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Exhibit 10.25
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is made as of the 14th day of November,
1995 among CONGRESS FINANCIAL CORPORATION, a California corporation (together
with its transferees, successors and assigns, "Senior Creditor"),
INTERCONTINENTAL MINING & RESOURCES INCORPORATED, a British Virgin Islands
corporation (together with its transferees, successors and assigns, "IMR", and
together with the Indenture Trustee (as defined below), individually and
collectively, "Junior Creditor"). Senior Creditor and Junior Creditor are
sometimes individually referred to herein as "Creditor" and collectively as
"Creditors."
W I T N E S S E T H:
WHEREAS, The Hanover Companies, a Nevada corporation ("THC") entered
into certain debt financing arrangements, pursuant to which THC issued and Sun
Life Insurance Company of America (now known as SunAmerica Life Insurance
Company, "SunAmerica") purchased from THC an aggregate of $20,000,000 in
principal amount of 9.25% Senior Subordinated Notes due August 1, 1998 (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, exchanged, restated or replaced, the "Notes"); and
WHEREAS, payment of the obligations of THC to Junior Creditor under the
Notes was guaranteed by The Horn & Hardart Company ("H&H"), which was, at the
time the Notes were issued, the parent company of THC, and by certain direct and
indirect Subsidiaries of THC; and
WHEREAS, Hanover Direct, Inc. (together with its successors and
assigns, "Hanover"), as successor to THC and H&H, has previously repaid
$6,000,000 in principal amount of the Notes, plus accrued interest thereto; and
WHEREAS, as of the date hereof, the unpaid balance of the Notes is
guaranteed by only those Subsidiaries of Hanover listed on Exhibit A annexed
hereto (the "Subsidiary Guarantors") (such guarantees of the Notes,
collectively, the "Guarantees"); and
WHEREAS, IMR has, on or before the date hereof, purchased from
SunAmerica, all of SunAmerica's right, title and interest in and to the
remaining Notes, in the outstanding principal amount of $14,000,000, and the
Guarantees, pursuant to a Repurchase and Option Agreement dated as of September
29, 1995; and
WHEREAS, in connection with its purchase of the remaining Notes,
Hanover and certain of the Subsidiary Guarantors, are about to grant to Junior
Creditor a security interest in their customer lists to secure payment of the
Notes; and
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WHEREAS, Senior Creditor is about to enter into financing arrangements
with certain Subsidiaries of Hanover, pursuant to which Senior Creditor may from
time to time make loans and provide other financial accommodations to certain
direct and indirect Subsidiaries of Hanover, upon the terms and conditions set
forth in that certain Loan and Security Agreement, dated as of the date hereof,
among Senior Creditor, and certain direct and indirect Subsidiaries of Hanover,
as acknowledged and agreed to by Hanover and various other direct and indirect
Subsidiaries of Hanover (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement"; and together with any and all supplements thereto, and all other
agreements, acknowledgments, documents and instruments now or at any time
hereafter executed and/or delivered in connection therewith or related thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Financing
Agreements"); and
WHEREAS, payment and performance of the obligations of the Borrowers to
Senior Creditor under the Financing Agreements have been guaranteed by Hanover
and its direct and indirect Subsidiaries; and
WHEREAS, as a condition of its willingness to enter into the Financing
Agreements, Senior Creditor has required that Junior Creditor enter into this
Subordination Agreement to provide for (i) the terms and conditions of the
subordination in favor of Senior Creditor of the obligations of Hanover to
Junior Creditor in respect of the Junior Debt (as defined below), and of any
other persons now or hereafter obligated, as borrower, guarantor or otherwise,
in respect of all or any part of the Junior Debt (Hanover, the Subsidiary
Guarantors, together with any other persons so obligated to Junior Creditor in
respect of all or any part of the Junior Debt and also obligated to Senior
Creditor, as borrower, guarantor or otherwise, in respect of all or any part of
the Obligations under the Financing Agreements, individually, an "Obligor" and,
collectively, "Obligors"), (ii) the relative priorities of Senior Creditor and
Junior Creditor with respect to liens upon and security interests in the
property of Obligors, and (iii) related matters;
NOW THEREFORE, in consideration of the mutual benefits accruing to
Creditors hereunder and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used in this Subordination Agreement, the following terms shall have
the meanings ascribed to them below:
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1.1. "Agreements" shall mean, collectively, the Senior Creditor
Agreements and the Junior Creditor Agreements.
1.2. "Borrowers" shall have the meaning ascribed to such term in the
Loan Agreement.
1.3. "Complete Standstill Event" shall mean the giving of
notice to the Indenture Trustee by Senior Creditor of the occurrence of one or
more of the following dates or events: (i) a default in payment of any portion
of the Senior Debt when due under the Senior Credit Agreements (whether or not
payment of the Senior Debt is accelerated) or (ii) Senior Creditor accelerates
payment of the Senior Debt at any time following any event of default under the
Senior Creditor Agreements, or (iii) the effective date the Loan Agreements are
terminated or not renewed, by either Senior Creditor or the Borrowers, whether
at the end of the stated term or any renewal thereof, by reason of default,
through voluntary termination by the parties, or otherwise. No subsequent,
contemporaneous or prior judicial action or taking of possession of Collateral
(as defined below) or foreclosure of Liens thereon or other action shall be
required in order for the occurrence of any of the dates or events set forth in
this definition to constitute a Complete Standstill Event. A Complete Standstill
Event shall be deemed terminated upon Senior Creditor's waiver in writing,
signed by Senior Creditor, waiving the event of default and/or rescinding the
acceleration constituting the Complete Standstill Event, and/or Senior
Creditor's acceptance of any permitted cure of any such event of default or
acceleration.
