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                                                                     EXHIBIT 4.1

                              HANOVER DIRECT, INC.
                        2000 MANAGEMENT STOCK OPTION PLAN

            1. PURPOSE. The purpose of this Hanover Direct, Inc. 2000 Management
Stock Option Plan (the "Plan") is to advance the interests of Hanover Direct,
Inc. (the "Company") and its shareholders by providing employees and officers
of, and consultants to, the Company and its affiliates, through the grant of
options to purchase shares of Common Stock (as hereinafter defined), with a
larger personal and financial interest in the success of the Company.

            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 be constituted in such a
manner as to satisfy the requirements of applicable law, the provisions of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor rule. The Committee shall be appointed, and vacancies
shall be filled, by the Board. The Committee shall have full power and authority
to (i) select the individuals to whom Options may be granted under the Plan;
(ii) determine the number of shares of Common Stock covered by each Option and
the terms and conditions, not inconsistent with the provisions of the Plan,
governing such Option; (iii) interpret the Plan and any Option granted
thereunder; (iv) establish such rules and regulations as it deems appropriate
for the administration of the Plan; and (v) take such other action as it deems
necessary or desirable for the administration of the Plan. Any action of the
Committee with respect to the administration of the Plan shall be taken by
majority vote. The Committee's interpretation and construction of any provision
of the Plan or the terms of any Option shall be conclusive and binding on all
parties.

            3. PARTICIPANTS. Options may be granted under the Plan to any
employee or officer of, or consultant to, the Company or of any affiliate of the
Company. Nothing contained in the Plan, or in any Option granted pursuant to the
Plan, shall confer upon any employee any right to the continuation of his or her
employment, or limit in any way the Company's right to terminate his or her
employment.

            4. THE SHARES. The shares that may be delivered or purchased under
the Plan shall not exceed an aggregate of 20,000,000 shares (subject to
adjustment pursuant to Section 7) of common stock, par value $.66 2/3 per share,
of the Company (the "Common Stock") (subject to adjustment pursuant to Section
7). 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 an Option may again be subjected
to an Option under the Plan.

            5. OPTIONS. Options to purchase Common Stock ("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) TYPES OF OPTIONS. Options granted under the Plan shall, as
         determined by the Committee at the time of grant, be either Options
         intended to qualify as incentive stock options under Section 422 of the
         Internal Revenue Code of 1986, as amended (the "Code") ("Incentive
         Stock Options") or Options not intended to so qualify ("Nonstatutory
         Stock Options"); provided, however, that Incentive Stock Options may be
         granted only to employees of the Company or a subsidiary (within the
         meaning of Section 424(f) of the Code) of the Company (a "Subsidiary").
         Each option agreement shall identify the Option as an Incentive Stock
         Option or as a Nonstatutory Stock Option. Notwithstanding such
         designation, however, to the extent that the aggregate fair market
         value (determined on the date of grant) of Common Stock for which a
         participant is granted Incentive Stock Options that first become
         exercisable during any given calendar year exceeds $100,000, the Option
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         shall be treated as a Nonqualified Stock Option. For this purpose,
         Incentive Stock Options shall be taken into account in the order in
         which  they were granted.

                  (b) PRICE. The 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; provided, however, that an Incentive Stock Option granted to an
         employee who owns stock possessing more than 10% of the total combined
         voting power of all classes of stock of the Company or any parent
         (within the meaning of Section 424(e) of the Code) or Subsidiary shall
         have a purchase price for the underlying shares equal to 110% of the
         fair market value of the Common Stock on the date of grant.

                  Solely for purposes of this Section 5(b) and Section 5(a), 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 10 trading
         days immediately preceding the date of grant and the 10 trading days
         immediately following such date.

                  (c) PER-PARTICIPANT LIMIT. No participant may be granted
         Options during any consecutive 12-month period on more than 1,000,000
         shares of Common Stock (subject to adjustment pursuant to Section 7).

                  (d) 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 the participant. Notwithstanding the foregoing, the
         Committee may, in the manner established by the Committee, allow a
         participant to transfer, without payment of consideration, any
         Nonstatutory Stock Option granted under the Plan to the participant's
         spouse, children, grandchildren, parents, and/or siblings, or to one or
         more trusts or partnerships for the benefit of such family members. 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).

