exv10w12w2



 





Exhibit 10.12.2




November 26, 2007




VIA HAND DELIVERY




Mr. James Strickler

301 East 79th Street –Apt. #3A

New York, NY 10021




          Re:      Retention Agreement 



Dear Mr. Strickler:




          As you know, this year has been a very challenging one for our industry. We recognize that it
may also, unfortunately, have had an unsettling effect on some of our key employees. We would like
to offer you the retention agreement set forth below in an effort to reduce concerns that you might
have about your immediate future, and to assure that you will be available to assist us during the
next year, which we believe will be crucial to our future.




          For purposes of clarity and consistency, we refer to this retention agreement as the
“Agreement.” We will refer to you as “you.” We will refer to Hanover Capital Mortgage Holdings,
Inc., including any successor to that entity, as “Hanover” or the “Company.”




RETENTION AGREEMENT




     1. Term.



          The period from the date of this letter through and including August 29, 2008 is referred to
herein as the “Term” of this Agreement. While employed during the Term, you agree to devote your
full time and efforts to advancing the Company’s Interests, and to continue to serve in such
capacity or capacities as may be determined by, or under the authority of, the Chief Executive
Officer of the Company.




     2. Retention Bonus or Retention Option Grant.



          Subject to the terms and conditions of this Agreement, and as compensation for your
obligations and covenants hereunder, you will be eligible for either, but not both, of the
following choices:




          (a) Choice I: A retention payment in the gross amount of $25,000.00, which is referred to
herein as the “Retention Bonus.” If all eligibility requirements are satisfied, the Retention
Bonus (less applicable payroll taxes and deductions) will be paid to you no later than August 29,
2008. You understand and agree that, except as provided in Sections 3(a) and 3(b) below, in order
to be entitled to the Retention Bonus payment, you must remain an active employee of the Company
through August 29, 2008.




          (b) Choice II: A grant of 30,000 options of the Company’s stock, which will be made within 30
days of the first day of the Term, and which is referred to herein as the “Retention




 









 








Mr. James Strickler

November 26, 2007

Page 2



Option Grant.”
If all eligibility requirements are satisfied, the Retention Option Grant will vest in its
entirety on August 29, 2008. You understand and agree that, except as provided in Sections 3(a)
and 3(b) below, to be eligible for the vesting of the Retention Option Grant, you must remain an
active employee of the Company through August 29, 2008. You also understand and agree that, except
as expressly in Sections 3(a) and 3(b), you will forfeit any part of the Retention Option Grant
that is not vested at the time your employment terminates.




     3. Employment At-Will.



          You understand and agree that this Agreement does not assure you of continued employment for
any period of time or duration, and that the Company maintains the right, without prior notice, in
its sole and absolute discretion, to terminate your employment at any time with or without cause
for any reason or no reason. However, if your employment is terminated during the Term under the
conditions specified below, you will be entitled to the benefits specified below.




          (a) Termination by the Company Without Cause.




               (i) The Company agrees that if it were to terminate your employment during the Term without
Cause (as defined below): (A) within 60 days following your termination of employment, you would be
entitled to receive a lump sum severance payment in the gross amount of $134,456.40 (representing
six months of your current base salary) less applicable payroll taxes and deductions; and (B)
within 60 days following your termination of employment, but no later than August 29, 2008, you
would be entitled to receive, depending upon the Choice which you selected in Section 2 above,
either the full amount of the Retention Bonus (less applicable payroll taxes and deductions) or
100% vesting of the Retention Option Grant.



