<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
HANOVER DIRECT, INC.
----------------------------------
(Name of Issuer)
COMMON STOCK, $0.66 2/3 PER SHARE
-------------------------------------------
(Title of Class of Securities)
440506 10 3
-------------------------------------------
(CUSIP Number)
With copies to:
Mr. Jan du Plessis Robert P. Wessely, Esq.
Richemont Finance S.A. Brobeck, Phleger & Harrison LLP
35 Boulevard Prince Henri 1633 Broadway, 47th Floor
L 1724 Luxembourg New York, NY 10019
011-352-227-252 (212) 581-1600
- -----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JUNE 13, 1997
--------------------------------------
(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 /_/.
Note. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
Page 1 of 15 Pages
<PAGE>
CUSIP NO. 440506 10 3 13D PAGE 2 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Richemont Finance S.A.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS / /
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Luxembourg
- -------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 40,687,970 shares
OF
SHARES ----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 94,762,555 shares
OWNED
BY ----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 40,687,970 shares
REPORTING
PERSON ----------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER 94,762,555 shares
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
135,450,525 shares
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / /
CERTAIN SHARES
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 67.7%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- ------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 440506 10 3 13D PAGE 3 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Richemont S.A.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS / /
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Luxembourg
- -------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 40,687,970 shares
OF
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 94,762,555 shares
OWNED
BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 40,687,970 shares
REPORTING
PERSON ------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER 94,762,555 shares
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
135,450,525 shares
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / /
CERTAIN SHARES
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 67.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 440506 10 3 13D PAGE 4 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Compagnie Financiere Richemont AG
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS / /
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland
- -------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 40,687,970 shares
OF ------------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 94,762,555 shares
OWNED ------------------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 40,687,970 shares
REPORTING
PERSON ------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER 94,762,555 shares
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
135,450,525 shares
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / /
CERTAIN SHARES
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 67.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 440506 10 3 13D PAGE 5 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Compagnie Financiere Rupert
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS / /
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland
- -------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 40,687,970 shares
OF ------------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 94,762,555 shares
OWNED
BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 40,687,970 shares
REPORTING
PERSON ------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER 94,762,555 shares
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
135,450,525 shares
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES / /
CERTAIN SHARES
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 67.7%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON PN
- -------------------------------------------------------------------------------
<PAGE>
Item 1. SECURITY AND ISSUER.
This Amendment No. 1 to Statement on Schedule 13D ("Amendment No. 1"),
filed with respect to events that occurred on June 13, 1997, relates to shares
of Common Stock, par value $0.66 2/3 per share (the "Common Stock"), of Hanover
Direct, Inc., a Delaware corporation (the "Issuer"), whose principal executive
offices are located at 1500 Harbor Boulevard, Weehawken, New Jersey 07087.
Unless otherwise indicated, each capitalized term used but not defined herein
shall have the meaning ascribed thereto in the original Statement on Schedule
13D filed on June 16, 1997 (the "Original Statement on Schedule 13D").
Item 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This Statement on Schedule 13D is filed on behalf of
Richemont Finance S.A., Richemont S.A., Compagnie Financiere Richemont AG and
Compagnie Financiere Rupert (the "Reporting Persons"). The following table sets
forth the name, the State or other place of organization, the principal
business, the address of such principal business and the address of the
principal office of each of the Reporting Persons.
NAME: RICHEMONT FINANCE S.A.
State of organization: Luxembourg
Principal business: Finance affiliate of Compagnie
Financiere Richemont AG, a Swiss public
company with interests primarily in the
fields of luxury goods and tobacco
products
Address of principal business: 35 Boulevard Prince Henri
L 1724 Luxembourg
Address of principal office: 35 Boulevard Prince Henri
L 1724 Luxembourg
NAME: RICHEMONT S.A.
