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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)
HANOVER DIRECT, INC.
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(Name of Issuer)
Common Stock, $0.66-2/3 par value
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(Title of Class of Securities)
440506 10 3
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(CUSIP Number)
Theodore H. Kruttschnitt, III
One Bay Plaza, Suite 850
1350 Bayshore Highway
Burlingame, CA 94010
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 9, 1994
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] .
Check the following box if a fee is being paid with this statement [ ] .
(Continued on following page(s))
Page 1 of 23 Pages
Exhibit Index Appears on Page 9
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CUSIP No. 440506 10 3
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Theodore H. Kruttschnitt, III
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2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [x]
OF A GROUP (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
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NUMBER 7 SOLE VOTING POWER 5,320,887*
OF -------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED --------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 5,320,887*
REPORTING --------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 5,320,887*
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.42%
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14 TYPE OF REPORTING PERSON IN
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* See Item 5 hereof.
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CUSIP No. 440506 10 3
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
J. David Hakman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [x]
OF A GROUP (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
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NUMBER 7 SOLE VOTING POWER 28,434*
OF --------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED --------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 28,434*
REPORTING --------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 28,434*
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .03%
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14 TYPE OF REPORTING PERSON IN
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* See Item 5 hereof.
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CUSIP No. 440506 10 3
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Edmund R. Manwell
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2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [x]
OF A GROUP (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
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NUMBER 7 SOLE VOTING POWER 33,628*
OF --------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED --------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 33,628*
REPORTING --------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 33,628*
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .04%
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14 TYPE OF REPORTING PERSON IN
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* See Item 5 hereof.
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Item 1. Security and Issuer.
This Amendment No. 9 to Statement on Schedule 13D relates to shares
of Common Stock, par value $.66-2/3 per share (the "Common Stock"), of Hanover
Direct, Inc., a Delaware corporation and the successor in interest to The Horn
& Hardart Company (the "Company"), whose principal executive offices are
located at 1500 Harbor Boulevard, Weehawken, New Jersey 07087.
Item 2. Identity and Background.
(a)-(c) Mr. Theodore H. Kruttschnitt, III's principal occupation is
investing and his business address is One Bay Plaza, 1350 Bayshore Highway,
Suite 850, Burlingame, California 94010.
Mr. J. David Hakman's principal occupation is serving as Chief
Executive Officer of Hakman Capital Corporation, an investment banking firm
located at 1350 Bayshore Highway, One Bay Plaza, Suite 333, Burlingame,
California 94010.
Mr. Edmund R. Manwell's principal occupation is serving as Senior
Partner of the law firm of Manwell & Milton, 101 California Street, Suite 3750,
San Francisco, California 94111.
(d)-(f) During the last five years, none of Messrs. Kruttschnitt,
Hakman or Manwell has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such individual was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws. Messrs. Kruttschnitt, Hakman and Manwell
are all United States citizens.
Item 3. Source and Amount of Funds or other Consideration.
Not Applicable.
Item 4. Purpose of the Transaction.
Pursuant to the Understandings Letter, dated March 8, 1994 (the
"Understandings Letter"), which was executed on March 9, 1994, by and among
Mr. Kruttschnitt, the Company, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and Alex. Brown & Sons
Incorporated (the "Underwriters"), Mr. Kruttschnitt and the Underwriters
outlined certain arrangements which they intend
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to perform in connection with an offering of shares of Common Stock to the
public (the "Offering"), including, among other things, that (i) the total size
of the Offering is expected to be 10,000,000 shares of Common Stock, which will
include 3,500,000 shares of Common Stock owned by Mr. Kruttschnitt, (ii) Mr.
Kruttschnitt will provide (to the extent he owns sufficient shares to include
in the Offering) for 37.45% (initially 525,000 shares) of an over-allotment
option, to be exercised at the option of the Underwriters, (iii) subject to Mr.
