Document:

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                                                                   Exhibit 10.20

                  SERIES 3 WARRANT AGREEMENT dated as of December 30, 1998
between The WMF Group, Ltd., a Delaware corporation (the "Company"), and HN
Acquisitions, Inc., a Florida corporation (hereinafter referred to as "HN").

                              W I T N E S S E T H:

                  WHEREAS, WMF Capital Corp., a subsidiary of the Company
("Capital Corp."), issued a certain Credit Lease Loan Commitment dated August 6,
1998, to HN; and

                  WHEREAS, HN, Norton Herrick ("Herrick"), the Company and
Capital Corp. have entered into a Settlement Agreement whereby HN and Herrick
have agreed to release the Company and Capital Corp. from liability under the
Credit Lease Loan Commitment; and

                  WHEREAS, as partial consideration to HN and Herrick under the
Settlement Agreement, the Company has agreed to issue to HN Series 3 warrants
(the "Warrants") to purchase up to 150,000 shares (the "Shares") of common stock
of the Company, $.01 par value (the "Common Stock");

                  NOW, THEREFORE, in further consideration for the release by HN
and Herrick of the Company and Capital Corp., from their obligations to HN under
the Credit Lease Loan Commitment, and in consideration of the premises and
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.       GRANT.

         HN (or its designees, as permitted pursuant to the Settlement
Agreement) is hereby granted the right to purchase, at any time from the date
hereof until 5:00 P.M., New York City time, on December 30, 2003 (the "Warrant
Exercise Term"), up to 150,000 Shares at an initial

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exercise price of $10.00 per Share (the "Initial Exercise Price") (subject to
adjustment as provided in SECTION 8 hereof).

2.       WARRANT CERTIFICATES.

         The warrant certificates (the "Warrant Certificates") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
EXHIBIT A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.

3.       CASH EXERCISE OF WARRANTS.

         The Warrants initially are exercisable at the Initial Exercise Price,
payable in cash or by check to the order of the Company, or any combination of
cash or check, subject to adjustment as provided in SECTION 8 hereof. Upon
surrender of the Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares purchased, at the Company's principal
offices (presently located at 1593 Spring Hill Road, Suite 400, Vienna, Virginia
22182) the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock). In the case of the purchase of less
than all the Shares purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Shares
purchasable thereunder.

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4.       CASHLESS EXERCISE OF WARRANTS.

         At any time during the Warrant Exercise Term, the Holder may, at its
option, exchange the Warrant, in whole or in part, into the number of Shares
determined in accordance with this SECTION 4 (a "Warrant Exchange"), by
surrendering this Warrant at the principal office of the Company or at the
office of its transfer agent, accompanied by a notice stating such Holder's
intent to effect such exchange, the number of Shares to be exchanged and the
date on which the Holder requests that such Warrant Exchange occur (the "Notice
of Exchange"). The Warrant Exchange shall take place on the date specified in
the Notice of Exchange or, if later, the date the Notice of Exchange is received
by the Company (the "Exchange Date"). Certificates for the Shares issuable upon
such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing
the balance of the Shares remaining subject to this Warrant, shall be issued as
of the Exchange Date and delivered to the Holder within five (5) business days
following the Exchange Date. In connection with any Warrant Exchange, this
Warrant shall represent the right to subscribe for and acquire the number of
Shares (rounded to the next highest integer) equal to (i) the number of Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Shares equal to the quotient obtained by dividing (A) the product
of the Total Number and the existing Exercise Price (as hereinafter defined) by
(B) the current Market Price of one share of Common Stock.

5.       ISSUANCE OF CERTIFICATES.

         Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five (5) business days
thereafter) without charge to the Holder

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thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall be issued in the name of,
or, if the requirements of SECTION 7 hereof have been satisfied, in such names
as may be directed by, the Holder thereof; PROVIDED, HOWEVER, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver such certificates unless and until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.

         The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of Directors
or President or a Vice President of the Company, attested to by the manual or
facsimile signature of the present or any future Treasurer or an Assistant
Treasurer or Secretary or an Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.

         The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended (the "Act") or
         applicable state securities laws, and may not be offered or sold except
         (i) pursuant to an effective registration statement under the Act or
         such laws, (ii) to the extent applicable, pursuant to Rule 144 under
         the Act (or any similar rule under the Act relating to the disposition
         of securities), or (iii) upon the delivery by the holder to the Company

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         of an opinion of counsel, reasonably satisfactory to counsel to the
         Company, stating that an exemption from registration under the Act is
         available."

6.       PRICE.

         6.1      INITIAL AND ADJUSTED EXERCISE PRICE.

         The initial exercise price of each Warrant shall be the Initial
Exercise Price set forth in SECTION 1. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
Initial Exercise Price in accordance with the provisions of SECTION 8 hereof.

         6.2      EXERCISE PRICE.

         The term "Exercise Price" herein shall mean the Initial Exercise Price
or the adjusted exercise price, depending upon the context.

7.       REGISTRATION RIGHTS; LIMITATIONS ON TRANSFER.

         The Warrants and the Shares have not been registered for purposes of
public distribution under the Securities Act of 1933, as amended ("the Act") or
applicable state securities laws and may not be offered, sold or otherwise
transferred except (i) pursuant to an effective registration statement under the
Act or such laws, (ii) to the extent applicable, pursuant to Rule 144 under the
Act (or any similar rule under the Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company, stating
that exemptions from registration under the Act and such laws are available. The
Shares shall be registered under the Act pursuant to the terms and conditions of
the Registration Rights Agreement, of even date herewith, by and between HN and
the Company.

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8.       ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.

         8.1 ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE.

         Upon any adjustment of the Exercise Price as provided in SECTION 8.2,
the holder hereof shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Common Stock
(calculated to the nearest full share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable hereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

         8.2 ADJUSTMENT OF EXERCISE PRICE.

         The Exercise Price shall be subject to adjustment from time to time as
hereinafter set forth.

                           (a) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
                  In the event that the Company after the date hereof shall:

                                     (1) declare a dividend upon, or make any
                           distribution in respect of, any of its stock, payable
                           in Common Stock, securities convertible or
                           exchangeable into Common Stock ("Convertible
                           Securities") or options, rights or warrants to
                           purchase Common Stock ("Stock Purchase Rights"), or

                                     (2) subdivide its outstanding shares of
                           Common Stock into a larger number of shares of Common
                           Stock, or

                                     (3) combine its outstanding shares of
                           Common Stock into a smaller number of shares of
                           Common Stock,

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         then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price immediately prior to such event by a fraction (A)
the numerator of which shall be the total number of outstanding shares of Common
Stock of the Company immediately prior to such event, and (B) the denominator of
which shall be the total number of outstanding shares of Common Stock of the
Company immediately after such event, treating as outstanding all shares of
Common Stock issuable upon conversions or exchanges of the Convertible
Securities and exercises of the Stock Purchase Rights referred to in SECTION
8.2(a)(1).

                           (b) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
                  case the Company shall issue or sell any shares of Common
                  Stock after the Closing Date for a consideration less than the
                  Market Price (as defined below) per share on the date
                  immediately prior to such issuance, the Exercise Price upon
                  each such issuance or sale shall be adjusted (to the nearest
                  full cent) to the price calculated by MULTIPLYING the then
                  existing Exercise Price by a fraction the numerator of which
                  is (A) the sum of (1) the number of shares of Common Stock
                  outstanding immediately prior to such issue or sale multiplied
                  by the Market Price per share of Common Stock on the date
                  immediately prior to such issue or sale PLUS (2) the
                  consideration received by the Company upon such issue or sale,
                  divided by (B) the total number of shares of Common Stock
                  outstanding immediately after such issue or sale, and the
                  denominator of which shall be the Market Price per share of
                  Common Stock on the date immediately prior to such issue or
                  sale.

