EXHIBIT 4.1

                              HANOVER DIRECT, INC.


                      2002 STOCK OPTION PLAN FOR DIRECTORS

     1.   PURPOSE. The purpose of the Hanover Direct, Inc. 2002 Stock Option
Plan for Directors (the "PLAN") is to advance the interests of Hanover Direct,
Inc. (the "COMPANY") by providing non-employee directors of the Company, through
the grant of options to purchase shares of Common Stock (as hereinafter
defined), with a larger personal and financial interest in the Company's
success.

     2. ADMINISTRATION. The Plan shall be administered by a committee (the
"COMMITTEE") consisting of at least two members of the Board of Directors of the
Company (the "BOARD"). The Committee shall have full power and authority to
interpret the Plan, to establish such rules and regulations as it deems
appropriate for the administration of the Plan, and to take such other action as
it deems necessary or desirable for the administration of the Plan. The
Committee's interpretation and construction of any provision of the Plan or the
terms of any Option (as hereinafter defined) shall be conclusive and binding on
all parties.

     3. PARTICIPANTS. Each director of the Company who is neither an employee of
the Company nor an Ineligible Director (as hereinafter defined) (a "NON-EMPLOYEE
DIRECTOR") shall be eligible to be granted Options to purchase shares of Common
Stock ("OPTIONS") under the Plan. An "INELIGIBLE DIRECTOR" means any director of
the Company who is a nonresident alien.

     Nothing contained in the Plan, or in any Option granted pursuant to the
Plan, shall confer upon any Director any right to the continuation of his or her
directorship or limit in any way the right of the Company to terminate his or
her directorship at any time.

     4. THE SHARES. Options may be granted from time to time under the Plan for
the purchase, in the aggregate, of not more than 500,000 shares of common stock,
par value $0.66 2/3 per share, of the Company ("COMMON STOCK") (subject to
adjustment pursuant to Section 13). Such shares of Common Stock may be set aside
out of the authorized but unissued shares of Common Stock not reserved for any
other purpose or out of previously issued shares acquired by the Company and
held in its treasury. Any shares of Common Stock which, by reason of the
termination or expiration of an Option or otherwise, are no longer subject to
purchase pursuant to an Option granted under the Plan, may again be subjected to
an Option under the Plan.

     5.   OPTION GRANTS. Options shall be evidenced by Option agreements which
shall be subject to the terms and conditions set forth in the Plan and such
other terms and conditions not inconsistent herewith as the Committee may
approve.


      (A)  INITIAL APPOINTMENT AWARDS. As of the effective date of his or her
      initial appointment or election to the Board (or, if later, the effective
      date of the Plan) (the "Initial Appointment Date"), a Non-Employee
      Director shall receive a grant of an Option to purchase 50,000 shares of
      Common Stock (subject to adjustment pursuant to Section 13).

      (B)  ANNUAL SERVICE AWARDS. On each Award Date (as hereinafter defined)
      occurring after a Non-Employee Director's Initial Appointment Date, such
      Non-Employee Director shall be granted, provided he or she continues to
      serve as a member of the Board on such date, an Option to purchase 25,000
      shares of Common Stock (subject


to adjustment pursuant to Section 13). An "Award Date" means August 2, 2002,
August 1, 2003 and August 3, 2004.

     6. OPTION PRICE. The price (the"OPTION PRICE") at which shares of Common
Stock may be purchased upon the exercise of an Option granted under the Plan
shall be the fair market value of such shares on the date of grant of such
Option. Solely for purposes of this Section 6, the fair market value of a share
of Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on the Award Date, the 10 trading days immediately preceding the
Award Date, and the 10 trading days immediately following the Award Date.

     7. TERM AND EXERCISABILITY OF OPTIONS. Options shall be granted for a
maximum term of 10 years. Subject to the other provisions of the Plan relating
to exercisability of Options, or as otherwise provided by the Committee and
evidenced in an Option agreement, the participant shall have the cumulative
right as of the first, second, and third anniversaries of the date of grant, to
purchase up to one-third, two-thirds, and 100%, respectively, of the Option
Shares; provided, however, that in the event of a Change of Control (as such
term is defined in the Hanover Direct, Inc. Key Executive Twenty-Four Month
Compensation Continuation Plan), the participant shall have the cumulative right
to purchase up to 100% of the Option Shares.

     8. TERMINATION OF DIRECTORSHIP. Except as otherwise provided in this
Section 8, or as otherwise provided by the Committee and evidenced in an Option
agreement, no person may exercise an Option more than three months after the
first date on which he or she ceases to be a director of the Company. If a
participant ceases to be a director of the Company by reason of death or
disability, any Options held by him or her may be exercised within 12 months
after the date he or she ceases to be a director of the Company. In no event may
an Option be exercised after the expiration of the term of such Option.

