Exhibit 10.37
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PURCHASE AGREEMENT
among
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
HANOVER STATUTORY TRUST I
and
TABERNA PREFERRED FUNDING I, LTD.
--------------------
Dated as of February 24, 2005
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PURCHASE AGREEMENT
($20,000,000 Trust Preferred Securities)
THIS PURCHASE AGREEMENT, dated as of February 24, 2005 (this "Purchase
Agreement"), is entered into among Hanover Capital Mortgage Holdings, Inc., a
Maryland corporation (the "Company"), Hanover Statutory Trust I, a Delaware
statutory trust (the "Trust", and together with the Company, the "Sellers"), and
Taberna Preferred Funding I, Ltd. or its assignee (the "Purchaser").
WITNESSETH:
WHEREAS, the Sellers propose to issue and sell 20,000 Preferred Securities
of the Trust, having a stated liquidation amount of $1,000 per security, bearing
a fixed rate of 8.51% per annum through March 30, 2010 and a variable rate,
reset quarterly, equal to LIBOR (as defined in the Indenture (as defined below))
plus 4.25% thereafter (the "Preferred Securities");
WHEREAS, the entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), and will be used by
the Trust to purchase Twenty Million Six Hundred Nineteen Thousand Dollars
($20,619,000) in principal amount of the unsecured junior subordinated
deferrable interest notes of the Company (the "Junior Subordinated Notes");
WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of the Closing Date, among the Company, as depositor,
JPMorgan Chase Bank, National Association, a national banking association, as
property trustee (in such capacity, the "Property Trustee"), Chase Bank USA,
National Association, a national banking association, as Delaware trustee (in
such capacity, the "Delaware Trustee"), the Administrative Trustees named
therein (in such capacities, the "Administrative Trustees") and the holders from
time to time of undivided beneficial interests in the assets of the Trust; and
WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the "Indenture"), between
the Company and JPMorgan Chase Bank, National Association, a national banking
association, as indenture trustee (in such capacity, the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
1. DEFINITIONS. The Preferred Securities, the Common Securities and
the Junior Subordinated Notes are collectively referred to herein as the
"Securities." This Purchase Agreement, the Indenture, the Trust Agreement and
the Securities are collectively referred to herein as the "Operative Documents."
As used herein, "Reimbursable Expenses Treatment" means the accounting treatment
with respect to certain reimbursable expenses incurred by Hanover Capital
Partners Ltd. All other capitalized terms used but not defined in this Purchase
Agreement shall have the respective meanings ascribed thereto in the Indenture.
2. PURCHASE AND SALE OF THE PREFERRED SECURITIES.
(a) The Sellers agree to sell to the Purchaser, and the Purchaser
agrees to purchase from the Sellers, the Preferred Securities for an amount (the
"Purchase Price") equal to Twenty Million Dollars ($20,000,000). The Purchaser
shall be responsible for the rating agency costs and expenses. The Trust shall
use the Purchase Price, together with the proceeds from the sale of the Common
Securities, to purchase the Junior Subordinated Notes.
(b) Delivery or transfer of, and payment for, the Preferred
Securities shall be made at 11:00 A.M., New York City time, on March 15, 2005,
(such date and time of delivery and payment for the Preferred Securities being
herein called the "Closing Date"). The Preferred Securities shall be transferred
and delivered to the Purchaser against the payment of the Purchase Price to the
Sellers made by wire transfer in immediately available funds on the Closing Date
to a U.S. account designated in writing by the Company at least two business
days prior to the Closing Date.
(c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two business days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser not later than 2:00 P.M., New York City time, on the
business day prior to the Closing Date. The closing for the purchase and sale of
the Preferred Securities shall occur at the offices of Xxxxxxxxx & Xxxxxxxxx,
L.L.P., 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, or such other
place as the parties hereto shall agree.
3. CONDITIONS. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:
(a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Preferred Securities.
(b) The Purchaser shall have sold securities issued by it in such an
amount that the net proceeds therefrom shall be available on the Closing Date
and shall be sufficient to purchase the Preferred Securities and all other
preferred securities contemplated in agreements similar to this Agreement.