         For purposes of this SECTION 8.2(b) the adjustment shall be made
successively whenever any issuance is made, and shall become effective
immediately after such issuance.

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         The provisions of this SECTION 8.2(b) shall not apply to any additional
shares of Common Stock which are distributed to holders of Common Stock pursuant
to a stock dividend or subdivision for which an adjustment is provided for under
SECTION 8.2(a). No adjustment of the Exercise Price shall be made under this
SECTION 8.2(b) upon the issuance of any additional shares of Common Stock which
are issued pursuant to the exercise of any Stock Purchase Rights or pursuant to
the conversion or exchange of any Convertible Securities to the extent that such
adjustment shall previously have been made upon the issuance of such Stock
Purchase Rights or Convertible Securities pursuant to subsection (a), (c) or (d)
of this SECTION 8.2.

         Further, the provisions of this SECTION 8.2(b) shall not apply if:

                  (i) the Company issues stock to third parties in an
         arms-length transaction for cash or other consideration having a value
         equal to at least (A) 85 percent (85%) of the Market Price on the date
         of the issuance of such stock or, if the offering is priced prior to
         the closing of the applicable market for the Common Stock on such date,
         the trading day immediately preceding such date, or (B) 90 percent
         (90%) of the average of the Market Prices of the Common Stock for the
         ten (10) consecutive trading days ending on the date of the issuance of
         such stock, including but not limited to, stock issuances pursuant to a
         merger, consolidation, corporate reorganization (both taxable and
         nontaxable), corporate restructuring, or private placement or;

                  (ii) the Company issues shares of Common Stock to individuals
         or entities upon the exercise or conversion of Convertible Securities
         or Stock Purchase Rights outstanding on the date hereof, or pursuant to
         Stock Purchase Rights issued pursuant to

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         the rights offering first announced publicly on or about October 21,
         1998 (the "Company Rights Offering") or pursuant to any stand-by
         purchase commitment relating to the Company Rights Offering; or

                  (iii) the Company issues warrants, rights, options or
         restricted stock to employees of the Company or its affiliates pursuant
         to a deferred compensation plan, key employee incentive plan or another
         applicable employment compensation plan so long as the exercise price
         for any such warrants, rights or options is equal to or greater than
         either (A) the Market Price on the date of the issuance of such
         warrants, rights or options, or (B) the average Market Prices for the
         ten (10) consecutive trading days ending on the date of the issuance of
         such warrants, rights or options.

         As used in this Agreement, the phrase "Market Price" at any date shall
be deemed to be the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading
or as reported in the Nasdaq National Market System, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the Nasdaq National Market System, the closing bid price as furnished by the
National Association of Securities Dealers, Inc. through Nasdaq or similar
organization if Nasdaq is no longer reporting such information, or if the Common
Stock is not quoted on Nasdaq, as determined in good faith by resolution of the
Board of Directors of the Company based on the best information available to it.

                           (c) ISSUANCE OF STOCK PURCHASE RIGHTS. In case the
                  Company shall issue or sell any Stock Purchase Rights and the
                  consideration per share for which

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                  additional shares of Common Stock may at any time thereafter
                  be issuable upon exercise thereof (or, in the case of Stock
                  Purchase Rights exercisable for the purchase of Convertible
                  Securities, upon the subsequent conversion or exchange of such
                  Convertible Securities) shall be less than the then Market
                  Price per share, the Exercise Price shall be adjusted as
                  provided in SECTION 8.2(b) on the basis that (I) the maximum
                  number of additional shares of Common Stock issuable upon
                  exercise of such Stock Purchase Rights (or upon conversion or
                  exchange of such Convertible Securities following such
                  exercise) shall be deemed to have been issued as of the date
                  of the determination of the Market Price, as hereinafter
                  provided, and (II) the aggregate consideration received for
                  such additional shares of Common Stock shall be deemed to be
                  the minimum consideration received and receivable by the
                  Company in connection with the issuance and exercise of such
                  Stock Purchase Rights (or upon conversion or exchange of such
                  Convertible Securities). For the purposes of this SECTION
                  8.2(c), the date as of which the Market Price shall be
                  determined shall be the earlier of (A) the date on which the
                  Company shall enter into a firm contract for the issuance of
                  such Stock Purchase Rights, or (B) the date of actual issuance
                  of such Stock Purchase Rights. The provisions of this SECTION
                  8.2(c) shall not apply to Stock Purchase Rights issued in
                  connection with the Company Rights Offering.

                           (d) ISSUANCE OF CONVERTIBLE SECURITIES. In case the
                  Company shall issue or sell any Convertible Securities and the
                  consideration per share for which additional shares of Common
                  Stock may at any time thereafter be issuable

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                  pursuant to the terms of such Convertible Securities shall be
                  less than the then Market Price per share, the Exercise Price
                  shall be adjusted as provided in SECTION 8.2(b) on the basis
                  that (I) the maximum number of additional shares of Common
                  Stock necessary to effect the conversion or exchange of all
                  such Convertible Securities shall be deemed to have been
                  issued as of the date for the determination of the Market
                  Price, as hereinafter provided, and (II) the aggregate
                  consideration received for such additional shares of Common
                  Stock shall be deemed to be equal to the minimum consideration
                  received and receivable by the Company in connection with the
                  issuance and exercise of such Convertible Securities. For the
                  purposes of this SECTION 8.2(d), the date as of which the
                  Market Price per share shall be determined shall be the
                  earlier of (A) the date on which the Company shall enter into
                  a firm contract for the issuance of such Convertible
                  Securities, or (B) the date of actual issuance of such
                  Convertible Securities. No adjustment of the Exercise Price
                  shall be made under this SECTION 8.2(d) upon the issuance of
                  any Convertible Securities which are issued pursuant to the
                  exercise of any Stock Purchase Rights, if an adjustment shall
                  previously have been made upon the issuance of such Stock
                  Purchase Rights pursuant to SECTION 8.2(c).

                           (e) MINIMUM ADJUSTMENT. In the event any adjustment
                  of the Exercise Price pursuant to this SECTION 8.2 shall
                  result in an adjustment of less than $.02 per share of Common
                  Stock, no such adjustment shall be made, but any such lesser
                  adjustment shall be carried forward and shall be made at the
                  time and together with the next subsequent adjustment, if any,
                  which, together with any adjustments so

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                  carried forward, shall amount to $.02 more per share of Common
                  Stock; PROVIDED, HOWEVER, that upon any adjustment of the
                  Exercise Price resulting from (i) the declaration of a
                  dividend upon, or the making of any distribution in respect
                  of, any stock of the Company payable in Common Stock or
                  Convertible Securities or (ii) the reclassification by
                  subdivision, combination or otherwise, of the Common Stock
                  into a greater or smaller number of shares, the foregoing
                  figure of $.02 per share (or such figure as last adjusted)
                  shall be proportionately adjusted.

