EXHIBIT 10.55
ADDENDUM TO ACCOUNT PURCHASE & CREDIT
CARD MARKETING & SERVICES AGREEMENT
This Addendum to Account Purchase & Credit Card Marketing & Services
Agreement ("Addendum") is entered into by and between Capital One Services,
Inc., a Delaware corporation ("COSI") and Capital One Bank, a Virginia banking
corporation ("COB")(jointly and severally, or as appropriate as to a particular
party's obligation, "Capital One") and Hanover Direct, Inc., a Delaware
corporation ("HDI"), as of July 7, 1999.
WHEREAS, Capital One and HDI entered into an Account Purchase & Credit
Card Marketing & Servicing Agreement ("Agreement") as of March 9, 1999; and
WHEREAS, Capital One and HDI now desire to amend certain provisions of the
Agreement.
NOW THEREFORE, the parties agree as follows:
1. The current definition of "Purchased Accounts" in the Agreement
is hereby deleted in its entirety and replaced with the following
definition:
"Purchased Accounts = Accounts from the purchased
Existing Portfolio on the Closing Date, excluding (i)
Charged-off Accounts, (ii) all Gumps Department Store
corporate credit accounts; (iii) all six-pay Gumps accounts;
and (iv) all eighteen-pay Gumps accounts."
2. The current definition of "Charged-off Accounts" in the
Agreement is hereby deleted in its entirety and replaced
with the following:
"Charged-off Accounts = Credit accounts issued under the
Existing Agreement that have been charged-off on the
books and records of the applicable issuer, net of
recoveries, pursuant to Applicable Law and, in every
event, (i) all accounts 180 days past due, (ii) all
fraudulent accounts, (iii) all accounts with lost or
stolen cards, (iv) all bankrupt accounts, (v) all
accounts with deceased account holders, and (vi) any
other instance mutually agreed upon by the parties."
3. The current definition of "Term" in the Agreement is
hereby deleted in its entirety and replaced with the
following definition:
"Term = as defined in IV.A.l."
4. Section II.A.1 is hereby deleted in its entirety and replaced
with the following:
"Replacement. Capitol One shall provide services generally
of a type provided previously by GECC with respect to HDI's
private label credit card program, except that Capital One
assumes no responsibility for any account programs serviced
by GECC and closed as of the closing date, including, without
limitation, the insurance sales and deferred billing programs.
Capital One shall do this by (a) purchasing from HDI the
Purchased Accounts at a price equal to 100% of the par value
of the outstanding receivables of accounts and (ii) continuing
to fund the portfolio's growth pursuant to the provisions of
this Agreement."
5. A new Section II.B.3 is hereby inserted to read as follows, and
the current Section II.B.3 will officially become Section II.B.4; the current
Section II.B.4 will officially become II.B.5 and the current Section II.B.5 will
officially become II.B.6:
"HDI's Override Authority. Notwithstanding Section II.B.2
above, and solely for the Gumps Department Store accounts,
Capital One shall not object to HDI overriding certain credit
limits set by Capital provided that overrides are made solely
pursuant to the Gumps Credit policy attached as Exhibit A.
In those instances that HDI exercises such override authority
and in the event Gumps accounts are later charged-off, HDI
and Capital One agree that Capital One will be only responsible
for the first one percent (1%) of the Gumps amounts so
charged-off and HDI shall be solely responsible for all other
charged-off losses".
6. A new Section II.B.4.(b) is hereby inserted to read as follows,
and the current Section II.B.4.(b) will officially become Section II.B.4.(c)
and the current Section II.4.3(c) will officially become II.B.4.(d):
"Should Capital One offer a 9.9% annual prime rate (the "9.9
Card") to qualifying Accounts, HDI agrees to reduce the fee
set forth in Section B.3.(a) from 0.625% of the quarterly
average outstanding receivable balance (2.5% annualized)
under the dual-line product, to .15% of the quarterly average
outstanding receivable balance (.60% annualized), excluding
Delinquent Accounts. Capital One agrees to limit the number
of accounts holding the 9.9 Card to a maximum of 20,000. Capital
One and HDI also agree
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to evaluate the success of the 9.9 Card program 18 months after
the Closing Date, unless terminated sooner by mutual agreement of
the parties, and if either party determines to discontinue the
program, the parties shall convert existing affected Accounts to
a new program.
