Document:

EXHIBIT 10.1

FORM OF
COACHMEN INDUSTRIES,
INC.
RESTRICTED STOCK AWARD GRANT/PROSPECTUS 

     COACHMEN  INDUSTRIES,
INC. (the  "Company")  hereby grants to (employee  name) (the  "Employee")  an award of       
          shares of
Common Stock of the Company, subject to the terms and conditions set forth below.

        This
award is granted            (the “Date of Grant”) under
the Company’s 2000 Omnibus Stock Incentive Program (herein called the
“Plan”) for the purpose of furnishing to the Employee maximum incentive to
improve operations and increase profits, and encouraging the Employee to continue
employment with the Company and its subsidiaries. Terms used herein shall have the same
meaning as in the Plan, and in the event of inconsistency between the provisions hereof
and the provisions of the Plan, the latter shall control. 

        The
terms and conditions and restrictions of the award are as follows: 

             1.       
          This award is granted in installments such that one third of the shares to be
          awarded shall be issued on the first anniversary of the date of grant, the
          second third on the second anniversary and the final third on the third
          anniversary of the date of grant. 

             2.       
          It shall be a condition of the issuance of stock for each installment of this
          award that the grantee shall be a full time employee of the Company or its
          subsidiaries on the award anniversary date for each corresponding installment.
          Termination of employment for any reason will terminate all rights under the
          award for any un-issued installments. 

             3.       
          Nothing herein confers upon the Employee any right to continue in the employ of
          the Company or of a subsidiary. 

             4.       
          This award is not transferable and may not be assigned, transferred, pledged, or
          hypothecated in any way, whether by operation of law or otherwise. Any attempt
          at assignment, transfer, pledge, hypothecation, or other disposition of this
          award contrary to the provisions hereof and the levy of any attachment or
          similar process upon this award shall be null and void and without effect. 

             5.       
          The Company shall not be required to issue or deliver any certificate for shares
          pending compliance with all applicable federal and state securities and other
          laws (including any registration requirements) and compliance with the rules and
          practices of any stock exchange upon which the Company’s Common Stock is
          listed. The Company will take such steps as are required to achieve such
          compliance with reasonable promptness from time-to-time as occasion demands. 

             6.       
          In the event that there is any increase in the number of issued shares of Common
          Stock of the Company without new consideration to the Company (such as by stock
          dividends or stock split-ups), then the total number of shares at the time
          un-issued under this award shall be increased in proportion to such increase in
          issued shares. 

            In
the event that the outstanding shares of Common Stock of the Company shall be combined, or
be changed into another kind of stock of the Company, or into securities of another
corporation, whether through recapitalization, sale, merger, consolidation, etc., if
appropriate, due adjustment shall be made to the number of shares un-issued under this
award following said recapitalization, sale, merger, consolidation, etc. 

             7.       
          Neither this award nor any other rights, benefits, values or interests resulting
          from the granting of this award shall be considered as compensation for purposes
          of any pension or retirement plan, insurance plan, investment of stock purchase
          plan, or any other employee benefit plan of the Company or any of its
          subsidiaries. 

             8.       
          The federal income tax consequences of a stock award are as follows: No income
          will be recognized by an employee at the time of the grant of the award. The
          market value of each installment of stock 

issued under the award will be
ordinary income to the Employee as of the corresponding anniversary date for which the
stock is issued. 

             9.
       By accepting this award, the Employee shall be deemed as having agreed that no
               later than the anniversary date for the issuance of each installment of stock,
               such Employee will pay to the Company, or make arrangements satisfactory to the
               Committee regarding payment of, any federal, state, or local taxes required by
               law to be paid with respect to such shares of stock. 

             10.
       The Company has registered 2,000,000 shares of its common stock, no par value
               per share, for sale under the Plan. The Plan is not subject to the provisions of
               the Employee Retirement Income Security Act of 1974, nor qualified under Section
               401(a) of the Internal Revenue Code of 1986. The Plan is administered and
               interpreted by the Compensation Committee of the Company’s Board of
               Directors. The Board has the authority to adopt, amend and rescind such rules,
               regulations and procedures as it deems advisable in the administration and
               interpretation of the Plan, subject to the provisions of the Plan. 