                           (f) READJUSTMENT OF EXERCISE PRICE. In the event (i)
                  the purchase price payable for any Stock Purchase Rights or
                  Convertible Securities referred to in subsection (c) or (d)
                  above, (ii) the additional consideration, if any, payable upon
                  exercise of such Stock Purchase Rights or upon the conversion
                  or exchange of such Convertible Securities or (iii) the rate
                  at which any Convertible Securities referred to above are
                  convertible into or exchangeable for additional shares of
                  Common Stock shall change, the Exercise Price in effect at the
                  time of such event shall forthwith be readjusted to the
                  Exercise Price which would have been in effect at such time
                  had such Stock Purchase Rights or Convertible Securities
                  provided for such changed purchase price, additional
                  consideration or conversion rate, as the case may be, at the
                  time initially granted, issued or sold. On the expiration of
                  any such Stock Purchase Rights or of any such right to convert
                  or exchange under any such Convertible Securities, if none of
                  such Stock Purchase Rights or such Convertible Securities, as
                  the case may be, shall have been exercised, the Exercise Price
                  then in effect hereunder shall forthwith be increased to the
                  Exercise Price

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                  which would have been in effect at the time of such expiration
                  or termination had such Stock Purchase Rights or Convertible
                  Securities never been issued. No readjustment of the Exercise
                  Price pursuant to this SECTION 8.2(f) shall have the effect of
                  increasing the Exercise Price by an amount in excess of the
                  adjustment originally made to the Exercise Price in respect of
                  the issue, sale or grant of the applicable Stock Purchase
                  Rights or Convertible Securities.

                           (g) REORGANIZATION, RECLASSIFICATION OR
                  RECAPITALIZATION OF COMPANY. In case of any capital
                  reorganization or reclassification or recapitalization of the
                  capital stock of the Company (other than in the cases referred
                  to in SECTION 8.2(a)), or in case of the consolidation or
                  merger of the Company with or into another corporation, or in
                  case of the sale or transfer of the property of the Company as
                  an entirety or substantially as an entirety, there shall
                  thereafter be deliverable upon the exercise of any Warrant or
                  any portion thereof (in lieu of or in addition to the number
                  of shares of Common Stock theretofore deliverable, as
                  appropriate) the number of shares of stock or other securities
                  or property to which the holder of the number of shares of
                  Common Stock which would otherwise have been deliverable upon
                  the exercise of any Warrant or any portion thereof at the time
                  would have been entitled upon such capital reorganization or
                  reclassification of capital stock, consolidation, merger or
                  sale, and at the same aggregate Exercise Price.

         Prior to and as a condition of the consummation of any transaction
described in the preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions herein set forth satisfactory
to the holder or holders of a majority of the Warrants,

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so that the provisions set forth herein shall thereafter be applicable, as
nearly as possible, in relation to any shares of stock or other securities or
other property thereafter deliverable upon exercise of any Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company and/or the successor entity, as applicable, which agreement shall
bind each such entity, shall be accompanied by an opinion of counsel as to the
enforceability of such agreement and shall be approved by the holder or the
holders of a majority of the Warrants.

                           (h) OTHER DILUTIVE EVENTS. In case any Distribution
                  shall occur as to which the other provisions of this SECTION 8
                  are not strictly applicable but the failure to make any
                  adjustment would not fairly protect the purchase rights
                  represented by this Warrant in accordance with the essential
                  intent and principles hereof, then, in each such case, the
                  Board of Directors of the Company shall determine the amount
                  of the adjustment in good faith and on a basis consistent with
                  the essential intent and principles established in this
                  SECTION 8, necessary to preserve, without dilution, the
                  purchase rights represented by this Warrant. Upon
                  determination of such adjustment, the Company will promptly
                  mail a copy thereof to the holder of this Warrant and shall
                  make the adjustment described therein.

                           (i) DETERMINATION OF CONSIDERATION. For purposes of
                  this SECTION 8, the consideration received or receivable by
                  the Company for the issuance, sale, grant or assumption of
                  additional shares of Common Stock, Stock Purchase Rights or
                  Convertible Securities, irrespective of the accounting
                  treatment of such consideration, shall be valued as follows:

                                     (1) CASH PAYMENT. In the case of cash, the
                           net amount received

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                           by the Company without deduction of any expenses paid
                           or incurred or any underwriting commissions or
                           concessions paid or allowed by the Company.

                                     (2) SECURITIES OR OTHER PROPERTY. In the
                           case of securities or other property, at the Market
                           Price of the security or the fair value of such other
                           property as determined in good faith by the Board of
                           Directors of the Company (in both cases as of the
                           date immediately preceding the issuance, sale or
                           grant in question).

                                     (3) ALLOCATION RELATED TO COMMON STOCK. In
                           the event additional shares of Common Stock are
                           issued or sold together with other securities or
                           other assets of the Company for a consideration which
                           covers both, the consideration received (computed as
                           provided in (1) and (2) above) shall be allocable to
                           such additional shares of Common Stock as determined
                           in good faith by the Board of Directors of the
                           Company.

                                     (4) DIVIDENDS IN SECURITIES. In case the
                           Company shall declare a dividend or make any other
                           distribution upon any stock of the Company (other
                           than Common Stock) payable in either case in Common
                           Stock, Convertible Securities or Stock Purchase
                           Rights, such Common Stock, Convertible Securities or
                           Stock Purchase Rights, as the case may be, issuable
                           in payment of such dividend or distribution shall be
                           deemed to have been issued or sold without
                           consideration.

                                     (5) STOCK PURCHASE RIGHTS AND CONVERTIBLE
                           SECURITIES. The

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                           consideration for which shares of Common Stock shall
                           be deemed to be issued upon the issuance of any Stock
                           Purchase Rights or Convertible Securities shall be
                           determined by dividing (i) the total consideration,
                           if any, received or receivable by the Company as
                           consideration for the granting of such Stock Purchase
                           Rights or the issuance of such Convertible
                           Securities, plus the minimum aggregate amount of
                           additional consideration payable to the Company upon
                           the exercise of such Stock Purchase Rights, or, in
                           the case of such Convertible Securities, the minimum
                           aggregate amount of additional consideration, if any,
                           payable upon the conversion or exchange thereof, in
                           each case after deducting any accrued interest,
                           dividends, or any expenses paid or incurred or any
                           underwriting commissions or concessions paid or
                           allowed by the Company, by (ii) the maximum number of
                           shares of Common Stock issuable upon the exercise of
                           such Stock Purchase Rights or upon the conversion or
                           exchange of all such Convertible Securities.

                                     (6) MERGER, CONSOLIDATION OR SALE OF
                           ASSETS. In case any shares of Common Stock or
                           Convertible Securities or any Stock Purchase Rights
                           shall be issued in connection with any merger or
                           consolidation in which the Company is the surviving
                           corporation, the amount of consideration therefor
                           shall be deemed to be the fair value of such portion
                           of the assets and business of the nonsurviving
                           corporation as shall be attributable to such Common
                           Stock, Convertible Securities or Stock Purchase
                           Rights, as the case may be. In the event of any
                           merger or consolidation of the Company

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                           in which the Company is not the surviving corporation
                           or in the event of any sale of all or substantially
                           all of the assets of the Company for stock or other
                           securities of any corporation, the Company shall be
                           deemed to have issued a number of shares of its
                           Common Stock for stock or securities of the other
                           corporation computed on the basis of the actual
                           exchange ratio on which the transaction was
                           predicated and for a consideration equal to the
                           Market Price on the date of such transaction of such
                           stock or securities of the other corporation, and if
                           any such calculation results in adjustment of the
                           Exercise Price, the determination of the number of
                           shares of Common Stock issuable upon exercise of this
                           Warrant immediately prior to such merger,
                           consolidation or sale, for the purposes of SECTION
                           8.2(g) above, shall be made after giving effect to
                           such adjustment of the Exercise Price.

                           (j) RECORD DATE. In case the Company shall take a
                  record of the holders of the Common Stock for the purpose of
                  entitling them (i) to receive a distribution payable in Common
                  Stock, Stock Purchase Rights or in Convertible Securities or
                  (ii) to subscribe for or purchase Common Stock or Convertible
                  Securities, then all references in this SECTION 8 to the date
                  of the issue or sale of the shares of Common Stock deemed to
                  have been issued or sold upon the making of such distribution
                  or the date of the granting of such right of subscription or
                  purchase, as the case may be, shall be deemed to be references
                  to such record date.

