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                                                                    EXHIBIT 10.3


                            FORM OF LETTER AGREEMENT
                         WITH CERTAIN LEVEL 8 EXECUTIVES

Date

Name
Address

City, State ZIP

Dear (Name):

It's with pleasure, I confirm your continued employment with Hanover Direct as
(TITLE), reporting to (NAME). This letter will highlight essential details and
summarize information concerning the terms and conditions of your employment
with Hanover Direct.

Your bi-weekly salary is $XXXX.XX, which annualized is equivalent to $XXX,XXX.
You will be eligible for a performance review in March 2004, and thereafter,
under the current practices of the Company, will be reviewed in March of all
subsequent years.

In addition, as part of your annual cash compensation, you will be eligible for
a maximum performance bonus of 125% of your base salary, 75% at target, 50% at
threshold, based on attainment of EBITDA goals.

You are also guaranteed:

-        In the event that your employment by Hanover Direct is involuntarily
         terminated by the Company for any reason other than cause, you will
         receive a payment equal to eighteen (18) months of severance, defined
         as base salary and COBRA reimbursement, subject to a release in favor
         of the Company

-        Should a Change of Control occur, your severance entitlement is equal
         to eighteen (18) months of base salary in accordance with the terms of
         the Company's Eighteen Month Key Executive Compensation Continuation
         Plan

-        Additionally, you will receive a Transaction Bonus equal to 50% of your
         base salary upon the occurrence of a Change of Control

As a Hanover Direct employee you are eligible to participate in the following:

-        5 weeks vacation annually

-        The base medical and dental plans of the Company and the Exec-U-Care
         program

-        Company paid Life Insurance, with the option to buy supplemental
         insurance

-        Company paid Long Term Disability, with the option to buy supplemental
         insurance

-        Company paid Accidental Death and Dismemberment Insurance, with the
         option to buy supplemental insurance

-        401(k) retirement savings plan

-        Employee merchandise discounts of up to 45%

-        The 2000 Management Stock Option Plan
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(NAME), you must acknowledge, confirm and agree that in your position as
(TITLE), you will be privy to and put in possession of certain confidential
information, proprietary property and trade secrets of Hanover Direct, Inc. and
that the disclosure or use by you of any such information, property or trade
secrets, other than directly for the purposes of fulfilling your job
requirements, would damage Hanover Direct, Inc. Accordingly, you acknowledge
your continuing duty of confidentiality to Hanover Direct, Inc. and agree that
you will hold in the utmost and strictest confidence and will not, without
Hanover Direct, Inc.'s prior written permission, use or disclose (or act so as
to cause the use or disclosure of) any such confidential information, property
and trade secrets. This provision shall survive the termination of your
employment with Hanover Direct, Inc.

You also covenant and agree that for a period of two years following termination
of your employment with Hanover Direct, Inc. you will not, directly or
indirectly, hire or engage, on behalf of yourself or any other person or entity,
any person known by you to be a current employee or representative of Hanover
Direct, Inc. In addition, you will not, directly or indirectly, during such
period, intentionally suggest, assist in or influence a distributor, source,
supplier, customer or contractor of Hanover Direct, Inc. to sever his, her or
its relationship with, decrease in any material or substantial respect its
activity with, or intentionally do anything (whether by act of commission or
omission) which would be adverse in any material or substantial respect to the
interests of Hanover Direct, Inc. This provision shall survive the termination
of your employment with Hanover Direct, Inc.

Please understand the foregoing does not constitute a contract of employment,
either expressed or implied. All employees are employed "At Will" and both you
and the Company have the right to terminate your employment at any time, for any
reason or for no reason. In addition, the Company reserves the right at it's
sole discretion to modify, add or delete any of its employee benefit programs or
other policies and procedures.

Please sign and return to me one of the enclosed copies of this letter.

                                                     Sincerely,

                                                     ---------------------------
                                                     Thomas C. Shull
                                                     President, CEO and Chairman
                                                     Of the Board

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Name                        Date