NETWOLVES CORPORATION
                             2001 Stock Option Plan


SECTION 1.  GENERAL PROVISIONS
            ------------------

1.1.  Name and General Purpose
      ------------------------

     The name of this plan is the NETWOLVES  CORPORATION  2001 Stock Option Plan
(hereinafter  called  the  "2001  Plan").  The  2001  Plan is  intended  to be a
broadly-based incentive plan which enables NETWOLVES CORPORATION (the "Company")
and its  subsidiaries  and affiliates to foster and promote the interests of the
Company by attracting  and retaining  directors,  officers and employees of, and
consultants  to, the Company who  contribute to the  Company's  success by their
ability, ingenuity and industry, to enable such directors,  officers,  employees
and  consultants  to  participate  in the  long-term  success  and growth of the
Company by giving  them a  proprietary  interest  in the  Company and to provide
incentive  compensation   opportunities  competitive  with  those  of  competing
corporations.

1.2  Definitions
     -----------

     a.  "Affiliate"  means any person or entity  controlled  by or under common
control with the Company,  by virtue of the ownership of voting  securities,  by
contract or otherwise.

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

     c. "Change in Control" means a change of control of the Company,  or in any
person directly or indirectly controlling the Company, which shall mean:

          (i) any person who is not currently such becomes the beneficial owner,
     directly or indirectly,  of securities of the Company  representing  25% or
     more of the combined voting power of the Company's then outstanding  voting
     securities; or

          (ii)  three  or more  directors,  whose  election  or  nomination  for
     election  is  not  approved  by a  majority  of  the  Incumbent  Board  (as
     hereinafter  defined),  are elected  within any single  12-month  period to
     serve on the Board of Directors; or

          (iii) members of the Incumbent Board cease to constitute a majority of
     the Board of Directors without the approval of the remaining members of the
     Incumbent Board; or

          (iv) any merger (other than a merger where the Company is the survivor
     and there is no  accompanying  Change in Control under  subparagraphs  (i),
     (ii)  or  (iii)  of  this  paragraph   (b),consolidation,   liquidation  or
     dissolution of the Company,  or the sale of all or substantially all of the
     assets of the Company.

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     Notwithstanding  the foregoing,  a Change in Control shall not be deemed to
occur pursuant to subparagraph (i) of this definition solely because 25% or more
of the combined voting power of the Company's outstanding securities is acquired
by one or more employee  benefit plans maintained by the Company or by any other
employer, the majority interest in which is held, directly or indirectly, by the
Company.  For purposes of this  definition,  the terms "person" and  "beneficial
owner"  shall  have the  meaning  set  forth in  Sections  3(a) and 13(d) of the
Exchange Act, and in the  regulations  promulgated  thereunder,  as in effect on
February 23, 2001; and the term "Incumbent  Board" shall mean (A) the members of
the Board of Directors  of the Company on February 23, 2001,  to the extent that
they  continue  to serve as  members  of the  Board  of  Directors,  and (B) any
individual  who becomes a member of the Board of  Directors  after  February 23,
2001, if his election or nomination for election as a director was approved by a
vote of at least three-quarters of the then Incumbent Board.

     d. "Committee"  means the Committee  referred to in Section 1.3 of the 2001
Plan.

     e. "Common  Stock" means shares of the Common  Stock,  par value $.0033 per
share, of the Company.

     f. "Company" means NETWOLVES CORPORATION, a corporation organized under the
laws of the State of Delaware (or any successor corporation).

     g. "Fair  Market  Value"  means the market price of the Common Stock on The
Nasdaq  Stock  Market  on the date of the  grant  or as  reported  on any  other
exchange  on which the Common  Stock is then traded on such date or on any other
date on which the Common Stock is to be valued hereunder.  If no sale shall have
been reported on any such exchange, Fair Market Value shall be determined by the
Committee.

     h.  "Non-Employee  Director" shall have the meaning set forth in Rule 16(b)
promulgated by the Securities and Exchange Commission ("Commission").

