EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of July 1,
2002, is made and entered into by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"),
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") (Burchett, Mizerak, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ collectively, the
"Sellers" and individually, each a "Seller") and Hanover Capital Mortgage
Holdings, Inc., a Maryland corporation (the "Corporation").
WHEREAS, the Sellers own, directly, beneficially and of record, 100% of
the issued and outstanding shares of common stock of each of HanoverTrade, Inc.
(f/k/a ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. and referred to herein as "HTC"), Hanover Capital
Partners Ltd. ("HCP") and Hanover Capital Partners 2, Inc. ("HCP2") (HTC, HCP
and HCP2 collectively, the "Subsidiaries" and individually, each a
"Subsidiary"), in the respective amounts and classes set forth opposite their
names on the attached Schedule 1 (the shares of issued and outstanding common
stock of HTC, HCP and HCP2 listed on Schedule 1 hereto, collectively, the
"Shares"); and
WHEREAS, the Sellers desire to sell the Shares, and the Corporation
desires to purchase such Shares, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
agreements, covenants, and representations hereinafter contained, the Sellers
and the Corporation intending to be legally bound, hereby agree as follows:
1. SALE AND PURCHASE OF THE SHARES.
1.1 AGREEMENT TO SELL. Upon the terms and conditions set forth
herein, the Sellers shall sell, assign, transfer and deliver the Shares free and
clear of all liens, claims, charges, pledges, security interests, pre-emptive
rights, rights of first refusal, obligations, encumbrances and restrictions
(collectively, "Liens"), to the Corporation at the Closing (as defined in
Section 1.3), and the Corporation shall purchase and accept the Shares from the
Sellers at the Closing.
1.2 PURCHASE PRICE. In consideration of the sale, assignment,
transfer and delivery of the Shares to the Corporation by the Sellers, and in
reliance on the representations and covenants hereinafter set forth, the
Corporation shall pay an aggregate purchase price in the amount of [Four Hundred
Seventy-Four Thousand Dollars ($474,000)] (the "Purchase Price"), which shall be
divided among the Sellers as set forth on Schedule 1.2 hereto, and which shall
be paid at Closing to the Sellers by wire transfer of immediately available
funds to the account or accounts set forth on Schedule 1.2 to this Agreement, or
by check or some other method as may be mutually agreed upon by the parties to
this Agreement, all as set forth on Schedule 1.2 hereto.
1.3 CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Shares contemplated hereby (the
"Closing") shall take place on Monday, July 1, 2002 by exchange of this
Agreement and all other deliveries contemplated hereby
executed by the parties via facsimile followed by delivery of such executed
documents by overnight delivery; provided that the Closing may take place by
such other means or at such other time, date or place as may be mutually agreed
upon by the parties to this Agreement in writing.
1.4 THE SELLERS' OBLIGATIONS AT CLOSING. At the Closing, each
Seller will deliver to the Corporation the following:
(a) certificate(s) representing the Shares set forth
opposite such Seller's name on Schedule 1 hereto, accompanied by a Stock Power
duly executed in blank and in substantially the form attached hereto as EXHIBIT
A; and
(b) such other documents and instruments as may be
required to consummate the transactions contemplated hereby.
1.5 CORPORATION'S OBLIGATIONS AT CLOSING. At the Closing, the
Corporation will deliver to the Sellers the following:
(a) the Purchase Price, divided among the Sellers as
set forth on Schedule 1.2 hereto; and
(b) such other documents and instruments as may be
required to consummate the transactions contemplated hereby.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each Seller, as to
himself only and not with respect to any other Seller, represents and warrants
to the Corporation that the statements contained in this Section 2 are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing:
2.1 OWNERSHIP OF THE SUBSIDIARIES. The Shares represent 100%
of the issued and outstanding common stock of the Subsidiaries. Other than the
Shares and the preferred stock held by the Corporation, no other shares of
capital stock, or options, warrants, conversion rights or other securities
exercisable or exchangeable for shares of capital stock, of any Subsidiary are
outstanding.
