EXHIBIT 10.78

                                 FIRST AMENDMENT
                TO THE HANOVER DIRECT SAVINGS AND RETIREMENT PLAN
                  (AS AMENDED AND RESTATED AS OF JULY 1, 1999)

        The Hanover Direct Savings and Retirement Plan (As Amended and Restated
as of July 1, 1999) is hereby amended effective March 1, 2002 by deleting
Section 3.04 thereof and substituting the following therefor:

        "3.04 Matching Employer Contributions.

        "An Employer may elect, in its sole discretion, to make Matching
Employer Contributions for a Plan Year for each Active Eligible Participant (as
hereinafter defined) on whose behalf Salary Deferral Contributions have been
made during the Plan Year. For purposes of this Section 3.04, an "Active
Eligible Participant" means (i) with respect to Salary Deferral Contributions
made prior to March 1, 2002, an Active Participant, and (ii) with respect to
Salary Deferral Contributions made on or after March 1, 2002, an Active
Participant who is employed by an Employer on the last day of the Plan Year and
has at least 1,000 Hours of Service during the Plan Year.

        "For any Plan Year, the Matching Employer Contributions (including any
forfeitures reallocated in accordance with Section 3.10) shall be allocated to
the Accounts of such Active Eligible Participants for the Plan Year in the same
proportion as the amount of Salary Deferral Contributions (not in excess of six
percent (6.0%) of the Participant's Compensation) for each such Active
Participant for such Plan Year bears to the total Salary Deferral Contribution
(as so limited) for all such Active Participants for such Plan Year. For
purposes of the preceding sentence, Salary Deferral Contributions and
Compensation shall be taken into account only with respect to periods when a
Participant is an Active Eligible Participant."


        IN WITNESS WHEREOF, Hanover Direct, Inc. has adopted this instrument
this ___ day of ____________, 2002.

                                            HANOVER DIRECT, INC.


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                                            By: