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                                                                  EXHIBIT 10.40

                                    EMPLOYEE
                       NONQUALIFIED STOCK OPTION AGREEMENT

                                 PURSUANT TO THE

                TANDY BRANDS ACCESSORIES, INC. 2002 OMNIBUS PLAN

      THIS EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is
made as of this ______ day of ____________, _________, between TANDY BRANDS
ACCESSORIES, INC., a Delaware corporation (the "Company"), and ________________,
an employee of the Company or one or more of its subsidiaries ("Employee").

                              W I T N E S S E T H:

      WHEREAS, the Company desires to carry out the purposes of the Tandy Brands
Accessories, Inc. 2002 Omnibus Plan (the "Plan"), by affording Employee the
opportunity to purchase shares of the common stock, $1.00 par value per share
("Common Stock"), of the Company.

      NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

      1. Grant of Option. The Company hereby grants to Employee the right and
option (the "Option") to purchase an aggregate of ____ shares (the "Shares") of
Common Stock, such Shares being subject to adjustment as provided in Paragraph 8
hereof, on the terms and conditions herein set forth.

      2. Purchase Price. The purchase price of the Shares shall be $__________
per Share, such purchase price being 100% of the Fair Market Value (as defined
in the Plan) of the Shares on the date first appearing above (the "Date of
Grant").

      3. Exercise of Option. Unless expired as provided in Paragraph 5 below,
and subject to the special provisions of Paragraph 6 below, the Option may be
exercised from time to time in whole or in part for not more than 33-1/3% of the
entire number of Shares at any time after the first anniversary of the Date of
Grant, and an additional 33-1/3% of the total Shares on or after each of the two
(2) succeeding anniversaries of the Date of Grant.

      4. Manner of Exercise; Payment of Purchase Price.

            (a) Subject to the terms and conditions of this Agreement, the
      Option shall be exercised by the delivery of written notice to the Company
      setting forth the number of shares of Common Stock with respect to which
      the Option is to be exercised and the date of exercise thereof which shall
      be at least three (3) days after giving such notice unless an earlier time
      shall have been mutually agreed upon. Such notice of exercise shall be
      signed by Employee and shall be irrevocable when given.

            (b) The notice of exercise shall be accompanied by the full payment
      of the purchase price for the Shares. The purchase price may be paid by
      (1) cash, check, bank draft, or money order payable to the order of the
      Company, (2) Common Stock (including Restricted Stock (as defined in the
      Plan)) owned by Employee on the date of exercise, and/or (3) in any other
      form of valid consideration as provided in the Plan. In the event Employee
      wishes to pay all or any portion of the purchase price by delivering
      shares of Common Stock, Employee shall, not less

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      than fourteen (14) days prior to the date of exercise, give written notice
      to the Secretary or Assistant Secretary of the Company requesting approval
      of such payment method, setting forth the particulars of the proposed
      payment method. The Committee (as defined in the Plan) shall approve,
      disapprove or modify the proposed payment method within fourteen (14) days
      of its receipt of the request. The failure of the Committee to respond to
      the request within the time period required shall be deemed an approval of
      Employee's proposed payment method.

            (c) Upon receipt of the purchase price, and subject to the terms of
      Paragraph 11, the certificate or certificates representing the Shares
      purchased shall be registered in the name of the person or persons so
      exercising the Option. If the Option shall be exercised by Employee and,
      if Employee shall so request in the notice exercising the Option, the
      Shares shall be registered in the name of Employee and another person as
      joint tenants with right of survivorship, and shall be delivered as
      provided above to or upon the written order of the person or persons
      exercising the Option. In the event the Option shall be exercised pursuant
      to Paragraph 7 hereof, by any person or persons other than Employee, such
      notice shall be accompanied by appropriate proof satisfactory to the
      Company of the right of such person or persons to exercise the Option. All
      Shares that shall be purchased upon the exercise of the Option as provided
      herein shall be fully paid and nonassessable.

      5. Expiration of Option. The Option shall expire and become null and void
upon the happening of whichever of the following events shall first occur: (a)
expiration of three (3) months after Employee ceases to be employed by the
Company or any of its subsidiaries for any reason other than termination for
cause, retirement, or due to death or Total and Permanent Disability (as defined
in the Plan); (b) a period of twelve (12) months shall have elapsed since
Employee's death; (c) a period of thirty-six (36) months shall have elapsed
since Employee's cessation of employment due to Total and Permanent Disability
(as defined in the Plan); (d) a period of thirty-six (36) months shall have
elapsed since Employee's retirement; (e) a period of ten (10) years shall have
elapsed since the Date of Grant; or (f) Employee's employment shall have been
terminated for cause as determined by the Committee or the Board of Directors of
the Company. Except as provided in Paragraph 6, only those portions of the
Option exercisable as of the date of termination of Employee's employment may be
exercised, whether such termination is by retirement or otherwise.