2.2 TITLE TO THE SHARES. The Seller is the sole beneficial and
record owner of the Shares set forth opposite his name on Schedule 1 hereto, and
owns such Shares free and clear of any Liens and has and at Closing will have
full power and authority to convey such Shares free and clear of any Liens, and
upon delivery of payment for the Shares as herein provided, the Seller will
convey to the Corporation good title thereto free and clear of any Liens. Other
than the Shares set forth opposite his name on Schedule 1 hereto, the Seller
does not own any other shares of capital stock of the Subsidiaries (or of any
subsidiaries or affiliates thereof), and such Shares represent all of the
Seller's right, title and interest in and to the Subsidiaries (and any of their
subsidiaries or affiliates).
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2.3 CAPACITY; AUTHORITY; BINDING EFFECT. The Seller has the
legal capacity to execute, deliver and perform this Agreement and each other
document being executed in connection herewith to which he is a party. This
Agreement has been duly and validly executed and delivered by the Seller and
(assuming the due authorization, execution and delivery thereof by the
Corporation) constitutes the legal, valid and binding obligation of the Seller,
enforceable against him in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights and remedies generally and subject to general principles of
equity.
2.4 BROKERS AND ADVISORS. The Seller has not taken any action
which would give rise to a valid claim against any party hereto for a brokerage
commission, finder's fee or like payment.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to each Seller that the statements contained in
this Section 3 are true and correct as of the date of this Agreement and will be
true and correct as of the Closing:
3.1 ORGANIZATION. The Corporation is a corporation validly
existing under the laws of the state of Maryland.
3.2 AUTHORITY; BINDING EFFECT. The Corporation has
been duly authorized to execute and deliver this Agreement and each other
document being executed in connection herewith to which the Corporation is a
party. This Agreement has been duly and validly executed and delivered by the
Corporation and (assuming the due authorization, execution and delivery thereof
by the Sellers) constitutes the legal, valid and binding obligation of the
Corporation, enforceable against the Corporation in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights and remedies generally and subject to general
principles of equity.
3.3 BROKERS AND ADVISORS. The Corporation has not taken
any action which would give rise to a valid claim against any party hereto for a
brokerage commission, finder's fee or like payment, except that the Corporation
has paid a fee of $20,000 to CastaNet Capital LLC in connection with the
valuation of the Subsidiaries for purposes of this Agreement.
4. COVENANTS OF CORPORATION. The Corporation covenants to the Sellers
that, except as otherwise consented to in writing by the Sellers, from and after
the date of this Agreement, the Corporation will use its best efforts to cause
all of the conditions described in Sections 7.1 and 7.2 of this Agreement to be
satisfied.
5. COVENANTS OF THE SELLERS. Each Seller covenants to the Corporation
that, except as otherwise consented to in writing by the Corporation, from and
after the date of this Agreement, such Seller will use his best efforts to cause
all of the conditions described in Sections 6.1 and 6.2 of this Agreement to be
satisfied.
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6. CONDITIONS TO CORPORATION's OBLIGATIONS. Unless waived by the
Corporation in writing in its sole discretion, all obligations of the
Corporation under this Agreement are subject to the fulfillment, prior to or at
the Closing, of each of the following conditions:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS.
The representations and warranties of the Sellers contained in Section 2 of this
Agreement shall be true and correct at and as of the Closing with the same
effect as though such representations and warranties had been made at and as of
such time; all Sellers shall have performed all obligations and complied with
all covenants required by this Agreement to be performed or complied with by
them prior to the Closing.
6.2 CLOSING DELIVERIES OF THE SELLERS. All Sellers shall have
made the Closing deliveries required pursuant to Section 1.4.
6.3 LEGAL MATTERS. No claim, action, suit, arbitration,
investigation or other legal or administrative proceeding shall have been
brought or threatened which questions the validity or legality of the
transactions contemplated hereby. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated or
enforced which prohibits the transactions contemplated hereby.
7. CONDITIONS TO THE SELLERS' OBLIGATIONS. Unless waived by the Sellers
in writing, all obligations of the Sellers under this Agreement are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Corporation contained in Section 3 of this
Agreement shall be true and correct at and as of the Closing with the same
effect as though such representations and warranties had been made at and as of
such time; the Corporation shall have performed all obligations and complied
with all covenants required by this Agreement to be performed or complied with
by it on or prior to the Closing.
