certain Defaults
Schedule 4.14(h) - Certain Obligations
Schedule 4.15(a) - Material Contracts
Schedule 5.3 - Certain Loan Documents
- iv -
<PAGE>
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT dated as of November 17, 1997 between
THE WMF GROUP, LTD., a Delaware corporation (the "COMPANY"), and CAPRICORN
INVESTORS II, L.P., a Delaware limited partnership (the "PURCHASER").
Terms not otherwise defined in this Agreement have the
meanings stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
SECTION 1.1 SHARE PURCHASE. Subject to the terms and
conditions set forth in this Agreement, at the Closing:
(a) the Company shall issue, sell and deliver to the Purchaser
and the Purchaser shall purchase, accept and acquire from the Company,
546,448 shares of Common Stock, (the "SHARES"), which number of shares
is intended by the parties to be equal to 11% of the number of shares
of Common Stock issued and outstanding after giving effect to the
issuance, sale and delivery of the Shares pursuant to this Section
1.1(a) (the "SHARE PURCHASE"); and
(b) the Purchaser shall deliver to the Company in
consideration of the issuance, sale and delivery to the Purchaser of
the Shares, $5,000,000 (the "PURCHASE PRICE"), in immediately available
funds, to such account or accounts as the Company shall specify at
least three Business days prior to the Closing; and
(c) the Company and the Purchaser shall execute and deliver
the Registration Rights Agreement substantially in the form of EXHIBIT
A attached hereto (the "THE REGISTRATION RIGHTS AGREEMENT").
ARTICLE II
CLOSINGS
SECTION 2.1 THE CLOSING. The closing of the Share Purchase
shall take place (the "CLOSING") (i) subsequent to (a) the declaration by the
SEC of the effectiveness of the Registration Statements and (b) the distribution
by NHP Incorporated, a Delaware corporation ("NHP"), of one-third of a share of
Common Stock of the Company to each holder of a Right
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<PAGE>
and (ii) prior to Capricorn Investors, L.P.'s distribution of such Common Stock
to certain of its limited partners (the "CLOSING DATE").
SECTION 2.2 LOCATION OF CLOSING. The Closing shall take place
at the offices of The WMF Group, Ltd., 1593 Spring Hill Road, Suite 400, Vienna,
Virginia or at such other location as agreed to by the parties.
ARTICLE III
CONDITIONS OF CLOSING
SECTION 3.1 CONDITIONS PRECEDENT TO THE CLOSING. The
obligations of each party under this Agreement with respect to the Transactions
are subject to the satisfaction of each of the following conditions, unless such
conditions either are required to be satisfied by such party (for the benefit of
the other party) or are waived by such party at or before the Closing:
(a) each party shall have obtained from each
Governmental Body or other person each Approval or taken all actions required to
be taken in connection with each Approval, and all waiting, review or appeal
periods prescribed with respect to each Approval shall have terminated or
expired, as the case may be, in each case with respect to an Approval that is
required or advisable on the part of such party for (1) the due execution and
delivery by such party of each Transaction Document to which it is or may become
a party, (2) the conclusion of the Transactions, (3) the performance by such
party of its obligations under each Transaction Document to which it is or may
become a party and (4) the exercise by such party of its rights and remedies
under each Transaction Document to which the party is or may become a party;
(b) no Action shall be pending or, to the knowledge
of either party, threatened against such party or any other person that
restricts in any material respect or prohibits (or, if successful, would
restrict or prohibit) the conclusion of the Transactions;
(c) neither party (1) is in violation of or default,
in any material respect, with respect to any Regulation of any Governmental Body
or any decision, ruling, order or award of any arbitrator applicable to it or
its business, properties or operations, (2) would be in violation of or default,
in any material respect, with respect to the same in connection with or as a
result of the conclusion of the Transactions, or (3) has received notice that,
in connection with or as a result of the conclusion of the Transactions it is or
would be in violation of or default, in any material respect, with respect to
the same;
(d) the representations and warranties of the other
party contained in each Transaction Document to which such other party is a
party shall be true and correct in all material respects on and as of the date
hereof and the Closing Date, with the same force and effect as though made on
and as of the date hereof and the Closing Date;
- 2 -
<PAGE>
(e) the other party shall have performed, in all
material respects, all of the covenants and other obligations that are required
by the Transaction Documents to which it is a party to be performed by such
other party at or before the Closing Date; and
(f) the Purchaser shall have received from the
Company the following, each dated the Closing Date, in form and substance
reasonably satisfactory to the Purchaser:
(1) a certificate of the Secretary or an Assistant
Secretary of the Company substantially in the form of EXHIBIT
3.1(F)(1), with respect to (i) the charter documents of the Company,
(ii) the bylaws of the Company, (iii) the resolutions of the Company
approving each Transaction Document and the other documents to be
delivered by it under the Transaction Documents and (iv) the names and
true signatures of the officers of the Company authorized to sign each
Transaction Document to which the Company is a party as of the Closing
Date and the other documents to be delivered by the Company under such
Transaction Documents;
(2) a certificate of the President or a Vice
President of the Company, substantially in the form of EXHIBIT
3.1(F)(2) to the effect that (i) the representations and warranties of
the Company contained in the Transaction Documents to which it is a
party are true and correct in all material respects on and as of the
Closing Date, and (ii) the Company has performed, in all material
respects, all covenants and other obligations required by the
Transaction Documents to which it is a party to be performed by it at
or before the Closing;
(3) certified copies, or other evidence satisfactory
to the Purchaser, of all Approvals of all Governmental Bodies and other
persons with respect to the Company referred to in Sections 4.3;
(4) a certificate of the Secretary of State of the
State of Delaware, dated as of a recent date, as to the good standing
of and payment of taxes by the Company and as to the charter documents
of the Company, as the case may be, on file in the office of the
Secretary of State;
(5) a favorable opinion of one or more counsel for
the Company, which together are substantially in the form of EXHIBIT
3.1(F)(5), and as to other matters reasonably requested by the
Purchaser;
(g) the Company shall have received from the
Purchaser the following, each dated the Closing Date, in form and substance
reasonably satisfactory to the Company:
(1) a certificate of the Secretary or an Assistant
Secretary of the Purchaser's general partner, substantially in the form
of EXHIBIT 3.1(G)(1), with respect to the names and true signatures of
the officers of the Purchaser authorized to sign each Transaction
Document to which the Purchaser is a party as of the Closing Date and
the other documents to be delivered by the Purchaser under such
Transaction Documents;
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<PAGE>
(2) a certificate of the President or Vice President
of the Purchaser's general partner, substantially in the form of
EXHIBIT 3.1(G)(2) to the effect that (i) the representations and
warranties of the Purchaser contained in the Transaction Documents to
which it is a party are true and correct in all material respects on
and as of the Closing Date, and (ii) the Purchaser has performed, in
all material respects, all covenants and other obligations required by
the Transaction Documents to which it is a party to be performed by it
at or before the Closing;
(3) certified copies, or other evidence satisfactory
to the Company, of all Approvals of all Government Bodies and other
persons with respect to the Purchaser referred to in Section 6.3; and
(4) a favorable opinion of one or more counsel for
the Purchaser, which together are substantially in the form of EXHIBIT
3.1(G)(4), and as to other matters reasonably requested by the Company.
(h) the Company shall have duly executed and
delivered to the Purchaser one or more certificates representing the Shares;
(i) the Purchaser shall have delivered to the
Company an amount in immediately available funds equal to the Purchase Price for
the Shares;
(j) the Company and the Purchaser shall have
executed and delivered the Registration Rights Agreement substantially in the
form of EXHIBIT A attached hereto, with such changes therein as shall have been
approved by the Company and the Purchaser; and
(k) NHP shall have distributed one-third of a share
of Common Stock of the Company to each holder of a Right; and
(l) each of the Registration Statements shall have
been declared effective by the SEC.
SECTION 3.2 LEGENDS.
(a) Each certificate for Shares and any certificate
issued in exchange therefor or on conversion or upon transfer, except
certificates issued in connection with a sale registered under the Securities
Act and except as provided below, shall bear legends to the following effect:
(1) "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered,
sold, transferred or otherwise disposed of except in compliance with
said Act."
- 4 -
<PAGE>
(2) "The shares represented by this certificate are subject to
the restrictions contained in the Registration Rights Agreement dated
as of __________ __, 1997, a copy of which is on file at the office of
the Secretary of the Company."
(b) The legend stated in Section 3.2(a)(1) shall be
removed by delivery of one or more substitute certificates without such legend
if the holder thereof shall have delivered to the Company a copy of a letter
from the staff of the Securities and Exchange Commission or an opinion of
counsel, in form and substance reasonably satisfactory to the Company, to the
effect that the legend is not required for purposes of the Securities Act.
(c) The legend stated in Section 3.2(a)(2) shall be
removed at such time as the related securities are no longer subject to the
Registration Rights Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Purchaser as
follows:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of the Company
and its Consolidated Subsidiaries (1) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (2) has all necessary corporate power and authority and all
material licenses, authorizations, consents and approvals required to own,
lease, license or use its properties now owned, leased, licensed or used and
proposed to be owned, leased, licensed or used and to carry on its business as
now conducted and proposed to be conducted, (3) is duly qualified as a foreign
corporation under the laws of each jurisdiction in which both (A) qualification
is required either (i) to own, lease, license or use its properties now owned,
leased, licensed and used or (ii) to carry on its business as now conducted and
(B) the failure to be so qualified could materially and adversely affect either
or both of (i) the business, properties, operations, prospects or condition
(financial or otherwise) of the Company and its Consolidated Subsidiaries taken
as a whole, and (ii) the ability of the Company or the Consolidated Subsidiary,
as the case may be, to perform its obligations under any Transaction Document to
which it is or may become a party and (4) has all necessary corporate power and
authority to execute and deliver each Transaction Document to which it is or may
become a party.
SECTION 4.2 AUTHORIZATION; CONTRAVENTION; MODIFICATIONS. The
execution and delivery by the Company of each Transaction Document to which it
is or may become a party and the performance by it of its obligations under each
such Transaction Document have been duly authorized by all necessary corporate
action and do not and will not (1) contravene, violate, result in a breach of or
constitute a default under, (A) its articles of incorporation or bylaws, (B) any
Regulation of any Governmental Body or any decision, ruling, order or award of
any
- 5 -
<PAGE>
arbitrator by which the representing party or any of its properties may be bound
or affected or (C) any agreement, indenture or other instrument to which any of
the Company and its Consolidated Subsidiaries is a party or by which the
representing party or their properties may be bound or affected or (2) result in
or require the creation or imposition of any Lien on any of the properties now
owned or hereafter acquired by any of the Company and its Consolidated
Subsidiaries.
SECTION 4.3 APPROVALS. No Approval of any Governmental Body or
other person is required or advisable on the part any of the Company and its
Consolidated Subsidiaries for (1) the due execution and delivery by the Company
or the Consolidated Subsidiary, as the case may be, of any Transaction Document
to which it is or may become a party, (2) the conclusion of the Transactions or
(3) the performance by the Company or the Consolidated Subsidiary, as the case
may be, of its obligations under each Transaction Document to which it is or may
become a party.
SECTION 4.4 BINDING EFFECT. Each Transaction Document to which
any of the Company and its Consolidated Subsidiaries is or may become a party
is, or when executed and delivered in accordance with this Agreement will be,
the legally valid and binding obligation of the Company or the Consolidated
Subsidiary, as the case may be, enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
SECTION 4.5 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the last day of its latest complete
fiscal year (the "BALANCE SHEET DATE") and the related consolidated statements
of operations, shareholders' equity and cash flows for the fiscal year then
ended, reported on by the independent public accountants of the Company and
filed with each of the Registration Statements and attached hereto as Schedule
4.5(a), a true and complete copy of which has been delivered to the Purchaser,
fairly present the consolidated financial position of the Company and its
Consolidated Subsidiaries as of that date and their consolidated results of
operations and cash flows for the year then ended, in accordance with GAAP
applied on a consistent basis except as described in the footnotes to such
financial statements or as set forth on Schedule 4.5(a).
(b) At the Balance Sheet Date, none of the Company
and its Consolidated Subsidiaries had any material liability or obligation of
any nature, whether accrued, absolute, fixed or contingent, and whether due or
to become due, that, in accordance with GAAP applied on a consistent basis,
should have been shown or reflected in the balance sheets but were not.
- 6 -
<PAGE>
(c) The Company has made available to the Purchaser
copies of each management letter delivered to the Company and its Consolidated
Subsidiaries by the independent public accountants of the Company in connection
with the financial statements referred to in this Section 4.5 or relating to any
review by them of the internal controls of the Company and its Consolidated
Subsidiaries during the three years ended on its Balance Sheet Date or
thereafter.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth on Schedule 4.6(a), since the Balance
Sheet Date there has been no material adverse change in the business,
properties, operations, prospects or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries, taken as a whole.
(b) Except as set forth on Schedule 4.6(b), since the Balance
Sheet Date, none of the Company and its Consolidated Subsidiaries has done the
following or entered into any agreement or other arrangement with respect to the
following, except in each case with respect or pursuant to each Transaction
Document to which it is or may become a party:
(1) transferred any of its assets except in each
case for fair consideration and in the ordinary course of business; or
(2) waived, released, cancelled, settled or
compromised any debt, claim or right of any material value except in
each case in the ordinary course of business; or
(3) entered into any material agreement, arrangement,
commitment, contract or transaction, amended or terminated any of the
same or otherwise conducted any of its affairs, in any case not in the
ordinary course of business and consistent with past practices; or
(4) except as disclosed in the footnotes to the
financial statements referred to in Section 4.5, changed any accounting
methods or principles used in recording transactions on the books of
the Company or a Consolidated Subsidiary or in preparing the financial
statements of the Company or a Consolidated Subsidiary.
SECTION 4.7 TAXES. Each of the Company and its Subsidiaries
has filed all Tax Returns that are required to be filed with any Governmental
Body and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect.
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<PAGE>
SECTION 4.8 LITIGATION. Except as set forth on Schedule 4.8,
there is no Action pending or, to the knowledge of the Company, threatened
against the Company, any of its Subsidiaries or any other person that (1)
involves any of the Transactions, (2) any property owned, leased, licensed or
used by the Company or such Subsidiary that, individually or in the aggregate,
if determined adversely to any of them, could have a Material Adverse Effect or
(3) individually or in the aggregate, if determined adversely to any of them,
could result in a liability to any of them in an amount that could have a
Material Adverse Effect.
SECTION 4.9 COMPLIANCE WITH REGULATIONS. None of the Company
and its Subsidiaries is in, and none of them has received notice of, a violation
of or default with respect to, any Regulation of any Governmental Body or any
decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations, including individual products or services
sold or provided by it, except for violations or defaults that, individually or
in the aggregate, could not have a Material Adverse Effect.
SECTION 4.10 SUBSIDIARIES.
(a) Set forth on Schedule 4.10 is a correct and
complete list of the Subsidiaries of the Company, showing the following as of
the date of this Agreement with respect to each such Subsidiary: (1) the
jurisdiction of its incorporation; (2) the title of each authorized class or
series of capital stock; (3) the number of shares of each authorized class or
series of capital stock; (4) the number of such shares outstanding; (5) the
number of outstanding shares owned directly or indirectly by the representing
party; and (6) the directors and officers of the Subsidiary as of the date of
this Agreement.