State of organization: Luxembourg
Principal business: Affiliate of Compagnie Financiere
Richemont AG, a Swiss public company
with interests primarily in the fields
of luxury goods and tobacco products
Address of principal business: 35 Boulevard Prince Henri
L 1724 Luxembourg
Address of principal office: 35 Boulevard Prince Henri
L 1724 Luxembourg
Page 6 of 15 Pages
<PAGE>
NAME: COMPAGNIE FINANCIERE RICHEMONT AG
State of organization: Switzerland
Principal business: A Swiss public company with interests
primarily in the fields of luxury goods
and tobacco products
Address of principal business: Rigistrasse 2
6300 Zug Switzerland
Address of principal office: Rigistrasse 2
6300 Zug Switzerland
NAME: COMPAGNIE FINANCIERE RUPERT
State of organization: Switzerland
Principal business: A partnership limited by shares, the
principal business of which is the
holding of investments
Address of principal business: Rigistrasse 2
6300 Zug Switzerland
Address of principal office: Rigistrasse 2
6300 Zug Switzerland
(d)-(e) During the five years prior to the date hereof, none of the
Reporting Persons (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, as a
result of which such person 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.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Inapplicable.
Item 4. PURPOSE OF TRANSACTION.
Inapplicable.
Page 7 of 15 Pages
<PAGE>
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons beneficially own 135,450,525 shares of Common
Stock of the Issuer, which represents 67.7% of the 200,031,580 shares of Common
Stock outstanding as of June 11, 1997.
(b) The Reporting Persons have sole power to vote and dispose of
40,687,970 of the shares of Common Stock of the Issuer referred to in Item 5(a)
above and, as more fully described in Item 4 of the Original Statement on
Schedule 13D, have shared power to vote and dispose of 94,762,555 of the shares
of Common Stock of the Issuer referred to in Item 5(a) above. The Reporting
Persons disclaim beneficial ownership of the 94,762,555 shares of Common Stock
of the Issuer owned by NAR Group Limited.
(c) Other than the transactions described in the Original Statement on
Schedule 13D and in this Amendment No. 1, no transactions in the shares of
Common Stock of the Issuer have been effected during the past 60 days by the
Reporting Persons.
(d) Inapplicable.
(e) Inapplicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is made to Amendment No. 19 to the Statement on Schedule 13D
relating to the Common Stock of the Issuer filed on even date herewith by a
group consisting of NAR Group Limited and Alan G. Quasha. The Reporting
Persons, through Richemont Finance S.A., are a stockholder of NAR Group Limited
and thus may be deemed to have shared voting power with respect to the
94,762,555 shares of Common Stock of the Issuer owned by NAR Group Limited.
On June 13, 1997, Mr. Quasha, Richemont Finance S.A. and Evansville amended
the Joint Venture Agreement (the "NAR Joint Venture Amendment") of NAR Group
Limited ("NAR") to, among other things, grant a put exercisable jointly by Mr.
Quasha and Evansville once at any time after March 31, 1998 to sell and transfer
to Richemont Finance S.A. such number of shares of Common Stock at a price per
share based on the then current market price of a share of Common Stock of the
Issuer as shall in the aggregate equal the Value (as such term is defined in the
NAR Joint Venture Amendment). The NAR Joint Venture Amendment also grants a
call to Richemont Finance S.A. exercisable by it once at any time after June 30,
1999 to cause NAR to sell to it a similarly determined number of shares of
Common Stock of the Issuer. The NAR Joint Venture Amendment also relieves Mr.
Quasha of any further obligation to provide to Richemont Finance S.A. any
financial or other information with respect to NAR's interest in the Issuer.
Furthermore, the NAR Joint Venture Amendment provides a mechanism for the
resolution of deadlocks relating to matters involving the voting of the Common
Stock of the Issuer which includes a buy-sell
Page 8 of 15 Pages
<PAGE>
arrangement for such shares. The foregoing description of the NAR Joint Venture
Amendment is qualified in its entirety by reference to the relevant sections of
such agreement, which are being filed as Exhibit A to this Amendment No. 1.
