Document:

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                                                                   Exhibit 10.12

                               Asta Funding, Inc.
                           Form 10-QSB March 31, 2002

         THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 21st day of
May, 2002 by and between ASTA FUNDING, INC., a Delaware corporation, with
offices at 210 Sylvan Ave., Englewood Cliffs, NJ 07632 (the "Company") and
ARTHUR STERN, an individual residing at 3333 Henry Hudson Parkway, Riverdale,
New York 10463 (the "Employee")

                               W I T N E S E T H:

         WHEREAS, the parties desire to enter this Agreement to set forth the
terms of the Employee's continued employment by the Company.

         NOW, THEREFORE, in consideration of the mutual premises and covenants
set forth herein and for other good and value consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, the Company and
the Employee mutually agree as follows:

         1. Employment Duties.

            (a) Employment. The Company agrees to continue to employ the
                Employee, and the Employee agrees to accept continued employment
                with the Company, on the terms and conditions set forth in this
                Agreement.

            (b) Scope of Duties. During the Employment Period (as defined
                herein), the Employee shall devote his business time, attention
                and energy to the business, and to seeking improvement in the
                profitability, of the Company. During the Employment Period, the
                Employee shall serve as Executive Vice President of the Company
                and its subsidiaries and shall have the authority to perform and
                shall perform all of the duties that are customary for the
                office of Executive Vice President of the Company, subject at
                all times to the control and direction of the President and the
                Board of Directors of the Company, and shall perform such
                services as typically are provided by the Executive Vice
                President of a corporation and such other services consistent
                therewith as shall be assigned to him from time to time by the
                President or the Board of Directors of the Company. Employee
                shall also continue to serve as Chairman of the Board of
                Directors of the Company for such period as he continues to be
                duly elected to such position by the shareholders of the
                Company.

            (c) Service. During the Employment Period, the Employee shall
                perform his duties in a diligent manner; shall not engage in
                activities which are or could be detrimental to the existing or
                future business of the Company and its subsidiaries; and shall
                observe and conform to all laws, customs, and standards of
                business ethics and honest business practices. The Employee
                shall be requested, and does hereby agree, to be a full time
                employee of the Company during the Employment Period. During the
                Employment Period, the Employee shall not engage in any other
                business activity which, in the reasonable judgement of the
                Company's Board of Directors, conflicts with the duties of the
                Employee hereunder, whether or not such activity is pursued for
                gain, profit or other pecuniary advantage; provided, however,
                that it is understood that this Section 1(c) shall not preclude
                the Employee from making passive investments in other companies
                or from serving as Vice President of Asta Group, Inc.

            (d) Professional Standards. Recognizing and acknowledging that it is
                essential for the protection and enhancement of the name and
                business of the Company and its subsidiaries and the good will
                pertaining thereto, the Employee shall perform his duties under
                this Agreement professionally and in accordance with the
                standards established by the Company from time to time; and the
                Employee shall not act, and shall refrain from acting, in any
                manner that could harm or tarnish the name, business or income
                of the Company and its subsidiaries or the good will pertaining
                thereto.

         2. Compensation.

            (a) Base Salary. For all services rendered by the Employee during
                the Employment Period, the Company shall pay the Employee a base
                salary ("Base Salary") in the amount of $225,000 on an
                annualized basis, payable in accordance with the Company's
                customary payment policies and periods. The Employee's Base
                Salary may be increased as determined by the Board of Directors
                of the Company in its sole discretion.

            (b) Bonuses. During the Employment Period, the Employee shall be
                eligible to receive bonuses as determined by the Board of
                Directors of the Company in its sole discretion.

            (c) Stock Options. During the Employment Period, the Employee shall
                be eligible to receive stock options as determined by the Board
                of Directors of the Company in its sole discretion.

            (d) Benefits. During the Employment Period, the Employee and/or the
                Employee's dependents, as the case may be, shall be entitled to
                participate (subject to eligibility requirements) in the
                employee benefit plans generally available to other similarly
                situated employees of the Company and the Employee shall be
                entitled to the fringe benefits and perquisites made generally
                available to other similarly situated employees of the Company.
                The Company reserves the right to modify, change or terminate
                its benefit plans, fringe benefits and perquisite plans and
                programs from time to time in the discretion of the Board of
                Directors of the Company.

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            (e) Vacation. During the Employment Period, the Employee shall be
                entitled to an annual vacation of fifteen (15) working days for
                each full calendar year of employment hereunder, which may be
                taken all at once or from time to time; provided, however, that:
                (i) the Employee shall schedule such vacation time so as to
                mitigate the adverse effects to the Company of the Employee's
                absence; (ii) the Employee shall give the Company at least
                thirty days (30) days notice of consecutive vacation days in
                excess of five (5) to be taken by the Employee at any one time;
                and (iii) up to one (1) week unused vacation time during the
                calendar year may be carried over and used by the Employee in
                the following calendar year.

