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AGREEMENT
AGREEMENT dated as of March 26, 1999 by and between Richemont Finance S.A., a
Luxembourg corporation ("Richemont"), and Hanover Direct, Inc., a Delaware
corporation ("Hanover").
W I T N E S S E T H:
WHEREAS, Hanover entered into that certain Reimbursement Agreement dated as of
December 18, 1996 with Swiss Bank Corporation (now UBS A.G., Stamford Branch)
("Bank") (as amended to the date hereof, the "Reimbursement Agreement") in
connection with the Bank's issuance of three letters of credit which support
certain obligations of Hanover (the "Letters of Credit");
WHEREAS, Richemont entered into an agreement dated as of December 18, 1996 with
the Bank pursuant to which Richemont guaranteed the reimbursement obligations
of Hanover in connection with draws under any Letter of Credit (the
"Guarantee"); and
WHEREAS, Richemont and Hanover and certain of Hanover's subsidiaries (Hanover
and such certain subsidiaries are herein collectively referred to as the
"Borrowers") entered into that certain Hanover Indemnity Agreement dated as of
December 17, 1996 (as amended to the date hereof, the "Indemnity Agreement")
whereby the Borrowers have agreed to reimburse Richemont for any payment it
makes to the Bank under the Guarantee in accordance with the Reimbursement
Agreement;
WHEREAS, Richemont and Hanover have agreed to extend the terms of the Indemnity
Agreement to March 31, 2000 on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. The parties agree to amend the Indemnity Agreement to extend its term to
March 31, 2000 and to take all steps necessary to so amend the Indemnity
Agreement, and Hanover agrees to cause those of its subsidiaries that are
party thereto to consent to such amendment.
2. The parties agree to use their reasonable best efforts to obtain the
Bank's consent to amend the Reimbursement Agreement, the Letters of Credit
and the Guarantee and other related agreements, as necessary, to extend
the terms of those instruments or agreements to March 31, 2000.
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3. Hanover shall use its reasonable best efforts to obtain from Congress
Financial Corporation ("Congress") its consent to extend the various
agreements referenced herein.
4. Richemont agrees to use its reasonable best efforts to obtain from
Congress its consent to amend the terms of the Subordination Agreement
between itself and Congress dated as of December 18, 1996 to the extension
of the various agreements referenced herein.
5. Upon the completion of all actions necessary to obtain the extension to
March 31, 2000 of the agreements referred to herein and the issuance of
the extended Letters of Credit, the Borrower agrees to pay to Richemont a
fee equal to 9-1/2% of the principal amount of each Letter of Credit, plus
all fees incurred by Richemont in connection with providing the Guarantee,
including all legal fees, expenses, bank fees and any similar costs and
expenses, all pursuant to the terms of the Term Sheet of even date
herewith and attached hereto as Exhibit A.
6. All capitalized terms used herein and not otherwise defined in the
Agreement shall have the meaning ascribed thereto in the Reimbursement
Agreement.
7. This Agreement contains the entire agreement of the parties with respect
to its subject matter, supersedes all prior discussions between them, and
shall be amended or modified only by a writing executed by the parties
hereto.
8. This Agreement shall be construed under and enforced in accordance with
the laws of New York, without reference to conflict of laws principles.
RICHEMONT FINANCE S.A.
By: /s/ J. DU PLESSIS
------------------- /s/ X. XXXXXX
Name: J. du Plessis A Grieve
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Title:
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HANOVER DIRECT, INC.
By: /s/ XXXXXX XXXX
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Name: Xxxxxx Xxxx
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Title: VP Finance-Treasurer
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Exhibit A
TERM SHEET
$25.8 MILLION LETTERS OF CREDIT
PARTIES: Hanover Direct, Inc. ("Hanover"), Richemont, S.A. ("Richemont"),
UBS, A.G., Stamford Branch ("UBS") and Congress Financial Corp.
("Congress").
FACILITY: In accordance with the Reimbursement Agreement, dated December 18,
1996, between Hanover and UBS, UBS has issued three letters of
credit for up to $25,837,082 (the "Letters of Credit").
TERM: The expiration date of the Letters of Credit shall be extended
until March 31, 2000 at the closing of the contemplated transaction
(the "Closing").
FACILITY FEE AND A facility fee of 9-1/2% of the principal amount of the Letters of
EXPENSE: Credit shall be paid by Hanover to Richemont, subject to reduction
for prepayment, other than that portion of the facility fee paid at
closing. In addition, Hanover shall pay all fees incurred by
Richemont in connection with providing the facilities described
herein, including legal fees, expenses, bank fees and any other
similar costs and expenses.
TIMING OF Payment of the facility fee and expenses incurred by Richemont
PAYMENTS: shall be made as follows: (a) $500,000 shall be paid at Closing,
and (b) the balance shall be paid in four equal quarterly
installments. Provision shall be made to prorate the remaining
quarterly payments of the facility fee balance but, by way of
clarification, not the $500,000 fee payable at closing, in the
event of prepayment of amounts due thereunder by Hanover.
INTEREST: Interest on all amounts, if any, drawn under the Letters of Credit
shall be paid to Richemont at a rate equal to 3.5% above the prime
rate, but in no event shall such rate be less than the rate charged
Richemont by UBS with respect to any such drawings, plus 2%.
Interest shall be paid quarterly in arrears based on a 360-day year
and actual days elapsed.
REIMBURSEMENT Hanover and Richemont shall amend the Agreement, dated December 18,
AGREEMENT: 1996 and amended as of February 18, 1998, to reflect the terms set
forth herein.
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SUBORDINATION: Obligations of Hanover to Richemont in connection herewith shall be
subordinated to all obligations of Hanover to Congress under that
Loan and Security Agreement, dated as of November 14, 1995, as
amended, between Congress, Hanover and certain other borrowers.
SECURITY: Unsecured.
ACCEDPTED
/s/ J. DU PLESSIS /s/ X. XXXXXX
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J. du Plessis X. Xxxxxx