1.4. "Customer Lists" shall mean the existing and future
mailing and customer lists used in the direct mail marketing business of
Borrowers, together with all software (including, without limitation, all
manuals, upgrades, modifications, enhancements and additions thereto), computer
tapes, disks, other electronic data storage media, documentation of file and
record formats and source code and all other property useful or necessary to
gain access to, transfer and fully utilize for all purposes, including, without
limitation, analysis, cross-checking and compilation of, and the sale, rental or
license of such mailing and customer lists, together with all updates and
additions thereto, including, without limitation, all such mailing and customer
lists which may be purchased, created or compiled in the future, but not
including any customer lists owned by third parties who are not Affiliates (as
defined in the Loan Agreement) of Borrowers, which are leased to, or otherwise
licensed for use by Borrowers, with permission of such third party owners.
1.5. "IMR Agreements" shall mean, collectively, the Repurchase and
Option Agreement, dated as of September 29, 1995, among IMR, SunAmerica and
Hanover, together with all instruments
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and agreements delivered thereunder, the Second Supplemental Indenture dated on
or about the date hereof among Hanover, the Subsidiary Guarantors and the
Indenture Trustee, and the Customer and Mailing List Escrow Agreement dated on
or about the date hereof, among Hanover, the Indenture Trustee, and HOSSCO, as
escrow agent, as the same now exist or may hereafter be amended, modified,
supplemented, restated or replaced.
1.6. "Indenture" shall mean that certain Indenture dated as of
August 1, 1993, among H&H, THC, the Subsidiary Guarantors and the Indenture
Trustee, as supplemented by the First Supplemental Indenture dated as of March
27, 1995, and the Second Supplemental Indenture dated on or about the date
hereof, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.7. "Indenture Trustee" shall mean First Trust National Association,
as Trustee under the Indenture, any successor Trustee, and their respective
successors and assigns.
1.8. "Junior Creditor Agreements" shall mean, collectively, the
Notes (including any notes exchanged therefor), the Purchase Agreement dated as
of August 17, 1993 presently among Hanover, certain of the Subsidiary Guarantors
and IMR as assignee of SunAmerica, the Indenture, the guarantees by the
Subsidiary Guarantors, the IMR Agreements and all other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by H&H,
THC, Hanover, the Subsidiary Guarantors or any other person to, with or in favor
of Junior Creditor in connection therewith or related thereto, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, exchanged, restated or replaced.
1.9. "Junior Creditor Representative" shall mean the Indenture Trustee.
1.10. "Junior Debt" shall mean all of the following evidenced
by or arising under or in connection with the Notes or the other Junior Creditor
Agreements to the extent relating to the Notes or the debt evidenced thereby:
all loans, obligations, liabilities, letters of credit, credit facilities and
other indebtedness of any kind, nature and description owing by any Obligor to
Junior Creditor, including principal, interest, charges, fees, premiums,
indemnities and expenses, whether as principal, surety, endorser, guarantor or
otherwise, whether now existing or hereafter arising, whether arising after the
commencement of any case with respect to any Obligor under the U.S. Bankruptcy
Code or any similar statute, whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, original, renewed or extended, and whether
arising
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directly or howsoever acquired by Junior Creditor including from any other
person outright, conditionally or as collateral security, by assignment, merger
with any other person, participations or interests of Junior Creditor in the
obligations of any Obligor to others, or by assumption or operation of law, or
by way of a claim or right of contribution, exoneration, reimbursement,
indemnification, subrogation or otherwise, however evidenced, and shall also
include all amounts chargeable to any Obligor under the Junior Creditor
Agreements or in connection with any of the foregoing.
1.11. "Lien" shall mean any pledge, hypothecation, assignment,
deposit arrangement, right of setoff, security interest, encumbrance, mortgage,
deed of trust (including, but not limited to, easements, rights of way and the
like), lien (statutory or other), security agreement or transfer intended as
security, including, without limitation, any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease or any
financing lease having substantially the same economic effect as any of the
foregoing.
1.12. "Payment Block Notice" shall have the meaning set forth in
Section 3.2 hereof.
1.13. "Person" or "person" shall mean an individual, a
partnership, a corporation (including a business trust), a joint stock company,
a limited liability company, a limited liability partnership, a trust, an
unincorporated association, a joint venture, or other entity or a government or
any agency, instrumentality or political subdivision thereof.
1.14. References. All terms defined in the Uniform Commercial
Code as in effect in the State of New York, unless otherwise defined herein,
shall have the meanings set forth therein. All references to any term in the
plural shall include the singular and all references to any term in the singular
shall include the plural. References in the singular include the plural and
references in the plural include the singular. Use of the term "or" shall mean
"and/or" unless the context otherwise clearly requires. Unless the context
otherwise clearly requires, references to "herein" or "hereunder" shall mean
this entire Subordination Agreement, not only the particular provision in which
such reference appears.
1.15. "Senior Creditor Agreements" shall mean, individually and
collectively, the Loan Agreement, the other Financing Agreements, and all
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Obligor or any other person to, with or in favor of
Senior Creditor in connection therewith or related thereto, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
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1.16. "Senior Debt" shall mean any and all loans, obligations,
liabilities, letters of credit, credit facilities and indebtedness of every
kind, nature and description owing by any Obligor to Senior Creditor or its
participants, including principal, interest, charges, fees, premiums,
indemnities and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, in each case arising under the Senior Creditor
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Senior Creditor
Agreements, or after the commencement of any case with respect to any Obligor
under the U.S. Bankruptcy Code or any similar statute, whether or not allowable
in whole or in part against any Obligor or any successor of any Obligor in any
case under the U.S. Bankruptcy Code or similar statute, whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, original, renewed
or extended and whether arising directly or howsoever acquired by Senior
Creditor under the Senior Creditor Agreements or by assumption or operation of
law, or by way of any claim or right of contribution, indemnification,
exoneration, reimbursement, subrogation or otherwise and shall also include all
amounts chargeable to any Obligor under the Senior Creditor Agreements or in
connection with any of the foregoing.
