Exhibit 2
VOTING AGREEMENT
VOTING AGREEMENT, dated as of August 28, 2000, between Washington
Homes, Inc., a Maryland corporation (the "Company") on the one hand, and Kevork
S. Hovnanian and Ara K. Hovnanian (each, a "Principal Stockholder"), on the
other hand.
RECITALS
Concurrently herewith, Hovnanian Enterprises, Inc., a Delaware
corporation ("Parent"), WHI Holding Co., Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and the Company are entering
into an Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), providing for the merger of the
Company with and into Merger Sub (the "Merger"), upon the terms and subject to
the conditions set forth in the Merger Agreement.
As of the date hereof, each Principal Stockholder is the record and
beneficial owner of the number of shares of Class A Common Stock, par value
$0.01 per share, and shares of Class B Common Stock, par value $0.01 per share
(collectively, "Common Stock"), of Parent set forth opposite his name on the
signature page of this Agreement (such Common Stock, together with any shares of
Common Stock or other voting stock of the Company acquired after the date hereof
and prior to the termination hereof, whether upon the exercise of options,
conversion of convertible securities or otherwise, are the "Shares"),
representing in the aggregate 70.7% of the aggregate voting power of the issued
and outstanding shares of Common Stock.
As a condition of its willingness to enter into the Merger Agreement,
the Company has requested that each Principal Stockholder enter into this
Agreement.
Prior to the date hereof, the Company and the Principal Stockholders
had no agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of the Shares.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
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ARTICLE I
VOTING
1.1 Agreement to Vote. (a) The Principal Stockholders hereby agree
during the term of this Agreement that each shall, and shall cause the holder of
record on any applicable record date to, at the request of the Company, at any
meeting (whether annual or special and whether or not an adjourned or postponed
meeting) of stockholders of Parent, however called, or in connection with any
written consent of the holders of Common Stock, (a) if a meeting is held, appear
at such meeting or otherwise cause the Shares to be counted as present thereat
for purposes of establishing a quorum, and (b) vote or consent (or cause to be
voted or consented), in person or by proxy, all Shares, and any other voting
securities of Parent (whether acquired heretofore or hereafter) that are
beneficially owned or held of record by the Principal Stockholders or (other
than shares of Common Stock held by a Principal Stockholder as a trustee) as to
which the Principal Stockholders have, directly or indirectly, the right to vote
or direct the voting (collectively, the "Subject Shares"), in favor of the
approval of the Share Issuance. Each of the Principal Stockholders further
agrees to use his best reasonable good faith efforts to cause the shareholders
of the Company to approve the Share Issuance. In the event the Parent's board of
directors does not call a meeting of its shareholders to approve the Share
Issuance and the transactions and matters contemplated in connection therewith,
each Principal Stockholder agrees to take all action permitted under the
Articles of Incorporation, as amended, and By-laws of the Company and under
Delaware law necessary to call a meeting of its stockholders to approve the
Share Issuance.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the stockholders of
the Company vote or consent or in connection with which other such approval is
sought, each Principal Stockholder shall vote the Subject Shares against any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement. Each Principal Stockholder further agrees
not to commit or agree to take any action inconsistent with the foregoing.
1.2 Proxy. Each Principal Stockholder agrees to grant to the Company a
proxy to vote the Subject Shares as indicated in Section 1.1 above if any
Principal Stockholder fails for any reason to vote the Subject Shares in
accordance with Section 1.1. Each Principal Stockholder agrees that such proxy
would be irrevocable and would be coupled with an interest and agrees that it
will take such further action or execute such other instruments as may be
necessary or desirable to effectuate the intent of such a proxy and hereby
revokes any proxy previously granted by it with respect to the Subject Shares.
1.3 No Inconsistent Agreements. Each Principal Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, each Principal Stockholder (a) has not entered, and shall not
enter at any time while this Agreement
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remains in effect, into any voting agreement or voting trust with respect to the
Shares and (b) has not granted, and shall not grant at any time while this
Agreement is in effect, a proxy or power of attorney with respect to the Shares,
in either case, which is inconsistent with his obligations pursuant to this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
2.1 Authorization; Validity of Agreements; Necessary Action. (a) Each
Principal Stockholder has full power and authority to execute and deliver this
Agreement, to perform his obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
each Principal Stockholder of this Agreement and the consummation by him of the
transactions contemplated hereby have been duly and validly authorized by and no
other actions or proceedings on the part of any Principal Stockholder are
necessary to authorize the execution and delivery by him of this Agreement and
the consummation by each of the Principal Stockholders of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
Principal Stockholder, and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a valid and binding obligation of
the Principal Stockholders, enforceable against it in accordance with its terms,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of such person in his capacity as such.
(c) The Principal Stockholders understand and acknowledge that the
Company is entering into the Merger Agreement in reliance upon such Principal
Stockholders' execution and delivery of this Agreement with the Company.