7.2 CLOSING DELIVERIES OF CORPORATION. The Corporation shall
have made the Closing deliveries required pursuant to Section 1.5.
7.3 LEGAL MATTERS. No claim, action, suit, arbitration,
investigation or other legal or administrative proceeding shall have been
brought or threatened which questions the validity or legality of the
transactions contemplated hereby. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated or
enforced which prohibits the transactions contemplated hereby.
8. INDEMNIFICATION.
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties hereto
contained in this Agreement, or listed
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or disclosed on any Exhibit or Schedule hereto, shall be deemed material and
shall be deemed to have been relied upon by the parties hereto. All of the
representations, warranties, covenants, and agreements made by the parties
hereto shall survive the execution and delivery of this Agreement and the
Closing hereunder until the time on which the applicable statute of limitations
has expired or indefinitely if no statute of limitation applies. There shall be
no termination of any such representation or warranty as to which any actions,
suit, claim, or counterclaim or legal, administrative or arbitration proceeding
or investigation has been asserted prior to the termination of such survival
period.
8.2 INDEMNIFICATION BY THE SELLER. Each Seller shall, severally
and not jointly, indemnify, defend, save and hold the Corporation and any of its
agents, representatives, successors or assigns, harmless from and after the
Closing against and in respect of any and all demands, claims, allegations,
assertions, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable attorneys'
fees and expenses) (collectively, "Losses") asserted against, imposed upon,
resulting to, required to be paid by, or incurred by the Corporation, directly
or indirectly, in connection with, arising out of, which could result in, or
which would not have occurred but for:
(a) any breach by him of any representation or
warranty contained in this Agreement; or
(b) any breach or nonfulfillment of any covenant or
agreement made by him in this Agreement.
8.3 INDEMNIFICATION BY CORPORATION. The Corporation shall
indemnify, defend, save and hold each Seller and any of his agents,
representatives, or heirs harmless from and after the Closing against and in
respect of any and all Losses asserted against, imposed upon, resulting to,
required to be paid by, or incurred by such Seller, directly or indirectly, in
connection with, arising out of, which could result in, or which would not have
occurred but for:
(a) any breach by the Corporation of any
representation or warranty contained in this Agreement; or
(b) any breach or nonfulfillment of any covenant or
agreement made by the Corporation in this Agreement.
8.4 NOTICE AND DEFENSE. If at any time the Corporation or any
of its agents, representatives, successors or assigns, or any Seller or any of
his agents, representatives or heirs (the "Indemnified Party") believes that it
has suffered or incurred, or will suffer or incur, or shall receive notice of,
any asserted Losses claimed to give rise to indemnification under Section 8.2 or
8.3, the Indemnified Party shall promptly give notice thereof ("Claims Notice")
to the indemnifying party (the "Indemnifying Party") of any such Losses. The
Claims Notice shall set forth a brief description of the Losses, and, if known
or reasonably estimable, the amount of the Losses that have been or may be
suffered by the Indemnified Party. The failure of the Indemnified Party to give
any notice required by this Section 8.4 shall not affect the Indemnified
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Party's rights under this Section 8 or otherwise except to the extent that such
failure is prejudicial to the rights or obligations of the Indemnifying Party.