Kruttschnitt's approval (and to the extent Mr. Kruttschnitt owns sufficient
shares to include in the Offering), if the amount of the shares in the Offering
increases to an amount above 10,000,000 shares, then Mr. Kruttschnitt shall
have the option to include additional shares in the Offering in an amount up to
an amount equal to 37.45% of the increase over 10,000,000 shares, (iv) in the
event that the size of the Offering is reduced to less than 10,000,000 shares,
the portion of Mr. Kruttschnitt's shares included in the Offering shall be
reduced by an amount equal to 37.45% of the amount of shares less than
10,000,000 that the Offering is reduced and (v) if Mr. Kruttschnitt sells any
of his shares of Common Stock in the Offering, (x) at the effectiveness of the
Company's Registration Statement relating to the Offering (the "Registration
Statement"), he shall sign a Purchase Agreement among the Company, the
shareholders participating in the Offering and the Underwriters (collectively
the "Signatories") (making the representations and giving the indemnity in the
form set forth in Annex A to the Understandings Letter), and (y) at the
pricing, he shall sign a Price Determination Agreement among the Signatories in
a form to be no more adverse to Mr. Kruttschnitt than the draft attached to the
Understandings Letter as Annex B.
The foregoing description of the Understandings Letter is a summary
of certain of its terms and reference is made to a copy of such Understandings
Letter which is attached hereto as Exhibit 1 and incorporated herein by
reference for all of its terms and conditions.
Pursuant to a Letter Agreement, dated February 18, 1994 (the
"Lock-Up Letter"), which was executed on March 9, 1994, by and among Mr.
Kruttschnitt and the Underwriters, Mr. Kruttschnitt agreed that from the date
of the Lock-Up Letter until 180 days after the Registration Statement becomes
effective, he will not, without the prior written consent of Merrill Lynch,
directly or indirectly sell (or offer or contract to sell), transfer, pledge
(subject to certain specified exceptions) or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock, except under certain circumstances outlined in the Lock-Up
Letter. Under certain circumstances, which are described in the Lock-Up
Letter, the Lock-Up Letter shall have no force and effect.
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The foregoing description of the Lock-Up Letter is a summary of
certain of its terms and reference is made to a copy of such Lock-Up Letter
which is attached hereto as Exhibit 2 and incorporated herein by reference for
all of its terms and conditions.
Pursuant to a Letter Agreement, dated as of February 18, 1994 (the
"Resignation Agreement"), which was executed on March 9, 1994, by and among the
Company and Messrs. Hakman, Manwell and Kruttschnitt, effective upon the date
of the closing of the sale of at least 3,500,000 shares of Common Stock by Mr.
Kruttschnitt (excluding any shares that may be sold pursuant to the exercise of
the over-allotment option) pursuant to the Registration Statement, (i) Mr.
Kruttschnitt agrees to resign as a director of the Company, (ii) the Letter
Agreement dated May 5, 1989 (the "Letter Agreement") between Messrs.
Kruttschnitt, Hakman and Manwell and The Horn & Hardart Company, a predecessor
in interest to the Company, shall have no further force and effect, and (iii)
each of Messrs. Hakman and Manwell shall continue to serve the unexpired
portion of his respective term as a director unless he shall cease to qualify
as a director or shall have resigned.
In the event that at least 3,500,000 shares of Mr. Kruttschnitt's
Common Stock (excluding any shares that may be sold pursuant to the exercise of
the over-allotment option) have not been sold pursuant to the Registration
Statement by May 1, 1994, or in the event the Company prior thereto shall have
withdrawn the Registration Statement, the Resignation Agreement shall be void
and of no further force and effect and the Letter Agreement shall remain in
full force and effect.
The foregoing description of the Resignation Agreement is a summary
of certain of its terms and reference is made to a copy of such Resignation
Agreement which is attached hereto as Exhibit 3 and incorporated herein by
reference for all of its terms and conditions.
Item 5. Interest in Securities of the Issuer.