1.17. "Standstill Period" shall mean the period beginning on
the earlier of the date that Junior Creditor has received a Payment Block Notice
or the date that Junior Creditor has given written notice to Senior Creditor
that an event of default under the Junior Creditor Agreements has occurred and
specifying such event of default and ending 180 days after such date;
provided, however, that the aggregate number of days that any
one or more Standstill Periods shall be in effect may not exceed 180 days in any
consecutive 365 day period; and provided, further, that no event
of default under the Senior Creditor Agreements which (i) is specified in the
written notice under this Section commencing a Standstill Period and (ii) is
subsequently waived by Senior Creditor, shall be or be made the basis for the
commencement of a subsequent Standstill Period unless such event of default
shall be waived by Senior Creditor as to the specific circumstances giving rise
to such event of default, for a period of not less than 365 days following the
occurrence of such event of default.
1.18. "Subsidiary" shall have the meaning ascribed to such term in the
Loan Agreement.
1.19. "Triggering Default" shall mean the occurrence or
existence of any event of default in respect of the Junior Debt under the Junior
Creditor Agreements, which remains uncured and unwaived or otherwise continues
beyond the expiration of the Standstill Period hereunder with respect to such
event of default.
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2. SECURITY INTERESTS; PRIORITIES; COVENANTS
2.1. Acknowledgment of Senior Creditor Security Interests.
Junior Creditor hereby agrees and acknowledges that, pursuant to the Loan
Agreement, Senior Creditor has been granted a Lien upon all of the assets of
Hanover, the Borrowers and all other direct and indirect Subsidiaries of
Hanover, whether such assets are now owned or are hereafter arising or acquired,
including, without limitation, all present and future accounts, contract rights,
general intangibles (including, without limitation, Customer Lists), documents,
instruments, chattel paper, inventory, equipment, fixtures and real property,
and the proceeds and products thereof, excluding only such assets of Hanover,
the Borrowers and other direct and indirect Subsidiaries of Hanover as are
expressly excluded from the Liens of Senior Creditor pursuant to the terms of
the Loan Agreement (such assets subject to the Lien of Senior Creditor at any
time and from time to time, the "Collateral").
2.2. No Contest of Creditor Liens.
(a) Junior Creditor agrees that it shall not contest the
validity, perfection, priority or enforceability of the Liens granted to or held
by Senior Creditor upon the Collateral and that, as between Senior Creditor and
Junior Creditor, the terms of this Subordination Agreement shall govern even if
part or all of the Senior Debt or the Liens securing payment and performance
thereof are avoided, disallowed, set aside or otherwise invalidated in any
judicial proceeding or otherwise.
(b) Senior Creditor agrees that it shall not contest the
validity, perfection, priority or enforceability of the Lien granted in or held
by Junior Creditor upon the Customer Lists of Hanover and certain of the
Subsidiary Guarantors, and that, as between Senior Creditor and Junior Creditor,
the terms of this Subordination Agreement shall govern even if part or all of
the Junior Debt or the Lien upon the Customer Lists securing payment and
performance thereof are avoided, disallowed, set aside or otherwise invalidated
in any judicial proceeding or otherwise.
2.3. Senior Creditor's Priority Liens.
Notwithstanding the order or time of attachment, or the order,
time or manner of perfection, or the order or time of filing or recordation of
any document or instrument, or other method of perfecting a security interest in
favor of each Creditor in any Collateral, and notwithstanding any conflicting
terms or conditions which may be contained in any of the Agreements, the Liens
of Senior Creditor upon the Collateral have and shall have priority over the
Liens of Junior Creditor upon the Collateral and such Liens of Junior Creditor
are and shall
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be, in all respects, subject and subordinate to the Liens of Senior Creditor
therein to the full extent of the Senior Debt outstanding at any time and from
time to time and secured thereby.
2.4. Priority Absolute.
The Lien priorities provided in Section 2.3 shall not be
altered or otherwise affected by any amendment, modification, supplement,
extension, renewal, restatement or refinancing of the Senior Debt or the Junior
Debt, nor by any invalidity of the Senior Debt or any failure to perfect or
lapse in perfection by Senior Creditor of any Lien on any Collateral, nor by any
action or inaction which any Creditor may take or fail to take in respect of the
Collateral.
2.5. Rights of Creditors to Enforce Collateral.
(a) Senior Creditor shall have the exclusive right to manage,
perform and enforce the terms of the Senior Creditor Agreements with respect to
the Collateral, to exercise and enforce all privileges and rights thereunder
according to its discretion and the exercise of its business judgment,
including, without limitation, the exclusive right to take or retake control of
possession of the Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, collect upon, or liquidate the Collateral. The provisions of
this Section 2.5(a) shall not, however, restrict the rights of enforcement of
the Junior Creditor to the extent permitted under and subject to the terms of
Sections 2.6 and 3.5 hereof.
(b) Notwithstanding anything to the contrary contained in any
of the Agreements, only Senior Creditor shall have the right to restrict or
permit, or approve or disapprove, the sale, transfer or other disposition of
Collateral. Each of IMR and the Indenture Trustee shall, upon the request of
Senior Creditor, release or otherwise terminate the Liens held by or on behalf
of Junior Creditor on the Collateral to the extent such Collateral is sold or
otherwise disposed of either by Senior Creditor, its agents, or any Obligor as
permitted under the Senior Creditor Agreements or as otherwise consented to by
Senior Creditor, and the Indenture Trustee and IMR shall deliver such release of
Lien documents as Senior Creditor may reasonably require in connection
therewith. Senior Creditor may apply the proceeds so realized to the Senior Debt
in such order and manner provided or as otherwise permitted under the Senior
Creditor Agreement, and may relend such proceeds to any Borrower or other
Obligor as Senior Creditor shall deem fit, and all obligations to Senior
Creditor arising from such relending, shall be part of Senior Debt.
