December 24, 1997



MOVIE STAR, INC.
136 Madison Avenue
New York, NY   10016


                                                     RE: FINANCING AGREEMENT
                                                     DATED: April 24, 1996


It is mutually  agreed that the above  mentioned  agreement  between us shall be
amended as hereinafter provided:

Paragraph 3.1, 3.2 and 3.3 are hereby amended to read as follows:

         3.1  Borrower  agrees to pay to Lender  each month  interest in arrears
(computed  on the basis of the actual  number of days elapsed over a year of 360
days) on the average  daily  balances in the Loan Account  during the  preceding
month at a rate  equal to the Prime  Rate plus two  percent  (2%) per annum (the
"Margin"); provided, however, that no decrease shall reduce the Prime Rate below
6% per annum. Any change in the effective  interest rates due to a change in the
Prime Rate shall take effect on the date of such change in the Prime Rate.

         3.2 Borrower  shall pay to Lender a facility fee for each contract year
of this  Agreement  equal to one half of one percent  (1/2 of 1%) of the Maximum
Amount payable on the first day of each contract year commencing on 7/1/98. Upon
any renewal of this  Agreement,  Borrower shall pay to Lender an annual facility
fee equal to one half of one percent (1/2 of 1%) of the Maximum Amount provided,
however,  that commencing with the calendar  quarter  beginning July 1, 1998, we
shall rebate to you  quarterly  twenty five percent  (25%) of an amount equal to
one half of one percent (1/2 of 1%) of the amount,  if any, by which $13,500,000
exceeds  the  maximum  amount  of  loans  and  letters  of  credit  at any  time
outstanding  during  such  calendar  quarter.  In addition to the above we shall
rebate to you  quarterly  on April 1, 1998 and July 1, 1998 twenty five  percent
(25%) of an amount  equal to .667% of the amount,  if any,  by which  13,500,000
exceed the maximum of loans and letters of credit at any time outstanding during
such quarterly period.

         3.3 Should Lender arrange to open Letters of Credit or issue guaranties
for Borrower's account,  Borrower agrees to pay Lender an amount equal to 1/4 of
1% of the face amount of such  Letters of Credit or  guaranties,  plus 1/8 of 1%
for each 60 days or portion  thereof that the Letter of Credit (or any resulting
acceptance) or guaranty remains open and unpaid, plus bank changes.

Paragraph 9.1 is hereby amended to read as follows:

         9.1 This Agreement shall become  effective upon acceptance by Lender at
its office in the State of New York, and shall continue in full force and effect
until  June 30,  1999 (the  "Renewal  Date")  and from year to year  thereafter,
unless  sooner  terminated  as herein  provided.  Borrower  may  terminate  this
Agreement on the Renewal Date or on the  anniversary  of the Renewal Date in any
year by  giving  Lender  at least  sixty  (60)  days'  prior  written  notice by
registered or certified mail, return receipt  requested,  and in addition to its
other rights hereunder,  Lender shall have the right to terminate this Agreement
at any time by giving  Borrower  thirty (30) days' prior written  notice.  If an
event of  default  hereunder  has not been  declared  by  Lender,  and  Borrower
terminates  this Agreement,  Borrower shall pay to Lender as liquidated  damages
and as part of the  Obligations,  an early  termination fee ("Early  Termination
Fee") in an amount  equal to  $150,000.00  or  $75,000 in the event that Mark M.
David and Mrs.  Abraham David sell 70% of their  respective  legal or beneficial
interest in the capital stock of Borrower (which as of June 30, 1997 amounted to
4,655,399 shares) less amounts paid to


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Lender for interest or letters of credit income  during such  contract  year. No
termination of this Agreement,  however,  shall relieve or discharge Borrower of
its  duties,  obligations  and  covenants  hereunder  until  such  time  as  all
Obligations  have been paid in full,  and the  continuing  security  interest in
Receivables and other Collateral  granted to Lender hereunder or under any other
agreement  shall  remain in  effect  until  such  Obligations  have  been  fully
discharged. The early termination fee is in addition to all other Obligations of
the Borrower hereunder.  No provision hereof shall be modified or amended orally
or by course of conduct  but only by a written  instrument  expressly  referring
hereto signed by both parties.

The foregoing amendment shall be effective as of January 1, 1998.

In all other  respects the terms and conditions of the aforesaid  agreement,  as
the same may have heretofore been amended, shall remain unchanged.





                                                   ROSENTHAL & ROSENTHAL, INC.

                                                   BY:/s/ Jerry Sandak
                                                     --------------------------
                                                   Jerry Sandak
                                                   SENIOR VICE PRESIDENT


THE FOREGOING IS ACKNOWLEDGED &
AGREED TO:

MOVIE STAR, INC.

BY:/s/ Saul Pomerantz
   ------------------------
Saul Pomerantz
EXECUTIVE VICE PRESIDENT

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