(a) Mr. Kruttschnitt is the beneficial owner of 5,320,887 shares of
Common Stock of the Company as determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, as amended ("Rule 13d-3"), 15,000 of which are
options to purchase shares of Common Stock exercisable within 60 days. The
5,320,887 shares of Common Stock represent, in accordance with Rule 13d-3,
approximately 6.42% of the 82,933,177 shares of Common Stock outstanding as of
January 1, 1994.
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Mr. Hakman is the beneficial owner of 28,434 shares of Common Stock
of the Company, as determined in accordance with Rule 13d-3, 15,000 of which
are options to purchase shares of Common Stock exercisable within 60 days. The
28,434 shares of Common Stock represent, in accordance with Rule 13d-3,
approximately .03% of the 82,933,177 shares of Common Stock outstanding as of
January 1, 1994.
Mr. Manwell is the beneficial owner of 33,628 shares of Common Stock
of the Company, as determined in accordance with Rule 13d-3, 20,000 of which
are options to purchase shares of Common Stock exercisable within 60 days. The
33,628 shares of Common Stock represent, in accordance with Rule 13d-3,
approximately .04% of the 82,933,177 shares of Common Stock outstanding as of
January 1, 1994.
Messrs. Kruttschnitt, Hakman and Manwell as a group are the
beneficial owners of 5,382,949 shares of Common Stock of the Company, as
determined in accordance with Rule 13d-3. The 5,382,949 shares of Common Stock
represent, in accordance with Rule 13d-3, approximately 6.49% of the 82,933,177
shares of Common Stock outstanding as of January 1, 1994.
(b) Mr. Kruttschnitt has the sole power to vote and dispose of all
his 5,320,887 shares of Common Stock except for 15,000, which represent options
to purchase shares of Common Stock exercisable within 60 days.
Mr. Hakman has the sole power to vote and dispose of all his 28,434
shares of Common Stock except for 15,000, which represent options to purchase
shares of Common Stock exercisable within 60 days.
Mr. Manwell has the sole power to vote and dispose of all his 33,628
shares of Common Stock except for 20,000, which represent options to purchase
shares of Common Stock exercisable within 60 days.
(c) and (d) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Reference is hereby made to Item 4 hereof for a description of
certain contracts, arrangements, understandings and relationships relating to
the securities of the Company. Except as described therein, none of the
Reporting Persons has any contract, arrangement, understanding or relations
with one or more security holders of the Company or others, with respect to the
purchase, holding, voting or disposition of shares of Common Stock or other
securities of the Company which are convertible or
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exercisable into such shares. Each of such persons reserves the right to enter
into any such contract, arrangement, understanding or relations in the future.
Item 7. Material to be Filed as Exhibits. Page
Exhibit 1: Understandings Letter
by and among Mr. Kruttschnitt, the Company and
the Underwriters. 13
Exhibit 2: Lock-Up Letter by and
among Mr. Kruttschnitt and the Underwriters. 19
Exhibit 3: Resignation Agreement
by and among the Company and Messrs. Hakman, 22
Manwell and Kruttschnitt.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: March 22, 1994
/s/ Theodore H. Kruttschnitt, III
----------------------------------
Theodore H. Kruttschnitt, III
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: March 22, 1994
/s/ Edmund R. Manwell
----------------------
Edmund R. Manwell
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Date: March 22, 1994
/s/ J. David Hakman
---------------------
J. David Hakman
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Exhibit Index
Exhibit 1: Understandings Letter
by and among Mr. Kruttschnitt, the Company and
the Underwriters. 13
Exhibit 2: Lock-Up Letter by and
among Mr. Kruttschnitt and the Underwriters. 19
Exhibit 3: Resignation Agreement
by and among the Company and Messrs. Hakman, 22
Manwell and Kruttschnitt.
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Exhibit 1
Theodore H. Kruttschnitt
1350 Bayshore Blvd., Suite 850
Burlingame, CA 94010
Phone: 415-348-7425
Fax: 415-348-0273
March 8, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Alex. Brown & Sons Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
New York, New York 10281
Understandings Letter
Ladies and Gentlemen:
Theodore H. Kruttschnitt (the "undersigned") is a securityholder of
Hanover Direct, Inc. (the "Company"). The undersigned understands that the
Company and certain securityholders of the Company (including the undersigned)
plan to sell shares of the Company's common stock, par value $.662/3 per share
(the "Common Stock"), including shares subject to over-allotment options, to
certain underwriters (the "Underwriters") represented by Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Alex.
