Account Purchase And Credit Card Marketing Agmt.

Exhibit 10.76


ACCOUNT PURCHASE & CREDIT CARD MARKETING & SERVICES AGREEMENT


This agreement ("Agreement") is entered into as of the 9th day of March, 1999 ("Effective Date"), by and among Capital One Services, Inc. ("COSI"), a Delaware corporation and Capital One Bank ("COB"), a Virginia banking corporation (jointly and severally, or as appropriate as to a particular party's obligations, "Capital One"), and Hanover Direct, Inc., a Delaware corporation located at 1500 Harbor Boulevard, Weehawken, New Jersey 07087, on behalf of its subsidiaries and affiliates other than Compagnie Financiere Richemont AG ("HDI").


RECITALS


A. General Electric Credit Corporation ("GECC") owns and services, among other things, a portfolio of credit card receivables for a single-line house credit card program as set forth in Exhibit A ("Existing Portfolio") pursuant to an agreement between HDI and GECC (the "Existing Agreement") (which existing Agreement has not been disclosed to Capital One) the terms of which provide that a third party purchaser may purchase the Existing Portfolio under limited conditions set forth in that certain Existing Agreement.


B. Capital One has offered to purchase the Existing Portfolio and HDI desires to sell the Existing Portfolio and the proposed transaction has been consented to by GECC pursuant to Section 12.3 and 12.5 of the Existing Agreement.


C. Capital One has offered to provide a dual-line credit card program to credit card holders of the Existing Portfolio and to market and promote the dual-line credit card program to prospective credit card applicants (the "Program") and HDI desires to engage Capital One for the purpose of servicing such Program on its behalf. "Dual-line" shall mean a private-label credit card line for HDI merchant use and a standard Visa or MasterCard line of credit for third-party use.


D. HDI owns and offers various products and services through several mail-order catalog subsidiaries and limited liability companies ("Catalogs") and maintains site(s) on the Internet, and owns and/or manages related Web sites (collectively, the "HDI Sites") and markets the sale of Catalogs' goods and services in a variety of direct response media, now known and hereafter developed ("Media Channels").


E. HDI and Capital One desire to use all Media Channels available to them to offer the Program to customers and prospective customers of both the Catalogs and Capital One.


Therefore, the parties agree as follows:


I DEFINITIONS


A. "Accounts" = Credit account and related contractual agreements with
holders of a MasterCard or Visa credit account, whether or not a plastic
card has been issued against such account.


B. "Active Account" = Program Accounts which have an open outstanding
balance.


C. "Affiliate" = As defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended, together with the rules and regulations
promulgated thereunder other than Compagnie Financiere Richemont AG.


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D. "Agreement" = As defined in the Preamble.


E. "Applicable Law" = All applicable laws of any jurisdiction, including
banking laws, consumer credit laws, securities laws, tax laws, tariff and
trade laws, ordinances, judgments, decrees, injunctions, writs and orders
or like actions of any Competent Authority and the rules, regulations,
orders, interpretations, licenses and permits of any Competent Authority.


F. "Capital One" = As defined in the Preamble.


G. "Capital One's Closing Conditions" = As defined in Section IV.B.5.


H. "Catalogs" = As defined in the Recitals.


I. "Charged-off Accounts" = HDI Accounts issued under the Program that
have been charged-off on the books and records of Capital One, net of
recoveries, pursuant to Applicable Law and, in every event, after 180 days
past due, under normal circumstances and immediately upon notice of
unusual events, including due to non-payment, death or otherwise.


J. "Closing" = As defined in Section IV.B.2.


K. "Closing Date" = As defined in Section IV.B.2.


L. "Competent Authority" = Any federal, state, county, local or municipal
governmental or quasi-governmental body, bureau, commission, board, board
of arbitration, instrumentality, authority, agent, court, department,
inspectorate, official or public or statutory person (whether autonomous
or not) having jurisdiction over this Agreement or any of the parties to
this Agreement.