               (ii) For purposes of this Agreement, Cause is defined as only: (A) your conviction of (or plea
of nolo contendere to) a felony or any crime which involves moral turpitude, (B)
the good faith determination by the Board of Directors of the Company that you have failed to
perform a material amount of your duties (other than a failure to perform duties resulting from
your incapacity due to physical or mental illness), which failure to perform duties shall not have
been cured within thirty (30) days after your receipt of written notice thereof from the Board
specifying with reasonable particularity such alleged failure; (C) any absence from the Company’s
regular full-time employment in excess of three consecutive days that is not due to a vacation,
participation in a permitted activity, bona fide illness, disability, death or other reason
expressly authorized by the Board in advance; (D) any act or acts of personal dishonesty
(including, without limitation, any insider trading or unauthorized trading in the Company’s
securities); (E) the violation of your fiduciary duties to the Company, or the violation of any
law, statute or regulation relating to the operation of the Company’s business; (F) misconduct that
impairs your ability effectively to perform the duties or responsibilities of your position; or (G)
your declining an offer of continued employment in a position: (1) with similar duties and
responsibilities, (2) with any entity controlled by any of the present or future owner(s) of the
Company or any of the Company’s assets, (3) at the same or higher base salary,
and (4) which would not involve a relocation of your worksite to a location more than 50 miles
from its current location.



 









 





Mr. James Strickler

November 26, 2007

Page 3




          (b) Termination by You Following Change in Control.




               (i) If you were to experience a Significant Adverse Action (as hereinafter defined) at any
time within 90 days following a Change of Control (as hereinafter defined), and you were to notify
the Company in writing within 30 days of the date on which the Significant Adverse Action first
occurred, and the Company failed to cure the Significant Adverse Action within 30 days of receipt
of such notice, then you would be permitted to terminate your employment on or within 15 days after
the 30th day of the Company’s failure to cure the Significant Adverse Action of which
you gave such written notice. In such case: (A) within 60 days following your termination of
employment, you would be entitled to receive a lump sum severance payment in the gross amount of
$134,456.40 representing six months of your current base salary) less applicable payroll taxes and
deductions; and (B) within 60 days following your termination of employment, but no later than
August 29, 2008, you would be entitled to receive, depending upon the Choice which you selected in
Section 2 above, either the full amount of the Retention Bonus (less applicable payroll taxes and
deductions) or 100% vesting of the Retention Option Grant.



               (ii) For purposes of this Agreement, a “Change of Control” shall mean and include any of the
following:



                    (A) a merger or consolidation of the Company with or into any other corporation or other
business entity (except one in which the holders of capital stock of the Company immediately prior
to such merger or consolidation continue to hold at least a majority of the outstanding securities
having the right to vote in an election of the Board of Directors (“Voting Stock”) of the surviving
corporation);



                    (B) a sale, lease, exchange or other transfer (in one transaction or a related series of
transactions) of all or substantially all of the Company’s assets except in a transaction where
you, your Affiliate, or an Affiliate of the Company is the transferee. For purposes of this
Agreement, an “Affiliate” shall mean: with respect to you, any other person that directly or
indirectly controls, or is controlled by, or is under common control with you; and with respect to
the Company, any other corporation or business entity that directly or indirectly controls, or is
controlled by, or is under common control with, the Company;



                    (C) the acquisition by any person or any group of persons (other than the Company, any of its
direct or indirect subsidiaries, or any director, trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or any of its direct or
indirect subsidiaries) acting together in any transaction or related series of transactions, of
such number of shares of the Company’s Voting Stock as causes such person, or group of persons, to
own beneficially, directly or indirectly, as of the time immediately after such transaction or
series of transactions, 50% or more of the combined voting power of the Voting Stock of the Company
other than as a result of an acquisition of securities directly from the Company, or solely as a
result of an acquisition of securities by the Company which by reducing the number of shares of the
Voting Stock
outstanding increases the proportionate voting power represented by the Voting Stock owned by
any such person to 50% or more of the combined voting power of such Voting Stock; and



 









 





Mr. James Strickler

November 26, 2007

Page 4




                    (D) a change in the composition of the Company’s Board of Directors following a tender offer
or proxy contest as a result of which persons who immediately prior to such tender offer or proxy
contest, constituted the Company’s Board of Directors, shall cease to constitute at least a
majority of the members of the Board of Directors (other than by their voluntary resignations), but
only in the event that the persons elected to the Board were not supported by you as a director or
shareholder.