                           (k) SHARES OUTSTANDING. The number of shares of
                  Common Stock deemed to be outstanding at any given time shall
                  exclude shares of Common Stock

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                  in the treasury of the Company and those held by any
                  subsidiary of the Company.

                           (l) MAXIMUM EXERCISE PRICE. At no time shall the
                  Exercise Price per share of Common Stock exceed the amount set
                  forth in SECTION 1 of this Agreement except as provided in
                  subsection (a) or (g) of this SECTION 8.2.

                           (m) APPLICATION. Except as otherwise provided herein,
                  all subsections of this SECTION 8.2 are intended to operate
                  independently of one another. If an event occurs that requires
                  the application of more than one subsection, all applicable
                  subsections shall be given independent effect.

         8.3 CERTIFICATES AND NOTICES.

                           (a) ADJUSTMENTS TO EXERCISE PRICE. Upon any
                  adjustment under this SECTION 8 of the number of shares of
                  Common Stock purchasable upon exercise of a Warrant or of the
                  Exercise Price, a certificate, signed (i) by the President or
                  a Vice President and by the Treasurer or an Assistant
                  Treasurer or the Secretary or an Assistant Secretary of the
                  Company, or (ii) by any independent firm of certified public
                  accountants of recognized national standing selected by, and
                  at the expense of, the Company, setting forth in reasonable
                  detail the events requiring the adjustment and the method by
                  which such adjustment was calculated, shall be mailed to the
                  holders of the Warrant specifying the adjusted Exercise Price
                  and the number of shares of Common Stock purchasable upon
                  exercise of such holder's Warrant after giving effect to such
                  adjustment.

         The certificate of any independent firm of certified public accountants
of recognized national standing selected by the Board of Directors of the
Company shall be conclusive evidence

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of the correctness of any computation made under this SECTION 8.

                           (b) EFFECT OF FAILURE.

                                    Failure to file any certificate or notice or
                  to mail any notice or any defect in any certificate or notice
                  pursuant to this SECTION 8.3 shall not affect the legality or
                  validity of the adjustment of the Exercise Price or the number
                  of shares purchasable upon exercise of any Warrant, or any
                  transaction giving rise thereto.

9.       EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES.

                  Each Warrant Certificate is exchangeable without expense, upon
the surrender hereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Shares in
such denominations as shall be designated by the Holder thereof at the time of
such surrender.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.

10.      ELIMINATION OF FRACTIONAL INTERESTS.

                  The Company shall not be required to issue certificates
representing fractions of shares of Common Stock and shall not be required to
issue scrip or pay cash in lieu of fractional

                                      -19-
<PAGE>

interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up to the nearest whole number of
shares of Common Stock.

11.      RESERVATION AND LISTING OF SECURITIES.

                  The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the purpose of issuance
upon the exercise of the Warrants, such number of shares of Common Stock as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any shareholder. As long as the Warrants shall be outstanding, the Company shall
cause all shares of Common Stock issuable upon the exercise of the Warrants to
be listed on or quoted by Nasdaq or listed on such national securities exchanges
as the Company's Common Stock is then listed or quoted, if any.

12.      NOTICES TO WARRANT HOLDERS.

                  Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent or to
receive notice as a shareholder in respect of any meetings of shareholders for
the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:

                           (a) the Company shall take a record of the holders of
                  its shares of Common Stock for the purpose of entitling them
                  to receive a dividend or distribution payable otherwise than
                  in cash, or a cash dividend or distribution payable otherwise
                  than out of current or retained earnings, as indicated by the

                                      -20-
<PAGE>

                  accounting treatment of such dividend or distribution on the
                  books of the Company; or

                           (b) the Company shall offer to all the holders of its
                  Common Stock any additional shares of capital stock of the
                  Company or securities convertible into or exchangeable for
                  shares of capital stock of the Company, or any option, right
                  or warrant to subscribe therefor; or

                           (c) a merger or consolidation involving the Company
                  or subsidiary of the Company and any other entity and the
                  Company is not the surviving entity; or

                           (d) a dissolution, liquidation or winding up of the
                  Company (other than in connection with a consolidation or
                  merger) or a sale of all or substantially all of its property,
                  assets and business as an entirety shall be proposed; then, in
                  any one or more of said events, the Company shall give written
                  notice of such event at least fifteen (15) days prior to the
                  date fixed as a record date or the date of closing the
                  transfer books for the determination of the shareholders
                  entitled to such dividend, distribution, convertible or
                  exchangeable securities or subscription rights, options or
                  warrants, or entitled to vote on such proposed merger,
                  consolidation, dissolution, liquidation, winding up or sale.
                  Such notice shall specify such record date or the date of
                  closing the transfer books, as the case may be. Failure to
                  give such notice or any defect therein shall not affect the
                  validity of any action taken in connection with the
                  declaration or payment of any such dividend or distribution,
                  or the issuance of any convertible or exchangeable securities
                  or subscription rights, options or warrants, or any proposed
                  merger, consolidation, dissolution,

                                      -21-
<PAGE>

                  liquidation, winding up or sale.

13.      NOTICES.

         All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:

                           (a) If to a registered Holder of the Warrants, to the
                  address of such Holder as shown on the books of the Company;
                  or

                           (b) If to the Company, to the address set forth in
                  SECTION 3 of this Agreement or to such other address as the
                  Company may designate by notice to the Holders.

14.      SUPPLEMENTS AND AMENDMENTS.

         The Company and HN may from time to time supplement or amend this
Agreement without the approval of any Holders of Warrant Certificates in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and HN may deem necessary or desirable and which the Company and HN
deem not to adversely affect the interests of the Holders of Warrant
Certificates.

15.      SUCCESSORS.

         All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.

                                      -22-
<PAGE>

16.      TERMINATION.

         This Agreement shall terminate at the close of business on December 30,
2003. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public.

17.      GOVERNING LAW.

         This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.

18.      BENEFITS OF THIS AGREEMENT.

         Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and HN and any other registered Holder or
Holders of the Warrant Certificates, Warrants or the Shares any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and HN and any other Holder
or Holders of the Warrant Certificates, Warrants or the Shares.

19.      COUNTERPARTS.

         This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.

                                      -23-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.

[SEAL]                                      THE WMF GROUP, LTD.

                                            By:   /S/ SHEKAR NARASIMHAN
                                               ------------------------------
                                            Name:   Shekar Narasimhan
                                            Title:  President and Chief
                                                    Executive Officer

Attest:

/S/  BARBARA EKSTROM
-----------------------

                                            HN ACQUISITIONS, INC.

                                            By:   /S/ NORTON HERRICK
                                               ------------------------------
                                            Name:  Norton Herrick
                                            Title: President

                                      -24-
<PAGE>

                                                                       EXHIBIT A

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR SUCH LAWS, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER
SUCH ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING
THAT EXEMPTIONS FROM REGISTRATION UNDER THE ACT AND SUCH LAWS ARE AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE

                   5:00 P.M., NEW YORK TIME, DECEMBER 30, 2003

No. W3-                                                _______ Series 3 Warrants

                          SERIES 3 WARRANT CERTIFICATE

                  This Warrant Certificate certifies that _______________
____________ or registered assigns, is the registered holder of _______ Series 3
Warrants to purchase, at any time from December 30, 1998 until 5:00 P.M. New
York City time on December 30, 2003 ("Expiration Date"), up to _____ shares
("Shares") of fully-paid and non-assessable common stock, $.01 par value
("Common Stock"), of The WMF Group, Ltd., a Delaware corporation (the
"Company"), at an initial exercise price per share of $10.00, subject to
adjustment in certain events (the "Exercise Price"), upon surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency of
the Company, but subject to the conditions set forth herein and in the Warrant
Agreement, dated as of December 30, 1998, between the Company and HN
Acquisitions, Inc. (the "Series 3 Warrant Agreement"). Payment of the Exercise
Price may be made in cash, or by certified or official bank check in New York
Clearing House funds payable to the order of the Company, or any combination of
cash or check, or by cashless exercise as provided in the Warrant Agreement.