(b) All outstanding shares of capital stock of each
Subsidiary are duly authorized, validly issued, fully paid and nonassessable and
are owned as set forth on Schedule 4.10, directly or indirectly, beneficially
and of record by the representing party, free and clear of all Liens.
SECTION 4.11 INSURANCE. The Company and its Subsidiaries are
insured with reputable insurers against all risks normally insured against in
accordance with generally prevailing practices in the multifamily and commercial
mortgage origination and servicing industry and all of such insurance policies
and bonds maintained by or for the benefit of the Company and such Subsidiary,
as the case may be, are in full force and effect. The Company and its
Subsidiaries maintain insurance with reputable insurance companies in such
amounts and covering such risks as are usually carried by companies engaged in
the same or similar business and similarly situated. There are no currently
outstanding material losses for which the Company or such Subsidiary has failed
to give or present notice or claim under any policy. There are no requirements
by any insurance company or by any board of fire underwriters or other body
exercising similar functions or by any Governmental Body of which the
representing party has knowledge requiring any repairs or other work to be done
to any of the properties owned, leased, licensed or used by the Company or such
Subsidiary or requiring any equipment or facilities to be installed on or in
connection with any of the properties, the failure to complete which could
result in the cancellation of the policy of insurance. Policies for all the
insurance
- 8 -
<PAGE>
are in full force and effect and none of the Company and its Subsidiaries is in
default in any material respect under any of the policies. The representing
party has no knowledge of the cancellation or proposed cancellation of any of
the insurance or of any proposed increase in the contributions for workers'
compensation or unemployment insurance or of any conditions or circumstances
applicable to the business of the Company or such Subsidiary, as the case may
be, which might result in a material increase in those contributions.
SECTION 4.12 DEBT. Set forth on Schedule 4.12 is a correct and
complete list (containing a brief description of each item on such list) of the
following: (1) all credit agreements, indentures, purchase agreements,
Guarantees, Capitalized Leases and other Investments, agreements and other
arrangements presently in effect providing for or relating to Debt in any amount
greater than $250,000 in respect of which any of the Company and its
Subsidiaries is in any manner directly or contingently obligated; (2) the
maximum principal or face amounts of such Debt outstanding or which may be
outstanding under each of those agreements and other arrangements; and (3) the
maturity date or dates of such Debt.
SECTION 4.13 NO DEFAULT. Except as set forth on Schedule 4.13,
none of the Company and its Subsidiaries is in default in respect of any
obligation under any credit agreement, indenture, purchase agreement, Guarantee,
Capitalized Lease and other Investment, agreement or arrangement referred to in
Section 4.12, which default either alone or together with any other default,
entitles another party thereto, with the giving of notice or the passage of time
or both, to terminate or modify the rights and obligations of the parties
thereunder or with respect thereto or to accelerate, increase or otherwise
modify any obligation of the Company or any of its Subsidiaries thereunder.
SECTION 4.14 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(A) 25,000,000 shares of Common Stock and (B) 12,500,000 shares of
Preferred Stock, $.01 par value, none of which Shares of Preferred
Stock are outstanding.
(b) As of November 17, 1997, there were (A) 4,217,478 shares
of Common Stock issued and outstanding, (B) 0 shares of Common Stock
held in the treasury of the Company and (C) a maximum of 1,133,042
shares of Common Stock reserved for issuance upon the exercise of stock
options, which amount consists of (i) 337,398 shares in respect of
options to be granted by the Company pursuant to its Key Employee
Incentive Plan (i.e., 8% of outstanding common stock), (ii) a maximum
of 395,644 shares in respect of options in NHP Incorporated, originally
granted by NHP Incorporated, which options and other rights will either
be exercised for shares of common stock of NHP Incorporated prior to
the initial public distribution of the Common Stock (requiring
distribution of shares of Common Stock at the time of the initial
public distribution of the Common Stock) or will be converted at the
time of the initial public distribution of the Common Stock into
options to acquire shares of Common Stock in the Company, and (iii) a
maximum of 400,000 shares by means of options granted to each employee
of the Company to purchase up to 1000 shares of Common Stock, which
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option is exercisable for up to ten (10) business days commencing upon
the initial public distribution of the Common Stock (collectively, the
"OUTSTANDING OPTIONS").
(c) Except as set forth above and except as provided herein,
no Equity Securities of the Company are issued, reserved for issuance
or outstanding.
(d) All outstanding shares of capital stock of the Company
are, and all shares that may be issued pursuant to the exercise of the
Outstanding Options, will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and are not subject to preemptive
rights.
(e) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding bonds, debentures,
notes or other indebtedness or other securities of the Company having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of the
Company may vote.
(f) Except with respect to the Outstanding Options and the
Transaction Documents, there is no agreement or arrangement restricting
the voting or transfer of the Equity Securities of the Company.
(g) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which any of the Company and its
Subsidiaries is a party or by which any of them is bound obligating the
Company or such Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
Equity Securities of the Company or such Subsidiary or obligating the
Company or such Subsidiary to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
(h) Except as set forth on Schedule 4.14(h), there are no
outstanding contractual obligations, commitments, understandings or
arrangements of any of the Company and its Subsidiaries to repurchase,
redeem or otherwise acquire, require or make any payment in respect of
any shares of Equity Securities of the Company or such Subsidiary.
(i) Except with respect to statutory restrictions of general
application, there are no legal, contractual or other restrictions on
the payment of dividends or other distributions or amounts on or in
respect of any of the Equity Securities of the Company.
(j) Except as contemplated by the Registration Rights
Agreement, there are no agreements or arrangements to which any of the
Company and its Subsidiaries is a party pursuant to which the Company
is or could be required to register shares of common stock or other
securities under the Securities Act.
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(k) Equity Securities of the Company that were issued and
reacquired by the Company were so reacquired (and, if reissued, so
reissued) in compliance with all applicable Regulations, and the
Company has no liability with respect to the reacquisition or
reissuance of the Equity Securities.
SECTION 4.15 MATERIAL CONTRACTS.
(a) Set forth on Schedule 4.15(a) is a correct and complete
list (containing a brief description of each item on such list) of the following
(collectively, the "MATERIAL CONTRACTS") with respect to any of the Company and
its Subsidiaries:
(1) agreements with investment bankers, brokers,
finders, consultants and advisers engaged by or on behalf of the
Company or such Subsidiary with respect to the Transactions or other
transactions contemplating the recapitalization of the Company or such
Subsidiary, the purchase or sale by the Company or such Subsidiary of
assets not in the ordinary course of business or the issuance and sale
by the Company or such Subsidiary of any Equity Securities or Debt of
the Company or such Subsidiary, as the case may be;
(2) agreements with any shareholder having beneficial
ownership of 5.0% or more of the shares of common stock of the Company
then issued and outstanding, director or officer of the Company or such
Subsidiary and all shareholders' agreements and voting trusts;
(3) agreements that may be cancelled, terminated,
amended or modified, or pursuant to which payments might be required or
acceleration of benefits may be required, in connection with or as the
result of the execution and delivery of the Transaction Documents or
the conclusion of any of the Transactions;
(4) Mortgage Servicing Agreements;
(5) agreements (other than Mortgage Loans) that may
require the payment or provision by or to any of the Company and its
Subsidiaries of money in an aggregate amount, or good or services have
an aggregate value, in each case in the excess of $250,000; and
(6) agreements not made in the ordinary course of
business and which are materially adverse to the business of the
Company or such Subsidiary.
(b) Each agreement referred to in clause (4), (5) and (6) of
Section 4.15 has, to the knowledge of the Company with respect to parties other
than the Company or its Subsidiaries, as the case may be, been duly authorized,
executed and delivered by the parties to such agreement, is in full force and
effect and constitutes the legal, valid and binding obligation of the parties to
such agreement or their respective successors or assigns, enforceable against
them in accordance with the terms of such agreement. There is no liability or
obligation
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of the Company or a Subsidiary with respect to any such agreement that, under
the terms of such agreement, is required to be paid or otherwise performed or is
required to have been paid or otherwise performed, that has not been paid or
otherwise performed in accordance with the applicable agreement. The right,
title and interest of the Company or a Subsidiary in, to and under each such
agreement is free and clear of all Liens. There exists no default under any such
agreement by any party, which default, individually or together with other
defaults under the same agreement or other agreements, could have a Material
Adverse Effect. The conclusion of any of the Transactions will not (and will not
give any person a right to) terminate or modify any rights of, or accelerate or
increase any obligation of, the Company or any Subsidiary under any such
agreement.
(c) Each Mortgage Servicing Agreement is valid, binding and
enforceable in accordance with its terms. The Company has serviced all Mortgage
Loans in accordance with all applicable Investor requirements, except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect. There are no pending or threatened claims by any
Investor against the Company relating directly or indirectly to any Mortgage
Loan or any Mortgage Servicing Agreement. The Company has no notice of any
default by other parties under any Mortgage Servicing Agreement or Flow
Servicing Agreement. No material default of the Company exists under any
Mortgage Servicing Agreement or Flow Servicing Agreement, including any default
arising with notice or lapse of time, or both, except to the extent that such
defaults could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.16 BOOKS AND RECORDS.
(a) The records and books of account of each of the Company
and its Consolidated Subsidiaries are correct and complete in all
material respects, have been maintained in accordance with good
business practices and are reflected accurately in the financial
statements referred to in Section 4.5. Each of the Company and its
Consolidated Subsidiaries has accounting controls sufficient to insure
that its transactions are (1) executed in accordance with management's
general or specific authorization and (2) recorded in conformity with
GAAP so as to maintain accountability for assets.
(b) In all material respects, the minute books of each of the
Company and its Consolidated Subsidiaries contain accurate records of
all meetings and accurately reflect all corporate action of the
stockholders and the board of directors (including committees) of the
Company or the Consolidated Subsidiary, as the case may be.
(c) The stock books and ledgers of each of the Company and its
Consolidated Subsidiaries correctly record all transfer and issuances
of all capital stock of the Company or the Consolidated Subsidiary, as
the case may be.
SECTION 4.17 FEES FOR BROKERS AND FINDERS. With respect to the
Transactions, the Company and its Subsidiaries and other Affiliates have not
authorized any person to act as financial advisor, broker, finder or other
intermediary that might be entitled to any fee,
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commission, expense reimbursement or other payment of any kind from any of the
Company, such Subsidiaries and such other Affiliates.
SECTION 4.18 MISSTATEMENTS. Except to the extent revised or
superseded by a subsequent certificate, schedule or written report furnished to
the other party, no written information, certificate, schedule or written report
furnished by Company or any of its Subsidiaries to Purchaser with respect to any
of the Company and its Subsidiaries in connection with the negotiation of any
Transaction Document or the satisfaction of any condition under any Transaction
Document contained as of the date thereof any untrue statement of a material
fact or omitted to state a material fact necessary to make the statement
contained therein, in the light of the circumstances under which it was made,
not misleading.
SECTION 4.19 REGISTRATION STATEMENTS. The Company has filed
each of the Registration Statements with the Securities and Exchange Commission.
The Company has delivered or made available to the Purchaser each of the
Registration Statements. As of its respective date, except to the extent revised
or superseded by a subsequent filing with the SEC, each of the Registration
Statements complied in all material respects with the requirements of the
Securities Act and did not as of such date contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company and the Subsidiaries included in each of the
Registration Statements including any amendments thereto, comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto.
SECTION 4.20 NO MERGER AGREEMENTS. None of the Company and its
Subsidiaries has entered into any agreement with any person which has not been
terminated as of the date of this Agreement and under which there remains any
liability or obligation of any of the Company and its Subsidiaries with respect
to a merger or consolidation with any of the Company and its Subsidiaries, an
acquisition of any Equity Securities of any of the Company and its Subsidiaries
or any other acquisition of a substantial amount of the assets of any of the
Company and its Subsidiaries.
SECTION 4.21 BOARD ACTIONS. The Board of Directors of the
Company, at a meeting duly called and held, unanimously (1) determined that the
Transactions, taken as a whole, are in the best interest of the Company and its
stockholders and (2) approved the Transaction Documents and the Transactions,
which actions constitute approval of each of the Transaction Documents and the
Transactions for purposes of Section 203 of the Delaware General Corporation Law
and which approval shall make such Section 203 inapplicable to the Transactions
and to any future transactions between the Company and the Purchaser.
SECTION 4.22 STOCKHOLDER APPROVAL. None of the Transactions is
required by the certificate of incorporation or bylaws of the Company, or by any
other agreement, indenture or instrument to which the Company is a party or by
which the Company or its properties may
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be bound or affected, to be approved by the holders of shares of any class of
Equity Securities of the Company.
SECTION 4.23 CONTINUING REPRESENTATIONS AND WARRANTIES. Each
of the representations and warranties made by the Company in this Agreement or
in any other Transaction Document as of any date other than a Closing Date will
be true and correct in all material respects on and as of the Closing Date
except as otherwise contemplated by such Transaction Document.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING LOANS AND SERVICING RIGHTS
The Company hereby represents and warrants to the Purchaser as
follows:
SECTION 5.1 APPROVED ISSUER. Washington Mortgage Financial
Group, Ltd. ("WMF") is a Fannie Mae approved DUS lender in good standing.
WMF/Huntoon is a GNMA approved issuer in good standing. Each of WMF and
WMF/Huntoon is (i) a FHA-approved mortgagee, (ii) a Fannie Mae and a Freddie Mac
approved seller/servicer in good standing, and (iii) in full compliance with all
of the material provisions contained in the applicable FHA, Fannie Mae and
Freddie Mac guides and, with respect to WMF/Huntoon, GNMA guides, any subsequent
amendments in or to any of them, and all other applicable regulations and
Investor requirements. Except as previously disclosed to Purchaser in writing,
which writing makes reference to this Agreement, the Company has not at any time
in the past received notice from any governmental, quasi-governmental or private
agency of pending or threatened actions or investigations which would question
the status of WMF or WMF/Huntoon as an approved lender or issuer as provided in
this Section 5.1. No outstanding claims exist against the Company (directly or
indirectly) from or through the FHA, GNMA or any Investors (including, without
limitation, claims under FHA multifamily co-insurance program). To the knowledge
of Company, no event has occurred which, with the passage of time or the giving
of notice, or both, would result in the loss by either WMF or WMF/Huntoon of its
qualification as an approved lender or issuer as set forth in this Section 5.1
or of the Company or any officer, director or employee of the Company as a
contractor or as a person otherwise permitted to transact business with any such
governmental, quasi-governmental or private agency.
SECTION 5.2 PAST SECURITIZATIONS; NO RECOURSE.
(a) PAST SECURITIZATIONS. The description of past
securitization transactions effected by the Company, as contained in
the Registration Statements, is true and complete in all material
respects and to the Company's best knowledge, no event or series of
events has occurred that would result in any of the securities issued
in connection with any of such transactions being downgraded or placed
on a watch list with
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negative implications by any rating agency or similar organization, or
that would impair the Company's or its Subsidiaries' ability to
consummate future securitization transactions upon economic terms
consistent with past securitization transactions or otherwise cause the
Company or any of its Subsidiaries to suffer any Material Adverse
Effect with respect to any past or future securitization transaction
(other than any such event or series of events described in the
Registration Statements.