             11.
       If the Employee is an affiliate of the Company, restrictions under the federal
               securities laws will apply to any resale of shares acquired pursuant to the
               Plan. If an affiliate wishes to resell or reoffer shares acquired pursuant to
               the Plan, and the resale is not covered by an effective prospectus, the
               affiliate must either comply with Rule 144 under the Securities Act of 1933 or
               comply with another provision of the Securities Act of 1933 exempting resales of
               securities from registration. Additional restrictions will apply to any resale
               under Section 16 of the Securities Exchange Act of 1934 if the Employee is an
               officer, director or 10% stockholder of the Company. 

             12.
       This document constitutes part of a prospectus covering securities that have
               been registered under the Securities Act of 1933. The date of this prospectus is
               March 14, 2005. The Company has registered the shares of common stock to be
               issued under the Plan on a Form S-8 Registration Statement filed with the
               Securities and Exchange Commission. The following documents filed by the Company
               with the Securities and Exchange Commission are specifically incorporated herein
               by reference: 

          	 	[a] 	  	
               The Company’s Annual Report on Form 10-K for the year ended December 31,
               2004; 

               

          	 	[b] 	  	
               All other reports filed by the Company pursuant to Section 13(a) or 15(d) of the
               Securities Exchange Act of 1934 since December 31, 2004; 

               

          	 	[c] 	  	
               The description of the Company’s common stock, no par value, contained in
               the Form 8-A and any amendment or report filed for the purpose of updating such
               description; 

               

          	 	[d] 	  	
               The description of the Company’s Preferred Stock Purchase Rights contained
               in the Company’s Registration Statement on Form 8-A filed pursuant to
               Section 12(g) of the Securities Exchange Act of 1934. 

               

        All
documents filed by the Company with the Securities and Exchange Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to
the date of this prospectus and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference into this prospectus
and to be a part hereof from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus. 

        
The
Company will provide without charge to each person participating in the Plan, upon written
or oral request, (i) a copy of any and all of the documents incorporated by reference in
this prospectus, except for the exhibits to such documents, and (ii) copies of any other
documents required to be delivered to employees participating in the Plan pursuant to Rule
428(b) of the Securities Act of 1933. Requests for such copies should be 

directed to Assistant Vice President
— Shareholder Relations, Coachmen Industries, Inc., 2831 Dexter Drive, Elkhart,
Indiana 46514; telephone (574) 262-0123. 

        IN
WITNESS WHEREOF, the Company has caused this Stock Award to be executed by its duly
authorized officer as of the granting date above set forth. 

		
	 	COACHMEN INDUSTRIES, INC.

Claire C. Skinner, Chairman and CEOEXHIBIT 10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made as of March 15, 2005 between John Swatek
(“Executive”) and Hanover Direct, Inc., a Delaware corporation (the “Company”).

     1.      Provision of Services. Executive shall serve as the Company’s Senior Vice
President, Chief Financial Officer and Treasurer.

     2.      Responsibilities. Executive shall act and serve during the term of this
Agreement as the Senior Vice President, Chief Financial Officer and Treasurer of the Company
and shall report to the Company’s President and/or Chief Executive Officer. Executive’s
employment responsibilities will include those normally held by the senior vice president,
chief financial officer and treasurer of a corporation of a similar size and nature to the
Company. Executive shall devote his full-time efforts in connection with his role as Senior
Vice President, Chief Financial Officer and Treasurer of the Company.

     3.      Term. Subject to Section 6 of this Agreement, the term of this Agreement
(the “Agreement Term”) and the term for the services of Executive hereunder shall commence
as of April 4, 2005 and shall terminate on May 5, 2006.

     4.      Compensation. As consideration for Executive’s performance of services
hereunder as Senior Vice President, Chief Financial Officer and Treasurer, the following
compensation shall be payable pursuant to this Agreement:

	 	(a)  	Executive shall receive base compensation at the rate of
$270,000 per annum (the “Base Compensation”), payable in accordance with the
Company’s normal payroll policies.
	 