2.6. Restrictions on Junior Creditor Rights. Notwithstanding any right
or remedy available to Junior Creditor under any of the
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Junior Creditor Agreements, applicable law or otherwise, Junior Creditor may
accelerate the Junior Debt (subject to required rescission of acceleration upon
cure as provided below), but shall not, directly or indirectly take any of the
following actions until all of the Senior Debt has been indefeasibly paid and
satisfied:
(a) unless and until a Triggering Default has occurred and
provided a Complete Standstill Event has not occurred, exercise any of its
rights or remedies (other than acceleration of the Junior Debt as aforesaid) as
against any Obligor or its property upon an event of default by any Obligor
under the Junior Creditor Agreements or otherwise, including, without
limitation, the termination of the Junior Creditor Agreements or the
commencement of suit for the enforcement of any provisions of the Junior
Creditor Agreements or for collection of the Junior Debt as against or from any
Obligor or its property;
(b) hold, seek to obtain or enforce any Lien in or upon any
Collateral or any other property of any Obligor, except after a Triggering
Default has occurred and provided a Complete Standstill Event has not occurred,
Junior Creditor may hold, obtain or enforce, subject to the Liens of Senior
Creditor thereon, any non-consensual Lien upon property of any Obligor, to the
extent such Lien is acquired through judicial enforcement of the Junior Debt; or
(c) commence, any administrative, legal or equitable action or
proceeding against any Obligor or its properties seeking any reorganization,
arrangement, composition, readjustment, liquidation, bankruptcy or any other
action involving the readjustment of all or any part of any Obligor's
obligations, or other similar relief under the U.S. Bankruptcy Code or any
present or future statute, law or regulation relative to any Obligor or its
properties or any proceedings for voluntary liquidation, dissolution or other
winding up of any Obligor's businesses or the appointment of any trustee,
receiver or liquidator for any Obligor or any part of its properties or any
assignment for the benefit of creditors or any marshalling of assets of any
Obligor.
3. SUBORDINATION OF JUNIOR DEBT
3.1. Subordination. Except as specifically set forth in Sections 3.2
and 3.5 below, Junior Creditor hereby subordinates its right to payment and
satisfaction of the Junior Debt, and the payment thereof, directly or
indirectly, by any means whatsoever, is deferred and subordinated, to the prior
indefeasible payment and satisfaction in full of all Senior Debt.
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3.2. Permitted Payments.
(a) Subject to all the other terms and conditions of this
Subordination Agreement, Senior Creditor hereby agrees that, unless and until
Senior Creditor has notified the Junior Creditor Representative of the
occurrence of a default or an event of default or the occurrence of an event or
existence of a condition which does, or would, with notice or lapse of time or
both constitute an event of default under the Senior Creditor Agreements, and in
each case specifying such event (such notice a "Payment Block Notice"), Hanover
may make, and Junior Creditor may receive and retain from Hanover (i) payments
of interest when due as regularly scheduled, and (ii) payment of principal when
due at scheduled maturity on August 1, 1998, and (iii) prepayments of principal,
plus accrued interest thereon, funded with the proceeds of an equity offering of
Hanover, in each case under clauses (i) and (ii) in accordance with the terms of
the Notes and the Indenture as in effect on the date hereof (but not any other
prepayment of principal or interest or other payment of principal or any payment
pursuant to acceleration or claims of breach or any payment to acquire any
Junior Debt or otherwise), and (iv) reimbursement to Junior Creditor, prior to
an event of default under any Junior Debt, for out-of-pocket expenses payable by
Hanover pursuant to the Junior Creditor Agreements. After a Payment Block Notice
is given, no payment otherwise permitted to be made to or received in respect of
the Junior Debt may be made to or received by Junior Creditor until the
expiration of the Standstill Period hereunder, and no such payment may be made
or received after such period if a Complete Standstill Event has occurred or
shall thereafter occur and while such Complete Standstill Event is continuing.
(b) No event of default which existed or was continuing under
the Senior Creditor Agreements on the date any Payment Block Notice is given,
and which is subsequently waived by Senior Creditor, shall be or be made the
basis for the giving of a subsequent Payment Block Notice, unless such event of
default shall be waived by Senior Creditor as to the specific circumstances
giving rise to such event of default, for a period of not less than 365 days
following the occurrence of such event of default.
(c) Senior Creditor may give any number of Payment Block
Notices hereunder, provided that the aggregate number of days that any one or
more Standstill Period(s) hereunder shall be in effect shall not exceed 180 days
during any 365 consecutive days, irrespective of the number of defaults with
respect to the Senior Creditor Agreements; and provided further that, upon
expiration or rescission of such Standstill Period, Junior Creditor must receive
payment of all regularly scheduled payments of interest and, if applicable,
principal payments described in clauses (ii) and (iii) of Section 3.2(a) which
have become due
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(on an unaccelerated basis, whether or not there has been an acceleration of any
Junior Debt), plus interest on such overdue payments as provided in the
Indenture, before a subsequent Payment Block Notice may be given.
3.3. Distributions.
(a) In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of any Obligor or the proceeds thereof to the
creditors of any Obligor or readjustment of the obligations and indebtedness of
any Obligor, whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors, marshalling of assets of
any Obligor or any other action or proceeding involving the readjustment of all
or any part of the obligations of any Obligor or the application of the assets
of any Obligor to the payment or liquidation thereof, or upon the dissolution or
other winding up of any Obligor's business, or upon the sale of all or
substantially all of the assets of any Obligor then, and in any such event,
Junior Creditor agrees that:
(i) Senior Creditor shall first receive indefeasible
payment in full in cash of all of the Senior Debt (including, without
limitation, interest after the commencement of any such liquidation, dissolution
or bankruptcy at the rate specified in the applicable Senior Creditor
Agreements, whether or not such interest is an allowable claim in any such
proceeding) prior to the payment of all or any part of the Junior Debt; and
(ii) Senior Creditor shall be entitled to receive any
payment or distribution of any kind or character, whether in cash, securities or
other property (including, without limitation, interest after the commencement
of any such liquidation, dissolution or bankruptcy at the rate specified in the
applicable Junior Creditor Agreements) which may be payable or deliverable in
respect of any or all of the Junior Debt.