(c) (i) DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, counsel for the Company
and the Trust (the "Company Counsel"), shall have delivered an opinion, dated
the Closing Date, addressed to the Purchaser and JPMorgan Chase Bank, National
Association, in substantially the form set out in Annex A-I hereto and (ii) the
Company shall have furnished to the Purchaser the opinion of the Company's
General Counsel or a certificate signed by the Company's Chief Executive
Officer, President, an Executive Vice President, Chief Financial Officer,
Treasurer or Assistant Treasurer, dated the Closing Date, addressed to the
Purchaser, in substantially the form set out in Annex A-II hereto. In rendering
their opinion, the Company Counsel may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees of
the Company and the Trust and by government officials (provided, however, that
copies of any such certificates or documents are delivered to the Purchaser) and
by and upon such other documents as such counsel may, in their reasonable
opinion, deem appropriate as a basis for the
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Company Counsel's opinion. The Company Counsel may specify the jurisdictions in
which they are admitted to practice and that they are not admitted to practice
in any other jurisdiction and are not experts in the law of any other
jurisdiction. If the Company Counsel is not admitted to practice in the State of
New York, the opinion of the Company Counsel may assume, for purposes of the
opinion, that the laws of the State of New York are substantively identical, in
all respects material to the opinion, to the internal laws of the state in which
such counsel is admitted to practice. Such Company Counsel Opinion shall not
state that they are to be governed or qualified by, or that they are otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(d) The Purchaser shall have been furnished the opinion of Xxxxxxxxx
& Xxxxxxxxx, L.L.P., special tax counsel for the Purchaser, dated the Closing
Date, addressed to the Purchaser and JPMorgan Chase Bank, National Association,
in substantially the form set out in Annex B hereto.
(e) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated
the Closing Date, addressed to the Purchaser, JPMorgan Chase Bank, National
Association, the Delaware Trustee and the Company, in substantially the form set
out in Annex C hereto.
(f) The Purchaser shall have received the opinion of Gardere Xxxxx
Xxxxxx LLP, special counsel for the Property Trustee and the Indenture Trustee,
dated the Closing Date, addressed to the Purchaser, in substantially the form
set out in Annex D hereto.
(g) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated
the Closing Date, addressed to the Purchaser and JPMorgan Chase Bank, National
Association, in substantially the form set out in Annex E hereto.
(h) The Company shall have furnished to the Purchaser a certificate
of the Company, signed by the Chief Executive Officer, President or an Executive
Vice President of the Company, and the Trust shall have furnished to the
Purchaser a certificate of the Trust, signed by an Administrative Trustee of the
Trust, in each case dated the Closing Date, and, in the case of the Company, as
to (i) and (ii) below and, in the case of the Trust, as to (i) below.
(i) the representations and warranties in this Purchase
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date, and the Company and the Trust have
in all material respects complied with all the agreements and satisfied
all the conditions on either of their part to be performed or satisfied at
or prior to the Closing Date; and
(ii) since 9/30/2004 (the date of the latest Financial
Statements), there has been no material adverse change in the condition
(financial or other), earnings, business or assets of the Company and its
subsidiaries (taken as a whole), whether or not arising from transactions
occurring in the ordinary course of business (a "Material Adverse
Change").
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(i) Subsequent to the execution of this Purchase Agreement, there
shall not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings, business
or assets of the Company and its subsidiaries (taken as a whole), whether or not
occurring in the ordinary course of business, the effect of which is, in the
Purchaser's reasonable judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the Preferred
Securities.
(j) Prior to the Closing Date, the Company and the Trust shall have
furnished to the Purchaser and its counsel such further information,
certificates and documents as the Purchaser or its counsel may reasonably
request.
If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser's
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser, provided, that the Company shall be provided notice of
and a reasonable oppurtunity to cure and such failure, which such cure period
shall not exceed 10 days, by the Company to fulfill any of the conditions
specified above. Notice of such cancellation shall be given to the Company and
the Trust in writing or by telephone or facsimile confirmed in writing.
Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Purchaser or the Purchaser's counsel in connection
with the Operative Documents and the transactions contemplated hereby and
thereby shall be deemed to be a representation and warranty of the Trust and/or
the Company, as the case may be, and not by such trustee or officer in any
individual capacity.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE TRUST. The
Company and the Trust jointly and severally represent and warrant to, and agree
with, the Purchaser, as follows:
(a) Neither the Company nor the Trust, nor any of their "Affiliates"
(as defined in Rule 501(b) of Regulation D ("Regulation D") under the Securities
Act (as defined below)), nor any person acting on its or their behalf, has,
directly or indirectly, made offers or sales of any security, or solicited
offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act of 1933, as
amended (the "Securities Act").
(b) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities.