                  No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.

<PAGE>

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.

                  The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.

                  Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection therewith.

                  Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.

                  The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.

                  All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.

Dated:  ___________,                                 THE WMF GROUP, LTD.

[SEAL]                                               By:________________________
                                                     Name:
                                                     Title:

Attest:

_______________________

<PAGE>

                         [FORM OF ELECTION TO PURCHASE]

                  The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of The WMF Group,
Ltd. in the amount of $ , all in accordance with the terms hereof. The
undersigned requests that a certificate for such Shares be registered in the
name of , whose address is __________________, and that such Certificate be
delivered to __________________, whose address is _____________.

Dated:                                       Signature:_________________________

                                             (Signature must conform in all
                                             respects to name of holder as
                                             specified on the face of the
                                             Warrant Certificate.)

                        ________________________________

                        ________________________________
                        (Insert Social Security or Other
                          Identifying Number of Holder)

Signature Guaranteed:

_______________________________

By:____________________________
Title:

The signature to this document must be guaranteed by a member of the Securities
Transfer Agents Medallion program. Notarized or witnessed signatures are not
acceptable.

<PAGE>

                              [FORM OF ASSIGNMENT]
             (To be executed by the registered holder if such holder
                  desires to transfer the Warrant Certificate.)

         FOR VALUE RECEIVED ____________________________________________________

hereby sells, assigns and transfers unto

________________________________________________________________________________
(Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,

and does hereby irrevocably constitute and appoint _______________, Attorney, to

transfer the within Warrant Certificate on the books of the within-named

Company, with full power of substitution.

Dated:                                      Signature:__________________________

                                                 Signature must conform in all
                                                 respects to name of holder as
                                                 specified on the face of the
                                                 Warrant Certificate)

_________________________________

_________________________________

(Insert Social Security or Other
Identifying Number of Assignee)

Signature Guaranteed:

______________________________________

By:___________________________________
Title:

The signature to this document must be guaranteed by a member of the Securities
Transfer Agents Medallion program. Notarized or witnessed signatures are not
acceptable.<PAGE>

                                                                   Exhibit 10.21

                          REGISTRATION RIGHTS AGREEMENT

                          Dated as of December 30, 1998

                                 by and between

                               THE WMF GROUP, LTD.
                                 as the Company,

                                       and

                              HN ACQUISITIONS, INC.
                              as the Initial Holder

         This Registration Rights Agreement is made and entered into as of
December 30, 1998, by and between The WMF Group, Ltd., a Delaware corporation
(the "Company"), and HN Acquisitions, Inc., a Florida corporation (the "Initial
Holder").

         This Agreement is entered into pursuant to the Settlement Agreement
(the "Settlement Agreement"), dated December 30, 1998, between the Company, WMF
Capital Corp., a Delaware corporation, Norton Herrick, in his individual
capacity and the Initial Holder. In order to induce the Initial Holder to enter
into the Settlement Agreement, and pursuant to Sections 1 and 2 of the
Settlement Agreement, the Company has agreed to provide the registration rights
provided for in this Agreement to the Initial Holder and its direct and indirect
transferees.

         The parties hereby agree as follows:

1.       DEFINITIONS

         As used in this Agreement, the following terms shall have the following
meanings:

         AFFILIATE: As to any specified Person, (i) any Person that directly or
indirectly controls or is controlled by or is under common control with the
specified Person, (ii) any Person that is an officer of, partner in or trustee
of, or serves in a similar capacity with respect to, the specified Person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, and (iii) any Person
that, directly or indirectly, is the beneficial owner of 10% or more of any
class of equity securities of the specified Person or of which the specified
Person is directly or indirectly the owner of 10% or more of any class of equity
securities.

         AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.

         BUSINESS DAY: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or such other place where such act is
to occur are authorized or obligated by applicable law, regulation or executive
order to close.

<PAGE>

         CLOSING DATE:  December 30, 1998.

         COMMISSION:  The United States Securities and Exchange Commission.

         COMMON STOCK:  Common stock, $0.01 par value per share, of the Company.

         COMPANY: The WMF Group, Ltd., a Delaware corporation, and any successor
corporation thereto.

         COMPANY WARRANTS: The Series 2 Warrants and Series 3 Warrants issued by
the Company to the Initial Holder pursuant to Section 1 of the Settlement
Agreement.

         CONTROLLING PERSON:  As defined in SECTION 6(a) hereof.

         EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission thereunder.

         EXPIRATION DATE: The earlier of (i) such time as all outstanding
Registrable Shares have been sold pursuant to a Registration Statement or have
been transferred pursuant to Rule 144 or otherwise transferred in a manner that
results in the transferred security being delivered not being subject to
transfer restrictions under the Securities Act or (ii) such time as the Company
delivers to the Holders an opinion of counsel reasonably satisfactory to the
Holders that the Registrable Shares may be sold without registration under the
Securities Act

         HOLDER: Each registered holder of any Registrable Shares from time to
time, including, without limitation, the Initial Holder and its Affiliates.

         INITIAL HOLDER: HN Acquisitions, Inc.

         PERSON: An individual, partnership, corporation, trust, or
unincorporated organization, or government and any agency or political
subdivision thereof.

         PLEDGED SHARES: Those shares of Common Stock pledged by the Company to
guarantee the obligation of WMF Capital Corp. pursuant to Section 2(ii) of the
Settlement Agreement.

         PROCEEDING: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the person subject thereto,
threatened.

         PROSPECTUS: The prospectus included in any Registration Statement,
including any preliminary Prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.

         REGISTER, REGISTERED and REGISTRATION: Such terms shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable

                                       2
<PAGE>

rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.

         REGISTRABLE SHARES: The Warrant Shares, the Pledged Shares and any
shares of Common Stock replacing or issued as a dividend on the Warrant Shares
or the Pledged Shares, upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such share, the earliest to occur
of (i) the date on which it has been registered effectively pursuant to the
Securities Act and disposed of in accordance with the Registration Statement
relating to it, (ii) the date on which either it is transferred in compliance
with Rule 144 (or any similar provisions then in effect) or (iii) the date on
which it is sold to the Company.

         REGISTRATION EXPENSES: Any and all expenses incident to performance of
or compliance with this Agreement, including without limitation: (i) all
Commission, stock exchange, or other market registration, listing and filing
fees, (ii) all fees and expenses incurred in connection with compliance with
federal or state securities or blue sky laws (including any registration,
listing and filing fees and reasonable fees and disbursements of counsel in
connection with blue sky qualification of any of the Registrable Shares and the
preparation of a Blue Sky Memorandum and compliance with applicable rules and
regulations), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, duplicating, printing, delivering and distributing
any Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements, certificates
and other documents relating to the performance of and compliance with this
Agreement, (iv) all fees and expenses incurred in connection with the listing of
any of the Registrable Shares on any securities exchange or market pursuant to
SECTION 4(i) hereof, (v) the fees and disbursements of counsel for the Company
and of the independent public accountants (including without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance) of the Company (provided that Registration Expenses shall
not include the fees and expenses of any counsel or accountants for the Holders)
and (vi) any fees and disbursements customarily paid by issuers or sellers of
securities (including the fees and expenses of any experts retained by the
Company in connection with any Registration Statement), but excluding
underwriters' and brokers' discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Shares by a Holder.

