STANDBY PURCHASE AGREEMENT
THIS STANDBY PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of October 16, 1998, by and among THE WMF GROUP, LTD., a Delaware
corporation (the "COMPANY"), DEMETER HOLDINGS CORPORATION, a Massachusetts
corporation ("DEMETER"), PHEMUS CORPORATION, a Massachusetts corporation
("PHEMUS"), and CAPRICORN INVESTORS II, L.P., a Delaware limited partnership
("CAPRICORN"). Demeter, Phemus and Capricorn are referred to herein individually
as an "INVESTOR" and collectively as the "INVESTORS." Capitalized terms not
otherwise defined herein shall have the meanings assigned to them in the Stock
Purchase Agreement referred to below.
RECITALS
A. The Company and the Investors entered into the Stock Purchase
Agreement, dated as of October 16, 1998 (the "STOCK PURCHASE
AGREEMENT"), providing for the purchase by the Investors of 3,635,972
shares of capital stock in a private placement by the Company (the
"PRIVATE PLACEMENT").
B. On October 21, 1998, the Company announced a rights offering to be made
to the Company's shareholders (the "RIGHTS OFFERING").
C. As provided for in the Stock Purchase Agreement, the Company and the
Investors now desire to enter into this Agreement to provide for a
stand-by commitment by the Investors to purchase up to 664,028 shares
of Common Stock (the "STAND-BY SHARES") in connection with the Rights
Offering.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
Subject to the terms and conditions set forth in this Agreement, the
Company agrees to issue and sell to the Investors, and the Investors agree to
purchase from the Company, up to 664,028 shares of Common Stock not subscribed
for by other shareholders of the Company in the Rights Offering, including
pursuant to any oversubscription privilege (the "AVAILABLE SHARES"), at a
purchase price of $5.00 per share (the "PURCHASE Price"). Of the Available
Shares, each Investor will purchase up to the maximum amount of its individual
commitment to purchase Stand-By Shares set forth on EXHIBIT A hereto. The
obligations of the Investors to purchase Stand-By Shares shall be several and
not joint. If the number of Available Shares is less than the
maximum number of Stand-By Shares, then each Investor shall purchase a number of
Stand-By Shares calculated by multiplying the number of Available Shares by a
fraction, the numerator of which shall be the maximum amount of such Investor's
individual commitment as set forth on EXHIBIT A and the denominator of which is
the maximum aggregate number of Stand-By Shares.
2. DETERMINATION OF AVAILABLE SHARES; CLOSING.
2.1. DETERMINATION OF AVAILABLE SHARES.
As soon as practicable following the expiration of the
exercise period of the rights issued in the Rights Offering (the "RIGHTS"), the
Company shall notify the Investors in writing of the number of Available Shares,
which shall be equal to the total number of Rights issued by the Company, less
(i) the number of Rights issued to the Investors and (ii) the number of Rights
for which the Company has received proper notice of exercise and full payment of
the applicable exercise price, and the number of Available Shares to be
purchased by each Investor, calculated in accordance with SECTION 1 of this
Agreement.
2.2. THE CLOSING.
The sale and purchase of the Stand-By Shares (the "CLOSING")
will take place at the offices of the Company at 10:00 a.m., Vienna, Virginia,
time on the fifth business day following the Company's delivery to the Investors
of notice of the number of Available Shares to be purchased by each of them, or
at such time and place as the Company and the Investors mutually agree upon (the
"CLOSING DATE"). At the Closing, the Company will deliver to each Investor a
certificate representing the Available Shares to be purchased by such Investor
against delivery to the Company by the Investor of the applicable Purchase Price
for such shares in immediately available funds.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Investors that at the
Closing, the following statements will be true and correct:
3.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware and has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as now conducted and as presently proposed to be
conducted. The Company is duly qualified and in good standing to do business as
a foreign corporation in each jurisdiction where failure to be so qualified
would have a material adverse effect on the business, financial condition,
assets or prospects of the Company (a "MATERIAL ADVERSE EFFECT").
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3.2. CAPITALIZATION.