(b) NO RECOURSE. Except with respect to DUS Mortgage Loans,
none of the Servicing Rights is subject to recourse against the Company
for losses on liquidation of a Mortgage Loan, borrower defaults or
repurchase obligations upon the occurrence of non-payment or other
events, and the Company has no obligation or recourse to any person to
which it may have sold or transferred any Mortgage Loans or Servicing
Rights. For the purposes of this Section 5.2(b), "recourse" shall not
include industry standard representations and warranties (such as those
concerning title, zoning, etc.), except to the extent that such
representations and/or warranties relate generally to economic
performance (such as those included in the DUS program).
SECTION 5.3 LOAN DOCUMENTS; MORTGAGE SERVICING AGREEMENTS.
Except as set forth on Schedule 5.3, there are no defaults under any of the Loan
Documents nor any events which, with the giving of notice or the passage of
time, or both, would constitute a default.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as follows:
SECTION 6.1 CORPORATE EXISTENCE AND POWER. The Purchaser (1)
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware, (2) has all necessary partnership and
all material licenses, authorizations, consents and approvals required to own,
lease, license or use its properties now owned, leased, licensed or used and
proposed to be owned, leased, licensed or used and to carry on its business as
now conducted and proposed to be conducted, (3) is duly qualified as a foreign
limited partnership under the laws of each jurisdiction in which both (A)
qualification is required either (i) to own, lease, license or use its
properties now owned, leased, licensed or used or (ii) to carry on its business
as now conducted and (B) the failure to be so qualified could materially and
adversely affect either or both of (i) the business, properties, operations,
prospects or condition (financial or otherwise) of the Purchaser and (ii) the
ability of the Purchaser to perform its obligations under any Transaction
Document to which it is or may become a party and (4) has all necessary
partnership power and authority to execute and deliver each Transaction Document
to which it is or may become a party.
SECTION 6.2 AUTHORIZATION; CONTRAVENTION. The execution and
delivery by the Purchaser of each Transaction Document to which it is or may
become a party and the performance by it of its obligations under each of those
Transaction Documents have been duly
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authorized by all necessary partnership action and do not and will not (1)
contravene, violate, result in a breach of or constitute a default under, (A)
its limited partnership agreement, (B) any Regulation or any decision, ruling,
order or award of any arbitrator by which the Purchaser or any of its properties
may be bound or affected, or (C) any agreement, indenture or other instrument to
which it is a party or by which it or its properties may be bound or affected or
(2) result in or require the creation or imposition of any Lien on any property
now owned or hereafter acquired by it.
SECTION 6.3 APPROVALS. No Approval of any Governmental Body or
other person is required or advisable on the part of the Purchaser, for (1) the
due execution and delivery by the Purchaser of any Transaction Document, (2) the
conclusion of the Transactions and (3) the performance by the Purchaser of its
obligations under each Transaction Document to which it is or may become a
party.
SECTION 6.4 BINDING EFFECT. Each Transaction Document to which
the Purchaser is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legally valid and binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
SECTION 6.5 LITIGATION. There is no Action pending or, to the
Purchaser's knowledge, threatened against the Purchaser or, to its knowledge,
any other person or that involves any of the Transactions or any property owned,
leased, licensed or used by the Purchaser that, individually or in the
aggregate, if determined adversely to the Purchaser or the other person, could
materially and adversely affect the ability of the Purchaser to perform its
obligations under any Transaction Document to which it is or may become a party.
SECTION 6.6 COMPLIANCE WITH LAWS. The Purchaser is neither in,
nor has received notice of a, violation of or default with respect to any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator applicable to it or its business, properties or operations, which
violation or default, individually or in the aggregate, could materially and
adversely affect the ability of the Purchaser to perform its obligations under
any Transaction Document to which it is or may become a party.
SECTION 6.7 INVESTMENT INTENT. The Purchaser acknowledges that
the Company is issuing and selling the Shares pursuant to the terms of the
Transaction Documents in reliance upon the exemption afforded by Section 4(2) of
the Securities Act for transactions by an issuer not involving any public
offering. The Purchaser represents that (1) it is acquiring such securities for
investment and without any view toward distribution of any of the securities to
any other person, (2) it will not sell or otherwise dispose of the securities
except in compliance with the registration requirements or exemption provisions
under the Securities Act and (3) before any sale or other disposition of any of
such securities other than in a sale registered under the
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Securities Act, or pursuant to Rule 144 under the Securities Act unless the
Company shall have been advised by counsel that the sale does not meet the
requirements of Rule 144 for the sale, it will deliver to the Company an opinion
of counsel, which counsel shall be reasonably satisfactory to the Company
(including, without limitation, O'Melveny & Myers LLP which shall be
satisfactory to the Company for this purpose), to the effect that such
registration is unnecessary.
SECTION 6.8 FEES FOR BROKERS AND FINDERS. The Purchaser has
not authorized any person to act as financial advisor, broker, finder or other
intermediary that might be entitled to any fee, commission, expense
reimbursement or other payment of any kind from the Purchaser upon the
conclusion of or in connection with any of the Transactions.
SECTION 6.9 FINANCIAL ABILITY. The Purchaser has sufficient
financial resources to perform its obligations on the Closing Date.
SECTION 6.10 CONTINUING REPRESENTATIONS AND WARRANTIES. Each
of the representations and warranties made by the Purchaser in this Agreement or
in any other Transaction Document as of a date other than a Closing Date shall
be true on and as of the Closing Date except as otherwise contemplated by the
Transaction Documents.
ARTICLE VII
COVENANTS
SECTION 7.1 MUTUAL COVENANTS. Each party covenants and agrees
to do the following until the conclusion of the Closing:
(a) MAINTENANCE OF EXISTENCE. The covenanting party shall, and
shall cause its Subsidiaries to, preserve and maintain its corporate or
limited partnership, as the case may be, existence and good standing in
the jurisdiction of its organization and qualify and remain qualified
as a foreign corporation or limited partnership, as the case may be, in
each jurisdiction in which both (1) qualification is required either
(A) to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used or
(B) to carry on its business as now conducted or proposed to be
conducted and (2) the failure to be so qualified could materially and
adversely affect either or both of (A) the business, properties,
operations, prospects or condition (financial or otherwise) of the
party and (B) the ability of the party to perform its obligations under
any Transaction Document to which it is or may become a party.
(b) COMPLIANCE WITH LAWS. The covenanting party shall, and
shall cause its Subsidiaries to, comply in all respects with all
Regulations of each Governmental Body and all decisions, rulings,
orders and awards of each arbitrator applicable to it or its business,
properties or operations in connection with the Transactions.
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(c) BEST EFFORTS. Upon the terms and subject to the conditions
provided in the Transaction Documents, the covenanting party shall, and
shall cause its Subsidiaries to, use its best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, and to assist
and cooperate with the other party hereto in doing all things
necessary, proper or advisable under applicable Regulations to ensure
that the conditions set forth in Article III and to the conclusion of
the Transactions are satisfied and to conclude and make effective, in
the most expeditious manner practicable, the Transactions including,
without limitation, using its best efforts to obtain all necessary
Approvals.
(d) NOTIFICATION. The covenanting party shall, and shall cause
its Subsidiaries to, give prompt notice to the other parties to this
Agreement or any other Transaction Document, as the case may be, of (1)
the occurrence, or failure to occur, of any event that would be likely
to cause any representation or warranty of the covenanting party
contained in the Transaction Document to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the
Closing Date and (2) any failure of the covenanting party to perform or
otherwise comply with, in any material respect, any covenant, condition
or agreement to be performed or complied with by it under the
Transaction Documents; which covenant of notification shall not limit
the right of the other party under Article III to require as a
condition precedent to the performance of its obligations under this
Agreement the continuing accuracy and performance of the
representations and warranties and covenants of the notifying party
made in the Transaction Documents and to receive an unqualified
certificate with respect to the same.
(e) PUBLICITY AND REPORTS. Except as may be required by
applicable laws or court process, the covenanting party shall, and
shall cause its Subsidiaries to, consult with the other party before
issuing any press release or making any public statement with respect
to the Transactions.
(f) CONFIDENTIALITY. The covenanting party shall, and shall
cause its Subsidiaries to, keep confidential information disclosed by
any of the other party, its Subsidiaries or their respective
representatives to any of the covenanting party, its Subsidiaries or
their respective representatives, whether before or after the date of
this Agreement, in connection with the Transactions or the discussions
and negotiations preceding the execution of the Transaction Documents,
and use such information only as contemplated by the Transaction
Documents, except in each case to the extent that (1) the information
was known by the recipient when received or the information is or
hereafter becomes lawfully obtainable from other sources, (2)
disclosure to a Governmental Body having jurisdiction over the parties
is necessary or appropriate, (3) disclosure may otherwise be required
by applicable Regulations or (4) the duty as to confidentiality is
waived in writing by the other party. If this Agreement is terminated,
each party shall use reasonable efforts to return upon written request
from the other party all documents (and reproductions of those
documents) received by it or its representatives from the other party
(and, in the case of reproductions, all reproductions made by the
receiving party) that include information not within the exceptions
contained in the
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preceding sentence, unless the recipients provide assurances reasonably
satisfactory to the requesting party that the documents have been
destroyed.
SECTION 7.2 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
agrees, that prior to the Closing Date, the Company shall do the following:
(a) REPORTING REQUIREMENTS. The Company shall, and shall
cause its Subsidiaries to, furnish to the Purchaser:
(1) ADVERSE EVENTS. Promptly after the occurrence, or
failure to occur, of any such event, information with respect to any
event (A) which could have a Material Adverse Effect, (B) which, if
known as of the date of this Agreement, would have been required to be
disclosed to the Purchaser or (C) which would be likely to cause any
representation or warranty contained in any Transaction Document with
respect to the Company or such Subsidiary to be untrue or inaccurate in
any material respect at any time from the date of this Agreement to the
Closing Date;
(2) ACCESS TO INFORMATION. Afford to the Purchaser
and to the officers, employees, financial advisors, attorneys,
accountants and other representatives of the Purchaser, reasonable
access during normal business hours to all its properties, books,
contracts commitments, personnel and records; furnish as promptly as
practicable to the Purchaser and its representatives such information
with respect to the business, properties, operations, prospects or
conditions (financial or otherwise) of the Company and its Subsidiaries
as they may from time to time reasonably request; and
(3) GENERAL INFORMATION. Such other information
respecting the condition or operations, financial or otherwise, of any
of the Company and its Subsidiaries as the Purchaser may from time to
time reasonably request.
(b) MAINTENANCE OF RECORDS. The Company shall, and shall cause
its Subsidiaries to, keep adequate records and books of account
reflecting all its financial transactions, keep minute books containing
accurate records of all meetings and accurately reflecting all
corporate action of its shareholders and its board of directors
(including committees) and keep stock books and ledgers correctly
recording all transfers and issuances of all capital stock.
(c) MAINTENANCE OF PROPERTIES. The Company shall, and shall
cause its Subsidiaries to, maintain, keep and preserve all its real
property and personal property used or useful in the proper conduct of
its business in good working order and condition, ordinary wear and
tear excepted.
(d) CONDUCT OF BUSINESS. Except as otherwise contemplated by
the Transaction Documents, the Company shall, and shall cause its
Subsidiaries to, continue to engage in an efficient and economical
manner solely in a business of the same general type as conducted by it
on the date of this Agreement in the ordinary course, consistent
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with past practices; and use its best efforts to preserve the business
of the Company and its Subsidiaries and to preserve the goodwill of
customers, suppliers and others having business relations with the
Company and its Subsidiaries.
(e) MAINTENANCE OF INSURANCE. The Company shall, and shall
cause its Subsidiaries to, maintain insurance such that the
representations and warranties stated in Section 4.11 shall at all
times remain true.
(f) PAYMENT OF TAXES. The Company shall, and shall cause its
Subsidiaries to, timely file all Tax Returns that are required to be
filed by it and pay before they become delinquent all Taxes due
pursuant to those Tax Returns or any assessment received by it or
otherwise required to be paid, except Taxes being contested in good
faith by appropriate proceedings and for which adequate reserves or
other provisions are maintained, and except for the filing of such Tax
Returns as to which the failure to file could not, individually or in
the aggregate, have a Materially Adverse Effect.
(g) DESIGNATION OF DIRECTORS. Herbert S. Winokur, Jr. shall be
elected a director of the Company simultaneously with, or, at the
election of Mr. Winokur, promptly after, the Closing of the
transactions contemplated by this Agreement.
SECTION 7.3 NEGATIVE COVENANTS OF THE COMPANY. The Company
agrees as follows, and shall not enter into any agreement or take any other
action inconsistent with the following, in each case until the conclusion of the
Closing:
(a) CHARTER DOCUMENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, amend its articles of incorporation
or its bylaws.
(b) CAPITALIZATION. The Company shall not, and shall not
permit any of its Subsidiaries to, issue any shares of capital stock or
other Equity Securities.
(c) MERGERS, ETC. Except as shall have been previously agreed
in writing by the parties, which writing makes reference to this
Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, merge or consolidate with any person, sell, lease,
license or otherwise dispose of all or substantially all of its assets
(whether now owned or hereafter acquired) to any person or acquire all
or substantially all of the assets or the business of any person, in
each case whether in one transaction or in a series of transactions,
except that a Consolidated Subsidiary may merge into or transfer assets
to the Company or a Wholly-Owned Consolidated Subsidiary.
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ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION.
(a) The obligations of the parties under this Agreement with
respect to the Closing may be terminated at any time prior to the
conclusion of the Closing, in each case by:
(1) the mutual consent of the Company and the
Purchaser:
(2) the Company, if (A) the conditions to be
satisfied by the Purchaser set forth in Sections 3.1 shall not have
been met with respect to the Closing by March 31, 1998 and (B) the
Company shall have paid in full to the Purchaser all amounts then owed
to the Purchaser pursuant to Section 8.2, if any;
(3) the Company, if a representation, warranty or
covenant of the Purchaser set forth in a Transaction Document is
breached or violated by the Purchaser in any material respect;
(4) the Purchaser, if the conditions to be satisfied
by the Company set forth in Sections 3.1 shall not have been met with
respect to the Closing by December 31, 1997; and
(5) the Purchaser, if a representation, warranty or
covenant of the Company set forth in a Transaction Document is breached
or violated by the Company in any material respect.
(b) Any termination of the obligations of the parties shall be
made by written agreement or by written notice from the terminating
party to the other parties.
(c) The termination of the obligations of the parties under
this Section 8.1 shall not relieve any party of any liability for a
breach of any warranty, covenant or agreement, or for any
misrepresentation, under this Agreement, or be deemed to constitute a
waiver of any available remedy (including specific performance if
available) for any breach or misrepresentation.
SECTION 8.2 EXPENSES AND FEES.
(a) PURCHASER COLLECTION EXPENSES. In addition to the other
provisions of this Section 8.2, the Company shall promptly, but in no
event later than two business days following written notice thereof,
together with related bills or receipts, reimburse the Purchaser for
all reasonable out-of-pocket costs, fees and expenses, including,
without
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limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation incurred in connection with collecting such
costs, fees and expenses and any other fees due under this Agreement or
any of the other Transaction Documents as a result of any willful
breach by the Company of its obligations under this Section 8.2.
(b) COMPANY COLLECTION EXPENSES. In addition to the other
provisions of this Section 8.2, the Purchaser shall promptly, but in no
event later than two business days following written notice thereof,
together with related bills or receipts, reimburse the Company for all
reasonable out-of-pocket costs, fees and expenses, including, without
limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation incurred in connection with collecting such
costs, fees and expenses and any other fees due under this Agreement or
any of the other Transaction Documents as a result of any willful
breach by the Purchaser of its obligations under this Section 8.2.