7. A new Section B.6 is hereby inserted as follows:
"Additional Capital One Fees. At the end of each quarter, the
parties hereby agree to calculate the amount of fees paid by each
party during such quarter under Sections A.4 and B.3.(b). If
during such period, fees paid by HDI to Capital One pursuant to
Section A.4 exceed fees paid by Capital One to HDI pursuant to
Section B.3.(b), Capital One agrees to pay HDI one-half of the
amount of such excess. [By way of illustration only, if under
Section A.4, HDI paid Capital One $1,000, and if under B.3.(b),
Capital One paid HDI $500, then Capital One would pay HDI $250
($500 subtracted from $1,000, divided by 2)]. If Capital One pays
more fees to HDI during any quarter, Capital One is not obligated
to pay HDI any further fees."
8. A new Section IV.B.3(b) is hereby to read as follows, and the
current Section IV.B.3(b) will officially become Section IV.B.3(c), and the
current Section IV.B.3(c) will officially become IV.B.3(d), and the current
Section IV.B.3(d) will officially become IV.B.3(e):
"reconcile with GECC, within 3 days of the Closing Date, any
discrepancies between the Purchase Price paid and the outstanding
amount of the receivables of the Purchased Accounts, as reflected
on the Tape received from GECC on the Closing Date. If, as a
result of this reconciliation, the estimated portion of the
Purchase Price delivered to Capital One prior to the Closing Date
from HDI is materially changed, Capital and HDI will "true-up"
any such discrepancies."
9. A new Section IV.B.3(f) is hereby inserted as follows:
"wire a portion of the Purchase Price, based on the June 2, 1999
Preliminary Tape, to Capital One no later than the day before the
scheduled Closing Date. Such amount will represent an estimate of
HDI's portion of the Purchase Price, which estimate will be
agreed upon by HDI and Capital One. Upon receipt of a
confirmation of HDI's funds, Capital One will wire GECC the
Purchase Price on
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the Closing Date. HDI and Capitol One agree to reconcile such amounts
paid to GECC within 10 business days of Closing."
10. A new Section W. is hereby added to Section IV of the Agreement as
follows:
"W. SPECIFIC INDEMNIFICATION. In the event that the purchase and sale of
the Existing Portfolio as contemplated in that certain Portfolio
Purchase and Sale Agreement by and among HDI and GECC (the "GECC
Agreement") is not consummated in accordance with the GECC Agreement
due primarily to any act or omission of HDI, then, in addition to the
obligations of HDI pursuant to Subsection J above, HDI agrees to
indemnify and hold harmless Capitol One and its affiliates and the
officers, directors, employees, agents and partners of Capitol One and
its affiliates (collectively, the "Indemnified Parties"), from any
liability, loss, cost, expense and damages (including, without
limitation, punitive damages) paid or payable to GECC or on its
behalf, and any interest thereon, including reasonable attorneys' fees
(collectively, "Losses"), which results in any material part from or
is caused in any material part by the notice letter sent to account
holders by Capital One with the concurrence of HDI on or around May
17, 1999 ("Pre-Closing Letter") or any related changes in terms or
benefits or any actions or omissions by HDI, any affiliate of HDI or
any of their respective agents relating to the Pre-Closing Notice or
any such changes in terms or benefits; provided that, in no event,
shall HDI be obligated under this section to indemnify any Indemnified
Party against any Losses to the extent such Losses result from the
gross negligence or willful misconduct of the Indemnified Parties or
from any violation of applicable law by the Indemnified Parties."
All other terms and conditions of the Agreement remain in full force and
effect.
This Addendum may be executed in separate counterparts, which, when taken
together, shall constitute the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Addendum to be duly
executed and to be effective as of the date first written above.
HANOVER DIRECT, INC. CAPITAL ONE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxx
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Xxxxxx X. Xxxx Xxxx X. Xxxxxx
President & Chief Vice President, Marketing
Executive Officer and Analysis
CAPITAL ONE BANK
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Vice President, Marketing
and Analysis
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