APPROVED BY BOARD OF DIRECTORS ON FEBRUARY 22, 2000
                                   APPROVED BY STOCKHOLDERS ON NOVEMBER 28, 2000


                           --------------------------
                                MOVIE STAR, INC.

                          2000 PERFORMANCE EQUITY PLAN




SECTION 1. PURPOSE; DEFINITIONS.

     1.1 Purpose. The purpose of the Movie Star, Inc. 2000 Performance Equity
Plan is to enable the Company to offer to its employees, officers, directors and
consultants whose past, present and/or potential contributions to the Company
and its Subsidiaries have been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary interest in the Company. The
various types of long-term incentive awards that may be provided under the Plan
will enable the Company to respond to changes in compensation practices, tax
laws, accounting regulations and the size and diversity of its businesses.

     1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:

          (a) "Agreement" means the agreement between the Company and the Holder
setting forth the terms and conditions of an award under the Plan and any other
agreement between the Company and the Holder governing the terms and conditions
of the Holder's employment by the Company.

          (b) "Board" means the Board of Directors of the Company.

          (c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

          (d) "Committee" means the Compensation Committee of the Board or any
other committee of the Board that the Board may designate to administer the Plan
or any portion thereof. If no Committee is so designated, then all references in
this Plan to "Committee" shall mean the Board.

          (e) "Common Stock" means the Common Stock of the Company, $0.01 par
value per share.

          (f) "Company" means Movie Star, Inc., a corporation organized under
the laws of the State of New York.

          (g) "Deferred Stock" means Common Stock to be received, under an award
made pursuant to Section 8, below, at the end of a specified deferral period.

          (h) "Disability" means physical or mental impairment as determined
under procedures established by the Committee for purposes of the Plan.

          (i) "Effective Date" means the date set forth in Section 11.1, below.




          (j) "Fair Market Value", unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date: (i) if the Common Stock is listed on a national securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on such date, as reported by the exchange or Nasdaq, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on such
date, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall determine, in good faith.

          (k) "Holder" means a person who has received an award under the Plan.

          (l) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

          (m) "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

          (n) "Normal Retirement" means retirement from active employment with
the Company or any Subsidiary on or after age 65.

          (o) "Other Stock-Based Award" means an award under Section 8, below,
that is valued in whole or in part by reference to, or is otherwise based upon,
Common Stock.

          (p) "Parent" means any present or future "parent corporation" of the
Company, as such term is defined in Section 424(e) of the Code.

          (q) "Plan" means the Movie Star, Inc. 2000 Performance Equity Plan, as
hereinafter amended from time to time.

          (r) "Repurchase Value" shall mean the Fair Market Value in the event
the award to be repurchased under Section 9.1 is comprised of shares of Common
Stock and the difference between Fair Market Value and the Exercise Price (if
lower than Fair Market Value) in the event the award is a Stock Option or Stock
Appreciation Right; in each case, multiplied by the number of shares subject to
the award.

          (s) "Restricted Stock" means Common Stock, received under an award
made pursuant to Section 6, below, that is subject to restrictions under said
Section 6.

          (t) "Stock Option" or "Option" means any option to purchase shares of
Common Stock which is granted pursuant to the Plan.

          (u) "Stock Reload Option" means any option granted under Section 5.3
of the Plan.

          (v) "Subsidiary" means any present or future "subsidiary corporation"
of the Company, as such term is defined in Section 424(f) of the Code.



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SECTION 2. ADMINISTRATION.

     2.1 Committee Membership. The Plan shall be administered by the Board or
the Committee. Committee members shall serve for such term as the Board may in
each case determine, and shall be subject to removal at any time by the Board.
The Committee members, to the extent possible and deemed to be appropriate by
the Board, shall be "non-employee directors" as defined in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and "outside directors" within the meaning of Section 162(m) of the Code.

     2.2 Powers of Committee. The Committee shall have full authority to award,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Restricted Stock,
(iii) Deferred Stock, (iv) Stock Reload Options and/or (v) Other Stock-Based
Awards. For purposes of illustration and not of limitation, the Committee shall
have the authority (subject to the express provisions of this Plan):

          (a) to select the officers, employees, directors and consultants of
the Company or any Subsidiary to whom Stock Options, Restricted Stock, Deferred
Stock, Reload Stock Options and/or Other Stock-Based Awards may from time to
time be awarded hereunder.