Except as described in the preceding paragraph, none of the Reporting
Persons nor, to the best of their knowledge, any executive officer or director
thereof, has any contract, arrangement, understanding or relationship with one
or more security holders of the Issuer or others, with respect to the purchase,
holding, voting or disposition of shares of Common Stock or other securities of
the Issuer which are convertible or exercisable into such shares. Each of such
persons reserves the right to enter into any such contract, arrangement,
understanding or relationship in the future.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT A: Certain Sections of Amendment No. 1 to the Joint Venture
Agreement of NAR Group Limited
Page 9 of 15 Pages
<PAGE>
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: July 11, 1997
RICHEMONT FINANCE S.A.
/s/ Robert P. Wessely
-----------------------------------
By: Robert P. Wessely, its
Attorney-in-Fact
RICHEMONT S.A.
/s/ Robert P. Wessely
----------------------------------
By: Robert P. Wessely, its
Attorney-in-Fact
COMPAGNIE FINANCIERE RICHEMONT AG
/s/ Robert P. Wessely
----------------------------------
By: Robert P. Wessely, its
Attorney-in-Fact
COMPAGNIE FINANCIERE RUPERT
/s/ Robert P. Wessely
-----------------------------------
By: Robert P. Wessely, its
Attorney-in-Fact
Page 10 of 15 Pages
<PAGE>
EXHIBIT A
CERTAIN SECTIONS OF
AMENDMENT NO. 1 TO THE
JOINT VENTURE AGREEMENT
OF NAR GROUP LIMITED
This Agreement, dated June 13, 1997, is Amendment No. 1 to a joint venture
agreement by and among RICHEMONT FINANCE SA, a Luxembourg corporation
("Richemont"), as successor to Richemont Group Limited, as successor to Rupert
Group Limited; EVANSVILLE LIMITED, a British Virgin Islands corporation, as
successor to the interests of both Herbard Ltd. and Pavonis Ltd. ("Evansville");
and ALAN G. QUASHA, a resident of New York, New York ("Alan Quasha"), and amends
that certain Joint Venture Agreement, effective as of March 31, 1988, by and
among Rupert Group Limited, Herbard Ltd., Pavonis Ltd. and Alan Quasha (the
"Original Agreement") which established North American Resources Ltd., a British
Virgin Islands international business company now known as NAR GROUP LIMITED
("NAR"). Evansville and Alan Quasha are hereinafter sometimes referred to as
the "Evansville Shareholders." Richemont, Evansville and Alan Quasha are
hereinafter sometimes referred to as the "Shareholders."
* * *
4. PUT AND CALL OPTIONS RELATING TO THE HANOVER COMMON STOCK.
A. Subject to Paragraphs 4(E), 4(F) and 4(G) hereof, Evansville and Alan
Quasha (which, for purposes of this Section 4, may only act jointly as the
Evansville Shareholders) shall have the right (the "Put Option"), exercisable
once only at any time after March 31, 1998, to cause NAR (which for purposes
hereof shall include any affiliate of NAR (other than Richemont and its non-NAR
affiliates) then nominally holding shares of Hanover Common Stock) to sell and
transfer to Richemont such number of the shares of Hanover Common Stock at a
price per share equal to the average of the closing bid price of a share of
Hanover Common Stock for the thirty (30) trading days immediately preceding the
date of the Put Notice (the "Put Price") as shall, in the aggregate, equal the
Value. The Put Option shall be exercised by Evansville and Alan Quasha
delivering a joint written notice (the "Put Notice") to NAR and Richemont
requesting Richemont to purchase such number of shares of Hanover Common Stock
pursuant to the terms of this Paragraph 4(A). Within thirty (30) days of the
later of: (i) the delivery of the Put Notice, or (ii) the completion of any
applicable waiting periods as set forth in Paragraph 4(D) hereof, the closing of
the Put Option shall occur whereby NAR shall cause such number of shares of
Hanover Common Stock to be transferred to Richemont, and Richemont shall
purchase such shares by tendering to NAR for redemption all shares of Preferred
Stock and agreeing to accept such shares of Hanover Common Stock as full payment
for the redemption of the Preferred Stock. Richemont shall thereafter have no
further rights in the Preferred Stock. All Hanover
Page 11 of 15 Pages
<PAGE>
Common Stock not then sold to Richemont for the redemption of the Preferred
Stock shall thereafter not be subject to the Put Option and shall immediately be
distributed pursuant to the provisions of Paragraph 4(E) herein.