(c) The Securities (i) are not and have not been listed on a
national securities exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of an open-end
investment company, unit investment trust or face-amount certificate company
that
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are, or are required to be, registered under section 8 of the Investment Company
Act of 1940, as amended (the "Investment Company Act"), and the Securities
otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated
pursuant to the Securities Act ("Rule 144A(d)(3)").
(d) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf, has engaged, or will engage, in
any "directed selling efforts" within the meaning of Regulation S under the
Securities Act with respect to the Securities.
(e) Neither the Company nor the Trust is, and, immediately following
consummation of the transactions contemplated hereby and the application of the
net proceeds therefrom, will not be, an "investment company" or an entity
"controlled" by an "investment company," in each case within the meaning of the
Investment Company Act.
(f) Neither the Company nor the Trust has paid or agreed to pay to
any person any compensation for soliciting another to purchase any of the
Securities, except for the preferred securities commission and/or the sales
commission in the amount of $600,000, the Company has agreed to pay to Xxxxx
Bros. & Company pursuant to the letter agreement between the Company and Xxxxx
Bros. & Company.
(g) The Trust has been duly created and is validly existing in good
standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C.
Section 3801, et seq. (the "Statutory Trust Act") with all requisite power and
authority to own property and to conduct the business it transacts and proposes
to transact and to enter into and perform its obligations under the Operative
Documents to which it is a party. The Trust is duly qualified to transact
business as a foreign entity and is in good standing in each jurisdiction in
which such qualification is necessary, except where the failure to so qualify or
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or assets of the Trust, whether or
not occurring in the ordinary course of business. The Trust is not a party to or
otherwise bound by any agreement other than the Operative Documents. The Company
and the Trust intend that the Trust is and will be, under current law,
classified for federal income tax purposes as a grantor trust and not as an
association or publicly traded partnership taxable as a corporation.
(h) The Trust Agreement has been duly authorized by the Company and,
on the Closing Date specified in Section 2(b), will have been duly executed and
delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of equity. Each
of the Administrative Trustees of the Trust is an employee of the Company and
has been duly authorized by the Company to execute and deliver the Trust
Agreement.
(i) The Indenture has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by the Indenture
Trustee, will be a legal, valid and binding
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obligation of the Company enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
(j) The Preferred Securities and the Common Securities have been
duly authorized by the Trust and, when issued and delivered against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and non-assessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement, enforceable against the Trust in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity. The issuance of the
Securities is not subject to any preemptive or other similar rights. On the
Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance of any kind (each, a "Lien").
(k) The Junior Subordinated Notes have been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture and,
when authenticated in the manner provided for in the Indenture and delivered to
the Trust against payment therefor in accordance with the Junior Subordinated
Note Purchase Agreement, will constitute legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.
(l) This Purchase Agreement has been duly authorized, executed and
delivered by the Company and the Trust.
(m) Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, nor the
consummation of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the Trust Agreement or the
charter or bylaws of the Company or any subsidiary of the Company, (ii) will
conflict with or constitute a violation or breach of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
governmental authority, agency or instrumentality or court, domestic or foreign,
having jurisdiction over the Trust or the Company or any of its subsidiaries or
their respective properties or assets (collectively, the "Governmental
Entities"), (iii) will conflict with or constitute a violation or breach of, or
a default or Repayment Event (as defined below) under, or result in the creation
or imposition of any Lien upon any property or assets of the Trust, the Company
or any of the Company's subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
(A) the Trust, the Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or (B) to which any of the property or assets of
any of them is subject, or any judgment, order or decree of any court,
Governmental Entity or arbitrator, except, in the case of clauses (ii)
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and (iii) of this Section 4(m), for such conflicts, breaches, violations,
defaults, Repayment Events (as defined below) or Liens which (X) would not,
singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents and (Y) would not, singly
or in the aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business, liabilities and assets (taken as a whole) of
the Company and its subsidiaries taken as a whole, whether or not occurring in
the ordinary course of business (a "Material Adverse Effect") or (iv) require
the consent, approval, authorization or order of any court or Governmental
Entity. As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Trust or
the Company or any of its subsidiaries prior to its scheduled maturity.
(n) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Maryland, with all requisite
corporate power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified or to
be in good standing would not, singly or in the aggregate, have a Material
Adverse Effect.
(o) The Company has no subsidiaries that are material to its
business, financial condition or earnings other than those subsidiaries listed
in Schedule 1 attached hereto (collectively, the "Significant Subsidiaries").
