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As filed with the Securities and Exchange Commission on March 15, 1994
Registration No. 33- -----
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HANOVER DIRECT, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1500 Harbor Boulevard 13-0853260
(State or other jurisdiction of Weehawken, New Jersey 07087 (I.R.S. Employer Identification
incorporation or organization) (201) 863-7300 Number)
</TABLE>
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Michael P. Sherman, Esq.
Hanover Direct, Inc.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
(201) 863-7300
(Name, address, including zip code,
and telephone number, including area
code, of agent for service)
Copy to:
Monte E. Wetzler, Esq.
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, New York 10166
(212) 351-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Amount to be Price Offering Registration
Title of Each Class of Securities to be Registered Registered Per Unit(1) Price(1) Fee
<S> <C> <C> <C> <C>
9.25% Senior Subordinated Notes, Series A, $14,000,000 100% $14,000,000 $4,828
Due August 1, 1998
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 of the Securities Act of 1933, as amended.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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Exhibit index on page --
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, Dated March 15, 1994
PROSPECTUS
HANOVER DIRECT, INC.
$14,000,000
9.25% SENIOR SUBORDINATED NOTES
DUE AUGUST 1, 1998, SERIES A
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This Prospectus relates to the offering from time to time of up to
$14,000,000 aggregate principal amount of 9.25% Senior Subordinated Notes due
August 1, 1998, Series A (the "Series A Notes") of Hanover Direct, Inc., a
Delaware corporation (the "Company"), by a holder of such notes (the "Selling
Noteholder"). See "The Selling Noteholder." The Company will not receive any
proceeds from the sales of the Series A Notes by the Selling Noteholder.
Pursuant to the terms of a registration rights agreement between the Company
and the Selling Noteholder, the Company is paying the expenses for the
registration of the Series A Notes being offered hereby.
The Series A Notes are senior subordinated obligations of the Company
unconditionally guaranteed, on a joint and several basis, by certain
subsidiaries of the Company. The Series A Notes mature on August 1, 1998 and
bear interest at the rate of 9.25% per annum. Interest on the Series A Notes
is payable quarterly on July 1, October 1, January 1 and April 1 of each year.
The Series A Notes will be offered by the Selling Noteholders from
time to time following the date of this Prospectus. It is anticipated that
sales of the Series A Notes being offered hereby, when made, will be made
through privately negotiated transactions. Thus, the period of distribution of
the SEries A Notes may occur over an extended period of time. See "Plan of
Distribution."
The Series A Notes are not listed on any exchange.
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REFERENCE IS MADE TO "RISK FACTORS" WHICH CONTAINS MATERIAL
INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE SECURITIES BEING
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS MARCH --, 1994.
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No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in or incorporated by
reference in this Prospectus and, if given or made, such other information or
representation should not be relied upon as having been authorized by the
Company or any other person. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the date hereof.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy the securities offered hereby to any person or by anyone in any
jurisdiction in which such offer or solicitation may not lawfully be made.
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3, of which this Prospectus
constitutes a part (together with any amendments thereto, the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Series A Notes. This Prospectus does not contain
all the information set forth in the Registration Statement, certain items of
which may be contained in schedules and exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission and to which
reference is hereby made for further information with respect to the Company
and the Series A Notes. Items of information omitted from this Prospectus but
contained in the Registration Statement may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. and at the following regional
offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois
60621-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the
Commission referred to above. In addition, copies of such reports, proxy
statements and other information concerning the Company may also be inspected
and copied at the library of the American Stock Exchange at 86 Trinity Place,
New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated in
this Registration Statement by reference: (a) the Annual Report on Form 10-K
for the fiscal year ended January 1, 1994 of the Company and (b) the Current
Reports on Form 8-K dated February 17, 1994 and March 10, 1994 of the Company.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 5(d) of the Exchange Act, prior to the termination of the
offering of the Series A Notes shall be deemed to be incorporated by reference
in this Registration Statement and to be a part of the Registration Statement
from the respective date of filing of each such document. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference herein, other than certain
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exhibits to such documents. Requests for such documents should be directed to
Michael P. Sherman, Executive Vice President, General Counsel and Secretary,
Hanover Direct, Inc., 1500 Harbor Boulevard, Weehawken, New Jersey 07087. The
Company's telephone number is (201) 863-7300.
THE COMPANY
The Company is a leading direct specialty retailer that publishes a
portfolio of 14 branded specialty catalogs offering home furnishings, general
merchandise and apparel. The Company's catalogs include Domestications, the
nation's leading specialty home textile catalog, which has grown rapidly with
revenues increasing from approximately $30 million in 1987 to approximately
$311 million in 1993. The Company's portfolio of catalogs also includes
Colonial Garden Kitchens, a leading specialty catalog featuring worksaving and
lifestyle enhancing items for the kitchen and home. During 1993, the Company
mailed approximately 322 million catalogs and had total revenues of
approximately $643 million. The Company maintains a proprietary customer list,
containing approximately 19 million names of customers who have made purchases
from at least one of the Company's catalogs within the past 36 months. Since
1991, approximately seven million names have been added to the list.
Approximately seven million of the names on the list represent customers who
have made purchases from at least one of the Company's catalogs within the last
12 months.