     i.  "Option"  means any option to purchase  Common Stock under Section 2 of
the 2001 Plan.

     j. "Option  Agreement" means the option agreement  described in Section 2.4
of the 2001 Plan.

     k. "Participant" means any director, officer, employee or consultant of the
Company,  a  Subsidiary  or an  Affiliate  who is selected by the  Committee  to
participate in the 2001 Plan.

     l.  "Subsidiary"  means  any  corporation  in which the  Company  possesses
directly or indirectly  50% or more of the combined  voting power of all classes
of stock of such corporation.

     m. "Total  Disability"  means  accidental  bodily injury or sickness  which
wholly and  continuously  disabled an optionee.  The Committee,  whose decisions
shall be final, shall make a determination of Total Disability.

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1.3  Administration of the Plan
     --------------------------

     The  2001  Plan  shall be  administered  by the  Board or by the  Committee
appointed by the Board.  The Committee  shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.

     Subject to this  Section 1.3,  the  Committee  shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and practices governing the operation of the 2001 Plan as it shall, from time to
time,  deem  advisable,  and to interpret  the terms and  provisions of the 2001
Plan.

     The Committee  shall keep minutes of its meetings and of action taken by it
without a meeting.  A majority of the Committee shall  constitute a quorum,  and
the acts of a majority of the  members  present at any meeting at which a quorum
is present,  or acts  approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.

1.4  Eligibility
     -----------

     Stock  Options may be granted  only to  directors,  officers,  employees or
consultants of the Company or a Subsidiary or Affiliate. Any person who has been
granted any Option may, if he is otherwise  eligible,  be granted an  additional
Option or Options.

1.5  Shares
     ------

     The aggregate  number of shares reserved for issuance  pursuant to the 2001
Plan shall be 1,750,000 shares of Common Stock, or the number and kind of shares
of stock or other  securities  which shall be substituted  for such shares or to
which such shares shall be adjusted as provided in Section 1.6.

     Such number of shares may be set aside out of the  authorized  but unissued
shares of Common Stock or out of issued shares of Common Stock  acquired for and
held in the Treasury of the Company, not reserved for any other purpose.  Shares
subject to, but not sold or issued under, any Option terminating or expiring for
any reason  prior to its  exercise in full will again be  available  for Options
thereafter granted during the balance of the term of the 2001 Plan.

1.6  Adjustments Due to Stock Splits,
      Mergers, Consolidation, Etc.
     --------------------------------

     If, at any time,  the  Company  shall  take any  action,  whether  by stock
dividend,  stock split,  combination of shares or otherwise,  which results in a
proportionate  increase  or  decrease  in the  number of shares of Common  Stock
theretofore issued and outstanding,  the number of shares which are reserved for
issuance  under the 2001 Plan and the number of shares which,  at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee,  be
increased or  decreased  in the same  proportion,  provided,  however,  that the
Company shall not be obligated to issue fractional shares.

     Likewise,  in the event of any change in the  outstanding  shares of Common
Stock by reason of any recapitalization, merger, consolidation,  reorganization,
combination or exchange of shares or other corporate change, the Committee shall
make such substitution or adjustments, if any, as it deems to be appropriate, as

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to the number or kind of shares of Common  Stock or other  securities  which are
reserved  for  issuance  under the 2001  Plan and the  number of shares or other
securities which, at such time are subject to Options.

     In the event of a Change in  Control,  (a) all Options  outstanding  on the
date of such Change in Control shall,  for a period of sixty (60) days following
such Change in Control,  become  immediately and fully  exercisable,  and (b) an
optionee will be permitted to surrender for cancellation  within sixty (60) days
after  such  Change in Control  any  Option or  portion  of an Option  which was
granted  more than six (6) months  prior to the date of such  surrender,  to the
extent not yet  exercised,  and to receive a cash  payment in an amount equal to
the excess,  if any, of the Fair Market Value (on the date of  surrender) of the
shares of Common  Stock  subject to the Option or portion  thereof  surrendered,
over the aggregate purchase price for such Shares under the Option.

