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                1993 EXECUTIVE EQUITY INCENTIVE PLAN, AS AMENDED



            1. PURPOSE. The purpose of this 1993 Executive Equity Incentive Plan
is to promote an alignment of the interests of selected key executives of
Hanover Direct, Inc. (the "Company") and its Affiliates who can significantly
impact the long-term success of the Company with the interests of its
shareholders by affording such executives a proprietary interest in the
Company's growth while providing them with an incentive to make a personal
financial investment in the Company and to remain in the employ of the Company
or its Affiliates.

            2. DEFINITIONS. As used in this Plan, the following terms shall have
the meanings set forth below:

            (a) "Affiliate" shall mean any entity which is controlled, directly
or indirectly, by the Company.

            (b) "Board" shall mean the Board of Directors of the Company.

            (c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder.

            (d) "Committee" shall mean the Compensation Committee of the Board.

            (e) "Company" shall mean Hanover Direct, Inc. and any successor
thereto by merger or otherwise.

            (f) "Date of Grant" of an Option shall mean the date on which such
Option is granted.

            (g) "Estate" shall mean an Optionee's legal representatives upon
death or any person who acquires the right under the laws of descent and
distribution to exercise an Option by reason of the Optionee's death. References
to an "Optionee" shall be deemed to include the Optionee's Estate where the
context so requires.

            (h) "Executive" shall mean an officer or key employee of the Company
or an Affiliate.

            (i) "Fair Market Value" of a Share shall mean the closing per-share
sale price of the Shares on the American Stock Exchange, composite tape or other
recognized market source, as determined by the Committee, on the applicable date
of reference

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hereunder, or if there is no sale on such date, then the closing sale price on
the last previous day on which a sale is reported.

            (j) "Mid-Term Rate" with respect to indebtedness shall mean the
mid-term applicable Federal rate in effect under Section 1274(d) of the Code as
of the day on which the indebtedness was incurred, compounded annually.

            (k) "Note" shall mean a note subject to the terms and conditions
described in Section 8 and used to pay a portion of the purchase price for
Tandem Shares.

            (l) "Option" shall mean any option granted pursuant to Section 6 to
an Executive to purchase Shares from the Company.

            (m) "Option Shares" shall mean the Shares purchased by an Optionee
pursuant to the exercise of an Option.

            (n) "Optionee" shall mean any Executive to whom an Option is granted
under the Plan.

            (o)  "Plan" shall mean this 1993 Executive Equity Incentive Plan.

            (p) "Ratification Date" shall mean the date approval of the Plan is
submitted to the Company's shareholders for ratification pursuant to Section 4.

            (q) "Refinancing Note" shall mean a note subject to the terms and
conditions described in Section 9, the proceeds of which are applied to the
payment of a Note.

            (r) "Right" shall mean a right granted pursuant to Section 7 to an
Executive to purchase Shares from the Company at their Fair Market Value.

            (s)  "Shares" shall mean the common stock of the Company, par value
$.66-2/3 per share.

            (t) "Short-Term Rate" with respect to indebtedness shall mean the
short-term applicable Federal rate in effect under Section 1274(d) of the Code
as of the day on which indebtedness was incurred.

            (u) "Tandem Investment Date" shall mean the date established by the
Committee for the purchase of Tandem Shares pursuant to the exercise of the
Right related to an Option.

            (v) "Tandem Shares" shall mean the Shares purchased by an Optionee
pursuant to the exercise of a Right.


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            3.  PARTICIPATION.  The Executives to whom Options and Rights may be
granted under the Plan shall be determined by the Committee.

            Nothing contained in the Plan, or in any Option or Right granted
pursuant to the Plan, shall confer upon any Executive any right to continue in
the employ of the Company or an Affiliate or limit in any way the right of the
Company or an Affiliate to terminate such Executive's employment at any time.

            4. EFFECTIVENESS AND TERMINATION OF PLAN. The Plan shall become
effective January 28, 1993, subject to ratification of the approval thereof at a
meeting of shareholders by the holders of a majority of the Shares present and
entitled to vote at such meeting. Prior to such approval no Option may be
exercised and no Tandem Shares may be sold or transferred. Should such holders
fail so to approve the Plan, the Plan and all actions taken thereunder shall
automatically be rescinded and become null and void.

            The Plan shall terminate on December 31, 1996 or such earlier date
as the Board may determine. Any Option outstanding at the time of such
termination shall remain in effect in accordance with its terms and those of the
Plan.

            5. THE SHARES. Options and Rights may be granted from time to time
under the Plan for the purchase, in the aggregate, of not more than 2,400,000
Shares (subject to adjustment pursuant to Section 10). Such Shares shall be made
available either from authorized and unissued Shares, Shares held by the Company
in its treasury, or reacquired Shares. All Shares subjected under the Plan to an
Option or Right which expires or terminates as to such Shares may again be
subjected to an Option or Right under the Plan. Options may not be granted to
any Executive covering an aggregate of more than 250,000 Shares during any
12-month period.

            6. OPTIONS. Options, 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, may be
granted at any time and from time to time prior to the termination of the Plan.

            Except as hereinafter provided, all Options shall be subject to the
following terms and conditions:

            (a) Status of Options. Options granted under the Plan shall be
      nonstatutory options not qualifying as incentive stock options under
      Section 422 of the Code.

            (b) Price. The per-share purchase price of the Shares subject to the
      Option shall be (i) $2.50 in the case of an Option granted on or before
      March 2, 1993 and (ii) the Fair Market Value of a Share on the Date of
      Grant in the case of all other Options. The purchase price shall be
      subject to adjustment as provided in Section 10.

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            (c) Payment. The purchase price shall be paid in full at the time of
      purchase in cash, in Shares valued at the Fair Market Value thereof on the
      date of purchase, or in a combination thereof.

            (d) Duration and Exercise of Options. Options shall expire six years
      from their Date of Grant. Except as otherwise provided in Section 6(f),
      Options shall not be exercisable before the third anniversary of their
      Date of Grant.

            (e) Tandem Investment. If the Optionee fails to purchase Tandem
      Shares on the Tandem Investment Date associated with an Option, the Option
      shall be canceled in its entirety. In the event the Optionee purchases on
      the Tandem Investment Date a number of Tandem Shares that is less than
      one-half the number of Shares covered by the Option, the number of Shares
      covered by the Option shall be reduced to twice such number of Tandem
      Shares and the balance of the Option shall be canceled.

            (f)  Termination of Employment.  Upon an Optionee's termination
      of employment, an Option granted to such Optionee may be exercised
      only as follows:

                  (i) Death, Disability, or Retirement. If the Optionee's
            employment is terminated by death, permanent disability (as
            determined by the Committee), or retirement at or after age 65, the
            Optionee (or the Optionee's Estate in the event of the Optionee's
            death) may, within 90 days following such termination, exercise the
            Option with respect to all or any part of the Shares subject thereto
            regardless of whether the Option was otherwise exercisable at the
            time of termination of employment.

                  (ii) Other Reasons. If the Optionee's employment is terminated
            for any reason other than death, permanent disability, or retirement
            at or after age 65, the Optionee may, within 30 days following such
            termination, exercise the Option with respect to all or any part of
            the Shares subject thereto; provided, however, that such Option may
            be exercised only if it was exercisable at the time of termination
            of employment (except to the extent the Committee may waive such
            requirement in its sole discretion in the case of an Optionee whose
            job has been eliminated).

      Notwithstanding the foregoing, no Option shall be exercisable in whole or
      in part after such Option expires.


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            (g) Transferability of Options. Options shall be transferable only
      by will or the laws of descent and distribution and shall be exercisable
      during the Optionee's lifetime only by the Optionee.

            (h) Other Terms and Conditions. Options may also contain such other
      provisions, which shall not be inconsistent with any of the foregoing
      terms, as the Committee shall deem appropriate.

            7. RIGHTS. In connection with the granting of an Option to an
Executive, the Committee shall grant such Executive a Right to purchase from the
Company on the Tandem Investment Date, at their Fair Market Value, a number of
Tandem Shares equal to one-half the maximum number of Shares covered by the
related Option. Each such Right shall be subject to the following terms and
conditions:

            (a) Effectiveness and Exercise of Right. An Optionee may exercise a
      Right with respect to all or a portion of the Shares covered by such Right
      by executing and delivering to the Company on or before the Tandem
      Investment Date the exercise form provided to the Executive for such
      purpose, accompanied by the purchase price for such Shares. The exercise
      of the Right shall become effective on the Tandem Investment Date, and the
      purchase of the Tandem Shares shall occur on such date. Any unexercised
      portion of such Right shall expire at the close of business on the Tandem
      Investment Date.

