<PAGE>   1
                                                                Exhibit 10.45

                   FIRST SUPPLEMENTAL SERIES A NOTE AGREEMENT


         This FIRST SUPPLEMENTAL SERIES A NOTE AGREEMENT dated as of December
29, 1995, between HANOVER DIRECT, INC., a Delaware corporation (the "Borrower"),
and NORWEST BANK MINNESOTA, N.A., a national banking association organized under
the laws of the United States of America and having its principal office in
Minneapolis, Minnesota, as trustee and paying agent (the "Trustee" or the
"Paying Agent", as applicable);

                              W I T N E S S E T H:

         WHEREAS, the Borrower and the Trustee entered into the Series A Note
Agreement dated as of November 9, 1994 (the "Series A Note Agreement") pursuant
to which the Borrower issued and sold its interest bearing Flexible Term Notes,
Series A (the "Series A Notes") in the aggregate principal amount of
$10,000,000; and

         WHEREAS, the Borrower has this day delivered to the Trustee a
Substitute Series A Letter of Credit in substitution for the Series A Letter of
Credit (each as defined in the Series A Note Agreement); and

         WHEREAS, in order to more fully evidence the delivery of the Substitute
Series A of Letter of Credit referenced above, the Borrower and the Trustee
desire to amend the Series A Note Agreement, subject to the terms and conditions
set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION 1. DEFINITIONS. All capitalized terms used in this First
Supplemental Series A Note Agreement and not otherwise herein defined shall have
the meaning ascribed to them in the Series A Note Agreement.

         SECTION 2. AMENDMENT TO SECOND RECITAL OF THE SERIES A NOTE AGREEMENT.
The second recital of the Series A Note Agreement on page 1 thereof is hereby
amended by deleting the reference to the "Bank" in the third line thereof and
replacing it with a reference to the "L/C Issuer".

         SECTION 3. AMENDMENTS TO SECTION 1.01 OF THE SERIES A NOTE AGREEMENT.

         (a) The definition of "BANK" set forth in Section 1.01 of the Series A
Note Agreement is hereby deleted in its entirety and replaced with the
following:

                  "BANK" means, individually and collectively, the Lender and
the L/C Issuer.

         (b) The definition of "BANK NOTES" set forth in Section 1.01 of the
Series A Note Agreement is hereby deleted in its entirety and replaced with the
following:
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                           "BANK NOTES" means any Series A Notes purchased from
                  proceeds from a draw under the Series A Letter of Credit and
                  pledged to the Lender under the Reimbursement Agreement, to
                  the extent provided therein, including, in the event a
                  book-entry system with respect to the Series A Notes is in
                  effect, any beneficial ownership interest therein; provided
                  that in the event that the L/C Issuer fails to honor a drawing
                  under the Series A Letter of Credit to fund such a purchase
                  and the Borrower purchases such Series A Notes with its own
                  funds, "Bank Notes" shall include such Series A Notes, except
                  that such Series A Notes shall not be pledged to the Lender
                  under the Reimbursement Agreement.

         (c) The definition of "BUSINESS DAY" set forth in Section 1.01 of the
Series A Note Agreement is amended by deleting the last sentence thereof in its
entirety and replacing it with the following:

                  For purposes of this definition, "paying office of the Bank"
                  means the office of the L/C Issuer responsible for making
                  payments under any Series A Letter of Credit.

         (d) The definition of "OPINION OF COUNSEL" set forth in Section 1.01 of
the Series A Note Agreement is hereby deleted in its entirety and replaced with
the following:

                           "OPINION OF COUNSEL" means a written opinion of
                  counsel who is reasonably acceptable to the Trustee, the
                  Placement Agent and Remarketing Agent. The counsel may be an
                  employee of or counsel to the Borrower, the Placement Agent,
                  the Remarketing Agent, the L/C Issuer or the Trustee.