M. "Credit Card Procedures" = Those policies and procedures adopted by
Capital One in the administration of credit card operations for itself or
its Affiliates and other third parties, as amended, from time to time in
the absolute discretion of Capital One.


N. "Delinquent Accounts" = Accounts which meet any one of the following
criteria: (i) one (1) or more days Past Due and over-limit, (ii) greater
than thirty (30) days Past Due, or (iii) is a Charged-off Account.


O. "Dual-line" = As defined in the Recitals.


P. "Encumbrance" = Any mortgage, lien, pledge, charge, assignment,
hypothecation, securitization, security interest, title retention,
preferential right, trust arrangement, lease, easement, servitude or
encumbrance of any kind.


Q. "Existing Portfolio" = As defined in the Recitals.


R. "Existing Portfolio Account Contract" = An agreement between HDI and an
account holder evidencing a Purchased Account.


S. "Existing Portfolio Account Holder List" shall mean the list of the
names and addresses of all account holders of a Purchased Account as of
the Closing Date.


T. "Existing Portfolio Account Information" = The following information
with respect to each Purchased Account: (a) the information contained in
the data fields listed


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on Exhibit A hereto; (b) the RM (returned mail) status of such Purchased
Account; (c) the original application for such Purchased Account (or a
copy thereof) as GECC may have in its files and (d) full file layout and
data dictionary with metadata.


U. "GECC" = As defined in the Recitals.


V. "HDI Account List" = A list of HDI Accounts for which an HDI Card has
been issued whether or not such Accounts are Active Accounts or
Charged-off Accounts.


W. "HDI Accounts" = Accounts issued under the Program pursuant to this
Agreement.


X. "HDI Card" = A plastic card bearing the HDI Mark issued to a customer
under an HDI Account.


Y. "HDI's Closing Conditions" = As defined in Section IV.B.6.


Z. "HDI Customer Data" = All names, addresses and other individual level
data associated with customers (i) originating with the Existing
Portfolio, (ii) originating with HDI offers for credit cards including but
not limited to HDI Customer Lists; and (iii) for customer orders for the
products sold by HDI.


aa. "HDI Customer List" = HDI Customer Data excluding individual level
data for customer orders for the products sold by HDI.


bb. "HDI Line of Credit" = The amount of credit available to a given HDI
Account for purchases solely of HDI products.


cc. "HDI Sites" = As defined in the Recitals.


dd. "Initial Term" = As defined in IV.A.1.


ee. "installment billing programs'" = Those programs which HDI offers to
its customers pursuant to which cardmembers may accept the offer to divide
a total transaction amount over 4 or 5 months.


ff. "Liaison" = As defined in Section IV.G.1.


gg. "Marks" = As to a party, means such party's trademarks, trade names,
logos, service marks, trade styles, trade dress and other proprietary
identifying marks whether or not registered or otherwise legally
determined to be owned by such party.


hh. "Media Channels" = As defined in the Recitals.


ii. "Models" = Criteria developed by Capital One for targeting and
identifying customers, credit products for such customers, or
restructuring credit products provided to existing Accounts, whether
mathematical or otherwise, including, without limitation, Confidential
Information of Capital One used or prepared in connection with the
development of such criteria, through analysis and modeling of risk
parameters and customer information, including from existing databases or
otherwise.


jj. "multi-pay accounts" = Those Accounts in which cardmembers have
accepted the offer to divide a total transaction amount over 4 or 5
months.


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kk. "open outstanding balance" = Accounts where an average daily balance
for a given period is greater than zero dollars.


ll. "Past Due" = An Account is past-due where payment has not been
received by the statement due date.


mm. "Person" = Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any group or political
subdivision thereof.


nn. "Program" = As defined in the Recitals.


oo. "Program Launch Date" = The date of closing of the purchase and
conversion of the Purchased Accounts.


pp. "Purchased Account(s)" = Accounts from the purchased Existing
Portfolio on the Closing Date excluding accounts which are (i) more than
180 days past due or (ii) bankrupt, deceased or otherwise subject to
charge-off by GECC, at the Closing Date hereunder.