(c) OTHER EXPENSES. Except as otherwise provided in this
Section 8.2, whether or not the Transactions are concluded, all costs
and expenses incurred in connection with the Transaction Documents and
the Transactions shall be paid by the party incurring such expenses.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY THE COMPANY.
(a) Subject to, and without limiting the effect of, any term
or provision of any Transaction Document that limits the Purchaser's
recourse against the Company in the event of a failure by the Company
to perform a certain covenant or agreement specified therein, and
whether or not the Closing shall occur, the Purchaser may make a claim
for indemnification pursuant to this Article IX at any time during the
period from the date of termination of this Agreement pursuant to
Section 8.1 or the Closing Date, as the case may be, through and
including the first anniversary of the date of termination of this
Agreement pursuant to Section 8.1 or the Closing Date, as the case may
be, and the Company shall thereafter indemnify the Purchaser against,
and hold it harmless from, any and all Losses in any way relating to or
allegedly arising out of any of the following:
(1) any breach of the representations, warranties,
covenants or agreements of the Company contained in any Transaction
Document, whether or not the Transactions are concluded or the
obligations of the parties under the Transaction Documents are
terminated pursuant to Article VII or otherwise;
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(2) any untrue statement of a material fact contained
in any notification or any materials filed by the Company with the
Securities and Exchange Commission or distributed or otherwise
disseminated to the public (or any amendment or supplement thereto)
relating to the Transaction Documents and the Transactions or any
failure to state a material fact required to make any statement
contained therein not misleading unless the statement or omission is
based primarily upon information furnished in writing to the Company by
the Purchaser or any other indemnified person expressly for inclusion
in the material in question; or
(3) any other matter as to which the Company in other
provisions of this Agreement or any other Transaction Document has
agreed to indemnify any of those persons.
The Company shall have no obligation under this Section 9.1 to (x) the Purchaser
with respect to any of the foregoing arising primarily out of the gross
negligence or willful misconduct of the Purchaser as determined by a final
judgment of a court of competent jurisdiction or (y) any of the limited partners
of the Purchaser.
(b) If any Action indemnifiable under this Section 9.1 shall
be brought, asserted or threatened against Purchaser, Purchaser shall
promptly notify the indemnifying person. A failure to notify the
indemnifying person timely or at all shall reduce the liabilities and
obligations of the indemnifying person under this Section 9.1 only to
the extent the indemnifying person actually shall be prejudiced by such
failure. The indemnifying person shall assume the defense of the
Action, including the employment of counsel satisfactory to the
indemnified person and the payment of all related fees and expenses,
but the indemnified person may employ separate counsel in the Action
and participate in the defense of the Action at its own expense.
However, the indemnified person may by written notice to the
indemnifying person assume the defense of the Action, including the
employment of counsel, at the expense of the indemnifying person
(except that the indemnifying person shall not be liable for the fees
and expenses of more than one such separate counsel with respect to the
Action) if:
(1) without a delay that shall be prejudicial to the
interests of the indemnified person, the indemnifying person fails to
take one or more of the following actions: (A) acknowledge in writing
to the indemnified person the liability of the indemnifying person to
the indemnified person under this Section 9.1 with respect to the
Action, (B) assume the defense, (C) post an indemnity or similar bond
(in form and substance satisfactory to the indemnified person) in an
amount equal to the full amount for which the indemnified person may be
liable as a result of the Action (including penalties and interest) or
provide other evidence satisfactory to the indemnified person of the
ability of the indemnifying person to pay that amount in full or (D)
employ counsel reasonably satisfactory to the indemnified person; or
(2) the persons against whom the Action shall have
been brought, asserted or threatened (including any impleaded parties)
include both the indemnified
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person and the indemnifying person and the indemnified person is
advised by counsel that there may be one or more legal defenses
available to the indemnified person that are different from or
additional to those available to the indemnifying person; or
(3) the indemnified person reasonably believes that
the Action or an unfavorable resolution of the Action may materially
and adversely affect the business, properties, operations, prospects or
condition (financial or otherwise) of the indemnified person and its
Affiliates other than as a result of the payment of money damages.
If the indemnified person has assumed the defense of the Action pursuant to any
of the three conditions stated above, then the indemnifying person shall not
have the right to assume the defense of the Action on behalf of the indemnified
person and the indemnified person shall have the right to control the defense,
compromise or settlement of any indemnifiable Action on behalf of and for the
account and risk of the indemnifying person. The indemnifying person shall be
bound by the result of the defense of any Action, whether the defense shall have
been assumed by the indemnifying person or by the indemnified person, and shall
indemnify the indemnified person against, and hold the indemnified person
harmless from, all Losses in any way relating to or allegedly arising in
connection with the matter or matters that shall be the basis of the Action or
otherwise connected to the Action, except that the indemnifying person shall not
be liable for the payment of the amount of money damages provided in a
settlement of an indemnifiable Action defended by the indemnified person
pursuant to the second or third conditions stated above that shall have been
effected without the written consent of the indemnifying person, which consent
shall not be unreasonably withheld.
(c) Notwithstanding anything in this Section 9.1 to the
contrary, if, in connection with an Action indemnifiable under this
Section 9.1, a Governmental Body or other person having authority or
jurisdiction over a matter or matters related to the Action shall have
rendered, entered or granted a binding judgment, decision, ruling,
order or award with respect to the matter or matters providing for the
payment of money damages or the claimant and the indemnifying party
shall have agreed to settle the Action for an amount of money damages
without reservation of any rights or defenses against the indemnified
person, and if the indemnified person elects to appeal the judgment,
decision, ruling, order or award or declines to agree to the proposed
settlement, as the case may be, then the indemnified person may
continue to defend the Action, free of any participation by the
indemnifying person, but the amount of any ultimate liability of the
indemnifying party under this Section 9.1 with respect to Losses
related to or allegedly arising in connection with the matter or
matters that shall have been comprehended by the judgment, decision,
ruling, order or award or by the proposed settlement, as the case may
be, shall then be limited to the amount of the judgment, decision,
ruling, order or award or the amount of the proposed settlement, as the
case may be, plus the other indemnified Losses of the indemnified
person relating to the matter or matters through the date of its
election to appeal or its rejection of the proposed settlement, as the
case may be.
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(d) If the indemnification provided for in this Section 9.1 is
unavailable to an indemnified person (other than by reason of
exceptions provided in this Section 9.1), or is insufficient to hold
harmless an indemnified person in respect of any Loss then the
indemnifying person, in lieu of indemnifying the indemnified person,
shall contribute to the amount paid or payable by the indemnified
person as a result of the Loss in the proportion that is appropriate to
reflect the relative fault of the indemnifying person on the one part
and of the indemnified person on the other part in connection with the
events or circumstances which resulted in the Loss as well as any other
relevant equitable considerations. The relative fault of the
indemnifying person on the one part and of the indemnified person on
the other part shall be determined by reference to, among other things,
those persons' relative intent, knowledge, access to information and
opportunity to correct or prevent the events or circumstances resulting
in the Loss. The amount of any Loss suffered, incurred or paid any
person shall be deemed to include all expenses incurred or paid by the
person in connection with investigating or defending any Action,
including, but not limited to, the fees and expenses of counsel.
SECTION 9.2 NO LIMITATION ON OTHER RIGHTS OF RECOVERY. The
indemnification set forth in this Article IX shall be in addition to any other
obligations or liabilities of an indemnifying person to an indemnified person at
common law or otherwise. The provisions of this Article VIII shall not eliminate
or otherwise limit the right of any indemnified person or any other person to
seek to recover contribution, damages or otherwise enforce its rights against
the indemnifying person or any other person without regard to the provisions of
this Article IX. If at any time all or any part of any indemnification payment
hereunder is or must be rescinded or returned to the person making such
indemnity payment for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any person) the indemnification
obligations of the person making such payment shall be reinstated with respect
to such payment so rescinded or returned as though such payment had never been
made or received.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, requests and other
communications to any party or under any Transaction Document shall be in
writing. Communications may be made by telecopy or similar writing. Each
communication shall be given to the party at its address stated on the signature
pages of this Agreement or at any other address as the party may specify for
this purpose by notice to the other party. Each communication shall be effective
(1) if given by telecopy, when the telecopy is transmitted to the proper address
and the receipt of the transmission is confirmed, (2) if given by mail, 72 hours
after the communication is deposited in the mails properly addressed with first
class postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
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SECTION 10.2 NO WAIVERS; REMEDIES. No failure or delay by any
party in exercising any right, power or privilege under any Transaction Document
shall operate as a waiver of the right, power or privilege. A single or partial
exercise of any right, power or privilege shall not preclude any other or
further exercise of the right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in the Transaction
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.3 AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of any Transaction Document, and no
consent to any departure by a party to a Transaction Document from any provision
of the Transaction Document, shall be effective unless it shall be in writing
and signed and delivered by the other parties to the Transaction Document, and
then it shall be effective only in the specific instance and for the specific
purpose for which it is given.
SECTION 10.4 SUCCESSORS AND ASSIGNS.
(a) Purchaser may assign to an Affiliate thereof its rights
and delegate its obligations under this Agreement before the Closing;
such assignee shall accept those rights and assume those obligations
for the benefit of the other party in writing in form reasonably
satisfactory to the Company. Thereafter, without any further action by
any person, all references in this Agreement to the "Purchaser" and all
comparable references, shall be deemed to be references to the
transferee, but such assignor shall not be released from any obligation
or liability under this Agreement.
(b) Except as provided in Section 10.4(a) or in any
Transaction Document, no party to this Agreement may assign its rights
under the Transaction Document. Any delegation in contravention of this
Section shall be void AB INITIO and shall not relieve the delegating
party of any obligation under this Agreement.
(c) The provisions of each Transaction Document shall be
binding upon and inure to the benefit of the parties to the Transaction
Document and their respective successors and permitted assigns.
SECTION 10.5 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance GAAP, applied on a basis consistent (except for changes approved
by the Company's independent public accountants) with the latest audited
financial statements referred to in Section 4.5.
SECTION 10.6 GOVERNING LAW. Each Transaction Document shall be
governed by and construed in accordance with the internal laws of the State of
New York. All rights and obligations of the Company and Purchaser shall be in
addition to and not in limitation of those provided by applicable law.
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SECTION 10.7 COUNTERPARTS; EFFECTIVENESS. Each Transaction
Document may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were on the same instrument.
SECTION 10.8 SEVERABILITY OF PROVISIONS. Any provision of any
Transaction Document that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition
or unenforceability without invalidating the remaining provisions of the
Transaction Document or affecting the validity or enforceability of the
provision in any other jurisdiction.
SECTION 10.9 HEADINGS AND REFERENCES. Article and section
headings in any Transaction Document are included in the Transaction Document
for the convenience of reference only and do not constitute a part of the
Transaction Document for any other purpose. References to parties and articles
and sections in any Transaction Document are references to the parties to or the
articles and sections of the Transaction Document, as the case may be, unless
the context shall require otherwise.
SECTION 10.10 ENTIRE AGREEMENT. The Transaction Documents
embody the entire agreement and understanding of the respective parties and
supersede all prior agreements or understandings with respect to the subject
matters of those documents; provided that the agreement of the parties contained
in the sixth paragraph of that certain letter agreement dated as of April 21,
1997 between Purchaser and Seller is expressly incorporated herein by this
reference.
SECTION 10.11 SURVIVAL. Except as otherwise specifically
provided in any Transaction Document, and notwithstanding any investigation or
notice to the contrary or any waiver by any other party of a related condition
precedent to the performance by the other party of an obligation under the
Transaction Document, (1) each representation and warranty of each party to the
Transaction Document contained in or made pursuant to the Transaction Document
shall survive each Closing and remain in full force and effect until the date
that is the first anniversary of the Closing Date (2) the other party may assert
or commence an Action against the party with respect to the breach of any such
representation or warranty of the party on or before such date and may maintain
any such Action thereafter. Each covenant or agreement of a party to a
Transaction Document required to be performed on or after a Closing shall remain
in full force and effect thereafter in accordance with its terms.
SECTION 10.12 NON-EXCLUSIVE JURISDICTION. Each party (1)
agrees that any Action with respect to any Transaction Document may be brought
in the courts of the State of New York or of the United States of America for
the Southern District of New York, (2) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any Action in
those jurisdictions; PROVIDED, HOWEVER, that any party may assert in an Action
in any other jurisdiction or venue each mandatory defense, third-
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party claim or similar claim that, if not so asserted in such Action, may
thereafter not be asserted by such party in an original Action in the courts
referred to in clause (1) above.
SECTION 10.13 WAIVER OF JURY TRIAL. Each party waives any
right to a trial by jury in any Action to enforce or defend any right under any
Transaction Document or any amendment, instrument, document or agreement
delivered, or which in the future may be delivered, in connection with any
Transaction Document and agrees that any Action shall be tried before a court
and not before a jury.
SECTION 10.14 AFFILIATE. Nothing contained in the Transaction
Documents shall constitute Purchaser an "affiliate" of any of the Company and
its Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 10.15 NON-RECOURSE. No recourse under any of the
Transaction Documents shall be had against any "controlling person" (within the
meaning of Section 20 of the Exchange Act) of any party or the shareholders,
directors, officers, employees, agents and Affiliates of the party or such
controlling persons, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any Regulation, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by such controlling person,
shareholder, director, officer, employee, agent or Affiliate, as such, for any
obligations of the party under this Agreement or any other Transaction Document
or for any claim based on, in respect of or by reason of such obligations or
their creation.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Purchase Agreement as of the date first written above.
THE WMF GROUP, LTD.
By: /s/ SHEKAR NARASIMHAN
------------------------------------------
Name: Shekar Narasimhan
Title: President
Address: 1593 Spring Hill Road
Suite 400
Vienna, Virginia 22182
Telecopy: (703) 610-1400
CAPRICORN INVESTORS II, L.P.
By: CAPRICORN HOLDINGS, LLC,
its General Partner
By: /s/ HERBERT S. WINOKUR, JR.,
------------------------------------------
Name: Herbert S. Winokur, Jr.,
Title: Manager
Address: 30 East Elm Street
Greenwich, Connecticut 06830
Telecopy: (203) 861-6600
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DEFINITION ANNEX
"ACTION" against a person means an action, suit,
investigation, complaint or other proceeding pending against or affecting the
person or its property, whether civil or criminal, in law or equity or before
any arbitrator or Governmental Body.
"AFFILIATE" of a person means any other person (1) that
directly or indirectly controls, is controlled by or is under common control
with, the person or any of its Subsidiaries, (2) that directly or indirectly
beneficially owns or holds 5.0% or more of any class of voting stock of the
person or any of its Subsidiaries or (3) 5.0% or more of the voting stock of
which is directly or indirectly beneficially owned or held by the person or any
of its Subsidiaries. The term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract or otherwise.
"APPROVAL" means an authorization, consent, approval or waiver
of, clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"BENEFICIAL OWNERSHIP" has the meaning assigned to that term
in Section 13(d) of the Exchange Act.
"BEST EFFORTS" means the use of all reasonable efforts,
including, without limitation, the expenditure of amounts reasonably related to
the objective sought to be achieved, with respect to matters and actions over
which the person has or could reasonably be expected to exert any control or
influence.
"CAPITALIZED LEASE" means any lease that is or should be
capitalized and appear on the balance sheet of the lessee.
