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                                                                    EXHIBIT 10.2

                         EMPLOYMENT AGREEMENT AMENDMENT

                               Amendment Number 3

      This Amendment Number 3 to the Employment Agreement, made as of September
1, 2002 and amended by Amendment Number 1 thereto made as of September 1, 2002
and Amendment Number 2 thereto made as of June 23, 2003 (as so amended, the
"Employment Agreement"), between Hanover Direct, Inc., a Delaware corporation
(the "Company"), and Thomas C. Shull ("Shull"), shall be effective as of August
3, 2003.

                              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. Section 3 of the Employment Agreement is hereby amended to read as
follows:

            "Term. Subject to paragraph 6, the term of this Agreement (the
            "Agreement Term") and the term for the services of Shull shall
            commence as of September 1, 2002 and shall terminate on March 31,
            2006."

      2. The first sentence of paragraph 4(a) of the Employment Agreement is
hereby amended to read as follows:

            "In consideration for providing his services as President/CEO,
            during the Agreement Term, Shull shall receive, in addition to the
            other consideration provided in this Agreement, compensation at the
            rate of $71,250 per month or $855,000 per annum (the "Base
            Compensation"), payable in accordance with the Company's normal
            payroll policies; provided, however, that for purposes of the 2002
            Management Incentive Plan referred to in Exhibit 1, and the 2003
            Management Incentive Plan, if any, Shull's annual Base Compensation
            shall be deemed to be $600,000 through March 31, 2003; and,
            provided, further, however,
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            that solely for purposes of (1) Sections 2.9(ii) and 5.1(i) of the
            Hanover Direct, Inc. Eighteen Month Key Executive Compensation
            Continuation Plan effective as of April 25, 2001, as amended, (2)
            clause (ii) of the definition of "For Good Reason" contained in
            Section 5 of this Agreement, and (3) the Transaction Bonus Agreement
            between the Company and Shull dated May 14, 2001 as amended
            September 1, 2002, Shull's Base Compensation (therein referred to as
            annualized base salary or base pay) shall be equal to the higher of
            Shull's Base Compensation (or annualized base salary or base pay) at
            the time of the Change of Control and Shull's Base Compensation on
            August 2, 2003 (which was $900,000)."

      3. The last sentence of the first paragraph of Section 5 of the
Employment Agreement is hereby amended to read as follows:

            "The 2000 Option is fully vested and exercisable until March 31,
             2006."

     4. The definition of "For Good Reason" contained in Section 5 of the
Employment Agreement is hereby amended to read as follows:

            ""For Good Reason" shall mean the voluntary termination by Shull of
            his employment with the Company on account of any of the following
            actions: (i) a substantial and material diminution of Shull's duties
            or responsibilities for the Company, (ii) a material and substantial
            diminution of Shull's base salary or any long-term incentive
            opportunity (each as in effect as of the first day of the Agreement
            Term), (iii) the Company's requiring Shull to regularly report to
            work at a facility that is more than 30 miles from the facility at
            which Shull regularly reported as of the first day of the Agreement
            Term, (iv) decisions or actions by the Board of Directors,
            committees or individual members of the Board (including designees
            of the holder of the Series B Participating Preferred Stock of the
            Company if any) that materially impede Shull's ability to take
            actions to increase value for all shareholders of the Company, (v)
            the failure of the Company to provide Shull with the number of paid
            vacation days to which he would otherwise be entitled in accordance
            with the vacation policy of the Company, or (vi) any action by the
            Company that adversely affects in a material way Shull's
            participation in or materially reduces Shull's benefits under any
            such of the Company's employee benefit or compensation plans;
            provided, however, that in all cases, in order to terminate his
            employment with the Company For Good Reason, Shull must notify the
            Company in writing that Good Reason exists within 30 Business days
            of his knowledge of the event or events constituting Good Reason.
            The Company shall thereafter have 15 Business days within which to
            cure Shull's otherwise Good Reason ("The Cure Period").  Unless
            Shull's Good Reason is cured during the Cure Period, his termination
            For Good Reason shall become effective on the first business day
            following the conclusion of the Cure Period."

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

           IN WITNESS WHEREOF, the Company and Shull have executed this
Amendment Number 3 as of August 6, 2003.



                                       HANOVER DIRECT, INC.

                                      By:  /s/ Brian C. Harriss
                                        -----------------------
                                         Name: Brian C. Harriss
                                        Title: Executive Vice President,
                                               Human Resources & Legal



                                        /s/  Thomas C. Shull
                                        -----------------------
                                       THOMAS C. SHULL