STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of May 10, 2000, among Prudential
Mortgage Capital Company, LLC, a Delaware limited liability company ("Parent")
and the holders listed on Schedule A attached hereto (each, a "Stockholder" and,
collectively, the "Stockholders") of shares of common stock, par value $0.01 per
share (the "Shares") of The WMF Group, Ltd., a Delaware corporation (the
"Company").
R E C I T A L S:
WHEREAS Parent, Prudential Mortgage Capital Acquisition Corp., a
Delaware corporation that is a wholly-owned subsidiary of Parent (the
"Purchaser") and the Company propose to enter into an Agreement and Plan of
Merger, dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement"), providing for the merger of the Purchaser with and into
the Company (the "Merger"), upon the terms and subject to the conditions set
forth in the Merger Agreement;
WHEREAS the execution and delivery of this Agreement by the parties
hereto is a condition precedent to Parent's willingness to enter into the Merger
Agreement;
WHEREAS each Stockholder owns the number of Shares set forth opposite
such Stockholder's name on Schedule A attached hereto (such Shares, together
with any other shares of capital stock of the Company acquired by such
Stockholders after the date hereof and during the term of this Agreement
(including, without limitation, through the exercise of any stock options,
warrants or similar instruments), being collectively referred to herein as the
"Subject Shares");
WHEREAS, Parent has undertaken and will continue to undertake
substantial expenses in connection with the negotiation and execution of the
Merger Agreement and the subsequent actions necessary to consummate the
transactions contemplated therein; and
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings specified therefor in the Merger Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration of
its entering into, the Merger Agreement, and in consideration of the premises
and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
A G R E E M E N T:
1. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER. Each
Stockholder hereby, severally and not jointly, represents and warrants to Parent
as of the date hereof in respect of himself, herself or itself as follows:
(a) Authority. Such Stockholder has all requisite power and
authority to enter into this Agreement and to perform its obligations
hereunder. This Agreement has been duly and validly authorized,
executed and delivered by such Stockholder and constitutes the valid
and binding obligation of such Stockholder enforceable against such
Stockholder in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity.
Neither the execution and delivery by such Stockholder of this
Agreement nor the performance by such Stockholder of its obligations
hereunder will violate or conflict in any material respect with, result
in a breach of any material provision of or constitute a default under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any material license, franchise, permit,
lease, contract, agreement or other instrument, commitment or
obligation to which such Stockholder is a party or by which such
Stockholder is bound.
(b) The Subject Shares. Such Stockholder is the record and
beneficial owner of and has valid title to, the Subject Shares set
forth opposite such Stockholder's name on Schedule A attached hereto,
free and clear of any claims, liens, encumbrances and security
interests whatsoever. Except to the extent set forth in footnotes 1, 2,
3 and 4 to Schedule A attached hereto, such Stockholder does not own,
of record or beneficially, any shares of capital stock of the Company
other than the Subject Shares set forth opposite such Stockholder's
name on Schedule A attached hereto. Such Stockholder has the sole right
to vote such Subject Shares, and none of such Subject Shares is subject
to any voting trust or other agreement, arrangement or restriction with
respect to the voting of such Subject Shares, except as contemplated by
this Agreement.
2. REPRESENTATION AND WARRANTY OF PARENT. Parent hereby represents
and warrants to each Stockholder that it has all requisite power and authority
to enter into this
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Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly authorized, executed and delivered by Parent and
constitutes the valid and binding obligation of Parent enforceable against it in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general principles of
equity. Neither the execution and delivery by Parent of this Agreement nor the
consummation by Parent of the transactions contemplated hereby will: (a) violate
or conflict in any material respect with, result in a breach of any material
provision of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination or in
a right of termination of, accelerate the performance required by or benefit
obtainable under, result in the vesting, triggering or acceleration of any
payment or other obligations pursuant to, or result in there being declared
void, voidable, subject to withdrawal, or without further binding effect, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust or any material license, franchise, permit, lease, contract, agreement
or other instrument, commitment or obligation to which Parent is a party, by
which it or any of its properties are bound, or under which it or any of its
properties are entitled to a benefit; (b) other than the filings required under
the HSR Act or any Exchange Act filings, require any consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Entity; or (c) violate in any material respect any laws applicable to Parent.
