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EXHIBIT 2.2
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Exhibit 2.2
As of June 20, 2001
Hanover Direct, Inc.
LWI Holdings, Inc.
0000 Xxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Re: Amendment No. 1 to Asset Purchase Agreement
Ladies and Gentlemen:
We make reference to the Asset Purchase Agreement, dated as of June
13, 2001 (the "Purchase Agreement"), between Hanover Direct, Inc. (the "Seller
Parent"), LWI Holdings, Inc. (the "Seller"), HSN LP (the "Purchaser Parent"),
HSN Improvements, LLC (the "Purchaser") and HSN Catalog Services, Inc. ("HSN
Catalog Services"). Unless otherwise defined herein, capitalized terms used
but not defined herein shall have the respective meanings set forth in the
Purchase Agreement. The Purchaser Parties and the Seller Parties hereby agree
as follows:
1. If the Closing under the Purchase Agreement occurs and if the
Business meets or exceeds its 2001 EBITDA target of $6,387,000 (calculated in
the same manner as "Variable Contribution" in the Budget (as such term is
defined in Section 2.1(e)(iii) of the Purchase Agreement)), rather than the
Seller Parent paying an aggregate of $216,821 (the "Bonus Amount") to those
Seller employees specified on Schedule 1 hereto as a special transaction bonus
at Closing, the Seller Parent will pay the Bonus Amount to HSN Catalog
Services on March 1, 2002. In exchange for HSN Catalog Services' receipt of
such a payment from the Seller Parent, HSN Catalog Services shall maintain
Seller's bonus arrangements that are in effect at the date hereof for the
balance of 2001 and shall pay full year bonuses to those HSN Catalog Services
employees who were formerly employees of the Seller and are specified on
Schedule 1 hereto , consistent with Seller's bonus arrangements that are in
effect at the date hereof and said Schedule 1. If the Seller Parent fails to
pay the Bonus Amount to HSN Catalog Services on March 1, 2002, such failure
shall be deemed to be a breach of the covenants and agreements in the Purchase
Agreement and the Purchaser Parties shall be entitled to recover the Bonus
Amount from the Escrow Amount under the Escrow Agreement, and such recovery
shall not count toward the $5,000,000 indemnity cap, nor shall it be subject
to the $250,000 indemnity Threshold, both provided for in Section 5.1(a) of
the Purchase Agreement.
2. (a) The Purchaser Parties covenant and agree to consult with the
Seller Parties prior to changing in any way the Business' practice with
respect the "insurance charge" which is the subject of the litigation
involving the Seller Parent and certain of its affiliates captioned Xxxxx X.
Xxxxxx v. Hanover Direct, Inc. and Xxxx Does 1 through 10, bearing case no.
CJ2000-177 in the State Court of Oklahoma (District Court in and for Sequoyah
County) (the "Action").
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(b) The Purchaser Parties covenant and agree to make available to
the Seller Parent and its counsel (1) those HSN Catalog Services employees who
were formerly employees of the Seller at such reasonable times and in such
reasonable places as may be reasonably necessary for the Seller Parent to
defend the Action, all without charge to the Seller Parties (except for the
reasonable expenses of such employees), and (2) copies of such records of the
Seller constituting part of the Acquired Assets relating to the "insurance
charge" as counsel to the Seller Parent may reasonably request in connection
with the defense of the Action, reasonable copy charges for which shall be
paid by the Seller Parent to the Purchaser Parties. In addition, the Purchaser
Parties covenant and agree to generally cooperate with the Seller Parent and
its counsel in response to any other reasonable request made by them to the
Purchaser Parties in connection with the defense of the Action.
3. The Seller Parent shall amend the Hanover Direct Savings and
Retirement Plan, so that, effective as of the Closing Date, the Continuing
Employees shall be fully vested in their accounts in the Hanover Direct
Savings and Retirement Plan.
4. The fax number for HSN LP in Section 6.4 of the Purchase Agreement
shall be replaced by: "(000) 000-0000".
5. Section 1.3(c) of the Purchase Agreement shall be deleted in its
entirety and replaced as follows: "(c) The allocation of the Purchase Price
among the Acquired Assets and the non-compete set forth in Section 3.8 shall
be reasonably agreed to by the Purchaser and the Seller within 30 days after
the Closing Date. The Purchaser, the Seller and HSN Catalog Services shall
follow such allocation in determining and reporting their liabilities for
federal, state, local and foreign tax returns filed by them subsequent to the
Closing Date."
6. The Seller Parties agree that the Purchaser and HSN Catalog
Services may notify the Seller of the Acquired Assets and Assumed Liabilities
to be purchased and assumed by HSN Catalog Services pursuant to Section 1.2(d)
of the Purchase Agreement at any time on or prior to the Closing Date.
7. The Merchant Receivables shall be calculated as of 12:00 noon on
June 29, 2001. If the actual value of the Merchant Receivables cannot be
determined prior to the Closing, the Seller shall determine its best good
faith estimate of the Merchant Receivables (the "Estimated Merchant
Receivables") for the Closing. If the Merchant Receivables are estimated, as
soon as possible after the Closing, and in no event later than the close of
business on Monday, July 2, 2001, the Seller shall deliver a certificate to
the Purchaser setting forth the actual amount of the Merchant Receivables and
the Seller shall pay the Purchaser the excess, if any, of the Merchant
Receivables over the Estimated Merchant Receivables, or the Purchaser shall
pay the Seller the excess, if any, of the Estimated Merchant Receivables over
the Merchant Receivables. For all other purposes under the Purchase Agreement,
the actual Merchant Receivables, not the Estimated Merchant Receivables, shall
be deemed to be the "Merchant Receivables."
Except as supplemented by this letter, the Purchase Agreement shall
remain unmodified and in full force and effect.
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This letter may be executed in one or more counterparts, each of which
will be deemed an original, but all of which together shall constitute one and
the same instrument.
Sincerely, Accepted and agreed to as of June 20, 2001
HSN LP Hanover Direct, Inc.
By: HSN General Partner LLC, its General
Partner By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
By: /s/ Xxxx Xxxxxxxx Title: President and CEO
Name: Xxxx Xxxxxxxx
Title: VP New Business Development LWI Holdings, Inc.
HSN Improvements, LLC By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
By: /s/ Xxxx Xxxxxxxx Title: Vice President
Name: Xxxx Xxxxxxxx
Title: VP
HSN Catalog Services, Inc.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: VP
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