         (e) The definition of "REIMBURSEMENT AGREEMENT" set forth in Section
1.01 of the Series A Note Agreement is hereby deleted in its entirety and
replaced with the following:

                           "REIMBURSEMENT AGREEMENT" means, individually and
                  collectively, (a) the Application for Irrevocable Standby
                  Letter of Credit dated as of December 22, 1995 executed and
                  delivered to the L/C Issuer by the Account Parties and the
                  Lender requesting the issuance by the L/C Issuer of the Series
                  A Letter of Credit (the "Application"), (b) the Loan and
                  Security Agreement dated as of November 14, 1995 (the "Loan
                  Agreement"), by and among the Account Parties and certain
                  other subsidiaries of the Borrower, and the Lender,
                  acknowledged and agreed to by the Borrower and certain other
                  subsidiaries of the Borrower, pursuant to which, among other
                  things, the Lender has executed the Application pursuant to
                  which the Series A Letter of Credit is issued by the L/C
                  Issuer and delivered to the Trustee, and any and all
                  modifications, alterations, amendments and supplements
                  thereto, (c) the other "Financing Agreements" as defined in
                  the Loan Agreement and (d) any similar agreements between or
                  among the Account Parties, the Borrower and the issuer of a
                  Substitute Series A Letter of Credit or lender providing
                  credit support to such issuer.



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         (f) The definition of "SERIES A LETTER OF CREDIT" set forth in Section
1.01 of the Series A Note Agreement is amended by (a) deleting the words "State
of North Carolina" in the third line thereof and replacing them with
"Commonwealth of Pennsylvania" and (b) by deleting the word "Bank" in the
fourteenth line thereof and replacing it with "L/C Issuer".

         (g) Section 1.01 of the Series A Note Agreement is hereby amended by
adding the following new definitions thereto:

                           "ACCOUNT PARTIES" means Hanover Direct Pennsylvania,
                  Inc., Hanover Direct Virginia Inc. and Gump's Corp., and their
                  successors and assigns.

                           "L/C ISSUER" means the issuer of the Series A Letter
                  of Credit, initially CoreStates Bank, N.A., and upon the
                  issuance and delivery of a Substitute Series A Letter of
                  Credit, shall mean the issuer of such Substitute Series A
                  Letter of Credit.

                           "LENDER" means Congress Financial Corporation, its
                  successors and assigns, or other lender that refinances the
                  obligations to Lender under the Reimbursement Agreement and
                  replaces all credit support given by Lender to the L/C Issuer
                  in respect of the Series A Letter of Credit or any Substitute
                  Series A Letter of Credit.

         SECTION 4. AMENDMENT TO SECTION 1.02 OF THE SERIES A NOTE AGREEMENT.
Subsection (g) of Section 1.02 of the Series A Note Agreement is hereby deleted
in its entirety and replaced with the following:

                  (g) All references herein to time shall be Eastern Time unless
                  otherwise expressly stated.

         SECTION 5. AMENDMENT TO SECTION 2.07 OF THE SERIES A NOTE AGREEMENT.
Subsection (b) of Section 2.07 of the Series A Note Agreement is amended by
deleting the third sentence thereof in its entirety and replacing it with the
following:

                  The Borrower, the Trustee and the Paying Agent will recognize
                  the Securities Depository Nominee, while the registered owner
                  of the Series A Notes so held, as the owner of the Series A
                  Notes for all purposes, including (i) payments of principal
                  and Purchase Price of, and interest on, the Series A Notes,
                  (ii) notices and (iii) voting.

         SECTION 6. AMENDMENT TO SECTION 2.08 OF THE SERIES A NOTE AGREEMENT.
Subsection (a) of Section 2.08 of the Series A Note Agreement is amended by
deleting the reference to the "Bank" in the sixth line thereof and replacing it
with a reference to the "Lender".

         SECTION 7. AMENDMENT TO SECTION 3.01 OF THE SERIES A NOTE AGREEMENT.
Subsection (a)(ii) of Section 3.01 of the Series A Note Agreement is amended by
deleting the reference to the "Bank" in the second line thereof and replacing it
with a reference to the "Lender".