Each Significant Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction in which it
is chartered or organized, with all requisite corporate power and authority to
own, lease and operate its properties and conduct the business it transacts and
proposes to transact. Each Significant Subsidiary is duly qualified to transact
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its activities requires such qualification, except where the
failure to be so qualified or to be in good standing would not, singly or in the
aggregate, have a Material Adverse Effect.
(p) Each of the Trust, the Company and the Company's Significant
Subsidiaries hold all such approvals, authorizations, orders, licenses,
consents, registrations, qualifications, certificates and permits (collectively,
the "Governmental Licenses") of and from Governmental Entities necessary to
conduct their respective businesses as now being conducted, and neither the
Trust, the Company nor any of the Company's Significant Subsidiaries has
received any written notice of proceedings relating to the revocation or
modification of any such Government License, except where the failure to hold
such Governmental License or the receipt of an unfavorable decision, ruling or
finding with respect to the revocation or modification of any Governmental
License, would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
where such invalidity or the failure of such Governmental Licenses to be in full
force and effect, would not, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its Significant Subsidiaries are in compliance with
all applicable laws, rules, regulations, judgments, orders, decrees and
consents, except where the failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect.
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(q) All of the issued and outstanding shares of capital stock of the
Company and each of its Significant Subsidiaries are validly issued, fully paid
and non-assessable; all of the issued and outstanding capital stock of each
Significant Subsidiary of the Company is owned by the Company, directly or
through subsidiaries, free and clear of any Lien, claim or equitable right; and
none of the issued and outstanding capital stock of the Company or any
Significant Subsidiary was issued in violation of any preemptive or similar
rights arising by operation of law, under the charter or by-laws of such entity
or under any agreement to which the Company or any of its Significant
Subsidiaries is a party.
(r) Neither the Company nor any of its Significant Subsidiaries is
(i) in violation of its respective charter or by-laws or similar organizational
documents or (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the
Company or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of any of them is subject,
except, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.
(s) There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company or the Trust, threatened against or affecting
the Trust or the Company or any of the Company's Significant Subsidiaries,
except for such actions, suits or proceedings that, if adversely determined,
would not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents or have a Material Adverse
Effect; and the aggregate of all pending legal or governmental proceedings to
which the Trust or the Company or any of its subsidiaries is a party or of which
any of their respective properties or assets is subject, including ordinary
routine litigation incidental to the business, is not expected to result in a
Material Adverse Effect.
(t) The accountants of the Company who certified the Financial
Statements (as defined below) are independent public accountants of the Company
and its subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder.
(u) The consolidated financial statements (including the notes
thereto) and schedules of the Company and its consolidated subsidiaries for the
fiscal year ended 12/31/2003 (the "Financial Statements") and the interim
unaudited consolidated financial statements of the Company and its consolidated
subsidiaries for the quarter ended 9/30/2004 (the "Interim Financial
Statements") provided to the Purchaser are the most recent available audited and
unaudited consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles, the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified (other than with respect to the Reimbursable Expenses
Treatment), subject, in the case of Interim Financial Statements, to (x)
year-end adjustments (which are expected to consist solely of normal recurring
adjustments) and (y) the omission of certain notes thereto. Such consolidated
financial statements and schedules have been prepared
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in accordance with U.S. generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved (except as otherwise noted
therein).
(v) None of the Company nor any of its Significant Subsidiaries has
any material liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including
any liability for taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit,
proceeding, hearing, charge, complaint, claim or demand against the Company or
its subsidiaries that could give rise to any such liability), except for (i)
liabilities set forth in the Financial Statements or the Interim Financial
Statements and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
the Company and all of its Significant Subsidiaries since the date of the most
recent balance sheet included in such Financial Statements.
(w) Since the respective dates of the Financial Statements and the
Interim Financial Statements, there has not been (A) any Material Adverse Change
or (B) any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock other than regular quarterly and
special dividends on the Company's common stock.
(x) The documents of the Company filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Company's most recent Annual Report on Form 10-K, at
the time they were or hereafter are filed by the Company with the Commission
(collectively, the "1934 Act Reports"), complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, at the date of this
Purchase Agreement and on the Closing Date, do not include an 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 (other than with
respect to the Reimbursable Expenses Treatment); and other than such
instruments, agreements, contracts and other documents as are filed as exhibits
to the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements, contracts or
documents of a character described in Item 601 of Regulation S-K promulgated by
the Commission to which the Company or any of its subsidiaries is a party. The
Company is in compliance, in all material respects, with all currently
applicable requirements of the Exchange Act that were added by the
Xxxxxxxx-Xxxxx Act of 2002.