As of the date of this Agreement, the capitalization of the
Company consists of the following:
(a) PREFERRED STOCK. A total of 12,500,000 authorized shares
of Preferred Stock, $.01 par value per share (the "PREFERRED STOCK"),
of which 3,635,972 shares have been designated Class A Non-voting
Convertible Preferred Stock, par value $.01 per share (the "Class A
Preferred Stock"), none of which are issued and outstanding. The
rights, privileges and preferences of the Class A Preferred Stock are
as set forth in the Company's Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation").
(b) COMMON STOCK. A total of 25,000,000 authorized shares of
Common Stock, of which 5,299,383 shares of Common Stock are issued and
outstanding. All issued shares of Common Stock have been duly and
validly authorized and issued in material compliance with all federal
and state securities laws and are fully paid and nonassessable.
(c) OPTIONS, WARRANTS, RESERVED SHARES. Except for the Class A
Preferred Stock and as set forth on SCHEDULE 3.2((c)), there are no
outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition from
the Company of any shares of its capital stock or any securities
convertible into or ultimately exchangeable or exercisable for any
shares of the Company's capital stock. Except as set forth on SCHEDULE
3.2((c)), no shares of the Company's outstanding capital stock, or
stock issuable upon exercise or exchange of any outstanding options,
warrants or rights, or other stock issuable by the Company, are subject
to any rights of first refusal or other rights to purchase such stock
(whether in favor of the Company or any other person), pursuant to any
agreement or commitment of the Company.
(d) NO AGREEMENTS. To the Company's knowledge, no shareholders
agreement, voting trust agreement or similar agreement exists relating
to the Company's securities.
3.3. COMPANY SUBSIDIARIES.
SCHEDULE 3.3 is a true and complete list of all business
entities that the Company operates, owns or otherwise controls directly or
indirectly through one or more subsidiaries, partnerships, joint ventures or
other business associations, a majority of the outstanding voting securities
(the "SUBSIDIARIES"). Each Subsidiary is duly incorporated and validly existing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own its properties and assets and to carry on its business as
now being conducted and as presently proposed to be conducted. Each Subsidiary
is duly qualified and in good standing to do business as a foreign corporation
in each jurisdiction where failure to be so qualified would have a material
adverse effect on the business, financial condition, assets or prospects of such
Subsidiary.
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All of such outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and nonassessable. Except as set forth
on SCHEDULE 3.3, the Company owns all of the shares of the issued and
outstanding capital stock of the Subsidiaries free and clear of any liens,
claims, encumbrances, charges or rights of third parties of any kind whatsoever.
3.4. DUE AUTHORIZATION; ENFORCEABILITY.
All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization, execution, delivery
and performance of all obligations of the Company under this Agreement, and the
authorization, issuance, reservation for issuance and delivery of the Stand-By
Shares has been taken. This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies.
3.5. VALID ISSUANCE OF STOCK; COMPLIANCE WITH SECURITIES LAWS.
(a) The Stand-By Shares, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration
provided for herein, will be duly and validly issued, fully paid and
nonassessable.
(b) Based in part on the representations made by the Investors
in SECTION 4 hereof, the Stand-By Shares will be exempt from the
registration and prospectus delivery requirements of the U.S.
Securities Act of 1933, as amended (the "1933 ACT") and the
registration and qualification requirements of the securities laws of
Massachusetts, Delaware, Virginia and Connecticut.
3.6. CONSENTS.
No further consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any third-party on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, EXCEPT FOR such qualifications or filings under
the 1933 Act and the regulations thereunder and all other applicable state
securities laws as may be required in connection with the transactions
contemplated by this Agreement. All such qualifications and filings will, in the
case of qualifications, be effective on the Closing Date and will, in the case
of filings, be made within the time prescribed by law.
3.7. LEGAL AND GOVERNMENTAL PROCEEDINGS.
Except as set forth on SCHEDULE 3.7, no legal or governmental
action, proceeding or investigation is pending, or to the best of the Company's
knowledge, threatened (or any basis therefor known to the Company) that
questions the validity of this Agreement or the Common
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Stock or that, if determined adversely to the Company or any Subsidiary, is
reasonably likely, currently or prospectively, individually or in the aggregate,
to have a Material Adverse Effect.