8.5 THIRD PARTY CLAIMS. If any Losses relate to any action,
suit, proceeding or demand instituted against the Indemnified Party by a third
party (a "Third Party Claim"), the Indemnifying Party shall be entitled to
participate in the defense of any such Third Party Claim at the sole cost and
expense of the Indemnifying Party through counsel chosen by the Indemnifying
Party and approved by the Indemnified Party (which approval shall not be
unreasonably withheld); provided, however, that any compromise or defense shall
be conducted in a manner which is reasonable and not contrary to the Indemnified
Party's interests and the Indemnified Party shall in all events have a right to
veto any compromise or defense that is unreasonable or which would jeopardize in
any material respect any assets or business of the Indemnified Party or any of
its affiliates or increase the potential liability of, or create a new liability
for, the Indemnified Party or any of its affiliates and, provided further that
the Indemnifying Party shall in all events indemnify the Indemnified Party and
its affiliates against any Losses resulting from the manner in which such Third
Party Claim is compromised or defended, including any failure to pay any such
claim while such litigation is pending. If the Indemnifying Party does so
undertake to compromise and defend a claim, the Indemnifying Party shall notify
the Indemnified Party of its intention to do so within thirty (30) days after
receipt of a Claims Notice. Even if the Indemnifying Party undertakes to
compromise or defend a claim, the Indemnified Party shall have the right to
defend, compromise or settle any Third Party Claim for which a claim for
indemnification has been made hereunder upon notice to the Indemnifying Party
and by waiving any right against the Indemnifying Party with respect to such
Third Party Claim. Each party agrees in all cases to cooperate with the
defending party and its counsel in the compromise of or defending of any such
liabilities or claims. In addition, the nondefending party shall at all times be
entitled to monitor such defense through the appointment, at its own cost and
expense, of advisory counsel of its own choosing.
9. MISCELLANEOUS.
9.1 EXPENSES. Except as otherwise set forth herein, each party
to this Agreement shall pay all of its expenses relating hereto, including any
income, capital gains, sales, transfer or documentary taxes, and fees and
disbursements of its counsel, accountants and financial advisors, whether or not
the transactions hereunder are consummated.
9.2 NOTICES. Except as otherwise provided herein, all notices,
requests, demands and other communications under or in connection with this
Agreement shall be in writing, and shall be addressed:
(a) If to the Corporation:
Hanover Capital Mortgage Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
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with a copy to:
▇.▇. ▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to a Seller:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
All such notices, requests, demands or communications shall be mailed
postage prepaid, certified mail, return receipt requested, or by overnight
delivery or delivered personally, and shall be sufficient and effective when
delivered to or received at the address so specified. Any party may change the
address at which it is to receive notice by like written notice to the others.
9.3 ENTIRE AGREEMENT. This Agreement (including the exhibits hereto and
the schedules delivered pursuant hereto, which are a part hereof) is intended by
the parties to and does constitute the entire agreement of the parties with
respect to the transactions contemplated by this Agreement. This Agreement
supersedes any and all prior understandings, written or oral, between the
parties, and this Agreement may be amended, modified, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the amendment, modification, waiver, discharge or termination is
sought.
9.4 GENERAL. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references made and pronouns used herein
shall be construed in the singular or plural, and in such gender, as the sense
and circumstances require. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall be
effective only
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upon execution by all parties hereto. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns, but nothing herein, express or implied, is intended to or shall confer
any rights, remedies or benefits upon any person other than the parties hereto.
This Agreement may not be assigned by any party hereto, except that the
Corporation may assign this Agreement to one or more of its subsidiaries or
affiliates, provided that the Corporation shall remain primarily liable on this
Agreement, notwithstanding any assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of Maryland, without
giving effect to the principles of conflicts of law thereof.
9.5 CONSULTATION WITH ATTORNEY. Each Seller acknowledges that he has
consulted with legal counsel of his choosing regarding the terms of this
Agreement before signing it and that in executing this Agreement he has not
relied upon any representations or statements by the Corporation or any of its
shareholders, agents, representatives, employees, or attorneys regarding the
subject matter, basis or effect of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Sellers and the Corporation have
caused this Agreement to be duly executed as of the date first above written.
WITNESS/ATTEST: THE SELLERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [SEAL]
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as to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ [SEAL]
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as to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ [SEAL]
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as to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ [SEAL]
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as to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
CORPORATION:
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [SEAL]
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name:
Assistant Secretary Title:
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EXHIBITS AND SCHEDULES
EXHIBITS:
EXHIBIT A FORM OF STOCK POWER
SCHEDULES:
SCHEDULE 1 SHARE OWNERSHIP
SCHEDULE 1.2 ALLOCATION OF PURCHASE PRICE; WIRE TRANSFER
INSTRUCTIONS
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