qq. "Purchase Date" = The date on which Purchased Accounts are purchased
by Capital One from GECC.


rr. "Set-up Period" = The period of time commencing from the Effective
Date and concluding on the Program Launch Date during which the parties
expect to undertake systems and operations preparations necessary to
establish the Program.


ss. "Solicitation" = An offering of the HDI Accounts to a group of Persons
identified as potential account holders through existing HDI Customer
Lists, the analysis and modeling of risk parameters and credit information
obtained from Credit Bureaus or otherwise via one or more of the following
marketing channels: (i) take-one or other similar applications; (ii)
direct mail; (iii) telemarketing and (iv) Internet-based application
forms.


tt. "Tape" = As defined in Section IV.B.3(b).


uu. "Tax" or "Taxes" = A United States or foreign federal, state or local
income, payroll, ad valorem, excise, sales, use, occupancy, real estate,
capital stock, or franchise tax or other governmental charge, including
any interest, fines, penalties, and additions relating to any such tax.


vv. "Tax Return" = Any statement, form, return or other document required
to be supplied to a taxing authority in connection with Taxes.


ww. "Term" = As defined in II.C.6(c).


xx. "Termination Date" = The date on which this Agreement shall terminate,
including for any reason set forth in IV.C.


yy. "Unbanked" / "Unbanked Consumer" = An individual who meet(s) either of
the following two (2) criteria:


i) no record in the credit bureaus; or


i) a record in the credit bureaus and


(a) an account that does not have at least 2 "trade lines"
on it; or


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(b) an account with 2 or more "trade lines" on it but the
individual consumer has a scoring report issued on it by
FAIR ISAAC (or a company with a similar scoring
mechanism) with a score of less than 600.


"Trade line" shall mean, for the purposes of this definition, a line of
credit issued by an entity which has extended credit to an individual and
reported it to the credit bureau. A credit inquiry shall not be deemed a
trade line.


zz. "Unbanked Market" = The consumer market wherein any entity may offer
for sale merchandise or services on credit where 40% or more of approved
applicants are Unbanked Consumers.


Section 1.1. Construction. With respect to all terms used in this Agreement, words used in the singular include the plural and words used in the plural include the singular. The word "including" means including without limitation, and the words "herein", "hereby", "hereto" and "hereunder" refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Articles, Sections and Exhibits mean the Articles and Section of and the Exhibits attached to this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time, to the extent provided by the provisions thereof and by this Agreement; and (iii) to a statute mean such statute as amended from time to time. The Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein.


II KEY POINTS OF RELATIONSHIP


A. REPLACEMENT OF GECC AS SERVICE PROVIDER OF HDI'S PRIVATE LABEL CREDIT
PROGRAM AND CONVERSION TO DUAL-LINE CREDIT CARD.


1. Replacement. Capital One shall provide services generally of a
type provided previously by GECC with respect to HDI's private label
credit card program. Capital One shall do this by (a) purchasing
from HDI the Existing Portfolio at a price equal to 100% of the par
value of the outstanding receivables of accounts excluding
Charged-off Accounts on the Closing Date and (ii) continuing to fund
the portfolio's growth pursuant to the provisions of this Agreement.


2. Selection of Card Association Capital One shall convert Purchased
Account holders over to a dual-line Visa or MasterCard with the
private label line that functions similar to the existing GECC
program. The final selection of Visa or MasterCard for the dual-line
card shall be made by HDI with the prior reasonable approval of
Capital One.


3. Visa or MasterCard Co-branded Incentive Dollars. HDI and Capital
One shall retain the right to jointly negotiate and share equally
(50:50) any Visa or MasterCard association "co-branded" incentive
dollars.


4. Risk offset Fee. Capital One will provide the dual-line private
label program to HDI for a Risk offset fee recognizing in part the
risk Capital One faces of potentially higher credit losses which
will be:


o $1.50 per Active Account per month.