The Company is incorporated in Delaware with its principal executive
office at 1500 Harbor Boulevard, Weehawken, New Jersey 07087. The Company's
telephone number is (201) 863-7300.
RISK FACTORS
In addition to all the other information contained in this Prospectus
and the documents incorporated by reference, prospective purchasers should
consider the risk factors set forth below prior to deciding whether to invest
in the Series A Notes offered hereby.
FUTURE OPERATING RESULTS
The Company's continued revenue growth and positive net income will
depend on its ability to increase catalog sales and to effectively monitor and
control costs. There can be no assurance that the Company's future operations
will generate net income. Furthermore, future operating results depend upon
many factors, including general economic conditions, the ability of the Company
to continue to attract and retain customers successfully, the level of
competition and its ability to successfully identify, forecast and respond to
customer preferences and fashion trends.
The Company'sDomestications catalog is the nation's leading specialty
home textile catalog with revenues of approximately $311 million in 1993, which
constitute approximately 48% of the Company's revenues in 1993. A decrease in
profitability of Domestications would have a material adverse effect upon the
Company's financial position and results of operations.
RECENT ACQUISITIONS AND NEW BUSINESS DEVELOPMENTS
The Company acquired three businesses during 1993: (i) in May, the
Company acquired the assets ofGump's, the well known San Francisco retailer and
a leading upscale catalog marketer of exclusive gifts; (ii) in August, the
Company acquired the assets of The Company Store, an upscale direct marketer of
down comforters and other down and related products for the home; and (iii) in
September, the Company acquired the stock of Tweeds, the European inspired
women's fashion catalog. None of these companies was profitable at the time of
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its acquisition by the Company. In addition, these acquisitions present
relatively new market niches for the Company and the Company must successfully
integrate and develop these newly acquired companies. There can be no
assurance that the Company will be able to successfully integrate or develop
these new businesses or improve their profitability.
In addition, in January 1994, the Company entered into an agreement
(the "Sears Agreement") with Sears Roebuck and Co. ("Sears") to produce
specialty catalogs for the 23 million customers of the recently discontinued
Sears catalog. The Sears Agreement represents the culmination of successful
test marketing by Sears and the Company during 1993. The Sears Agreement
contains increasing performance standards which must be met by the Company and
which allow Sears to terminate the Sears Agreement upon noncompliance. There
can be no assurance that the Company will be able to meet such performance
standards.
COMPUTER SYSTEMS CONVERSION
The Company is currently in the process of upgrading its management
information systems by implementing new integrated software and migrating from
a centralized mainframe to mid-range mini-computers. The Company currently
estimates that the total cost to install and implement the new systems,
including the cost of dedicated internal personnel, will be approximately $13
to $15 million. The Company plans to bring the new systems on-line for several
catalogs in 1994 (during which time it will maintain its existing systems for
its other catalogs) with the balance of the Company's catalogs to be brought
on-line in 1995 . There can be no assurance that the new systems will be
implemented as currently scheduled or that they will achieve the goals
established by the Company, in which case the Company's financial position or
results of operations may be adversely affected.
NEW FULFILLMENT FACILITY
The Company owns an interest in the Roanoke, Virginia fulfillment
center which services itsTweeds catalog. The Company plans to consolidate
additional Apparel Group catalogs into this facility and to construct in 1994
an additional 500,000 square foot state-of-the-art facility on a separate site
in Roanoke which, upon its completion, will handle all of Domestications
fulfillment needs. The Company estimates that the total cost of this
consolidation effort and the construction of the new facility will be
approximately $18 million. Although the Company has carefully planned the
transition to these facilities in phases, significant delays or serious
unanticipated difficulties arising from the transition could adversely effect
the Company's financial position or results of operations.
FOREIGN SOURCING
Approximately 10% of the Company's merchandise is purchased directly
from foreign suppliers. Although the Company believes that it has established
close relationships with its principal manufacturing sources, the Company's
future success will depend in some measure upon its ability to maintain such
relationships.
The Company's business is subject to the risks generally associated
with conducting business abroad, including adverse fluctuations in currency
exchange rates (particularly those of the U.S. dollar against certain foreign
currencies), changes in import duties or quotas, the imposition of taxes or
other charges on imports, disruptions or delays in shipments and
transportation, labor disputes and strikes. The occurrence of any one or more
of the foregoing could adversely affect the Company's financial position or
results of operations. To date, these factors have not caused any material
disruption of the Company's operations. Also, the Company conducts business
with most of its vendors in United States currency and has not experienced any
material difficulties as a result of any foreign, political, economic or social
liabilities.
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INCREASES IN COSTS OF MAILING, PAPER AND PRINTING
Postal rate increases and paper and printing costs affect the cost of
the Company's order fulfillment and catalog and promotional mailings. In 1993,
the Company mailed approximately 322 million catalogs and the aggregate cost of
mailing catalogs and other promotional materials, including printing and paper
costs, totalled approximately $158 million. The Company has contracted for its
paper needs through the end of 1994 and believes its paper costs are
competitive at the present time. However, no assurance can be given that the
Company will not be subject to a significant increase in paper costs. The
Company anticipates a postal rate increase in 1995. Increases in postal rates
or paper and printing costs could have a material negative impact on the
Company's financial position and results of operations to the extent that the
Company is unable to pass such increase directly on to customers or to offset
such increase by raising selling prices or by implementing more efficient
printing, mailing, delivery and order fulfillment systems.
