SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

FELDMAN STUART

(Last)

(First)

(Middle)

712 FIFTH AVE 45TH FL

(Street)

NEW YORK

10019

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
HANOVER DIRECT INC [ HNV ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

X	Director	X	10% Owner
	Officer (give title below)		Other (specify below)

3. Date of Earliest Transaction (Month/Day/Year)
07/08/2004

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock	07/08/2004		J⁽¹⁾		4,344,762	A	$0	115,649,483⁽¹⁾	I	See Footnote⁽²⁾
Common Stock								160,900	D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock Warrant	$0.01	07/08/2004		J⁽³⁾⁽⁴⁾⁽⁵⁾		102,172,096⁽³⁾⁽⁴⁾⁽⁵⁾		⁽³⁾⁽⁴⁾⁽⁵⁾	⁽³⁾⁽⁴⁾⁽⁵⁾	Common Stock	102,472,096⁽³⁾⁽⁴⁾⁽⁵⁾	⁽³⁾⁽⁴⁾⁽⁵⁾	102,472,096⁽³⁾⁽⁴⁾⁽⁵⁾	I	See Footnote⁽²⁾
Common Stock Warrant	$0.22	11/18/2003		A		50,000		11/30/2003	11/18/2013	Common Stock	50,000	$0	50,000	D

Explanation of Responses:

1. In connection with the closing of a junior secured term loan facility with the Issuer (the "Term Loan Facility"), Chelsey Direct, LLC ("Chelsey Direct") received a waiver fee equal to 1% of the accreted liquidation preference of the Issuer's Series C Participating Preferred Stock held by Chelsey Direct, payable in shares of the common stock of the Issuer (the "Common Stock"), calculated with reference to the fair market value thereof two business days prior to the closing date, or 4,344,762 additional shares of Common Stock, in consideration for the waiver by Chelsey Direct of its blockage rights over the issuance of senior securities. The number of shares reported on this Form 4 as beneficially owned by the Reporting Person do not give effect to the one-for-ten reverse stock split that is scheduled for stockholder approval at the Annual Meeting (as defined in footnote 3 below).

2. The holdings reported on Table I are owned of record by Chelsey Direct, LLC (which is wholly-owned by the Chelsey Capital Profit Sharing Plan (the "Plan"), of which the Reporting Person is the Trustee ) and indirectly by William B. Wachtel as the Manager of Chelsey Direct. The estimated holdings reported on Table II are expected to be owned of record by Chelsey Finance, LLC ("Chelsey Finance"), which is wholly-owned by Chelsey Funding, LLC, which is in turn wholly-owned by the Plan. The Reporting Person is the principal beneficiary of the Plan. The Reporting Person is also the sole officer and director of DSJ International Resources Ltd., the sponsor of the Plan.

3. In consideration for providing the Term Loan Facility to the Issuer, Chelsey Finance is expected to receive a warrant (the "Common Stock Purchase Warrant"), exercisable at $.01 per share for a period of ten years following date of issuance, to purchase shares of Common Stock in an amount equal to 30% of the fully diluted outstanding shares of Common Stock after giving effect to the issuance of the Common Stock Purchase Warrant. Based on the number of shares of Common Stock outstanding on the date hereof as reported by the Issuer to the Reporting Person, the Reporting Person estimates that 30% of the fully diluted outstanding shares would be approximately 102,472,096 shares of Common Stock.

4. Because the issuance of the Common Stock Purchase Warrant requires stockholder approval of such issuance and of certain amendments to the Issuer's Certificate of Incorporation, Chelsey Finance received on the Closing Date a warrant (the "Series D Preferred Stock Purchase Warrant") to purchase, at any time after September 30, 2004, 100 shares of a newly-issued series of nonvoting preferred stock of the Issuer, called Series D Participating Preferred Stock.

5. The Series D Preferred Stock Purchase Warrant will be automatically exchanged for the Common Stock Purchase Warrant upon the receipt of stockholder approval of the issuance thereof anticipated at the Issuer's 2004 Annual Meeting of Stockholders scheduled for August 12, 2004 (the "Annual Meeting"). Chelsey Direct owns a majority of the aggregate voting power of the Issuer's capital stock. Accordingly, Chelsey Direct will be able to control the outcome of all matters upon which it votes at the Annual Meeting, including the issuance of the Common Stock Purchase Warrant.

	/s/ Stuart Feldman	07/12/2004
	** Signature of Reporting Person	Date
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