Brown & Sons Incorporated (together with Merrill Lynch, the "Representatives").
The Underwriters propose to offer such shares of Common Stock to the public
(the "Offering").
The letter agreement outlines and confirms certain arrangements which
the Representatives and the undersigned intend to perform in connection with
the Offering. The following is our understanding of such arrangements:
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1. The total size of the Offering is expected to be 10,000,000 shares of
Common Stock and it will include 3,500,000 shares of Common Stock
owned by the undersigned.
2. The Offering will have an over-allotment option equal to 15% of the
shares sold in the Offering. The undersigned will provide (to the
extent the undersigned owns sufficient shares to include in the
Offering) for 37.45% (initially 525,000 shares) of the over-allotment
option. The over-allotment option will be exercised at the option of
the Underwriters, except that if the Underwriters elect to purchase
any of the over-allotment shares, then 37.45% of such shares
purchased will be from the undersigned.
3. Subject to the undersigned's approval (and to the extent that the
undersigned owns sufficient shares to include in the Offering), if
the amount of shares in the Offering increase to an amount above
10,000,000 shares, then the undersigned will have the option to
include additional shares in the Offering in amount up to an amount
equal to 37.45% of the increase over 10,000,000 shares. On a day on
which the American Stock Exchange is open, between the hours of 9:00
a.m. and 8:00 p.m. Eastern Standard Time, either the Company or the
Representatives shall give the undersigned and his counsel prompt
written notice (which shall be by facsimile) of any increase in the
size of the Offering. Any such facsimile notice will be made to both
the undersigned's office and his home. In addition, the
Representatives agree to use their best efforts to notify the
undersigned and his counsel by telephone at the same time written
notice is given. The undersigned must notify the Representatives of
the undersigned's intention to include additional shares in the
Offering within three hours of the receipt of any notice from the
Company or the Representatives.
4. In the event that the size of the Offering is reduced to less than
10,000,000 shares, the portion of undersigned's shares included in
the Offering will be reduced by an amount equal to 37.45% of the
amount of shares less than 10,000,000 that the Offering is reduced.
5. The Representatives agree to keep the undersigned informed of any
material events occurring with respect to the Offering on the same
basis and at the same time as the Representatives inform the Company
between
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the filing of Amendment No. 1 (which will include the Company's 1993
year-end financial information and is scheduled to be filed around
March 14, 1994) to the Registration Statement and the closing of the
Offering.
6. If the undersigned is selling any of his shares of Common Stock in
the Offering, at effectiveness of the Registration Statement with the
Securities and Exchange Commission, the undersigned agrees to sign
the Purchase Agreement among the Company, the shareholders of the
Company participating in the Offering (including the undersigned) and
the Underwriters (collectively, the "Signatories"). In the Purchase
Agreement, the undersigned will make the representations and give the
indemnity in the form set forth in Annex A hereto. With respect to
other matters related to the undersigned in the Purchase Agreement,
such matters shall be reasonably acceptable to the parties. The
undersigned will have the opportunity to participate (either by phone
or in person, at his option) in the meeting with the Representatives
and the Company at which the price of the shares of Common Stock to
be sold in the Offering is determined. At the pricing, if the
undersigned is selling any of his shares of Common Stock in the
Offering, the undersigned agrees to sign the Price Determination
Agreement among the Signatories with the form of such Agreement to be
no more adverse to the undersigned than the draft version thereof
attached hereto as Annex B.
7. The undersigned will arrange with Bear, Stearns & Co., Inc. ("Bear
Stearns") to release at pricing as described below the amount of the
undersigned's shares of Common Stock that the undersigned is selling
in the Offering (including shares the undersigned is selling if the
Underwriters' overallotment option is exercised) (the "Offered
Shares") from the undersigned's margin account at Bear Stearns and
enter into an agreement with Merrill Lynch providing for a margin
loan from Merrill Lynch as provided below.