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         SECTION 8. AMENDMENT TO SECTION 3.04 OF THE SERIES A NOTE AGREEMENT.
Section 3.04 of the Series A Note Agreement is amended by deleting the reference
to the "Bank" in the third line thereof and replacing it with a reference to the
"Lender".

         SECTION 9. AMENDMENT TO SECTION 3.08 OF THE SERIES A NOTE AGREEMENT.
Subsection (d)(ii) of Section 3.08 of the Series A Note Agreement is hereby
deleted in its entirety and replaced with the following:

                           (ii) All Bank Notes (other than Bank Notes purchased
                  with the Borrower's own funds and not with the proceeds of a
                  draw on the Series A Letter of Credit) will be registered in
                  the name of the Trustee, and, to the extent so provided under
                  the Reimbursement Agreement, held by the Trustee as agent and
                  bailee of the Lender and subject to the pledge by the Borrower
                  to the Lender and shall be held by the Trustee pursuant to
                  this Agreement and the Reimbursement Agreement. Upon receipt
                  of Remarketing Proceeds in respect of Bank Notes, the
                  Remarketing Agent shall notify the Lender, the Trustee and the
                  Borrower of such receipt, and the Remarketing Agent shall
                  execute and deliver to the L/C Issuer, a certificate in the
                  form of Exhibit C attached hereto requesting reinstatement of
                  the Series A Letter of Credit as provided therein. Thereafter,
                  upon the Trustee's receipt of notice from the L/C Issuer, as
                  provided in the Series A Letter of Credit, that the Available
                  Amount of the Series A Letter of Credit has been automatically
                  reinstated as provided therein, the Trustee shall so notify
                  the Remarketing Agent and the Lender, whereupon the
                  Remarketing Agent will remit such Remarketing Proceeds as
                  directed by the Lender. The Trustee shall not release the Bank
                  Notes until it receives from the L/C Issuer the notice
                  referred to in the preceding sentence. The Remarketing Agent
                  shall hold such Remarketing Proceeds in a segregated account
                  of the Remarketing Agent for the benefit of the Borrower,
                  subject to the security interest of the Lender therein
                  pursuant to the Reimbursement Agreement, except that if the
                  Series A Letter of Credit is not reinstated by an amount equal
                  to the Remarketing Proceeds, then the Remarketing Agent shall
                  hold such funds for the benefit of the purchasers which
                  provided such Remarketing Proceeds.



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         SECTION 10. AMENDMENTS TO SECTION 4.03 OF THE SERIES A NOTE AGREEMENT.

         (a) Subsection (c) of Section 4.03 of the Series A Note Agreement is
amended by deleting all references to the "Bank" therein and replacing them with
references to the "Lender".

         (b) Subsection (e) of Section 4.03 of the Series A Note Agreement is
amended by deleting the reference to the "Bank" in the last line thereof and
replacing it with a reference to the "L/C Issuer".

         SECTION 11. AMENDMENT TO SECTION 5.02 OF THE SERIES A NOTE AGREEMENT.
Subsection (c) of Section 5.02 of the Series A Note Agreement is amended by
deleting all references therein to the "Bank" and replacing them with references
to the "L/C Issuer".

         SECTION 12. AMENDMENT TO SECTION 5.03 OF THE SERIES A NOTE AGREEMENT.
Subsection (b) of Section 5.03 of the Series A Note Agreement is amended by
deleting the reference to the "Bank" in the last line thereof and replacing it
with a reference to the "L/C Issuer".

         SECTION 13. AMENDMENT TO SECTION 5.04 OF THE SERIES A NOTE AGREEMENT.
Section 5.04 of the Series A Note Agreement is amended by deleting the second
and third paragraphs thereof in their entirety and replacing them with the
following:

                  When the Series A Letter of Credit terminates or expires in
         accordance with its terms or a Substitute Series A Letter of Credit
         therefor is accepted hereunder, the Trustee shall immediately surrender
         the Series A Letter of Credit to the L/C Issuer. The Trustee hereby
         agrees that, except in the case of a redemption in part pursuant to
         Article III hereof or any other reduction in the principal amount of
         Series A Notes Outstanding, it will not under any circumstances request
         that the L/C Issuer reduce the amount of the Series A Letter of Credit.
         If at any time, all Series A Notes shall cease to be Outstanding, the
         Trustee shall execute and deliver to the L/C Issuer the certificate in
         the form of Annex E to the Series A Letter of Credit and shall
         surrender the Series A Letter of Credit to the L/C Issuer for
         cancellation.

