Amended and restated effective January 16, 1996


                         FACTORY STORES OF AMERICA, INC.
                              AMENDED AND RESTATED
                       1993 EMPLOYEE STOCK INCENTIVE PLAN


         1. General. This Employee Stock Incentive Plan (the "Plan") provides
Eligible Persons (as defined hereafter) with the opportunity to acquire an
equity interest in the Company by making available for purchase shares of Common
Stock, $.01 par value per share, of the Company ("Common Stock"), through the
granting of nontransferable options to purchase Common Stock ("Stock Options").
An Eligible Person is a key employee of Factory Stores of America, Inc., and its
subsidiaries or, with respect to non-qualified Stock Options only, (a) such
other person, such as a consultant, whose relationship with the Company or its
subsidiaries is deemed by the Administrator (as defined hereafter) to be
sufficiently important to the Company or its subsidiaries as to warrant receipt
by such person of a Stock Option or (b) such person that the Company or
Administrator wishes to employ as a key employee of the Company or its
subsidiaries for whom the grant of a Stock Option will, in the Administrator's
judgment, act as an inducement to such person to accept such employment. An
individual grant of Stock Options shall be individually referred to herein as a
"Grant".

         It is intended that Eligible Persons may be granted, simultaneously or
from time to time, Stock Options that qualify as incentive stock options
("Incentive Stock Options") under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or Stock Options that do not so qualify
("Non-qualified Stock Options"). No provision of the Plan is intended or shall
be construed to grant employees alternative rights in any Incentive Stock Option
granted under the Plan so as to prevent such Option from qualifying under
Section 422 of the Code.

         The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including, without limitation, Rule 16b-3 under the
Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be
administered, and Stock Options shall be granted and may be exercised, only in
such a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and Stock Options granted hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.

         2. Purpose of the Plan. The purpose of the Plan is to provide
continuing incentives to Eligible Persons by encouraging such Eligible Persons
to acquire new or additional stock



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ownership in the Company, thereby increasing their proprietary interest in the
Company's business and enhancing their personal interest in the Company's
success.

         For purposes of the Plan, a "subsidiary corporation" is any corporation
fifty percent (50%) or more of the total combined voting power of the
outstanding stock of which is directly or indirectly owned by the Company.

         3. Effective Date of the Plan. The Plan shall become effective upon its
adoption by the Board of Directors of the Company, subject to approval by the
holder(s) of a majority of the outstanding shares of voting capital stock of the
Company. If the Plan is not so approved within twelve (12) months after the date
the Plan is adopted by the Board of Directors, the Plan and any Grants made
hereunder shall be null and void. However, if the Plan is so approved, no
further stockholder approval shall be required with respect to the making of
Grants pursuant to the Plan, except as provided in Section 12 hereof.

         4. Administration of the Plan. The Plan shall be administered by a
committee selected by the Board of Directors of the Company (the "Board") by
majority vote and composed of no fewer than two (2) members of the Board (such
committee, the "Administrator"). No person shall be appointed to the
Administrator who, during the one-year period immediately preceding such
person's appointment to the Administrator, has received any Grants under the
Plan or any similar stock option or stock incentive plan, other than a
formula-based plan, maintained by the Company or any subsidiary corporation. A
member of the Administrator shall not be eligible to participate in the Plan
while serving on the Administrator.

         Subject to the terms and conditions of the Plan, the Administrator
shall be authorized and empowered:

                  (a)      To select Eligible Persons to whom Grants may be
         made;

                  (b)      To determine the number of shares of Common Stock
         to be covered by any Grant;

                  (c)      To prescribe the terms and conditions of any
         Grants made under the Plan, and the form(s) and agreement(s)
         used in connection with such Grants;

                  (d)      To determine the time or times when Stock Options
         will be granted and when they will terminate in whole or in
         part;

                  (e)      To determine the time or times when Stock Options
         that are granted may be exercised;

                  (f)      To determine, at the time a Stock Option is
         granted under the Plan to an Eligible Person, whether such


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         Stock Option is an Incentive Stock Option entitled to the
         benefits of Section 422 of the Code; and

                  (g) To establish any other Stock Option agreement provisions
         not inconsistent with the terms and conditions of the Plan and, where
         the Stock Option is an Incentive Stock Option, with the terms and
         conditions of Section 422 of the Code.