(y) No labor dispute with the employees of the Trust, the Company or
any of its subsidiaries exists or, to the knowledge of the executive officers of
the Trust or the Company, is imminent, except those which would not, singly or
in the aggregate, have a Material Adverse Effect.
(z) Each of the Trust, the Company and each Significant Subsidiary
of the Company has good and marketable title to all of its respective real and
personal properties, in each case free and clear of all Liens and defects,
except for those that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Trust, the
Company or any Significant Subsidiary of the Company holds properties are in
full
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force and effect, except where the failure of such leases and subleases to be in
full force and effect would not, singly or in the aggregate, have a Material
Adverse Effect, and none of the Trust, the Company or any Significant Subsidiary
of the Company has any knowledge or has received any written notice of any claim
of any sort that has been asserted by anyone adverse to the rights of the Trust,
the Company or any Significant Subsidiary of the Company under any such leases
or subleases, or affecting or questioning the rights of such entity to the
continued possession of the leased or subleased premises under any such lease or
sublease, except for such claims that would not, singly or in the aggregate,
have a Material Adverse Effect.
(aa) The Company has no present intention to exercise its option to
defer payments of interest on the Junior Subordinated Notes as provided in the
Indenture. The Company believes that the likelihood that it would exercise its
rights to defer payments of interest on the Junior Subordinated Notes as
provided in the Indenture at any time during which the Junior Subordinated Notes
are outstanding is remote because of the restrictions that would be imposed on
the Company's ability to declare or pay dividends or distributions on, or to
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal, interest or premium, if any, on, or repay, repurchase or redeem, any
of its debt securities that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Notes.
(bb) Commencing with its taxable year ended December 31, 1997, the
Company has been, and upon the completion of the transactions contemplated
hereby, the Company will continue to be, organized and operated in conformity
with the requirements for qualification and taxation as a real estate investment
trust (a "REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), and the Company's proposed method of operation
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code, and no actions have been taken (or not taken
which are required to be taken) which would cause such qualification to be lost.
The Company expects to continue to be organized and to operate in a manner so as
to qualify as a REIT in the taxable year ending December 31, 2004 and succeeding
taxable years.
(cc) Except for matters which would not, singly or in the aggregate,
have a Material Adverse Effect, the Company and each of the Significant
Subsidiaries have timely and duly filed all Tax Returns required to be filed by
them, and all such Tax Returns are true, correct and complete in all material
respects. The Company and each of the Significant Subsidiaries have timely and
duly paid in full all material Taxes required to be paid by them (whether or not
such amounts are shown as due on any Tax Return). There are no federal, state,
or other Tax audits or deficiency assessments proposed or pending with respect
to the Company or any of the Significant Subsidiaries, and no such audits or
assessments are threatened. As used herein, the terms "Tax" or "Taxes" mean (i)
all federal, state, local, and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term "Tax Returns" means all federal, state, local, and foreign Tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto filed or required to be filed with any
Governmental Entity.
11
(dd) The Trust is not subject to United States federal income tax
with respect to income received or accrued on the Junior Subordinated Notes,
interest payable by the Company on the Junior Subordinated Notes is deductible
by the Company, in whole or in part, for United States federal income tax
purposes, and the Trust is not, or will not be within ninety (90) days of the
date hereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges. There are no rulemaking or similar proceedings
before the United States Internal Revenue Service or comparable federal, state,
local or foreign government bodies which, to the knowledge of the Company and
the Trust, involve or affect the Company or any subsidiary, which could result
in a material adverse effect on the Company and the Significant Subsidiaries,
taken as a whole.
(ee) The books, records and accounts of the Company and its
Significant Subsidiaries accurately and fairly reflect, in reasonable detail,
the transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Significant Subsidiaries (other than with
respect to the Reimbursable Expenses Treatment). The Company and each of its
Significant Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(ff) The Company and the Significant Subsidiaries are insured
against such losses and risks and in such amounts in all material respects as
are customary for the businesses in which they are engaged or propose to engage
and the value of their properties after giving effect to the transactions
contemplated hereby. All policies of insurance and fidelity or surety bonds
insuring the Company or any of the Significant Subsidiaries or the Company's or
Significant Subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect. The Company and each of the Significant
Subsidiaries are in compliance with the terms of such policies and instruments
in all material respects. Neither the Company nor any Significant Subsidiary has
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and the Significant
Subsidiaries, taken as a whole. Within the past twelve months, neither the
Company nor any Significant Subsidiary has been denied any insurance coverage
which it has sought or for which it has applied.