CONSUMER SPENDING
The success of the Company's operations depends upon a number of
factors relating to consumer spending, including future economic conditions
affecting disposable consumer income such as employment, business conditions,
interest rates and taxation. There can be no assurance that weak economic
conditions or changes in the retail environment or other economic factors that
impact the level of consumer spending would not have a material adverse impact
on the Company.
COMPETITION
The mail order catalog business is highly competitive. The Company's
catalogs compete with other mail order catalogs and retail stores, including
department stores, specialty stores and discount stores. A number of the
Company's competitors have substantially greater financial, distribution and
marketing resources than the Company. The recent substantial sales growth in
the direct marketing industry has encouraged the entry of many new competitors
and an increase in competition from established companies.
RELATIONSHIP WITH NAR
NAR Group Limited, a British Virgin Island corporation or its
affiliates ("NAR"), currently owns 54.3% of the Company's outstanding Common
Stock on a fully-diiluted basis. Although pursuant to a stock purchase
agreement between the Company and NAR, NAR has agreed to nominate only six of
the Company's 11 Directors until 1996, NAR will have the power to elect the
entire Board of Directors and, except as otherwise provided by law of the
Company's Certificate of Incorporation, to approve any adction requiring
shareholder approval without a shareholders meeting.
RATIO OF EARNINGS TO FIXED CHARGES
For the purposes of calculating the ration of earnings to fixed
charges, earnings consist of the amount of fixed charges plus earnings before
income taxes and extraordinary items. Fixed charges consist of interest and
the portion of rent deemed representative of the interest factor. For the
years ended December 30, 1989, December 26, 1992 and January 1, 1994, the ratio
of earnings to fixed charges was 1.04 to 1.00, 1.08 to 1.00 and 3.91 to 1.00,
respectively. For the years ended December 29, 1990 and December 28, 1991,
earnings as defined were less than fixed charges by approximately $1,236,000
and $50,856,000, respectively.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Series A Notes hereunder.
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DESCRIPTION OF THE SERIES A NOTES
The following general summary of the material terms of the Series A
Notes does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the pertinent portions of that certain Indenture
dated as of August 17, 1993, amoung the Company, as issuer, and certain
subsidiaries of the Company, as guarantors, and First Trust National
Association, as trustee (the "Indenture").
General
The Series A Notes are senior obligations of the Company subordinated
in right of prior payment in full of all existing and future Senior
Indebtedness of the Company pursuant to the terms of the Indenture and a
certain subordination agreement dated as of August 17, 1993 among Congress
Financial Corporation and Sun Life Insurance Company of America ("Sun Life").
The Company's obligations under the Series A Notes are absolutely and
unconditionally guaranteed on a joint and several basis by certain Guarantor
Subsidiaries of the Company.
The Series A Notes will mature on August 1, 1998 and bear interest at
9.25% per annum. Interest on the Series A Notes is payable quarterly on July
1, October 1, January 1 and April 1 of each year to the persons who are the
registered holders thereof at the close of business on June 15, September 15,
December 15 and March 15, respectively. The Company will pay interest at
12.25% per annum on any overdue principal and prepayment charge and, to the
extent permitted by applicable law, on any interest overdue (without regard to
any applicable grace period), until same shall be paid.
Interest on the Series A Notes will be computed on the basis of a
360-day year of twelve 30-day months. The Company may pay principal and
interest or premium, if any, by wire transfer and/or may mail an interest check
to the registered address of a holder of the Series A Notes. Upon written
request of a holder of Series A Notes in an aggregate principal amount equal to
a least $1,000,000, the Company shall make payment of principal or interest or
premium, if any, by wire transfer of immediately available funds to the wire
address specified in such notice.
Redemption
The Series A Notes are redeemable, at the option of the Company, in
whole or from time to time in part in each case at the greater of (i) 100% of
the outstanding principal amount, plus accrued interest and other amounts then
due and owing on the Series A Notes to the redemption date, or (ii) the present
value of the scheduled principal and interest payments due on such Series A
Notes, computed using a discount rate equal to the Treasury Rate, plus accrued
interest and other amounts then due and owing on the Series A Notes.
If less than all the Series A Notes are to be redeemed, selection for
redemption will be made by the Trustee on a substantially pro rata basis.
Limitation on the Incurrence of Additional Indebtedness
At March 11, 1994, the Company had an aggregate of $26.1 million
principal amount of indebtedness that by the terms of such indebtedness is
senior in right of payment to the Series A Notes. This amount represents
currently outstanding balance under the Company's $52.5 million three-year
revolving credit facility. Pursuant to the terms of the Indenture, the Company
and the Guarantors shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly create, incur, assume, guarantee, suffer to exist or
otherwise in any manner become liable or commit to become liable with respect
to any Indebtedness except for: (a) securities issued under the Indenture (the
"Securities"); (b) certain Indebtedness existing as of August 17, 1993 (except
Indebtedness which is to be repaid from the proceeds of the sale of the
Securities); (c) intercompany Indebtedness between (i) the Company and a
Restricted Subsidiary and (ii) a Restricted Subsidiary and another Restricted
Subsidiary, provided that such
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intercompany Indebtedness is fully subordinated in all respects to the
Securities and subject to subordination provisions that are consented to in
writing by a majority of holders in principal amount of the Securities; and (d)
other Indebtedness that on a proforma basis, as if such Indebtedness were
outstanding for the entire immediately preceding four (4) consecutive quarters,
complies with all the terms, conditions and covenants of the Securities and the
Indenture, provided, that (i) on the date such Indebtedness is incurred,
created or assumed, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing and (ii) if such Indebtedness is
to be used to redeem any of the Securities pursuant to the terms of paragraph 5
of the Securities, such Indebtedness shall (x) have an interest cost that is
equal to or less than the interest cost on the Securities any (y) not have an
Average Life shorter that the remaining Average Life of the Securities at the
time of such redemption.
