<PAGE>   1

                                                                   EXHIBIT 10.72

                          REGISTRATION RIGHTS AGREEMENT


                  REGISTRATION RIGHTS AGREEMENT, dated as of November 4, 1997,
between HANOVER DIRECT, INC., a Delaware corporation (the "Company"), and
SMALLCAP WORLD FUND, INC., a Maryland corporation (the "Stockholder").

                                R E C I T A L S:

                  A. The parties hereto are parties to a Stock Purchase
Agreement, dated the date hereof (the "Purchase Agreement").

                  B. Pursuant to the Purchase Agreement, the Company is issuing
to the Stockholder an aggregate of 3,700,000 shares of the Company's Common
Stock, par value $.66 2/3 per share (the "Common Stock").

                  THE PARTIES AGREE AS FOLLOWS:

                  1. Certain Definitions. Capitalized terms used herein which
are not otherwise defined herein and which are defined in, or by reference in,
the Purchase Agreement shall have the meanings given therein. For the purposes
of this Agreement, the following terms shall have the following meanings:

                  "Agreement" shall mean this Registration Rights Agreement, as
the same may be amended, modified or supplemented from time to time.

                  "Demand Notice" shall have the meaning set forth in Section
2(a) hereof.

                  "Shelf Registration" shall have the meaning set forth in
Section 2(a) hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.

                  "Holder" shall mean the Stockholder and each Person to whom
Registrable Securities are transferred so long as such Person holds such
Registrable Securities.

                  "Registrable Securities" shall mean the shares of Common Stock
issued pursuant to the Purchase Agreement. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act in accordance
with Section 2(c) hereof, regardless of whether such securities are actually
sold pursuant to such



<PAGE>   2

registration statement, (ii) they shall have been disposed of pursuant to rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force (and the
Holder thereof shall have received an opinion of independent counsel for the
Holder reasonably satisfactory to the Company to the foregoing effects), or (iv)
they shall have ceased to be outstanding.

                  "Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement, including, without
limitation, (i) all SEC and National Association of Securities Dealers, Inc.,
American Stock Exchange or relevant stock exchange registration, listing and
filing fees, (ii) all fees and expenses of complying with securities or blue sky
laws (including reasonable fees and disbursements of counsel for the Company,
the underwriters or the Holders in connection with blue sky qualifications of
the Registrable Securities), (iii) all printing, messenger, telephone and
delivery expenses and transfer taxes, (iv) the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, (v) the reasonable fees and
disbursements of one law firm retained in connection with such registration by
the Holders of Registrable Securities being registered and selected by the
Stockholder, (vi) any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, and (vii) the reasonable fees and expenses of
any special experts retained in connection with the requested registration, but
excluding underwriting discounts and commissions of underwriters, agents or
dealers relating to the distribution of the Registrable Securities, if any.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.

                  "SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act or any similar federal statutes then in effect.

                  2.  Shelf Registration.

                  (a) Timing. As promptly as practicable after April 1, 1998,
the Company will use its best efforts to effect the registration under the
Securities Act of all the Registrable Securities to the extent necessary to
permit the disposition (in accordance with the intended method or methods of
distribution thereof as specified at the time by the Stockholder) of such
Registrable Securities ("Shelf Registration"); provided, however, that the
Company may delay the filing of such registration statement relating to the
Registrable Securities for not more than ninety (90) calendar days following
such date if, in the reasonable judgment of the Board of Directors of the
Company, such filing is not in the best interests of the Company at such time.
Such registration shall be effected by the preparation and filing by the Company
with the SEC of a registration statement on Form S-3 or other similar form with
respect to the offering and sale by the Holders


                                     - 2 -

<PAGE>   3

of the Registrable Securities on a continuous or delayed basis in the future
pursuant to Rule 415 under the Securities Act.

                  (b) Expenses. The Company will pay all Registration Expenses
in connection with a registration of Registrable Securities requested pursuant
to this Section 2.

                  (c) Effective Registration Statement. A registration pursuant
to this Section 2 will be deemed to have been effected if (i) the registration
statement filed in connection with such registration shall have become effective
under the Securities Act and shall have remained effective until November 7,
1999 (provided that if, after such registration statement has become effective,
the offering of Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected), or (ii) the Company is unable to complete such
registration statement because one or more Holders of Registrable Securities
thus being registered failed to provide information for use in such registration
statement requested reasonably and in a timely manner by the Company or because
such Holders otherwise failed to do such reasonable acts and things as may be
requested in writing in a timely manner by the Company to enable the Company to
comply with the requirements of applicable law.

