Document:

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                                                                  Exhibit 10.181

                                                        DELMONTE
                                                        MSDWMC Loan No. 01-09625

                                PROMISSORY NOTE

$12,125,000.00                                                New York, New York

                                                                October 24, 2001

          FOR VALUE RECEIVED, DELMO 11/12 (DE) LLC, a Delaware limited liability
company, as maker, having its principal place of business at c/o W.P. Carey &
Co. LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020 ("Borrower"),
hereby unconditionally promises to pay to the order of SECORE FINANCIAL
CORPORATION, a Pennsylvania corporation, as payee, having an address at 7315
Wisconsin Avenue, Suite 450 North, Bethesda, Maryland 20814 ("Lender"), or at
such other place as the holder hereof may from time to time designate in
writing, the principal sum of TWELVE MILLION ONE HUNDRED TWENTY FIVE THOUSAND
AND NO/100 DOLLARS ($12,125,000.00) (the "Loan"), in lawful money of the United
States of America with interest thereon to be computed from the date of this
Note at the Applicable Interest Rate (defined below) in accordance with the
terms of this Note.

                                   ARTICLE I

                                 PAYMENT TERMS

          Borrower agrees to pay sums under this Note in installments as
follows:

          (a)  on the date hereof, a payment of interest only in the amount of
$19,804.16 with respect to the period commencing on the date hereof and ending
on, and including, the last day of the month in which this Note is executed;

          (b)  a constant payment of $88,425.00 ("Debt Service") on the first
day of December, 2001 and on the first day of each calendar month thereafter up
to and including the first day of October, 2011 (each, a "Payment Date"), each
of the payments to be applied as follows: (i) first, to the payment of interest
computed at the Applicable Interest Rate; and (ii) the balance toward the
reduction of the principal sum; and

          (c)  the balance of the principal sum and all interest thereon on the
first day of November, 2011 (the "Maturity Date").
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                                   ARTICLE II

                                    INTEREST

     The interest rate on this Note is seven and thirty five hundredths percent
(7.35%) per annum (the "Applicable Interest Rate"). Interest on the principal
sum of this None shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year (that is, the
Applicable Interest Rate or the Default Rate, as then applicable, divided by
360) by (c) the outstanding principal balance.

                                  ARTICLE III

                            DEFAULT AND ACCELERATION

     If any payment required in this Note is not paid (a) prior to the fifth
(5th) day after a Payment Date, (b) on the Maturity Date or (c) on the
happening of any other default, after the expiration of any applicable notice
and grace periods, herein or under the terms of the Security Instruments
(defined below) or any of the Other Security Documents (as defined in the
Security Instruments) (collectively, an "Event of Default"), at the option of
Lender (i) the whole of the principal sum of this Note, (ii) Interest, default
interest, late charges and other sums, as provided in this Note, the Security
Instruments or the Other Security Documents, (iii) all other monies agreed or
provided to be paid by Borrower in this Note, the Security Instruments or the
Other Security Documents, (iv) all sums advanced pursuant to the Security
Instruments to protect and preserve the Individual Properties (defined below)
and the lien and the security interest created thereby, and (v) all sums
advanced and costs and expenses incurred by Lender in connection with the Debt
(defined below) or any part thereof, any renewal, extension, or change of or
substitution for the Debt or any part thereof, or the acquisition or perfection
of the security therefor, whether made or incurred at the request of Borrower
of Lender (all the sums referred to in (i) through (v) above shall collectively
be referred to as the "Debt") shall without notice become immediately due and
payable.

                                   ARTICLE IV

                                DEFAULT INTEREST

     Borrower agrees that upon the occurrence of an Event of Default, Lender
shall be entitled to receive and Borrower shall pay interest on the entire
unpaid principal sum at a per annum rate equal to the lesser of (a) five
percent (5%) plus the Applicable Interest Rate or (b) the maximum interest rate
which Borrower may by law pay (the "Default Rate"). The Default Rate shall be
computed from the occurrence of the default giving rise to such Event of
Default (without regard to any notice or grace period) until the earlier of the
date upon which the Event of Default is cured or the date upon which the Debt
is paid in full. Interest calculated at the Default Rate shall be deemed part
of the Debt and shall be deemed secured by the Security Instruments. This
clause, however, shall not be construed as an agreement or privilege to extend

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the date of the payment of the Debt, nor as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of any Event of Default.

                                   ARTICLE V

                                  LATE CHARGE

     If any monthly installment payable under this Note is not paid prior to
the fifth (5th) day after the applicable Payment Date, Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of such
unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing the delinquent payment
and to compensate Lender for the loss of the use of the delinquent payment and
the amount shall be secured by the Security Instruments and the Other Security
Documents.

                                   ARTICLE VI

                             PREPAYMENT; DEFEASANCE

     (a)  Prepayment. The principal balance of this Note may not be prepaid in
whole or in part except as expressly permitted pursuant hereto.

     (b)  Total Defeasance. (i) Provided no Event of Default shall have
occurred and remain incurred, Borrower shall have the right at any time after
the Release Date (as defined below) to obtain a release of the lien of the
Security Instruments encumbering all Individual Properties upon satisfaction of
the following conditions:

          (A)  Borrower shall provide Lender sixty (60) days prior written
     notice (or such shorter period of time if permitted by Lender in its sole
     discretion) specifying a Payment Date (the "Defeasance Date") on which
     Borrower shall have satisfied the conditions in this Article VI(b) and on
     which it shall affect the defeasance;

          (B)  Borrower shall pay to Lender (A) all payments of principal and
     interest due on this Note to and including the Defeasance Date and (B) all
     other sums, then due under this Note, the Security Instruments and the
     Other Security Documents;

          (C)  Borrower shall deposit the Total Defeasance Collateral into the
     Defeasance Collateral Account and otherwise comply with the provisions of
     Article VI(d) and (e) hereof;

          (D)  Borrower shall execute and deliver to Lender a Security Agreement
     in respect of the Defeasance Collateral Account and the Total Defeasance
     Collateral;

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          (E)  Borrower shall deliver to Lender an opinion of counsel for
     Borrower that would be satisfactory to a prudent lender opining, among
     other things, that (A) Lender has a legal and valid perfected first
     priority security interest in the Defeasance Collateral Account and the
     Total Defeasance Collateral, (B) if Securities have been issued, the REMIC
     Trust formed pursuant to the related securitization will not fail to
     maintain its status as a "real estate mortgage investment conduit" within
     the meaning of Section 860D of the IRS Code as a result of the defeasance
     pursuant to this Article VI(b), (C) a defeasance pursuant to this Article
     VI(b) will not result in a deemed exchange for purposes of the IRS Code and
     will not adversely effect the status of this Note as indebtedness for
     federal income tax purposes, (D) delivery of the Total Defeasance
     Collateral and the grant of a security interest therein to Lender shall not
     constitute an avoidable preference under Section 547 of the Bankruptcy Code
     or applicable state law and (E) a non-consolidation opinion with respect to
     the Successor Borrower;

          (F)  Borrower shall deliver to Lender a confirmation in writing from
     the applicable Rating Agencies to the effect that the release of the
     Individual Properties from the lien of the Security Instruments as
     contemplated by this Article VI(b) and the substitution of the Total
     Defeasance Collateral will not result in a downgrading, withdrawal or
     qualification of the respective ratings in effect immediately prior to such
     defeasance for the Securities issued in connection with the securitization
     which are then outstanding;

          (G)  Borrower shall deliver an officer's certificate certifying that
     the requirements set forth in this Article VI(b) have been satisfied;

          (H)  Borrower shall deliver a certificate of Borrower's independent
     certified public accountant certifying that the Total Defeasance Collateral
     will generate monthly amounts equal to or greater than the Scheduled
     Defeasance Payments;

          (I)  Borrower shall deliver such other certificates, opinions,
     documents and instruments as Lender may reasonably request; and

          (J)  Borrower shall pay all costs and expenses of Lender incurred in
     connection with the defeasance, including Lender's reasonable attorneys'
     fees and expenses and Rating Agency fees and expenses.