"CLOSING DATE" has the meaning stated in Section 2.1 of this
Agreement.
"COMMON STOCK" means the common stock, par value $.01 per
share, of the Company.
"COMPANY" means The WMF Group, Ltd., a Delaware corporation,
and its successors.
"CONSOLIDATED" means, as applied to any financial or
accounting term, the term determined on a consolidated basis for a person and
its Subsidiaries, excluding intercompany items and minority interests.
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"CONSOLIDATED SUBSIDIARY" of a person at any date means any
Subsidiary of the person or other entity the accounts of which would be
consolidated with those of the person in its consolidated financial statements
as of that date.
"DEBT" of a person at any date means, without duplication, the
sum of (1) all obligations of the person (A) for borrowed money, (B) evidenced
by bonds, debentures, notes or other similar instruments, (C) to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (D) as lessee under Capitalized
Leases, (E) under letters of credit issued for the account of the person and (F)
arising under acceptance facilities, plus (2) all Debt of others Guaranteed by
the person, plus (3) all Debt of others secured by a Lien on any asset of the
person and whether or not such Debt is assumed by the person.
"DOLLARS" AND "$" refer to United States dollars and other
lawful currency of the United States of America from time to time in effect.
"DUS" shall mean the Fannie Mae Delegated Underwriting and
Servicing program.
"DUS MORTGAGE LOANS" shall mean Mortgage Loans originated
under DUS.
"EQUITY SECURITIES" of a person means the capital stock of the
person and all other securities convertible into or exchangeable or exercisable
for any shares of its capital stock, all rights to subscribe for or to purchase,
all options for the purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any securities
convertible into or exchangeable or exercisable for any of the foregoing.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the related rules and regulations thereunder.
"EXCHANGE ACT REGISTRATION STATEMENT" means the Registration
Statement on Form 10 filed by the Company with the SEC on August 4, 1997 which
became effective October 3, 1997 with respect to the registration of the Common
Stock under the Exchange Act.
"FHA" shall mean the Federal Housing Administration, an agency
within HUD, or any successor thereto and including the Federal Housing
Commissioner and the Secretary of HUD where appropriate under the FHA
regulations.
"FANNIE MAE" shall mean Fannie Mae or any successor
organization.
"FLOW SERVICING AGREEMENT" shall mean an agreement between the
Company and a Mortgage originator setting forth the terms and conditions under
which the Company agrees to buy loan servicing rights from the Mortgage
originator.
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"FREDDIE MAC" shall mean the Federal Home Loan Mortgage
Corporation or any successor or organization.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America from time to time.
"GNMA" shall mean the Government National Mortgage Association
or any successor organization.
"GOVERNMENTAL BODY" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, county or local,
domestic or foreign including, without limitation, HUD, GNMA, Freddie Mac,
Fannie Mae and the FHA.
"GUARANTEE" by any person means any obligation, contingent or
otherwise, of the person directly or indirectly guaranteeing any Debt of any
other person or in any manner providing for the payment of any Debt of any other
person or the investment of funds in any other person or otherwise protecting
the holder of the Debt against loss (whether by agreement to indemnify, to lease
assets as lessor or lessee, to purchase assets, goods, securities or services,
or to take-or-pay or otherwise), but the term "GUARANTEE" does not include
endorsements for collection or deposit in the ordinary course of business. The
term "GUARANTEE" used as a verb has a correlative meaning.
"HUD" shall mean the United States Department of Housing and
Urban Development or any successor organization.
"INVESTOR" shall mean FHA, GNMA, Fannie Mae and Freddie Mac or
any private or public investor or credit enhancer for which the Company or any
of its Subsidiaries is originating and/or servicing (or to the extent or any
continuing obligation, has in the past originated or serviced) Mortgage Loans
pursuant to a Mortgage Servicing Agreement.
"KNOWLEDGE" with respect to a representation or warranty of a
party contained in any Transaction Document means, after due inquiry by the
representing party of each of the following persons, the actual knowledge of any
of the officers or other employees of the representing party having managerial
responsibility for the portion of the operations, assets or liabilities of the
representing party and its Subsidiaries with respect to which such knowledge of
the person is being represented.
"LIEN" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest or encumbrance of any kind (including, but not
limited to, any conditional sale agreement or other title retention agreement,
any Capitalized Lease or financing lease having substantially the same economic
effect as the foregoing and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
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"LOAN DOCUMENTS" shall mean any Mortgage Note or Mortgage or
similar instrument, and all amendments thereto, evidencing or securing a
Mortgage Loan, including hard copies where available, and all machine-readable
copies on any media.
"LOSS" means, with respect to any person, any cost, damage,
disbursement, expense, liability, judgment, loss, deficiency, obligation, Taxes,
penalty or settlement of any kind or nature, whether foreseeable or
unforeseeable (including, without limitation, interest or other carrying costs,
penalties, legal, accounting, expert witness, consultant and other professional
fees and expenses incurred by such person in the investigation, collection,
prosecution and defense of Actions (including, without limitation claims in
connection with the enforcement of any rights under any of the Transaction
Documents) and amounts paid in settlement), that may be imposed on or otherwise
incurred or suffered by such person.
"MATERIAL ADVERSE EFFECT" means, with respect to a
circumstance or event subject to a representation, warranty, covenant or other
agreement of a person or any of its Subsidiaries in any Transaction Document
that includes a reference therein to the possible occurrence of a Material
Adverse Effect, whether considered individually or together in the aggregate
with all other circumstances or events that are the subject of the same
representation, warranty, covenant or other agreement, a material adverse effect
on the business, properties, operations, prospects, condition (financial or
otherwise) or capitalization of the person and its Subsidiaries, taken as a
whole, or the ability of the person to perform its obligations under any
Transaction Document to which it is or may become a party.
"MATERIAL CONTRACT" means an agreement referred to in Section
4.15.
"MORTGAGE" shall mean a mortgage, deed of trust, security deed
or other security instrument on real property securing a Mortgage Note.
"MORTGAGE LOAN" shall mean a mortgage loan evidenced by a
Mortgage Note and secured by a Mortgage which is either an Owned Mortgage Loan
or a Mortgage Loan comprising the Mortgage Servicing Portfolio.
"MORTGAGE NOTE" shall mean a written promise to pay a sum of
money at a fixed or variable interest rate during a specified term evidencing a
Mortgage Loan.
"MORTGAGE SERVICING AGREEMENT" shall mean an agreement between
the Company and an Investor or a servicer or other party setting forth the terms
and conditions under which Mortgage Loans or other obligations relating to
Mortgage Loans have been and are to be serviced or subserviced and which may be
incorporated in general guidelines and issuances of an Investor (such as the
applicable Fannie Mae and Freddie Mac Seller/Servicer Guides) or PMI.
"MORTGAGE SERVICING PORTFOLIO" shall mean, as of the date of
this Agreement, all the Mortgage Loans which have been, are and, subject to
existing Mortgage Servicing
A-4
<PAGE>
Agreements, are to be serviced or subserviced by the Company, other than the
Owned Mortgage Loans, and, from time to time after the date of this Agreement,
as and when Owned Mortgage Loans are delivered to Investors, such previously
Owned Mortgage Loans as well.
"OUTSTANDING OPTIONS" has the meaning stated in Section
4.14(b) of this Agreement.
"OWNED MORTGAGE LOANS" shall mean all the Mortgage Loans the
legal and/or beneficial ownership interests in which are vested in the Company
(or any of its Subsidiaries) as of the date of this Agreement. For the purpose
of this Agreement, Owned Mortgage Loans shall not include Mortgage Loans backed
by mortgage pass-through certificates guaranteed by GNMA (since such Mortgage
Loans are transferred in trust to the owner of the related GNMA guaranteed
mortgage-backed securities).
"PMI" shall mean private mortgage insurance, credit
enhancement or a private mortgage insurer or credit enhancer, as the context may
require.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Body.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement between the Company and Purchaser to be dated as of the Closing Date,
substantially in the form attached hereto as EXHIBIT A.
"REGISTRATION STATEMENTS" means the Securities Act
Registration Statement and the Exchange Act Registration Statement,
collectively.
"REGULATION" means (1) any applicable law, rule, regulation,
judgment, decree, ruling, order, award, injunction, recommendation or other
official action of any Governmental Body and (2) any official change in the
interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
"SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the related rules and regulations thereunder.
"SECURITIES ACT REGISTRATION STATEMENT" means the Registration
Statement on Form S-1 filed by the Company with the SEC on October 8, 1997 which
became effective November 4, 1997 with respect to the registration under the
Securities Act of the distribution of shares of Common Stock by Capricorn
Investors, L.P.
A-5
<PAGE>
"SERVICING RIGHTS" shall mean the right to receive the
servicing fee income and any other income arising from or connected to the
Mortgage Servicing Agreements or the servicing of the Mortgage Loans in the
Mortgage Servicing Portfolio.
"SHARES" has the meaning stated in Section 1.1(a).
"SUBSIDIARY" of a person means (i) any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect not less than 50% of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
person or (ii) a partnership in which the person or a Subsidiary of the person
is, at the date of determination, a general or limited partner of such
partnership, but only if the person or its Subsidiary is entitled to receive
more than fifty percent of the assets of such partnership upon its dissolution.
"TAXES" means all taxes, charges, fees, levies, duties,
imposts, withholdings, restrictions, fines, interest, penalties, additions to
tax or other assessments or charges, including, but not limited to, income,
excise, property, withholding, sales, use, gross receipts, value added and
franchise taxes, license recording, documentation and registration fees and
custom duties imposed by any Governmental Body.
"TAX RETURN" means a report, return or other information
required to be filed by a person with or submitted to a Governmental Body with
respect to Taxes, including, where permitted or required, combined or
consolidated returns for any group of entities that includes the person.
"TRANSACTION DOCUMENTS" means, collectively, means this
Agreement and the Registration Rights Agreement, and all other instruments and
documents executed and delivered by any person in connection with the conclusion
of one or more of the transactions contemplated thereby.
"TRANSACTIONS" means, collectively, the transactions
undertaken pursuant to or otherwise contemplated by, the Transaction Documents.
"TRANSFER" means a sale, an assignment, a lease, a license, a
grant, a transfer or other disposition of an asset or any interest of any nature
in an asset. The term "TRANSFER" used as a verb has a correlative meaning.
"WMF GROUP" shall mean Washington Mortgage Financial Group,
Ltd., a Delaware corporation.
"WMF/HUNTOON" shall mean WMF/Huntoon, Paige Associates
Limited, a Delaware corporation.
A-6
CAPRICORN INVESTORS II, L.P.
30 EAST ELM STREET
GREENWICH, CONNECTICUT 06830
April 21, 1997
NHP Financial Services, Ltd.
1593 Spring Hill Road
Suite 400
Vienna, Virginia 22182
Re: Capricorn Investors II, L.P. Investment in NHP
Financial Services, Ltd.
Ladies and Gentlemen:
You have requested that Capricorn Investors II, L.P. ("CAPRICORN II") make an
investment (the "INVESTMENT") in NHP Financial Services, Ltd. ("NFS") for
certain purposes in connection with the distribution by NHP Incorporated ("NHP")
to its stockholders of all the shares of Common Stock, par value $.01 per share
("NFS STOCK"), of NFS owned by NHP (the "SPIN-OFF"). The Spin-off, the
Investment and all other transactions undertaken by NFS and its respective
subsidiaries and affiliates in contemplation of, or proposed to be effected in
connection with, any of the foregoing, are collectively referred to as the
"TRANSACTIONS".
Subject to the terms and conditions of this letter agreement, Capricorn II is
pleased to confirm that it hereby commits to provide the Investment. The
Investment shall consist of the purchase by Capricorn II, for $5 million, of
shares of NFS Stock at a price of $9.15 per share following consummation of the
Spin-Off and after giving effect to the recapitalization of the NFS Stock
contemplated in connection therewith. Capricorn II reserves the right to arrange
for one or more of its affiliates, as Capricorn II shall designate, to make all
or any portion of the Investment.
Capricorn II's commitment to provide the Investment is based in part upon our
current assumptions regarding the terms of the Spin-off, the assets,
liabilities, business, operations, conditions (financial or otherwise) and
prospects of NFS after the Spin-off, the officers and directors of NFS following
the Spin-off, the authority and ability of NFS to issue the NFS Stock in
connection with the Investment, and certain other premises, including, without
limitation, our current assumptions and expectations regarding the terms and
conditions of the Transactions and certain other matters referred to in this
letter agreement.
Capricorn II's commitment to provide the Investment on the terms and conditions
set forth in this letter agreement is also subject to the negotiation, execution
and delivery of the definitive agreements, in each case prepared by legal
counsel for Capricorn II and containing terms and conditions satisfactory to
Capricorn II, to evidence such terms and conditions. The definitive
<PAGE>
NHP Financial Services, Ltd.
April 21, 1997
Page 2
agreements would also contain such other terms and conditions, representations
and warranties, covenants, indemnifications, and conditions that, in our
opinion, are appropriate for the Investment. This letter agreement is not meant
to be, and shall not be construed as, an attempt to define all of the terms and
conditions of the Investment, which will be set forth in full in the definitive
documentation for the Investment all of which shall be satisfactory to Capricorn
II, in its sole discretion, but instead this letter agreement constitutes only a
framework for further discussion and negotiation of the terms and conditions of
the Investment. Except as expressly set forth in this letter agreement, until
definitive documentation for the Investment has been executed and delivered by
all necessary parties, there is no legally binding agreement with respect to the
Investment and there are no other legal or equitable duties, responsibilities or
rights with respect thereto.
Capricorn II's commitment to provide the Investment is also subject to (i)
Capricorn II's satisfaction with respect to all matters related to the
Transactions, (ii) no information coming to Capricorn II's attention which it
believes is reasonably likely to have a material adverse impact on NFS, (iii) no
adverse change in the condition of the financial markets and (iv) verification
of the legal, tax, financial, operating, structural and other factual premises
upon which Capricorn II's commitment to provide the Investment is based.
Capricorn II also agrees as follows:
(a) if (i) Capricorn II provides the Investment, (ii) at any time
prior to the first anniversary of the Spin-Off Capricorn II
and its Affiliates (as defined in Rule 144(a) under the
Securities Act of 1933, as amended; provided that for purposes
of this letter, Capricorn Investors, L.P. shall not be deemed
an "AFFILIATE" of Capricorn II) collectively own more than 20%
of the shares of NFS Stock then outstanding and (iii) at such
time no other person or Group (as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) shall own
a number of shares of NFS that is greater than the number of
shares of NFS Stock then owned by Capricorn II and its
Affiliates, then neither Capricorn II nor any such Affiliate
(each, a "STOCKHOLDER") shall transfer or agree to transfer,
in one or a series of related transactions concluding prior to
the first anniversary of the Spin- Off, a number of shares
equal to more than 50% of the shares of NFS Stock then owned
by the Stockholders (a "TRANSACTION"), without first requiring
as a condition to any such transaction (which condition such
Stockholder may not waive or amend) the person or Group (as
defined in Section 13(d)(3) of the Securities Exchange Act
1934, as amended ) acquiring shares from a Stockholder in a
Transaction (the "ACQUIROR") to either:
(i) commence a tender or exchange offer to all
stockholders of NFS offering to purchase the shares
of NFS Stock held by all such stockholders on
<PAGE>
NHP Financial Services, Ltd.