                  (d) The Stockholder shall be entitled to request one Shelf
Registration pursuant to this Agreement. No additional requests for Shelf
Registrations will be required to be effected by the Company.

                  3.  Incidental Registration.

                  (a) Right to Include Registrable Securities. If at any time on
or after April 1, 1998 and before March 31, 2000 the Company proposes to
register any of its equity securities under the Securities Act (other than a
registration on Form S-4 or Form S-8), whether or not for sale for its own
account, it will give ten (10) days prior written notice to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 3. Upon the written request of any such Holder made within
twenty (20) days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method of disposition thereof), the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holders
thereof, to the extent requisite to permit the disposition (in accordance with
such intended methods thereof) of the Registrable Securities so to be registered
("Incidental Registration"); provided that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and thereupon shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration, without prejudice, however, to the rights of Holders under Section
2 herein. No registration effected under this Section 3 shall relieve the
Company of its obligations to effect a registration upon


                                     - 3 -

<PAGE>   4

request under Section 2 herein. The Company will pay all Registration Expenses
in connection with the registration of Registrable Securities requested pursuant
to this Section 3.

                  (b) Priority in Incidental Registrations. If a registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration would have an adverse
effect on such offering, including the price at which such shares can be sold,
the Company will include in such registration the maximum number of securities
which it is so advised by such managing underwriter can be sold without such an
adverse effect, allocated as follows:

                  (A) first, all securities proposed to be registered by the
         Company for its own account, and

                  (B) second, all securities requested to be included in such
         registration under this Section 3 and any other securities proposed to
         be registered by the Company other than for its own account (if
         necessary, allocated pro rata among all such requesting Holders on the
         basis of the relative number of shares of securities each such Holder
         has requested to be included in such registration).

                  4. Registration Procedures. Whenever the Company effects or
causes the registration of the Registrable Securities under the Securities Act
as provided in this Agreement, the Company will use its best efforts to permit
the sale of such Registrable Securities in accordance with the intended method
or methods of distribution thereof, and will, as expeditiously as possible:

                  (a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, provided, however, that the
Company may discontinue any registration of its securities which is being
effected pursuant to Section 3 herein at any time prior to the effective date of
the registration statement relating thereto;

                  (b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective (i)
in the case of an Incidental Registration pursuant to Section 3 hereof, until
all securities registered pursuant to such registration statement have been
disposed of or (ii) in the case of a Shelf Registration pursuant to Section 2
hereof, for a period not to exceed ninety (90) days from the effective date
thereof, subject to the provisions of Section 2(c ) hereof, and to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Holders set forth in
such registration statement;

                  (c) furnish to the Holders such number of executed and
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits and all documents
incorporated by reference therein), such number of copies


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<PAGE>   5

of the prospectus included in such registration statement (including each
preliminary prospectus and supplemental prospectus), and such other documents as
the Holders may reasonably request in order to facilitate the disposition of the
Registrable Securities by such Holders;

                  (d) use its best efforts to register or qualify (and keep
effective such registration or qualification) such Registrable Securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States as may be reasonably
required to permit the Holders to sell the Registrable Securities or as the
Holders shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Holders to consummate the
disposition in such jurisdictions of the Registrable Securities; provided that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction where, but for the
requirements of this subsection (d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to consent
to general service of process in any such jurisdiction; and provided, further,
that this subsection (d) shall not be construed to require the Company to
register as a broker-dealer in any jurisdiction any third person to whom or
through whom a Holder proposes to sell Registrable Securities;

                  (e) immediately notify the Holders, at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in subsection (b) of this Section 4, of
the Company becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and at the request of the Holders promptly prepare and furnish to such
Holders a reasonable number of copies of an amended or supplemented prospectus
as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;

                  (f) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months beginning with the first month after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;

                  (g) use its best efforts to list such Registrable Securities
on the American Stock Exchange or any securities exchange on which securities of
such class are then listed, if such Registrable Securities are not already so
listed, and to provide a transfer agent and registrar for such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;

                  (h) enter into such agreements (including an underwriting
agreement in customary form) and take such other actions as the Stockholder
reasonably requests in order to expedite or facilitate the disposition of such
Registrable Securities;


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<PAGE>   6

                  (i) whether or not the registration relates to an underwritten
offering, make such representations and warranties to the Holders and to the
underwriters, if any, as are customarily made by issuers to underwriters in
underwritten offerings, obtain opinions of counsel to the Company addressed to
each Holder and to the underwriters, if any, covering the matters customarily
covered in underwritten offerings, and obtain a "cold comfort" letter or letters
and updates thereof from the Company's independent public accountants in
customary form and covering matters of the type customarily covered in
underwritten offerings, in each case as the underwriters or the Stockholder
shall request; and

                  (j) make available for inspection by the Holders, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant, or other agent retained
by the Holders or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all information
reasonably requested by the Holders, underwriter, attorney, accountant or agent
in connection with such registration statement.

