JOINT DIRECTION AND RELEASE
EXHIBIT 10.1.18
THIS JOINT DIRECTION AND RELEASE, dated as of April 17, 2009 (this “Joint Direction and
Release”), is entered into by and among Hanover Capital Mortgage Holdings, Inc. (the
“Company”), Hanover Statutory Trust II (the “Trust”) and Wilmington
Trust Company, as trustee (the “Trustee”).
WHEREAS, the Company and the Trustee have entered into that certain Indenture, dated as of
November 4, 2005 (the “Indenture”), pursuant to which the Company’s junior subordinated
debt securities (the “Debt Securities”) were issued to the Trust;
WHEREAS, the Company, the Trustee (in its capacities as Trustee and as Delaware trustee) and
the administrators entered into that certain Amended and Restated Declaration of Trust, dated as of
November 4, 2005 (the “Trust Agreement”), pursuant to which the Trust issued Capital
Securities and Common Securities (as such terms are defined in the Trust Agreement);
WHEREAS, Xxxxxx Trading Company (“Xxxxxx”) and Ramat Securities, Ltd.
(“Ramat”), the holders of the Capital Securities, and the Company, have entered into an
Exchange Agreement, dated as of September 30, 2008, as amended on February 6, 2009 (the
“Exchange Agreement”), pursuant to which the Company agreed to pay $750,000 to Xxxxxx and
Ramat and to deliver 6,762,793 duly authorized, validly issued, fully paid and non-assessable
shares of common stock of the Company in exchange for the transfer by Xxxxxx and Ramat of the
Capital Securities of the Trust held by Xxxxxx and Ramat (the “Exchange”) to the Company;
WHEREAS, pursuant to Section 6.6 of the Trust Agreement, the Administrators (as such term is
defined in the Truste Agreement) are entitled to surrender Capital Securities and Common Securities
held by them to the Trustee for cancellation, and pursuant to Section 2.09 of the Indenture, under
certain circumstances the Company is entitled to surrender Debt Securities held by it to the
Trustee for cancellation;
WHEREAS, the Exchange occurred on April 17, 2009, with Xxxxxx, Ramat and the Company agreeing,
among other items, in the Exchange Agreement that all obligations under the Capital Securities are
deemed fully discharged, and Xxxxxx and Ramat agreed to surrender and forfeit any right, title and
interest in and to any payments or principal, interest or any other amounts due and payable under
the Capital Securities whether or not any of such payments are due or accrued or unpaid, and
released the Company and other persons from any liability under the Capital Securities; and
WHEREAS, the Company, as beneficial owner of the Capital Securities, and the Trust, desire
that all of the Capital Securities in an aggregate amount of $20,000,000 be cancelled, and that all
of the Common Securities in an aggregate amount of $620,000 and all of the Debt Securities in an
aggregate amount of $20,620,000 be cancelled.
NOW THEREFORE, the Company, the Trust and the Trustee hereby agree as follows:
SECTION 1. INCORPORATION BY REFERENCE. Capitalized terms used or referenced in this
Joint Direction and Release and not otherwise defined or referenced herein are used herein as
defined or referenced in the Indenture or the Trust Agreement.
SECTION 2. JOINT DIRECTION AND RELEASE. By separate correspondence, the Company has
delivered to the Trustee the Capital Securities. Each of the Company and the Trust hereby (a)
consents to the cancellation of the Capital Securities, the Common Securities and the Debt
Securities, (b) directs the Trustee to cancel the Capital Securities, the Common Securities and the
Debt Securities and (c) directs the Trustee to take such actions as may be appropriate to discharge
the Indenture and terminate the Trust Agreement. The Company and the Trust hereby release the
Trustee from any liability for actions taken in accordance with this Joint Direction and Release.
SECTION 3. LOST CERTIFICATES. In the event that the Company is unable to locate the
certificate(s) representing the Common Securities, it agrees that it will cooperate with the
Trustee by providing such certifications and indemnities as may be required by the Trustee to
protect the Trustee from any liability resulting from such lost certificate and as may otherwise be
requested by the Trustee to facilitate cancellation of the Common Securities.
SECTION 4. TRUSTEE ACCEPTANCE. The Trustee shall not be responsible in any manner
whatsoever for the validity or sufficiency of this Joint Direction and Release or the due execution
hereof by any of the parties hereto or for or in respect of the recitals and statements contained
herein, all of which recitals and statements are made solely by the Company.
SECTION 5. COUNTERPARTS. This Joint Direction and Release shall become effective
only upon the Trustee’s receipt of a counterpart of this Joint Direction and Release duly executed
by the all of the parties hereto. This Joint Direction and Release may be executed in any number
of counterparts, each of which shall be deemed to be an original for all purposes, but such
counterparts shall together be deemed to constitute but one and the same instrument. The executed
counterparts may be delivered by facsimile transmission, which facsimile copies shall be deemed
original copies.
SECTION 6. EXPENSES. The Company agrees to promptly pay the reasonable attorneys’
fees, expenses and disbursements of the Trustee in connection with this Joint Direction and
Release.
SECTION 7. GOVERNING LAW. The laws of the State of New York shall govern this Joint
Direction and Release without regard to the conflict of law principles thereof.
SECTION 8. EXECUTION, DELIVERY AND VALIDITY. The Company and the Trust each
represents and warrants, solely on its own behalf, to the Trustee that this Joint Direction and
Release has been duly and validly executed and delivered by such party and constitutes its
respective legal, valid and binding obligation, enforceable against such party in accordance with
its terms.
2
IN WITNESS WHEREOF, the parties hereto have caused this Joint Direction and Release to be duly
executed as of the day and year first above written.
| HANOVER CAPITAL MORTGAGE | ||||||
| HOLDINGS, INC. | ||||||
| as Company | ||||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||||
Chairman, President and Chief Executive Officer |
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| WILMINGTON TRUST COMPANY, | ||||||
| as Trustee | ||||||
| By: | /s/ Xxxxxxx X. Xxxxx, Xx.
Title: Assistant Vice President |
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| HANOVER STATUTORY TRUST II | ||||||
| By: | /s/ Xxxx X. Xxxxxxx
Title: Administrator |
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