Provided, however, that if the Senior Creditor accepts shares of
stock and/or debt securities issued by any Obligor in connection with any
liquidation, dissolution or bankruptcy case or proceeding, then, notwithstanding
clauses (i) and (ii) of this Section 3.3(a), Junior Creditor may receive shares
of stock and/or debt securities that are subordinated to the remaining Senior
Debt and the stock and debt securities issued to Senior Creditor at least to the
same extent and pursuant to the same or more stringent terms as is the Junior
Debt, as evidenced by a supplement hereto, executed by the Senior Creditor and
the Junior Creditor Representative.
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(b) In order to enable Senior Creditor to enforce its rights
under this Section 3.3, Senior Creditor is hereby irrevocably authorized and
empowered (in its own name or in the name of Junior Creditor or otherwise), but
shall have no obligation to:
(i) enforce claims comprising any of the Junior Debt
by proof of debt, proof of claim, suit or otherwise; and
(ii) demand, ▇▇▇ for, collect and receive any assets
of any Obligor distributed, divided or applied by way of payment, or any other
property or interest issued, on account of any of the Junior Debt and apply the
same, or the proceeds of any realization upon the same, to any of the Senior
Debt.
(c) Notwithstanding anything to the contrary in this Section
3.3, in the event of a case under the U.S. Bankruptcy Code involving any
Obligor, Junior Creditor shall be entitled, on ten (10) days' prior written
notice to Senior Creditor, to file a proof of claim with respect to the Junior
Debt if Senior Creditor has elected not to do so and if the failure to file such
a proof of claim within the succeeding thirty (30) day or lesser period would
result in the claim being barred from assertion; provided,
however, such proof of claim expressly states that the Junior Debt has
been subordinated in favor of Senior Creditor upon the terms and provisions of
this Subordination Agreement and which gives Senior Creditor the right, among
other things, to vote such claim of Junior Creditor.
(d) Junior Creditor shall execute and deliver to Senior
Creditor such powers of attorney as may be necessary so to enable Senior
Creditor to effect the filing of a proof of claim in respect of the Junior Debt.
3.4. Payments Received by Junior Creditor. Except for permitted
payments received by Junior Creditor as provided in Section 3.2 or through
permitted enforcement of the Junior Debt as provided in Sections 2.6 and 3.5
hereof, or distributions permitted under Section 3.3 hereof, if any payment or
distribution or security or instrument or proceeds thereof is received by the
Junior Creditor in respect of the Junior Debt, or if any sums are recovered in
respect of the Junior Debt upon enforcement not permitted pursuant to Sections
2.6 and 3.5 hereof, Junior Creditor shall receive and hold the same in trust, as
trustee, for the benefit of Senior Creditor. Junior Creditor shall segregate
each such payment, distribution or recovery from all other funds and property of
Junior Creditor and shall forthwith deliver such payment, distribution or
recovery to Senior Creditor (together with any endorsement or assignment of
Junior Creditor where necessary), for application to any of the Senior Debt. In
the event of the failure of the Junior Creditor to make any such endorsement or
assignment to Senior Creditor,
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Senior Creditor, or any of its officers or employees, is hereby irrevocably
authorized on behalf of Junior Creditor to make the same.
3.5. Permitted Enforcement.
(a) If any event of default under the Junior Creditor
Agreements has occurred and is continuing, Junior Creditor may (i) accelerate
such portion of the Junior Debt as is in default or any other amounts as may
otherwise be accelerated pursuant to the terms of the Junior Creditor
Agreements, and/or (ii) upon the expiration of any Standstill Period arising
with respect to such event of default, commence and prosecute judicial
enforcement of the Junior Creditor Agreements and collection of the Junior Debt
as against any Obligor or take other actions otherwise prohibited under Section
2.6(a), (b) or (c); provided that no Complete Standstill Event
has occurred or thereafter occurs; and further provided that any
such enforcement or other action shall be and remain subject to Senior
Creditor's prior Liens upon any Collateral as well as Senior Creditor's own
enforcement efforts then or thereafter commenced with respect to any Obligor or
any Collateral, and all proceeds or amounts realized or collected upon such
enforcement against any Collateral shall be delivered to Senior Creditor for
application to the Senior Debt.
(b) Senior Creditor shall have the right, but not any
obligation, to cure for the account of any Obligor any default or event of
default under the Junior Creditor Agreements, which cure may be effected at any
time during the Standstill Period (on an unaccelerated basis, whether or not
there has been an acceleration of any Junior Debt) or, with Junior Creditor's
consent, at any time after the expiration of the Standstill Period;
provided, however, that at or upon the effectuation of such
cure, Junior Creditor receives payment of all regularly scheduled payments of
interest and, if applicable, principal payment described in clause (ii) of
Section 3.2(a), which have become due (on an unaccelerated basis, whether or not
there has been an acceleration of any Junior Debt), plus interest on such
overdue payments as provided in the Indenture, prior to or during the Standstill
Period up to and through the date of such cure. Any sums paid by Senior Creditor
to effect any such cure shall be deemed a loan to Borrowers pursuant to the
Financing Agreements and shall be part of the Senior Debt. Upon any such cure,
Junior Creditor shall be deemed to have rescinded any acceleration and shall be
deemed to have restored the Notes to non-default status and good standing, but
nothing in this Section 3.5(b) shall be deemed to prevent Junior Creditor from
accelerating the Junior Debt again if there is thereafter another event of
default under the Junior Debt, subject to subsequent cure and subject to all
other provisions of this Subordination Agreement. No sum paid or other action
taken by Senior Creditor in connection with any default or event of default
under the Junior Creditor Agreements,
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or the cure thereof, shall constitute an assumption by Senior Creditor of any
obligation or liability to Junior Creditor or any other person.