The Company may require the Holders to furnish the Company such information
regarding the Holders and the distribution of such securities for use in the
registration statement relating to such registration as the Company may from
time to time reasonably request in writing and to do such reasonable acts and
things as the Company may from time to time reasonably request in writing in
order to permit the Company to comply with the requirements of law.

                  Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in subsection (e) of this
Section 4, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subsection (e) of this Section 4, and, if so
directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in subsection (b) of this Section 4
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to subsection (e) of this Section 4
to and including the date when each Holder of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by subsection (e) of this Section 4.

                  5.  Indemnification.


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                  (a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Sections 2 or 3 herein, the Company will, and it hereby does, indemnify and
hold harmless, to the fullest extent permitted by law, the sellers of any
Registrable Securities covered by such registration statement, its directors and
officers or general and limited partners (and directors and officers thereof),
each person who participates as an underwriter in the offering or sale of such
securities and each other person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any and all
losses, claims, damages or liabilities, joint or several, and expenses
(including legal, accounting and other expenses incurred in connection with
investigation, preparation or defense of any of the foregoing, and including any
amounts paid in any settlement effected with the Company's consent) to which
such seller, any such director or officer or general or limited partner or any
such underwriter or controlling person may become subject under the Securities
Act, the Exchange Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
supplemental prospectus contained therein, or any amendment or supplement
thereto, or (b) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such seller and each such
director, officer, general or limited partner, underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or preparing for and defending any such loss,
claim, liability, action or proceeding from time to time as such expenses are
incurred; provided that the Company shall not be liable in any such case to any
such person, to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment or supplement thereto
or in any such preliminary, final or supplemental prospectus in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller or underwriter specifically stating that
it is for use in the preparation thereof. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller or any such director, officer, general or limited partner, underwriter or
controlling person and shall survive the transfer of such securities by such
seller.

                  (b) Indemnification by the Sellers. The Company may require,
as a condition to including any Registrable Securities in any registration
statement filed in accordance with Section 4 herein, that the Company shall have
received an undertaking reasonably satisfactory to it from the prospective
sellers of such Registrable Securities (except that no such undertaking shall be
required to the extent applicable law, charter documents or by-laws forbid such
prospective sellers from giving such undertaking) or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subsection (a) of this Section 5) the Company, its directors and
officers signing the registration statement and its controlling persons and all
other prospective sellers and their respective controlling persons with respect
to any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary, final or supplemental prospectus
contained therein, or any amendment or supplement,


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<PAGE>   8

if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such sellers or underwriter
specifically stating that it is for use in the final or supplemental prospectus
or amendment or supplement, or a document incorporated by reference into any of
the foregoing; provided in no event shall the liability of any selling Holder of
Registrable Securities be greater in amount than the amount of proceeds received
by such Holder upon such sale. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any other prospective sellers or any of their respective directors, officers or
controlling Persons and shall survive the transfer of such securities by such
sellers.

                  (c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment (which is based on the written opinion of its counsel) a conflict of
interest between such indemnified and indemnifying parties exists in respect of
such claim, the indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof. If in an indemnified party's reasonable judgment (which is
based on the written opinion of its counsel) a conflict of interest between the
indemnified and indemnifying parties exists in respect of a claim or if the
indemnifying party refuses to participate in and to assume the defense of any
action brought against an indemnified party, the indemnified party may assume
the defense of such claim or action with counsel of its choosing which shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 5. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

                  (d) Contribution. If the indemnification provided for in or
pursuant to this Section 5 is due in accordance with the terms hereof but is
held by a court to be unavailable or unenforceable in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified person,
shall contribute to the amount paid or payable by such indemnified person as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified person on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,


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<PAGE>   9

liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified person by such persons'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. In no event shall the liability of any
selling Holder of Registrable Securities be greater in amount than the amount of
proceeds received by such Holder upon such sale.

                  6. Rule 144. The Company covenants that it will use its best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of the Holders, make publicly available such information as necessary to
permit sales pursuant to Rule 144 under the Securities Act, as amended), and it
will do all such other acts and things from time to time as requested by the
Holders to the extent required from time to time to enable each Holder to sell
shares of Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.

                  7. Public Trading Market. Until the earlier of (a) two years
after the effective date of the registration statement filed pursuant to Section
2 or (b) the date on which there are no Registrable Securities, the Company
shall use its best efforts to maintain a public trading market for its Common
Stock.