Limitations on the Declaration of Dividends
Pursuant to the terms of the Indenture, neither the Company nor the
Guarantor shall directly or indirectly, nor cause or permit any Restricted
Subsidiary or any person controlled by the Company, the Guarantor or any
Restricted Subsidiary to, declare, pay or make any dividends or distributions
on any shares of Capital Stock (other than dividends or distributions payable
in the Guarantor's Capital Stock, or warrants to purchase the Guarantor's
Capital Stock, or splitups or reclassifications of the Guarantor's Capital
Stock into additional or other shares of the Company's or the Guarantor's
Capital Stock or dividends from Consolidated Subsidiaries solely to the Company
or Consolidated Subsidiaries of the Company), or pay any Management Fee
permitted under Section 4.14 of the Indenture in excess of $750,000 in the
aggregate in any fiscal year or make or permit or suffer to exist any
Restricted Investments (collectively, "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment: (i) the aggregate
amount of Restricted Payments (and to the extent applicable, the amount of any
Restricted Payment shall be the original principal or capital or guarantee
amount thereof less returns of principal or equity thereon without adjustment
by reason of the financial condition or results of operations of any subsidiary
or investment), declared, paid or made during the period beginning July 1, 1993
to an including the date any such Restricted Payment is made would not exceed
twenty percent (20%) of aggregate Consolidated Net Income (plus, in determining
the amount available to make any Restricted Payment consisting solely of a
Restricted Investment, the amount of the net proceeds from the issuance and
sale of Capital Stock by the Company, the Guarantor or any Restricted
Subsidiary) for the period from July 1, 1993 to the end of the immediately
preceding ended fiscal quarter at the date any such Restricted Payment is made
(it being agreed that the amount of any Restricted Payment made by transfer of
property of any Person other than cash shall be the greater of (A) the fair
market value of such property, as determined in good faith by the Board of
Directors of such Person and evidenced by Board Resolution or (B) the book
value of such property); (ii) the Company could incur $1.00 of additional
Indebtedness pursuant to the covenants of the Indenture, the CFC Credit
Agreement and any other instrument or evidence of Indebtedness; and (iii) no
Default or Event of Default (and no event that, after notice or lapse of time,
or both, would become an Event of Default) shall have occurred and be
continuing.
Events of Default
Each of the following is an "Event of Default" under the Indenture:
(1) the Company, the Guarantor or the Guarantor Subsidiaries default in the
payment of interest or any other amounts owing on any Security when the same
becomes due and payable and the Default continues for a period of ten (10)
days; or the Distribution Facility Subsidiary defaults in the payment of
interest or any other amounts owing on the Pledged Note when the same becomes
due and payable; (2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon redemption
or otherwise; or the Distribution Facility Subsidiary defaults in the payment
of the principal of the Pledged Note when the same becomes due and payable upon
demand, upon acceleration, upon redemption or otherwise; or the Company fails
to pay to the holders any interest, principal, proceeds, assets or other
amounts collected by the Company with respect to the Pledged Note within one
day after receipt thereof; or any payment default occurs under the CFC Credit
Agreement or any default under Section 6.18 or 6.19 of the CFC Credit Agreement
occurs and continues for a period of forty-five (45) days; or the Trustee
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receives a Payment Block Notice pursuant to the Subordination Agreement; or any
representation or warranty made in the Purchase Agreement or any other Document
was false in any material respect on the date as of which made or deemed made;
(3) either the Company, the Guarantor or the Guarantor Subsidiaries fail to
comply with any of its other agreements or covenants in, or provisions of, the
Securities, the Indenture, the Guaranty or the other Documents to which it is a
party and such failure shall have continued for a period of thirty (30) days
after the earlier of written notice by the Trustee or when such failure shall
first have become known to the Company, the Guarantor or the Guarantor
Subsidiaries; (4) an acceleration of payment prior to scheduled maturity
occurs under any mortgage, indenture, instrument or agreement under which there
may be issued or by which there may be secured or evidenced any Indebtedness of
the Company, the Guarantor or any of their subsidiaries in an aggregate amount
in excess of $1,000,000 (other than the CFC Credit Agreement), whether such
Indebtedness now exists or shall be created hereafter; (5) a final judgment or
final judgments for the payment of money are entered by a court or courts of
competent jurisdiction against the Company, the Guarantor or any Restricted
Subsidiary and such remains undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such judgments exceeds $1,000,000; (6) the Company, the Guarantor or any
Restricted Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, or (E) admits in writing
its inability generally to pay its debts as the same become due; (7) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against any of the Company, the Guarantor or any
Restricted Subsidiary in an involuntary case, (B) appoints a Custodian of any
of the Company, the Guarantor or any Restricted Subsidiary or for all or
substantially all of the property of the Company, the Guarantor or any
Restricted Subsidiary, or (C) orders the liquidation of any of the Company, the
Guarantor or any Restricted Subsidiary, and the order or decree remains
unstayed and in effect for 60 days; (8) there has occurred a revocation,
suspension or involuntary loss of any material license, contract or franchise
of the Company, the Guarantor or any Guarantor Subsidiary which results in the
cessation of the operation of the business of any of such entities for a period
of more than 30 consecutive days; (9) a court of competent jurisdiction enters
a final judgment holding any of the Guaranty or any other Documents to be
invalid or unenforceable and such judgment remains unstayed and is in effect
for a period of 60 consecutive days; or if either the Company, the Guarantor or
any Guarantor Subsidiary shall assert, in any pleading filed in such a court,
that the Guaranty or any other Documents are invalid or unenforceable; (10)
the Company, the Guarantor or any Guarantor Subsidiary default in the payment
of any amounts due pursuant to the terms of the Purchase Agreement, the
Registration Rights Agreement, the Registration Rights Agreement or the other
Documents (other than payments already covered by subsection (1) and (2)
hereof) when the same become due and payable; or (11) the Company or the
Guarantor admits in any writing that it is unable to pay its debts as they
become due.