2.2 The Subject Shares. The shares of Common Stock are, and all of
each Principal Stockholder's Shares from the date hereof through and on the
Closing Date (as defined in the Merger Agreement) and have been and will be,
owned beneficially or of record by each Principal Stockholder as is set forth
opposite such Principal Stockholder's name on the signature page hereto. As of
the date hereof, the shares of Common Stock constitute all of the Shares owned
of record or beneficially by the Principal Stockholders (other than shares of
Common Stock held as a trustee). Each Principal Stockholder has or will have
sole voting power, sole power of disposition, sole power to issue instructions
with respect to the matters set forth in
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Article I hereof, and sole power to agree to all of the matters set forth in
this Agreement, in each case with respect to all of the shares of Common Stock
on the Closing Date (as defined in the Merger Agreement), with no limitations,
qualifications or restrictions on such rights, subject to applicable federal
securities laws and the terms of this Agreement.
2.3 Additional Subject Shares; Adjustments. Each Principal Stockholder
hereby agrees, while this Agreement is in effect, to promptly notify the Company
of the number of any new Subject Shares acquired by such Principal Stockholder,
if any, after the date hereof. In the event of a stock dividend or distribution,
or any change in Parent's Common Stock by reason of any stock dividend,
split-up, recapitalization, combination or the exchange of shares, the term
"Subject Shares" shall be deemed to refer to and include the Subject Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Subject Shares may be changed or exchanged.
2.4 No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by any Principal Stockholder and
the consummation by such Principal Stockholder of the transactions contemplated
hereby (other than (i) filings under the DGCL and the MGCL required to effect
the Merger, (ii) the filing of a pre-merger notification and report form under
the HSR, (iii) the filing of the Registration Statement, the Proxy Statement and
the Information Statement by the Company and Parent in connection with the
Merger, or (iv) as otherwise contemplated by the Merger Agreement) and neither
the execution and delivery of this Agreement by any Principal Stockholder nor
the consummation by any Principal Stockholder of the transactions contemplated
hereby nor compliance by the Principal Stockholders with any of the provisions
hereof shall conflict with or result in any breach of any organizational
documents applicable to any of the Principal Stockholders, result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third-party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which any Principal Stockholder is a party or by which
his properties or assets may be bound or violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to any Principal
Stockholder or any of his properties or assets.
2.5 No Liens. The shares of Common Stock are held by each Principal
Stockholder, or by a nominee or custodian for the exclusive benefit of such
Principal Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any encumbrances arising hereunder and
agreements existing prior to the date hereof between a Principal Stockholder and
the Parent, as the same may be amended pursuant to this Agreement.
2.6 Fiduciary Duties. Notwithstanding anything in this Agreement to
the contrary, the covenants and agreements set forth in this Agreement shall not
be deemed to prevent the Principal Stockholders from taking any action, subject
to the applicable provisions of the Merger Agreement, while acting in his
capacity as director of Parent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Representations and Warranties of the Company. The Company
represents and warrants to each Principal Stockholder as follows:
(a) Power: Binding Agreement. The Company has full corporate power and
authority to execute and deliver this Agreement and to perform all of its
respective obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) No Conflicts. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby (other than
(i) filings under the DGCL and the MGCL required to effect the Merger, (ii) the
filing of a pre-merger notification and report form under the HSR, (iii) the
filing of the Proxy Statement by the Company in connection with the Merger, or
(iv) as otherwise contemplated by the Merger Agreement) and neither the
execution and delivery of this Agreement by Parent or Merger Sub nor the
consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof shall conflict with
or result in any breach of any organizational documents applicable to the
Company, result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third-party
right of termination, cancellation, material modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Company is a party or
by which the Company's properties or assets may be bound or violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Company or any of the Company's properties or assets.
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ARTICLE IV
OTHER COVENANTS
4.1 Further Agreements of the Principal Stockholders. (a) Each
Principal Stockholder, severally and not jointly, agrees not to (i) sell,
transfer, encumber, pledge, assign or otherwise dispose of (including by gift,
merger, testamentary disposition, interspousal disposition (pursuant to domestic
relations proceeding or otherwise) or otherwise by operation of law
("Transfer")), or enter into any contract, option or other arrangement or
understanding (including any profit sharing arrangement) with respect to the
Transfer of, any of the Shares or any interest therein to any person other than
pursuant to the terms hereof or the Merger Agreement, (ii) except as
contemplated hereby, grant any proxy or power of attorney, enter into any voting
trust, arrangement or understanding or otherwise transfer voting power, with
respect to the Shares or any interest therein to any other person other than
Parent, (iii) take any action that would make any of his representations or
warranties contained herein untrue or incorrect in any material respect, or have
the effect of preventing or disabling such Principal Stockholder from performing
his obligations under this Agreement or (iv) commit or agree to take any of the
foregoing actions.