3. COVENANTS OF EACH STOCKHOLDER. Until the termination of this
Agreement in accordance with Section 7, each Stockholder severally and not
jointly agrees as follows:
(a) At any meeting of the stockholders of the Company called
to vote upon the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval
with respect to the Merger and the Merger Agreement is sought, such
Stockholder shall vote (or cause to be voted) its Subject Shares in
favor of the adoption by the Company of the Merger Agreement (as it may
be amended from time to time, provided that such amendment is not
adverse to such Stockholder) and the approval of the terms thereof and
each of the transactions contemplated thereby. Any vote cast in
accordance with this Section 3(a) or in accordance with Section 3(b)
shall be cast in such manner as will ensure that such vote is duly
counted for purposes of determining whether a quorum is present and for
purposes of determining the result of such vote.
(b) At any meeting of the stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which such
Stockholder's vote, consent or other
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approval is sought, such Stockholder shall vote (or cause to be voted)
its Subject Shares against any (i) Acquisition Proposal or (ii) any
amendment of the Company's certificate of incorporation or by-laws or
other proposal, which transaction or amendment or other proposal would
be reasonably likely to impede, frustrate, prevent or nullify the
Merger or the Merger Agreement (as it may be amended from time to time,
provided such amendment is not adverse to such Stockholder), or any of
the other transactions contemplated by the Merger Agreement or change
in any manner the voting rights of the Shares. Such Stockholder further
agrees not to enter into any agreement inconsistent with the foregoing.
(c) Such Stockholder shall not, prior to the earliest of (i)
the Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms, (x) sell, transfer, give, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"),
consent to any Transfer of, or enter into any contract, option or other
arrangement with respect to the Transfer of any or all of such
Stockholder's Subject Shares or any interest therein or (y) enter into
any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection with any Acquisition Proposal and agrees not
to commit or agree to take any of the foregoing actions other than
Transfers to its Affiliates provided that such transferee agrees to be
bound by the terms hereof, and Transfers pursuant to the terms of
Section 3(d).
(d) In the event that Parent, Purchaser, or any affiliate
thereof conducts a tender offer in accordance with the Merger
Agreement, such Stockholder shall validly tender such Stockholder's
Subject Shares and shall not withdraw Subject Shares so tendered.
(e) Until after the earlier to occur of the Merger being
consummated or the Merger Agreement being terminated, such Stockholder,
solely in its capacity as stockholder, shall use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the other
transactions contemplated by the Merger Agreement (as it may be amended
from time to time, provided such amendment is not adverse to such
Stockholder).
(f) Such Stockholder, solely in its capacity as stockholder,
shall not take any action which would restrict, limit or frustrate in
any way the transactions contemplated by this Agreement.
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4. FURTHER ASSURANCES. (a) From time to time, at any party's
request and without further consideration, each other party shall execute and
deliver such additional documents and take all such further action as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
(b) By its execution of this Agreement, (i) each Stockholder
acknowledges that it has been afforded the opportunity to consult with its legal
counsel and financial advisors with respect to its investment decision to
execute this Agreement and (ii) each Stockholder acknowledges that it has been
afforded the opportunity to discuss the Merger Agreement with representatives of
Parent. Each Stockholder further acknowledges that it has otherwise investigated
this matter to its full satisfaction and will not seek rescission or revocation
of this Agreement or seek to withdraw or revoke any vote, irrevocable proxy or
irrevocable instruction delivered by it or on its behalf in connection
therewith.