3.6. Instrument Legend and Notation.
(a) Each of the Notes and any other instruments at any time
evidencing any Junior Debt, or any portion thereof, shall be permanently marked
on its face with a legend conspicuously indicating that payment thereof is
subordinated in right of payment to the Senior Debt and is subject to the terms
and conditions of this Subordination Agreement; and after being so marked
certified copies thereof shall be delivered to Senior Creditor.
(b) In the event any legend or endorsement is omitted, Senior
Creditor or any of its officers or employees, are hereby irrevocably authorized
on behalf of Junior Creditor to make the same. No specific legend, further
assignment or endorsement or delivery of notes, guarantees or instruments shall
be necessary to subject any Junior Debt to the subordination thereof contained
in this Subordination Agreement.
4. COVENANTS, REPRESENTATIONS AND WARRANTIES
4.1. Additional Covenants. Junior Creditor agrees in favor of
Senior Creditor that until all Senior Debt has been indefeasibly paid and
satisfied in full:
(a) except as specifically set forth in Sections 3.2, 3.3 and
3.5 above, Junior Creditor shall not, directly or indirectly, accept or receive
any payment of principal or interest or expenses or any prepayment or other
payment of principal or any payment pursuant to acceleration or claims of breach
or any payment to acquire Junior Debt or otherwise in respect of any Junior
Debt;
(b) Junior Creditor shall not, directly or indirectly, accept
or receive from any Obligor any loan, gift or, except as permitted herein,
distribution of assets to Junior Creditor, and Junior Creditor shall not accept
or hold any guaranties for the Junior Debt except the Guarantees of the
Subsidiary Guarantors whether now existing or as contemplated by the Junior
Creditor Agreements as in effect on the date hereof, and shall not hold or
acquire any Lien upon the assets of any Obligor, except the Lien on the Customer
Lists subject to the provisions of Section 3.5 and any Lien held and obtained to
the extent permitted under the exception contained in Section 2.6(b) and subject
to the enforcement restrictions of Section 2.6(b); and
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(c) IMR shall not sell, assign, transfer or encumber any
interest in the Notes, except upon terms expressly subject to the terms of this
Subordination Agreement, and then only if the Notes and the Guarantees are no
longer secured by any property of any Obligor and remain unsecured.
4.2. Additional Representations and Warranties. Junior Creditor
represents and warrants to Senior Creditor that:
(a) as of the date hereof, the total indebtedness owing by
Hanover to Junior Creditor in respect of the debt evidenced by the Notes and by
the Subsidiary Guarantors as guarantors thereof, is in the aggregate principal
amount of FOURTEEN MILLION ($14,000,000) DOLLARS, all of which is secured by,
but only by, the Customer Lists, to the extent provided in the Junior Creditor
Agreements as in effect on the date hereof;
(b) as of the date hereof, no default or event of default, or
event or condition which with notice or passage of time or both would constitute
a default or an event of default, exists or has occurred and is continuing under
the Junior Creditor Agreements;
(c) Junior Creditor is the exclusive legal and beneficial owner
of all of the Junior Debt;
(d) none of the rights of Junior Creditor in and to the Junior
Debt are subject to any lien, security interest, financing statements,
subordination, assignment or other claim, except in favor of Senior Creditor;
(e) true, correct and complete copies of all Junior Creditor
Agreements in effect as of the date hereof have been furnished to Senior
Creditor;
(f) the execution, delivery and performance of this Agreement
is within the corporate powers of Junior Creditor, has been duly authorized by
all necessary corporate action of Junior Creditor, and does not contravene any
law, any provision of the memorandum or articles of association or other charter
document of Junior Creditor or any agreement to which Junior Creditor is a party
or by which it or its properties are bound; and
(g) this Agreement constitutes the legal, valid and binding
obligations of Junior Creditor, enforceable in accordance with its terms.
4.3. Waivers. Notice of acceptance hereof, the making of loans,
advances and extensions of credit or other financial accommodations to, and the
incurring of any expenses by or in respect of, any Obligor or any other
subordinate creditor, by Senior Creditor, and presentment, demand, protest,
notice of
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protest, notice of nonpayment or default and all other notices to which Junior
Creditor and any Obligor are or may be entitled are hereby waived (except to the
extent, if any, expressly provided for herein). Junior Creditor also waives
notice of (a) any amendment, modification, supplement, renewal, restatement or
extensions of the Senior Creditor Agreements or any Collateral, or of the time
of payment of, or increase or decrease in the amount of, any of the Senior Debt,
(b) the taking, exchange, surrender and releasing of Collateral or guarantees
now or at any time held by or available to Senior Creditor for the Senior Debt
or any other person at any time liable for or in respect of the Senior Debt, (c)
the exercise of, or refraining from the exercise of any right against any
Obligor or any Collateral, (d) the settlement, compromise or release of, or the
waiver of any default with respect to, any of the Senior Debt, and/or (e) Senior
Creditor's election, in any proceeding instituted under the U.S. Bankruptcy Code
of the application of Section 1111(b)(2) of the U.S. Bankruptcy Code. None of
the foregoing shall, in any manner, affect the terms hereof or impair the
obligations of Junior Creditor hereunder or give rise to any claim by Junior
Creditor against Senior Creditor, whether or not any of the foregoing are or
purport to be restricted in any manner under the terms of the Junior Creditor
Agreements. All of the Senior Debt shall be deemed to have been made or incurred
in reliance upon this Subordination Agreement. Junior Creditor hereby agrees
that all payments received by Senior Creditor may be applied, reversed, and
reapplied, in whole or in part, to any of the Senior Debt, as Senior Creditor,
in its discretion, deems appropriate.
