VOTING
AGREEMENT, dated as of September 30, 2008 (this “
Agreement ”), among Walter Industries, Inc., a
Delaware corporation (“ Walter ”), JWH
Holding Company, LLC, a Delaware limited liability company (“
JWH ”), and each of the stockholders of Hanover
Capital Mortgage Holdings, Inc., a Maryland corporation (“
Hanover ”), signatory hereto (each, a “
Stockholder ” and, collectively, the “
Stockholders ”), and, solely for the purposes
of Section 5.2 hereof, Hanover.
WHEREAS,
concurrently with the execution of this Agreement, Walter, JWH, and
Hanover are entering into an Agreement and Plan of Merger, dated as
of the date hereof (as amended, supplemented, restated or otherwise
modified from time to time, the “ Merger
Agreement ”) pursuant to which, among other things,
JWH will merge into Hanover (the “ Merger
”), the separate existence of JWH shall cease and Hanover
shall continue as the surviving corporation (the “
Surviving Corporation ”) and, except as
otherwise provided in the Merger Agreement, shares of common stock
of Hanover, par value $0.01 per share (the “ Common
Stock ”), issued and outstanding immediately prior to
the Effective Time shall be combined into fully paid and
non-assessable shares of common stock of the Surviving Corporation,
par value $0.01 per share (the “ Surviving Corporation
Common Stock ”), at the rate specified in the Merger
Agreement.
WHEREAS,
as a condition and inducement to Walter and JWH entering into the
Merger Agreement, Walter and JWH have required that the
Stockholders agree, and the Stockholders have agreed, to enter into
this Agreement and perform the covenants and obligations with
respect to the Covered Shares (as hereinafter defined) set forth
herein.
NOW
THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1.1.
Defined Terms . The following capitalized terms, as used in
this Agreement, shall have the meanings set forth below.
Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in the Merger Agreement.
“
Beneficial Ownership ” by a Person of any
securities includes ownership by any Person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares (i) voting power
which includes the power to vote, or to direct the voting of, such
security; and/or (ii) investment power which includes the
power to
dispose, or to
direct the disposition, of such security; and shall otherwise be
interpreted in accordance with the term “beneficial
ownership” as defined in Rule 13d-3 adopted by the
Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended; provided that for purposes of
determining Beneficial Ownership, a Person shall be deemed to be
the Beneficial Owner of any securities which may be acquired by
such Person pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise (irrespective of whether the
right to acquire such securities is exercisable immediately or only
after the passage of time, including the passage of time in excess
of 60 days, the satisfaction of any conditions, the occurrence
of any event or any combination of the foregoing). The terms
“ Beneficially Own ” and “
Beneficially Owned ” shall have a correlative
meaning.
“
Covered Shares ” means, with respect to each
Stockholder, such Stockholder’s Existing Shares, together
with any shares of Common Stock or other voting stock of Hanover
and any securities convertible into or exercisable or exchangeable
for shares of Common Stock or other voting stock of Hanover, in
each case that such Stockholder acquires Beneficial Ownership of on
or after the date hereof.
“
Encumbrance ” means any security interest,
pledge, mortgage, lien (statutory or other), charge, option to
purchase, lease or other right to acquire any interest or any
claim, restriction, covenant, title defect, hypothecation,
assignment, deposit arrangement or other encumbrance of any kind or
any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention
agreement).
“
Existing Shares ” means, with respect to each
Stockholder, any shares of Common Stock Beneficially Owned or owned
of record by such Stockholder.
“
Person ” means any individual, corporation,
limited liability company, limited or general partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity, or any group comprised of two or more
of the foregoing.
“
Representatives ” means the officers,
directors, employees, agents, advisors and Affiliates of a
Person.
“
Transfer ” means, directly or indirectly, to
sell, transfer, assign, pledge, encumber, hypothecate or similarly
dispose of (by merger, by testamentary disposition, by operation of
law or otherwise), either voluntarily or involuntarily, or to enter
into any contract, option or other arrangement or understanding
with respect to the sale, transfer, assignment, pledge,
Encumbrance, hypothecation or similar disposition of (by merger, by
testamentary disposition, by operation of law or
otherwise).