         The Administrator may, in its discretion and consistent with the
requirements of Section 16b and Rule 16b-3 under the Exchange Act, the
requirements of other applicable law, and the terms of any Grant made hereunder,
amend, modify, or waive the provisions of any Grant or the terms of any
provision of this Plan as they apply to the exercise of any Grant; provided,
however, that no such amendment, modification or waiver shall, without the
optionee's written consent, (a) adversely alter or impair any rights of the
optionee or obligations to the optionee under a Grant or this Plan or (b) have
an adverse impact on the optionee's exercise of the Grant under Rule 16b-3 or
the tax laws of the United States.

         5. Persons Eligible for Grants. Grants may be made from time to time to
those Eligible Persons who are designated by the Administrator in its sole and
exclusive discretion. Eligible Persons who are employees may include, but shall
not necessarily be limited to, officers of the Company and any subsidiary
corporation, excluding members of the Administrator. The Administrator may grant
more than one Stock Option to the same Eligible Person. No Stock Option shall be
granted to any Eligible Person during any period of time when such Eligible
Person is on a leave of absence.

         6. Shares Subject to the Plan. The shares to be issued pursuant to any
Grant made under the Plan shall be Common Stock. Either Common Stock held as
treasury stock or authorized and unissued Common Stock, or both, may be so
issued, in such amount or amounts within the maximum limits of the Plan as the
Administrator shall from time to time determine.

         Subject to the provisions of the next succeeding paragraph of this
Section 6, the aggregate number of shares of Common Stock that can be actually
issued under the Plan shall be 1,500,000.

         If, at any time subsequent to the date of adoption of the Plan by the
Board of Directors, the number of shares of Common Stock are increased or
decreased, or 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
as a result of a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization or otherwise): (i) there shall
automatically be substituted for each share of Common Stock subject to an
unexercised Stock Option (in whole or in part) granted under the


                                      - 3 -

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Plan, the number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for which each such share
of Common Stock shall be exchanged; and (ii) the option price per share of
Common Stock or unit of securities shall be increased or decreased
proportionately so that the aggregate purchase price for the securities subject
to a Stock Option shall remain the same as immediately prior to such event. In
addition to the foregoing, the Administrator shall be entitled in the event of
any such increase, decrease or exchange of Common Stock to make other
adjustments to the securities subject to a Stock Option, to the provisions of
the Plan, and to any related Stock Option agreements (including adjustments
which may provide for the elimination of fractional shares), where necessary
(under Section 422(a)(2) of the Code or otherwise) to preserve the terms and
conditions of any Grants hereunder.

         7.       Stock Option Provisions.

                  (a) General. The Administrator may grant to Eligible Persons
         (also referred to as "optionees") nontransferable Stock Options that
         either qualify as Incentive Stock Options under Section 422 of the Code
         or do not so qualify. However, any Stock Option which is an Incentive
         Stock Option shall only be granted to employees and shall only be
         granted within 10 years from the earlier of (i) the date this Plan is
         adopted by the Board of Directors of the Company and (ii) the date this
         Plan is approved by the stockholder(s) of the Company.

                  (b) Stock Option Price. The option price per Common Share
         which may be purchased under an Incentive Stock Option granted under
         the Plan shall be determined by the Administrator at the time of Grant,
         but shall not be less than one hundred percent (100%) of the Fair
         Market Value (as defined below) of a Common Share, determined as of the
         date such Option is granted; however, if an Eligible Person to whom an
         Incentive Stock Option is granted is, at the time of the grant of such
         Option, an "owner" as defined in Section 422(b)(6) of the Code
         (modified as provided in Section 424(d) of the Code) of more than ten
         percent (10%) of the total combined voting power of all classes of
         stock of the Company or any subsidiary corporation (a "Substantial
         Stockholder"), the price per share of Common Stock of such Option, as
         determined by the Administrator, shall not be less than one hundred ten
         percent (110%) of the Fair Market Value of a share of Common Stock on
         the date such Option is granted. The option price per share of Common
         Stock under each Stock Option granted pursuant to the Plan which is a
         Non-qualified Stock Option shall be determined by the Administrator at
         the time of Grant, but shall not be less than one hundred percent
         (100%) of the Fair Market Value of a share of Common Stock, determined
         as of the date such Option is granted. The day on which the
         Administrator approves the granting of a Stock Option shall be
         considered