(gg) The Company and its Significant Subsidiaries or, to the
knowledge of the Company any person acting on behalf of the Company and its
Significant Subsidiaries including, without limitation, any director, officer,
agent or employee of the Company or its Significant Subsidiaries has not,
directly or indirectly, while acting on behalf of the Company and its
Significant Subsidiaries: (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
12
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(hh) The information provided by the Company and the Trust pursuant
to this Purchase Agreement and the transactions contemplated hereby does not, as
of the date hereof, and will not as of the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company and the Trust as
follows:
(a) The Purchaser is aware that the Preferred Securities have not
been and will not be registered under the Securities Act and may not be offered
or sold within the United States or to "U.S. persons" (as defined in Regulation
S under the Securities Act) except in accordance with Rule 903 of Regulation S
under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act.
(b) The Purchaser is an "accredited investor," as such term is
defined in Rule 501(a) of Regulation D under the Securities Act.
(c) Neither the Purchaser, nor any of the Purchaser's affiliates,
nor any person acting on the Purchaser's or the Purchaser's Affiliate's behalf
has engaged, or will engage, in any form of "general solicitation or general
advertising" (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Preferred Securities.
(d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Preferred Securities and that it is unlikely that a
public market will ever exist for the Preferred Securities, (ii) the Purchaser
is purchasing the Preferred Securities for its own account, for investment and
not with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act or other applicable securities laws,
subject to any requirement of law that the disposition of its property be at all
times within its control and subject to its ability to resell such Preferred
Securities pursuant to an effective registration statement under the Securities
Act or pursuant to an exemption therefrom or in a transaction not subject
thereto, and the Purchaser agrees to the legends and transfer restrictions
applicable to the Preferred Securities contained in the Indenture, and (iii) the
Purchaser has had the opportunity to ask questions of, and receive answers and
request additional information from, the Company and is aware that it may be
required to bear the economic risk of an investment in the Preferred Securities.
(e) The Purchaser is a company with limited liability duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction in which it is organized with all requisite (i) power and authority
to execute, deliver and perform the Operative Documents to which it is a party,
to make the representations and warranties specified herein and therein and to
consummate the transactions contemplated herein and (ii) right and power to
purchase the Preferred Securities.
(f) This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and no filing with, or authorization, approval,
consent, license, order
13
registration, qualification or decree of, any governmental body, agency or court
having jurisdiction over the Purchaser, other than those that have been made or
obtained, is necessary or required for the performance by the Purchaser of its
obligations under this Purchase Agreement or to consummate the transactions
contemplated herein.
(g) The Purchaser is a "Qualified Purchaser" as such term is defined
in Section 2(a)(51) of the Investment Company Act and was not formed for the
specific purpose of acquiring the Preferred Securities.
6. COVENANTS AND AGREEMENTS OF THE COMPANY AND THE TRUST. The
Company and the Trust jointly and severally agree with the Purchaser as follows:
(a) During the period from the date of this Agreement to the Closing
Date, the Company and the Trust shall use their reasonable best efforts to take
all action necessary or appropriate to cause their representations and
warranties contained in Section 4 hereof to be true as of the Closing Date,
after giving effect to the transactions contemplated by this Purchase Agreement,
as if made on and as of the Closing Date.
(b) The Company and the Trust will arrange for the qualification of
the Preferred Securities for sale under the laws of such jurisdictions as the
Purchaser may designate and will maintain such qualifications in effect so long
as required for the sale of the Preferred Securities. The Company or the Trust,
as the case may be, will promptly advise the Purchaser of the receipt by the
Company or the Trust, as the case may be, of any notification with respect to
the suspension of the qualification of the Preferred Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(c) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates to, nor will either of them permit any person
acting on its or their behalf (other than the Purchaser) to, resell any
Preferred Securities that have been acquired by any of them.
(d) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf to, engage
in any "directed selling efforts" within the meaning of Regulation S under the
Securities Act with respect to the Preferred Securities.
(e) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf to, directly
or indirectly, make offers or sales of any security, or solicit offers to buy
any security, under circumstances that would require the registration of any of
the Preferred Securities under the Securities Act.
(f) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates or any person acting on their behalf to, engage in
any form of "general solicitation or general advertising" (within the meaning of
Regulation D) in connection with any offer or sale of the any of the Preferred
Securities.