3.8. COMPLIANCE WITH CHARTER DOCUMENTS, CONTRACTS AND LAW.
Except as set forth on SCHEDULE 3.8, the Company and each
Subsidiary is not in violation of its respective articles of incorporation or
bylaws, both as amended, nor in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties may be
bound. To the best of the Company's knowledge, except for any violations that
individually and in the aggregate would not have a Material Adverse Effect, the
Company and the Subsidiaries are in compliance with all applicable statutes,
laws, regulations and executive orders of the United States of America and all
states, foreign countries or other governmental bodies and agencies having
jurisdiction over the Company's and the Subsidiaries' business or properties.
Neither the Company nor any Subsidiary has received any notice of any such
violation of such statutes, laws, regulations or orders that has not been
remedied prior to the date hereof. The execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or default, or be in
conflict with or constitute, with or without the passage of time or the giving
of notice or both, either a default under the Company's Certificate of
Incorporation or Bylaws, or, to the best of the Company's knowledge, any such
violation of any statutes, laws, regulations or orders.
3.9. NO CONFLICTS.
The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
violate or conflict with or result in a breach of any provision of, or
constitute a default (or any event that, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien upon any of the properties of the Company or
any Subsidiary under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or any Subsidiary is a party, or by which the Company, the
Subsidiaries or any of their properties is bound or affected, except for any of
the foregoing matters that would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect. 3.10. SECURITIES FILINGS.
As of their respective dates, all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), since December 1,
1997, in each case, as amended (the "COMPANY REPORTS"): (a) complied as to form
in all material respects with the applicable requirements of the 1934 Act and
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(b) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of the Company included in
or incorporated by reference into the Company Reports (as amended and including
the related notes and schedules) (i) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the U.S. Securities Exchange Commission ("SEC") with respect
thereto, (ii) were prepared in all material respects in accordance with
generally accepted accounting principles ("GAAP"), and (iii) fairly presented in
all material respects the consolidated financial position of the Company and its
wholly-owned subsidiaries as of its date in conformity with GAAP. Each of the
consolidated statements of income, retained earnings and cash flows of the
Company included in or incorporated by reference into the Company Reports (as
amended and including any related notes and schedules) (A) complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with GAAP, and (C) fairly presented the results of
operations, retained earnings or cash flows, as the case may be, of the Company
and its subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments that would not be
material in amount or effect) in conformity with GAAP.
The Company's registration statement relating to the Rights
Offering as of its effective date (a) complied as to form in all material
respects with the applicable requirements of the 1933 Act and (b) did not
contain any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Except as and to the extent set forth in the Company Reports
and as set forth on SCHEDULE 3.10, neither the Company nor any of its
subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of the Company or in the
notes thereto, prepared in accordance with GAAP consistently applied, or any
other material liabilities (such liabilities being deemed material if the value
of such liabilities, individually or in the aggregate, is greater than $1
million), except liabilities arising in the ordinary course of business since
such date which would not have a Material Adverse Effect.
3.11. NO CHANGES.
Since September 30, 1998, except as set forth on SCHEDULE
3.11, there has been no material adverse change in the business, financial
condition, assets or prospects of the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor hereby represents and warrants to the Company that at
Closing, the following statements will be true and correct:
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4.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION.
Such Investor is a partnership or corporation, as applicable,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite power and authority to own
its properties and assets and to enter into the transactions contemplated by
this Agreement.
4.2. DUE AUTHORIZATION.
All corporate and partnership action on the part of such
Investor as applicable, necessary for the authorization, execution, delivery and
performance of all obligations of such Investor under this Agreement has been
taken. This Agreement constitutes such Investor's valid and legally binding
obligation, enforceable in accordance with its terms except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies.
4.3. PURCHASE FOR OWN ACCOUNT.
The Stand-By Shares are being acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the 1933 Act, and
such Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same. Such Investor also represents that it
has not been formed for the specific purpose of acquiring the Stand-By Shares.
4.4. INVESTMENT EXPERIENCE.
Such Investor understands that the purchase of the Stand-By
Shares involves substantial risk. Such Investor: (i) has experience as an
investor in securities and acknowledges that such Investor is able to fend for
itself, can bear the economic risk of its investment in the Stand-By Shares and
has such knowledge and experience in financial or business matters that such
Investor is capable of evaluating the merits and risks of this investment in the
Stand-By Shares and protecting its own interests in connection with this
investment and/or (ii) has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a
nature and duration that enables such Investor to be aware of the character,
business acumen and financial circumstances of such persons.