     (ii) If Borrower has elected to defease this entire Note and the
requirements of this Article VI have been satisfied, all of the Individual
Properties shall be released from the Liens of their respective Security
Instruments and the Total Defeasance Collateral, pledged pursuant to the
Security Agreement, shall be the sole source of collateral securing this Note.
In connection with the release of the liens, Borrower shall submit to Lender,
not less than thirty (30) days prior to the Defeasance Date (or such shorter
time as permitted by Lender in its sole discretion), a release of lien (and
related Other Security Documents) for execution by Lender. Such release shall be
in a form appropriate in each jurisdiction in which an Individual Property is
located and that would be satisfactory to a

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     prudent lender. In addition, Borrower shall provide all other documentation
     Lender reasonably requires to be delivered by Borrower in connection with
     such release, together with an officer's certificate certifying that such
     documentation (i) is in compliance with all legal requirements, and (ii)
     will effect such releases in accordance with the terms of this Note.
     Borrower shall pay all costs, taxes and expenses associated with the
     release of the lien of the Security Instruments, including Lender's
     reasonable attorneys' fees. Except as set forth in this Article VI, no
     repayment, prepayment or defeasance of all or any portion of this Note
     shall cause, give rise to a right to require, or otherwise result in, the
     release of any lien of any Security Instruments on any of the Individual
     Properties.

          (c)  Partial Defeasance. (i) Provided no Event of Default shall have
occurred and remain uncured, Borrower shall have the right at any time after the
Release Date to obtain a release of the lien of the Security Instruments
encumbering one or more Individual Properties upon satisfaction of the
following conditions:

               (A)  Borrower shall provide Lender sixty (60) days prior written
          notice (or such shorter period of time if permitted by Lender in its
          sole discretion) specifying (A) a Payment Date (the "Partial
          Defeasance Date") on which Borrower shall have satisfied the
          conditions in this Article VI(c) and shall effect the defeasance and
          (B) the Individual Property or Properties proposed to be released from
          the lien of the Security Instruments (individually a "Release
          Property" and collectively the "Release Properties");

               (B)  Borrower shall pay to Lender (A) all payments of principal
          and interest due on this Note to and including the Partial Defeasance
          Date and (B) all other sums, then due under this Note, the Security
          Instruments and the Other Security Documents;

               (C)  Borrower shall deposit the Partial Defeasance Collateral
          into the Defeasance Collateral Account and otherwise comply with the
          provisions of Article VI(d) and (e) hereof;

               (D)  Borrower shall prepare all necessary documents to amend and
          restate this Note and issue two substitute notes, one note having a
          principal balance equal to 125% of the Allocated Loan Amount for the
          Release Property or Release Properties, as the case may be (the
          "Defeased Note"), and the other note having a principal balance equal
          to the excess of (A) the original principal amount of this Note, over
          (B) the amount of Defeased Note (the "Undefeased Note"). The Defeased
          Note and Undefeased Note shall have identical terms as this Note
          except for the principal balance. The Defeased Note and the Undefeased
          Note shall be cross defaulted and cross collateralized unless the
          Rating Agencies shall require otherwise or unless a Successor Borrower
          is established pursuant to Article VI(e) hereof. A Defeased Note may
          not be the subject of any further defeasance;

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     (H)  Borrower shall execute and deliver to Lender a Security Agreement in
respect of the Defeasance Collateral Account and the Partial Defeasance
Collateral;

     (F)  After giving effect to the release of the lien of the Security
Instruments encumbering the Individual Property or Individual Properties
proposed by Borrower to be released, the debt service coverage ratio (as
computed by Lender in accordance with generally accepted industry underwriting
standards for securitized commercial mortgage loans) with respect to the
remaining Individual Properties is not less than the greater of (1) the debt
service coverage ratio (as computed by Lender in accordance with generally
accepted industry underwriting standards for securitized commercial mortgage
loans) of all Individual Properties encumbered by the Security Instruments prior
to the release and (2) 1.53 to 1.0;

     (G)  Borrower shall have delivered to Lender and the Rating Agencies shall
have received from Borrower with respect to the matters referred to in clause
(F), (1) statements of the underwritable cash flow and debt service (as computed
by Lender in accordance with generally accepted industry underwriting standards
for securitized commercial mortgage loans) (both on a consolidated basis and
separately for the applicable Individual Property or Individual Properties to be
released) for the applicable measuring period and (2) based on the foregoing
statements of underwritable cash flow and debt service (as computed by Lender in
accordance with generally accepted industry underwriting standards for
securitized commercial mortgage loans), calculations of the debt service
coverage ratio (as computed by Lender in accordance with generally accepted
industry underwriting standards for securitized commercial mortgage loans) both
with and without giving effect to the proposed release, and (3) calculations of
the ratios referred to in such clause (F), accompanied by an officer's
certificate stating that such statements, calculations and information are true,
correct and complete in all material respects;

     (H)  Borrower shall deliver to Lender an opinion of counsel for Borrower
that would be satisfactory to a prudent lender opining, among other things, that
(1) Lender has a legal and valid perfected first priority security interest in
the Defeasance Collateral Account and the Partial Defeasance Collateral, (2) if
Securities has been issued, the REMIC Trust formed pursuant to the related
securitization will not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code as a result
of the defeasance pursuant to this Article VI(c), (3) a defeasance pursuant to
this Article VI(c) will not result in a deemed exchange for purposes of the IRS
Code and will not adversely effect the status of the Defeased Note and the
Undefeased Note as indebtedness for federal income tax purposes, (4) delivery of
the Partial Defeasance Collateral and the grant of a security interest therein
to Lender shall not constitute an avoidable preference under Section 547 of the
Bankruptcy Code or applicable state law and (5) a non-consolidation opinion with
respect to the Successor Borrower;

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          (I)  Borrower shall deliver to Lender evidence in writing from
     the applicable Rating Agencies to the effect that the release of the
     Individual Property or Individual Properties from the lien of the Security
     Instruments as contemplated by this Article VI(c) and the substitution of
     the Partial Defeasance Collateral will not result in a downgrading,
     withdrawal or qualification of the respective ratings in effect immediately
     prior to such defeasance for the Securities issued in connection with the
     securitization which are then outstanding;

          (J)  Borrower shall deliver to Lender a certificate of Borrower's
     independent certified public accountant certifying that the Partial
     Defeasance Collateral will generate monthly amounts equal to or greater
     than the Scheduled Defeasance Payments;

          (K)  Borrower shall deliver to Lender an officer's certificate
     certifying that the requirements set forth in this Article VI(c) have been
     satisfied;

          (L)  Borrower shall deliver to Lender such other certificates,
     documents or instruments as Lender may reasonably request; and

          (M)  Borrower shall pay all costs and expenses of Lender incurred in
     connection with the defeasance, including Lender's reasonable attorneys'
     fees and expenses.

     (ii) If Borrower has elected to make a partial defeasance and the
requirements of this Article VI have been satisfied, the Release Property or
Release Properties shall be released from the lien of their Security
Instruments. In connection with the release of the lien, Borrower shall submit
to Lender, not less than thirty (30) days prior to the Partial Defeasance Date
(or such shorter time as permitted by Lender in its sole discretion), a release
of lien (and related Other Security Documents) for execution by Lender. Such
release shall be in a form appropriate in the jurisdiction in which such
Individual Property is located and that would be satisfactory to a prudent
lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such
release, together with an officer's certificate certifying that such
documentation (i) is in compliance with all legal requirements, and (ii)
will effect such releases in accordance with the terms of this Note. Borrower
shall pay all costs, taxes and expenses associated with the release of the lien
of the Security Instruments, including Lender's reasonable attorneys' fees.
Borrower shall cause title to the Individual Property so released from the lien
of the Security Instrument to be transferred to and held by a person or entity
other that Borrower. Except as set forth in this Article VI, no repayment,
prepayment or defeasance of all or any portion of this Note shall cause, give
rise to a right to require, or otherwise result in, the release of any lien of
any Security Instrument on any of the Individual Properties.