8. To facilitate the transfer of all the Offered Shares from the
undersigned's margin account at Bear Stearns to the undersigned's
margin account at Merrill Lynch and to facilitate the delivery of the
Offered Shares at the closing of the Offering, the following
procedures will be arranged:
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a. The undersigned will enter into a margin loan agreement with
Merrill Lynch with an initial amount equal to 45% of value with
value based on the price to public of the Common Stock in the
Offering but in no event in excess of $17 million, with an
interest rate equal to the Bear Stearns Broker Call Rate plus 1%
(at the date hereof 5-1/4%, all inclusive) with no further
maintenance margin and with terms otherwise customary for such
loans.
b. Immediately prior to the signing of the Price Determination
Agreement by the Signatories, Merrill Lynch will place the
proceeds of the margin loan from Merrill Lynch in a designated
bank account (the "Merrill Lynch Account") which shall be at a
bank at which Bear Stearns maintains an account (the "Bear
Stearns Account").
c. Immediately after signing the Price Determination Agreement by
the Signatories, Merrill Lynch will deliver by wire transfer the
funds in the Merrill Lynch Account to the Bear Stearns Account
for the account of the undersigned and the undersigned will
cause Bear Stearns to deliver immediately all of the Offered
Shares in Bear Stearns' custody directly to Merrill Lynch as
collateral for the undersigned's margin loan from Merrill Lynch.
d. At the closing of the Offering, Merrill Lynch shall apply the
proceeds of the sale of the Offered Shares to repay in full the
margin loan extended by Merrill Lynch (with any proceeds from
the sale of the Offered Shares in excess of the amount of the
margin loan to be delivered to the undersigned or his designee
on the closing date of the Offering in New York Clearing House
Funds) in exchange for the Offered Shares which shall be
delivered directly to Merrill Lynch without any additional
action needed to be taken by the undersigned.
e. Any Offered Shares not sold in the Offering will be returned to
the undersigned immediately upon repayment in full of the margin
loan from Merrill Lynch, other than any Offered Shares subject
to the Underwriter's over-allotment option, which shares if not
sold in the Offering will be promptly returned to the
undersigned upon lapse of any unexercised over-allotment option.
If the over-
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allotment option is exercised by the Underwriters, proceeds from
the sale of any Offered Shares shall be delivered to the
undersigned or his designees in New York Clearing House Funds
on the closing of the sale of such over-allotment shares. All of
the undersigned's unsold shares of Common Stock will be subject
to the lock up restrictions contained in the letter agreement
(the "Lock-Up Letter") between the Representatives and the
undersigned, dated February 18, 1994.
9. Prior to the filing of Amendment No. 1 to the Registration Statement,
the undersigned will use his reasonable best efforts to enter into an
agreement with Bear Stearns which will require Bear Stearns to use
securities other than the Common Stock to satisfy a margin call by
Bear Stearns on the undersigned's margin account at Bear Stearns.
Nonetheless, at all times the undersigned will use his reasonable
best efforts to cause Bear Stearns to use securities other than the
Common Stock to satisfy a margin call by Bear Stearns on the
undersigned's margin account at Bear Stearns.
Notices:
a. All notices under this Letter Agreement shall be sent to the
undersigned at:
1350 Bayshore Boulevard, Suite 850
Burlingame, California 94010
Telephone: (415) 348-7425
Fax: (415) 348-0273
and
735 Eucalyptus Avenue
Hillsborough, California 94010
Telephone: (415) 348-4113
Fax: (415) 348-4123
and to the undersigned's counsel at:
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Hosie Wes, McLaughlin & Sacks
One Sansome Street
San Francisco, California 94104
Attention: Robert McLaughlin
Telephone: (415) 781-3200
Fax: (415) 781-2525
Home Telephone: 510-658-6250
b. All notices under this Letter Agreement will be sent to Merrill Lynch
at:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281
Attention: Jerry Marcus
Telephone: (212) 449-8516
Fax: (212) 449-9902
c. All notices under this Letter Agreement shall be sent to the Company
at:
1500 Harbor Boulevard
Weehawken, NJ 07087
Attention: Michael Sherman
Telephone: (201) 319-3403
Fax: (201) 392-5005
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This letter may be relied upon by the Company, the Underwriters and
the undersigned. This letter shall terminate upon termination of the Lock-Up
Letter or if the undersigned determines not to sell any of his shares of Common
Stock in the Offering.
