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                                                                   Exhibit 10.16




                              HANOVER DIRECT, INC.

                          SUPPLEMENTAL RETIREMENT PLAN






                              HANOVER DIRECT, INC.

                          SUPPLEMENTAL RETIREMENT PLAN


                                  INTRODUCTION


                 The Hanover Direct, Inc. Supplemental Retirement Plan,
previously adopted as The Horn & Hardart Company Supplemental Retirement Plan,
which was effective January 1, 1989, is hereby amended and restated in its
entirety, effective as of October 1, 1993, to read as follows:

                                    ARTICLE I
                                   DEFINITIONS

                 As used in this Plan, the following terms shall have the
meanings set forth below, unless the context clearly requires otherwise:
         1.01 ACCOUNT shall mean the accumulated Annual Earned Accruals and
Matching Earned Accruals determined for the Designated Executive, including any
investment earnings. Any active employee who participated in the Horn & Hardart
Company Supplemental Retirement Plan in effect prior to October 1, 1993 shall
have his Account under this Plan credited with the value of his Contribution

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Account (as defined under such prior plan) as of September 30, 1993.
         1.02    AFFILIATE shall mean any entity (whether or not incorporated)
which controls, is controlled by, or under common control with the Company.
         1.03    BOARD shall mean the Board of Directors of the Company.
         1.04    BREAK-IN-SERVICE shall mean any Plan Year during which a
Participant has not completed more than five hundred (500) Hours of Service.
         1.05 CODE shall mean the Internal Revenue Code of 1986, as amended
from time to time. Reference to a specific provision of the Code shall include
such provision, any valid regulation or ruling promulgated thereunder and any
comparable provision of future law that amends, supplements or supersedes such
provision.
         1.06    COMPANY shall mean Hanover Direct, Inc. and any successor
thereto by merger, consolidation or otherwise.
         1.07 COMPENSATION shall mean the fixed salary or base pay which is paid
or made available to a Designated Executive during a Plan year for his personal
services actually rendered to the Company or any Affiliate, but shall not
include any amounts paid as cost-of-living supplements, bonuses, overtime
payments, expense reimbursements, golden parachutes, stock options, other
contractual stock payments, severance payments, or any incentive or other
compensation predicated or computed as a percentage of, or as a commission on,
sales. Any contributions made by a salary reduction election (in accordance with
Code Sections 401(k), 125 or 129) and


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which would have otherwise reduced a fixed salary or base pay shall be counted
as Compensation under the Plan.
         1.08 DESIGNATED EXECUTIVE shall mean any employee whose Compensation
exceeds $70,000 and becomes eligible to become a Participant in the Plan as
prescribed in Article II. In addition, any active employee, who participated in
the Plan in effect prior to this Plan and who is not otherwise eligible for this
Plan, shall become a Designated Executive and continue to have any existing
Account held under the Plan credited with interest under Section 3.03, but shall
have no earned accruals credited under Sections 3.01 and 3.02. In no event,
however, shall an employee be eligible to become a Designated Executive unless
he is employed at one of the following Affiliates or such other Affiliate who
adopts this Plan from time to time, with the approval of the board:

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         1.09 DISABILITY shall mean a physical or mental condition of such
severity and probable prolonged duration as to cause the Participant to be
unable to continue his duties as an Employee. The existence of any Disability
shall be determined by a physician chosen by the Benefits Committee, based on
medical evidence of a physical or mental impairment that can be expected to last
more than 12 months or result in death, or on other uniform and non-



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discriminatory criteria as established by the Benefits Committee.
Notwithstanding the foregoing, eligibility for Social Security Disability
benefits or for long term disability benefits under an insured plan sponsored by
the Company shall be deemed conclusive proof of disability.
         1.10 NORMAL RETIREMENT DATE shall mean the first day of the month
following the date a Designated Executive attains his sixty-fifth (65th)
birthday.
         1.11 BENEFITS COMMITTEE shall mean the Committee appointed to
administer the Plan, as provided in Section 4.0l.
         1.12    PARTICIPANT shall mean a Designated Executive who has met the
requirements of Section 2.01.
         1.13 PLAN shall mean the Hanover Direct, Inc. Supplemental Retirement
Plan, as amended from time to time.
         1.14    PLAN YEAR shall mean the calendar year.
         1.15 SALARY DEFERRAL ELECTION shall mean the percentage reduction in
Compensation (not to exceed 4%) elected by a Designated Executive which will be
credited in accordance with Section 3.01.
         1.16 SCHEDULED PAYMENT DATES shall mean the date(s) 45 days following a
Valuation Date.
         1.17 VALUATION DATE shall mean the last day of the Plan Year and any
other date(s) as of which the Benefits Committee, in its sole discretion, elects
to value the Account of a Designated Executive.