B. Unless the Put Option shall have previously been exercised, Richemont
shall, subject to Paragraphs 4(E), 4(F) and 4(G) hereof, have the right (the
"Call Option"), exercisable once only at any time after June 30, 1999, to cause
NAR to sell and transfer to Richemont such number of the shares of Hanover
Common Stock, at a price per share equal to the average of the closing bid price
of a share of Hanover Common Stock for the thirty (30) trading days immediately
preceding the date of the Call Notice (the "Call Price") as shall, in the
aggregate, equal the Value. The Call Option shall be exercised by Richemont
delivering written notice (the "Call Notice") to NAR and the Evansville
Shareholders requesting the Evansville Shareholders to cause NAR to sell such
number of shares of the Hanover Common Stock pursuant to the terms of this
Paragraph 4(B). Within thirty (30) days of the later of: (i) the delivery of
the Call Notice, or (ii) the completion of any applicable waiting periods as set
forth in Paragraph 4(D) hereof, the closing of the Call Option shall occur
whereby NAR shall cause such number of shares of Hanover Common Stock to be
transferred to Richemont, and Richemont shall purchase such shares by tendering
to NAR for redemption all shares of Preferred Stock and agreeing to accept such
shares of Hanover Common Stock as full payment for the redemption of the
Preferred Stock. Richemont shall thereafter have no further rights in the
Preferred Stock. All Hanover Common Stock not then sold to Richemont for the
redemption of the Preferred Stock shall thereafter not be subject to the Call
Option and shall immediately be distributed pursuant to the provisions of
Paragraph 4(E) herein.
C. In the event the Call Option or the Put Option is exercised pursuant to
the terms of this Agreement, each of Richemont, Evansville and Alan Quasha shall
join in the execution and filing of any application, consent or other document
that may be necessary in order to obtain the authorization, approval or consent
of any governmental body, federal, state, local or foreign, which may be
reasonably required, in connection with the consummation of the purchase or sale
of such shares of Hanover Common Stock. Each of Richemont, Evansville and Alan
Quasha agrees to use its best efforts to cause the conditions referred to in
Paragraph 4(D) to be met and agrees to take all reasonable steps necessary to
obtain early termination of the waiting period under the Hart-Scott-Rodino Act
("HSR Act"), if applicable, or any other applicable federal, state, local or
foreign law.
D. Closing of any transaction contemplated by this Paragraph 4 shall not
occur until all applicable waiting periods under the HSR Act and any other
federal, state, local or foreign law with respect to the consummation of the
purchase or sale of Hanover Common Stock shall have expired or early termination
shall have been granted by, in the case of the HSR Act, both the by Federal
Trade Commission and the United States Department of Justice, and in the case of
any other federal, state, local or foreign law, the applicable agency or
agencies.
Page 12 of 15 Pages
<PAGE>
E. Each of the Call Option and the Put Option may only be exercised one
time. Following the exercise of the Put Option or the Call Option, as the case
may be, the total number of shares of Hanover Common Stock beneficially owned by
NAR after such exercise shall thereafter promptly be distributed by NAR to
Richemont and (subject to Paragraph 4(H) hereof) to the Evansville Shareholders
in accordance with their respective ownership of the common stock of NAR.