Very truly yours,
/s/ Theodore H. Kruttschnitt
Theodore H. Kruttschnitt
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
ALEX. BROWN & SONS INCORPORATED
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Jerry H. Marcus
Name: Jerry H. Marcus
Title: Director
Confirmed and accepted as to paragraphs 1, 2, 3
and 4 as of the date first above written:
HANOVER DIRECT, INC.
By: /s/ Michael P. Sherman
Name: Michael P. Sherman
Title: Executive Vice President-Corporate Affairs,
General Counsel and Secretary
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Exhibit 2
Theodore H. Kruttschnitt
1350 Bayshore Blvd., Suite 850
Burlingame, CA 94010
Phone: 415-348-7425
Fax: 415-348-0273
February 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Alex. Brown & Sons Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Merrill Lynch World Headquarters
North Tower
New York, New York 10281
Ladies and Gentlemen:
Theodore H. Kruttschnitt (the "undersigned") is a securityholder of
Hanover Direct, Inc. (the "Company"). The undersigned understands that the
Company and certain securityholders of the Company (including the undersigned)
plan to sell shares of the Company's common stock, par value $.66 2/3 per share
("Common Stock"), including shares subject to over-allotment options, to
certain underwriters (the "Underwriters") represented by Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Alex.
Brown & Sons Incorporated. The Underwriters propose to offer such shares of
Common Stock to the public (the "Offering").
In order to induce the Underwriters to participate in the Offering, the
undersigned represents and agrees that from the date of this letter until 180
days after the Registration Statement on Form S-3 relating to the sale of
10,000,000 shares of the Common Stock (the "Shares") (excluding the shares of
Common Stock to be sold upon exercise of the Underwriters' over-allotment
options) filed by the Company with the Securities and Exchange Commission, as
amended (the "Registration Statement"), becomes effective, the undersigned will
not, without the prior written consent of Merrill Lynch, directly or
<PAGE> 2
indirectly sell (or offer or contract to sell), transfer, pledge or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock, except that the undersigned may
(i) pledge such securities as collateral in a "margin" account with Bear,
Stearns & Co. Inc. until pricing of the shares or Merrill Lynch and (ii)
transfer such securities to Bear, Stearns & Co. Inc. or Merrill Lynch as a
result of a margin call in connection with such account (in which case the
transferee shall not be bound in any respect by the terms of this letter as to
the transferred shares).
This letter agreement shall be of no further effect upon the earliest to
occur of (i) May 31, 1994, if the Registration Statement is not declared
effective by the Securities and Exchange Commission prior to such date; (ii)
the withdrawal of the Registration Statement from the Securities and Exchange
Commission by the Company; or (iii) upon the determination by Merrill Lynch
prior to May 31, 1994 to postpone the Offering to a date after May 31, 1994.
This letter agreement will have no force or effect past the date of the
filing of Amendment No. 1 to the Registration Statement unless by such date
Merrill Lynch has delivered to the undersigned letter agreements (the "Lock-up
Letters") preventing other securityholders participating in the Offering, North
American Resources Limited and each director and executive officer of the
Company from selling any shares of Common Stock or any securities convertible
into or exchangeable for any shares of Common Stock or any securities
convertible into or exchangeable for any shares of Common Stock for a period
beginning on the filing of Amendment No. 1 to the Registration Statement until
180 days after the effective date of the Registration Statement; provided,
however, that in the case of Sun Life Insurance Company of America, such 180
day period shall be 90 days.