      6. Acceleration of Exercise Dates. Notwithstanding the provisions of
Paragraph 3 above relating to the exercise of the Option in installments: (a)
upon Employee's death or cessation of employment due to Total and Permanent
Disability (as defined in the Plan), the Option shall be immediately
exercisable, until the expiration date provided in Paragraph 5 above, for the
entire number of Shares covered hereby; (b) upon Employee's retirement, the
Committee may, in its discretion, permit the Option to be immediately
exercisable, until the expiration date provided in Paragraph 5 above, for the
entire number of Shares covered hereby; and (c) upon any Change of Control of
the Company (as defined in the Plan), the Option may be exercised for a period
of sixty (60) days following the date of the Change of Control for the entire
number of Shares covered hereby.

      7. Option Nontransferable. Except as otherwise herein provided, the Option
and the rights and privileges conferred hereby may not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
option or any right or privilege conferred hereby, contrary to the provisions
hereof, the Option and the rights and privileges conferred hereby shall
immediately become null and void. Notwithstanding the foregoing, upon the death
of Employee, the Option may be exercised by Employee's executor,

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administrator, legatee or distributee as the case may be, in accordance with
Paragraph 6. References herein to Employee shall include, where applicable, a
permitted transferee.

      8. Adjustments of Shares Subject to Option. If the outstanding shares of
Common Stock shall at any time be changed or exchanged by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, combination of shares or a dividend payable in stock, then the aggregate
number of Shares subject to this Agreement and the purchase price of such Shares
shall be automatically adjusted such that Employee's proportionate interest
shall be maintained as before the occurrence of such event. The determination of
any such adjustment by the Committee shall be final, binding and conclusive.

      9. No Contract. This Agreement does not constitute a contract for
employment and shall not affect the right of the Company to terminate Employee's
employment for any reason whatsoever.

      10. Rights as Stockholder. This Option shall not entitle Employee or any
permitted transferee to any rights of a stockholder of the Company or to any
notice of proceedings of the Company with respect to any Shares issuable upon
exercise of the Option unless and until the Option has been exercised for such
Shares and such Shares have been registered in the Employee's (or permitted
transferee's) name upon the stock records of the Company.

      11. Restriction on Issuance of Shares. The Company shall not be required
to issue or deliver any certificates for Shares purchased upon the exercise of
an Option prior to: (a) the obtaining of any approval from any governmental
agency which the Company shall, in its sole discretion, determine to be
necessary or advisable; (b) the completion of any listing, registration or other
qualification of such Shares on any securities exchange or inter-dealer
quotation system or under any state or federal law or ruling or regulation of
any governmental body which the Company shall, in its sole discretion, determine
to be necessary or advisable; and (c) the determination by the Committee that
Employee has tendered to the Company any federal, state or local tax owed by
Employee as a result of exercising the Option when the Company has a legal
liability to satisfy such tax. In addition, if the Common Stock reserved for
issuance upon the exercise of the Option shall not then be registered under the
Securities Act of 1933, the Company may upon Employee's exercise of the Option,
require Employee or his permitted transferee to represent in writing that the
Shares being acquired are for investment and not with a view to distribution,
and may mark the certificate for the Shares with a legend restricting transfer
and may issue stop transfer orders relating to such certificate to the Company's
transfer agent.

      12. Lapse of Option. This Agreement shall be null and void in the event
Employee shall fail to sign and return a counterpart hereof to the Company
within thirty (30) days of its delivery to Employee.

      13. Construction. The Committee shall have authority to make reasonable
constructions of the Option and to correct any defect or supply any omission or
reconcile any inconsistency in the Option, and to prescribe reasonable rules and
regulations relating to the administration of the Option.

      14. Notice. Any notice relating to this Agreement shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit in
the United States mail, registered or certified, postage prepaid and addressed
to the Company at its main office at 690 E. Lamar Boulevard, Suite No. 200,
Arlington, Texas 76011 or to such other address as may be hereafter specified by
the Company, to the attention of the Company's Secretary or Assistant Secretary.
All notices to Employee

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shall be delivered to Employee at Employee's address specified below or to such
other address as may be hereafter specified by Employee.

      15. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.

      16. Binding Effect. This Agreement shall be binding upon the permitted
transferees, heirs, executors, administrators, and successors of the parties
hereto.

      17. No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.

      18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

      19. Governing Instrument and Law. This Option and any Shares issued
hereunder shall in all respects be governed by the terms and provisions of the
Plan, which terms and provisions are hereby incorporated herein by reference,
and by the laws of the State of Texas, and in the event of a conflict between
the terms of this Agreement and the terms of the Plan (copy attached), the terms
of the Plan shall control.

      20. Entire Agreement. The Plan and this Agreement constitute the entire
contract between the parties hereto with regard to the subject matter hereof.

      21. Nonqualified Stock Option. This Option is not intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code and shall not be so construed.

                                 TANDY BRANDS ACCESSORIES, INC.

                                 By: _______________________________________
                                     J.S.B. Jenkins
                                     President and Chief Executive Officer

Accepted and Agreed:

EMPLOYEE:

_________________________________      Date: _______________________________
_________________________________
Address:_________________________
        _________________________

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