4.5. ACCREDITED INVESTOR STATUS.
Such Investor is an "accredited investor" within the meaning
of Regulation D promulgated under the 1933 Act, and such Investor has received a
copy of the Company's Certificate of Incorporation, Bylaws, this Agreement and
such other documents and agreements that it has requested and has read and
understands the respective contents thereof. Such Investor has had the
opportunity to ask questions of the Company and has received answers to such
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questions from the Company. Such Investor has carefully reviewed and evaluated
these documents and understands the risks and other considerations relating to
the investment.
4.6. RESTRICTED SECURITIES.
Such Investor understands that the Stand-By Shares may be
characterized as "restricted securities" under the 1933 Act inasmuch as the
Stand-By Shares are being acquired from the Company in a transaction not
involving a public offering and that under the 1933 Act and applicable rules and
regulations thereunder such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with Rule 144 of the SEC, as presently
in effect, and understands the resale limitations imposed thereby and by the
1933 Act.
5. COVENANTS OF THE PARTIES.
5.1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
(a) Each Investor agrees not to make any disposition of all or
any portion of the Stand-By Shares unless and until:
(i) there is then in effect a registration statement
under the 1933 Act and all applicable state securities laws
covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) the Investor shall have notified the Company of
the proposed disposition and shall have furnished the Company
with a statement of the circumstances surrounding the proposed
disposition, and (B) the Investor shall have furnished the
Company, at the expense of such Investor or its transferee,
with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration
of such securities under the 1933 Act or under any applicable
state securities laws.
(b) The Stand-By Shares shall be Registrable Shares for
purposes of the Registration Rights Agreement, dated June 12, 1998,
between the Company, Harvard and Capricorn (the "REGISTRATION RIGHTS
AGREEMENT"), as amended. By signing and entering into this Agreement,
the Company, the Investors and Harvard each agree that the Registration
Rights Agreement shall be binding upon and inure to the benefit of
Demeter and Phemus. The Company and Demeter and Phemus will execute an
amendment to the Registration Rights Agreement to confirm the rights
and responsibilities of Demeter and Phemus under the Registration
Rights Agreement.
Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be required:
(A) for any transfer of any of the Stand-By Shares in compliance with SEC Rule
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144; or (B) for any transfer of any of the Stand-By Shares by the Investor to an
affiliate of the Investor; PROVIDED that in the foregoing case the transferee
agrees in writing to be subject to the terms of this SECTION 5.1 to the same
extent as if the transferee were the Investor hereunder.
5.2. LEGENDS.
(a) Each Investor acknowledges that the certificates
evidencing the Stand-By Shares will bear the legends set forth below,
in addition to any legend required by any state securities laws:
(i) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
(ii) THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO A STANDBY PURCHASE
AGREEMENT BETWEEN THE INITIAL HOLDER HEREOF AND THE WMF GROUP,
LTD.
(b) The legend set forth in SUBSECTION (A)(I) above shall be
removed by the Company from any certificate evidencing any of the
Stand-By Shares upon effectiveness of a registration statement under
the 1933 Act with respect to the legended security or upon delivery to
the Company of an opinion of counsel, reasonably satisfactory to the
Company, that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Company issued the Stand-By Shares.
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6. CONDITIONS TO CLOSING.
6.1. CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING.
The obligations of the Investors under this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of the
following conditions, the waiver of which may be given by written, oral or
telephone communication to the Company, its counsel or to counsel to the
Investors:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in SECTION 3 shall be true and
correct in all respects on and as of the Closing Date (except for
representations and warranties that speak as of a specific date and
time, which need be true and correct as of such date and time), the
Company shall have taken all actions required by this Agreement to be
taken by the Company prior to Closing.
(b) SECURITIES EXEMPTIONS. The offer and sale of the Stand-By
Shares by the Company to the Investors pursuant to this Agreement shall
be exempt from the registration requirements of the 1933 Act and the
registration and/or qualification requirements of all applicable state
securities laws.
(c) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investors and to the
Investors' counsel, and the Investors shall have received counterpart
originals and certified or other copies of the following documents:
(i) CERTIFIED CHARTER DOCUMENTS. A copy of the
Certificate of Incorporation and the Bylaws of the Company (as
amended through the date of the Closing), certified by the
Secretary of the Company as true and correct copies thereof as
of the Closing.
