EXHIBIT 10.18
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,
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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
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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
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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
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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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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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(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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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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(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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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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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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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.
----------------------------
[Intentionally Left Blank]
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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: 0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
CAPRICORN INVESTORS II, L.P.
BY: CAPRICORN HOLDINGS, LLC,
ITS GENERAL PARTNER
By:__________________________________________
Name:
Title:
Address: 00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
S-1
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