          (b) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, number of shares, share exercise price or types of consideration paid upon
exercise of such options, such as other securities of the Company or other
property, any restrictions or limitations, and any vesting, exchange, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine);

          (c) to determine any specified performance goals or such other factors
or criteria which need to be attained for the vesting of an award granted
hereunder;

          (d) to determine the terms and conditions under which awards granted
hereunder are to operate on a tandem basis and/or in conjunction with or apart
from other equity awarded under this Plan and cash awards made by the Company or
any Subsidiary outside of this Plan;

          (e) to permit a Holder to elect to defer a payment under the Plan
under such rules and procedures as the Committee may establish, including the
crediting of interest on deferred amounts denominated in cash and of dividend
equivalents on deferred amounts denominated in Common Stock;

          (f) to determine the extent and circumstances under which Common Stock
and other amounts payable with respect to an award hereunder shall be deferred
that may be either automatic or at the election of the Holder; and

          (g) to substitute (i) new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms, and (ii) new awards of any
other type for previously granted awards of the same type, which previously
granted awards are upon less favorable terms.

     2.3 Interpretation of Plan.

          (a) Committee Authority. Subject to Section 11, below, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable, to interpret the terms and provisions of the Plan and any award
issued under the Plan (and to determine the form and substance of all Agreements
relating thereto), and to


                                       3


otherwise supervise the administration of the Plan. Subject to Section 11,
below, all decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding upon all persons, including the Company, its Subsidiaries and Holders.

          (b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options (including but limited to Stock Reload Options or Stock Appreciation
rights granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the Holder(s) affected, to disqualify any Incentive Stock Option under such
Section 422.

SECTION 3. STOCK SUBJECT TO PLAN.

     3.1 Number of Shares. The total number of shares of Common Stock reserved
and available for issuance under the Plan shall be 750,000 shares. Shares of
Common Stock under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares of Common Stock that have been
granted pursuant to a Stock Option cease to be subject to a Stock Option, or if
any shares of Common Stock that are subject to any Stock Appreciation Right,
Restricted Stock, Deferred Stock award, Reload Stock Option or Other Stock-Based
Award granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the Holder in the form of Common Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. If a Holder pays the exercise price of a Stock
Option by surrendering any previously owned shares and/or arranges to have the
appropriate number of shares otherwise issuable upon exercise withheld to cover
the withholding tax liability associated with the Stock Option exercise, then
the number of shares available under the Plan shall be increased by the lesser
of (i) the number of such surrendered shares and shares used to pay taxes; and
(ii) the number of shares purchased under such Stock Option.

     3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, dividend (other than a cash dividend)
payable on shares of Common Stock, stock split, reverse stock split, combination
or exchange of shares, or other extraordinary or unusual event occurring after
the grant of an award which results in a change in the shares of Common Stock of
the Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award
or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final,
binding and conclusive.

SECTION 4. ELIGIBILITY.

          Awards may be made or granted to employees, officers, directors and
consultants who are deemed to have rendered or to be able to render significant
services to the Company or its Subsidiaries and who are deemed to have
contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of grant.

SECTION 5. STOCK OPTIONS.

     5.1 Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the


                                       4


authority to grant Incentive Stock Options or Non-Qualified Stock Options, or
both types of Stock Options which may be granted alone or in addition to other
awards granted under the Plan. To the extent that any Stock Option intended to
qualify as an Incentive Stock Option does not so qualify, it shall constitute a
separate Nonqualified Stock Option.

     5.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:

          (a) Option Term. The term of each Stock Option shall be fixed by the
Committee; provided, however, that an Incentive Stock Option may be granted only
within the ten-year period commencing from the Effective Date and may only be
exercised within ten years of the date of grant (or five years in the case of an
Incentive Stock Option granted to an optionee who, at the time of grant, owns
Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company ("10% Stockholder").

          (b) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may not be less than 100% of the Fair Market Value on the day
of grant; provided, however, that the exercise price of an Incentive Stock
Option granted to a 10% Stockholder shall not be less than 110% of the Fair
Market Value on the date of grant.

          (c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee and as set forth in Section 10, below. If the Committee provides, in
its discretion, that any Stock Option is exercisable only in installments, i.e.,
that it vests over time, the Committee may waive such installment exercise
provisions at any time at or after the time of grant in whole or in part, based
upon such factors as the Committee shall determine.