4.4. Subrogation; No Marshaling. After the full and
indefeasible payment and satisfaction of all Senior Debt, and after all of the
Senior Creditor Agreements have been terminated, Junior Creditor shall be
subrogated to the rights of the holders of Senior Debt to receive distributions
applicable to the Senior Debt to the extent that distributions otherwise payable
to Junior Creditor have been applied to payment of Senior Debt, and any such
distributions otherwise payable to Junior Creditor and applied to Senior Debt
shall not, as between Hanover and Junior Creditor, constitute a payment by
Hanover of Senior Debt. Junior Creditor hereby waives any and all rights to have
any of the Collateral held by or granted to Senior Creditor marshaled upon
foreclosure or other disposition of such Collateral by Senior Creditor, its
agents or by any Obligor with the consent of Senior Creditor.
4.5. Information Concerning Obligors.
(a) Junior Creditor hereby assumes sole responsibility for
keeping itself informed of the financial condition of Hanover, any and all
endorsers and any and all guarantors of the Junior Debt and any other Obligor,
and of all other circumstances
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bearing upon the risk of nonpayment of the Senior Debt and/or the Junior Debt
that diligent inquiry would reveal, and Junior Creditor hereby agrees that
Senior Creditor shall have no duty to advise Junior Creditor of information
known to Senior Creditor regarding such condition or any such circumstances.
(b) In the event Senior Creditor, in its discretion,
undertakes, at any time or from time to time, to provide any such information to
Junior Creditor, Senior Creditor shall be under no obligation (i) to provide any
such information to the Junior Creditor on any subsequent occasion or (ii) to
undertake any investigation and shall be under no obligation to disclose any
information obtained in any investigation, routine or otherwise.
5. MISCELLANEOUS
5.1. Amendments. Any waiver, permit, consent or approval by a
Creditor of or under any provision, condition or covenant to this Subordination
Agreement must be in writing executed by such Creditor, or its successors and
assigns, and shall be effective only to the extent it is set forth in such
signed writing and as to the specific facts or circumstances covered thereby.
Any amendment of this Subordination Agreement must be in writing and signed by
each of the parties to be bound thereby. Execution of any amendment by the
Junior Creditor Representative shall bind the Junior Creditor and its successors
and assigns, and shall be effective for any Junior Creditor.
5.2. Successors and Assigns.
(a) This Subordination Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of each of the Creditors and its respective successors, participants
and assigns.
(b) Senior Creditor reserves the right to grant participations
in, or otherwise sell, assign, transfer or negotiate all or any part of, or any
interest in, the Senior Debt and the Collateral securing same.
(c) In connection with any assignment or transfer of any or all
of the Senior Debt, or any or all rights of Senior Creditor in the property of
any Obligor, (other than pursuant to a participation), Junior Creditor agrees to
execute and deliver an agreement containing terms substantially identical to
those contained herein in favor of any such assignee or transferee and, in
addition, shall execute and deliver an agreement containing terms substantially
identical to those contained herein in favor of any third person who succeeds to
or replaces any or all of Senior Creditor's financing of any Borrower which is
an Obligor or any other Obligor, whether such successor financing or
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replacement occurs by transfer, assignment, "takeout" or any other means or
vehicle.
5.3. Insolvency. This Subordination Agreement shall be
applicable both before and after the filing of any petition by or against any
Obligor under the U.S. Bankruptcy Code and all converted or succeeding cases in
respect thereof, and all references herein to any Obligor shall be deemed to
apply to a trustee for any Obligor as debtor and debtor-in-possession. The
relative rights of Senior Creditor and Junior Creditor to payment of the Senior
Debt and the Junior Debt, respectively, and in or to any distributions from or
in respect of any Obligor or any Collateral or proceeds of Collateral, shall
continue after the filing thereof on the same basis as prior to the date of the
petition.
5.4. Notices.
(a) All notices, requests and demands to or upon the respective
parties hereto shall be deemed duly given, made or received if in writing and:
if by hand, immediately upon sending; if by Federal Express, Express Mail or any
other overnight delivery service, one (1) day after dispatch; and if mailed by
certified mail, return receipt requested, five (5) days after mailing to the
parties at their addresses set forth below (or to such other addresses as the
parties may designate in accordance with the provisions of this Section 5.4):
To Senior
Creditor: Congress Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
To any Junior
Creditor or to
the Junior
Creditor
Representative: First Trust National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy to: Intercontinental Mining & Resources
Incorporated
c/o Quadrant Management Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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(b) A Creditor may change the address(es) to which all notices,
requests and other communications are to be sent by giving ten (10) days written
notice of such address change to the other Creditor in conformity with this
Section 5.4, but such change shall not be effective until notice of such change
has been received by the other Creditor.
5.5. Counterparts. This Subordination Agreement may be executed
in any number of counterparts, each of which shall be an original with the same
force and effect as if the signatures thereto and hereto were upon the same
instrument.
5.6. Governing Law. The validity, construction and effect of
this Subordination Agreement shall be governed by the laws of the State of New
York.
5.7. Consent to Jurisdiction; Waiver of Jury Trial. Each of
Junior Creditor and Senior Creditor hereby irrevocably consents to the
non-exclusive jurisdiction of the Supreme Court of the State of New York and the
United States District Court for the Southern District of New York and waives
trial by jury in any action or proceeding with respect to this Subordination
Agreement or any matter directly or indirectly arising out of or relating to
their financing arrangements with any Obligor.
5.8. Complete Agreement. This written Subordination Agreement is
intended by the parties as a final expression of their agreement and is intended
as a complete statement of the terms and conditions of their agreement.
5.9. No Third Parties Benefitted. This Subordination Agreement
is solely for the benefit of the Creditors and their respective successors,
participants and assigns, and no other person, including any other creditor or
creditor's representative of any Obligor shall have any right, benefit, priority
or interest under, or because of the existence of, this Subordination Agreement.