	 	(b)  	Executive shall be entitled to participate in such bonus plans
with such targets as the Compensation Committee of the Board of Directors of
the Company (the “Board of Directors”) may approve in its sole discretion
determined in a manner consistent with bonus opportunities afforded to other
senior executives under such plans. For purposes of such participation,
Executive shall be entitled to a minimum annual bonus equal to 50% of the
amount of his then Base Compensation; provided, however, that
the maximum annual bonus payable to Executive shall be equal to 150% of the
amount of his then Base Compensation.
	 
	 	(c)  	The Company shall provide Executive with the employee benefits
it provides to its other senior executives (such as health, life insurance and
long-term disability), including but not limited to 4 weeks of paid vacation
per year.
	 
	 	(d)  	The Company shall reimburse Executive for his reasonable
out-of-pocket expenses in performing services for the Company as its Senior
Vice President, Chief Financial Officer and Treasurer (such as travel, meals,
communications and lodging) which are incurred during the Agreement Term on
Company business. Executive shall submit invoices and

 

 

	 	   	documentation for such reimbursable expenses on a monthly basis, and the
Company shall process payment of the same promptly and in accordance with
its customary procedures. In addition, the Company shall reimburse
Executive for up to $5,000 of attorneys’ fees incurred by him in connection
with legal advice relating to, and the negotiation of, this Agreement.
	 
	 	(e)  	The Company shall pay Executive a $25,000 sign-on bonus on his
first day of employment with the Company if he does not receive his bonus for
the calendar year 2004 from his previous employer.

     5.      Stock Options. Subject to the resumption of trading of the Company’s Common
Stock, the Company shall grant Executive an option (the “Executive Option”) to purchase an
aggregate of 50,000 shares of the Company’s Common Stock (“Shares”) under the Company’s 2000
Management Stock Option Plan. The Executive Option shall be exercisable for 10 years and
shall be subject to the terms and conditions set forth in the applicable Stock Option
Agreement between Executive and the Company, a form of which is annexed hereto.

     The Executive Option shall vest over a 2-year period. Upon the execution of this
Agreement, the Executive Option shall be one-third vested. Thereafter, the remaining
unvested portion of the Executive Option shall vest at the rate of 50% per year; provided
that the Executive Option shall vest in its entirety and become fully exercisable upon the
earliest to occur of: (i) Executive’s resignation “For Good Reason” (as defined below), (ii)
the Company’s termination of Executive’s services hereunder, other than “For Cause” (as
defined below), or (iii) a “Change of Control” (as defined below) of the Company. To the
extent the Executive Option vests and becomes exercisable pursuant to this Section 5, it
shall remain exercisable for the 90 day period immediately following the date of the
applicable resignation, termination or Change of Control. Any unvested portion of the
Executive Option on the date of Executive’s resignation or termination, as applicable, shall
be forfeited. In the event of vesting of the Executive Option on account of a Change of
Control, the Company shall use its reasonable best efforts to ensure that such vesting shall
take place sufficiently in advance of the Change of Control (but subject to its occurrence)
to permit Executive to take all steps reasonably necessary to exercise the Executive Option
and to take such action with respect to the Shares purchased under the Executive Option so
that those Shares may be treated in the same manner in connection with the Change of Control
transaction as the Shares of other Company shareholders.