April 21, 1997
Page 3
substantially the terms and conditions offered to
such Stockholder; provided that the Acquiror may
offer to purchase less than all shares issued and
outstanding as long as the offer is for not less than
the number of shares that the Acquiror originally
offered to purchase from such Stockholder and the
Acquiror purchases from each person (including the
Stockholder) accepting the offer a pro rata portion
of the shares with respect to which the offer is
accepted, or
(ii) propose a merger, consolidation or other business
combination involving NFS in which each stockholder
would be entitled, upon completion of such
transaction to receive the same consideration as that
offered to such Stockholder.
The foregoing provisions shall not apply to shares of NFS
Stock transferred by any Stockholder in a registered offering,
through Rule 144 or any other open market transactions, in
connection with a tender or exchange offer which is made to
all shareholders other than as referred to in clause (i)
above, or with respect to transfers by Capricorn to any of its
Affiliates; and
(b) Capricorn II and its Affiliates shall not buy any shares of
NFS Stock in open market transactions for a period of 90 days
following the Spin-Off, except that Capricorn II and its
Affiliates shall be permitted to make any such purchases
during any portion of such 90 day period in which Capricorn II
shall have been advised by NFS in writing that NFS itself will
not be buying any shares of NFS Stock in open market
transactions.
You represent and warrant that all information with respect to the matters
referred to above and other matters related to the Transactions (i) made
available to Capricorn II and its affiliates by NFS and its affiliates, (ii)
contained in any filing by NFS and its affiliates with any court or governmental
or regulatory agency, commission or instrumentality or (iii) contained in any
prospectus, information statement or any other reports or documents published,
delivered, sent or given by or on behalf of NFS and its affiliates in respect of
the issuance or distribution of any securities of NFS (collectively, and to the
extent that any of the foregoing is superseded or revised by information
subsequently and timely made available to Capricorn II or its affiliates, as the
case may be, prior to the closing of the Investment, the "INFORMATION") will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements are made, in each case as of the date
as of which the Information purports to speak and at the date of the closing of
the Investment.
<PAGE>
NHP Financial Services, Ltd.
April 21, 1997
Page 4
Capricorn II shall have the right to review and approve in advance (which
approval will not be unreasonably withheld) all public announcements, filings,
solicitations, information, memoranda and similar documentation made or
distributed by NFS and its affiliates relating to the Transactions or the other
transactions contemplated by this letter agreement to the extent that they refer
to or otherwise affect Capricorn II or its affiliates.
You represent and warrant that the Board of Directors of NFS, at a meeting duly
called and held, unanimously approved the Investment, which action constitutes
approval of the Investment for purposes of Section 203 of Delaware General
Corporation Law and which approval shall make such Section 203 inapplicable to
the Investment and to any future transactions between NFS and Capricorn II.
This letter agreement shall not be assignable by you without the prior written
consent of Capricorn II and may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by each of the parties
hereto. References herein to "this letter agreement" include such waivers and
modifications. This letter is for the benefit of NFS only and no other person or
entity may relay hereon. There are no express or implied third-party
beneficiaries of Capricorn II's commitment to provide the Investment (including,
without limitation, NHP, the stockholders of NHP and, after the Spin-off, the
stockholders of NFS), and no person other than a party hereto may rely on such
commitment or on any other matter contemplated by this letter agreement, except
that, if Capricorn II provides the Investments, the agreements stated in the
sixth paragraph of this letter agreement shall be made for the benefit of the
stockholders of NFS.
If definitive agreements have not then been executed and delivered, Capricorn
II's commitment to provide the Investment will terminate at 10:00 a.m., New York
time, on May 15, 1997, unless prior thereto Capricorn II and you shall have
agreed in writing to extend the term hereof.
Capricorn II reserves the right to employ the services of its affiliates in
connection with the matters contemplated by this letter agreement. You
acknowledge that Capricorn II may share with any of its affiliates, and such
affiliates may share with Capricorn II, any information (including non-public
information) related to NFS and its affiliates and subsidiaries, the
Transactions or any of the other matters contemplated by this letter agreement
in connection with the Transactions.
This letter agreement may be executed in counterparts, each of which shall be
deemed an original and all of which counterparts shall constitute one and the
same document.
This letter agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, representations or other
arrangements, whether express or implied, written or oral, of the parties
<PAGE>
NHP Financial Services, Ltd.
April 21, 1997
Page 5
in connection therewith except to the extent expressly incorporated or
specifically referred to herein or therein. Nothing in this letter agreement is
intended to obligate or commit Capricorn II and its affiliates to provide any
financing or services other than as set out herein.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAW.
EACH PARTY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS LETTER, THE TRANSACTIONS
OR THE MATTERS CONTEMPLATED BY THIS LETTER AGREEMENT. EACH PARTY HEREBY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK COURTS LOCATED IN
THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS LETTER
AGREEMENT, THE TRANSACTIONS OR ANY MATTERS CONTEMPLATED BY THIS LETTER
AGREEMENT. In the event of litigation, this letter agreement may be filed as a
written consent to a trial by the court.
If you are in agreement with the foregoing, please sign and return to us the
enclosed copy of this letter agreement on or before the close of business on
April 21, 1997, whereupon the agreement, as set forth herein, shall become
binding.
<PAGE>
We are delighted that you have given us this opportunity, and we look forward to
working with you on this matter.
Very truly yours,
CAPRICORN INVESTORS II, L.P.
By: Capricorn Holdings, LLC, its General
Partner
By: /s/ HERBERT S. WINOKUR, JR.
-------------------------------------
Name: Herbert S. Winokur, Jr.
Title: Manager
<PAGE>
AGREED TO AND ACCEPTED AS OF THE
21ST DAY OF APRIL, 1997:
NHP FINANCIAL SERVICES, LTD.
By: /s/ J. RODERICK HELLER, III
---------------------------------
Name: J. Roderick Heller, III
Title: Chairman
EXHIBIT A
FORM OF
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of _______ __, 1997
between THE WMF GROUP, LTD., a Delaware corporation (the "COMPANY"), and
CAPRICORN INVESTORS II, L.P., a Delaware limited partnership (the "PURCHASER").
Terms not otherwise defined herein have the meanings stated in
the Purchase Agreement (as defined below).
RECITALS
A. The Company and the Purchaser have entered into the
Purchase Agreement dated as of November 17, 1997 (as amended or modified from
time to time, the "PURCHASE AGREEMENT").
B. Pursuant to the Purchase Agreement, the Purchaser is
purchasing the Shares. The Shares are collectively referred to herein as the
"REGISTRABLE SHARES".
C. The Company and the Purchaser desire to enter into this
Agreement to provide for the registration under the Securities Act of the
disposition of the Registrable Shares and certain other matters. The execution
and delivery of this Agreement is a condition precedent to the respective
obligations of the parties on the Closing Date pursuant to Section 3.1(j) of the
Purchase Agreement.
AGREEMENT
The parties agree as follows:
SECTION 1. DEMAND REGISTRATION RIGHTS.
(a) From and after the Closing Date (the
"COMMENCEMENT DATE") and to and including the date that is the fourth
anniversary of the Commencement Date, subject to extension pursuant to Section 4
(as so extended from time to time, the "TERMINATION DATE"), on one or more
occasions when the Company shall have received the written request of the
Purchaser, any pledgee of Registrable Shares from the Purchaser or holders of at
least 100,000 Registrable Shares in the aggregate (as such number of shares may
be adjusted in the event of any change in the Registerable Shares by reason of
stock dividends, split-ups, reverse split-ups, mergers, recapitalizations,
subdivisions, conversions,
B-1
<PAGE>
exchanges of shares or the like) that shall have been acquired directly or
indirectly from the Purchaser and to which rights under this Section 1 shall
have been assigned pursuant to Section 13(a) (each such person, when requesting
registration under this Section 1 or under Section 2 and thereafter in
connection with any such registration, being hereinafter referred to as a
"REGISTERING STOCKHOLDER"), the Company shall give written notice of the receipt
of such request to each potential Registering Stockholder; it being understood
that, without prior notice to the Company, the Company shall not be deemed to
have knowledge of the existence of any pledgee of Registrable Shares. The
Company shall, as expeditiously as possible and in good faith, include in a
Registration Statement the number of Registrable Shares (the "TRANSACTION
REGISTRABLE SHARES") that the Registering Stockholders shall have specified by
written notice received by the Company not later than 10 Business Days after the
Company shall have given such written notice to the Registering Stockholders
pursuant to this Section 1(a).
(b) If the requested registration pursuant to this
Section 1 shall involve an underwritten offering, (1) no other securities of the
Company, including securities to be offered for the account of the Company or
any person other than a Registering Stockholder, shall be included in the
Registration Statement and (2) the Registering Stockholder initiating a request
for registration of Registrable Shares pursuant to this Section 1 shall select
(with the consent of the Company, not to be unreasonably withheld) the managing
underwriter in connection with the offering and any additional investment
bankers and managers to be used in connection with the offering.
(c) Notwithstanding anything herein to the contrary:
(1) the Company shall not be required to prepare and file
pursuant to this Section 1 a Registration Statement including less than
100,000 Registrable Shares in the aggregate (as such number of shares
may be adjusted in the event of any change in the Registerable Shares
by reason of stock dividends, split-ups, reverse split-ups, mergers,
recapitalizations, subdivisions, conversions, exchanges of shares or
the like);
(2) subject to the following clause (3), the Company shall not
be required to prepare and file pursuant to this Section 1 more than
seven Registration Statements, PROVIDED that a Registration Statement
shall be deemed not to have been prepared and filed if the same does
not become effective; and
(3) if a requested registration pursuant to this Section 1
shall involve an underwritten offering, and if the managing underwriter
shall advise the Company and the Registering Stockholders in writing
that, in its opinion, the number of Transaction Registrable Shares
proposed to be included in the registration is so great as to adversely
affect the offering, including the price at which the Transaction
Registrable Shares could be sold, the Company will include in the
registration the maximum number of securities which it is so advised
can be sold without the adverse effect, allocated pro rata among all
Registering Stockholders on the basis of the relative number of
Transaction Registrable Shares that each Registering Stockholder
B-2
<PAGE>
has duly requested to be included in the registration; PROVIDED, that
if 10% or more of the Transaction Registrable Shares requested to be
registered by the Registering Stockholder initiating a request for
registration of Registrable Shares pursuant to this Section 1 are so
excluded from any registration and an investment banking firm of
recognized national standing shall advise the Company that the number
of the Transaction Registerable Shares requested to be registered by
such Registering Stockholder, at the time of the request and in light
of the market conditions then prevailing, did not exceed the number
that would have an adverse effect on the offering of such Transaction
Registrable Shares, including the price of which such Transaction
Registrable Shares could be sold, there shall be provided one
additional registration under the preceding clause (2) in respect of
each such exclusion.
SECTION 2. PIGGY-BACK REGISTRATION RIGHTS.
(a) From and after the Commencement Date to and
including the date that is the fourth anniversary of the Commencement Date, if
the Company shall determine to register or qualify by a registration statement
filed under the Securities Act and under any applicable state securities laws,
any offering of any Equity Securities of the Company, other than an offering
with respect to which a Registering Stockholder shall have requested a
registration pursuant to Section 1, the Company shall give notice of such
determination to each potential Registering Stockholder and each other person
having rights with respect to the registration under the Securities Act of the
disposition of securities of the Company about which the Company has knowledge;
it being understood that without prior notice to the Company, the Company shall
not be deemed to have knowledge of the existence of any pledgee of Registrable
Shares. The Company shall, as expeditiously as possible and in good faith,
include in the registration statement the number of Registrable Shares (the
"TRANSACTION REGISTRABLE SHARES") that the Registering Stockholders shall have
specified by written notice received by the Company not later than 30 Business
Days after the Company shall have given such written notice to the Registering
Stockholders pursuant to this Section 2(a).
(b) Notwithstanding anything herein to the contrary:
(1) the Company shall not be required by this Section 2 to
include any Registrable Shares owned by Registering Stockholders in a
registration statement on Form S-4 or S-8 (or any successor form) or a
registration statement filed in connection with an exchange offer or
other offering of securities solely to the then existing stockholders
of the Company; and
(2) if a registration pursuant to this Section 2 involves an
underwritten offering, the Company shall select the managing
underwriter for the offering and any additional investment bankers and
managers to be used in connection with the offering, and if the
managing underwriter advises the Company in writing that, in its
opinion, the number of securities requested to be included in the
registration is so great as to adversely affect the offering, including
the price at which the securities
B-3
<PAGE>
could be sold, the Company will include in the registration the maximum
number of securities which it is so advised can be sold without the
adverse effect, allocated as follows:
(A) FIRST, all securities proposed to be registered
by the Company for its own account;
(B) SECOND, all securities proposed to be registered
by the Company pursuant to the exercise by any person other than a
Registering Stockholder of a "demand" right requesting the registration
of shares of Common Stock in accordance with an agreement substantially
similar to the provisions of Section 1;
(C) THIRD, all Transaction Registrable Shares duly
requested to be included in the registration, allocated pro rata among
all Registering Stockholders on the basis of the relative number of
Transaction Registrable Shares that each Registering Stockholder has
duly requested to be included in the registration; and
(D) FOURTH, any other securities proposed to be
registered by the Company other than for its own account, including,
without limitation, securities proposed to be registered by the Company
pursuant to the exercise by any person other than a Registering
Stockholder of a "piggy-back" right requesting the registration of
shares of Common Stock in accordance with an agreement substantially
similar to this Section 2;
PROVIDED, HOWEVER, that in no event will the number of Registrable
Shares included in a registration pursuant to this Section 2 be reduced
to less than 10% of the aggregate number of securities included in the
registration.
SECTION 3. REGISTRATION PROVISIONS. With respect to each
registration pursuant to this Agreement:
(a) Notwithstanding anything herein to the contrary,
the Company shall not be required to include in any registration any of the
Registrable Shares owned by a Registering Stockholder (1) if the Company shall
deliver to the Registering Stockholder an opinion, satisfactory in form, scope
and substance to the Registering Stockholder and addressed to the Registering
Stockholder by legal counsel satisfactory to the Registering Stockholder, to the
effect that the distribution of such Registrable Shares proposed by the
Registering Stockholder is exempt from registration under the Securities Act and
all applicable state securities laws or (2) if such Registering Stockholder or
any underwriter of such Registrable Shares shall fail to furnish to the Company
the information in respect of the distribution of the shares that may be
required under this Agreement to be furnished by the Registering Stockholder or
the underwriter to the Company.
(b) The Company shall make available for inspection
by each Registering Stockholder participating in the registration, each
underwriter of Transaction
B-4
<PAGE>
Registrable Shares owned by the Registering Stockholder and their respective
accountants, counsel and other representatives all financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility in connection with each registration of Transaction Registrable
Shares owned by the Registering Stockholder, and shall cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such person in connection with such registration; PROVIDED that records
and documents which the Company determines, in good faith, after consultation
with counsel for the Company and counsel for the Registering Stockholder or
underwriter, as the case may be, to be confidential and which it notifies such
persons are confidential shall not be disclosed to them, except in each case to
the extent that (1) the disclosure of such records or documents is necessary to
avoid or correct a misstatement or omission in the Registration Statement, (2)
the disclosure of such records or documents to an agency, bureau, commission,
court, department, official, political subdivision or other instrumentality of
any government, whether federal, state, county or local, domestic or foreign
(each, a "GOVERNMENTAL BODY") having jurisdiction over such person is necessary
or appropriate or (3) the disclosure of such records or documents may otherwise
be required by applicable laws, rules, regulations, ordinances, judgments,
rulings, orders, awards, recommendation or other official action of any
Governmental Body having jurisdiction over such person. Each Registering
Stockholder shall, after determining that disclosure of any records or documents
may be necessary or advisable in the circumstances referenced in the proviso to
the preceding sentence, give notice to the Company, and allow the Company, at
the Company's expense, to undertake appropriate action and to prevent disclosure
of any such records or documents deemed confidential.