         REGISTRATION STATEMENT: Any registration statement of the Company that
covers the issuance or resale of any of the Registrable Shares on an appropriate
form, including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement.

         RIGHTS OFFERING: The rights offering by the Company announced publicly
on or about October 14, 1998.

         RULE 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

                                       3
<PAGE>

         RULE 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         RULE 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.

         SETTLEMENT AGREEMENT:  As defined in the preamble.

         UNDERWRITTEN OFFERING: A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.

         WARRANT AGREEMENTS: The Series 2 Warrant Agreement or the Series 3
Warrant Agreement between the Company and the Initial Holder, as the context
requires.

         WARRANT SHARES: Those shares of Common Stock that the holder of the
Company Warrants is entitled to purchase upon exercise of the Company Warrants.

2.       SHELF REGISTRATION

         Pursuant to the registration procedures set forth in SECTION 4 hereof,
the Company agrees to file with the Commission no later than April 15, 1999, one
or more shelf Registration Statements with respect to the sale from time to time
in open-market transactions by the Holders of any and all Registrable Shares.

3.       PIGGYBACK REGISTRATION

         (a) PIGGYBACK REGISTRATION RIGHTS AND NOTICE OF REGISTRATION. From the
Closing Date until the Expiration Date, the Company shall notify all Holders in
writing at least twenty-one (21) days prior to filing any registration statement
under the Securities Act for the purpose of effecting a public offering of
securities of the Company (including, but not limited to, registration
statements relating to offerings of the Company's securities by any shareholders
of the Company, but EXCLUDING registration statements relating to the Rights
Offering or relating exclusively to any employee benefit plan or corporate
reorganization) and will afford each such Holder an opportunity to include in
such registration statement all or any part of the Registrable Shares then held
by such Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Shares held by such Holder shall,
within seven (7) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Shares such Holder wishes to include in
such registration statement. If a Holder decides not to include all of its
Registrable Shares in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Shares in any subsequent registration statement or

                                       4
<PAGE>

registration statements as may be filed by the Company with respect to offerings
of Company securities, all upon the terms and conditions set forth herein.

         (b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right,
in its sole discretion, to terminate or withdraw any registration initiated by
it under this SECTION 3 prior to the effectiveness of such registration, whether
or not any Holder has elected to include Registrable Shares in such
registration.

         (c) UNDERWRITING. If a registration statement under which the Company
gives notice under this SECTION 3 is for an Underwritten Offering, then the
Company shall so advise the Holders of Registrable Shares and the Holder shall
have the opportunity to include its Registrable Shares in such registration
statement. In such event, the right of any Holder to include its Registrable
Shares in a registration pursuant to this SECTION 3(c) shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Shares in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter(s) selected for such underwriting. Notwithstanding any other
provision of this Agreement, if the managing underwriter(s) determine(s) in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares (including
Registrable Shares) from the registration and the underwriting, and the number
of shares that may be included in the registration and the underwriting shall be
allocated, FIRST, to the Company, and SECOND, to each of the shareholders
(including the Holders) requesting inclusion of their shares in such
registration statement on a PRO RATA basis based on the total number of shares
such shareholder has requested be included in such registration statement. If
any Holder disapproves of the proposed terms of any such Underwritten Offering,
such Holder may elect to withdraw therefrom by written notice to the Company and
the managing underwriter(s), delivered at least ten (10) Business Days prior to
the date on which the Underwritten Offering is expected to commence. Any
Registrable Shares excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder that is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Holder," and any PRO RATA reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.

         (d) HOLDBACK AGREEMENT. By electing to include Registrable Shares in
any registration pursuant to SECTION 3 hereof, the Holder of the Registrable
Shares shall be deemed to have agreed not to effect any public sale or
distribution of securities of the Company of the same or similar class or
classes of the securities included in the Registration Statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 under the Securities Act, during such
periods as are reasonably requested by the managing underwriter(s), if an
Underwritten Offering, or the Company, in any other registration. Any period up
to 180 days shall be deemed reasonable.

                                       5
<PAGE>

         (e) The Company shall not be obligated to effect, or to take any action
to effect, any such registration of Registrable Shares pursuant to this
SECTION 3 in any particular jurisdiction in which the Company would be required
to execute a general consent to service of process or to qualify to do business
as a foreign corporation in affecting such registration, qualification or
compliance, unless the Company is already subject to service or required to be
so qualified in such jurisdiction and except as may be required by the
Securities Act.

4.       REGISTRATION PROCEDURES.

         Subject to SECTIONS 2 and 3 hereof, in connection with the obligations
of the Company with respect to any registration pursuant to this Agreement, the
Company shall use its commercially reasonable best efforts to effect or cause to
be effected the registration of the Registrable Shares under the Securities Act
to permit the sale of such Registrable Shares by the Holder or Holders in
accordance with customary methods of sale or distribution, including through
brokers' transactions and block trades. The Company shall:

         (a) prepare and file with the Commission, as specified in this
Agreement, a Registration Statement, which Registration Statement shall comply
as to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith, and use its commercially reasonable best efforts to cause such
Registration Statement to become effective as soon as possible after filing and
to remain effective until the Expiration Date;

         (b) subject to SECTION 4(h) hereof, prepare and file with the
Commission such amendments and post-effective amendments to each such
Registration Statement as may be necessary to keep such Registration Statement
effective for the period described in SECTION 4(a); cause each such Prospectus
contained therein to be supplemented by any required prospectus supplement, and
as so supplemented, to be filed pursuant to Rule 424 or any similar rule that
may be adopted under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holder thereof;

         (c) upon request of any Holder named in any Prospectus, prepare and
file with the Commission a post-effective amendment to the Registration
Statement of which such Prospectus is a part to reflect any transfer of one or
more Company Warrants to an individual or entity not already named as a Holder
in such Prospectus;

         (d) furnish without charge to any Holder named in any Prospectus as
many copies of such Prospectus, and any amendment or supplement thereto and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company
consents to the use of any such Prospectus by such Holder in connection with the
offering and sale of the Registrable Shares covered by any such Prospectus;

         (e) use its commercially reasonable best efforts to register or
qualify, or obtain exemption from registration or qualification for, all
Registrable Shares by the time the applicable

                                       6
<PAGE>

Registration Statement is declared effective by the Commission under all
applicable state securities or "blue sky" laws of such jurisdictions as any
Holder shall reasonably request in writing, keep each such registration or
qualification or exemption effective during the period such Registration
Statement is required to be kept effective pursuant to SECTION 4(a) and do any
and all other acts and things which may be reasonably necessary or advisable to
enable each Holder to consummate the disposition in each such jurisdiction of
such Registrable Shares owned by such Holder;

         (f) notify each Holder promptly and, if requested by any Holder,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any Proceedings for that purpose, and (iii) of
the happening of any event during the period a Registration Statement is
effective as a result of which such Registration Statement or the related
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made);

         (g) during the period of time referred to in SECTION 4(a), use its
commercially reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of any enjoining order suspending the use or effectiveness
of a Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction, at the earliest possible moment;

         (h) upon request, furnish to each requesting Holder, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);

         (i) except as provided in SECTION 5 hereof, upon the occurrence of any
event contemplated by SECTION 4(e)(iii) hereof, use its commercially reasonable
best efforts to promptly prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Shares, such Prospectus will 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 therein, in
the light of the circumstances under which they were made, not misleading;