                                      - 4 -

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         the date on which such Option is granted. Notwithstanding the foregoing
         provisions of this Section 7(b), with respect to Grants made within one
         year following the date on which Common Stock is sold pursuant to the
         Company's first effective registration statement for such Common Stock
         filed under the Securities Act of 1933, as amended (the "IPO"), in no
         event shall the option price per share of Common Stock be less than the
         price at which such shares are sold to the public in the IPO (subject
         to equitable adjustment for stock splits, combinations, stock dividends
         and recapitalizations).

                  (c) Fair Market Value. The "Fair Market Value" of a share of
         Common Stock as of a given date shall be (in order of applicability):
         (i) the closing price of a share of Common Stock on the principal
         exchange on which the Common Stock is then trading, if any, on the day
         immediately prior to such date, or if Common Stock was not traded on
         the day previous to such date, then on the next preceding trading day
         during which a sale occurred; or (ii) if Common Stock is not traded on
         an exchange but are quoted on NASDAQ or a successor quotation system,
         (A) the last sale price (if Common Stock is then listed as a National
         Market Issue under the NASD National Market System) or (B) if Common
         Stock is not then so listed, the mean between the closing
         representative bid and asked prices for Common Stock on the day
         previous to such date as reported by NASDAQ or such successor quotation
         system; or (iii) if Common Stock is not publicly traded on an exchange
         and not quoted on NASDAQ or a successor quotation system, the mean
         between the closing bid and asked prices for Common Stock, on the day
         previous to such date, as determined in good faith by the
         Administrator; or (iv) if Common Stock is not publicly traded, the fair
         market value established by the Administrator acting in good faith.

                  (d) Period of Stock Option. The Administrator shall determine
         when each Stock Option is to expire. However, no Incentive Stock Option
         shall be exercisable after the expiration of ten (10) years from the
         date on which such Option is granted. Further, no Incentive Stock
         Option granted to an Eligible Person who is a Substantial Stockholder
         at the time of the grant of such Stock Option shall be exercisable
         after the expiration of five (5) years from the date of grant of such
         Stock Option. Subject to Section 9 hereof, in the event of (i) the
         death or permanent and total disability of an Eligible Person, (ii) the
         retirement of an Eligible Person who is an employee, or (iii) a Change
         in Control as defined in Section 9, the Stock Options held by such
         Eligible Person shall be automatically and immediately vested and
         exercisable. Notwithstanding any other provision hereof to the
         contrary, no Stock Option may be exercised until there has been filed
         with the Securities and Exchange Commission an effective registration
         statement on Form S-8 (or such other form as the Company shall deem

                                      - 5 -

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         necessary) with respect to the Common Stock issuable upon exercise of
         such Stock Options.

                  (e) Limitation on Exercise and Transfer of Stock Options. Only
         the Eligible Person to whom a Stock Option is granted may exercise such
         Option, except where a guardian or other legal representative has been
         duly appointed for such Eligible Person, and except as otherwise
         provided in the case of such Eligible Person's death. No Stock Option
         granted hereunder shall be transferable by an optionee other than by
         will or the laws of descent and distribution. No Stock Option granted
         hereunder may be pledged or hypothecated, nor shall any such Option be
         subject to execution, attachment or similar process.