(c) Each Registering Stockholder shall furnish, and
shall cause each underwriter of Transaction Registrable Shares owned by the
Registering Stockholder to be distributed pursuant to the registration to
furnish, to the Company in writing promptly upon the request of the Company the
additional information regarding the Registering Stockholder or the underwriter,
the contemplated distribution of the Transaction Registrable Shares and the
other information regarding the proposed distribution by the Registering
Stockholder and the underwriter that shall be required in connection with the
proposed distribution by the applicable securities laws of the United States of
America and the states thereof in which the Transaction Registrable Shares are
contemplated to be distributed. The information furnished by any Registering
Stockholder or any underwriter shall be certified by the Registering Stockholder
or the underwriter, as the case may be, and shall be stated to be specifically
for use in connection with the registration.
(d) The Company shall prepare and file with the
Securities and Exchange Commission the Registration Statement, including the
Prospectus, and each amendment thereof or supplement thereto, under the
Securities Act and as required under any applicable state securities laws, on
the form that is then required or available for use by the Company to permit
each Registering Stockholder, upon the effective date of the Registration
Statement, to use the Prospectus in connection with the contemplated
distribution by the Registering Stockholder of the Transaction Registrable
Shares requested
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to be so registered. A registration pursuant to Section 1 shall be effected
pursuant to Rule 415 (or any similar provision then in force) under the
Securities Act if the manner of distribution contemplated by the Registering
Stockholder shall include an offering on a delayed or continuous basis. The
Company shall furnish to each Registering Stockholder drafts of the Registration
Statement and the Prospectus and each amendment thereof or supplement thereto
for its timely review prior to the filing thereof with the Securities and
Exchange Commission. If any Registration Statement refers to any Registering
Stockholder by name or otherwise as the holder of any securities of the Company
but such reference is not required by the Securities Act or any similar federal
statute then in force, then the Registering Stockholder shall have the right to
require the deletion of such reference. The Company shall deliver to each
Registering Stockholder, without charge, one executed copy of the Registration
Statement and each amendment or post-effective amendment thereof and one copy of
each document incorporated therein by reference. If the registration shall have
been initiated solely by the Company or shall not have been initiated by a
Registering Stockholder, the Company shall not be obligated to prosecute the
registration, and may withdraw the Registration Statement at any time prior to
the effectiveness thereof, if the Company shall determine in good faith not to
proceed with the offering of securities included in the Registration Statement.
In all other cases, the Company shall use its best efforts to cause the
Registration Statement to become effective and, as soon as practicable after the
effectiveness thereof, shall deliver to each Registering Stockholder evidence of
the effectiveness and as many copies of the Prospectus and each amendment
thereof or supplement thereto as the Registering Stockholder may reasonably
request. The Company consents to the use by each Registering Stockholder of each
Prospectus and each amendment thereof and supplement thereto in connection with
the distribution, in accordance with this Agreement, of the Transaction
Registrable Shares owned by the Registering Stockholder. In addition, if
necessary for resale by the Registering Stockholders, the Company shall qualify
or register in such states as may be reasonably requested by each Registering
Stockholder the Transaction Registrable Shares of the Registering Stockholder
that shall have been included in the Registration Statement; PROVIDED that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation in any state in which it is not subject
to process or qualified as of the date of the request. The Company shall advise
the Purchaser and each Registering Stockholder in writing, promptly after the
occurrence of any of the following, of (1) the filing of the Registration
Statement or any Prospectus, or any amendment thereof or supplement thereto,
with the Securities and Exchange Commission, (2) the effectiveness of the
Registration Statement and any post-effective amendment thereto, (3) the receipt
by the Company of any communication from the Securities Exchange Commission with
respect to the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, including, without limitation, any stop order
suspending the effectiveness thereof, any comments with respect thereto and any
requests for amendments or supplements and (4) the receipt by the Company of any
notification with respect to the suspension of the qualification of Transaction
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose.
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(e) The Company shall use its best efforts to cause
the Registration Statement and the Prospectus to remain effective or current, as
the case may be, including the filing of necessary amendments, post-effective
amendments and supplements, and shall furnish copies of such amendments,
post-effective amendments and supplements to the Registering Stockholders, so as
to permit the Registering Stockholders to distribute the Transaction Registrable
Shares owned by them in their respective manner of distribution during their
respective contemplated periods of distribution, but in no event longer than six
consecutive months from the effective date of the Registration Statement;
PROVIDED that the period shall be increased by the number of days that any
Registering Stockholder shall have been required by Section 4 to refrain from
disposing under the registration of the Transaction Registrable Shares owned by
the Registering Stockholder. During such respective contemplated periods of
distribution, the Company shall comply with the provisions of the Securities Act
applicable to it with respect to the disposition of all Transaction Registrable
Shares that shall have been included in the Registration Statement in accordance
with their respective contemplated manner of disposition by the Registering
Stockholders set forth in the Registration Statement, the Prospectus or the
supplement, as the case may be. The Company shall not be deemed to have used its
best efforts to cause the Registration Statement to remain effective during the
applicable period if it voluntarily takes any action (other than an action
required under applicable law or taken pursuant to and in accordance with
Section 4) that would result in the Registering Stockholders not being able to
dispose of the Transaction Registrable Shares during their respective
contemplated periods of distribution in accordance with their respective
contemplated manner of disposition. The Company shall notify each Registering
Stockholder, at any time when a prospectus with respect to the Transaction
Registrable Shares is required to be delivered under the Securities Act, when
the Company becomes aware of the happening of any event as a result of which the
Prospectus (as then in effect) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein (in
the case of the Prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading and, as promptly as
practicable thereafter, prepare and file with the Securities and Exchange
Commission an amendment or supplement to the Registration Statement or the
Prospectus so that, as thereafter delivered to the purchasers of such
Transaction Registrable Shares, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company shall make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment. Notwithstanding anything in the
foregoing to the contrary, if, in the opinion of counsel for the Company, there
shall have arisen any legal impediment to the offer of the Transaction
Registrable Shares made by the Prospectus or if any legal action or
administrative proceeding shall have been instituted or threatened or any other
claim shall have been made relating to the offer made by the Prospectus or
against any of the parties involved in the offer, the Company may at any time
upon written notice to each Registering Stockholder (1) terminate the
effectiveness of the Registration Statement or (2) withdraw from the
Registration Statement the Transaction Registrable Shares owned by the
Registering Stockholder; PROVIDED that, promptly after those matters
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shall be resolved to the satisfaction of counsel for the Company, then, pursuant
to Section 1 or 2, as the case may be, the Company shall cause the registration
of Transaction Registrable Shares formerly covered by the Registration Statement
that were removed from registration by the action of the Company.
(f) If requested by any Registering Stockholder or
an underwriter of Transaction Registrable Shares owned by the Registering
Stockholder, the Company shall as promptly as practicable prepare and file with
the Securities and Exchange Commission an amendment or supplement to the
Registration Statement or the Prospectus containing such information as the
Registering Stockholder or the underwriter requests to be included therein,
including, without limitation, information with respect to the Transaction
Registrable Shares being sold by the Registering Stockholder to the underwriter,
the purchase price being paid therefor by such underwriter and other terms of
the underwritten offering of the Transaction Registrable Shares to be sold in
such offering.
(g) Each Registering Stockholder shall report to the
Company distributions made by the Registering Stockholder of Transaction
Registrable Shares pursuant to the Prospectus and, upon written notice by the
Company that an event has occurred as a result of which an amendment or
supplement to the Registration Statement or the Prospectus is required, the
Registering Stockholder shall cease further distributions pursuant to the
Prospectus until notified by the Company of the effectiveness of the amendment
or supplement. Each Registering Stockholder shall distribute Transaction
Registrable Shares only in accordance with the manner of distribution
contemplated by the Prospectus with respect to the Transaction Registrable
Shares owned by the Registering Stockholder. Each Registering Stockholder, by
participating in a registration pursuant to this Agreement, acknowledges that
the remedies of the Company at law for failure by the Registering Stockholder to
comply with the undertaking contained in this paragraph (g) would be inadequate
and that the failure would not be adequately compensable in damages and would
cause irreparable harm to the Company, and therefore agrees that undertakings
made by the Registering Stockholder in this paragraph (g) may be specifically
enforced.
(h) If the registration is made pursuant to Section
2 and the registration involves an underwritten offering, in whole or in part,
the Company may require the Transaction Registrable Shares owned by the
Registering Stockholders to be included in such underwriting on the same terms
and conditions as shall be applicable to the other securities being sold through
underwriters in the registration. In that event, the Registering Stockholders
shall be parties to the related underwriting agreement.
(i) If the registration involves an underwritten
offering, (1) at the request of one or more of the Registering Stockholders or
the Company, the Company and the requesting Registering Stockholders shall enter
into an appropriate underwriting agreement with respect to the Registrable
Shares of the Registering Stockholders containing terms and provisions customary
in agreements of that nature, including, without limitation, provisions with
respect to expenses substantially the same as those set forth in Section 5 and
provisions with respect to indemnification and contribution substantially the
same as those
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<PAGE>
set forth in Section 6, (2) the Company shall make such representations and
warranties, and deliver such certificates with respect thereto, to each
Registering Stockholder owning the Transaction Registrable Shares included in
such underwritten offering and each underwriter of such Transaction Registrable
Shares, and in each case in such form, substance and scope, as are customarily
made by issuers to underwriters in primary underwritten offerings, (3) the
Company shall obtain and deliver to each such Registering Stockholder and
underwriter opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, substance and scope) shall be reasonably
satisfactory to the managing underwriter in such offering) addressed to such
Registering Stockholder and underwriter with respect to matters customarily
covered by such opinions requested in underwritten offerings and such other
matters as may reasonably be requested by such Registering Stockholder or
underwriter, (4) the Company shall obtain and deliver to each such Registering
Stockholder and underwriter "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accounts of any subsidiary of the Company or
of any business of the Company for which financial statements and financial data
are, or required to be, included in the Registration Statement), addressed to
such Registering Stockholder and underwriter, in customary form and substance,
with respect to matters customarily covered by "cold comfort" letters in
connection with primary underwritten offerings, and (5) the Company shall
prepare or obtain, and deliver to each such Registering Stockholder and
underwriter, such other documents as may reasonably be requested by such
Registering Stockholder or underwriter.
(j) Prior to sales of Transaction Registrable Shares
under the Registration Statement, the Company shall cooperate with each
Registering Stockholder and each underwriter of Transaction Registrable Shares
owned by the Registering Stockholder to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing such
Transaction Registrable Shares, and to enable such Transaction Registrable
Shares to be in such denominations and registered in such names as the
Registering Stockholder or the underwriter may request.
(k) The Company shall use its best efforts to comply
with all applicable rules and regulations of the Securities and Exchange
Commission, and make available to its securityholders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with the first calendar
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(l) The Company shall take all action required to
cause the Transaction Registrable Shares to be listed on each national
securities exchange on which the Common Stock shall then be listed, if any, and
to be qualified for inclusion in the NASDAQ/National Market System or the
NASDAQ/SmallCap Market, as the case may be, if the Common Stock is then so
qualified.
(m) For the purposes of this Agreement, the
following terms shall have the following meanings:
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<PAGE>
(1) "BUSINESS DAY" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close;
(2) "PROSPECTUS" means (A) the prospectus relating to the
Transaction Registrable Shares owned by the Registering Stockholders
included in a Registration Statement, (B) if a prospectus relating to
the Transaction Registrable Shares shall be filed with the Securities
and Exchange Commission pursuant to Rule 424 (or any similar provision
then in force) under the Securities Act, such prospectus, and (C) in
the event of any amendment or supplement to the prospectus after the
effective date of the Registration Statement, then from and after the
effectiveness of the amendment or the filing with the Securities and
Exchange Commission of the supplement, the prospectus as so amended or
supplemented;
(3) "REGISTRATION STATEMENT" means (A) a registration
statement filed by the Company in accordance with Section 3(d),
including exhibits and financial statements thereto, in the form in
which it shall become effective, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 (or any similar
provision or forms then in force) under the Securities Act and
information deemed to be a part of such registration statement pursuant
to paragraph (b) of Rule 430A (or any similar provision then in force)
and (B) in the event of any amendment thereto after the effective date
of the registration statement, then from and after the effectiveness of
the amendment, the registration statement as so amended; and
(4) information "CONTAINED", "INCLUDED" or "STATED" in a
Registration Statement or a Prospectus (or other references of like
import) includes information incorporated by reference.
SECTION 4. BLACKOUT PROVISIONS.
(a) By delivery of written notice to any of the
Purchaser, the Registering Stockholders and the other holders of Registrable
Shares, stating which one or more of the following limitations shall apply to
the addressee of such written notice, the Company may (1) postpone effecting a
registration under this Agreement pursuant to this Section 4 on one occasion
during any period of nine consecutive months, (2) require such addressee to
refrain from disposing of Transaction Registrable Shares under the registration
or (3) require such addressee to refrain from otherwise disposing of any
Registrable Shares owned by such addressee (whether pursuant to Rule 144 or 144A
under the Securities Act or otherwise), in each case for a reasonable time
specified in the notice but not exceeding 90 days (which period may not be
extended or renewed).
(b) The Company may postpone effecting a
registration or apply to any person specified in clauses (2) and (3) of
paragraph (a) above any of the limitations specified in such clauses if (1) an
investment banking firm of recognized national standing
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<PAGE>
shall advise the Company and the Registering Stockholders in writing that
effecting the registration or the disposition by such person of Registrable
Shares, as the case may be, would materially and adversely affect an offering of
Equity Securities of the Company the preparation of which had then been
commenced or (2) the Company is in possession of material non-public information
the disclosure of which during the period specified in such notice the Company
reasonably believes would not be in the best interests of the Company.
(c) If the Company shall take any action pursuant to
paragraph (a) above, the period during which the Registering Stockholders may
exercise their respective rights under Sections 1 and 2 shall be extended by one
day beyond the Commencement Date for each day that, pursuant to this Section 4,
the Company postpones effecting a registration, requires any person to refrain
from disposing of Transaction Registrable Shares under a registration or
otherwise requires any person to refrain from disposing of Registrable Shares.
SECTION 5. EXPENSES.