(g) So long as any of the Preferred Securities are outstanding, (i)
the Securities shall not be listed on a national securities exchange registered
under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) neither the
14
Company nor the Trust shall be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under section 8 of the Investment Company Act, and, the Preferred
Securities shall otherwise satisfy the eligibility requirements of Rule
144A(d)(3).
(h) Each of the Company and the Trust shall furnish to (i) the
holders, and subsequent holders of the Preferred Securities, (ii) Xxxxx Bros. &
Company (at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or
such other address as designated by Xxxxx Bros. & Company) and (iii) any
beneficial owner of the Preferred Securities reasonably identified to the
Company and the Trust (which identification may be made by either such
beneficial owner or by Xxxxx Bros.), a duly completed and executed certificate
in the form attached hereto as Annex F, including the financial statements
referenced in such Annex, which certificate and financial statements shall be so
furnished by the Company and the Trust not later than forty five (45) days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year of
the Company.
(i) Each of the Company and the Trust will, during any period in
which it is not subject to and in compliance with section 13 or 15(d) of the
Exchange Act, or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of the Preferred Securities and to each prospective purchaser (as
designated by such holder) of the Preferred Securities, upon the request of such
holder or prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. If the Company and the Trust are required
to register under the Exchange Act, such reports filed in compliance with Rule
12g3-2(b) shall be sufficient information as required above. This covenant is
intended to be for the benefit of the Purchaser, the holders of the Preferred
Securities, and the prospective purchasers designated by the Purchaser and such
holders, from time to time, of the Preferred Securities.
(j) Neither the Company nor the Trust will, until one hundred eighty
(180) days following the Closing Date, without the Purchaser's prior written
consent, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Preferred Securities or
other securities substantially similar to the Preferred Securities other than as
contemplated by this Purchase Agreement or (ii) any other securities convertible
into, or exercisable or exchangeable for, any Preferred Securities or other
securities substantially similar to the Preferred Securities.
(k) The Company will use its best reasonable efforts to meet the
requirements to qualify as a REIT under Sections 856 through 860 of the Code,
effective for the taxable year ending December 31, 2004 (and each fiscal quarter
of such year) and succeeding taxable years, to the extent it is reasonable under
tax laws as such may be revised from time to time hereafter.
(l) The Company shall not identify the Purchaser or Xxxxx Bros. &
Company in a press release or any other public statement without the consent of
Purchaser or Xxxxx Bros. & Company, as applicable.
7. PAYMENT OF EXPENSES. The Company, as depositor of the Trust,
agrees to
15
pay all costs and expenses incident to the performance of the obligations of the
Company and the Trust under this Purchase Agreement, whether or not the
transactions contemplated herein are consummated or this Purchase Agreement is
terminated, including all costs and expenses incident to (i) the authorization,
issuance, sale and delivery of the Preferred Securities and any taxes payable in
connection therewith; (ii) the fees and expenses of qualifying the Preferred
Securities under the securities laws of the several jurisdictions as provided in
Section 6(b); (iii) the fees and expenses of the counsel, the accountants and
any other experts or advisors retained by the Company or the Trust; (iv) the
fees and all reasonable expenses of the Property Trustee, the Delaware Trustee,
the Indenture Trustee and any other trustee or paying agent appointed under the
Operative Documents, including the fees and disbursements of counsel for such
trustees, which fees shall not exceed a $2,000 acceptance fee, $3,500 for the
fees and expenses of Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware counsel
retained by the Delaware Trustee in connection with the Closing, and $4,000 in
administrative fees annually; and (vi) $25,000 for the fees and expenses of
Xxxxxxxxx & Xxxxxxxxx, L.L.P., special counsel retained by the Purchaser.
If the sale of the Preferred Securities provided for in this
Purchase Agreement is not consummated because any condition set forth in Section
3 hereof to be satisfied by either the Company or the Trust is not satisfied,
because this Purchase Agreement is terminated pursuant to Section 9 or because
of any failure, refusal or inability on the part of the Company or the Trust to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by the Purchaser, the
Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses (including the fees and expenses of each of the
Purchaser's counsel specified in subparagraphs (v) and (vi) of the immediately
preceding paragraph) that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Preferred Securities. The
Company shall not in any event be liable to the Purchaser for the loss of
anticipated profits from the transactions contemplated by this Purchase
Agreement.