                  If at any time, the L/C Issuer shall fail to honor a draft
         presented under the Series A Letter of Credit, in conformity with the
         terms thereof, the Trustee shall give immediate telephonic notice
         thereof to the Remarketing Agent, the Lender and the Borrower.

         SECTION 14. AMENDMENT TO SECTION 7.01 OF THE SERIES A NOTE AGREEMENT.
Subsection (d) of Section 7.01 of the Series A Note Agreement is hereby deleted
in its entirety and replaced with the following:

                  (d) Receipt by the Trustee of written notice from the Lender
                  that an Event of Default has occurred under the Reimbursement
                  Agreement.

         SECTION 15. AMENDMENTS TO SECTION 7.02 OF THE SERIES A NOTE AGREEMENT.


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         (a) Subsection (a) of Section 7.02 of the Series A Note Agreement is
amended by deleting the reference to the "Bank" in the second line thereof and
replacing it with a reference to the "Lender".

         (b) Subsection (b) of Section 7.02 of the Series A Note Agreement is
hereby deleted in its entirety and replaced with the following:

                           (b) Upon the occurrence of any Event of Default
                  specified in Section 7.01(c), the Trustee shall notify the
                  Lender of such Event of Default and shall, by notice to the
                  Borrower, the Paying Agent (who shall promptly give such
                  notice to the holders) and the Remarketing Agent declare the
                  entire unpaid principal of and interest on the Series A Notes
                  immediately due and payable, and, thereupon, the entire unpaid
                  principal of and interest on the Series A Notes shall
                  forthwith become due and payable.

         SECTION 16. AMENDMENT TO SECTION 7.03 OF THE SERIES A NOTE AGREEMENT.
Section 7.03 of the Series A Note Agreement is amended (a) by deleting the
reference to the "Bank" in the first sentence thereof and replacing it with a
reference to the "Lender" and (b) by deleting the second sentence thereof in its
entirety and replacing it with the following:

         If such instructions are received by the Trustee, such draw proceeds
         and, if necessary, the moneys on deposit in the Interest Reserve
         Account, shall be immediately applied to the purchase of the Series A
         Notes, the acceleration of the Series A Notes shall be cancelled, the
         Series A Notes shall become Bank Notes and the Series A Notes shall be
         registered in the name of the Trustee, and, to the extent so provided
         under the Reimbursement Agreement, held by the Trustee as agent and
         bailee of the Lender, and pledged under the Reimbursement Agreement as
         additional security for repayment of the Borrower's obligations under
         the Reimbursement Agreement.

         SECTION 17. AMENDMENT TO SECTION 7.05 OF THE SERIES A NOTE AGREEMENT.
Section 7.05 of the Series A Note Agreement is amended by adding the phrase "and
the Account Parties" between the words "Borrower" and "to" in the seventh line
thereof.

         SECTION 18. AMENDMENT TO SECTION 7.06 OF THE SERIES A NOTE AGREEMENT.
Section 7.06 of the Series A Note Agreement is amended (a) by deleting the
references to the "Bank" in the second and fourth lines thereof and replacing
them with references to the "Lender" and (b) by deleting the reference to the
"Bank" in the second line of subsection (b) thereof and replacing it with a
reference to the "L/C Issuer".


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<PAGE>   7
         SECTION 19. AMENDMENT TO SECTION 7.09 OF THE SERIES A NOTE AGREEMENT.
Section 7.03 of the Series A Note Agreement is deleted in its entirety and
replaced with the following:

                  SECTION 7.09 [RESERVED].