                  8. Restriction on Resale. Unless otherwise agreed by the
Company, until the earlier of (a) two years after the effective date of the
registration statement filed pursuant to Section 2 or (b) the date on which
there are no Registrable Securities, each Holder agrees that it will not resell
such Registrable Securities without registration under the Securities Act,
compliance with Rule 144 under the Securities Act or an opinion of counsel for
such Holder, addressed to the Company, to the effect that no such registration
is required. All reasonable costs, fees and expenses of counsel in connection
with such opinion shall be borne by the Holder.


                  9.  Miscellaneous.

                  (a) Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act of the
Stockholder. Holders of Registrable Securities shall be bound by any consent
authorized by this Section 9(a), whether or not such Registrable Securities
shall have been marked to indicate such consent.


                                     - 9 -

<PAGE>   10

                  (b) Successors, Assigns and Transferees. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
legal successors-in-interest, and nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

                  (c) Notices. All notices and other communications provided for
hereunder shall be given and shall be effective as provided in the Purchase
Agreement.

                  (d) Descriptive Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise effect the
meaning of the terms contained herein.

                  (e) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision, paragraph, word, clause, phrase, or sentence
in every other respect and of the remaining provisions, paragraphs, words,
clauses, phrases or sentences hereof shall not be in any way impaired, it being
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

                  (f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.

                  (g) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.

                  (h) Remedies. The parties hereto acknowledge that monetary
damages will not be adequate compensation for any loss incurred by reason of a
breach by either of them of the provisions hereof and agree, to the fullest
extent permitted by law, to waive the defense of adequacy of legal remedies in
any action for specific performance hereof.

                  (i) Merger, etc. If, directly or indirectly, (i) the Company
shall merge with and into, or consolidate with, any other Person, (ii) any
Person shall merge with and into, or consolidate with, the Company and the
Company shall be the surviving corporation of such merger or consolidation and,
in connection with such merger or consolidation, all or part of the Registrable
Securities shall be changed into or exchanged for stock or other securities of
any other Person, then, in each such case, proper provision shall be made so
that such Person shall be bound by the provisions of this Agreement and the term
"Company" shall thereafter be deemed to refer to such Person. For purposes
hereof, the term "Person" shall mean any individual, corporation, partnership,
trust or other nongovernmental entity.

                  (j) Legal Fees; Costs. If any party to this Agreement
institutes any action or proceeding, whether before a court or arbitrator, to
enforce any provision of this Agreement, the prevailing party therein shall be
entitled to receive from the losing party reasonable attorneys' fees


                                     - 10 -

<PAGE>   11

and costs incurred in such action or proceeding, whether or not such action or
proceeding is prosecuted to judgment.

                  (k) Termination. Except as otherwise provided herein, the
Company's obligations under Sections 2 and 3 hereof shall terminate at the close
of business on March 31, 2000, or such earlier date on which there shall be no
Registrable Securities.


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<PAGE>   12

                  IN WITNESS WHEREOF, each of the undersigned has caused this
Registration Rights Agreement to be executed on its behalf as of the date first
written above.



                                        HANOVER DIRECT, INC.


                                        By:    /s/Larry J. Svoboda
                                               --------------------------------
                                        Title: Senior Vice President and C.F.O.
                                               --------------------------------



                                        SMALLCAP WORLD FUND, INC.


                                        By:    /s/Vincent P. Corti
                                               --------------------------------
                                        Title: Vice President
                                               --------------------------------


                                     - 12 -
<PAGE>   13
                          ATTACHMENT TO SCHEDULE 2.02


HANOVER DIRECT, INC.
OPTION NAD WARRANT ROLLFORWARD
SEPTEMBER 27, 1997


WARRANTS

                              Outstanding
         Holder            September 27, 1997
----------------------------------------------
         Total                      5,646,490
                           ===================

Note: All of the outstanding warrants are held by NAR and affiliates.


OPTIONS

Horn & Hardart Stock Option Plan

                              Outstanding
         Holder            September 27, 1997
----------------------------------------------
         Total                         30,000
                           ===================

Hanover Direct, Inc. 1996 Stock Option Plan

         Total                      5,425,000
                           ===================


Various Option Plans for Rakesh Kaul

         Total                      7,530,000
                           ===================


Note: Future grant for R. Kaul does not appear due to uncertainty of ability to
      exercise. Please see attached copy of disclosure from 1997 Proxy
      Statement.


Directors Options

         Total                         70,000
                           ===================

Tandem Options

         Total                        624,000
                           ===================



     TOTAL OPTIONS                 13,679,000
                           ===================