1.7  Non-Alienation of Benefits
     --------------------------

     Except as herein  specifically  provided,  no right or unpaid benefit under
the 2001 Plan shall be subject to alienation,  assignment,  pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant  or other person  entitled to benefits  hereunder  should attempt to
alienate,  assign,  pledge or charge any benefit  hereunder,  then such  benefit
shall, in the discretion of the Committee, cease.

1.8  Withholding or Deduction for Taxes
     ----------------------------------

     If, at any time,  the Company or any  Subsidiary  or Affiliate is required,
under applicable laws and regulations, to withhold, or to make any deduction for
any taxes, or take any other action in connection with any Option exercise,  the
Participant  shall be  required  to pay to the  Company  or such  Subsidiary  or
Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
at the option of the Company,  the Company or such  Subsidiary  or Affiliate may
accept a  sufficient  number  of shares  of  Common  Stock to cover  the  amount
required to be withheld.

1.9  Administrative Expenses
     -----------------------

     The entire expense of administering the 2001 Plan shall be borne by the
Company.

1.10 General Conditions
     ------------------

     a. The Board or the  Committee  may, from time to time,  amend,  suspend or
terminate any or all of the provisions of the 2001 Plan,  provided that, without
the  Participant's  approval,  no change may be made which would alter or impair
any right theretofore granted to any Participant.

     b. With the consent of the Participant  affected thereby, the Committee may
amend or modify any outstanding  Option in any manner not inconsistent  with the
terms of the 2001 Plan, including,  without limitation,  and irrespective of the
provisions of Section 2.3(c) below,  to accelerate the date or dates as of which
an installment of an Option becomes exercisable.

     c.  Nothing  contained  in the 2001 Plan shall  prohibit the Company or any
Subsidiary  or  Affiliate   from   establishing   other   additional   incentive
compensation  arrangements  for  employees of the Company or such  Subsidiary or
Affiliate.

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     d. Nothing in the 2001 Plan shall be deemed to limit, in any way, the right
of the Company or any  Subsidiary  or  Affiliate  to  terminate a  Participant's
employment with the Company (or such Subsidiary or Affiliate) at any time.

     e. Any decision or action taken by the Board or the  Committee  arising out
of or in connection with the construction,  administration,  interpretation  and
effect of the 2001 Plan shall be  conclusive  and binding upon all  Participants
and any person claiming under or through any Participant.

     f. No member of the Board or of the  Committee  shall be liable for any act
or action,  whether of  commission  or  omission,  (i) by such member  except in
circumstances involving actual bad faith, nor (ii) by any other member or by any
officer, agent or employee.

1.11  Compliance with Applicable Law
      ------------------------------

     Notwithstanding any other provision of the 2001 Plan, the Company shall not
be  obligated  to issue any shares of Common  Stock,  or grant any  Option  with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable  Federal and State laws pertaining to the
issuance of  securities  and the Company  may require any stock  certificate  so
issued to bear a legend, may give its transfer agent  instructions  limiting the
transfer  thereof,  and may  take  such  other  steps,  as in its  judgment  are
reasonably required to prevent any such violation.

1.12  Effective Dates
      ---------------

     The 2001 Plan was adopted by the Board  effective  February 23,  2001.  The
2001 Plan shall terminate on February 22, 2011.


Section 2.  OPTION GRANTS
            -------------

2.1  Authority of Committee
     ----------------------

     Subject to the  provisions of the 2001 Plan,  the Committee  shall have the
sole and complete  authority to determine (i) the  Participants  to whom Options
shall be granted;  (ii) the number of shares to be covered by each  Option;  and
(iii) the conditions and limitations,  if any, in addition to those set forth in
Sections 2 and 3 hereof,  applicable  to the  exercise  of an Option,  including
without limitation,  the nature and duration of the restrictions,  if any, to be
imposed upon the sale or other  disposition of shares  acquired upon exercise of
an Option.

     Stock  Options  granted  under the 2001 Plan shall be  non-qualified  stock
options.

     The Committee shall have the authority to grant Options.