     (d)  Defeasance Collateral Account. On or before the date on which Borrower
delivers the Total Defeasance Collateral or Partial Defeasance Collateral.
Borrower shall open at any Eligible Institution the defeasance collateral
account (the "Defeasance Collateral Account") which shall at all times be an
Eligible Account. The Defeasance Collateral Account shall contain only (i) Total
Defeasance Collateral and Partial Defeasance Collateral, and (ii) cash from
interest

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and principal paid on the Total Defeasance Collateral or Partial Defeasance
Collateral. All cash from interest and principal payments paid on the Total
Defeasance Collateral or Partial Defeasance Collateral shall be paid over to
Lender on each Payment Date and applied first to accrued and unpaid interest
and then to principal. Any cash from interest and principal paid on the Total
Defeasance Collateral or the Partial Defeasance Collateral not needed to pay
accrued and unpaid interest or principal shall be retained in the Defeasance
Collateral Account as additional collateral for the Loan. Borrower shall cause
the Eligible Institution at which the Total Defeasance Collateral and Partial
Defeasance Collateral are deposited to enter an agreement with Borrower and
Lender, satisfactory to Lender in its sole discretion, pursuant to which such
Eligible Institution shall agree to hold and distribute the Total Defeasance
Collateral and Partial Defeasance Collateral in accordance with this Note. The
Successor Borrower shall be the owner of the Defeasance Collateral Account and
shall report all income accrued on Total Defeasance Collateral and Partial
Defeasance Collateral for federal, state and local income tax purposes in its
income tax return. Borrower shall prepay all cost and expenses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall not in
any way be liable by reason of any insufficiency in the Defeasance Collateral
Account.

          (e)  Successor Borrower. In connection with a total or partial
defeasance under this Article VI, Borrower shall, if required by the Rating
Agencies, establish or designate a successor entity (the "Successor Borrower")
which shall be a single purpose bankruptcy remote entity and which shall be
approved by the Rating Agencies. Any such Successor Borrower may, at Borrower's
option, be an affiliate of Borrower unless the Rating Agencies shall require
otherwise. Borrower shall transfer and assign all obligations, rights and duties
under and to this Note or the Defeased Note, as applicable, together with the
Total Defeasance Collateral or the Partial Defeasance Collateral, as applicable,
to such Successor Borrower. Such Successor Borrower shall assume the obligations
under this Note or the Defeased Note, as applicable, and the Security Agreement
and Borrower shall be relieved of its obligations under such documents. Borrower
shall pay $1,000 to any such Successor Borrower as consideration for assuming
the obligations under this Note or the Defeased Note, as applicable, and the
Security Agreement, Borrower shall pay all costs and expenses incurred by
Lender, including Lender's attorney's fees and expenses, incurred in connection
therewith.

          (f)  Definitions.   The following terms shall have the meanings set
forth below:

          "Allocated Loan Amount" shall mean the portion of the Loan allocated
to each Individual Property as set forth on Schedule I hereto.

          "Eligible Account" shall mean a separate and identifiable account
from all other funds held by the holding institution that is either (i) an
account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in
its fiduciary capacity which, in the case of a state chartered depository
institution or trust company is subject to regulations substantially similar to
12 C.F.R. Section 9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal
and state

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authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

     "Eligible Institution" shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by Standard
& Poor's Ratings Group, P-1 by Moody's Investors Services, Inc. and F-1+ by
Fitch, Inc. in the case of accounts in which funds are held for thirty (30)
days or less or, in the case of accounts in which funds are held for more than
thirty (30) days, the long term unsecured debt obligations of which are rated at
least "AA" by Fitch, and S&P and "Aa2" by Moody's.

     Partial Defeasance Collateral" shall mean U.S. Obligations which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates
and other scheduled payment dates, if any, under the Defeased Note after the
Defeasance Date and up to and including the Maturity Date, and (ii) in amounts
equal to or greater than the Scheduled Defeasance Payments.

     "Release Date" shall mean the earlier to occur of (a) the fourth
anniversary of the first day of the first full calendar month following the
date hereof and (b) the date that is two (2) years from the "startup day"
(within the meaning of Section 860G(a)(9) of the IRS Code) of a REMIC that
holds this Note.

      "Scheduled Defeasance Payments" shall mean scheduled payments of interest
and principal under this Note in the case of a total defeasance and under the
Defeased Note in the case of a partial defeasance for all Payment Dates
occurring after the Defeasance Date and up to and including the Maturity Date
(including, in the case of a total defeasance, the outstanding principal
balance on this Note as of the Maturity Date and, in the case of a partial
defeasance, the outstanding principal balance on the Defeased Note as of the
Maturity Date).

     "Security Agreement" shall mean a security agreement in form and substance
that would be satisfactory to a prudent lender pursuant to which Borrower
grants Lender a perfected, first priority security interest in the Defeasance
Collateral Account, the Total Defeasance Collateral and the Partial Defeasance
Collateral, as applicable.

     "Total Defeasance Collateral" shall mean U.S. Obligations, which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under this Note after the Defeasance
Date and up to and including the Maturity Date, and (ii) in amounts equal to or
greater than the Scheduled Defeasance Payments.

     "U.S. Obligations" shall mean direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.

     (g)  Default Prepayment. If a Default Prepayment (defined below) occurs,
Borrower shall pay to Lender the entire Debt, including, without limitation, an
amount (the "Default Consideration") equal to the greater of (i) the amount (if
any) which when added to the then outstanding principal amount of this Note
will be sufficient to purchase Defeasance Collateral providing the required
Scheduled Defeasance Payments assuming Defeasance would be permitted hereunder,
or (ii) one percent (1%) of the Default Prepayment. For purposes of this

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Notes, the term "Default Prepayment" shall mean a prepayment of the principal
amount of this Note made after the occurrence of any Event of Default or an
acceleration of the Maturity Date under any circumstances, including, without
limitation, a prepayment occurring in connection with reinstatement of the
Security Instruments provided by statute under foreclosure proceedings or
exercise of a power of sale, any statutory right of redemption exercised by
Borrower or any other party having a statutory right to redeem or prevent
foreclosure, any sale in foreclosure or under exercise of a power of sale or
otherwise.

     (h)  Permitted and Mandatory Prepayments. Notwithstanding anything to the
contrary herein, Borrower may prepay the principal balance of this Note in
whole, without premium or penalty, on any Payment Date during the three (3)
months prior to the Maturity Date. Borrower shall prepay without premium or
penalty the principal balance of this Note in an amount equal to (i) any
insurance proceeds or condemnation awards which Lender has the right to and
elects to have applied to the Debt pursuant to Sections 3.6 and 3.7 of the
Security Investments, (ii) (subject to the immediately following sentence) the
Allocated Loan Amount for the related Individual Property in the event Borrower
exercises its right to accept or reject Del Monte's offer to terminate the Del
Monte Lease (as defined in the Security Instruments) pursuant to Section 3.8(f)
of the Security Instruments simultaneously with such prepayment or (iii) the
amount required by Lender due to changes in tax and debt credit pursuant to
Section 7.3(a) or (b) of the Security Instruments (provided, however, that in
the event any such prepayment pursuant to this sentence shall be made on a date
other than a Payment Date, the amount so prepaid shall include all interest
which would have accrued on such amount through the next Payment Date). In the
alternative, from and after the Release Date, in the event Borrower exercises
its right to accept or reject Del Monte's offer to terminate the Del Monte Lease
pursuant to Section 3.8(f) of the Security Instruments, Borrower may, in lieu of
prepaying this Note in part pursuant to clause (ii) above, elect to partially
defease this Note pursuant to and in accordance with the terms and provisions of
Article VI of this Note with respect to the related Individual Property
simultaneously with the exercise of such right to accept or reject. In addition,
in the event (i) Lender consents to Borrower's acceptance of an Intended
Assignment Offer or an Abandonment Notice (as defined in the Security
Instruments) pursuant to Section 3.8(h) of the Security Instruments or (ii) Del
Monte exercises its option to purchase all of the Individual Properties pursuant
to and in accordance with Paragraph 37 of the Del Monte Lease, Borrower shall
partially or totally, as applicable, defease this Note pursuant to and in
accordance with the terms and provisions or Article VI of this Note with respect
to the related Individual Property(ies) simultaneously therewith. In each
instance of prepayment permitted under this subparagraph (h), Borrower shall be
required to pay all other sums due hereunder, and no principal amount repaid may
be reborrowed.

                                  ARTICLE VII

                                    SECURITY

     This Note is secured by those certain Mortgage and Security Agreements and
those certain Deed to Secure Debt and Security Agreements dated the date
hereof each in the principal sum of $12,500,000.00 given by Borrower to (or for
the benefit of) Lender covering the fee estate of Borrower in certain premises
located in (i) Plover, Wisconsin, (ii) Toppemish,

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Washington, (iii) Mendote, Illinois and (iv) Yakima, Washington, and other
property, as more particularly described therein (each an "Individual Property"
and, collectively, the "Individual Properties") and intended to be duly recorded
in the applicable recording offices (each a "Security Instrument" and,
collectively, the "Security Instruments"), and by the Other Security Documents.