(b) In furtherance of this Agreement, concurrently herewith, each
Principal Stockholder shall and hereby does authorize Parent's counsel to notify
Parent's transfer agent that there is a stop transfer order with respect to all
of the Shares and that this Agreement places limits on the voting and transfer
of such shares. Each Principal Stockholder agrees that within ten business days
after the date hereof, such Principal Stockholder will no longer hold any Shares
in "street name" or in the name of any nominee. If requested by the Company,
each Principal Stockholder agrees to submit to the Company contemporaneously
with or promptly following execution of this Agreement all certificates
representing the Shares so that the Company may note thereon a legend referring
to the option, proxy and other rights granted to it by this Agreement. If any of
the Shares beneficially owned by such Principal Stockholder are held of record
by a brokerage firm in "street name" or in the name of any other nominee (a
"Nominee," and, as to such Shares, "Nominee Shares"), each Principal Stockholder
agrees that, upon written notice by the Company requesting it, such Principal
Stockholder will within five days of the giving of such notice execute and
deliver to the Company a limited power of attorney in such form as shall be
reasonably satisfactory to the Company enabling the Company to require the
Nominee to (i) grant to the Company the irrevocable proxy to the same effect as
Articles I and II hereof with respect to the Nominee Shares held by such Nominee
and (ii) submit to the Company the certificates representing such Nominee Shares
for notation of the above-referenced legend thereon.
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ARTICLE V
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate on the first to occur
of (i) the Effective Time; (ii) the termination of the Merger Agreement for any
reason; or (iii) written notice of termination of this Agreement by the Company
to the Principal Stockholders. Nothing in this Section 5.1 shall relive or
otherwise limit any party of liability for breach of this Agreement. Upon any
termination of this Agreement, this Agreement shall thereupon become void and of
no further force and effect, and there shall be no liability in respect of this
Agreement or of any transactions contemplated hereby on the part of any party
hereto or any of its directors, officers, partners, members, stockholders,
employees, agents, advisors, representatives or affiliates; provided, however,
that nothing herein shall relieve any party from any liability for such party's
material breach of this Agreement; and provided further that nothing in this
Section 5.1 shall limit, restrict, impair, amend or otherwise modify the rights,
remedies, obligations or liabilities of any person under any other contract or
agreement, including, without limitation, the Merger Agreement.
5.2 Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or appropriate to consummate the transactions contemplated by this
Agreement.
5.3 Noninterference. Each Principal Stockholder hereby agrees and
covenants that he shall not, directly or indirectly, take any action that would
make any representation or warranty contained herein untrue or incorrect or have
the effect of preventing or disabling the Principal Stockholders from performing
its obligations under this Agreement.
5.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or facsimile, upon confirmation of receipt,
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the tenth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to the Company, to:
Washington Homes, Inc.
1802 Brightseat Road
Landover, MD 20785-4235
Attention: Geaton A. DeCesaris, Jr.
Facsimile No.: (301) 772-8934
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with a copy to:
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
Attention: John W. Griffin, Esq.
Facsimile No.: (202) 776-7801
(b) if to a Principal Stockholder, to him at the address set
forth below under his signature
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Attention: Vincent Pagano, Esq.
Facsimile No.: (212) 455-2502
5.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
5.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to conflicts
of laws principles thereof.
5.7 Submission to Jurisdiction; Waivers. Each Principal Stockholder
and the Company irrevocably agree that any legal action or proceeding with
respect to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by the other party hereto or its successors or assigns
may be brought and determined in any court of the United States located in the
State of Delaware, New York or New Jersey, or in Delaware, New York or New
Jersey state court, and the Company and each of the Principal Stockholders
hereby irrevocably submit with regard to any such action or proceeding for
itself and in respect to its of his property, generally and unconditionally, to
the exclusive jurisdiction of the aforesaid courts. Each Principal Stockholder,
Parent and Merger Sub hereby irrevocably waive, and agree not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it or he is not personally
subject to the jurisdiction of the above-named courts for any reason other than
the failure to lawfully serve process, (b) that it or he or its or his property
is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment
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or otherwise), (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts and (d) any right to a trial by jury.
5.8 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
5.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity,
including without limitation injunctive relief.
5.10 Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the Principal Stockholders and the Company
have executed this Agreement or have caused this Agreement to be signed by their
respective officers or other authorized persons thereunto duly authorized as of
the date first written above.
WASHINGTON HOMES, INC.
By: /s/ Geaton A. DeCesaris, Jr.
------------------------------
Name: Geaton A. DeCesaris, Jr.
Title: President, Chief Executive
Officer
Number of Hovnanian Class A Common Shares /s/ Kevork S. Hovnanian
---------------------------------
Principal Stockholder
Record: 5,323,075
Beneficial: 18,250
---------------------------------
Number of Hovnanian Class B Common Shares
---------------------------------
Address of Principal Stockholder
Record: 2,694,412
Beneficial: 1,517,913
Number of Hovnanian Class A Common Shares /s/ Ara K. Hovnanian
---------------------------------
Principal Stockholder
Record: 1,000,020
Beneficial: 0
---------------------------------
Number of Hovnanian Class B Common Shares
---------------------------------
Address of Principal Stockholder
Record: 946,849
Beneficial: 575,974