Within ninety (90) days after the end of each fiscal year and within
forty-five (45) days after the end of each fiscal quarter, the Company and the
Guarantor will deliver to the Trustee and holders of at least $1,000,000 in
aggregate principal amount of the Series A Note an Officer's Certificate as to
the absence of default and as to compliance with the terms of the Indenture.
Amendments and Waiver
Pursuant to the terms of the Indenture, the holders of a majority in
principal amount of the then outstanding Series A Notes may waive compliance
with any provision of the Indenture, the Series A Notes or any related
Document, including an existing Default or Event of Default and its
consequences except a continuing Default or Event of Default in the payment of
the principal of or interest of any Series A Notes.
The terms of the Indenture, the Series A Notes and any other related
Document may be amended with the written consent of the holders of at least a
majority in principal amount of the then outstanding Series A Notes. However,
without the consent of each Series A Note holder affected, an amendment or
waiver may not: (i) reduce
8
<PAGE> 10
the amount of Series A Notes whose Holders must consent to an amendment or
waive; (ii) reduce the rate of or change the time for payment of interest on
any Series A Note; (iii) reduce the principal of or change the fixed maturity
of any Series A Note or alter the redemption provisions with respect thereto;
(iv) make any Series A Note payable in money other than that stated in the
Series A Note; (v) make any change in the waiver and amendment provisions of
the Indenture or (vi) waive a default in the payment of the principal of, or
interest or premium on, any Series A Note.
The Trustee
First Trust National Association, whose address is First Trust Center,
180 East Fifth Street, P.O. Box 64111, St. Paul, Minnesota 55164, is the
trustee under the Indenture. The Trustee may perform certain services for and
transact other banking business with the Company from time to time in the
ordinary course of business.
SELLING NOTEHOLDER
All of the Series A Notes being offered hereby are being offered on
behalf of the Selling Noteholder, Stately & Co., a nominee of Sun Life
Insurance Company of America, 1999 Avenue of the Stars, Los Angeles, California
90067, which purchased $20,000,000 aggregate principal amount of Series A Notes
from the Company pursuant to a Purchase Agreement dated as of August 17, 1993.
The Selling Noteholder has indicated that it wishes to be in a position to sell
all of the Series A Notes offered hereby. The aggregate principal amount of
Series A Notes which may actually be sold by the Selling Noteholder will be
determined from time to time by such Selling Noteholder and will depend on a
number of factors including the price which may be obtained for the Series A
Notes.
PLAN OF DISTRIBUTION
The Series A Notes are being sold by the Selling Noteholder for its
own account; the Company will not receive any proceeds from the sales of the
Series A Notes by the Selling Noteholder. The Selling Noteholder is not
restricted as to the price or prices at which it may sell its Series A Notes.
The aggregate proceeds to the Selling Noteholder from the sale of the Series A
Notes will be the purchase price of such Series A Notes sold less any agents'
commissions and other expenses of issuance and distribution not borne by the
Company. Further, the Selling Noteholder is not restricted as to the aggregate
principal amount of Series A Notes which may be sold at any one time. It is
anticipated that sales of the Series A Notes being offered hereby, when made,
will be made through privately negotiated transactions.
EXPERTS
The consolidated balance sheets of Hanover Direct, Inc. (successor to
The Horn & Hardart Company) and subsidiaries as of January 1, 1994 and December
26, 1992, and the related consolidated statements of income (loss),
shareholders' (deficit) equity and cash flows for each of the three fiscal
years in the period ended January 1, 1994 and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports. Reference is made to said reports, which include an
explanatory paragraph with respect to the change in its method of accounting
for income taxes as discussed in Notes 1 and 10 to the consolidated financial
statements.