(ii) SECRETARY'S INCUMBENCY CERTIFICATE. A certificate
of the Secretary or an Assistant Secretary or other officer of
the Company certifying the names of the officers of the
Company authorized to sign this Agreement, the certificates
for the Stand-By Shares and the other documents, instruments
or certificates to be delivered pursuant to this Agreement by
the Company or any of its officers, together with the true
signatures of such officers.
(iii) CORPORATE ACTIONS. A copy of the resolutions of
the Board of Directors evidencing its approval, including the
approval of a majority of the Company's disinterested
directors, of this Agreement, the issuance of Stand-By Shares
and the other matters contemplated hereby, certified by the
Secretary of the Company to be true, complete and correct.
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(iv) LEGAL OPINION. An opinion or opinions of Hunton &
Xxxxxxxx or Xxxxxx & Xxxxxx, counsel to the Company, dated as
of the Closing Date, in substantially the form attached hereto
as EXHIBIT B.
(v) GOOD STANDING CERTIFICATE. A good standing
certificate of the Company issued by the Secretary of State of
the State of Delaware dated within ten (10) days before the
Closing.
(d) APPROVAL BY DISINTERESTED DIRECTORS. The transactions
contemplated by this Agreement shall have been approved by a majority
of the members of the Company's Board of Directors who are neither
employees of the Company nor affiliated with the Investors.
(e) PRIVATE PLACEMENT. The Private Placement shall have been
completed successfully.
(f) LISTING. The Stand-By Shares shall have been approved for
listing on The Nasdaq Stock Market or any other stock exchange or
automated quotation system on which the Common Stock is then listed or
included.
(g) CONSENTS. All government and third-party consents
necessary for the execution, delivery and performance by the Company
and each Investor of this Agreement and the related agreements shall
have been received.
(h) REGISTRATION RIGHTS AGREEMENT AMENDMENT. The amendment to
the Registration Rights Agreement contemplated by SECTION 5.1(B) hereof
shall have been executed by the Company, the Investors and Harvard.
(i) CERTIFICATE. The Investors shall have received a
certificate of the President or an Executive Vice President of the
Company to the effect that the conditions set forth in subparagraphs
(a) and (d) through (g) hereof have been satisfied and setting forth
the capitalization of the Company as of the Closing Date.
(j) HSR ACT. Any waiting period applicable to the transactions
contemplated by this Agreement under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), shall have
terminated or expired.
6.2. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Investors of this
Agreement are subject to the fulfillment or waiver on or before the Closing of
the following conditions, the waiver of which may be given by written, oral or
telephone communication to the Investors, their counsel or to counsel to the
Company:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Investor set forth in SECTION 3.1 shall be true and
correct in all respects on and as of the Closing Date, and the Company
shall have received a certificate of an appropriate officer or partner,
as applicable, of each Investor to such effect.
(b) PAYMENT OF PURCHASE PRICE. Each Investor shall have
delivered to the Company such Investor's aggregate Purchase Price in
accordance with the provisions of SECTIONS 1 AND 2.
(c) SECURITIES EXEMPTIONS. The offer and sale of the Stand-By
Shares by the Company to the Investors pursuant to this Agreement shall
be exempt from the registration requirements of the 1933 Act and the
registration and/or qualification requirements of all other applicable
state securities laws.
(d) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company and to the Company's
legal counsel, and the Company shall have received all such counterpart
originals and certified or other copies of such documents as it may
reasonably request.
(e) PRIVATE PLACEMENT. The Private Placement shall have been
completed successfully.
(f) LISTING. The issuance of the Stand-By Shares shall not
violate or conflict with the Company's listing agreement with the
Nasdaq National Market with regard to the Common Stock or the listing
standards or other applicable rules of the Nasdaq National Market.
(g) APPROVAL BY DISINTERESTED DIRECTORS. The transactions
contemplated by this Agreement shall have been approved by a majority
of the members of the Company's Board of Directors who are neither
employees of the Company nor affiliated with the Investors.
(h) CONSENTS. All government and third-party consents
necessary for the execution, delivery and performance by the Company of
this Agreement and the related agreements shall have been received.