                                  ARTICLE VIII

                                  LOAN CHARGES

     This Note, the Security Instruments and the Other Security Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance due hereunder at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the maximum interest rate which Borrower is permitted by
applicable law to contract or agree to pay. If by the terms of this Note, the
Security Instruments and the Other Security Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of such maximum rate, the Applicable Interest Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
such maximum rate and all previous payments in excess of the maximum rate shall
be deemed to have been payments in reduction of principal and not on account of
the interest due hereunder. All sums paid or agreed to be paid to Lender for
the use, forbearance, or detention of the Debt, shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount
of interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.

                                   ARTICLE IX

                                    WAIVERS

     Borrower and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind, except for notices expressly provided for in
this Note, the Security Instruments or the Other Security Documents. No release
of any security for the Debt or extension of time for payment of this Note or
any installment hereof, and no alteration, amendment or waiver of any provision
of this Note, the Security Instruments or the Other Security Documents made by
agreement between Lender or any other person or party shall release, modify,
amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment
of all or any part of the Debt, under this Note, the Security Instruments or
the Other Security Documents. No notice to or demand on Borrower shall be
deemed to be a waiver of the obligation of Borrower or of the right of Lender
to take further action without further notice or demand as provided for in this
Note, the Security Instruments or the Other Security Documents. If Borrower is
a partnership, corporation or limited liability company, the agreements
contained herein shall remain in full force and effect, notwithstanding

                                      -11-
<PAGE>
any changes in the individuals or entities comprising the Borrower, and the
term "Borrower," as used herein, shall include any alternate or successor
entity, but any predecessor entity, and its partners or members, as the case
may be, shall not thereby be released from any liability. (Nothing in the
foregoing sentence shall be construed as a consent to, or a waiver of, any
prohibition or restriction on transfers of interests in Borrower which may be
set forth in the Security Instruments or any Other Security Document.)

                                   ARTICLE X

                            WAIVER OF TRIAL BY JURY

          BORROWER AND LENDER HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENTS OR THE OTHER SECURITY DOCUMENTS OR ANY
ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

                                   ARTICLE XI

                                  EXCULPATION

     (a)  Notwithstanding anything to the contrary contained in this Note, the
Security Instruments or any Other Security Document (but subject to the
provisions of subsections (b), (c) and (d) of this Article 11), Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note or the Security Instruments by any action or
proceeding wherein a money judgment or any deficiency judgment or other
judgment establishing any personal liability shall be sought against Borrower
or any principal, director, officer, employee, beneficiary, shareholder,
partner, member, trustee, agent or affiliate of Borrower or any person owning,
directly or indirectly, any legal or beneficial interest in Borrower, or any
successors or assigns of any of the foregoing (collectively, the "Exculpated
Parties"), except that Lender may bring a foreclosure action, action for
specific performance or other appropriate action or proceeding to enable Lender
to enforce and realize upon this Note, the Security Instruments, the Other
Security Documents, and the interest in the Property, the Rents (as defined in
the Security Instruments) and any other collateral given to Lender to secure
this Note; provided, however, subject to the provisions of subsections (b), (c)
and (d) of this Article 11, that any judgment in any such action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender to secure this Note. Lender, by accepting this Note and the
Security Instruments, agrees that it shall not, except as otherwise provided
in this Article 11, sue for, seek or demand any deficiency judgment against
Borrower or any of the Exculpated Parties, in any such action or proceeding,
under or by reason of or under or in connection with this Note, the Security
Instruments or the Other Security Documents. The

                                      -12-
<PAGE>
provisions of this Article II shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Security Instruments or the Other Security Documents delivered to Lender; (ii)
impair the right of Lender to name Borrower as a party defendant in any action
or suit for judicial foreclosure and sale under the Security Instruments; (iii)
affect the validity or enforceability of any indemnity, guaranty, master lease
or similar instrument made in connection with this Note, the Security
Instruments, or the Other Security Documents; (iv) impair the right of Lender to
obtain the appointment of a receiver; (v) impair the enforcement of the
Assignment of Leases and Rents executed in connection herewith; (vi) impair the
right of Lender to enforce the provisions of Section 12.2 of the Security
Instruments or of Section 3.12(c) of the Security Instruments; or (vii) impair
the right of Lender to obtain a deficiency judgment or other judgment on the
Note against Borrower if necessary to obtain any insurance proceeds or
condemnation awards to which Lender would otherwise be entitled under the
Security Instruments; provided however, Lender shall only enforce such judgment
to the extent of the insurance proceeds and/or condemnation awards.

          (b)  Notwithstanding the provisions of this Article II to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instruments) Lender incurs due to: (i) fraud or
intentional misrepresentation by Borrower or any of the Exculpated Parties in
connection with the execution and the delivery of this Note, the Security
Instruments or the Other Security Documents or any documents or certificate now
or at any time during the term of the Loan evidenced by this Note; (ii)
Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of and during the continuance of an Event of Default; (iii)
Borrower's misapplication or misappropriation of tenant security deposits or
Rents collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards; (v) Personal Property (as defined in
the Security Instruments) taken from any Individual Property by or on behalf of
Borrower or any of the Exculpated Parties and not replaced with Personal
Property of the same utility and of the same or greater value specifically
excluding, however any Personal Property owned by any tenant on such Individual
Property; (vi) any act of arson by Borrower or any of the Exculpated Parties;
(vii) any fees or commissions paid by Borrower after Borrower receives notice
from Lender of the occurrence, and during the continuance, of an Event of
Default to any Exculpated Party in violation of the terms of this Note, the
Security Instruments or the Other Security Documents; (viii) Borrower's breach
of, or failure to comply with, the representations, warranties and covenants
contained in Article 5.8(b) and/or Article 12 of the Security Instruments; or
(ix) without the prior written consent of Lender, any amendment, modification or
waiver of any provisions of the Del Monte Lease, except as specifically
permitted pursuant to Section 3.8 of the Security Instruments, or any
termination thereof (whether by Borrower or Del Monte (as defined in the
Security Instruments)), except as otherwise specifically permitted pursuant to
the terms of the Del Monte Lease, this Note, the Security Instruments and the
Other Security Documents and except for the rejection of the Del Monte Lease by
Del Monte or its trustee in a bankruptcy proceeding.

          (c)  Notwithstanding the foregoing the agreement of Lender not to
pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect in the event of Borrower's
default under Article 8 of the Security Instruments or if the Individual
Properties or any part thereof shall become an asset in a (i) voluntary
bankruptcy or insolvency proceeding, or (ii) an involuntary bankruptcy or

                                      -13-

<PAGE>
insolvency proceeding (other than one filed by or on behalf of Lender) which is
not dismissed within ninety (90) days of filing.

     (d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instruments or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Note, the Security Instruments and the Other Security Documents.

                                  ARTICLE XII

                                   AUTHORITY

     Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Instruments and the Other Security Documents
and that this Note, the Security Instruments and the Other Security Documents
constitute valid and binding obligations of Borrower.

                                  ARTICLE XIII

                                 GOVERNING LAW

     (A) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER
AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THIS NOTE
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND
ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE AND
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

     (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER'S OPTION BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT
TO SECTION 5-

                                      -14-

<PAGE>
1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          DELMO 11/12 (DE) LLC
          c/o W.P. Carey & Co. LLC
          50 Rockefeller Plaza
          Second Floor
          New York, NY 10020

          with a copy to:

          Read Smith LLP
          2500 One Liberty Place
          Philadelphia, PA 19103
          Attention: Chairman, Real Estate Department

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SUCH AGENT AT SUCH ADDRESS AND WRITTEN NOTICE OF SUCH SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL
BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS); AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.

                                  ARTICLE XIV

                                    NOTICES

     All notices required or permitted hereunder shall be given as provided in
the Security Instruments.

                                      -15-
<PAGE>

                                   ARTICLE XV

                           INCORPORATION BY REFERENCE

     All of the terms, covenants and conditions contained in the Security
Instruments and the Other Security Documents are hereby made part of this Note
to the same extent and with the same force as if they were fully set forth
herein.