This also confirms our understanding that in the event Merrill Lynch
releases any of the Lock-up Letters in order to permit any other securityholder
participating in the Offering, North American Resources Limited or any director
or executive officer of the Company to sell any shares of Common Stock or any
securities convertible into or exchangeable for any shares of Common Stock
during the term of this letter agreement, this letter agreement shall be of no
further effect on and as of the date Merrill Lynch grants such permission.
Merrill Lynch agrees to immediately notify the undersigned if any such
permission is granted.
This letter will further confirm that the undersigned has not taken, and
until 180 days after the effective date of the Registration Statement, will not
take, directly or indirectly, any action which might result in the
stabilization of the price of the Common Stock.
-2-
<PAGE> 3
This letter may be relied upon by the Company, the Underwriters and the
undersigned.
Very truly yours,
/s/ Theodore H. Kruttschnitt
----------------------------
Theodore H. Kruttschnitt
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
ALEX. BROWN & SONS INCORPORATED
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By: /s/ Jerry H. Marcus
-------------------
Name: Jerry H. Marcus
Title: Director
On behalf of themselves and each of the
Underwriters
-3-
<PAGE> 1
Exhibit 3
February 18, 1994
Mr. Theodore H. Kruttschnitt
One Bayshore Plaza, Suite 850
1350 Bayshore Boulevard
Burlingame, CA 94010
Re: Board of Directors
Dear Ted:
Reference is made to the letter agreement dated May 5, 1989 (the
"Letter Agreement") between you, The Horn & Hardart Company, a predecessor in
interest of Hanover Direct, Inc. (the "Company"), J. David Hakman and Edmund R.
Manwell relating to, among other things, certain obligations with respect to
the Kruttschnitt Designees (as such term is defined therein). Concurrently
with the execution of this letter agreement, the Company is filing a
Registration Statement (the "Registration Statement") for the offering
(exclusive of any "over-allotment" option) of 10,000,000 shares of the
Company's Common Stock, par value $.66-2/3 per share (the "Common Stock"), of
which 3,500,000 shares are intended to be offered by you (the "Registered
Shares").
Effective upon the date of the closing of the sale by you of at least
3,500,000 shares of Common Stock (excluding any shares that may be sold
pursuant to the exercise of the over-allotment option) pursuant to the
Registration Statement, (i) you agree to resign as a director of the Company,
(ii) the Letter Agreement shall have no further force or effect, and (iii) each
of Messrs. Hakman and Manwell shall continue to serve the unexpired portion of
his current term as a director unless he shall cease to qualify as a director
or shall have resigned.
Subject to the immediately following paragraph, until such time as
the sale by you of at least 3,500,000 shares of Common Stock (excluding any
shares that may be sold pursuant to the exercise of the over-allotment option)
<PAGE> 2
pursuant to the Registration Statement has closed, notwithstanding anything to
the contrary in the Letter Agreement, none of you or Messrs. Hakman and Manwell
shall be required to resign as a director of the Company. Rather, each of you
and Messrs. Hakman and Manwell will continue to serve as a director of the
Company for the unexpired portion of his current term as a director unless he
shall cease to qualify as a director or shall have resigned.
In the event that the Registered Shares have not been sold pursuant
to the Registration Statement by May 1, 1994 or in the event the Company, prior
thereto shall have withdrawn the Registration Statement, this letter shall be
void and of no further force and effect and the Letter Agreement shall remain
in full force and effect.
Except as modified hereby, the Letter Agreement shall remain in full
force and effect in accordance with its terms.
Very truly yours,
HANOVER DIRECT, INC.
By:/s/ Michael P. Sherman
----------------------
Michael P. Sherman
Executive Vice President
Accepted and agreed
to as of the date
first above written.
/s/ Theodore H. Kruttschnitt
- ----------------------------
Theodore H. Kruttschnitt
/s/ J. David Hakman
- ----------------------------
J. David Hakman
/s/ Edmund R. Manwell
- ----------------------------
Edmund R. Manwell
-2-