(a) The Company shall bear all expenses of the
following in connection with the registration of Transaction Registrable Shares
pursuant to this Agreement, whether or not any related Registration Statement
shall become effective:
(1) preparing, printing and filing each Registration Statement
and Prospectus and each qualification or notice required to be filed
under federal and state securities laws or the rules and regulations of
the National Association of Securities Dealers, Inc. (the "NASD");
(2) all fees and expenses of complying with federal and state
securities laws and the rules and regulations of the NASD;
(3) furnishing to each Registering Stockholder one executed
copy of the related Registration Statement and the number of copies of
the related Prospectus that may be required by Sections 3(d) and 3(e)
to be so furnished, together with a like number of copies of each
amendment, post-effective amendment or supplement;
(4) performing its obligations under Sections 3(d) and 3(i);
(5) printing and issuing share certificates, including the
transfer agent's fees, in connection with each distribution so
registered;
(6) preparing audited financial statements required by the
Securities Act and the rules and regulations thereunder to be included
in the Registration Statement and preparing audited financial
statements for use in connection with the registration other than
audited financial statements required by the Securities Act and the
rules and regulations thereunder;
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<PAGE>
(7) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties);
(8) premiums or other expenses relating to liability insurance
required by the Company or underwriters of the Registering
Stockholders;
(9) fees and disbursements of underwriters of the Registering
Stockholders customarily paid by issuers or sellers of securities;
(10) listing of the Registrable Shares on national securities
exchanges and inclusion of the Registrable Shares on the
NASDAQ/National Market System or the NASDAQ/SmallCap Market, as the
case may be; and
(11) fees and expenses of any special experts retained by the
Company in connection with the registration.
(b) The Registering Stockholders shall bear all
other expenses incident to the distribution by the respective Registering
Stockholders of the Registrable Shares owned by them in connection with a
registration pursuant to this Agreement, including, without limitation, the
selling expenses of the Registering Stockholders (but excluding the expenses
referred to in paragraph (a)(9) above), commissions, underwriting discounts,
insurance, fees of counsel for the Registering Stockholders and their
underwriters.
SECTION 6. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless
each Registering Stockholder participating in a registration pursuant to this
Agreement, each underwriter of Transaction Registrable Shares owned by the
Registering Stockholder to be distributed pursuant to the registration, each
partner in the Registering Stockholder, the officers and directors of the
Registering Stockholder and the underwriter and each person, if any, who
controls the Registering Stockholder, any partner in the Registering Stockholder
or the underwriter within the meaning of Section 15 (or any successor provision)
of the Securities Act, and their respective successors, against all claims,
losses, damages and liabilities to third parties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in the Registration Statement or the Prospectus or
other document incident thereto or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Registering
Stockholder and each other person indemnified pursuant to this Section 6(a) for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
PROVIDED that the Company shall not be liable in any case to the extent that any
such claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Registering Stockholder or the underwriter of such
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<PAGE>
Transaction Registrable Shares specifically for use in the Registration
Statement or the Prospectus.
(b) Each Registering Stockholder, by participating
in a registration pursuant to this Agreement, thereby agrees to indemnify and to
hold harmless the Company and its officers and directors and each person, if
any, who controls any of them within the meaning of Section 15 (or any successor
provision) of the Securities Act, and their respective successors, against all
claims, losses, damages and liabilities to third parties (or actions in respect
thereof) arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement or the
Prospectus or other document incident thereto or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse the
Company and each other person indemnified pursuant to this Section 6(b) for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
PROVIDED that this Section 6(b) shall apply only if (and only to the extent
that) the statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by the Registering Stockholder
specifically for use in the Registration Statement or the Prospectus, PROVIDED,
FURTHER, that in no event shall the liability of a Registering Stockholder
hereunder be greater in amount than the dollar amount of the proceeds received
by the Registering Stockholder upon the sale of the Registrable Shares giving
rise to such indemnification obligations.
(c) If any action or proceeding (including any
governmental investigation or inquiry) shall be brought, asserted or threatened
against any person indemnified under this Section 6, the indemnified person
shall promptly notify the indemnifying party in writing, and the indemnifying
party shall assume the defense of the action or proceeding, including the
employment of counsel satisfactory to the indemnified person and the payment of
all expenses. The indemnified person shall have the right to employ separate
counsel in any action or proceeding and to participate in the defense of the
action or proceeding, but the fees and expenses of that counsel shall be at the
expense of the indemnified person unless:
(1) the indemnifying party shall have agreed to pay those
fees and expenses; or
(2) the indemnifying party shall have failed to assume the
defense of the action or proceeding or shall have failed to employ
counsel reasonably satisfactory to the indemnified person in the action
or proceeding; or
(3) the named parties to the action or proceeding (including
any impleaded parties) include both the indemnified person and the
indemnifying party, and the indemnified person shall have been advised
by counsel that there may be one or more legal defenses available to
the indemnified person that are different from or additional to those
available to the indemnifying party (in which case, if the
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<PAGE>
indemnified person notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the
defense of such action or proceeding on behalf of the indemnified
person; it being understood, however, that the indemnifying party shall
not, in connection with any one action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the indemnified
person, which firm shall be designated in writing by the indemnified
person).
The indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by reason of the
settlement or judgment.
(d) If the indemnification provided for in this
Section 6 is unavailable to an indemnified person (other than by reason of
exceptions provided in this Section 6) in respect of losses, claims, damages,
liabilities or expenses referred to in this Section 6, then each applicable
indemnifying party, in lieu of indemnifying the indemnified person, shall
contribute to the amount paid or payable by the indemnified person as a result
of the losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified person on the other in connection with the
statements or omissions which resulted in the losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified person and by these
persons' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties agree that it would
not be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding sentence. The amount paid or payable by a person as a
result of the losses, claims, damages, liabilities and expenses shall be deemed
to include any legal or other fees or expenses reasonably incurred by the person
in connection with investigating or defending any action or claim.
Notwithstanding in the foregoing to the contrary, no Registering Stockholder or
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder shall be required to contribute any amount in excess of the amount
by which (1) in the case of the Registering Stockholder, the net proceeds
received by the Registering Stockholder the sale of Transaction Registrable
Shares or (2) in the case of the underwriter, the total price at which such
Transaction Registrable Shares purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the
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<PAGE>
amount of any damages that the Registering Stockholder or underwriter, as the
case may be, has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission. No person guilty of fraudulent
representation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
(e) Each Registering Stockholder participating in a
registration pursuant to Section 1 shall cause each underwriter of any
Transaction Registrable Shares owned by the Registering Stockholder to be
distributed pursuant to the registration to agree in writing on terms reasonably
satisfactory to the Company to indemnify and to hold harmless the Company and
its officers and directors and each person, if any, who controls any of them
within the meaning of Section 15 (or any successors provision) of the Securities
Act, and their respective successors, against all claims, losses, damages and
liabilities to third parties (or actions in respect thereof) arising out of or
based upon any untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement or the Prospectus or other document
incident thereto or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and to reimburse the Company and each other person
indemnified pursuant to the agreement for any legal or any other expense
reasonably incurred in connection with investigating or defending any claim,
loss, damage, liability or action; PROVIDED that the agreement shall apply only
if (and only to the extent that) the statement or omission was made in reliance
upon and in conformity with information furnished to the Company in writing by
the underwriter specifically for use in the Registration Statement or the
Prospectus.
SECTION 7. TRANSFER RESTRICTIONS.
(a) The Purchaser acknowledges that the Company
will issue and sell the Registrable Shares to the Purchaser in reliance upon the
exemption afforded by Section 4(2) of the Securities Act for transactions by an
issuer not involving any public offering. The Purchaser represents that (1) it
will acquire the Registrable Shares for investment and without any view toward
distribution of any of the Registrable Shares to any other person and (2) it
will not sell or otherwise dispose of the Registrable Shares except in
compliance with the registration requirements or exemption provisions under the
Securities Act.
(b) Except as provided to the contrary in this
Section 7, each certificate for Registrable Shares, and any certificate issued
in exchange therefor or upon conversion, exercise or transfer thereof, shall
bear legends substantially to the effect stated in clauses (1) and (2) below:
(1) "The shares of Common Stock represented by this
certificate have not been registered under the Securities Act of 1933,
as amended, and may not be offered, sold, transferred or otherwise
disposed of except in compliance with said Act."
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(2) "The shares of Common Stock represented by this
certificate are subject to the restrictions stated in the Registration
Rights Agreement dated as of __________, 1997, a copy of which is on
file at the office of the Secretary of the Company."
(c) The legend stated in Section 7(b)(1) shall be
removed by delivery of one or more substitute certificates without such legend
if either (1) such substitute instruments or certificates are issued in
connection with a sale that is registered under the Securities Act or (2) the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act.
(d) The legend stated in Section 7(b)(2) shall be
removed by delivery of one or more substitute certificates without such legend
at such time as the related securities are no longer subject to this Agreement.
SECTION 8. EXEMPT SALES.
(a) The Company shall make all filings with the
Securities and Exchange Commission required by paragraph (c) of Rule 144 (or any
similar provision then in force) under the Securities Act to permit the sale of
Registrable Shares by any holder thereof (other than an Affiliate of the
Company) to satisfy the conditions of Rule 144 (or any similar provision then in
force). The Company shall, promptly upon the written request of the holder of
Registrable Shares, deliver to such holder a written statement as to whether the
Company has complied with all such filing requirements.
(b) If any of the Registrable Shares are then
eligible for sale by the holder thereof pursuant to Rule 144A (or any similar
provision then in force) under the Securities Act, the Company shall, promptly
upon the written request of such holder, furnish to such holder and each
prospective purchaser of such Registrable Shares identified by such holder in
such written request, the information required by paragraph (d)(4) of Rule 144A
(or any similar provision then in force) to permit the sale of such Registrable
Shares to satisfy the conditions of Rule 144A (or any similar provision then in
force).
(c) Prior to sales of Registrable Shares proposed
to be sold pursuant to an exemption from the registration requirements of the
Securities Act, the Company shall, subject to Section 6(d), cooperate with the
Purchaser and each other holder of Registrable Shares to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing such Registrable Shares.
SECTION 9. MERGER, CONSOLIDATION, EXCHANGE, ETC. In the event,
directly or indirectly, (1) the Company shall merge with and into, or
consolidate with, or consummate a share exchange pursuant to Subchapter IX of
the Delaware General Corporation Law (or successor provisions or statutes) with,
any other person, or (2) any person shall merge with
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and into, or consolidate, the Company and the Company shall be the surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Registrable Shares shall be changed into or
exchanged for stock or other securities of any other person, then, in each such
case, proper provision shall be made so that such other person shall be bound by
the provisions of this Agreement and the term "Company" shall thereafter be
deemed to refer to such other person.
SECTION 10. OTHER AGREEMENTS. The Company, on behalf of itself
and its Affiliates (other than a Registering Stockholder), agrees (1) not to
effect any public sale or distribution of any securities similar to the
Registrable Shares being registered pursuant to this Agreement or any securities
convertible into or exchangeable or exercisable for such Registrable Shares
during the 14 days prior to, and during the 90-day period beginning on, the
effective date of the Registration Statement (except (x) on Form S-4 or Form S-8
(or comparable form) or (y) as part of the Registration Statement; PROVIDED that
with respect to clause (y) in the case of a registration pursuant to Section 1
the Registering Stockholder initiating the registration consents to such
inclusion), or the commencement of a public distribution of Registrable Shares;
(2) not to enter into any agreement inconsistent with any provision of this
Agreement; (3) that any agreement entered into after the date of this Agreement
pursuant to which the Company issues or agrees to issue any privately placed
securities shall contain a provision under which holders of such securities
agree not to effect any public sale or distribution of any of the securities
during the periods described in clause (1) of this Section 10, in each case
including a sale in a Rule 144 Transaction (except as part of any such
registration, if permitted); PROVIDED that the provisions of this Section 10
shall not prevent the conversion or exchange of any securities pursuant to their
terms into or for other securities.
SECTION 11. NOTICES. All notices, requests and other
communications to any party under this Agreement shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given to the party at its address stated on the signature pages of this
Agreement or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given by
telecopy, when the telecopy is transmitted to the proper address and the receipt
of the transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 12. NO WAIVERS; REMEDIES. No failure or delay by any
party in exercising any right, power or privilege under this Agreement shall
operate as a waiver of the right, power or privilege. A single or partial
exercise of any right, power or privilege shall not preclude any other or
further exercise of the right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
shall be cumulative and not exclusive of any rights or remedies provided by law.
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SECTION 13. AMENDMENTS, ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 14. SUCCESSORS AND ASSIGNS.
(a) Each holder of Registrable Shares may assign to
any transferee of Registrable Shares its rights and delegate to the transferee
its obligations under this Agreement, including, without limitation, the rights
of assignment pursuant to this Section 14; PROVIDED that such transferee
assignee shall accept such rights and assume such obligations for the benefit of
the Company by written instrument, in form and substance reasonably satisfactory
to the Company. Thereafter, without any further action by any person, all
references in this Agreement to the holder of such Registrable Securities, and
all comparable references, shall be deemed to be references to the transferee,
and the transferor shall be released from each obligation or liability under
this Agreement with respect to the Registrable Shares so transferred.
(b) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns pursuant to Section 3(a).
SECTION 15. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
SECTION 16. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 17. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 18. HEADINGS AND REFERENCES. Section headings in this
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. References to parties
and sections in this Agreement are references to the parties to or the sections
of this Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 19. ENTIRE AGREEMENT. This Agreement embodies the
entire agreement and understanding of the parties and supersedes all prior
agreements or understandings with respect to the subject matters of this
Agreement.
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SECTION 20. SURVIVAL. Except as otherwise specifically
provided in this Agreement, each representation, warranty or covenant of each
party contained in to this Agreement shall remain in full force and effect,
notwithstanding any investigation or notice to the contrary or any waiver by the
other party of a related condition precedent to the performance by such other
party of an obligation under this Agreement.
SECTION 21. EXCLUSIVE JURISDICTION. Each party (1) agrees that
any Action with respect to this Agreement or transactions contemplated by this
Agreement shall be brought exclusively in the courts of the State of New York or
of the United States of America for the Southern District of New York, (2)
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts, (3) irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter
have to the bringing of any action in those jurisdictions; PROVIDED, HOWEVER,
that each party may assert in an Action in any other jurisdiction or venue each
mandatory defense, third-party claim or similar claim that, if not so asserted
in such Action, may not be asserted in an original Action in the courts referred
to in clause (1) above.
SECTION 22. WAIVER OF JURY TRIAL. Each party waives any right
to a trial by jury in any Action to enforce or defend any right under this
Agreement or any amendment, instrument, document or agreement delivered, or
which in the future may be delivered, in connection with this Agreement and
agrees that any Action shall be tried before a court and not before a jury.
SECTION 23. NON-RECOURSE. No recourse under this Agreement
shall be had against any "controlling person" (within the meaning of Section 20
of the Exchange Act) of the Purchaser or the stockholders, directors, officers,
employees, agents and Affiliates of the Purchaser or such controlling persons,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any Regulation, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise be incurred by such controlling person, stockholder, director,
officer, employee, agent or Affiliate, as such, for any obligations of the
Purchaser under this Agreement or any other Transaction Document or for any
claim based on, in respect of or by reason of such obligations or their
creation.
SECTION 24. AFFILIATE. Nothing contained in this Agreement
shall constitute the Purchaser an "affiliate" of any of the Company and its
Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Registration Rights Agreement as of the date first written above in New
York, New York.
THE WMF GROUP, LTD.
By:__________________________________________
Name:
Title:
Address: 1593 Spring Hill Road
Suite 400
Vienna, Virginia 22182
Telecopy: (703) 610-1400
CAPRICORN INVESTORS II, L.P.
BY: CAPRICORN HOLDINGS, LLC,
ITS GENERAL PARTNER
By:__________________________________________
Name:
Title:
Address: 30 East Elm Street
Greenwich, Connecticut 06830
Telecopy: (203) 861-6671
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