         SECTION 20. AMENDMENT TO SECTION 8.05 OF THE SERIES A NOTE AGREEMENT.
Section 8.05 of the Series A Notes Agreement is amended by deleting the
references to the "Bank" in the sixth and tenth lines thereof and replacing them
with references to the "Lender".

         SECTION 21. AMENDMENT TO SECTION 8.08 OF THE SERIES A NOTE AGREEMENT.
Section 8.08 of the Series A Note Agreement is amended (a) by deleting all
references therein to the "Bank" or "Banks" and replacing them with references
to the "Lender" or "Lender's", as applicable, and (b) by adding the following
sentence after the last paragraph thereof:

                  No resignation or removal of the Trustee shall be binding upon
         the L/C Issuer for purposes of the Series A Letter of Credit, and no
         successor Trustee shall have any rights to draw, except upon compliance
         with the transfer provisions therein set forth.

         SECTION 22. AMENDMENT TO SECTION 8.10 OF THE SERIES A NOTE AGREEMENT.
Section 8.10 of the Series A Note Agreement is amended (a) by deleting all
references therein to the "Bank" and replacing them with references to the
"Lender" and (b) by adding the following sentence after the last paragraph
thereof:

                  No such resignation or removal of the Remarketing Agent or
         appointment of or assignment to a successor Remarketing Agent shall be
         binding upon the L/C Issuer for purposes of the Series A Letter of
         Credit, unless set forth in an amendment to the Series A Letter of
         Credit issued by the L/C Issuer.

         SECTION 23. AMENDMENT TO SECTION 8.11 OF THE SERIES A NOTE AGREEMENT.
Subsection (c) of Section 8.11 of the Series A Note Agreement is amended by
deleting the reference to the "Bank" in the fourth line thereof and replacing it
with a reference to the "L/C Issuer".

         SECTION 24. AMENDMENT TO SECTION 8.12 OF THE SERIES A NOTE AGREEMENT.
Section 8.12 of the Series A Note Agreement is amended by deleting all
references to the "Bank" therein and replacing them with references to the
"Lender".

         SECTION 25. AMENDMENT TO SECTION 8.13 OF THE SERIES A NOTE AGREEMENT.
Section 8.13 of the Series A Note Agreement is amended by deleting all
references to the "Bank" therein and replacing them with references to the
"Lender".


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<PAGE>   8
         SECTION 26. AMENDMENT TO SECTION 8.14 OF THE SERIES A NOTE AGREEMENT.
Section 8.14 of the Series A Note Agreement is amended by deleting all
references to the "Bank" or "Bank's" therein and replacing them with references
to the "Lender" or "Lender's", as applicable.

         SECTION 27. AMENDMENT TO SECTION 8.16 OF THE SERIES A NOTE AGREEMENT.
Section 8.16 of the Series A Note Agreement is amended (a) by adding the phrase
", to the extent provided in the Reimbursement Agreement," after the word
"shall" at the end of the fourth line thereof and (b) by deleting the reference
to the "Bank" in the fifth line thereof and replacing it with a reference to the
"Lender".

         SECTION 28. AMENDMENT TO SECTION 9.01 OF THE SERIES A NOTE AGREEMENT.
Subsection (f) of Section 9.01 of the Series A Note Agreement is amended by
deleting the reference to the "Bank" in the fifth line thereof and replacing it
with a reference to the "L/C Issuer".

         SECTION 29. AMENDMENT TO SECTION 9.02 OF THE SERIES A NOTE AGREEMENT.
Section 9.02 of the Series A Note Agreement is amended by deleting the reference
to the "Bank" in the fourteenth line thereof and replacing it with a reference
to the "L/C Issuer".

