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HANOVER DIRECT, INC.
1500 HARBOR BOULEVARD
WEEHAWKEN, NEW JERSEY 07087
(201) 863-7300
INFORMATION STATEMENT
This Information Statement is furnished by the Board of Directors of
Hanover Direct, Inc., a Delaware corporation (the "Company"), in connection with
the taking of certain corporate action, as described below, upon written consent
in lieu of a meeting of the Company's shareholders. This Information Statement
is first being sent to the Company's shareholders on or about October 11, 1996.
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
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AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors of the Company and NAR Group Limited ("NAR"), the
holder of 54.3% of the Company's common stock, par value $.66 2/3 per share (the
"Common Stock"), approved on September 26, 1996, pursuant to Sections 242 and
228 of the Delaware Business Corporation Law, an amendment to the Company's
Certificate of Incorporation increasing the number of shares of Common Stock
which the Company shall have authority to issue from 150,000,000 to 225,000,000
shares. This action will become effective upon the filing of a Certificate of
Amendment to the Certificate of Incorporation, which will not be earlier than
October 31, 1996, which is 20 days after the mailing of this Information
Statement. As of September 26, 1996, the Company had 143,044,492 shares of
Common Stock outstanding and 1,157,061 shares held in treasury. The increase in
authorized shares is necessary to provide enough shares of Common Stock for
issuance pursuant to options and warrants previously granted by the Company to
directors and officers, including options to purchase an aggregate of 7,530,000
shares granted by the Company on August 23, 1996 to the Company's President and
Chief Executive Officer, Rakesh K. Kaul. The additional shares of Common Stock
not used for such purpose, together with the shares of Common Stock held in
treasury, will be available for general corporate purposes, as determined by the
Board of Directors, without (except as otherwise required by law) further
authority from shareholders. The additional shares of Common Stock will have the
same voting and other rights as the presently authorized Common Stock. Holders
of shares of Common Stock presently have no preemptive rights and will have none
in respect of the additional shares of Common Stock.
As of September 26, 1996, the record date for the action (the "Record
Date"), there were 143,044,492 shares of Common Stock and 634,900 shares of
Series B Convertible Additional Preferred Stock, par value $.01 and stated value
$10.00 per share (the "Series B Preferred Stock"), outstanding. The approval of
the holders of a majority of the outstanding shares of Common Stock and Series B
Preferred Stock, voting together as a single class, is necessary to adopt the
amendment to the Certificate of Incorporation. Each outstanding share of Common
Stock is entitled to one vote on the proposal to adopt the amendment and each
outstanding share of Series B Preferred Stock is entitled to 1.5 votes on the
amendment. NAR, as the holder of 78,004,954 shares of Common Stock, or 54.2% of
the voting power of the Common Stock and the Series B Preferred Stock voting
together as a class, therefore, has the requisite power to approve the amendment
by written consent. Such consent was executed and delivered on September 26,
1996. Under Delaware law, shareholders who do not consent to the amendment do
not have appraisal rights with respect to the shares held by them.
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PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE COMPANY
The following table sets forth information concerning each person or group
of affiliated persons known by management to own beneficially more than five
percent (5%) of the Company's Common Stock as of September 26, 1996. The
information given is based on information furnished to the Company by such
persons or groups and statements filed with the Securities and Exchange
Commission (the "Commission").
<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK CLASS(1)
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<S> <C> <C>
Alan G. Quasha(2)................................................ 83,671,444(3,4) 58.5%
c/o Quadrant Management, Inc.
127 East 73rd Street
New York, New York 10021
NAR Group Limited(2)............................................. 83,651,444(3) 58.5%
c/o P.M.M. Services (B.V.I.) Limited
P.O. Box 438 Road Town, Tortola,
British Virgin Islands
Theodore H. Kruttschnitt, III.................................... 8,011,889(5) 5.6%
1350 Bayshore Boulevard
Suite 850
Burlingame, California 94010
</TABLE>
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(1) Includes in each case shares of Common Stock issuable upon exercise of
options or warrants exercisable within 60 days for the subject individual
only. Percentages computed on the basis of 143,044,492 shares of Common
Stock outstanding as of September 26, 1996.
(2) Information concerning the number of shares beneficially owned has been
taken from Amendment No. 16 to the Statement on Schedule 13D filed by NAR
Group Limited, a British Virgin Islands corporation ("NAR"), on August 29,
1996 with the Commission, as supplemented by additional information provided
to the Company by NAR. All of the shares beneficially owned by NAR could
also be deemed to be owned beneficially by certain other persons including
Alan G. Quasha, Intercontinental Mining & Resources Limited, Quadrant
Capital Corp. and Compagnie Financiere Richemont, A.G., each of which
disclaims beneficial ownership of securities of the Company owned of record
by any of the others.