                                  ARTICLE XVI

                                 MISCELLANEOUS

     (a)  Whenever pursuant to this Note it is provided that Borrower pay any
costs and expenses, such costs and expenses shall include; but not be limited
to, reasonable legal fees and disbursements of Lender, whether with respect to
retained firms, the reimbursement for the expenses of in-house staff, or
otherwise. Borrower shall pay to Lender on demand any and all expenses,
including legal expenses and reasonable attorneys' fees, incurred or paid by
Lender in enforcing this Note, whether or not any legal proceeding is commenced
hereunder, together with interest thereon at the Default Rate from the date paid
or incurred by Lender until such expenses are paid by Borrower.

     (b)  This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

     (c)  If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.

     Whenever used, the singular number shall include the plural, the plural
number shall include the singular, and the words "Lender" and "Borrower" shall
include their respective successors, assigns, heirs, executors and
administrators.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -16-

<PAGE>
          IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
day and year first above written.

                                        BORROWER:

                                        DELMO 11/12 (DE) LLC,
                                        a Delaware limited liability company

                                        By: DELMO (DE) QRS 11/12-1, INC.,
                                            a Delaware corporation,
                                            its sole managing member

                                             By: /s/ Gordon J. Whiting
                                                 ----------------------
                                             Name: Gordon J. Whiting
                                             Title: Executive Director
<PAGE>
             SCHEDULE I
----------------------------------------
PROPERTY                ALLOCATED LOAN
                           AMOUNT
----------------------------------------
Mendoza, Illinois        $4,000,000
----------------------------------------
Toppanish, Washington    $4,625,000
----------------------------------------
Plover, Wisconsin        $3,500,000
----------------------------------------<PAGE>
                                                                    EXHIBIT 10.1

                               SERVICES AGREEMENT

         This Services Agreement (this "Agreement") is made as of December 14,
2001 by and among: (i) Meridian Ventures, LLC, a Nevada limited liability
company controlled by Thomas C. Shull ("Meridian"), and Thomas C. Shull
("Shull"), jointly and severally; and (ii) Hanover Direct, Inc. (the "Company"),
a Delaware corporation.

                  1. Provision of Services. Meridian shall provide for the
         benefit of the Company the services of Shull. In connection therewith,
         Shull shall serve as the President and Chief Executive Officer (the
         "President/CEO") and as a member of the Company's Board of Directors
         (the "Board of Directors"), its Executive Committee (the "Executive
         Committee") and its Nominating Committee (the "Nominating Committee").

                  2. Responsibilities. The President/CEO shall act and serve
         during the term of this Agreement as the President and Chief Executive
         Officer of the Company and shall report to the Board of Directors. The
         employment responsibilities of the President/CEO will include those
         normally held by the president and chief executive officer of a
         corporation of a similar size and nature to the Company. The
         President/CEO shall devote his full-time efforts (which shall mean an
         average of 50 hours per work week, excluding reasonable vacation,
         personal, sick time or de minimus non-conflicting time for Meridian) in
         connection with his role as President, Chief Executive Officer and
         member of the Executive and Nominating Committees. All employees and
         officers shall report directly or indirectly to the President/CEO.

                  3. Term. Subject to paragraph 6, the term of this Agreement
         (the "Agreement Term") and the term for services of Shull shall
         commence as of December 14, 2001 and shall terminate on March 31, 2003;
         provided, however, that, on or prior to February 1, 2003, the Company
         may extend the Agreement Term on a day to day basis upon written notice
         to Shull provided that thereafter either party may terminate the
         Agreement and the Agreement Term with 60 days notice to the other
         party.

                  4. Compensation. The following compensation shall be payable
         pursuant to this Agreement:

                  (a)      In consideration for providing the services of Shull
                           as President/CEO, during the Agreement Term, Meridian
                           shall receive, in addition to the other consideration
                           provided in this Agreement, compensation at the rate
                           of $75,000 per month for the services of Shull
                           payable in advance during the first week of each
                           month (the "Base Fee").

                  (b)      The compensation payable to Meridian under this
                           Agreement is in consideration for the services of
                           Shull. To the extent permitted by applicable law, and
                           except as otherwise provided herein, the Company
<PAGE>
                           shall not be obligated to provide Shull (and Meridian
                           and Shull specifically decline) any employee benefits
                           (for example, health, 401K, pension, or other
                           benefits provided by the Company to its employees,
                           etc.) under this Agreement; provided, however, that
                           the Company has extended the benefits of its Key
                           Executive Eighteen Month Compensation Continuation
                           Plan effective as of April 25, 2001, as amended (the
                           "Change of Control Plan"), and its transaction bonus
                           program (each as referred to in Exhibit 1) to Shull.
                           Notwithstanding the foregoing, the Company will allow
                           Shull during the Agreement Term to avail himself of
                           any Company employee discount offered to other
                           employees generally. In addition, the Company has
                           guaranteed to Shull a target bonus for fiscal 2001
                           pursuant to the Company's 2001 Management Incentive
                           Plan equal to $300,000 which shall be payable in one
                           lump sum on or about April 1, 2002 (or on the date of
                           closing of any transaction which constitutes a Change
                           of Control (as hereinafter defined), if earlier) so
                           long as Shull is providing services to the Company
                           hereunder on December 29, 2001 (or on the date of
                           closing of such a transaction, if earlier). Shull
                           shall be eligible to receive a maximum bonus for
                           fiscal 2001 pursuant to the Company's 2001 Management
                           Incentive Plan equal to up to $600,000 (including the
                           target bonus described in the previous sentence)
                           which shall be payable as set forth in the previous
                           sentence if he achieves the maximum goals set for him
                           by the Board of Directors (as set forth on Exhibit 2
                           hereto). Shull shall receive a bonus for fiscal 2002
                           under the Company's 2002 Management Incentive Plan
                           determined in a manner consistent with bonuses
                           awarded to all other Class 7 participants under such
                           Plan for such period, subject to all of the terms and
                           conditions applicable generally to Class 7
                           participants thereunder.

                  (c)      In addition to the payments required by paragraph
                           4(a), during the Agreement Term the Company shall pay
                           Meridian a flat fee of $15,000 per month, which shall
                           represent 20% of the comparable compensation in
                           paragraph 4(a) for Shull and is deemed to cover
                           Meridian over-head (including legal and accounting),
                           health care costs, payroll costs, and other expenses
                           (the "Flat Fee"). If, notwithstanding paragraph 4(b),
                           applicable law requires the Company to provide Shull
                           with any employee benefits (other than the Company
                           employee discount given Shull), the value of such
                           benefits shall be offset against the Flat Fee.

                  (d)      The Company shall reimburse Meridian for the
                           reasonable out-of-pocket expenses of the
                           President/CEO (such as travel, meals, communications
                           and lodging) which are incurred during the Agreement
                           Term on behalf of the Company on appropriate
                           business. Meridian shall submit invoices and
                           documentation for such reimbursable expenses on a
                           monthly basis, and the Company shall process payment
                           of the same upon receipt in accordance with its
                           customary procedures.

                  (e)      The Company shall provide a personal secretary to be
                           interviewed and selected by Shull to assist Shull in
                           the performance of his duties as

                                       2
<PAGE>
                           President/CEO during the Agreement Term. The
                           secretary shall be employed by the Company at its
                           cost.

                  (f)      The Company shall promptly reimburse Meridian and
                           Shull for their reasonable legal fees in the event
                           that either of them shall consult with their counsel
                           during the Agreement Term in connection with their
                           fiduciary responsibilities to the Company under the
                           Agreement.

                  (g)      Upon the closing of any transaction which constitutes
                           a "Change of Control" (as defined in paragraph 5),
                           provided that Shull is then employed by the Company,
                           the Company shall make a lump sum cash payment to
                           Meridian on the date of such closing of $900,000
                           pursuant to the Change of Control Plan, $300,000
                           pursuant to the transaction bonus program and at
                           least $300,000 in target bonus (plus any amount of
                           maximum bonus) payable pursuant to the Company's 2001
                           Management Incentive Plan as described in paragraph
                           4(b). The lump sum cash payment referred to in this
                           paragraph 4(g) shall be in lieu of any cash payment
                           pursuant to paragraph 6(b)(iii) as a result of a
                           termination of this Agreement pursuant to paragraph
                           6(a)(v) and in lieu of the aggregate amount of Base
                           Fees and Flat Fees to which Meridian would have
                           otherwise been entitled through the end of the
                           Agreement Term.