8. INDEMNIFICATION. (a) The Sellers agree, jointly and severally, to
indemnify and hold harmless the Purchaser, Xxxxx Bros. & Company, Xxxxxxx Xxxxx
& Co. (collectively, the "Indemnified Parties") and the Indemnified Parties'
respective directors, officers, employees and agents and each person, if any,
who controls the Indemnified Parties within the meaning of the Securities Act,
or the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act")
against any losses, claims, damages or liabilities, joint or several, to which
the Indemnified Parties may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are connected with (i) any untrue
statement or alleged untrue statement of a material fact contained in any
information (whether written or oral) or documents executed in favor of,
furnished or made available to the Indemnified Parties by the Sellers or (ii)
any omission or alleged omission to state in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Indemnified Parties by the Sellers a material fact required to be stated therein
or necessary to make the statements therein not misleading. Sellers agree,
jointly and severally, to reimburse the Indemnified Parties for any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such loss, claim, damage or liability or action
arising out of or being connected with the execution and
16
delivery by the Sellers, and the consummation by the Sellers of the transactions
contemplated by, this Purchase Agreement or the other Operative Documents. This
indemnity agreement will be in addition to any liability that any of the Sellers
may otherwise have.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever due from the Trust under
paragraph (a) above.
(c) Promptly after receipt by an Indemnified Party under this
Section 8 of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) above
unless and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a) above.
Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
that counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. An indemnifying party will not, without
the prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.
9. TERMINATION; REPRESENTATIONS AND INDEMNITIES TO SURVIVE. This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by notice given to the Company and the Trust prior to delivery of
and payment for the Preferred Securities, if prior to such time (i) a
downgrading shall have occurred in the rating accorded the Company's debt
securities or preferred stock by any "nationally recognized statistical rating
organization," as that term is used by the Commission in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company's debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at
least $20,000,000 stated liquidation value of Preferred Securities, (iii) a
suspension or material limitation in trading in securities generally shall have
occurred on the New York Stock Exchange, (iv) a suspension or material
limitation in trading in any of the Company's securities shall have occurred on
the exchange or quotation system upon which the Company' securities are traded,
if any, or (v) there shall have occurred any outbreak or escalation of
hostilities involving the United States, or declaration by the United States of
a national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the Purchaser's judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred
17
Securities. The respective agreements, representations, warranties, indemnities
and other statements of the Company and the Trust or their respective officers
or trustees and of the Purchaser set forth in or made pursuant to this Purchase
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Purchaser, the Company or the Trust or any of the
their respective officers, directors, trustees or controlling persons, and will
survive delivery of and payment for the Preferred Securities. The provisions of
Sections 7 and 8 shall survive the termination or cancellation of this Purchase
Agreement.
10. AMENDMENTS. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.
11. NOTICES.
(a) Any communication shall be given by letter or facsimile, in the
case of notices to the Trust, to it at:
Hanover Statutory Trust I
c/o Hanover Capital Mortgage Holdings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000)000-0000
Attention: Xxxx X. Xxxxxxx
in the case of notices to the Company, to it at:
Hanover Capital Mortgage Holdings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
with a copy to:
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: X.X. Xxxxx, Xx.
and in the case of notices to the Purchaser, to it at:
18
Taberna Preferred Funding I, Ltd.
c/x Xxxxx Bros. & Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Asset Backed Securities
with a copy to:
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(b) Any such communication shall take effect, in the case of a
letter, at the time of delivery and in the case of facsimile, at the time of
dispatch.
(c) Any communication not by facsimile shall be confirmed by letter
but failure to send or receive the letter of confirmation shall not invalidate
the original communication.
12. SUCCESSORS AND ASSIGNS. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof and their
successors, assigns, heirs and legal representatives, any right or obligation
hereunder. None of the rights or obligations of the Company or the Trust under
this Purchase Agreement may be assigned, whether by operation of law or
otherwise, without the Purchaser's prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company's or the Trust's consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase Agreement.
13. APPLICABLE LAW. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).
14. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
19
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
15. COUNTERPARTS AND FACSIMILE. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
20
IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of
the date first written above.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: CEO and President
HANOVER STATUTORY TRUST I
By: Hanover Capital Mortgage Holdings,
Inc., as Depositor
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: CEO and President
TABERNA PREFERRED FUNDING I, LTD.
By: /s/ Xxxxxxxx Xxxx
Name: Xxxxxxxx Xxxx
Title: Chief Operating Officer
21
LIST OF SIGNIFICANT SUBSIDIARIES
HANOVERTRADE, INC., A DELAWARE CORPORATION
HANOVER CAPITAL PARTNERS LTD., A NEW YORK CORPORATION