          (d) Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case and as provided in
the Agreement, Stock Options may be exercised in whole or in part at any time
during the term of the Option, by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such
notice shall be accompanied by payment in full of the purchase price, which
shall be in cash or, if provided in the Agreement, either in shares of Common
Stock (including Restricted Stock and other contingent awards under this Plan)
or partly in cash and partly in such Common Stock, or such other means which the
Committee determines are consistent with the Plan's purpose and applicable law.
Cash payments shall be made by wire transfer, certified or bank check or
personal check, in each case payable to the order of the Company; provided,
however, that the Company shall not be required to deliver certificates for
shares of Common Stock with respect to which an Option is exercised until the
Company has confirmed the receipt of good and available funds in payment of the
purchase price thereof. Payments in the form of Common Stock shall be valued at
the Fair Market Value on the date prior to the date of exercise. Such payments
shall be made by delivery of stock certificates in negotiable form that are
effective to transfer good and valid title thereto to the Company, free of any
liens or encumbrances. Subject to the terms of the Agreement, the Committee may,
in its sole discretion, at the request of the Holder, deliver upon the exercise
of a Nonqualified Stock Option a combination of shares of Deferred Stock and
Common Stock; provided that, notwithstanding the provisions of Section 8 of the
Plan, such Deferred Stock shall be fully vested and not subject to forfeiture. A
Holder shall have none of the rights of a Stockholder with respect to the shares
subject to the Option until such shares shall be transferred to the Holder upon
the exercise of the Option.

          (e) Transferability. Except as may be set forth in the Agreement, no
Stock Option shall be transferable by the Holder other than by will or by the
laws of descent and distribution, and all Stock


                                       5


Options shall be exercisable, during the Holder's lifetime, only by the Holder
(or, to the extent of legal incapacity or incompetency, the Holder's guardian or
legal representative).

          (f) Termination by Reason of Death. If a Holder's employment by the
Company or a Subsidiary terminates by reason of death, any Stock Option held by
such Holder, unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, shall thereupon automatically terminate, except
that the portion of such Stock Option that has vested on the date of death may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year (or
such other greater or lesser period as the Committee may specify at grant) from
the date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.

          (g) Termination by Reason of Disability. If a Holder's employment by
the Company or any Subsidiary terminates by reason of Disability, any Stock
Option held by such Holder, unless otherwise determined by the Committee at the
time of grant and set forth in the Agreement, shall thereupon automatically
terminate, except that the portion of such Stock Option that has vested on the
date of termination may thereafter be exercised by the Holder for a period of
one year (or such other greater or lesser period as the Committee may specify at
the time of grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.

          (h) Other Termination. Subject to the provisions of Section 12.3,
below, and unless otherwise determined by the Committee at the time of grant and
set forth in the Agreement, if a Holder is an employee of the Company or a
Subsidiary at the time of grant and if such Holder's employment by the Company
or any Subsidiary terminates for any reason other than death or Disability, the
Stock Option shall thereupon automatically terminate, except that if the
Holder's employment is terminated by the Company or a Subsidiary without cause
or due to Normal Retirement, then the portion of such Stock Option that has
vested on the date of termination of employment may be exercised for the lesser
of three months after termination of employment or the balance of such Stock
Option's term.

          (i) Additional Incentive Stock Option Limitation. In the case of an
Incentive Stock Option, the aggregate Fair Market Value (on the date of grant of
the Option) with respect to which Incentive Stock Options become exercisable for
the first time by a Holder during any calendar year (under all such plans of the
Company and its Parent and Subsidiary) shall not exceed $100,000.

          (j) Buyout and Settlement Provisions. The Committee may at any time,
in its sole discretion, offer to repurchase a Stock Option previously granted,
based upon such terms and conditions as the Committee shall establish and
communicate to the Holder at the time that such offer is made.

     5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to pay
the exercise price of a Stock Option ("Underlying Option"), and/or arranges to
have a portion of the shares otherwise issuable upon exercise withheld to pay
the applicable withholding taxes, the Holder may receive, at the discretion of
the Committee, a new Stock Reload Option to purchase that number of shares of
Common Stock equal to the number of shares tendered to pay the exercise price
and the withholding taxes ( but only if such shares were held by the Holder for
at least six months). Stock Reload Options may be any type of option permitted
under the Code and will be granted subject to such terms, conditions,
restrictions and limitations as may be determined by the Committee, from time to
time. Such Stock Reload Option shall have an exercise price equal to the Fair
Market Value as of the date of exercise of the Underlying Option. Unless the
Committee determines otherwise, a Stock Reload Option may be exercised
commencing one year after it is granted and shall expire on the date of
expiration of the Underlying Option to which the Reload Option is related.