                  (h)      Provided that this Agreement shall be in effect on
                           June 30, 2002, the Company shall make a lump sum cash
                           payment to Meridian on such date of $450,000.

                  (i)      During the Agreement Term, solely at the expense of
                           the Company, Shull shall be entitled to engage the
                           services of Meridian personnel from time to time at
                           their then current rates, in his discretion, to
                           assist him in performing his duties under this
                           Agreement.

                  5. Stock Options. Pursuant to paragraph 5 of the Services
         Agreement made as of December 5, 2000 by and among Meridian, Shull and
         the Company (the "Prior Services Agreement"), the Company granted Shull
         and certain individuals who were providing consulting services to the
         Company under the Prior Services Agreement ("Consultants") stock
         options (the "2000 Options") for an aggregate four million (4,000,000)
         shares of the common stock of the Company (the "Shares"). If not
         already covered by a Registration Statement on Form S-8 relating to the
         Company's 2000 Management Stock Option Plan, all Shares underlying the
         2000 Options shall be registered by the Company utilizing a
         Registration Statement on Form S-8 (or other similar form) prior to
         December 24, 2001. All 2000 Options shall terminate upon any
         termination of the Agreement pursuant to paragraph 6(a)(i) or 6(a)(iv).
         All outstanding 2000 Options shall vest and become exercisable upon any
         termination of the Agreement pursuant to paragraph 6(a)(ii), 6(a)(v) or
         6(a)(vi). Further, and notwithstanding anything to the contrary
         contained herein, provided that this Agreement shall then be in effect,
         one-half (1/2) of Shull's 2000 Option and all of the Consultants'
         Options shall vest and become exercisable on December 4, 2001, and the
         remaining portion of Shull's 2000 Option shall

                                       3
<PAGE>
         vest and become exercisable, provided that this Agreement shall then be
         in effect, on June 30, 2002.

                  In addition to the 2000 Options, upon his execution of this
         Agreement, the Company shall grant Shull and certain members, officers
         or employees of, or consultants, contractors or subcontractors to,
         Meridian, additional stock options under and subject to the terms and
         conditions of the Company's 2000 Management Stock Option Plan (the
         "2001 Options") for an aggregate of one million (1,000,000) Shares,
         with an exercise price equal to the fair market value of a Share as of
         the close of business on the date hereof. Allocation of the 2001
         Options shall be as follows: Thomas C. Shull (an option for 500,000
         Shares); Edward Lambert (an option for 300,000 Shares); Paul Jen (an
         option for 100,000 Shares); and John F. Shull (an option for 100,000
         Shares). If not already covered by a Registration Statement on Form S-8
         relating to the Company's 2000 Management Stock Option Plan, all Shares
         underlying the 2001 Options shall be registered by the Company
         utilizing a Registration Statement on Form S-8 (or other similar form)
         prior to March 31, 2003. The 2001 Options shall not be vested and
         exercisable until March 31, 2003 (provided that this Agreement shall
         then be in effect), upon which date (and under such circumstances) the
         2001 Options shall become fully vested and exercisable. The 2001
         Options shall terminate on the earlier of March 31, 2006 or upon any
         termination of the Agreement pursuant to paragraph 6(a)(i) or 6(a)(iv).
         The 2001 Options shall vest and become exercisable upon any termination
         of the Agreement pursuant to paragraph 6(a)(ii), 6(a)(v) or 6(a)(vi).

                  In addition, and notwithstanding anything to the contrary
         contained herein, all of the 2000 Options and the 2001 Options
         (collectively, the "Options") shall vest and become exercisable upon
         the earliest to occur of (i) Shull's resignation "For Good Reason" (as
         defined below), (ii) the Company's termination of Shull's services
         hereunder without being "For Cause" (as defined below), (iii) a "Change
         of Control" (as defined below), or (iv) the expiration of the Agreement
         Term. Options which vest and become exercisable pursuant to this
         paragraph 5 shall remain exercisable for a 3-year period (or the date
         of their earlier exercise). In the event of a vesting resulting from a
         termination of the Agreement pursuant to paragraph 6(a)(v), such
         vesting shall take place sufficiently in advance of such termination
         (but subject to its occurrence) to permit each optionee to take all
         steps reasonably necessary to exercise his Options and to deal with the
         Shares purchased under the Options so that those Shares may be treated
         in the same manner in connection with the transaction described in
         paragraph 6(a)(v) as the Shares of other shareholders.

                  For purposes of this Agreement, the following terms shall have
         the following meanings:

                  "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

                                       4
<PAGE>
         Agreement Term, (iv) decisions or actions by the Board of Directors,
         committees or individual members of the Board 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 of 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 60 days of his
         knowledge of the event or events constituting Good Reason. The Company
         shall thereafter have 30 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.

                  "For Cause" shall mean the involuntary termination of Shull's
         employment with the Company on account of his (i) willful and continued
         failure to perform his regular duties for the Company, (ii) commission
         of an act of fraud relating to and adversely affecting the Company, or
         (iii) conviction of a felony in connection with his employment with the
         Company.

                  "Change of Control" shall mean the first to occur of any of
         the events described in clauses (i) through (iii) below, following the
         first day of the Agreement Term:

                  (i) When any Person becomes, through an acquisition, the
         beneficial owner of shares of the Company having at least 50% of the
         total number of votes that may be cast for the election of directors of
         the Company (the "Voting Shares"); provided, however, that the
         following acquisitions shall not constitute a Change of Control:

                           (A) if a Person owns less than 50% of the voting
         power of the Company and that Person's ownership increases above 50%
         solely by virtue of an acquisition of stock by the Company, then no
         Change of Control shall have occurred, unless and until that Person
         subsequently acquires one or more additional shares representing voting
         power of the Company; or

                           (B) any acquisition by a Person who as of the first
         day of the Agreement Term owned at least 33% of the Voting Shares.

                  (ii)(A) Notwithstanding the foregoing, a Change of Control
         will occur when the shareholders of the Company approve any of the
         following (each, a "Transaction"):

                           (I) any reorganization, merger, consolidation or
         other business combination of the Company;

                           (II) any sale of 50% or more of the market value of
         the Company's assets (for this purpose, said 50% amount shall be deemed
         to be $107.6 million); or

                                       5
<PAGE>
                           (III) a complete liquidation or dissolution of the
         Company.

                  (B) Notwithstanding clause (ii)(A) above, shareholder approval
         of either of the following types of Transactions will not give rise to
         a Change of Control:

                           (I) a Transaction involving only the Company and one
         or more of its subsidiaries; or

                           (II) a Transaction immediately following which the
         shareholders of the Company immediately prior to the Transaction
         continue to have a majority of the voting power in the resulting
         entity.

                  (iii) When, within any 24 month period, persons who were
         directors of the Company (each, a "Director") immediately before the
         beginning of such period (the "Incumbent Directors") shall cease (for
         any reason other than death or disability) to constitute at least a
         majority of the Board of Directors or the board of directors of any
         successor to the Company. For purposes of this clause (iii), any
         Director who was not a Director as of the first day of the Agreement
         Term shall be deemed to be an Incumbent Director if such Director was
         elected to the Board of Directors by, or on the recommendation of, or
         with the approval of, at least a majority of the members of the Board
         of Directors or the Nominating Committee who, at the time of the vote,
         qualified as Incumbent Directors either actually or by prior operation
         of this clause (iii), and any persons (and their successors from time
         to time) who are designated by a holder of 33% or more of the Voting
         Shares to stand for election and serve as Directors in lieu of other
         such designees serving as Directors on the first day of the Agreement
         Term shall be considered Incumbent Directors. Notwithstanding the
         foregoing, any director elected to the Board of Directors to avoid or
         settle a threatened or actual proxy contest shall not, under any
         circumstances, be deemed to be an Incumbent Director.