               (iii) For purposes of this Agreement, a “Significant Adverse Action” shall mean and include
only any of the following: (A) a material and substantial reduction in the Employee’s duties and
responsibilities; (B) a material reduction in your base salary; or (C) a relocation of your
worksite to a location more than 50 miles from that immediately before the Change in Control.



     4. Further Conditions of Severance.



          You understand that the severance benefits provided in Section 3 above would replace, and not
supplement, any severance benefits to which you would otherwise be entitled under any plan or
policy providing such benefits to Company employees. Your receipt of any severance benefits under
this Agreement shall also be conditioned upon all of the following, and any such benefits shall be
forfeited if such conditions are not met within 60 days of your termination of employment.




          (a) You must tender a resignation for all positions you held as a member of the Board of
Directors of the Company or of the Board of Directors of any affiliated company;




          (b) You must be in compliance with all of the material terms of any written employment
agreement between you and the Company; and




          (c) You must execute, after the date of your termination from employment and within 21 days
of its first presentation to you by the Company, a confidential separation agreement and general
release of claims in form and substance acceptable to the Company and it must thereafter become
effective in accordance with its terms; provided, however, that this condition (c) shall not apply
unless such separation agreement and general release has been provided to you by the Company
within 30 days of your termination from employment.




     5. Successors and Assigns.



          This Agreement shall inure to the benefit of, and be binding upon, the Company and any
corporation with which the Company merges or consolidates or to which the Company sells all or
substantially all of its assets, and upon you and your executors, administrators, heirs, and legal
representatives. You may not assign this Agreement, nor may you assign, pledge, hypothecate,
transfer, give as collateral or encumber any rights to payments hereunder, and any attempt to do
so shall be wholly void.




 









 








Mr. James Strickler

November 26, 2007

Page 5




     6. Governing Law and Venue.



          This Agreement shall be construed and enforced in accordance with the laws of the State of
New Jersey, without reference to the conflict of law principles thereof. To the extent that
either party is permitted to file any action in a Court that involves any aspect of this
Agreement, the parties agree that such action must be brought in either federal court in the State
of New Jersey or in the Superior Court of New Jersey, Middlesex County, and the parties
irrevocably consent to jurisdiction and venue in such courts.




     7. Miscellaneous.



          Except as required by applicable law, you agree to keep this Agreement confidential. You
also agree this Agreement contains the entire understanding between you and the Company concerning
the Retention Bonus, the Retention Option Grant, and Severance, and supersedes all prior
agreements or understandings concerning the matters covered herein. This Agreement does not
supersede any agreements or understandings concerning matters other than those identified in the
immediately preceding sentence. Any changes or modification in this Agreement must be in writing
and be signed by both you, and on behalf of an authorized representative of the Company, to be
effective.




          Payment of the Retention Bonus and Severance under the terms set forth herein is not, and
shall not be considered, as an employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).




 









 








Mr. James Strickler

November 26, 2007

Page 6



Again, on behalf of the Company, we appreciate your services and look forward to your continued
good works and accomplishments. If this Agreement is acceptable to you, please designate which of
the two Choices you have chosen, and sign and date a copy of this letter where indicated below, and
return a signed copy within 10 business days of the date of this letter to Ms. Caryl O’Dowd, Vice
President Human Resources, Hanover Capital Mortgage Holdings, Inc.,
200 Metroplex Drive, Suite 100, Edison, NJ 08817.




Sincerely yours,




/s/
John Burchett

John Burchett

Chief Executive Officer

Hanover Capital Mortgage Holdings, Inc.



TO ACCEPT THIS RETENTION AGREEMENT, YOU MUST: 1) DESIGNATE WHICH OF THE TWO CHOICES YOU ARE
ACCEPTING; 2) SIGN AND DATE THE AGREEMENT; AND 3) RETURN THIS DOCUMENT AS PROVIDED
ABOVE.




RETENTION
CHOICE SELECTED (check one)      Choice I
___      Choice II
  X  





Employee
Signature /s/ James Strickler     



Agreed and
Accepted on
     11/27/07      (Date)