EXHIBIT 10.1


                         EMPLOYMENT AGREEMENT AMENDMENT

                               Amendment Number 1

      This Amendment Number 1 to the Employment Agreement made as of September
1, 2002 between Hanover Direct, Inc., a Delaware corporation (the "Company"),
and Thomas C. Shull ("Shull") (the "Employment Agreement"), shall be effective
as of September 1, 2002.

                              W I T N E S S E T H :

      WHEREAS, the Company and Shull entered into the Employment Agreement; and

      WHEREAS, the Company and Shull now desire to amend the Employment
Agreement in certain respects.

      NOW, THEREFORE, it is agreed by and between the parties hereto to the
following amendments to the Employment Agreement:

      1. The second sentence of paragraph 4(f) of the Employment Agreement is
hereby amended to read as follows:


      "In addition, the Company shall make cash payments of $450,000 in the
      aggregate to Shull in two equal lump sum amounts of $225,000 each payable
      on March 31, 2003 and September 30, 2004; provided that on each such date
      this Agreement has not been terminated pursuant to paragraph 6(a)(i) or
      6(a)(iv) hereof; and provided, further, however, that such payments shall
      be made notwithstanding any termination of this Agreement on or prior to
      such dates pursuant to paragraph 6(a)(ii), 6(a)(iii), 6(a)(v) (or as a
      result of another event constituting a Change of Control (as hereinafter
      defined)) or 6(a)(vi) hereof."

      2. The first sentence of paragraph 6(b)(iii) of the Employment Agreement
is hereby amended to read as follows:

      "If the termination is pursuant to paragraph 6(a)(ii) or 6(a)(vi), Shull
      shall be entitled to receive a lump sum payment equal to (A) the aggregate
      amount of Base Compensation to which he would have otherwise been entitled
      through the end of the Agreement Term (not to exceed 18 months of such
      Base Compensation) plus (B) such additional amount, if any, in severance
      pay which, when combined with

      the amount payable pursuant to clause (A) equals 18 months of Base
      Compensation and such amount of bonus as may be payable pursuant to the
      Company's 2002 Management Incentive Plan or other bonus plan, as
      applicable (based upon the termination date and the terms and conditions
      of the applicable bonus plan), as described in paragraph 4(b), as well as
      such amounts as may be unpaid pursuant to paragraph 4(f) and employee
      benefits such as accrued vacation and insurance in accordance with the
      Company's customary practice."

      3. Except as hereunder provided, the Employment Agreement shall remain in
full force and effect without further modification.

      IN WITNESS WHEREOF, the Company and Shull have executed this Amendment
Number 1 as of September 1, 2002.

                                  HANOVER DIRECT, INC.

                                  By:     /s/ Michael D. Contino
                                          Name: Michael D. Contino
                                          Title: EVP/C.O.O

                                  /s/ Thomas C. Shull
                                  THOMAS C. SHULL