         SECTION 30. AMENDMENT TO SECTION 9.06 OF THE SERIES A NOTE AGREEMENT.
The heading and the first sentence of Section 9.06 of the Series A Note
Agreement are hereby deleted in their entirety and replaced with the following:

                  Section 9.06. LENDER AND REMARKETING AGENT CONSENT REQUIRED.
         Except to the extent that the consent of the Remarketing Agent or the
         Lender is not required for the action that is the subject of the
         amendment (e.g., removal of the Remarketing Agent, the Trustee or the
         Paying Agent by the Borrower upon the terms specified herein), an
         amendment to this Agreement or the Series A Notes shall not become
         effective unless the Remarketing Agent (but only to the extent that
         such amendment affects the rights, duties or obligations of the
         Remarketing Agent hereunder) and the Lender deliver to the Trustee
         their written consents to the amendment.

         SECTION 31. AMENDMENT TO SECTION 10.01 OF THE SERIES A NOTE AGREEMENT.
Subsection (b) of Section 10.01 of the Series A Note Agreement is amended by
deleting the reference to, and the address of, the "Bank" therein and replacing
them with the following:

If to the L/C Issuer: CoreStates Bank, N.A.
                      530 Walnut Street
                      Philadelphia, Pennsylvania 19106
                      Attention: Ms. Cheryl Morton, Letter of Credit Department,
                        7th Floor
                      Telephone No.: (215) 973-8157
                      Fax No.: (215) 973-6352



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<PAGE>   9
         If to the Lender:  Congress Financial Corporation
                            1133 Avenue of the Americas
                            New York, New York 10036
                            Attention:  Mr. Mark Fagnani
                            Telephone No.:  (212) 840-2000
                            Fax No.: (212) 545-4283

         SECTION 32. AMENDMENT TO SECTION 10.09 OF THE SERIES A NOTE AGREEMENT.
Section 10.09 of the Series A Note Agreement is amended by deleting the
reference to the "Bank" in the fourth line thereof and replacing it with a
reference to the "Lender".

         SECTION 33. AMENDMENTS TO EXHIBIT A TO THE SERIES A NOTE AGREEMENT -
FORM OF SERIES A NOTE. Exhibit A to the Series A Note Agreement (the "Form of
Series A Note") is hereby amended as follows:

         (a) The second boldface paragraph on the first page of the Form of
Series A Note (prior to the text thereof) is hereby deleted in its entirety and
replaced with the following:

                  PAYMENTS OF PRINCIPAL AND PURCHASE PRICE OF AND INTEREST ON
                  THIS SERIES A NOTE WILL BE MADE FROM DRAWINGS UNDER THE SERIES
                  A LETTER OF CREDIT (HEREINAFTER DEFINED) IF REMARKETING
                  PROCEEDS ARE NOT AVAILABLE OR IF AN EVENT OF DEFAULT HAS
                  OCCURRED. ALTHOUGH THE SERIES A LETTER OF CREDIT IS A BINDING
                  OBLIGATION OF CORESTATES BANK, N.A. (THE "L/C ISSUER"), THIS
                  SERIES A NOTE IS NOT A DEPOSIT OR OBLIGATION OF CORESTATES
                  FINANCIAL CORP OR ANY OF ITS AFFILIATES, INCLUDING THE L/C
                  ISSUER AND CONGRESS FINANCIAL CORPORATION, NOR IS THIS SERIES
                  A NOTE A DEPOSIT OR OBLIGATION OF NATIONSBANK CORPORATION OR
                  ANY OF ITS AFFILIATED BANKS, INCLUDING NATIONSBANK, N.A., AND
                  THIS SERIES A NOTE IS NOT GUARANTEED BY ANY OF THESE ENTITIES.
                  THIS SERIES A NOTE IS NOT INSURED BY THE FEDERAL DEPOSIT
                  INSURANCE CORPORATION AND IS SUBJECT TO CERTAIN INVESTMENT
                  RISKS INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
                  INVESTED.