2.2  Option Exercise Price
     ---------------------

     The price of stock purchased upon the exercise of Options granted  pursuant
to the 2001 Plan  shall be the Fair  Market  Value  thereof at the time that the
Option is granted.

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     The  purchase  price  is to be  paid in full  in  cash,  certified  or bank
cashier's  check or, at the option of the  Company,  Common  Stock valued at its
Fair Market Value on the date of exercise,  or a combination  thereof,  when the
Option is exercised and stock  certificates  will be delivered only against such
payment.

2.3  Option Grants
     -------------

     Each Option will be subject to the following provisions:

     a. Term of Option
        --------------

     An Option  will be for a term of not more  than ten years  from the date of
grant.


     b. Exercise
        --------

     (i)  By an Employee:

     Subject  to the power of the  Committee  under  Section  1.10(b)  above and
except in the manner  described below upon the death of the optionee,  an Option
may be exercised only in installments as follows: up to one-third of the subject
shares on and after the first anniversary of the date of grant, up to two-thirds
of the subject shares on and after the second  anniversary of the date of grant,
up to all of the subject  shares on and after the third such  anniversary of the
date of the grant of such  Option but in no event later than the  expiration  of
the term of the Option.

     An Option shall be exercisable  during the optionee's  lifetime only by the
optionee and shall not be exercisable by the optionee unless, at all times since
the date of grant and at the time of exercise,  such  optionee is an employee of
or providing  services to the Company,  any parent corporation of the Company or
any  Subsidiary  or  Affiliate,  except  that,  upon  termination  of  all  such
employment or provision of services (other than by death,  Total Disability,  or
by Total Disability followed by death in the circumstances  provided below), the
optionee may exercise an Option at any time within three months  thereafter  but
only to the extent such Option is exercisable on the date of such termination.

     Upon termination of all such employment by Total  Disability,  the optionee
may exercise such Options at any time within three years thereafter, but only to
the extent such Option is exercisable on the date of such termination.

     In the  event of the  death of an  optionee  (i)  while an  employee  of or
providing services to the Company,  any parent corporation of the Company or any
Subsidiary or Affiliate,  or (ii) within three months after  termination  of all
such  employment or provision of services  (other than for Total  Disability) or
(iii) within three years after termination on account of Total Disability of all
such employment or provision of services,  such optionee's  estate or any person
who acquires the right to exercise such option by bequest or  inheritance  or by
reason of the death of the optionee may exercise such  optionee's  Option at any
time  within  the period of three  years from the date of death.  In the case of
clauses (i) and (iii) above,  such Option shall be  exercisable  in full for all
the remaining shares covered thereby, but in the case of clause (ii) such Option
shall be exercisable  only to the extent it was  exercisable on the date of such
termination.

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  (ii) By Persons other than Employees:

     If the optionee is not an employee of the Company or the parent corporation
of the Company or any  Subsidiary or Affiliate,  the vesting of such  optionee's
right to  exercise  his  Options  shall be  established  and  determined  by the
Committee in the Option Agreement covering the Options granted to such optionee.

     Notwithstanding  the  foregoing  provisions  regarding  the  exercise of an
Option in the event of death, Total Disability,  other termination of employment
or  provision  of  services  or  otherwise,  in no  event  shall  an  Option  be
exercisable  in whole or in part  after the  termination  date  provided  in the
Option Agreement.

     c.   Transferability
          ---------------

     An Option granted under the 2001 Plan shall not be  transferable  otherwise
than by will or by the laws of descent and  distribution,  or, as  determined by
the Board or the Committee, to (i) a member or members of the optionee's family,
(ii) a trust,  (iii) a  family  limited  partnership  or (iv) a  similar  estate
planning vehicle primarily for members of the optionee's family.

2.4  Agreements
     ----------

     In  consideration  of any Options  granted to a Participant  under the 2001
Plan,  each such  Participant  shall  enter  into an Option  Agreement  with the
Company  providing,  consistent  with the 2001 Plan, such terms as the Committee
may deem advisable.