                  (f) Employment, Holding Period Requirements For Certain
         Options. The Administrator may condition any Stock Option granted
         hereunder to an Eligible Person who is an employee upon the continued
         employment of the optionee by the Company or by a subsidiary
         corporation. However, the Administrator will require that, from and
         after the date of grant of any Incentive Stock Option granted hereunder
         until the day three (3) months prior to the date such Option is
         exercised, such optionee must be an employee of the Company or of a
         subsidiary corporation, but always subject to the right of the Company
         or any such subsidiary corporation to terminate such optionee's
         employment during such period (except if the optionee's employment is
         terminated due to death or permanent and total disability, in which
         event such period shall be one year). Each Stock Option shall be
         subject to such additional restrictions as to the time and method of
         exercise as shall be prescribed by the Administrator. Upon compliance
         with any condition or requirement imposed by the Administrator pursuant
         to the foregoing, a Stock Option or the appropriate portion thereof may
         be exercised in whole or in part from time to time during the option
         period; however, such exercise right(s) shall be limited to whole
         shares.

                  (g)      Payment of Stock Option Price; Cashless Exercise.

                                  (i) A Stock Option may be exercised by an
                  optionee giving written notice to the Company of his intention
                  to exercise the same, accompanied by full payment of the
                  purchase price in cash or by check, or, with the consent of
                  the Administrator, in whole or in part with a surrender of
                  previously acquired Common Stock having a Fair Market Value on
                  the date of exercise equal to that portion of the purchase
                  price for which payment in cash or check is not made. The date
                  on which payment is received by the Company shall be the date
                  of exercise of the Stock Option.

                                 (ii) A Stock Option may be exercised by an
                  optionee giving written notice to the Company of his


                                      - 6 -

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                  intention to exercise the same, provided that within five
                  business days of the delivery of such notice the funds to pay
                  for exercise of the Stock Option are delivered to the Company
                  by a broker acting on behalf of the optionee either in
                  connection with the sale of the shares underlying the Stock
                  Option or in connection with the making of a margin loan to
                  the optionee to enable payment of the exercise price of the
                  Stock Option. The latter of the dates on which such notice and
                  payment are received by the Company shall be the date of
                  exercise of the Stock Option. In connection with any such
                  exercise, the Company will provide a copy of the notice of
                  exercise of the Stock Option to the aforesaid broker upon
                  receipt by the Company of such notice and will deliver to such
                  broker, within five business days of the delivery of such
                  notice to the Company, a certificate or certificates (as
                  requested by the broker) representing the number of Common
                  Stock underlying the Stock Option that have been sold by such
                  broker for the optionee.

                                (iii) The Administrator may, in its sole
                  discretion, approve other methods of exercise for a Stock
                  Option or payment of the option price, provided that no such
                  method shall cause any Stock Option granted under the Plan as
                  an Incentive Stock Option to not qualify under Section 422 of
                  the Code, or cause any share of Common Stock issued in
                  connection with the exercise of a Stock Option not to be a
                  fully paid and non-assessable share of Common Stock.

                  (h) Cancellation and Replacement of Stock Options and- Related
         Rights. The Administrator may at any time or from time to time permit
         the voluntary surrender by an optionee who is the holder of any
         outstanding Stock Options under the Plan, where such surrender is
         conditioned upon the granting to such optionee of new Stock Options for
         such number of shares as the Administrator shall determine, or may
         require such a voluntary surrender as a condition precedent to the
         grant of new Stock Options. The Administrator shall determine the terms
         and conditions of new Stock Options, including the prices at and
         periods during which they may be exercised, in accordance with the
         provisions of this Plan, all or any of which may differ from the terms
         and conditions of the Stock Options surrendered. Any such new Stock
         Options shall be subject to all the relevant provisions of this Plan.
         The Common Stock subject to any Stock Option so surrendered shall no
         longer be charged against the limitation provided in Section 6 of this
         Plan and may again become shares subject to the Plan. The granting of
         new Stock Options in connection with the surrender of outstanding Stock
         Options under this Plan shall be considered for the purposes of the
         Plan as the granting of new Stock Options and not an alteration,
         amendment or


                                      - 7 -

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         modification of the Plan or of the Stock options being
         surrendered.