     5A.      Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

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	 	(a)  	“For Good Reason” shall mean the voluntary resignation by
Executive of his employment with the Company on account of any of the following
actions: (i) a substantial and material diminution of Executive’s duties or
responsibilities for the Company; provided that if following a Change in
Control (as defined below), Executive is appointed to a position where he
reports directly to a new Chief Financial Officer or is appointed to a position
as Chief Financial Officer of a successor, subsidiary or affiliate of the
Company following such Change in Control, such appointment shall not be deemed
to be a substantial and material diminution of Executive’s duties or
responsibilities, (ii) any reduction of Executive’s base salary (as in effect
as of the first day of the Agreement Term), or (iii) the Company’s (or a
successor to the Company pursuant to a Change of Control) requiring Executive
to regularly report to work at a facility that is more than 30 miles from
Weehawken, New Jersey; provided, however, that in all cases, in
order to terminate his employment with the Company For Good Reason, Executive
must notify the Company in writing that Good Reason exists within 30 business
days (“Business Days”) of his knowledge of the event or events constituting
Good Reason. The Company shall thereafter have 30 Business Days within which
to cure Executive’s otherwise Good Reason (the “Good Reason Cure Period”).
Unless Executive’s Good Reason is cured during the Good Reason Cure Period, his
resignation For Good Reason shall become effective on the first Business Day
following the conclusion of the Good Reason Cure Period.
	 
	 	(b)  	“For Cause” shall mean the involuntary termination by the
Company of Executive’s employment with the Company on account of his (i)
material breach of any of the material terms of the Agreement, (ii) willful and
continued failure to perform his regular duties for the Company, (iii)
commission of an act of fraud relating to and adversely affecting the Company,
(iv) conviction of, or a plea of guilty or nolo contendere to, a felony, or (v)
gross negligence in the performance of his duties which adversely affects the
Company. Notwithstanding the foregoing, Executive shall not be terminated For
Cause without (A) delivery of a written notice to Executive setting forth the
reasons for the Company’s intention to terminate Executive’s employment
hereunder For Cause; (B) the failure of Executive to cure the nonperformance,
violation or misconduct described in the notice referred to in clause (A) of
this paragraph, if cure thereof is possible, to the reasonable satisfaction of
the Board of Directors, within 15 Business Days of Executive’s receipt of such
notice (the “For Cause Cure Period”); and (C) an opportunity for Executive,
together with Executive’s counsel, to be heard before the Board of Directors.
	 
	 	(c)  	“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:

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     (i)      When any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) (a “Person”) becomes, through an acquisition,
the beneficial owner of shares of the Company having more than 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 be deemed to occur
upon the closing of any of the following (each, a “Transaction”):

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

     (II) any sale or any series of sales occurring on or after the date of
this Agreement, involving all or substantially all of the Company’s assets;
or

     (III) a complete liquidation or dissolution of the Company.

     (B) Notwithstanding clause (ii)(A) above, neither of the following types of
Transactions will be deemed to 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 (other than as described in clause (ii)(A)(II) of
this definition) 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 commencing on or after the first day of the
Agreement Term, 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 its Nominating Committee who, at

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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 which, as of the first day of the Agreement Term, held 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, for purposes of this clause
(iii), 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.

	 	(d)  	“Disability” shall mean the inability of Executive to perform
his duties under this Agreement for 3 consecutive months or an aggregate of 180
days within a 2-year period.

     6.      Termination and Severance. The following provisions shall govern the
termination of Executive’s employment under this Agreement:

	 	(a)  	The Agreement, the Agreement Term, the term for services of
Executive and the employment of Executive hereunder will terminate upon the
first to occur of the following:

	 	(i)  	the third day after written notice by the
Company to Executive that Executive’s employment under this Agreement
has been terminated For Cause following the end of the For Cause Cure
Period;
	 
	 	(ii)  	the tenth day after written notice by Executive
to the Company that Executive’s employment under this Agreement has
been terminated pursuant to his resignation For Good Reason following
the end of the Good Reason Cure Period;
	 
	 	(iii)  	the expiration of the Agreement Term;
	 
	 	(iv)  	the death or Disability of Executive;
	 
	 	(v)  	the day the Company terminates Executive’s
employment under this Agreement other than For Cause; or
	 
	 	(vi)  	the thirtieth day after written notice by
Executive to the Company that the Executive’s employment under this
Agreement has been terminated pursuant to his resignation other than
For Good Reason.