            (b) Price. The purchase price of the Tandem Shares shall be their
      Fair Market Value on the Date of Grant of the related Option.

            (c)  Payment.  The purchase price shall be paid in full on the date
      of purchase as follows:

                  (i) Cash. The Optionee shall pay at least 20 percent of the
            purchase price of the Tandem Shares in cash or by delivery of a
            short-term note, in such form and subject to such terms and
            conditions as the Committee may prescribe, having a term not
            exceeding three months.

                  (ii)  Note.  The Optionee shall pay the balance, if any, of
            the purchase price with a Note.

            (d) Termination of Employment. A Right granted to an Optionee shall
      be void in the event of such Optionee's termination of employment for any
      reason prior to the Tandem Investment Date.

            (e) Transferability of Rights. Rights are not transferable and shall
      be exercisable only by the Optionee.

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            (f) Transferability of Tandem Shares. Tandem Shares shall not be
      transferable until the earlier of (i) the date on which the Option to
      which the Tandem Shares relate becomes exercisable pursuant to Section
      6(d) and (ii) the date on which the Optionee's employment terminates.

            (g) Other Terms and Conditions. Rights may also contain such other
      provisions, which shall not be inconsistent with any of the foregoing
      terms, as the Committee shall deem appropriate.

            8. NOTE. Each Note used to finance a portion of the purchase price
of Tandem Shares prior to the Ratification Date shall be subject to the
following terms and conditions:

            (a) Term. Subject to acceleration as hereinafter provided, the Note
      shall become due and payable in full on the earlier of (i) December 31,
      1993 and (ii) the fifth business day following the Ratification Date.

            (b) Interest. Interest shall accrue at the Short-Term Rate and shall
      be payable in a single payment concurrently with the payment of principal.

            (c)  Prepayment.  The Optionee may prepay the Note at any time
      without penalty.

            (d) Acceleration. The entire unpaid principal and interest on the
      Note shall become immediately due and payable in the event of the
      Optionee's termination of employment for any reason, including death or
      retirement.

            In the event of the Optionee's sale or other disposition of any
      Tandem Shares, the proceeds, net of brokerage commissions, from such sale
      (or the Fair Market Value of such Tandem Shares on the date of their
      disposition other than by sale) must be applied to the repayment of
      principal and interest on the Note within 15 days after such sale or other
      disposition.

            (e) Other Terms and Conditions. The Note may also contain such other
      provisions, which shall not be inconsistent with any of the foregoing
      terms, as the Committee shall deem appropriate.

Each Note used to finance a portion of the purchase price of Tandem Shares on or
after the Ratification Date shall be subject to the same terms and conditions as
a Refinancing Note, except that the term of the Note shall be six years (subject
to acceleration under the same terms and conditions as under the Refinancing
Note).


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            9. REFINANCING NOTE. Upon the maturity of a Note executed prior to
the Ratification Date by an Executive to purchase Tandem Shares, the Executive
may borrow from the Company the total amount of principal and interest due on
such Note, by delivery of a Refinancing Note and accompanying pledge of
collateral satisfying the terms and conditions set forth below. The proceeds of
such Refinancing Note shall be applied to the payment of the Note in
satisfaction thereof.

            (a) Term. Subject to acceleration as hereinafter provided, the
      Refinancing Note shall become due and payable in full on the sixth
      anniversary of the date of the original Note.

            (b) Interest. Interest shall accrue at the Mid-Term Rate and shall
      be payable in a single payment concurrently with the payment of principal.

            (c)  Prepayment.  The Optionee may prepay the Refinancing Note
      at any time without penalty.

            (d) Acceleration. The entire unpaid principal and interest on the
      Refinancing Note shall become immediately due and payable (i) 90 days
      after the Optionee's termination of employment by reason of death,
      permanent disability, or retirement at or after age 65, and (ii) 30 days
      after the Optionee's termination of employment for any other reason,
      except to the extent such acceleration is waived by the Committee in its
      sole discretion.

            In the event of the Optionee's sale or other disposition of any
      Tandem Shares (other than as payment of the purchase price of an Option),
      the proceeds, net of brokerage commissions, from such sale (or the Fair
      Market Value of such Tandem Shares on the date of their disposition other
      than by sale) must be applied to the repayment of principal and interest
      on the Note within 15 days after such sale or other disposition.