                  (i) Withholding of Taxes. The Administrator may, in its sole
         discretion, require, as a condition to any Grant or to the delivery of
         certificates for shares issued hereunder, that the optionee pay to the
         Company, in cash, any federal, state or local taxes of any kind
         required by law to be withheld with respect to any Grant or any
         delivery of Common Stock upon exercise hereof. The Administrator, in
         its sole discretion, may permit optionees to pay such taxes through the
         withholding of Common Stock otherwise deliverable to such optionee in
         connection with such Grant or the delivery to the Company of Common
         Stock otherwise acquired by the optionee. The Fair Market Value of
         Common Stock withheld by the Company or tendered to the Company for the
         satisfaction of tax withholding obligations under this Section 7(j)
         shall be determined on the date such Common Stock are withheld or
         tendered. The Company, to the extent permitted or required by law,
         shall have the right to deduct from any payment of any kind (including
         salary, bonus, severance or insurance proceeds) otherwise due to an
         optionee any federal, state or local taxes of any kind required by law
         to be withheld with respect to any Grant or to the delivery of Common
         Stock under the Plan, or to retain or sell without notice a sufficient
         number of shares of Common Stock to be issued to such optionee to cover
         any such taxes, provided that the Company shall not sell any such
         Common Stock if such sale would be considered a sale by such optionee
         for purposes of Section 16 of the Exchange Act.

                  (j) Limitation on Exercisable Incentive Stock Options. The
         aggregate fair market value of the Common Stock first becoming subject
         to exercise as Incentive Stock Options by an optionee during any given
         calendar year shall not exceed the sum of One Hundred Thousand Dollars
         ($100,000). Such aggregate fair market value shall be determined as of
         the date such Option is granted, taking into account, in the order in
         which granted, any other incentive stock options granted by the
         Company, or by a parent or subsidiary corporation thereof.

         8. Termination of Employment. If an Eligible Person who is an employee
ceases to be an employee of the Company or any subsidiary corporation, for a
reason other than death, retirement, "permanent and total disability" (as
defined below) or termination "without cause" (as defined below), his Stock
Options shall, unless extended by the Administrator on or before his date of
termination of employment, terminate on the effective date of such termination
of employment. Neither such Eligible Person nor any other person shall have any
right after such date to exercise all or any part of his Stock Options.

         If termination of employment of an Eligible Person who is an
employee is due to death or permanent and total disability, all


                                      - 8 -

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Stock Options held by such Eligible Person shall become immediately and
automatically vested and exercisable.

         If termination of employment of an Eligible Person who is an employee
is due to death or permanent and total disability or is without cause, then
outstanding Stock Options (to the extent, but only to the extent, that such
Stock Options are vested on the date of termination, or, in the case of death or
permanent and total disability, become immediately and automatically vested and
exercisable pursuant to the foregoing sentence) may be exercised within the one
(1) year period ending on the anniversary of such death, permanent and total
disability or termination without cause (except that, with respect to Incentive
Stock Options held by an Eligible Person whose employment is terminated without
cause, such Options must be exercised within three months of the date of such
termination). In the event of the permanent and total disability of an Eligible
Person who is not an employee on the effective date of any Stock Option granted
to him, such Option may be exercised within the one (1) year period ending on
the anniversary of such permanent and total disability. In the case of death of
any Eligible Person, the Eligible Person's outstanding Stock Options shall be
exercised by such Eligible Person's estate, or the person designated by such
Eligible Person by will, or as otherwise designated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Stock Option
be exercisable after the expiration of the option period, and in the case of
exercises made after an Eligible Person's death, not to any greater extent than
such Eligible Person would have been entitled to exercise such Option at the
time of his death after giving effect to the immediately preceding paragraph.

         Subject to the discretion of the Administrator, in the event an
Eligible Person who is an employee terminates employment with the Company and
all subsidiary corporations because of normal or early retirement under any
pension plan or retirement plan hereafter adopted by the Company, any
then-outstanding Stock Options held by such Eligible Person shall lapse at the
end of the term of such Stock Option or within three (3) months of the date of
retirement, whichever first occurs.