                                        6


SECTION 6. RESTRICTED STOCK.

     6.1 Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture ("Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
awards.

     6.2 Terms and Conditions. Each Restricted Stock award shall be subject to
the following terms and conditions:

          (a) Certificates. Restricted Stock, when issued, will be represented
by a stock certificate or certificates registered in the name of the Holder to
whom such Restricted Stock shall have been awarded. During the Restriction
Period, certificates representing the Restricted Stock and any securities
constituting Retained Distributions (as defined below) shall bear a legend to
the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.

          (b) Rights of Holder. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Holder will
have the right to vote such Restricted Stock, to receive and retain all regular
cash dividends and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (i) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (ii) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Stock (and such
Retained Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or
otherwise established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.

          (c) Vesting; Forfeiture. Upon the expiration of the Restriction Period
with respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (i) all or part of such Restricted
Stock shall become vested in accordance with the terms of the Agreement, subject
to Section 9, below, and (ii) any Retained Distributions with respect to such
Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 9, below. Any such
Restricted Stock and Retained Distributions that do not vest shall be forfeited


                                        7


to the Company and the Holder shall not thereafter have any rights with respect
to such Restricted Stock and Retained Distributions that shall have been so
forfeited.

SECTION 7. DEFERRED STOCK.

     7.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom and the time or times at which grants of Deferred
Stock will be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of the period ("Deferral Period") during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.

     7.2 Terms and Conditions. Each Deferred Stock award shall be subject to the
following terms and conditions:

          (a) Certificates. At the expiration of the Deferral Period (or the
Additional Deferral Period referred to in Section 7.2 (d) below, where
applicable), share certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered by
the Deferred Stock award.

          (b) Rights of Holder. A person entitled to receive Deferred Stock
shall not have any rights of a Stockholder by virtue of such award until the
expiration of the applicable Deferral Period and the issuance and delivery of
the certificates representing such Common Stock. The shares of Common Stock
issuable upon expiration of the Deferral Period shall not be deemed outstanding
by the Company until the expiration of such Deferral Period and the issuance and
delivery of such Common Stock to the Holder.

          (c) Vesting; Forfeiture. Upon the expiration of the Deferral Period
with respect to each award of Deferred Stock and the satisfaction of any other
applicable restrictions, terms and conditions all or part of such Deferred Stock
shall become vested in accordance with the terms of the Agreement, subject to
Section 9, below. Any such Deferred Stock that does not vest shall be forfeited
to the Company and the Holder shall not thereafter have any rights with respect
to such Deferred Stock.

          (d) Additional Deferral Period. A Holder may request to, and the
Committee may at any time, defer the receipt of an award (or an installment of
an award) for an additional specified period or until a specified event
("Additional Deferral Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock award (or such
installment).

SECTION 8. OTHER STOCK-BASED AWARDS.

          Other Stock-Based Awards may be awarded, subject to limitations under
applicable law, that are denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, shares of Common Stock,
as deemed by the Committee to be consistent with the purposes of the Plan,
including, without limitation, purchase rights, shares of Common Stock awarded
which are not subject to any restrictions or conditions, convertible or
exchangeable debentures, or other rights convertible into shares of Common Stock
and awards valued by reference to the value of securities of or the performance
of specified Subsidiaries. Other Stock-Based Awards may be awarded either alone
or in addition to or in tandem with any other awards under this Plan or any
other plan of the Company. Each other Stock-Based Award shall be subject to such
terms and conditions as may be determined by the Committee.



                                        8


SECTION 9. ACCELERATED VESTING AND EXERCISABILITY.

     9.1 Approved Transactions. Except as otherwise expressly provided in the
Agreement, the Committee may, in the event of an acquisition of substantially
all of the Company's assets or at least 50% of the combined voting power of the
Company's then outstanding securities in one or more transactions (including by
way of merger or reorganization) which has been approved by the Company's Board
of Directors, (i) accelerate the vesting of any and all Stock Options and other
awards granted and outstanding under the Plan, and (ii) require a Holder of any
award granted under this Plan to relinquish such award to the Company upon the
tender by the Company to Holder of cash in an amount equal to the Repurchase
Value of such award.