(3) Includes warrants to purchase 5,646,490 shares of Common Stock exercisable
within 60 days granted to NAR or its affiliates.
(4) Includes options to purchase 20,000 shares of Common Stock exercisable
within 60 days by Mr. Quasha.
(5) Information concerning the number of shares beneficially owned has been
taken from Amendment No. 11 to the Statement on Schedule 13D filed by Mr.
Kruttschnitt on August 28, 1996 with the Commission. Such statement sets
forth the number of shares beneficially owned by Mr. Kruttschnitt and, of
such shares, the number as to which he holds sole voting power, shared
voting power, sole dispositive power or shared dispositive power. The
amended Statement on Schedule 13D also indicates that Mr. Kruttschnitt is a
member of a group which includes Mr. Hakman, who beneficially owns 20,286
shares of Common Stock, and Mr. Manwell, who beneficially owns 20,579 shares
of Common Stock.
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SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock by each Director and executive officer
and by all executive officers and Directors as a group as of September 26, 1996.
The information given is based on information furnished to the Company by such
persons and statements filed with the Commission.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
COMMON STOCK CLASS(1)
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<S> <C> <C>
Ralph Destino............................................ 25,000(4) *
J. David Hakman(2)....................................... 20,286 *
Rakesh K. Kaul........................................... 1,510,000 1.1%
S. Lee Kling............................................. 37,750 *
Theodore H. Kruttschnitt(2).............................. 8,011,889 5.6%
Jeffrey Laikind.......................................... 116,425(4) *
Elizabeth Valk Long...................................... 70,300(4) *
Edmund R. Manwell(2)..................................... 20,579(5) *
Alan G. Quasha(3)........................................ 83,671,444 58.5%
Geraldine Stutz.......................................... 115,440(6) *
Robert F. Wright......................................... 108,050(4) *
Charles E. Hudson........................................ 105,734(7) *
Michael Lutz............................................. 27,284 *
Edward J. O'Brien........................................ 124,080(8) *
Larry J. Svoboda......................................... 152,000 *
Mary Vonnegut............................................ 13,333 *
Jane R. Ries............................................. 25,000 *
Ralph J. Bulle........................................... -- *
Directors and executive officers as a group (18
persons)............................................... 10,503,150(9) 7.3%
</TABLE>
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* Less than 1%
(1) Includes in each case shares of Common Stock issuable upon exercise of
options or warrants exercisable within 60 days for the subject individual
only. Percentages computed on the basis of 143,044,492 shares of Common
Stock outstanding as of September 26, 1996.
(2) See Note (5) under "PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE COMPANY."
(3) See Note (2) under "PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE COMPANY."
All of the shares beneficially owned by NAR could also be deemed to be
beneficially owned by Alan G. Quasha due to his shared investment and
voting power with NAR.
(4) Includes options to purchase 25,000 shares exercisable within 60 days.
(5) Includes options to purchase 5,000 shares exercisable within 60 days.
(6) Includes options to purchase 75,000 shares exercisable within 60 days.
(7) Includes options to purchase 50,000 shares exercisable within 60 days.
(8) Includes options to purchase 40,000 shares exercisable within 60 days.
(9) Excludes 78,004,954 shares and warrants to purchase 5,646,490 shares
beneficially owned by NAR which could also be deemed to be beneficially
owned by Mr. Quasha. Includes options to purchase 20,000 shares held by Mr.
Quasha and options held by other individual officers and directors to
purchase an aggregate of 270,000 shares, in each case exercisable in 60
days.
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None of the Company's Directors or executive officers owns any shares of Series
B Preferred Stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (a) the Annual Report on Form 10-K for the
fiscal year ended December 30, 1995, as amended by Amendments No. 1, 2 and 3
thereto filed April 30, 1996, May 1, 1996 and July 18, 1996, respectively; (b)
the Quarterly Report on Form 10-Q for the quarterly period ended March 30, 1996,
as amended by Amendment No. 1 thereto filed July 17, 1996; (c) the Quarterly
Report on Form 10-Q for the quarterly period ended June 29, 1996; (d) Amendments
No. 1 and 2 dated April 16, 1996 and July 12, 1996, respectively, to the Current
Report on Form 8-K dated May 25, 1995; (e) the Current Report on Form 8-K dated
July 25, 1996; and (f) the Current Report on Form 8-K dated August 5, 1996.
Copies of such documents may be obtained without charge (except for exhibits
thereto which will be furnished upon payment of the Company's reasonable
expenses in furnishing such exhibits) by any person solicited hereunder by
writing to: Debra A. Berliner, Vice President -- Investor Relations and
Corporate Communications, Hanover Direct, Inc., 1500 Harbor Boulevard,
Weehawken, New Jersey 07087.
By Order of the Board of Directors
/s/ EDWARD J. O'BRIEN
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Edward J. O'Brien
Secretary
October 11, 1996
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