9
<PAGE> 11
The consolidated balance sheets of Company Store Holdings, Inc. and
subsidiaries (Debtors-in-Possession) as of August 1, 1992 and July 27, 1991,
and the related consolidated statements of operations, shareholders' investment
(deficit) and cash flows for each of the three years in the period ended August
1, 1992 incorporated by reference in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen & Co., independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports. Reference is made to said
reports which include an explanatory paragraph that describes Company Store
Holdings, Inc.'s filing for bankruptcy and its ability to continue as a going
concern, as discussed in Note 2 to the consolidated financial statements.
The financial statements of Tweeds, Inc. as of and for the years ended
June 30, 1991 and July 30, 1990 which are incorporated herein by reference,
have been so included in reliance upon the report of Deloitte & Touche,
independent auditors (of which the report contains explanatory language with
respect to the substantial doubt about the entity's ability to continue as a
going concern), incorporated herein by reference, given upon the authority of
said firm as experts in auditing and accounting.
The balance sheets of Tweeds, Inc. as of January 31, 1993 and February
2, 1992, and the related statements of operations, stockholders' equity and
cash flows for the year ended January 31, 1993, and the period from July 1,
1991 to February 2, 1992 incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by KPMG Peat Marwick,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Gump's Inc. at February 27,
1993 and February 29, 1992 and February 23, 1991 and for each of the three
years in the period ended February 27, 1993, incorporated by reference in this
Prospectus and Registration Statement have been audited by Ernst & Young,
independent auditors, as set forth in their reports thereon (which contain an
explanatory paragraph with respect to the Company's ability to continue as a
going concern) appearing elsewhere herein are incorporated by reference. Such
consolidated financial statements are included in reliance upon the authority
of such firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Series A Notes offered hereby is being passed upon
for the Company by Whitman Breed Abbott & Morgan, New York, New York.
10
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the offering of the Series
A Notes, which will be borne by the Company, are as follows:
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,828
Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . 20,000*
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 50,000*
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000*
Blue Sky fees and expenses (including counsel fees) . . . . . . . . . . 20,000*
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000*
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . 5,172*
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 140,000*
=========
</TABLE>
- ------------------------
* Estimated
ITEM 15. Indemnification of Directors and Officers.
The Company is incorporated under the laws of the State of
Delaware. Section 145 of the Delaware General Corporation Law provides the
following with respect to the indemnification of directors, officers, employees
and agents:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment
II-1
<PAGE> 13
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand
II-2
<PAGE> 14
in the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article SEVENTH of the Certificate of Incorporation of the Company
(referred to therein as the "Corporation") provides, in pertinent part, as
follows:
Indemnification. Except as prohibited by Section 145 of the Delaware
General Corporation Law, every director and officer of the Corporation
shall be entitled as a matter of right to be indemnified by the Corporation
against reasonable expense and any liability paid or incurred by such
person in connection with any actual or threatened claim, action, suit or
proceeding, civil, criminal, administrative, investigative or other,
whether brought by or in the right of the Corporation or otherwise, in
which he or she may be involved, as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or by
reason of the fact that such person is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or other
representative of the Corporation or another corporation, partnership,
joint venture, trust, employee benefit plan or other entity (such claim,
action, suit or proceeding hereinafter being referred to as an "action");
provided, however, that no such right of indemnification shall exist with
respect to an action brought by a director or officer against the
Corporation other than in a suit for indemnification as provided hereunder.
Such indemnification shall include the right to have expenses incurred by
such person in connection with an action paid in advance by the Corporation
prior to final disposition of such action, subject to such conditions as
may be prescribed by law. As used herein, "expense" shall include, among
other things, fees and expenses of counsel selected by such person, and
"liability" shall include amounts of judgments, excise taxes, fines and
penalties, and amounts paid in settlement.
Insurance; Other Funding. The Corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified
hereunder against any liability or expense asserted or incurred by such
person in connection with any action, whether or not the Corporation would
have the power to indemnify such person against such liability or expense
by law or under the provisions of this Article Seventh. The Corporation
may make other financial arrangements, which may include, among other
things, a trust fund, program of self-insurance, grant of a security
interest or other lien on any assets of the Corporation, or establishment
of a letter of credit, guaranty or surety, to ensure the payment of such
sums as may become necessary to effect indemnification as provided herein.
Non-Exclusive; Nature and Extent of Rights. The right of
indemnification provided for herein (i) shall not be deemed exclusive of
any other rights, whether now existing or hereafter created, to which those
seeking indemnification hereunder may be entitled under any agreement,
by-law or article provision, vote
II-3
<PAGE> 15
of the stockholders or directors or otherwise, (ii) shall be deemed to
create contractual rights in favor of persons entitled to indemnification
hereunder, (iii) shall continue as to persons who have ceased to have the
status pursuant to which they were entitled or were designated as entitled
to indemnification hereunder and shall inure to the benefit of the heirs
and legal representatives of persons entitled to indemnification hereunder
and (iv) shall be applicable to actions, suits or proceedings commenced
after the adoption of this Article Seventh, whether arising from acts or
omissions occurring before or after the adoption hereof. The right of
indemnification provided for herein may not be amended, modified or
repealed so as to limit in any way the indemnification provided for herein
with respect to any acts or omissions occurring prior to the adoption of
any such amendment or repeal.
Article IV of the Bylaws of the Company also contains the same
provisions relating to the indemnification of directors and officers which are
set forth in Article SEVENTH of the Certificate of Incorporation of the
Company.