                                       9
<PAGE>   10
         (b) The second paragraph of the text of the Form of Series A Note,
beginning on page A-2 thereof, is amended by deleting the first two sentences
thereof and replacing them with the following:

                  This Series A Note is one of an issue not to exceed
                  $10,000,000 Hanover Direct, Inc. Flexible Term Notes, Series A
                  (the "Series A Notes"), issued pursuant to a Series A Note
                  Agreement dated as of November 9, 1994, between the Borrower,
                  and Norwest Bank Minnesota, N.A., as trustee (in such
                  capacity, the "Trustee") and Paying Agent, as amended by that
                  certain First Supplemental Series A Note Agreement dated as of
                  December 29, 1995 between the Borrower and the Trustee (as
                  further amended, restated, supplemented or otherwise modified
                  from time to time in accordance with its terms, the "Series A
                  Note Agreement"), for the purpose of refinancing and/or
                  financing certain construction, refurbishment and related
                  costs of an approximately 530,000 square foot distribution
                  facility owned and used by certain subsidiaries of the
                  Borrower located in Roanoke, Virginia and a new retail store
                  of Gump's Corp., a subsidiary of the Borrower located in San
                  Francisco, California. Pursuant to the Series A Note
                  Agreement, the Borrower has arranged, through a credit
                  facility established with Lender for certain of Borrower's
                  subsidiaries, and as guarantor of such financing arrangements
                  with Lender, for L/C Issuer to issue for the account of such
                  subsidiaries its irrevocable Series A Letter of Credit dated
                  December 29, 1995 (the "Series A Letter of Credit") in favor
                  of the Trustee, in an amount sufficient to pay the Series A
                  Facility Amount and unpaid interest on or Purchase Price of
                  the Series A Notes, but not to exceed $10,145,833, pursuant to
                  (a) the Application for Irrevocable Standby Letter of Credit
                  dated as of December 22, 1995 executed and delivered to the
                  L/C Issuer by the Account Parties (as defined in the Series A
                  Note Agreement) and the Lender requesting the issuance by the
                  L/C Issuer of the Series A Letter of Credit (the
                  "Application"), (b) the Loan and Security Agreement dated as
                  of November 14, 1995 (the "Loan Agreement"), by and among the
                  Account Parties and certain other subsidiaries of the
                  Borrower, and the Lender, acknowledged and agreed to by the
                  Borrower and certain other subsidiaries of the Borrower,
                  pursuant to which, among other things, the Lender has executed
                  the Application pursuant to which the Series A Letter of
                  Credit is issued by the L/C Issuer and delivered to the
                  Trustee, and any and all modifications, alterations,
                  amendments and supplements thereto, (c) the other "Financing
                  Agreements" as defined in the Loan Agreement and (d) any
                  similar agreements between or among the Account Parties, the
                  Borrower and the issuer of a Substitute Series A Letter of
                  Credit or lender providing credit support to such issuer
                  (individually and collectively, the "Reimbursement
                  Agreement").


                                       10
<PAGE>   11
         (c) The seventh paragraph of the text of the Form of Series A Note,
beginning on page A-4 thereof, is amended by deleting the third sentence thereof
in its entirety and replacing it with the following:

                  The Borrower, the Trustee and the Paying Agent will recognize
                  the Securities Depository Nominee, as hereinafter defined,
                  while the registered owner of the Series A Notes so held, as
                  the owner of the Series A Notes for all purposes, including
                  (i) payments of principal and Purchase Price of, and interest
                  on, the Series A Notes, (ii) notices and (iii) voting.

         (d) Section 1 of the Form of Series A Note, beginning on page A-5
thereof, is amended by adding the following definition:

                  "BANK" means, individually and collectively, the Lender and
                  the L/C Issuer.

         (e) Subsection (f) of Section 3 of the Form of Series A Note, beginning
on page A-9 thereof, is amended by deleting the reference to the "Bank" in the
third line thereof and replacing it with a reference to the "Lender."

         (f) Subsection (a) of Section 4 of the Form of Series A Note, beginning
on page A-10 thereof, is amended by deleting the reference to the "Bank" in the
fourth line of the last paragraph thereof and replacing it with a reference to
the "Lender."