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2.1.
Agreement to Vote . At the Hanover Stockholders Meeting or
any other meeting of the Hanover Stockholders, however called,
including any adjournment or postponement thereof, or in connection
with any written consent of the Hanover Stockholders, each
Stockholder shall, in each case to the fullest extent that such
Stockholder’s Covered Shares are entitled to vote thereon or
consent thereto:
(a) appear
at each such meeting or otherwise cause the Covered Shares to be
duly counted as present thereat for purposes of calculating a
quorum; and
(b) vote
(or cause to be voted), in person or by proxy, or deliver (or cause
to be delivered) a written consent covering, all of such
Stockholder’s Covered Shares (i) in favor of proposals
to approve (w) the Merger Agreement and the Merger and the
other transactions contemplated by the Merger Agreement, including
the amendment and restatement of the Charter as set forth in the
Amended and Restated Charter and the Merger Share Issuance,
(x) the Exchange Share Issuance, (y) the Plan Amendment and
(z) any other action reasonably requested by Walter in
furtherance of any of the foregoing; (ii) against any action,
proposal, transaction or agreement that would reasonably be
expected to result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of
Hanover contained in the Merger Agreement, or of any Stockholder
contained in this Agreement; and (iii) against any Hanover
Acquisition Proposal or any other action, agreement or transaction
that is intended, or could reasonably be expected, to materially
impede, interfere with, delay, postpone, discourage or adversely
affect the Merger or any of the other transactions contemplated by
the Merger Agreement or this Agreement or the performance by such
Stockholder of its obligations under this Agreement, including,
without limitation: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business
combination involving Hanover or its Subsidiaries (other than the
Merger); (B) a sale, lease or transfer of a material amount of
assets of Hanover or any of its Subsidiaries or a reorganization,
recapitalization or liquidation of Hanover or any of its
Subsidiaries except as contemplated by the Merger Agreement;
(C) an election of new members to the board of directors of
Hanover, other than nominees for election as directors of Hanover
who are serving as directors of Hanover on the date of this
Agreement, who are nominated by Hanover’s Board of Directors
or who are expressly contemplated by the Merger Agreement in
connection with the consummation of the Merger; (D) any
material change in the present capitalization or dividend policy of
Hanover or any amendment or other change to Hanover’s charter
or Bylaws, except as specified in the Amended and Restated Charter
and the Amended and Restated Bylaws or if approved by Walter in
writing; or (E) any other material change in Hanover’s
corporate structure or business except as contemplated by the
Merger Agreement.
2.2.
No Inconsistent Agreements . Each Stockholder hereby
represents, warrants, covenants and agrees that, except for this
Agreement, such Stockholder (a) has not entered into, and
shall not enter into at any time while this Agreement remains in
effect, any voting agreement or voting trust with respect to such
Stockholder’s Covered Shares and (b) has not granted,
and shall not grant at any time while this Agreement remains in
effect, a proxy, consent or power of
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attorney with
respect to such Stockholder’s Covered Shares that is
inconsistent with this Agreement.
REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS
3.1.
Representations and Warranties of the Stockholders . Each
Stockholder hereby severally, and not jointly, represents and
warrants to Walter and JWH as follows:
(a)
Organization; Authorization; Validity of Agreement; Necessary
Action . Such Stockholder has the legal capacity and all
requisite power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by each Stockholder and, assuming this
Agreement constitutes a valid and binding obligation of Walter and
JWH, constitutes a valid and binding obligation of such
Stockholder, enforceable against it in accordance with its terms,
except as enforcement may be limited by general principles of
equity, whether applied in a court of law or a court of equity, and
by bankruptcy, insolvency and similar laws affecting
creditors’ rights and remedies generally.
(b)
Ownership . Such Stockholder Beneficially Owns or is the
record holder of the number of Existing Shares set forth below its
name on the signature page hereto, and such Stockholder’s
Existing Shares are, and all of such Stockholder’s
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