The Company has insurance to indemnify its directors and officers
against liabilities incurred as a result of serving in such capacity and has
assumed the indemnification agreements H&H entered into with each of its
directors. In addition, the Company has assumed the Shareholders' Agreement,
dated October 25, 1991, among The Horn & Hardart Company ("H&H"), The Hanover
Companies and North American Resources Limited ("NAR"), which provides for
indemnification, to the fullest extent permitted by law, of NAR's designees to
the Board of Directors of the Company (as a result of such assumption) against,
among other things, all liabilities and claims arising out of their service in
any capacity for or on behalf of the Company.
II-4
<PAGE> 16
ITEM 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
------ ---------------------- ------
<S> <C> <C>
4 Indenture between Hanover Direct, Inc. and
First Trust National Association, as
Trustee, dated as of August 17, 1993
(incorporated by reference to Exhibit
4.1 to the Annual Report on Form 10-K of
Hanover Direct, Inc. for the fiscal year
ended January 1, 1994). --
5 Opinion of Whitman Breed Abbott & Morgan as
to the legality of the securities being registered.
12 Statement re computation of ratio
of earnings to fixed charges.
23.1 Consents of Arthur Andersen & Co.
23.2 Consent of KPMG Peat Marwick.
23.3 Consent of Deloitte & Touche.
23.4 Consent of Ernst & Young.
23.5 Consent of Whitman Breed Abbott & Morgan
(included in the opinion set forth as
Exhibit 5 to this Registration Statement). --
24 Powers of Attorney of certain directors
and officers of the Company (included on page
II-7 of this Registration Statement). --
25 Statement of Eligibility and Qualification of
First Trust National Association, as Trustee,
on Form T-1 (to be filed by amendment).
</TABLE>
ITEM 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
II-5
<PAGE> 17
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) of 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(5) The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-6
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Hanover Direct, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Weehawken, State of New Jersey, on
the 15th day of March, 1994.
HANOVER DIRECT, INC.
By: /s/ Jack E. Rosenfeld
---------------------------------
Jack E. Rosenfeld,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Jack E. Rosenfeld,
Wayne P. Garten and Michael P. Sherman, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
II-7
<PAGE> 19
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities indicated on March 15, 1994.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Alan G. Quasha Chairman of the Board and Director
- -------------------------------------
Alan G. Quasha
/s/ Jack E. Rosenfeld Director, President and Chief Executive Officer
- ------------------------------------- (principal executive officer)
Jack E. Rosenfeld
/s/ Wayne P. Garten Executive Vice President and Chief Financial Wayne P. Garten Officer
- ------------------------------------- (principal financial officer)
/s/ David E. Ullman Vice President, Controller
- ------------------------------------- (principal accounting officer)
David E. Ullman
/s/ Ralph Destino Director
- -------------------------------------
Ralph Destino
/s/ J. David Hakman Director
- -------------------------------------
J. David Hakman
/s/ S. Lee Kling Director
- -------------------------------------
S. Lee Kling
Director
- -------------------------------------
Theodore H. Kruttschnitt
/s/ Jeffrey Laikind Director
- -------------------------------------
Jeffrey Laikind
/s/ Elizabeth Valk Long Director
- -------------------------------------
Elizabeth Valk Long
/s/ Edmund R. Manwell Director
- -------------------------------------
Edmund R. Manwell
/s/ Geraldine Stutz Director
- -------------------------------------
Geraldine Stutz
/s/ Robert F. Wright Director
- -------------------------------------
Robert F. Wright
</TABLE>
II-8
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
------ ---------------------- ------
<S> <C> <C>
4 Indenture between Hanover Direct, Inc. and
First Trust National Association, as
Trustee, dated as of August 17, 1993
(incorporated by reference to Exhibit
4.1 to the Annual Report on Form 10-K of
Hanover Direct, Inc. for the fiscal year
ended January 1, 1994). --
5 Opinion of Whitman Breed Abbott & Morgan as
to the legality of the securities being registered.
12 Statement re computation of ratio
of earnings to fixed charges.
23.1 Consents of Arthur Andersen & Co.
23.2 Consent of KPMG Peat Marwick.
23.3 Consent of Deloitte & Touche.
23.4 Consent of Ernst & Young.
23.5 Consent of Whitman Breed Abbott & Morgan
(included in the opinion set forth as
Exhibit 5 to this Registration Statement). --
24 Powers of Attorney of certain directors
and officers of the Company (included on page
II-7 of this Registration Statement). --
25 Statement of Eligibility and Qualification of
First Trust National Association, as Trustee,
on Form T-1 (to be filed by amendment).
</TABLE>
<PAGE> 1
Exhibit 5
March 14, 1994
Hanover Direct, Inc.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Re: Hanover Direct, Inc. Series A Notes
Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), filed by Hanover Direct, Inc., a Delaware corporation (the "Company"),
with the Securities and Exchange Commission (the "Commission"). The
Registration Statement covers up to $14,000,000 in aggregate principal amount
of the Company's 9.25% Senior Subordinated Notes, Series A, Due August 1, 1998
(the "Series A Notes") which may be sold by a certain noteholder of the
Company.