                  6. Termination. The following provisions shall relate to the
         termination of this Agreement:

                  (a)      The Agreement, the Agreement Term, the term for
                           services of Shull and the engagement of Meridian and
                           Shull hereunder will terminate upon the first to
                           occur of the following: (i) the tenth day after
                           written notice by the Company to Meridian and Shull
                           with respect to any material breach by Meridian or
                           Shull of the terms of this Agreement or Willful
                           Misconduct (as defined below) committed by Meridian
                           or Shull; (ii) the tenth day after written notice by
                           Meridian and Shull to the Company that the Company is
                           in material breach of this Agreement; (iii) the
                           expiration of the Agreement Term; (iv) the death or
                           permanent disability of Shull; (v) the first day
                           after the acquisition of the Company (whether by
                           merger or the acquisition of all of its outstanding
                           capital stock) or the tenth day after the sale of 50%
                           or more of the market value of the Company's assets
                           (for this purpose, said 50% amount shall be deemed to
                           be $107.6 million); or (vi) the day the Company
                           terminates the engagement of Meridian and Shull when
                           there

                                       6
<PAGE>
                           has been no Willful Misconduct or material breach of
                           the Agreement by either Meridian or Shull.

                  (b)      The parties agree that Meridian and Shull will have
                           been unable to pursue alternative, profitable
                           opportunities in order to take on this engagement,
                           that Meridian and Shull would suffer substantial
                           financial damage if either party were to exercise its
                           rights of termination hereunder, and that the amount
                           of damages to Meridian and Shull would be difficult,
                           if not impossible, to calculate accurately.
                           Accordingly, the parties agree that if pursuant to
                           this paragraph 6, Meridian, Shull or the Company
                           shall at any time cause this Agreement to terminate
                           or the Agreement shall otherwise terminate, then the
                           Company shall pay Meridian an amount as set forth
                           below. In the event of the termination of this
                           Agreement as provided in paragraph 6(a), Meridian
                           shall receive hereunder the Base Fee and the Flat Fee
                           through the end of the month in which the date of
                           termination has occurred, plus a termination payment
                           as follows:

                                    (i)      If the termination is pursuant to
                                             paragraph 6(a)(i) or 6(a)(iv)
                                             above, no amount shall be due and
                                             owing to Meridian;

                                    (ii)     If the termination is pursuant to
                                             paragraph 6(a)(iii) above, Meridian
                                             shall be entitled to receive a lump
                                             sum payment equal to $450,000 in
                                             severance pay and at least $300,000
                                             in target or maximum bonus pursuant
                                             to the Company's 2002 Management
                                             Incentive Plan, as described in
                                             paragraph 4(b); or

                                    (iii)    If the termination is pursuant to
                                             paragraph 6(a)(ii) or 6(a)(vi),
                                             Meridian shall be entitled to
                                             receive a lump sum payment equal to
                                             (A) the aggregate amount of Base
                                             Fees and Flat Fees to which it
                                             would have otherwise been entitled
                                             through the end of the Agreement
                                             Term plus (B) $600,000 in severance
                                             pay and at least $300,000 in target
                                             or maximum bonus pursuant to the
                                             Company's 2001 or 2002 Management
                                             Incentive Plan, as applicable
                                             (based upon the termination date
                                             and the terms and conditions of the
                                             applicable Management Incentive
                                             Plan), as described in paragraph
                                             4(b). If the termination is
                                             pursuant to paragraph 6(a)(v) and
                                             the amount realized in the
                                             transaction described therein is
                                             less than $0.50 per Share (or the
                                             equivalent of $0.50 per Share), and
                                             if and only if the Change of
                                             Control Plan shall not then be in
                                             effect, Meridian shall be entitled
                                             to receive a lump sum payment equal
                                             to the aggregate amount of Base
                                             Fees and Flat Fees to which it
                                             would have otherwise been entitled
                                             through the end of the Agreement
                                             Term. If the termination is
                                             pursuant to paragraph 6(a)(v) and
                                             the amount realized in the
                                             transaction described therein

                                       7
<PAGE>
                                             equals or exceeds $0.50 per Share
                                             (or the equivalent of $0.50 per
                                             Share), and if and only if the
                                             Change of Control Plan shall not
                                             then be in effect, Meridian shall
                                             be entitled to receive a lump sum
                                             payment equal to the greater of the
                                             aggregate amount of Base Fees and
                                             Flat Fees to which it would have
                                             otherwise been entitled through the
                                             end of the Agreement Term or the
                                             sum of $1,000,000. If the
                                             termination is pursuant to
                                             paragraph 6(a)(v) and the Change of
                                             Control Plan is then in effect, no
                                             amount shall be payable hereunder
                                             pursuant to either of the
                                             immediately preceding two
                                             sentences, and Shull shall be
                                             entitled to receive his benefit
                                             under the Change of Control Plan
                                             plus the other amounts described in
                                             paragraph 4(g).

                  (c)      The parties agree that the amounts established
                           hereunder are liquidated damages reasonable under the
                           terms and circumstances of this Agreement (but
                           excluding amounts due under paragraph 8 which shall
                           continue to survive the termination of this
                           Agreement), the payment of which shall fully satisfy
                           and discharge any obligation of the Company to pay
                           (i) any further compensation under paragraph 4 and
                           (ii) any compensation for lost opportunity costs
                           incurred by Meridian or Shull as a result of either
                           party entering into this Agreement.

                  (d)      In addition, upon termination of this Agreement for
                           any reason, the Company shall reimburse Meridian in
                           accordance with paragraph 4(d) for all reasonable
                           reimbursable expenses incurred by Meridian prior to
                           the time of termination.

                  (e)      Any amounts payable to Meridian pursuant to this
                           paragraph 6 shall be paid in a lump sum within five
                           business days after the termination date of this
                           Agreement; provided, however, that, if the party
                           receiving a notice pursuant to paragraph 6(a)(i) or
                           6(a)(ii) notifies the other party that a dispute
                           exists concerning the termination, then, for purposes
                           of paragraphs 5 and 6, the deemed date of termination
                           of this Agreement shall be the date on which the
                           dispute is finally resolved, either by mutual written
                           agreement of the parties or by a final judgment,
                           order or decree of an arbitrator or court of
                           competent jurisdiction (which, in either case, is not
                           appealable or with respect to which the time for
                           appeal therefrom has expired and no appeal has been
                           perfected); provided further that the date of
                           termination of this Agreement shall be extended by a
                           notice of dispute only if such notice is given in
                           good faith and the party giving such notice pursues
                           the resolution of such dispute with reasonable
                           diligence. To the extent permitted by applicable law,
                           any such dispute and any other controversy arising
                           under or in connection with this Agreement, except
                           (at the Company's election) a dispute or controversy
                           under paragraph 9, shall be settled exclusively by
                           binding arbitration in New York, New York, in
                           accordance with the Employment Dispute Resolution
                           Rules then in effect

                                       8
<PAGE>
                           with the American Arbitration Association. Judgment
                           may be entered on the arbitrator's award in any court
                           having jurisdiction.

                  7. Insurance. The Company shall maintain in force during the
         term of this Agreement, directors' and officers' liability insurance
         ("D&O Insurance") with limits not less than five million dollars
         ($5,000,000) on terms and conditions currently provided for under the
         Company's existing insurance policy, and shall use reasonable efforts
         to name Shull as an insured thereunder. A copy of the policy shall be
         furnished to Shull for his information annually.

                  8. Indemnity. If Meridian, Shull or any member, officer or
         employee of, or consultant, contractor or subcontractor to, Meridian
         who serves as a consultant to the Company ("Indemnitee") is threatened
         with or made a party to, or called as a witness or deposed or
         subpoenaed in, any action, suit or other legal, administrative or
         governmental proceeding or other legal process by reason that
         Indemnitee is or was deemed a consultant, officer, employee or other
         agent of the Company or any of its affiliates, the Company shall
         defend, indemnify and hold Indemnitee harmless to the maximum extent
         allowed by applicable law and the Company's Certificate of
         Incorporation and By-Laws against all liabilities, obligations, losses,
         damages, penalties, actions, judgments, suits, claims, disbursements
         and expenses, including counsel fees reasonably incurred by Indemnitee
         in connection therewith, to the extent the same are not paid under the
         D&O Insurance ("Indemnified Liability" or "Indemnified Liabilities");
         provided however, that Indemnitee shall not be entitled to
         indemnification hereunder to the extent any such liability, obligation,
         loss, damage, penalty, action, judgment, suit, claim, disbursement or
         expense results from the gross negligence, willful misconduct or
         criminal conviction ("Willful Misconduct") of Indemnitee as determined
         by a court of competent jurisdiction. Indemnitee represents and
         warrants that it or he has not received notice of any claim which might
         constitute an Indemnified Liability hereunder. The Company represents
         that it has not received any notice of any claim against Indemnitee
         that would constitute an Indemnified Liability hereunder. Payments
         under this indemnity in respect of indemnified settlements or judgments
         shall be paid at the time of final settlement or final judgment (from
         which no appeal may be taken), or, in respect of counsel fees or costs
         of defense, which shall be limited to one counsel for all Indemnitees,
         shall be paid at the time such fees or costs are incurred.