(i) HSR ACT. Any waiting period applicable to the transactions
contemplated by this Agreement under the HSR Act shall have terminated
or expired.
7. MISCELLANEOUS.
7.1. SURVIVAL OF WARRANTIES.
The representations, warranties and covenants of the Company
and the Investors contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing and shall in no way
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be affected by any investigation of the subject matter thereof made by or on
behalf of each Investor, its counsel or the Company or its counsel, as the case
may be.
7.2. SUCCESSORS AND ASSIGNS.
The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Except for assignments by the Investors to affiliates, this Agreement
may not be assigned by any Investor without the prior written consent of the
Company or by the Company without the prior written consent of the Investors.
7.3. GOVERNING LAW.
This Agreement shall be governed by and construed under the
internal laws of the Commonwealth of Virginia as applied to agreements among
Virginia residents entered into and to be performed entirely within Virginia,
without reference to principles of conflict of laws or choice of laws.
7.4. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7.5. HEADINGS.
The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits and schedules attached hereto, all of which exhibits and
schedules are incorporated herein by this reference.
7.6. NOTICES.
Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or one day after
deposit with a national overnight delivery service or three days after deposit
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with the United States Post Office, by registered or certified mail, postage
prepaid and addressed as follows:
To the Company:
The WMF Group, Ltd.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
with copies to:
Krooth and Xxxxxx
0000 X Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
and
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
To Demeter:
c/o Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx
Xxxx X. Xxxxx
with copies to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxx, Esquire
To Phemus:
c/o Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx
Xxxx X. Xxxxx
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with copies to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxx, Esquire
To Capricorn:
Capricorn Investors II, L.P.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Xxxxx X. Better
with copies to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esquire
or at such other address as an Investor or the Company may designate by giving
ten days advance written notice to the other parties.
7.7. NO FINDER'S FEES.
Each party represents that it neither is nor will be obligated
for any finder's or broker's fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' or broker's fee (and any asserted liability) for which such Investor or
any of its officers, partners, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless the Investors from any liability
for any commission or compensation in the nature of a finder's or broker's fee
(and any asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
7.8. EXPENSES.
The Company shall pay all reasonable fees and expenses of the
Investors in connection with the preparation, execution and delivery of this
Agreement and the issuance of the Stand-By Shares and any filings necessary
under the HSR Act.
7.9. AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
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consent of the Company and the Investors. Any amendment or waiver effected in
accordance with this Section 7.9 shall be binding upon the Investors and the
Company.
7.10. SEVERABILITY.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement, and the balance of the Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
7.11. ENTIRE AGREEMENT.
This Agreement, together with all exhibits and schedules
hereto, constitutes the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties with respect to the subject matter hereof. The schedules
hereto shall be deemed a part of this Agreement for all purposes.
7.12. FURTHER ASSURANCES.
From and after the date of this Agreement, upon the request of
the Investors or the Company, the Company and the Investors shall execute and
deliver such instruments, documents or other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY: THE WMF GROUP, LTD.,
a Delaware corporation
By:
-------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title President
THE INVESTORS: DEMETER HOLDINGS CORPORATION,
a Massachusetts corporation
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
PHEMUS CORPORATION,
a Massachusetts corporation
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
STANDBY PURCHASE AGREEMENT
CAPRICORN INVESTORS II, L.P.,
a Delaware limited partnership
By: Capricorn Holdings, LLC,
a Delaware limited liability
company, its General Partner
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Manager
STANDBY PURCHASE AGREEMENT
STANDBY PURCHASE AGREEMENT
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 3.2 (c) Options, Warrants, Reserved Shares
Schedule 3.3 Subsidiaries
Schedule 3.7 Legal and Governmental Proceedings
Schedule 3.8 Defaults
Schedule 3.10 Liabilities and Obligations
Schedule 3.11 Changes in Business of the Company
EXHIBITS
Exhibit A Stand-By Shares Purchase Commitments
Exhibit B Form of Legal Opinion
EXHIBIT A
STAND-BY SHARES
PURCHASE COMMITMENTS
NAME COMMITMENT
---- ----------
Demeter Holdings Corporation 503,619 Shares
Phemus Corporation 27,603
Capricorn Investors II, L.P. 132,806
-------
TOTAL 664,028