     9. PAYMENT. Full payment of the purchase price for shares of Common Stock
purchased upon the exercise, in whole or in part, of an Option granted under the
Plan shall be made at the time of such exercise. The Option Price may be paid in
cash or in shares of Common Stock valued at their fair market value on the date
of exercise. Alternatively, an Option may be exercised in whole or in part by
delivering a properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds necessary to pay the Option Price, and such other documents as
the Committee may determine.

     No shares of Common Stock shall be issued or transferred to a participant
until full payment therefor has been made, and a participant shall have none of
the rights of a stockholder until shares are issued or transferred to him or
her.

     10. NONTRANSFERABILITY. Options granted under the Plan shall not be
transferable other than by will or by the laws of descent and distribution, and,
during a participant's lifetime, shall be exercisable only by him or her.
Notwithstanding the foregoing, a participant may transfer any Option granted
under the Plan to the participant's spouse, children, grandchildren, parents,
and/or siblings or to one or more trusts for the benefit of such family members,
if the agreement evidencing such Option so provides and the participant does not
receive any consideration for the transfer. Any Option so transferred shall
continue to be subject to the same terms and conditions that applied to such
Option immediately prior to its transfer (except that such transferred Option
shall not be further transferable by the transferee during the transferee's
lifetime).

     11.  ISSUANCE OF SHARES. If a participant so requests, shares purchased
upon the exercise of an Option may be issued or transferred in the name of the
participant and another person jointly with the right of survivorship.


     12.  STATUS OF OPTIONS. Options granted under the Plan are nonqualified
options not qualifying as incentive stock options under Section 422 of the
Internal Revenue Code of 1986, as amended.

     13. CHANGES IN CAPITAL STRUCTURE, ETC. In the event of any merger, share
exchange, reorganization, consolidation, recapitalization, reclassification,
distribution, stock dividend, stock split, reverse stock split, split-up,
spin-off, or other similar transaction or event affecting the Common Stock, the
Committee is authorized, to the extent it deems appropriate, to make
substitutions or adjustments in the aggregate number and kind of shares of
Common Stock reserved for issuance under the Plan, in the number, kind and price
of shares of Common Stock subject to outstanding awards, and in the award limits
under the Plan (or to make provision for cash payment to the holder of an
Option). Outstanding Options shall be appropriately amended as to price and
other terms in a manner consistent with the aforementioned adjustment to the
shares of Common Stock subject to the Plan. Fractional shares resulting from any
adjustment in Options pursuant to this Section 13 may be settled in cash or
otherwise as the Committee shall determine. Notice of any adjustment shall be
given by the Company to each holder of an Option which shall have been adjusted
and such adjustment (whether or not such notice is given) shall be effective and
binding for all purposes of this Plan.

     14. EFFECTIVE DATE AND TERMINATION OF PLAN. The Plan shall become effective
on the date of its adoption by the Board or a duly authorized committee thereof,
subject to the ratification of the Plan by the affirmative vote or consent of
holders of a majority of the issued and outstanding shares of Common Stock. The
Plan shall terminate 10 years from the date of its adoption or such earlier date
as the Board or such committee may determine. Any Option outstanding under the
Plan at the time of its termination shall remain in effect in accordance with
its terms and conditions and those of the Plan.

     15. AMENDMENT. The Board or a duly authorized committee thereof may amend
the Plan in any respect from time to time; provided, however, that no amendment
shall become effective unless approved by affirmative vote of the Company's
shareholders if such approval is necessary or desirable for the continued
validity of the Plan or if the failure to obtain such approval would adversely
affect the compliance of the Plan with Rule 16b-3 or any successor rule under
the Securities Exchange Act of 1934 or any other rule or regulation. No
amendment may, without the consent of a participant, impair his or her rights
under any Option previously granted under the Plan.

     The Board or a duly authorized committee thereof shall have the power, in
the event of any disposition of substantially all of the assets of the Company,
its dissolution, any merger or consolidation of the Company with or into any
other corporation, or the merger or consolidation of any corporation into the
Company, to amend all outstanding Options to terminate such Options as of such
effectiveness. If the Board shall exercise such power, all Options then
outstanding shall be deemed to terminate upon such effectiveness.

     16. LEGAL AND REGULATORY REQUIREMENTS. No Option shall be exercisable and
no shares will be delivered under the Plan except in compliance with all
applicable federal and state laws and regulations including, without limitation,
compliance with the rules of all domestic stock exchanges on which the Common
Stock may be listed. Any share certificate issued to evidence shares for which
an Option is exercised may bear such legends and statements as the Committee
shall deem advisable to assure compliance with federal and state laws and
regulations. No Option shall be exercisable, and no shares will be delivered
under the Plan, until the Company has obtained consent or approval from
regulatory bodies, federal or state, having jurisdiction over such matters as
the Committee may deem advisable.

     In the case of the exercise of an Option by a person or estate acquiring
the right to exercise the Option by bequest or inheritance, the Committee may
require reasonable evidence as to the ownership of the Option and may require
consents and releases of taxing authorities that it may deem advisable.