                  With the prior written consent of the Company, which shall not
         be unreasonably withheld, Indemnitee shall have the right to pay or
         compromise and adjust all Indemnified Liabilities not manifestly
         without merit. The Company shall have the right to pay or compromise
         without Indemnitee's consent Indemnified Liabilities other than those
         which arise from or are related to any criminal action, suit or
         proceeding. Notwithstanding anything to the contrary contained in the
         preceding sentence, Indemnitee's consent shall be required for any
         settlement which contains a stipulation to, or admission or
         acknowledgement of, any liability or wrongdoing on the part of
         Indemnitee.

                  This paragraph 8 shall survive the termination of this
         Agreement.

                                       9
<PAGE>
                  9. Confidentiality. Meridian and Shull shall at all times both
         during its and his engagement hereunder and after termination thereof
         regard and preserve as confidential all trade secrets and other
         confidential information pertaining to the business of the Company that
         have been or may be obtained by Meridian or Shull by reason of the
         performance of the terms of this Agreement. Meridian and Shull agree
         that all documents, reports, manuals, drawings, designs, tools,
         equipment, plans, proposals, marketing and sales plans, customer lists,
         or materials made by the Company or coming into Meridian's or Shull's
         possession by reason of its or his performance under this Agreement,
         are the property of the Company and shall not be used by Meridian or
         Shull in any way prohibited by this Agreement. Except as expressly
         provided herein, during the Agreement Term and after termination
         thereof, Meridian and/or Shull shall not deliver, reproduce, publish or
         in any way allow, after due care, information describing any trade
         secrets or other confidential documents or things to be delivered or
         used by any third party without specific direction or written consent
         of the Company or in response to lawful process. Immediately upon
         termination of this Agreement, Meridian and Shull shall promptly
         deliver to the Company all documents, tools, equipment, drawings,
         blueprints, manuals, material and significant or confidential letters
         and notes, reports, price lists, customer lists and copies thereof, and
         all other materials relating to the Company's business and which are in
         the possession of or under the control of Meridian or Shull.
         Confidential information as defined above shall exclude information or
         materials that become generally available to the public other than
         through disclosure by Meridian, Shull or any employee of Meridian in
         violation of this Agreement.

                  This paragraph 9 shall survive the termination of the
         Agreement.

                  10. Miscellaneous. This Agreement shall be governed by and
         construed in accordance with the internal laws of the state of New
         Jersey.

                  11. Modification. This Agreement may only be modified by
         mutual agreement.

                  12. Assignment. This Agreement is a personal service contract
         and may not be assigned by either party.

                  13. Notices. All notices required or permitted by this
         Agreement shall be in writing and shall be personally delivered or
         faxed to the parties at their addresses set forth below or to such
         different addresses as such parties shall direct by notice sent in
         accordance with this paragraph.

         If to Thomas C. Shull or Meridian Ventures, LLC:

                  28 Leeward Lane
                  Riverside, CT 06878
                  Tel.:  203-637-7659
                  Fax:  203-637-5576

                                       10
<PAGE>
         with copies to:

                  Morton M. Rosenfeld, Esq.
                  Rosenfeld, Wolff, Aronson & Klein
                  2049 Century Park East, Suite 3090
                  Los Angeles, California  90067
                  Tel.:  310-556-1221
                  Fax:  310-556-0401

         If to the Company:

                  Corporate Counsel
                  Hanover Direct, Inc.
                  1500 Harbor Boulevard
                  Weehawken, New Jersey  07087
                  Tel.:  201-863-7300
                  Fax:  201-272-3498

         and

                  Chief Administrative Officer
                  Hanover Direct, Inc.
                  115 River Road, Building 10
                  Edgewater, New Jersey  07020
                  Tel.:  201-272-3424
                  Fax:  201-272-3465

         with copies to:

                  Sarah Hewitt, Esq.
                  Brown Raysman Millstein Felder & Steiner LLP
                  900 Third Avenue
                  New York, New York 10022
                  Tel.:  212-895-2000
                  Fax.:  212-895-2900

                  14. Counterparts. This Agreement may be signed in two or more
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

                  15. Attorneys' Fees. Shull shall be entitled to reimbursement
         for reasonable attorneys' fees and disbursements incurred in connection
         with the review of, and advice with respect to the execution or
         extension of, or administration of, this Agreement; provided, however,
         that the aggregate amount of such reimbursement shall not exceed
         $25,000. If any legal action or proceeding or arbitration proceeding is
         brought either for the enforcement of this Agreement or because of an
         alleged dispute, breach, default, or material misrepresentation in
         connection with any of the provisions of the Agreement, the

                                       11
<PAGE>
         successful or prevailing party shall be entitled, in addition to any
         other relief to which it may be entitled, to recover reasonable
         attorneys' fees and other costs incurred in that action or proceeding
         including fees and costs incurred on appeal and in collecting any
         judgment, and the arbitrator or court shall so provide in its judgment.

                  16. Consent to Jurisdiction. Subject to their agreement to
         binding arbitration in paragraph 6(e), the Company, Meridian and Shull
         each hereby irrevocably consent to the jurisdiction of the courts of
         the State of New Jersey for all purposes in connection with any legal
         action or proceeding which arises out of or relates to this Agreement
         and agree that any legal action or proceeding instituted under this
         Agreement shall be brought only in such courts and that such courts
         shall have jurisdiction as provided above, except that the Company
         shall be entitled to enforce its rights under paragraph 9 in any court
         of competent jurisdiction.

                  17. Successors and/or Assigns. Whenever in this Agreement any
         of the parties hereto is referred to, such reference shall be deemed to
         include the successors and/or assigns and/or personal representatives
         of such party, and this Agreement shall inure to the benefit of and
         shall be binding on the parties hereto and the successors and/or
         assigns and/or personal representatives of each such party.

                  18. Entire Agreement. This Agreement (together with those
         agreements listed on Exhibit 1 hereto) sets forth the entire agreement
         of the parties hereto in respect of the subject matter contained herein
         and supersedes all prior agreements (including but not limited to the
         Prior Services Agreement), promises, covenants, arrangements,
         communications, representations or warranties, whether oral or written,
         by any officer, employee or representative of any party hereto, other
         than the indemnification obligations in paragraph 8 of the Prior
         Services Agreement and the obligations contained in the agreements
         listed on Exhibit 1 hereto.

                                       12
<PAGE>
                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

                                    HANOVER DIRECT, INC.

                                    By:     /s/ Brian C. Harriss
                                            Name:  Brian C. Harriss
                                            Title: Executive Vice President
                                                   And Chief Financial Officer

                                    MERIDIAN VENTURES, LLC

                                    By:     /s/ Thomas C. Shull
                                            Thomas C. Shull, President

                                    By:     /s/ Thomas C. Shull
                                            Thomas C. Shull, as an individual

                                       13
<PAGE>
                                                                       EXHIBIT 1

                WRITTEN AGREEMENTS BETWEEN THE COMPANY AND SHULL
                          RE: COMPENSATION AND BENEFITS

Hanover Direct, Inc. Key Executive Eighteen Month Compensation Continuation Plan
effective as of April 25, 2001, as amended

Transaction Bonus in the event of a Change of Control as set forth in a letter
agreement between the Company and Shull dated May 14, 2001

2001 Management Incentive Plan

                                       14
<PAGE>
                                                                       EXHIBIT 2

                2001 MANAGEMENT INCENTIVE PLAN MAXIMUM BONUS GOAL

15% per dollar of 2001 EBITDA in excess of $12.4 million (before deducting
extraordinary legal and advisory fees related to one-time transactions during
the period) limited to a maximum bonus of $300,000 (in addition to the $300,000
target bonus described in Section 4(b) hereof).

                                       15

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