                  (e) TERM AND EXERCISABILITY OF OPTIONS. Options may be granted
         for terms of not more than 10 years and shall be exercisable in
         accordance with such terms and conditions as are set forth in the
         option agreement evidencing the grant of such Options. In no event
         shall an Incentive Stock Option granted to an employee who owns stock
         possessing more than 10% of the total combined voting power of all
         classes of stock of the Company or any parent (within the meaning of
         Section 424(e) of the Code) or Subsidiary be exercisable after the
         expiration of five years from the date such Incentive Stock Option is
         granted.

                  Except as otherwise provided in Section 5(f), no Option
         granted under the Plan shall be exercisable by a participant during the
         first year after the date of grant of such Option.

                  (f) TERMINATION OF EMPLOYMENT. Except to the extent otherwise
         provided in the option agreement evidencing such Option, an Option may
         not be exercised after a participant ceases to be an employee, officer
         or consultant except as set forth in this Section 5(f).

                        (i) Death, Disability, or Retirement. If a participant
              ceases to be an employee, officer or consultant by reason of
              death, permanent disability (within the meaning of Section
              22(e)(3) of the Code), or, in the case of an employee, retirement
              at or after age 65, the participant (or the participant's estate
              in the event of the participant's death) may, within one (1) year
              following such cessation, exercise the Option with respect to all
              or any part of the shares of Common Stock subject thereto
              regardless of whether the Option was otherwise exercisable at the
              time of such cessation. Except in the case of the participant's
              death or permanent disability, the exercise of an Incentive Stock
              Option more than three (3) months after a participant ceases to be
              an employee of the Company or a Subsidiary will cause such Option
              to be treated as a Nonstatutory Stock Option.
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                        (ii) Other Reasons. If a participant ceases to be an
              employee, officer or consultant for any reason other than death,
              permanent disability, or retirement at or after age 65, the
              participant may, within three (3) months following such cessation,
              exercise the Option with respect to all or any part of the shares
              of Common Stock subject thereto, but only to the extent that such
              Option was exercisable at the time of such cessation.

      In no event may an Option be exercised after the expiration of the term of
such Option.

                  (g) 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 purchase price may be paid in cash or, if so provided in
         the option agreement evidencing the grant of such Option, in shares of
         Common Stock valued at their fair market value on the date of purchase.
         Alternatively, if the option agreement evidencing the grant of such
         Option so provides, the 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 purchase price
         and applicable withholding taxes, and such other documents as the
         Committee may determine.

            6. WITHHOLDING. No later than the date as of which an amount first
becomes includible in the gross income of a participant for Federal income tax
purposes with respect to any Option under the Plan, the participant shall pay to
the Company, or make arrangement satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes required by law to be withheld
with respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Common Stock, including Common Stock
that is part of the Option that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind due to the
participant.

            7. 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 holders 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 7 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.

            8. EFFECTIVE DATE AND TERMINATION OF PLAN. The Plan shall become
effective on the date of its adoption by the Board, 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 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.

            9. AMENDMENT. The Board 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 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
under the Exchange Act or any other rule or regulation. No amendment may,
without the consent of a participant, impair such participant's rights under any
Option previously granted under the Plan. The Board shall have the power, in
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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 other corporation into
the Company, to amend all outstanding Options to terminate such Options as of
the effectiveness of such transaction. If the Board shall exercise such power,
all Options then outstanding shall be deemed to terminate upon such
effectiveness. The Board may, in its sole discretion, amend all outstanding
Options to cause them to be immediately exercisable prior to the effectiveness
of such termination.

            10. LEGAL AND REGULATORY REQUIREMENTS. No Option shall be
exercisable and no shares shall be delivered under the Plan except in compliance
with all applicable Federal and state laws and regulations including, without
limitation, compliance with withholding tax requirements and 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 shall 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.

            11. GENERAL PROVISIONS. (a) Nothing contained in the Plan, or in any
Option granted pursuant to the Plan, shall confer upon any employee any right to
the continuation of the employee's employment. (b) Nothing contained in the
Plan, or in any Option granted under the Plan, shall be construed to prevent the
Company from taking any corporate action which is deemed by the Company to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Option granted under the Plan. No participant,
beneficiary, or other person shall have any claim against the Company as a
result of any such action. (c) The Plan and all Options made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of New York.