F. In the event that Hanover Common Stock shall no longer be trading in a
public forum such that its trading price is not readily ascertainable by public
quotes, then, within thirty (30) days of the date on which either the Evansville
Shareholders (with regard to the Put Option) or Richemont (with regard to the
Call Option) gives notice to the other and to NAR that it desires, upon the
determination of a Put Price or a Call Price, to consider exercising its
respective Option, the Call Price or the Put Price shall be determined by an
investment banking firm promptly selected by the mutual agreement of Richemont
and the Evansville Shareholders, and whose determination (which shall be paid
for by the party or parties giving such notice) shall be final and binding on
the Shareholders. In the event that Richemont and the Evansville Shareholders
are unable, within ten (10) days of the receipt of such notice, to agree upon an
investment banking firm for this purpose, each entity shall immediately select
its own investment banking firm to determine the Call Price or the Put Price, as
the case may be, and each such firm shall have thirty (30) days from the date of
its respective appointment to make such determination. The actual Call Price or
Put Price shall equal the average of the values determined by each such
investment bank. In making its determination of the Call Price or the Put
Price, as the case may be, each investment banking firm selected pursuant to the
provisions of this Paragraph shall determine such Price by averaging the
following two numbers: (i) the per share valuation of Hanover Common Stock that
would be achievable were HDI to effect an initial public offering at such time,
and (ii) the per share price that would be achievable were a controlling block
of shares of Hanover Common Stock to be sold in a private "block trade"
transaction at such time. The Put Option or Call Option may thereafter be
exercised in the manner stated hereinabove by the giving of the Put Notice or
Call Notice within thirty (30) days of the date on which such investment banking
firm or firms gives notice to Richemont and to the Evansville Shareholders of
its determination of such Price.
G. Neither the Call Option nor the Put Option may be exercised if (i)
trading in the Hanover Common Stock shall have been suspended by order of the
United States Securities and Exchange Commission or of the American Stock
Exchange or of any other entity, (ii) trading in securities generally on the
American Stock Exchange (or on any other exchange where Hanover Common Stock may
then be traded) shall have been suspended or limited or minimum prices shall
have been established on such exchange, (iii) on any trading day during the
thirty (30) trading days immediately preceding the date of the Put Notice or
Call Notice, the closing bid price of a share of Hanover Common Stock shall be
at least fifteen percent (15%) greater or less than the average of the closing
bid price of a share of Hanover Common Stock for such thirty (30) trading day
period, or (iv) the party or parties exercising such option are then in
possession of material, non-public information concerning Hanover Common Stock
which may reasonably be expected to have a material effect on the per share
Page 13 of 15 Pages
<PAGE>
price of Hanover Common Stock once such information is publicly disclosed. In
any such situations, the Call Option or the Put Option may be exercised only
after the basis for such prohibition on exercising the Option has expired or
been alleviated.
H. If, immediately following the exercise of either the Put Option or the
Call Option, the beneficial ownership of Hanover Common Stock by Richemont
(after deducting any shares of Hanover Common Stock subject to an option to Mr.
Kaul, as more fully described in Section 1(B) hereof) shall be less than 50.1%
of the number of voting shares then outstanding, the Evansville Shareholders
hereby each agree to grant to Richemont (i) an irrevocable proxy to vote such
number of shares (the "Proxy Shares") then owned by them as shall at all times
equal the difference between (x) the number of voting shares of HDI then owned
by Richemont and its affiliates (other than the Evansville Shareholders) and (y)
the number of voting shares of HDI as shall equal not less than 50.1% of the
aggregate number of voting shares of HDI then outstanding; and (ii) a right of
first offer to purchase the Proxy Shares, as more fully described below. In the
event that the Evansville Shareholders (who agree to act jointly for all
purposes with regard to the Proxy Shares) should decide to sell or otherwise
dispose of any of the Proxy Shares, they shall first give written notice to
Richemont of their intention to sell such shares, together with the price at
which they are willing to sell such shares. Richemont shall then have thirty
(30) days from the date it receives such notice to evaluate such offer. If, at
or prior to the end of such 30-day period, Richemont gives notice to the
Evansville Shareholders that it accepts such offer, then the Evansville
Shareholders shall, within fifteen (15) days of receipt of such notice, sell to
Richemont, and Richemont shall purchase for cash, all such Proxy Shares. If, at
the end of such 30-day period, Richemont declines such offer or does not respond
to such offer in writing, then the Evansville Shareholders shall be free to sell
such shares at any time during the succeeding ninety (90) days (starting the day
following the end of the previous 30-day period) to a third party, but only at a
price per share equal to or higher than the price per share at which such shares
were first offered to Richemont. Upon the completion of the sale of such shares
by the Evansville Shareholders to a third party during such 90-day period, the
irrevocable proxy described in the first sentence of this Paragraph 4(H) shall
thereupon terminate. If the Evansville Shareholders do not complete the sale of
such shares in such manner during such 90-day period, then the Right of First
Offer described in this Section 4(H) shall again be applicable, and the
irrevocable proxy shall remain in full force and effect.