We have examined the originals or certified, photostatic or facsimile
copies of such records of the Company and of public officials and such other
documents as we have deemed relevant and necessary as the basis for the
opinions set forth below. In such examination, we have assumed the legal
capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies.
Based upon our examination mentioned above, as described above, and
subject to the assumptions and qualifications stated and relying on statements
of fact contained in the documents that we have examined, we are of the opinion
that, the Series A Notes proposed to be sold by the selling noteholder have
been duly authorized for issuance and that the Series A Notes, when issued to
and paid for by the purchasers thereof, will be duly and validly issued.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to this firm appearing under the
caption "Legal Matters" in the Prospectus that forms a part of the Registration
Statement. In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act or the General Rules and Regulations of the Commission.
Very truly yours,
WHITMAN BREED ABBOTT & MORGAN
<PAGE> 1
EXHIBIT 12
HANOVER DIRECT, INC.
EARNINGS TO FIXED CHARGES RATIO
(IN THOUSANDS, EXCEPT FOR RATIOS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
---------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest on debt and capitalized leases, net $ 11,084 $ 11,426 $ 18,341 $ 13,135 $ 2,757
Interest element of rentals 1,713 1,742 2,460 2,970 3,153
------ ------ ------ ------ ------
Total fixed charges $ 12,797 $ 13,168 $ 20,801 $ 16,105 $ 5,910
------ ------ ------ ------ ------
Preferred dividends:
Amount declared $ 0 $ 0 $ 466 $ 3,197 $ 4,093
----- ----- ----- ------ ------
Gross-up to pretax based on 1.5% rate(1) 0 0 473 3,246 4,155
----- ----- ----- ------ ------
Total fixed charges and preferred dividends $ 12,797 $ 13,168 $ 21,274 $ 19,351 $10,065
------ ------ ------ ------ ------
Earnings:
Consolidated net income (loss) $ (8,959) $ (115,911) $ (65,285) $ 20,249 $17,337
Add back:
Extraordinary charge (income) 0 (2,146) (6,915) (9,201) 0
Loss from discounted operations 9,146 115,921 21,119 0 0
Provision (benefit) for income taxes 300 900 225 219 (130)
Fixed charges 12,797 13,168 20,801 16,105 5,910
Cumulative effect of accounting for income taxes 0 0 0 (10,000) 0
-------- -------- -------- -------- --------
Total Earnings $ 13,284 $ 11,932 $(30,055) $ 17,372 $ 23,117
------- ------- -------- ------- ------
Ratio of earnings to fixed charges 1.04 * * 1.08 3.91
==== ==== ====
Ratio of earnings to fixed charges and preferred dividends 1.04 * * * 2.30
==== ======
Excess (Deficiency):
After fixed charges $ 487 $ (1,236) $(50,856) $ 1,267 $17,207
=== ======= ======== ====== ======
After fixed charges and preferred dividends $ 487 $ (1,236) $(51,329) $ (1,979) $13,052
=== ======= ======== ======= ======
Note 1 - Taxes represent state taxes only (net of
Federal benefit) as the Company had significant
net operating losses to offset Federal taxable income.
</TABLE>
________________________
* Calculation of the ratio results in an amount that is
less than 1.0.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 28, 1994
included in Hanover Direct, Inc.'s Form 10-K for the year ended January 1, 1994
and to all references to our Firm included in this registration statement.
<TABLE>
<S> <C>
ARTHUR ANDERSEN & CO.
New York, New York
March 9, 1994
</TABLE>
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated September 30,
1992 on the consolidated balance sheets of Company Store Holdings, Inc. and
Subsidiaries (Debtors-in-Possession) as of August 1, 1992 and July 27, 1991,
and the related consolidated statements of operations, shareholders' investment
(deficit) and cash flows for each of the three years in the period ended August
1, 1992, included in Hanover Direct, Inc.'s Form 8-K dated February 17, 1994
and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN & CO.
Minneapolis, Minnesota
March 9, 1994
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report dated March 12, 1993, on the balance
sheets of Tweeds, Inc., as of January 31, 1993 and February 2, 1992, and the
related statements of operations, stockholders' equity and cash flows for the
year ended January 31, 1993, and the period from July 1, 1991 to February 2,
1992, incorporated by reference in this Registration Statement on Form S-3 of
Hanover Direct, Inc. and to the reference to our firm under the heading
"experts" in the prospectus.
KPMG PEAT MARWICK
March 9, 1994
<PAGE> 1
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Hanover Direct, Inc. of our report dated September 12, 1991, except
for note 3 as to which the date is December 11, 1991, on the financial
statements of Tweeds, Inc. for the years ended June 30, 1991 and July 1, 1990
appearing in Form 8-K of Hanover Direct, Inc. and to the reference to us under
the heading "Experts" in this Prospectus, which is part of this Registration
Statement.
Deloitte & Touche
Parsippany, New Jersey
March 14, 1994
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 33-XXXXX) and related Prospectus of
Hanover Direct, Inc. for the registration of $14,000,000 of 9.25% Senior
Subordinated Notes, Series B, Due August 1, 1998 and to the incorporation by
reference therein of our reports dated June 11, 1993, except for Note 1 as to
which the date is July 15, 1993, and June 17, 1991, except for Note B as to
which the date is August 7, 1991, with respect to Gump's Inc.
ERNST & YOUNG
San Francisco, California
March 10, 1994