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         1.18 YEAR OF SERVICE shall mean a Plan Year in which an Employee has at
least one thousand (1,000) hours of service. Solely for purposes of determining
whether a Designated Executive is eligible to become a participant after his
initial year of employment under Section 2.01, a Year of Service shall be
credited to a Designated Executive who has at least one thousand (1,000) hours
of service during the initial twelve (12) month period commencing with such
Designated Executive's date of employment. In addition, solely for purposes of
determining vesting under Section 3.04, Years of Service shall be counted from a
Designated Executive's date of participation as determined under Section 2.01.




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                                   ARTICLE II
                                  PARTICIPATION

         2.01 DESIGNATION OF PARTICIPANTS A Designated Executive shall commence
participation under this Plan as of the January 1st coincident with or next
following attainment of age 21 and the completion of one Year of Service.

         2.02 MODIFICATION OF REQUIREMENTS The Benefits Committee, in its sole
discretion, reserves the right to change the requirements to become a
participant under Section 2.01 at any time.




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                                   ARTICLE III
                    BENEFIT DETERMINATIONS AND DISTRIBUTIONS

         3.01 ANNUAL EARNED ACCRUALS A Designated Executive shall have earned
accruals credited to his Account for each Plan Year on the same frequency as
payroll deductions have been taken, provided the Designated Executive is
employed at a rate such that he will work at least 1,000 hours during the Plan
Year. A Designated Executive shall have an Annual Earned Accrual credited to his
Account in accordance with the terms set forth below:
         (a) The Annual Earned Accrual credited to the Designated Executive's
Account for each Plan Year shall be equal to his Salary Deferral Election
multiplied by his Compensation for such Plan Year.
         (b) Termination of Employment - Notwithstanding the foregoing, if a
Designated Executive terminates employment for any reason during a Plan Year, he
shall receive an Annual Earned Accrual for that Plan Year, based on his
Compensation while employed for the Plan Year.
         3.02 MATCHING EARNED ACCRUALS The Company shall make a contribution
called a Matching Earned Accrual contribution on behalf of each Designated
Executive in the same amount and on the same frequency as Annual Earned Accruals
are credited to his account. In no event, however, shall the Matching Earned
Accrual credited to a Designated Executive exceed 4% of Compensation earned
during the Plan Year.



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         3.03 INTEREST On any Valuation Date during each Plan Year, an interest
amount will be credited to each Designated Executive's Account equal to that
Account's proportionate share of the investment return of all Accounts held
under the Plan.
         3.04 VESTING IN ACCOUNTS A Designated Executive shall be 100% vested in
his Annual Earned Accruals at all times. In addition, a Designated Executive
shall be 100% vested in the value of his Matching Earned Accruals when he
attains his Normal Retirement Date, or if his employment terminates due to death
or Disability (as defined in Section 1.08). Otherwise, he shall be vested in his
Matching Earned Accruals (even if his participation in the Plan has been
discontinued) in accordance with the following table:

                                                     Percentage
          Years of Service                             Vested
          ----------------                           ----------

          less than 2                                     0%
          2 but less than 3                              20%
          3 but less than 4                              40%
          4 but less than 5                              60%
          5 but less than 6                              80%
          6 or more                                     100%


         Any Designated Executive who was a participant in the Plan in effect
prior to this Plan shall also be entitled to credit for Years of Service for
such period and will be entitled to the greater of the vesting percentage
determined under the prior plan for each participant as of September 30, 1993 or
the vesting percentage determined under this Plan at retirement or other