	 	(b)  	In the event of the termination of Executive’s employment under
this Agreement for any of the reasons provided in Section 6(a), Executive shall
receive hereunder the Base Compensation through the end of the month in which
the date of termination has occurred, plus a termination payment as follows:

5

 

	 	(i)  	If the termination or resignation is pursuant
to Section 6(a)(i), 6(a)(iv) or 6(a)(vi) above, no additional amount
shall be due and owing to Executive.
	 
	 	(ii)  	If the termination or resignation is pursuant
to Section 6(a)(ii) or 6(a)(v) and the Executive has not received or
become entitled to receive a Change of Control payment under Section
6(b)(iii), Executive shall be entitled to receive, subject to his
continued compliance with the requirements of Sections 9 and 10 of this
Agreement, the following severance payments (a) continued payments of
his monthly Base Compensation for a period equal to 12 months payable
in accordance with the Company’s normal payroll practices and policies;
and (b) the pro rated portion (based upon the number of days in the
fiscal year prior to the effective date of termination) of bonuses
earned for the fiscal year in which the effective date of termination
occurs pursuant to the Company’s bonus plans, as applicable (based upon
the terms and conditions of the applicable bonus plan), as described in
Section 4(b), accrued vacation and continued coverage under the
Company’s health, life insurance and long-term disability benefit plans
for the 12-month period immediately following Executive’s termination
or resignation, as applicable. Any such bonus shall be paid to
Executive, subject to his continued compliance with the requirements of
Sections 9 and 10 of this Agreement, at such time as is consistent with
the Company’s customary practice.
	 
	 	(iii)  	If a Change of Control occurs within the
Agreement Term and provided Executive has not received or become
entitled to receive a payment under Section 6(b)(ii), then, subject to
Section 6(b)(iv), Executive shall be entitled to receive a payment
equal to 100% of his Base Compensation, such payment to be made in a
lump sum within thirty days of Executive’s termination date.
	 
	 	(iv)  	If the termination is pursuant to Section
6(a)(iii) and the Executive has not received or become entitled to
receive a payment under Section 6(b)(iii), then, at the end of the
Agreement Term, he shall be entitled to receive, subject to Executive’s
continued compliance with the requirements of Sections 9 and 10 of this
Agreement, monthly severance payments at the rate of Executive’s Base
Compensation for a period of 12 months, payable in accordance with the
Company’s normal payroll practices and policies and continued coverage
under the Company’s health, life insurance and long-term disability
benefit plans for the 12-month period immediately following the end of
the Agreement Term.

	 	(c)  	Notwithstanding anything to the contrary contained in Section
6(b), solely to the extent that any payment to Executive under Section 6(b)
could

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	 	   	reasonably be expected to trigger the imposition of additional gross income,
interest and/or tax under Section 409A(a)(i) of the Internal Revenue Code of
1986, as amended, on account of the requirements of Section 409A(a)(2)(B),
any payment(s) otherwise required to be paid at the time or times as set
forth in Section 6(b) shall be deferred for a period of 6 months and 1 day
and, thereupon, a “catch-up” payment aggregating the total amount of such
deferred payments shall be paid by the Company to the Employee in a single
lump sum.

     7.      Arbitration. Any dispute or other controversy arising under or in
connection with this Agreement (except that the Company may, at its election, seek to
enforce Executive’s obligations under Section 9 and/or 10 of this Agreement in a court of
competent jurisdiction) shall be settled exclusively by binding arbitration in New York, New
York, in accordance with the Employment Dispute Resolution Rules then in effect with the
American Arbitration Association. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction. The Company shall pay all of Executive’s attorneys’ fees in
connection with any arbitration brought by either of the parties hereto pursuant to this
Section 7 in which Executive prevails.

     8.      Indemnity. If Executive 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 Executive 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 Executive 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 Executive in
connection therewith, to the extent the same are not paid under the Company’s D&O insurance
policies (“Indemnified Liability” or “Indemnified Liabilities”); provided however, that
Executive 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 or
other conduct which bars indemnification under applicable law (“Misconduct”) of Executive as
determined by a court of competent jurisdiction. 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, shall be paid at the time such fees or
costs are incurred.