         (j) if the Company has listed its Common Stock on an exchange or
automated quotation system, use its commercially reasonable best efforts
(including, without limitation, seeking to cure any deficiencies (within the
Company's control) cited by the exchange or automated quotation system in the
Company's listing application) to list all Registrable Shares on such exchange
or automated quotation system;

         (k) prepare and file in a timely manner all documents and reports
pursuant to the Exchange Act which are incorporated by reference into any
Registration Statement;

                                       7
<PAGE>

         (l) use its commercially reasonable best efforts to comply with all
applicable rules and regulations of the Commission and make generally available
to its securityholders, as soon as reasonably practicable, earnings statements
covering at least 12 months which satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 (or any similar rule promulgated under the
Securities Act) thereunder;

         (m) provide and cause to be maintained a transfer agent for all
Registrable Shares covered by any Registration Statement from and after a date
not later than the effective date of such Registration Statement; and

         (n) in connection with any sale or transfer of the Registrable Shares
that will result in such securities no longer being restricted from resale
without registration under the Securities Act, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing the
Registrable Shares to be sold, which certificates shall not bear any restrictive
legends, and to enable such Registrable Shares to be in such denominations and
registered in such names as the Holders may request at least two (2) Business
Days prior to any sale of the Registrable Shares.

         The Company may require each Holder to furnish to the Company such
information regarding the proposed distribution by such Holder of Registrable
Shares as the Company may from time to time reasonably request in writing and no
Holder shall be entitled to be named as a selling securityholder in any
Registration Statement, and no Holder shall be entitled to use the Prospectus
forming a part thereof, if such Holder does not provide such information to the
Company.

         Upon receipt of written notice from the Company of the happening of any
event of the kind described in SECTION 4(e)(iii) hereof, the Holders will
immediately discontinue disposition of Registrable Shares pursuant to a
Registration Statement until the Holders' receipt of the copies of a
supplemented or amended Prospectus. If so requested by the Company, the Holders
will deliver to the Company (at the expense of the Company) all copies in their
possession, other than permanent file copies then in the Holders' possession, of
the Prospectus covering such Registrable Shares current at the time of receipt
of such notice.

5.       BLACK-OUT PERIOD. Subject to the provision of this SECTION 5, the
Company may defer filing or requesting the effectiveness of a Registration
Statement, or following the effectiveness of a Registration Statement (and the
filings with any state securities commissions), the Company, by written notice
to the Holders, may direct the Holders to suspend sales of the Registrable
Shares pursuant to the Registration Statement, if either of the following events
shall occur: (i) the suspension of sales is necessary to correct a material
misstatement or omission in the applicable Registration Statement or any
document incorporated by reference therein, (ii) the Company is engaged in a
primary Underwritten Offering of its securities and the managing underwriter(s)
informs the Company that the sale of shares under the Registration Statement
would impair the pricing or commercial practicability of the offering, or (iii)
if (A) the Company is engaged in negotiations relating to, or the consummation
of, a material transaction or (B) an event has occurred that would require
additional disclosure of material information by the Company in the Registration
Statement or the documents incorporated by reference therein, in either case as
to

                                       8
<PAGE>

which the Board of Directors of the Company determines in good faith that the
Company has a bona fide business purpose for preserving confidentiality or which
renders the Company unable to comply with the Commission's disclosure
requirements, but such suspension shall continue only for so long as such event
or its effect is continuing. Upon the occurrence of such event, the Company
shall use its commercially reasonable best efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis, as applicable, so as to permit
the Holders to resume sales of the Registrable Shares.

         In the case of an event which causes the Company to suspend the
effectiveness of a Registration Statement (a "Suspension Event"), the Company
may give written notice (a "Suspension Notice") to the Holders at the addresses
set forth in the stock transfer records of the Company to suspend sales of the
Registrable Shares so that the Company may amend or update the Registration
Statement; PROVIDED, HOWEVER, that such suspension shall continue only for so
long as the Suspension Event or its effect is continuing and the Company is
taking all reasonable steps to terminate suspension of the effectiveness of the
Registration Statement as promptly as possible. In no case shall a suspension of
sales pursuant to this SECTION 5 continue for a total of more than 120 days out
of any one-year period and no more than 180 days in any two-year period. The
Warrant Exercise Term (as defined in the applicable Warrant Agreement) of any
Company Warrants outstanding at the time of any Suspension Event shall be
extended for a period of time equal to the duration of the resulting suspension.

         The Holders shall not effect any sales of the Registrable Shares
pursuant to such Registration Statement at any time after receipt of a
Suspension Notice from the Company (and prior to receipt of an End of Suspension
Notice (defined below)). If so requested by the Company, the Holders will
deliver to the Company (at the expense of the Company) all copies in their
possession, other than permanent file copies then in the Holders' possession, of
the Prospectus covering such Registrable Shares at the time of receipt of the
Suspension Notice. The Holders may recommence effecting sales of the Registrable
Shares pursuant to the Registration Statement (or such filings) following
further notice to such effect (an "End of Suspension Notice") from the Company,
which End of Suspension Notice shall be given by the Company to the Holders in
the manner described above promptly following the conclusion of any Suspension
Event.

6.       INDEMNIFICATION AND CONTRIBUTION.

         (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless (i) the Initial Holder, (ii) each Holder, (iii) each Person, if
any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any of the foregoing (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "Controlling
Person"), (iv) the respective officers, directors, partners, employees,
representatives and agents of each Initial Holder and each Holder or any
Controlling Person, and (v) any person deemed to be an "underwriter" under the
Securities Act or other applicable law as follows:

                  (i) from and against any and all loss, claim, liability and
damage whatsoever, as incurred, arising out of (A) violation by the Company of
the Securities Act or applicable state

                                       9
<PAGE>

securities laws in connection with an offering of Registrable Shares hereunder
and (B) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) pursuant to
which Registrable Shares were registered under the Securities Act, including all
documents incorporated therein by reference, or the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto), including all documents incorporated therein
by reference, or the omission or alleged omission to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that such indemnity with respect to any
Prospectus shall not inure to the benefit of any Holder or Initial Holder (or
any Controlling Person thereof) to the extent that any such loss, claim,
liability, damage or expense arises out of such indemnified person's failure to
send or give a copy of the revised final Prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Shares to such Person if such statement
or omission was corrected in such final Prospectus;

                  (ii) from and against any and all loss, liability, claim and,
damage whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or Proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, if such settlement is effected with the
written consent of the Company, which consent shall not be unreasonably
withheld; and

                  (iii) from and against any and all expense reasonably incurred
(including reasonable fees and disbursements of one firm of attorneys), in
investigating, preparing or defending against any litigation, or investigation
or Proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (i) or (ii)
above;

         PROVIDED, HOWEVER, that this indemnity agreement does not apply to any
Holder with respect to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
furnished to the Company in writing by such Holder expressly for use in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).