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termination of employment. The vested percentage of a Designated Executive's
Account will not increase after the date as of which he terminates employment.
Solely for purposes of determining vesting under the Plan, Years of Service
shall be determined from the date a Designated Executive first became a
Participant under the Plan.
         3.05 DISTRIBUTIONS The vested Account of a Designated Executive will be
distributed on the first Scheduled Payment Date following the Valuation Date
coincident with or next following his retirement or other termination of
employment. The distribution will be made in a full lump sum payment of the
vested Account balance of the Designated Executive.
         3.06 DEATH BENEFITS If a Designated Executive dies, his named
beneficiary shall receive his vested Account as of the Valuation Date coincident
with or next following his death distributed in accordance with Section 3.05.
         If, at the time of the Designated Executive's death, there is no named
beneficiary, then the Designated Executive's estate shall be paid the benefits
otherwise due to the named beneficiary.
         3.07 VALUATION OF ACCOUNT As of each Valuation Date, each Designated
Executive's Account shall be updated with all earned accruals and interest for
such Plan Year based on Sections 3.01, 3.02, and 3.03. Each Designated Executive
shall receive a statement of his Account within ninety (90) days of such
Valuation Date.






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                                    ARTICLE 4
                                 ADMINISTRATION

         4.01 APPOINTMENT OF COMMITTEE The Plan shall be administered by the
Benefits Committee appointed by the Board.
         4.02 POWERS AND AUTHORITY OF COMMITTEE Whenever the Plan provides
authority to the Board or its designated representative, the Benefits Committee
may be, but is not required to be, the designated representative. Otherwise, the
Benefits Committee shall have the power and full discretionary authority to
interpret and construe this Plan, to determine all questions arising under this
Plan, to correct any defect or supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent as it shall deem
necessary or appropriate to effectuate the purpose and intent of this Plan, to
adopt and amend from time to time such by-laws and rules and regulations as are
necessary of the administration of this Plan which are not inconsistent with the
terms and provisions of this Plan, and to determine all questions of
eligibility, status and rights of Designated Executives and their beneficiaries
hereunder.
         4.03 QUORUM AND VOTING; PROCEDURES A majority of the members of the
Benefits Committee at the time in office shall constitute a quorum for the
transaction of business. The Benefits Committee may act by vote or consent of
the majority of its members then in office and may establish its own procedures.
The Benefits Committee may authorize any one or more of its members to sign and








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deliver any instrument, certificate or other paper or document on its behalf.
The Benefits Committee may appoint from its members such subcommittees (of one
or more such members), with such powers, as it shall determine.
         4.04 CLAIMS PROCEDURE The Benefits Committee shall establish a claims
procedure and shall afford a reasonable opportunity to any Designated Executive
or named beneficiary whose claim for benefits has been denied for a full and
fair review of the decision denying such claims.
         4.05 LIABILITY LIMITED AND INDEMNIFICATION Except as otherwise provided
by law, no person who is a member of the Benefits Committee or who is a
stockholder, employee, officer, or director of the Company or any affiliate
shall incur any liability whatsoever on account of any matter connected with or
related to the Plan or the administration of the Plan, unless such person shall
have acted in bad faith or have willfully neglected his duties in respect to the
Plan; and as a condition precedent to his participation in the Plan or the
receipt of benefits thereunder, or both, such liability, if any, is expressly
waived and released by each Designated Executive and named beneficiary, such
waiver and release to be conclusively evidenced by any act or participation in
or the acceptance of benefits under this Plan. The Company shall indemnify and
hold each such person harmless against any and all loss, liability, claim,
damage, cost and expense which may arise by reason of, or be based upon, any
matter connected with or related to the Plan or the administration of the Plan
(including, but not






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limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or in settlement of any such claim whatsoever) to the fullest extent
permitted under the Certificate of Incorporation and By-Laws of the Company.





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                                    ARTICLE 5
                            AMENDMENT AND TERMINATION

         The Company may amend, terminate or suspend this Plan at any time or
from time to time by a resolution of the Board; provided, however, that no
amendment or termination of the Plan shall deprive any Designated Executive or
named beneficiary of any of the benefits to which any is entitled under this
Plan by reason of the Designated Executive's prior Years of Service, death,
disability or other termination of employment. If the Plan is terminated or
contribution accruals are permanently suspended, the vesting schedule set forth
in Section 3.04 shall continue to apply to each Designated Executive, unless the
Board, in its sole discretion, elects to fully vest a particular Designated
Executive. If the Plan terminates within two years of a change in ownership of
the Company, all Designated Executives will become fully vested.