            In the event of the Optionee's sale or other disposition of any
      Option Shares acquired by exercise of the Option to which the Tandem
      Shares relate (other than as payment of the purchase price of an Option),
      the excess of the proceeds, net of brokerage commissions, from such sale
      (or the Fair Market Value of such Option Shares on the date of their
      disposition other than by sale) over the purchase price paid by the
      Optionee for such Option Shares must be applied to the repayment of
      principal and interest on the Note within 15 days after such sale or other
      disposition.

            (e)  Collateral.  The Refinancing Note shall be secured by a pledge
      of the Tandem Shares.  In the event that the Optionee makes a partial

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      payment of the Note, a proportionate number of the Tandem Shares shall be
      released and delivered to the Optionee.

            (f) Other Terms and Conditions. The Refinancing Note may also
      contain such other provisions, which shall not be inconsistent with any of
      the foregoing terms, as the Committee shall deem appropriate.

            10. ADJUSTMENT OF AND CHANGES IN SHARES. In the event that the
Shares, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or if the number of such Shares shall be increased through the
payment of a stock dividend or a dividend on the Shares of rights or warrants to
purchase securities of the Company shall be made, then there shall be
substituted for or added to each Share theretofore appropriated or thereafter
subject or which may become subject to an Option the number and kind of shares
of stock or other securities into which each outstanding Share shall be so
changed, or for which each such Share shall be exchanged, or to which each such
Share shall be entitled, as the case may be, and references herein to Shares
shall be deemed to be references to any such stock or other securities as
appropriate. Outstanding Options shall also be appropriately amended as to price
and other terms as may be necessary to reflect the foregoing events. In the
event there shall be any other change in the number or kind of the outstanding
Shares or of any stock or other securities into which such Shares shall have
been changed or for which it shall have been exchanged, then if the Committee
shall, in its sole discretion, determine that such change equitably requires an
adjustment in any Option theretofore granted or which may be granted under this
Plan, such adjustments shall be made in accordance with such determination.
Fractional shares resulting from any adjustment in Options pursuant to this
Section 10 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 so adjusted and such adjustment (whether or not
such notice is given) shall be effective and binding for all purposes of this
Plan.

            11. SECURITIES ACT REQUIREMENTS. No Option or Right granted pursuant
to the Plan shall be exercisable in whole or in part, and the Company shall not
be obligated to sell any Shares subject to any such Option or Right, if such
exercise would, in the opinion of counsel for the Company, violate the
Securities Act of 1933, as amended (or other Federal or state statutes having
similar requirements), as in effect at that time. Each Option or Right shall be
subject to the further requirement that, if at any time the Board shall
determine in its discretion that the listing or qualification of the Shares
subject to such Option or Right under any securities exchange requirements or
under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or Right or the issuance of Shares thereunder,
such Option or Right may not be exercised in whole or in part unless such
listing, qualification, consent, or approval

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shall have been effected or obtained free of any conditions not acceptable to
the Committee.

            12. WITHHOLDING. Appropriate provision shall be made for all taxes
required to be withheld from Shares issued under the Plan under the applicable
laws or other regulations of any governmental authority, whether federal, state
or local, and whether domestic or foreign. To that end, the Company may at any
time take such steps as it may deem necessary or appropriate (including sale or
retention of Shares) to provide for payment of such taxes.

            13. ADMINISTRATION AND AMENDMENT OF PLAN. The Plan shall be
administered by the Committee. The Committee shall have and shall exercise all
powers and duties with respect to the Plan and its administration except such
powers and duties as are reserved under this Section 13 to the Board or to the
shareholders of the Company. The Board may from time to time remove members from
the Committee or add members thereto, and vacancies in the Committee, however
caused, shall be filled by the Board. The Committee from time to time may adopt
rules and regulations for carrying out this Plan. The interpretation and
construction by the Committee of any provision of the Plan or any Option or
Right shall be final and conclusive. No member of the Board or of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option or Right granted pursuant hereto.

            The Board may from time to time make such changes in and additions
to the Plan, and the Committee may amend the terms and conditions of any Option
or Right, in each case as it may deem proper and in the best interests of the
Company, without further action on the part of the shareholders of the Company;
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. Amendments to the Plan or to any Option or Right may be
applied prospectively or retroactively; provided, however, that no such
amendment to any Option previously granted to an Optionee shall impair the
rights of the Optionee without the consent of such Optionee or such Optionee's
Estate.

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