ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 4, 2005, Hanover Capital Mortgage Holdings, Inc. (the "Company") completed a private placement of $20 million of trust preferred securities (the "Securities") through Hanover Statutory Trust II (the "Trust"), a statutory trust formed by the Company for that purpose. In connection with that issuance, the Company entered into a Purchase Agreement dated November 4, 2005, among the Company, the Trust and Citigroup Global Markets, Inc., and an Amended and Restated Declaration of Trust, dated November 4, 2005, among the Company and Wilmington Trust Company ("WTC"), as Delaware trustee and as institutional trustee pursuant to which the Securities were issued. The proceeds from the sale of the Securities were used by the Trust to purchase from the Company $20,619,000 in aggregate principal amount of the Company's junior subordinated notes due 2035 (the "Notes"). The Notes were issued pursuant to a junior subordinated indenture (the "Indenture"), dated November 4, 2005, by and between the Company and WTC.
On October 8, 2008, the Company provided WTC with notice that, pursuant to
Section 2.11 of the Indenture, it elected to defer the next payment of interest on the Securities, for the quarterly interest payment due on October 31, 2008.
The Company has the right, pursuant to Section 2.11 of the Indenture, upon appropriate notice, to defer the payment of interest for a period (the "Extension Period") of up to four (4) consecutive quarterly interest periods, so long as no Event of Default has occurred and is continuing, subject to certain other restrictions set forth in Section 3.08 of the Indenture.
Section 5.01(c) of the Indenture clarifies that if interest payments are being deferred during an Extension Period, this shall not constitute an Event of Default under the Indenture.
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