5. CERTAIN EVENTS. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including without limitation such Stockholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Shares, or the acquisition of additional
Shares or other voting securities of the Company by any Stockholder, the number
of Subject Shares listed in Schedule A beside the name of such Stockholder shall
be adjusted appropriately and this Agreement and the obligations hereunder shall
attach to any additional Shares or other voting securities of the Company issued
to or acquired by such Stockholder.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign, as contemplated by Section 10.5 of the Merger Agreement, in its sole
discretion, any and all of its rights, interests and obligations hereunder to
Parent or any other affiliate of The Prudential Insurance Company of America.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
7. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder shall terminate upon the earlier of (a) the Effective Time
and (b) the date upon which the Merger Agreement is terminated in accordance
with its terms provided that if the Merger.
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Agreement has been terminated for any reason, Sections 6, 7, 8, 9 and 10 shall
survive for one year following such termination.
8. GENERAL PROVISIONS.
(a) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) NOTICE. All notices and other communications hereunder shall
be in writing and shall be deemed given if hand delivered or sent by overnight
courier (providing proof of delivery) to Parent in accordance with Section 10.4
of the Merger Agreement and to the Stockholders at their respective addresses
set forth on Schedule A attached hereto (or at such other address for a party as
shall be specified by like notice).
(c) INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
(e) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(f) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
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9. ENFORCEMENT. Each Stockholder agrees that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Each Stockholder accordingly agrees that Parent shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the Southern District of New York or in a New York
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, Parent and each Stockholder (a)
consent to submit such party to the personal jurisdiction of any Federal court
located in the Southern District of New York or any New York state court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (b) agree that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agree that such party will not bring any action relating to this
Agreement or the transactions contemplated hereby in any court other than a
Federal court sitting in the state of New York or a New York state court and (d)
waive any right to trial by jury with respect to any claim or proceeding related
to or arising out of this Agreement or any of the transactions contemplated
hereby.
10. PUBLIC ANNOUNCEMENTS. Each party to this Agreement will
consult with the other party before issuing, and provide the other party with
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement that
expressly identifies any of the Stockholders, and shall not issue any such press
release or make any such public statement without the prior approval of the
other party, which approval shall not be unreasonably withheld.
11. STOP TRANSFER. Each Stockholder agrees with and covenants to
Parent that such Stockholder shall not request that the Company register the
transfer of any certificate or uncertificated interest representing any of such
Stockholder's Subject Shares, unless such transfer is made in compliance with
this Agreement. Each Stockholder agrees, with respect to any Subject Shares in
certificated form, that such Stockholder will submit to the Company, within ten
business days after the date hereof, the certificates representing such Subject
Shares in order for the Company to inscribe upon such certificates the following
legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF MAY 10, 2000, AND, PURSUANT TO THE TERMS
THEREOF, MAY NOT BE SOLD, TRANSFERRED, GIVEN, PLEDGED, ASSIGNED OR OTHERWISE
DISPOSED OF, AND ARE SUBJECT TO FURTHER RESTRICTIONS REGARDING, AMONG OTHER
THINGS, VOTING RIGHTS AND CERTAIN INDIRECT TRANSFERS AS SET FORTH IN SUCH.
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STOCKHOLDERS AGREEMENT." Each Stockholder agrees that within ten business days
after the date hereof, such Stockholder will no longer hold any Subject Shares,
whether certificated or uncertificated, in "street name" or in the name of any
nominee.
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IN WITNESS WHEREOF, Parent and the Stockholders have caused this Agreement to be
duly executed and delivered as of the date first written above.
Prudential Mortgage Capital Company, LLC
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: /s/ Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Stockholders:
Phemus Corporation
By: /s/ XXXX XXXXX
-------------------------------------
Name: Xxxx Xxxxx
Title: Authorized Signatory
Demeter Holdings Corporation
By: /s/ XXXX XXXXX
-------------------------------------
Name: Xxxx Xxxxx
Title: Authorized Signatory
Capricorn Investors II, L.P.