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                                    ARTICLE 6
                                  MISCELLANEOUS

         6.01 SOURCE OF PAYMENTS The Company shall establish and maintain
records which incorporate the crediting of earned accruals and interest under
this Plan; provided, that the Company is advised by tax counsel that the
maintenance of such records will not result in taxation of income to a
Designated Executive or a named beneficiary prior to payment of benefits to any
such person.
         6.02 NO EMPLOYMENT CONTRACT This Plan shall not be construed as
creating any contract of employment between the Company or any Affiliate and the
Designated Executive. The Company and all affiliates shall have the same control
over their employees as though this Plan had never been executed.
         6.03 FORFEITURE Notwithstanding any other provision of this Plan,
neither a Designated Executive nor his named beneficiary shall be entitled to
receive any benefits under the Plan if the Designated Executive's employment is
terminated because of (a) his willful misconduct in connection with the
performance of his duties to the Company or any Affiliate, including, but
without limiting the generality of the foregoing, misappropriation of funds or
property of the Company or any Affiliate, securing or attempting to secure
personally any profit in connection with any transaction entered into on behalf
of the Company or any Affiliate, or committing the Company or any Affiliate to
any transaction adverse






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to their respective interests except as a result of an honest error in judgment,
or (b) his conviction for a felony.
         6.04 NO ASSIGNMENT The interest in this Plan of a Designated Executive
or named beneficiary shall not be subject to assignment or transfer or otherwise
be alienable either by voluntary or involuntary acts of such person, or by
operation of law, nor shall it be subject to attachment, execution, garnishment,
sequestration or other seizure under any legal, equitable or other process. If
any Designated Executive or named beneficiary shall attempt to or shall
alienate, sell, transfer, pledge or otherwise encumber any amount to which he is
or might become entitled, or if by reason of the insolvency of any such person
or the issuance of any garnishment, writ of execution or other court process, or
other event happening at any time any amount otherwise payable hereunder to such
person should devolve upon anyone other than him or would not be enjoyed by him,
the Benefits Committee shall terminate such interest, but may, in its absolute
discretion, hold or apply it to or for the benefit of such Participant, the
spouse, children or other dependents of such person, in such manner as the
Benefits Committee may deem proper.
         6.05 INCAPACITY In the event that the Benefits Committee determines
that a Designated Executive or named beneficiary is unable to care for his
affairs due to illness or accident, any payment due to such individual under
this Plan may be made to his duly appointed legal representative. The Benefits
Committee may, in its discretion, make such payments to a child, parent or
spouse






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of such individual, or to any other person with whom he resides or who is
charged with his care. The Benefits Committee shall make such payment according
to such instructions, which shall be in writing and witnessed by a notary
public, as the Designed Executive or named beneficiary had delivered to it prior
to becoming unable to care for his affairs due to illness or accident. Any
payment made according to the provisions of this Section shall be a complete
discharge of the liability of the Company under this Plan.
         6.06 TAX WITHHOLDING Benefit payments hereunder shall be subject to
withholding, to the extent required (as advised by tax counsel) by applicable
tax or other laws.
         6.07 SEPARABILITY If any provision of this Plan is held invalid or
unenforceable, to the extent necessary to effectuate the purposes of this Plan,
its invalidity or unenforceability shall not affect any other provisions of the
Plan and the Plan shall be construed and enforced as if such provisions had not
been included therein.
         6.08 BINDING EFFECT This Plan shall be binding upon and shall inure to
the benefit of the successors and assigns of the Company and shall be binding
upon the Designated Executive and shall inure to his benefit and that of his
named beneficiary.
         6.09 GENDER AND NUMBER The masculine pronoun whenever used herein shall
include the feminine pronoun and the singular number shall include the plural
number and vice versa unless the context clearly requires otherwise.






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         6.10 GOVERNING LAW The Plan shall be construed in accordance with the
laws of the State of Delaware, where it is made and where it shall be enforced,
except to the extent such laws have been superseded by Federal law.

         IN WITNESS WHEREOF, Hanover Direct, Inc. has caused this instrument to
be executed by its duly appointed officers this                 day of
                    , 1993.                    -----------------
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                                        HANOVER DIRECT, INC.

                                       BY
                                           -------------------------------




ATTEST


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