         For purposes hereof, "permanent and total disability" means a permanent
and total disability as defined in Section 22(e)(3) of the Code. For purposes
hereof, termination "without cause" means termination of the employee's
employment by the Company for reasons other than (i) conviction of the employee
for a felony or for any crime or offense lesser than a felony involving the
property of the Company or a subsidiary corporation or affiliate of the Company;
(ii) conduct by the employee that has caused demonstrable and serious injury to
the Company or a subsidiary, monetary or otherwise, as evidenced by a final
determination of a court or governmental agency of competent jurisdiction in
effect after exhaustion or lapse of all rights of appeal; or (iii) gross
dereliction of duty or other grave misconduct by the employee, as determined in
good faith by the Company.


                                      - 9 -

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         In the event an Eligible Person who is an employee is granted a leave
of absence by the Company or such subsidiary corporation to enter military
service or because of sickness, his employment with the Company or such
subsidiary corporation shall not be considered terminated, and he shall be
deemed an employee of the Company or such subsidiary corporation during such
leave of absence or any extension thereof granted by the Company or such
subsidiary corporation.

         9.       Change of Control.  Upon the occurrence of a Change of
Control (as defined below), notwithstanding any other provisions
hereof or of any agreement to the contrary, all Stock Options
granted under this Plan shall become immediately vested and
exercisable in full.

         For purposes of this Plan, a Change of Control shall be deemed to have
occurred if: (i) a tender offer shall be made and consummated for the ownership
of 25% or more of the outstanding voting securities of the Company; (ii) the
Company shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 25% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former stockholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; (iii) the Company
shall sell substantially all of its assets to another corporation which is not a
wholly owned subsidiary; or (iv) a person [(except (A) J. Dixon Fleming, Jr.,
his siblings, David A. Hodson, John M. Slocum, Connell L. Radcliff and R.
Kenneth Langston)]; (B) their respective spouses and lineal descendants; (C) any
trust or other fiduciary solely for the benefit of any of the persons described
in clauses (A) and (B); or (D) any entity controlled, directly or indirectly, by
any of the persons described in clauses (A) through (C)), within the meaning of
Section 3(a)(9) or Section 13(d)(3) (as in effect on the date hereof) of the
Exchange Act, shall acquire, other than by reason of inheritance, twenty-five
percent (25%) or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). For purposes of this
Plan, ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in
effect on the date hereof) of the Exchange Act.

         10. Amendments to the Plan. The Administrator is authorized to
interpret this Plan and from time to time adopt any rules and regulations for
carrying out this Plan that it may deem advisable. Subject to the approval of
the Board of Directors of the Company, the Administrator may at any time amend,
modify, suspend or terminate this Plan. In no event, however, without the
approval of the stockholders, shall any action of the Administrator or the Board
of Directors result in:

                  (a)      Materially amending, modifying or altering the
                           eligibility requirements provided in Section 5
                           hereof;


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                  (b)      Materially increasing, except as provided in Section
                           6 hereof, the maximum number of shares of Common
                           Stock that may be made subject to Grants under the
                           Plan;

                  (c)      Materially increasing the benefits accruing to
                           participants under this Plan;

                  (d)      reduce the minimum option price requirements of
                           Section 7(b); or

                  (e)      modify the Plan in any manner requiring stockholder
                           approval under Rule 16b-3 under the Exchange Act, as
                           the Rule may be amended from time to time;

except to conform this Plan and any agreements made hereunder to changes
required by the Code or by governing law.

         11.      Investment Representation, Approvals and Listing.  The
Administrator may, if it deems appropriate, condition its grant
of any Stock Option hereunder upon receipt of the following or
any substantially similar investment representation from the
optionee:

         "I agree that any Common Stock of Factory Stores of America, Inc. which
         I may acquire by virtue of this Stock Option shall be acquired for
         investment purposes only and not with a view to distribution or resale,
         and may not be transferred, sold, assigned, pledged, hypothecated or
         otherwise disposed of by me unless (i) a registration statement or
         post-effective amendment to a registration statement under the
         Securities Act of 1933, as amended, with respect to said Common Stock
         has become effective so as to permit the sale or other disposition of
         said Common Stock by me; or (ii) there is presented to Factory Stores
         of America, Inc. an opinion of counsel satisfactory to Factory Stores
         of America, Inc. to the effect that the sale or other proposed
         disposition of said Common Stock by me may lawfully be made otherwise
         than pursuant to an effective registration statement or post-effective
         amendment to a registration statement relating to the said stock under
         the Securities Act of 1933, as amended."