5.10. Disclosures, Non-Reliance. Each Creditor has the means
to, and shall in the future remain, fully informed as to the financial condition
and other affairs of each Obligor, and neither Creditor shall have any
obligation or duty to disclose any such information to the other Creditor.
Except as expressly set forth in this Subordination Agreement, the parties
hereto have not otherwise made to each other nor do they hereby make to each
other any warranties, express or implied, nor do they assume any liability to
each other with respect to: (a) the enforceability, validity, value or
collectibility of any of the Junior Debt or Senior Debt or any guarantee or
security which may have been granted to any of them in connection therewith, or
(b) any other matter except as expressly set forth in this Subordination
Agreement.
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5.11. Term. This Subordination Agreement is a continuing agreement and
shall remain in full force and effect until the indefeasible satisfaction in
full of all Senior Debt and the termination of the Senior Creditor Agreements.
5.12. Severability. If any provision of this Subordination
Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Subordination Agreement as a whole
but this Subordination Agreement shall be construed as though it did not contain
the particular provision or provisions held to be invalid or unenforceable and
the rights and obligations of the parties shall be construed and enforced only
to such extent as shall be permitted by law.
5.13. Senior Creditor's Rights under Indenture. The rights and
benefits afforded the Senior Creditor under this Subordination Agreement shall
be in addition to any and all rights and benefits which Senior Creditor may have
under the terms of the Indenture. The terms and provisions of the Indenture
shall in no way limit or impair the rights and benefits of Senior Creditor
hereunder or limit or otherwise modify the obligations of, or restrictions upon,
Junior Creditor hereunder.
5.14. Indenture Trustee's Compensation Not Prejudiced. Nothing in this
Subordination Agreement shall restrict the rights of the Indenture Trustee to
▇▇▇ upon its claims for compensation under the Indenture.
5.15. No Fiduciary Duty to Senior Creditor. Indenture Trustee,
by its execution of the Acknowledgment and Agreement hereto, undertakes to
perform or observe and be bound by only the terms and provisions hereof
applicable to it or applicable to the holders of Junior Debt on whose behalf the
Indenture Trustee is acting in that capacity under the Indenture. The Indenture
Trustee shall not be deemed to owe any fiduciary duty to Senior Creditor.
5.16. Application of Monies Deposited with Trustee. Nothing in
this Subordination Agreement shall (i) prevent the application by the Indenture
Trustee or any paying agent of any monies or the proceeds of U.S. government
obligations received from Hanover at a time when such payment and receipt
thereof by Junior Creditor would not have been prohibited hereunder, or (ii)
prevent the application by the Indenture Trustee or any paying agent of any
monies or the proceeds of any U.S. government obligations deposited by Hanover
under the Indenture to the payment of or on account of the principal of or
interest on the Notes if, at the time of such deposit, payment of such amounts
by Hanover under the Notes, and the receipt thereof by Junior Creditor, would
not have been prohibited by this Subordination Agreement.
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5.17. Headings. The headings used herein are for convenience only and
do not constitute matters to be considered in interpreting this Subordination
Agreement.
IN WITNESS WHEREOF, the parties have caused this Subordination
Agreement to be duly executed as of the day and year first above written.
Junior Creditor:
INTERCONTINENTAL MINING & RESOURCES
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Attorney in Fact
Senior Creditor:
CONGRESS FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Senior Vice President
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ACKNOWLEDGMENT AND AGREEMENT BY OBLIGORS
The undersigned hereby acknowledge and consent to the foregoing
Subordination Agreement. By its signature below, each of the undersigned agrees
that it will, together with its successors and assigns, be bound by the
provisions thereof.
Each of the undersigned acknowledges and agrees that: (i) although it
may sign this Acknowledgment and Agreement, it is not a party to the foregoing
Subordination Agreement and does not and will not receive any right, benefit,
priority or interest under or because of the existence of the foregoing
Subordination Agreement and (ii) it will execute and deliver such additional
documents and take such additional action as may be necessary or desirable in
the opinion of Senior Creditor to effectuate the provisions and purposes of the
foregoing Subordination Agreement.
HANOVER DIRECT, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: Senior Vice President
BRAWN OF CALIFORNIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: Senior Vice President
HANOVER DIRECT PENNSYLVANIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: Senior Vice President
GUMP'S BY MAIL, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
HANOVER SYNDICATION CORP.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER LIST MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
YORK FULFILLMENT COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: ▇▇
▇▇▇▇'▇ HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER DIRECT NEW JERSEY, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
COMPANY STORE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
TWEEDS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER CASUALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER DIRECT VIRGINIA INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER VENTURES, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LWI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER REALTY, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
HANOVER CATALOG HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------
Title: VP
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ACKNOWLEDGMENT AND AGREEMENT BY INDENTURE TRUSTEE
The undersigned Trustee under the Indenture referred to in the
foregoing Subordination Agreement hereby acknowledges and consents to the
foregoing Subordination Agreement to the extent its consent is or may be
required. The undersigned agrees that it will be bound by the provisions of the
Subordination Agreement as applicable to the undersigned as a Junior Creditor
(as defined in the Subordination Agreement) in its capacity as Trustee under the
Indenture.
FIRST TRUST NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ R. Prokofch
-------------------------
Title: Trust Officer
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EXHIBIT A
TO
SUBORDINATION AGREEMENT
Subsidiary Guarantors
Hanover Direct Pennsylvania, Inc.
Brawn of California, Inc.
Gump's By Mail, Inc.
Hanover Syndication Corp.
Hanover List Management, Inc.
York Fulfillment Company, Inc.
Gump's Holdings, Inc.
Hanover Direct New Jersey, Inc.
Company Store Holdings, Inc.
Tweeds, Inc.
Hanover Casuals, Inc.
Hanover Direct Virginia Inc.
Hanover Holdings Inc.
Hanover Ventures, Inc.
LWI Holdings, Inc.
Hanover Realty, Inc.
Hanover Catalog Holdings, Inc.
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