         (g) Section 7 of the Form of Series A Note, beginning on page A-13
thereof, is amended by deleting the second and third sentences of the first
paragraph thereof in their entirety and replacing them with the following:

                  The Series A Note Agreement directs the Trustee to declare an
                  acceleration upon written notice by the Lender of the
                  occurrence and continuance of an event of default under the
                  Reimbursement Agreement and upon the occurrence of certain
                  other Events of Default under the Series A Note Agreement.

         SECTION 34. ADDITION OF EXHIBIT C TO SERIES A NOTE AGREEMENT. The
Series A Note Agreement is amended by adding Exhibit C thereto, a copy of which
is attached hereto and incorporated herein and in the Series A Note Agreement by
this reference.

         SECTION 35. EFFECT OF FIRST SUPPLEMENTAL SERIES A NOTE AGREEMENT.
Except as modified hereby, all of the terms and provisions of the Series A Note
Agreement shall remain in full force and effect.


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<PAGE>   12
         SECTION 36. GOVERNING LAW. This First Supplemental Series A Note
Agreement and the Series A Note Agreement, as amended hereby, shall be deemed to
be contracts made under, and for all purposes shall be construed in accordance
with, the laws of the State of New York.

         SECTION 37. SEVERABILITY. If any provision of this First Supplemental
Series A Note Agreement shall be determined to be unenforceable by a court of
law, that shall not affect any other provision of this First Supplemental Series
A Note Agreement.

         SECTION 38. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will be an original and all of which together will
constitute the same instrument.


                         [Signatures on following page.]


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<PAGE>   13
         IN WITNESS WHEREOF, the parties hereto have cause this First
Supplemental Series A Note Agreement to be duly executed as of the day and year
first above written.

HANOVER DIRECT, INC.


                                        By:    /s/ Edward J. O'Brien
                                              _________________________________
                                        Name:  Edward J. O'Brien
                                              _________________________________
                                        Title: Executive Vice President &
                                               Treasurer
                                              _________________________________

                                        [CORPORATE SEAL]


                                        NORWEST BANK MINNESOTA, N.A. as
                                        Trustee and Paying Agent

                                        By:    /s/ Polly B. Berquist
                                              _________________________________
                                        Name:  Polly B. Berquist
                                              _________________________________
                                        Title: Assistant Vice President
                                              _________________________________

                                       13
<PAGE>   14
                                    EXHIBIT C


                  CERTIFICATE OF REMARKETING OF NOTES TO EFFECT
                        REINSTATEMENT OF PURCHASE DRAWING

                                     [DATE]


CoreStates Bank, N.A.
530 Walnut Street
Philadelphia, Pennsylvania   19106

Attention:        Ms. Cheryl Morton
                  Letter of Credit Department, 7th Floor

         RE:      IRREVOCABLE LETTER OF CREDIT REF. NO. ___________
                  FOR THE ACCOUNT OF HANOVER DIRECT PENNSYLVANIA, INC., HANOVER
                  DIRECT VIRGINIA INC. AND GUMP'S CORP. (THE LETTER OF CREDIT")

Ladies and Gentlemen:

         The undersigned, being the Remarketing Agent, as defined in the
above-referenced Letter of Credit, hereby certifies that Bank Notes in the
principal amount of $_______ (the "Remarketed Notes") for which a Purchase
Drawing was made by the Trustee and previously paid by you, have been remarketed
by us and we are holding the remarketing proceeds pursuant to Section
3.08(d)(ii) of the Note Agreement.

         Please confirm to the Trustee that the Principal Component has been
reinstated automatically by an amount equal to the said principal amount of the
Remarketed Notes and that the Interest Component has been reinstated
automatically by an amount equal to thirty-five (35) days' interest on the
Principal Component so reinstated computed at the Maximum Rate.

         Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the above-referenced Letter of
Credit.

         IN WITNESS WHEREOF, the Remarketing Agent has executed and delivered
this Certificate as of ___ of ____, ___.



                                 NATIONSBANK, NATIONAL ASSOCIATION,
                                       as Remarketing Agent

                                 By: _______________________________________
                                       [Name and Title]