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o $10 per Account originated under the Program paid once
per Account origination, settled on a quarterly basis
for all Accounts generated in the quarter.


5. It is the intention of Capital One to accommodate, consistent
with Applicable Law, funding to HDI of up to $2,000,000 in
receivables on HDI multi-pay accounts. Capital One shall use
good faith best efforts to offer a reasonable funding rate for
such accounts. HDI shall have the option to accept the offer,
re-negotiate the offer, or decline the offer. The parties
anticipate negotiating the terms of any such arrangement
during the Set-up Period.


B. SHARING OF COSTS AND PROFITS OF DUAL LINE CREDIT CARD ISSUED TO HDI'S
EXISTING CUSTOMER PORTFOLIO


1. Promotion. Subject to the provisions of Article III below, HDI
will be responsible for promoting the HDI Card, both for continued
use as well as to acquire new HDI Accounts in all Media Channels on
a mutually agreeable basis.


(a) Where these programs can be added to an HDI existing
customer contact ( i.e. on-page in existing catalogs, as a
package insert or inbound telemarketing ), costs will be borne
by HDI.


(b) For stand-alone credit promotions, if any, that do not use
an existing customer contact of HDI, the catalog, mailing and
telemarketing costs of the Program will be equally split
between HDI and Capital One. HDI alone will bear the cost and
risk of catalog inventory. Where such promotions are
anticipated, Capital One and HDI agree to prepare detailed
plans including a promotion budget which outlines expected
costs. Once completed, both parties shall agree in writing to
the budget and the sharing of promotion/mailing costs,
including any variances to the budget.


2. Credit Screening. As set forth in Article III below, Capital One
shall be responsible for the credit screen which Capital One may
deem necessary (pre-screening and at the point of application if
required), credit underwriting and account set-up costs. Capital One
shall be solely responsible for credit decisions, including credit
line. HDI and Capital One shall agree in advance to the standard
terms and conditions used for the Program. For Delinquent Accounts,
Capital One may at its own discretion modify the Delinquent
Account's terms and conditions; provided that Capital One will not
change terms for any such Account the first time such Account
becomes a Delinquent Account except Accounts that are bankrupt or
deceased, or that Capital One in good faith believes to be
fraudulent. Accounts which have become a Delinquent Account a second
time shall be referred to herein as a "Longstanding Delinquent
Account."


3. HDI Fees.


a) HDI will receive an annual fee to be paid quarterly by
Capital One, being 0.625% of the quarterly average
outstanding receivable balance (2.5% annualized) under
the dual-line product, excluding Delinquent Accounts.
(By way of illustration, on a $1,000 quarterly average
outstanding balance for an account holder, 0.625% or
$6.25 shall be paid by Capital One to HDI.)


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b) On a quarterly basis, a marketing offset fee of $10 per
HDI Account paid once per Account origination, settled
on a quarterly basis for all Accounts generated in the
quarter.


c) Such fees shall be the sole amount paid to HDI by
Capital One which shall otherwise retain all profits
associated with the dual-line product.


4. Shared Credit Risk for 18 Months. For a period of 18 months from
the Closing Date, HDI shall share the credit risk on the Purchased
Accounts with an assumed 8% total shared risk measured as a
percentage of average receivable balance, with monthly
reconciliation therefor. (By way of illustration, monthly
reconciliation will examine "charge-offs"; if total losses are 10%,
HDI shall be responsible to pay Capital One 1% of the losses; if
total losses are 6%, Capital One shall be responsible to pay HDI 1%
of the losses. If such month is after 18 months from the Purchase
Date, then HDI shall share no part of credit losses or gains above
or below 8%.)


5. By-Pass. No interchange fee will be required to be paid by HDI
for charges made to the private label line of the card with
transactions billed directly to Capital One as set forth below and
not sent through the Visa or MasterCard association payment system.


C. JOINT DEVELOPMENT OF PROGRAM TO BUILD 'UNBANKED' CREDIT PORTFOLIO


1. Program Development. HDI and Capital One agree to jointly develop
a program to build a portfolio of Program credit card members who
are Unbanked Consumers.