         The Company shall not issue any certificate or certificates for Common
Stock upon the exercise of any Stock Option granted under this Plan prior to (i)
the obtaining of any approval from any governmental agency which the
Administrator shall, in its sole discretion, determine to be necessary or
advisable; (ii) the admission of such stock to listing on any national
securities exchange on which the Common Stock may be listed; (iii) the
completion of any registration or other qualifications of the Common Stock under
any state or federal law or ruling or regulations of any governmental body which
the Administrator shall, in its sole discretion, determine to be necessary or


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advisable or the determination by the Administrator, in its sole discretion,
that any registration or other qualification of the Common Stock is not
necessary or advisable; or (iv) the obtaining of an investment representation
from the optionee in the form stated above or in such other form as the
Administrator, in its sole discretion, shall determine to be adequate.

         12. General Provisions. The form and substance of Stock Option
agreements made hereunder, whether granted at the same or different times, need
not be identical. Nothing in this Plan or in any Stock Option agreement shall
confer upon any Eligible Person who is an employee any right to continue in the
employ of the Company or any of the Company's subsidiary corporations or
affiliates or to interfere with or limit the right of the Company or any
subsidiary corporation to terminate his employment at any time, with or without
cause. Nothing contained in this Plan or in any Stock Option agreement shall be
construed as entitling any optionee to any rights of a stockholder as a result
of the grant of a Stock Option, until such time as Common Stock is actually
issued to such optionee pursuant to the exercise of such Option. This Plan may
be assumed by the successors and assigns of the Company. The liability of the
Company under this Plan and any sale made hereunder is limited to the
obligations set forth herein with respect to such sale and no term or provision
of this Plan shall be construed to impose any liability on the Company in favor
of any Eligible Person (or other party acting on his behalf or in his stead)
with respect to any loss, cost or expense which such person or party may incur
in connection with or arising out of any transaction in connection with this
Plan. The cash proceeds received by the Company from the issuance of Common
Stock pursuant to this Plan will be used for general corporate purposes. The
expense of administering this Plan shall be borne by the Company. The captions
and section numbers appearing in this Plan are inserted only as a matter of
convenience; they do not define, limit, construe or describe the scope or intent
of the provisions of this Plan. All references to employee or key employee
herein refer to an employee of the Company or a subsidiary corporation.

         13. Provisions Applicable Solely to Insiders. The following provisions
shall apply only to persons who are subject to Section 16 of the Exchange Act
with respect to securities of the Company ("Insiders"), and shall apply to
Insiders notwithstanding any provision of the Plan to the contrary:

                  (a) No Insider shall be permitted to transfer any security of
         the Company acquired by him, except to the extent permitted by 17
         C.F.R. ss.240.16a-2(d)(1), upon the exercise of any Stock Option, until
         at least six months and one day after the later of (i) the day on which
         such Stock Option is granted to the Insider or (ii) the day on which
         the exercise or conversion price of such security is fixed.

                  (b)      An Insider may elect to have stock withheld from a
         Grant or tender stock to the Company in order to satisfy any


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         applicable tax withholding consequences of a Grant only during the
         period beginning on the third business day following the date on which
         the Company releases the financial information specified in 17 C.F.R.
         ss.240.16b- 3(e)(1)(ii) and ending on the twelfth business day
         following such date. Notwithstanding the foregoing, an Insider may
         elect to have stock withheld from a Grant in order to satisfy any
         applicable tax withholding consequences thereof by providing the
         Company with a written election to so withhold at least six months in
         advance of the withholding of stock otherwise issuable upon exercise of
         a Stock Option,

         14. Termination of the Plan. The Plan shall terminate on March 30,
2003. Thereafter, no Stock Options shall be granted hereunder. All Stock Options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to their terms and the terms and conditions of the Plan.



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