     The Company may require the Executive to deliver a written undertaking to return any
amount advanced to him for indemnification hereunder if it shall thereafter be determined
that indemnification is not available to Executive due to his Misconduct.

     This Section 8 shall survive the termination of this Agreement.

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     9.      Confidentiality. Executive shall at all times both during his employment
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 Executive by reason of the performance of the terms of this
Agreement. Executive agrees 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 Executive’s possession by reason of his performance under this
Agreement, are the property of the Company and shall not be used by Executive in any way
prohibited by this Agreement. Except as expressly provided herein, during the Agreement
Term and after termination thereof, Executive 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, Executive 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 Executive. Confidential information as defined above shall exclude
information or materials that become generally available to the public other than through
disclosure by Executive in violation of this Agreement.

     This Section 9 shall survive the termination of the Agreement.

     10.      Nonsolicitation. During the Agreement Term and for a period ending on the
later of (i) the period during which the Executive receives severance payments as provided
herein, or (ii) one (1) year after the termination of Executive’s employment with the
Company, Executive and/or any person, firm, corporation or other entity which is controlled
by Executive, shall not, without the prior written consent of the Company, personally or as
an employee, owner, consultant, manager, associate, partner, agent or otherwise, or by means
of any corporate or other entity solicit for employment or hire any employee of the Company
or any of its subsidiaries. Executive acknowledges that the restrictions contained in this
Section 10 are reasonable and necessary to protect the legitimate interests of the Company,
do not cause the Executive or his affiliates undue hardship, and that any violation of any
provision of this Section 10 will result in irreparable injury to the Company and that,
therefore, the Company shall be entitled to preliminary and permanent injunctive relief in
any court of competent jurisdiction and to an equitable accounting of all earnings, profits
and other benefits arising from such violation, which right shall be cumulative and in
addition to any other rights or remedies to which the Company may be entitled.

     This Section 10 shall survive the termination of the Agreement.

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

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

     13.      Assignment. This Agreement is a personal service contract and may not be
assigned by either party, except that the Company may assign this Agreement to its successor
in interest in connection with a sale of assets, merger or similar transaction, or any
Change of Control transaction, so long as the successor assumes the Company’s obligations
hereunder.

     14.      Notices. All notices required or permitted by this Agreement shall be in
writing and shall be deemed received when personally delivered, or the next business day
after deposit in overnight mail or five days after mailing by registered mail. Notices
shall be sent 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 Executive:

Mr. John Swatek

Senior Vice President, Chief

    Financial Officer and Treasurer

Hanover Direct, Inc.

1500 Harbor Boulevard

Weehawken, New Jersey 07086

Email: jswatek@hanoverdirect.com

     with copies to:

___________________, Esq.

___________________

___________________

___________________

Fax.: ___________________

Email: ___________________

     If to the Company:

General Counsel

Hanover Direct, Inc.

1500 Harbor Boulevard

Weehawken, New Jersey 07086

Fax: 201-272-3498

     and

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President and Chief Executive Officer

Hanover Direct, Inc.

115 River Road, Building 10

Edgewater, New Jersey 07020

Fax: 201-272-3465

     15.      Counterparts; Telecopy. 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. This Agreement may be executed by telecopy
signature which shall be deemed an original.

     16.      Successors and/or Assigns. Whenever in this Agreement either of the
parties hereto is referred to, such reference shall be deemed to include the successors
and/or permitted 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 permitted assigns and/or personal representatives of each such party.

     17.      Entire Agreement. This Agreement (together with the Stock Option Agreement
referred to herein) sets forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.

     18.      No Conflict. Executive represents and warrants to the Company that neither
the execution of this Agreement nor the performance of his obligations hereunder violate any
agreement to which he is a party or by which he is otherwise bound.

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

	 	 	 	 	 
	 	HANOVER DIRECT, INC.

 	 
	 	By:  	Wayne P. Garten	 
	 	 	Name:  	Wayne P. Garten 	 
	 	 	Title:  	President and Chief
Executive Officer 	 
	 

	 	 	 
	 

	 	/s/ John Swatek

John Swatek

10

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