2. Marketing Responsibility. HDI will act as the marketing arm of
the two parties to generate Unbanked credit applicants. These
applicants will be submitted to Capital One for credit approval and
dual-line account set up.


3. Marketing Costs. Capital One shall pay HDI a marketing offset fee
of $10 per HDI Account paid once per Account origination, settled on
a quarterly basis for all Accounts generated in the quarter. HDI
will be responsible for the costs of all marketing, merchandising,
and promotions in generating the applications but all such media
materials will be created by Capital One, consistent with the
provisions of Article III below, subject to the reasonable right of
review of promotional copy as provided in Section II.E. below.


4. Credit Analysis Responsibility and Costs. Capital One will be
responsible for all credit evaluation, credit set up and all costs
associated with credit account management.


5. Account Approval Standards. Prior to each promotion by HDI to
generate accounts, HDI and Capital One will agree to the terms and
conditions required by Capital One to approve accounts for the
purpose of enabling HDI to make its promotions to a more selective
market, to more effectively take customer applications, and to
properly communicate with both Capital One and customers. This may
include such items as credit history (required positive or
prohibited negative credit bureau line items), required down
payment, APR, and account fees.


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6. Profit Sharing for Unbanked Consumers. HDI credit sales using HDI
Accounts by Unbanked Consumers shall result in profit sharing by the
parties on the following schedule and in recognition of Capital One
taking on potentially higher credit losses:


(a) During the 1st 12 months for each HDI Account, (i) HDI
will pay Capital One $2.00 per month for each Active Account.


(b) During the 2nd 12 months for each HDI Account:


(i) Capital One will pay HDI 4% of the average annual
receivable balance for each HDI Account excluding
Delinquent Accounts.


(ii) HDI will pay Capital One:


1. $1.50 per month for each Active Account.


2. 4% of net HDI sales on the HDI Account (net of
returns, cancellations, shipping, handling, tax and
royalties or revenue splits paid to 3rd parties).


(c) During the 3rd 12 months for each HDI Account, and
thereafter for all extensions of the Term:


(i) Capital One will pay HDI 4% of the average annual
receivable balance for each HDI Account excluding
Delinquent Accounts;


(ii) HDI will pay Capital One:


1. $1.00 per month for each Active Account;


2. 4% of net HDI sales on the HDI Account (net of
returns, cancellations, shipping, handling, tax and
royalties or revenue splits paid to 3rd parties).


(d) During the Term, HDI will pay Capital One a Risk offset
fee of $10 per Account originated under the Program in
recognition of the higher credit loss ratios experienced under
the Program.


Payments will generally be made on a quarterly basis consistent with
Section III.J.


D. INTELLECTUAL PROPERTY AND CONTENT OWNERSHIP AND LICENSE


1. Grant of License. Subject to the terms and conditions of this
Agreement, during the term of this Agreement, each of the parties,
to the extent that it has any such rights which may be sublicensed,
shall grant to the other party and does hereby grant to the other
party, a non-exclusive royalty-free sublicense to use, copy,
reproduce, distribute, transmit and publicly display, in the United
States of America and in all territories in which HDI's chosen Media
Channels are exposed, to the extent to which such party has the
right to grant such a license, the Marks which are customarily and
usually required to be in Promotion Copy (defined below in Section
II.E.) (as narrowly defined for the purposes of this Agreement,


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"Intellectual Property") with respect to such party, and to
sub-license their Intellectual Property, to existing wholly-owned
subsidiaries of such other party or to existing joint ventures in
which such party holds an ownership interest for the sole purpose of
using, reproducing, distributing, transmitting and publicly
displaying the licensor party's Intellectual Property but only for
the purposes described in and in accordance with this Agreement. A
sublicense granted to a party in the manner described herein is
personal to the sublicensee and shall not, without the written
consent of the licensor, be assigned, mortgaged, sublicensed or
otherwise encumbered by the sublicensee or by operation of law.


2. Card Design. Ca ...