By Capricorn Holdings, LLC,
its General Partner
By: /s/ XXXXXXX X. XXXXXXX, XX.
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Manager
Capricorn Holdings, Inc.
By: /s/ XXXXXXX X. XXXXXXX, XX.
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: President
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Commonwealth Overseas Trading
By: /s/ XXXXXX XXXXXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title:
Xxxxxx Xxxxxxxxxx
/s/ XXXX X. XXXXXX
----------------------------------------
Xxxx X. Xxxxxx
/s/ XXXXXXXX X. XX-XXXXXXXX
----------------------------------------
Xxxxxxxx X. Xx-Xxxxxxxx
/s/ J. XXXXXXXX XXXXXX, III
----------------------------------------
J. Xxxxxxxx Xxxxxx, III
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SCHEDULE A
Share Ownership
---------------
Shares Underlying
Stock Options
Name and Address -----------------
of Stockholder Existing Shares Vested Unvested Total
-------------- --------------- ------ -------- -----
Demeter Holdings Corporation 5,134,483 20,000 10,000 5,164,483
c/o Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxx, XX 00000
Phemus Corporation 281,419 --- --- 281,419
c/o Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxx, XX 00000
Capricorn Investors II, L.P. (1) 1,730,532 10,000 5,000 1,745,532
00 Xxxx Xxx Xx.
Xxxxxxxxx, XX 00000
Capricorn Holdings, Inc. (1) 163,533 --- --- 163,533
00 Xxxx Xxx Xx.
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx (2) 55,415 118,867 41,800 216,082
c/o WMF Group Ltd.
0000 Xxxxxx Xxxx Xx
Xxxxx 000
Xxxxxx, XX 00000
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Shares Underlying
Stock Options
Name and Address -----------------
of Stockholder Existing Shares Vested Unvested Total
-------------- --------------- ------ -------- -----
Commonwealth Overseas Trading 145,040 --- --- 145,040
Company Limited
c/o Ms. Xxxxx Xxxxxxx
The Bank of N.T. Xxxxxxxxxxx & Son,
Limited
00 Xxxxx Xxxxxx
Xxxxxxxx, XXXX
Xxxxxxx
Xxxxxxxx X. (3) --- 10,000 5,000 15,000
Al-Tuwaijri
X.X. Xxx 00000
Xxxxxxxx Xxxxxx
Xxxxxx 00000
Xxxxx Xxxxxx
J. Xxxxxxxx Xxxxxx III (4) 169,464 130,290 5,000 304,754
0000 X Xxxxxx, X.X. Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxx X. Xxxxxx (5) 210,033 10,000 5,000 225,033
0000 Xxxxxxxxx Xxxxxx, X.X.
#000
Xxxxxxxxxx, XX 00000
(1) Does not include 10,000 shares owned by two revocable trusts benefiting
members of Xxxxxxx X. Xxxxxxx, Xx.'s family.
(2) Excludes 20,000 shares of restricted stock subject to forfeiture unless
certain events occur and 145,040 shares of common stock owned by
Commonwealth Overseas Trading Company Limited, over which Xx.
Xxxxxxxxxx and Xx. Xx-Xxxxxxxx share voting power.
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(3) Excludes 145,040 shares of common stock owned by Commonwealth Overseas
Trading Company Limited, over which Xx. Xxxxxxxxxx and Xx. Xx-Xxxxxxxx
share voting power.
(4) Notwithstanding Section 1(b) of the Agreement, the number of Subject
Shares includes 35,000 shares owned by the Xxxxxx Family Foundation, a
charitable foundation of which Xx. Xxxxxx is an officer, and 6,000
shares held of record by Xx. Xxxxxx as custodian for his minor
granddaughter.
(5) Excludes 23,108 shares owned by a trust benefiting members of Xx.
Xxxxxx'x family of which Xx. Xxxxxx has no voting or investment
control.
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