SECTION 10. AMENDMENT AND TERMINATION.

     The Board may at any time, and from time to time, amend alter, suspend or
discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder's consent.

SECTION 11. TERM OF PLAN.

     11.1 Effective Date. The Plan shall be effective as of February 22, 2000,
subject to the approval of the Plan by the Company's stockholders within one
year after the Effective Date. Any awards granted under the Plan prior to such
approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned upon, and subject to,
such approval of the Plan by the Company's stockholders and no awards shall vest
or otherwise become free of restrictions prior to such approval.

     11.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time as no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the Effective Date.

SECTION 12. GENERAL PROVISIONS.

     12.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms, of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 10 days after the Agreement has been delivered to the Holder for
his or her execution.

     12.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.

     12.3 Employees.

          (a) Engaging in Competition With the Company; Disclosure of
Confidential Information. Except as otherwise expressly provided in the
Agreement, if a Holder's employment with the Company or a Subsidiary is
terminated as a result of the voluntary resignation of the Holder, and within
one hundred and eighty (180) days after the date thereof such Holder either (i)
accepts employment with any


                                        9


competitor of, or otherwise engages in competition with, the Company or (ii)
discloses to anyone outside the Company or uses any confidential information or
material of the Company in violation of the Company's policies or any agreement
between the Holder and the Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
that was realized or obtained by such Holder at any time during the period
beginning on the date that is one hundred and eighty (180) days prior to the
date such Holder's employment with the Company is terminated, unless the award
is a stock option which the Holder exercised at least one hundred and eighty
(180) days prior to such voluntary resignation. The provisions of this Section
12.3(a) shall not apply to any awards granted prior to the date upon which the
Plan shall have been approved by the Company's stockholders.

          (b) Termination for Cause. Except as otherwise expressly provided in
the Agreement, the Committee may, if a Holder's employment with the Company or a
Subsidiary is terminated for cause, annul any award granted under this Plan to
such employee and, in such event, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
that was realized or obtained by such Holder at any time during the period
beginning on the date that is one hundred and eighty (180) days prior to the
date such Holder's employment with the Company is terminated.

          (c) No Right of Employment. Nothing contained in the Plan or in any
award hereunder shall be deemed to confer upon any Holder who is an employee of
the Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, nor shall it interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of any Holder who is an
employee at any time.

     12.4 Investment Representations; Company Policy. The Committee may require
each person acquiring shares of Common Stock pursuant to a Stock Option or other
award under the Plan to represent to and agree with the Company in writing that
the Holder is acquiring the shares for investment without a view to distribution
thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company's securities.

     12.5 Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in
specific cases.

     12.6 Withholding Taxes. Not later than the date as of which an amount must
first be included in the gross income of the Holder for Federal income tax
purposes with respect to any option or other award under the Plan, the Holder
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such amount. If permitted
by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company or any Subsidiary.

     12.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of New York (without regard to choice of law provisions); provided,
however, that all matters relating to or involving corporate law shall be
governed by the laws of the State of New York.


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     12.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).

     12.9 Non-Transferability. Except as otherwise expressly provided in the
Plan or the Agreement, no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.

     12.10 Applicable Laws. The obligations of the Company with respect to all
Stock Options and awards under the Plan shall be subject to (i) all applicable
laws, rules and regulations and such approvals by any governmental agencies as
may be required, including, without limitation, the Securities Act of 1933, as
amended, and (ii) the rules and regulations of any securities exchange on which
the Common Stock may be listed.

     12.11 Conflicts. If any of the terms or provisions of the Plan or an
Agreement conflict with the requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so conflict
with such requirements. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein and therein with
the same force and effect as if such provision had been set out at length herein
and therein. If any of the terms or provisions of any Agreement conflict with
any terms or provisions of the Plan, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of the
Plan. Additionally, if any Agreement does not contain any provision required to
be included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length therein.

     12.12 Non-Registered Stock. The shares of Common Stock to be distributed
under this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and, except as otherwise expressly provided in the Agreement,
the Company has no obligation to any Holder to register the Common Stock or to
assist the Holder in obtaining an exemption from the various registration
requirements, or to list the Common Stock on a national securities exchange or
any other trading or quotation system, including the Nasdaq National Market and
Nasdaq SmallCap Market.



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