         (b) INDEMNIFICATION BY HOLDERS. Each Holder severally and not jointly
agrees to indemnify and hold harmless the Company, its directors, officers,
partners, employees, representatives and agents (including each officer of the
Company who signed the Registration Statement), and each Person, if any, who
controls the Company, within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against

                                       10
<PAGE>

                  (i) any and all loss, liability, claim, damage and expenses
whatsoever, as incurred, arising out of (A) any violation by the Holders of the
Securities Act or applicable state securities laws in connection with the
offering and (B) any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) pursuant
to which Registrable Shares were registered under the Securities Act, including
all documents incorporated therein by reference, or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

                  (ii) from and against any and all loss, liability, claim and,
damage whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or Proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, if such settlement is effected with the
written consent of such Holder, which consent shall not be unreasonably
withheld; and

                  (iii) from and against any and all expense reasonably incurred
(including reasonable fees and disbursements of one firm of attorneys), in
investigating, preparing or defending against any litigation, or investigation
or Proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (i) or (ii)
above;

         but only with respect to such untrue statements or omissions, or
alleged untrue statements or omissions, made in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished to the Company in
writing by such Holder expressly for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto),
and PROVIDED FURTHER, that no Holder shall be liable under this Section 6(b) for
any amount in excess of the net proceeds received by such Holder from the sale
of such Holder's Registrable Shares pursuant to a Registration Statement or a
Prospectus, as the case may be.

         (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Each indemnified party
shall give reasonably prompt notice to each indemnifying party of any action or
Proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have under this SECTION 6 except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. If the indemnifying party so elects within a reasonable time after
receipt of such notice, the indemnifying party may assume the defense of such
action or Proceeding at such indemnifying party's own expense with counsel
chosen by the indemnifying party and approved by the indemnified parties in such
action or Proceeding, which approval shall not be unreasonably withheld;
PROVIDED, HOWEVER, that, if such indemnified party or parties reasonably
determine that a

                                       11
<PAGE>

conflict of interest exists where it is advisable for such indemnified party or
parties to be represented by separate counsel or that, upon advice of counsel,
there may be legal defenses available to them which are different from or in
addition to those available to the indemnifying party, then the indemnifying
party shall not be entitled to assume such defense and the indemnified party or
parties shall be entitled to one separate counsel at the indemnifying party's
expense. If an indemnifying party is not entitled to assume the defense of such
action or Proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense, and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or Proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of not more than one counsel (and any necessary
local counsel) for the indemnified party or parties. In such event, however, no
indemnifying party will be liable for any settlement effected without the
written consent of such indemnifying party. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or enter
into a settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. If an indemnifying party
is entitled to assume, and assumes, the defense of such action or Proceeding in
accordance with this paragraph, such indemnifying party shall not be liable for
any fees and expenses for counsel for the indemnified parties incurred
thereafter in connection with such action or Proceeding.

         (d) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this SECTION 6 is for any reason held to be unenforceable, unavailable or
insufficient although applicable in accordance with it terms, the Company and a
Holder shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the Company and the Holder in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Holder on the other.
Relative fault shall be determined by reference to, among other things, whether
an untrue or alleged untrue statement of a material fact or an omission or
alleged omission of a material fact relates to information supplied by or
available to the Company on the one hand, or the Holder, on the other hand, and
by the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Notwithstanding
the foregoing, no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. No Holder shall be liable under this Section 6(d) for any
amount in excess of the net proceeds received from such Holder from the sale of
such Holder's Registrable Shares pursuant to a Registration Statement or a
Prospectus, as the case may be. For purposes of this SECTION 6, each Person, if
any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) the Holder or the Company (as applicable) and
its respective officers, directors, partners, employees, representatives and
agents shall have the same rights to contribution as the Holder or the Company
(as applicable). Each party entitled to contribution

                                       12
<PAGE>

agrees that upon the service of a summons or other initial legal process upon it
in any action instituted against it in respect of which contribution may be
sought, it shall promptly give written notice of such service to the party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise, except to the extent that such party was actually prejudiced by the
failure to receive notice.

         (e) SURVIVAL. The obligations of the Company and the Holders under this
SECTION 6 shall survive the completion of any offering of Registrable Shares
pursuant to a Registration Statement or otherwise.

7.       COVENANTS OF THE HOLDERS. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and filings with any
state securities commissions as the Company may reasonably request, and (b) to
deliver or cause delivery of the Prospectus contained in such Registration
Statement to any purchaser of the shares covered by such Registration Statement
from the Holder, as required by the Securities Act and any applicable state
securities laws.

8.       ADDITIONAL SHARES. The Company, at its option, may register under any
Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued shares of Common Stock
or any shares of Common Stock owned by any other shareholder or shareholders of
the Company.

9.       TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no
obligations pursuant to this Agreement with respect to any request or requests
for registration made by any Holder on a date after the Expiration Date.

10.      NO OTHER OBLIGATION TO REGISTER. Except as otherwise expressly provided
in this Agreement, the Company shall have no obligation to the Holders to
register the Registrable Shares under the Securities Act or applicable state
securities laws.

11.      MISCELLANEOUS.

         (a) REMEDIES.

                  (i) In the event of a breach by the Company or by a Holder of
any of its obligations under this Agreement, each Holder or the Company, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The parties agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and the parties hereby further agree that, in the
event of any action for specific performance in respect of such breach, the
parties shall waive the defense that a remedy at law would be adequate. No
Holder shall have any right to obtain or seek an injunction restraining or

                                       13
<PAGE>

otherwise delaying any registration as a result of any controversy that might
arise with respect to the interpretation or implementation of this Agreement.

                  (ii) If the Company fails to register the Warrant Shares
pursuant to SECTION 2 hereof on or before April 15, 1999, the Company shall be
obligated to issue to the Initial Holder or its permitted designee, additional
Series 2 Warrants and Series 3 Warrants entitling the Initial Holder to purchase
an additional five (5) shares of Common Stock under each of the Series 2
Warrants and Series 3 Warrants, for each date after April 15, 1999 which elapses
until such registration shall become effective, up to a maximum of 100,000
additional Series 2 Warrants and an additional 150,000 Series 3 Warrants.

         (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, without the written consent of the Company and of Holders owning not less
than 50% of the then outstanding Registrable Shares; PROVIDED, HOWEVER, that,
for the purposes of this Agreement, Registrable Shares that are owned, directly
or indirectly, by either the Company or an Affiliate of the Company shall not be
deemed to be outstanding. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect the
rights of any other Holder may be given by such Holder; PROVIDED, HOWEVER, that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.

         (c) NOTICES. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, or telecopy;

                  (i) if to the Company, as provided in the Settlement
Agreement,

                  (ii) if to the Initial Holder, as provided in the Settlement
Agreement, or

                  (iii) if to any other person who is then the registered Holder
of any Registrable Shares, to the address of such Holder as it appears in the
Common Stock register of the Company.

         Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when (A) delivered by hand, if
personally delivered, (B) one (1) Business Day after being timely delivered to a
next-day air courier, (C) five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed, or (E) when receipt is acknowledged by the
recipient's telecopier machine, if telecopied.

         (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Each Holder shall be
deemed a third party beneficiary of this Agreement. Notwithstanding the
foregoing, no successor of the Company shall have any of the rights granted

                                       14
<PAGE>

under this Agreement until such successor shall acknowledge its rights and
obligations hereunder by a signed written agreement pursuant to which such
successor accepts such rights and obligations.

         (e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.

         (f) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, as applied to
contracts made and performed within the Commonwealth of Virginia without regard
to principles of conflicts of law.

         (g) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

         (h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the provisions hereof.
All references made in this Agreement to "Section" refer to such Section of this
Agreement, unless expressly stated otherwise.

                                       15
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.

                                   THE WMF GROUP, LTD.

                                   By:  /S/ SHEKAR NARASIMHAN
                                      ------------------------------------------
                                   Name:  Shekar Narasimhan
                                   Title: President and Chief Executive Officer

The foregoing Registration Rights Agreement
is hereby confirmed and accepted as of the date
first above written.

HN ACQUISITIONS, INC.

By:  /S/  NORTON HERRICK
   ---------------------------------------
Name:    Norton Herrick
Title:   President

                                       16

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