* * *
6. OTHER MATTERS.
A. Following the Effective Date, Alan Quasha shall have no further
responsibility for financial reporting and other information delivery
obligations to Richemont relating to NAR's interest in HDI. Alan Quasha shall
be relieved of his duty to continue to provide to Richemont financial reporting
and other information relating to the businesses or assets of NAR, except to
provide the reports prepared by such businesses (other than HDI) or the managers
of such assets, all of which reports Mr. Quasha shall cause to be promptly
Page 14 of 15 Pages
<PAGE>
forwarded to Richemont. The provisions of this Section 6(A) shall in no way
relieve NAR of its obligation to provide Richemont with such periodic financial
reports concerning NAR's aggregate assets and operations as shall be necessary
in order to enable Richemont to satisfy its financial reporting obligations.
B. In the event that the Evansville Shareholders, on the one hand, and
Richemont, on the other hand, or their respective representatives, are unable to
agree on the terms of any material decision relating to NAR's ownership of
Hanover Common Stock or to the business of HDI (a "Deadlock"), then the parties
agree that the following provisions shall apply and such provisions shall
supersede the provisions of Section 4 hereof:
(1) Richemont shall give notice to the other Shareholders of a
Deadlock. Within ten (10) days of such written notice, Richemont shall provide
to the other Shareholders, in writing (the "Notice"), its determination of the
price per share at which it is prepared to purchase all of the shares of Hanover
Common Stock then owned by NAR (the resulting per share valuation, for purposes
of this Paragraph 6(B), being termed the "Auction Value").
(2) Together with the Notice of the Auction Value, Richemont shall
offer to purchase from NAR all, but not less than all, of its shares of Hanover
Common Stock, at a price per share equal to the Auction Value. Such Notice
shall offer to pay for NAR's shares of Hanover Common Stock, in cash or cash
equivalents, within thirty (30) days of the date of the Notice.
(3) Upon receipt of the Notice, the other Shareholders shall
immediately nominate one representative of such Shareholders, and shall agree to
be jointly and severally bound by the determination of such representative as to
all matters relating to this Paragraph 6(B). Such representative shall have
twenty (20) days from the date of the Notice in which to notify Richemont that
it either (a) accepts such Auction Value and agrees to cause NAR to sell to
Richemont all of its Hanover Common Stock at such share price, or (b) desires to
purchase all of NAR's shares of Hanover Common Stock, at a price per share equal
to the Auction Value. In the event the representative of the other Shareholders
shall have responded in accordance with (a) above, or shall have made no
response by such twentieth (20th) day, then the Shareholders hereby agree to
cause NAR to sell its shares of Hanover Common Stock to Richemont at a price per
share equal to the Auction Value, on such terms and at such date as was
specified in the Notice, and Richemont agrees to so purchase such shares. In
the event that the other Shareholders shall have responded in accordance with
(b) above, then the Shareholders shall cause NAR to sell its shares of Hanover
Common Stock to such other Shareholders, on the same terms and at such date as
was specified in the Notice, at a price per share equal to the Auction Value,
and such other Shareholders agree to so purchase such Shares. In either event,
(i) the purchase price shall be paid in cash and (ii) the parties hereto shall,
simultaneously with such sale, cause NAR to redeem the Preferred Stock, at the
Full Redemption Value.
* * *
Page 15 of 15 Pages