         3. Non-Competition.

            (a) In view of the Employee's knowledge of the trade secrets and
                other proprietary information relating to the business of the
                Company, its subsidiaries and their respective customers which
                the Employee has heretofore obtained and is expected to obtain
                during the period the Employee is employed under this Agreement
                (the "Employment Period"), and in consideration of the
                Employee's employment hereunder, the Employee agrees: (i) that
                he will not during the Employment Period Participate In (as such
                term hereinafter defined) any other business or organization if
                such business or organization now is or shall then be competing
                with or be of a nature similar to the business of the Company or
                its subsidiaries; and (ii) (A) for a period of twelve (12)
                months after the Termination Date (as defined in Section 6) due
                to a termination of this Agreement for Cause (as defined herein)
                or (B) for such period as the Company shall continue to pay to
                the Employee his Base Salary and health insurance benefits in
                accordance with Section 8(b) after a termination of the
                Employee's employment Without Cause (as defined below) or for
                Disability (as defined below), he will not, in any geographic
                area in which the Company or any of its subsidiaries does
                business as of the Termination Date, compete with or be engaged
                in the same business as, or Participate In, any other business
                or organization which competes with or is engaged in the same
                business as the Company or its subsidiaries with respect to any
                service offered or activity engaged in up to the Termination
                Date, except that in each case the provisions of this Section 3
                will not be deemed breached merely because the Employee owns not
                more than 2% of the outstanding common stock of a corporation,
                if, at the time of its acquisition by the Employee, such stock
                is listed on a national securities exchange, is reported on
                NASDAQ, or is regularly traded in the over-the-counter market by
                a member of a national securities exchange.

            (b) The term "Participate In" shall mean: "directly or indirectly,
                for his own benefit or for the benefit of any other enterprise,
                own, manage, operate, control or loan money to (provided that an
                investment in debt instruments issued pursuant to an effective
                registration statement under the Securities Act of 1993, as
                amended shall not be deemed to be a loan), or participate in the
                ownership, management, operation, or control of, or be connected
                as a director, officer, employee, partner, agent, or otherwise
                with, or acquiesce in the use of his name in."

            (c) During the Employment Period and, in the case of the termination
                of the Employee's employment for Cause only, for a period one
                (1) year after the Termination Date, the Employee will not
                directly or indirectly:

                (i) Reveal the name of, solicit, use or interfere with, or
                    endeavor to entice away from the Company (or any of its
                    subsidiaries) any of their customers, vendors, or employees;
                    or

                (ii) Employ or engage any person or entity who or which, at any
                    time up to the Termination Date, was an employee or agent of
                    the Company or its subsidiaries without the prior written
                    consent of the Company.

            (d) The Employee agrees that the provisions of this Section 3 and
                Sections 4 and 5 are necessary and reasonable to protect the
                Company in the conduct of its business. If any restriction
                contained in this Section 3 or in Sections 4 or 5 shall be
                deemed by a court of competent jurisdiction to be invalid,
                illegal, or unenforceable by reason of the extent, duration, or
                geographical scope thereof, or otherwise, then the court making
                such determination shall have the right to reduce such extent,
                duration, geographical scope, or other provisions hereof, and in
                its reduced from such restriction shall then be enforceable in
                the manner contemplated hereby.

         4. Confidential Information. All confidential information which the
Employee may now possess, may obtain during or after the Employment Period, or
may create prior to the end of the Employment Period relating to the business of
the Company or its subsidiaries or of any of their respective customers or
vendors shall not be published, disclosed, or made accessible by him to any
other person, firm, corporation or entity, either during or after the Employment
Period or used by him during or after the Employment Period (except in the
business and for the benefit of the Company or its subsidiaries), without the
prior written consent of the Company. The Employee shall return all tangible
evidence of such confidential information to the Company prior to or at the end
of the Employment Period.

         5. Rights of the Company.

            (a) Any interest in copyrights, copyrightable works, developments,
                discoveries, designs and processes, patents, patent
                applications, inventions and technological innovations
                (collectively, "Inventions") which the Employee (i) owns,
                conceives of or develops, alone or with others, (A) relating to
                the business of the Company or its subsidiaries or any business
                in which the Company (or its subsidiaries) contemplates being
                engaged or (B) which anticipate research or development of the
                Company or its subsidiaries, or (ii) conceives of or develops
                utilizing the time, material, facilities or information of the
                Company or its subsidiaries, in either case during the
                Employment Period, shall belong to the Company.

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            (b) As soon as the Employee owns, conceives of or develops any
                Invention, the Employee shall immediately communicate such fact
                in writing to the Board of Directors of the Company. Upon the
                request of the Company, the Employee shall, without further
                compensation but at the Company's expense (subject to clause (i)
                below) execute all such assignments and other documents
                (including applications for trademarks, copyrights and patents
                and assignments thereof) and take all such other action as the
                Company may reasonably request, including obtaining spousal
                consents or waivers, (i) to vest in the Company all right, title
                and interest of the Employee in and to such Inventions, free and
                clear of all liens, mortgages, security interests, pledges,
                charges and encumbrances ( the Employee to take such action, at
                his expense, as is necessary to remove all such liens) and (ii)
                if patentable or copyrightable, to obtain patents or copyrights
                (including extensions and renewals) therefor in any and all
                jurisdictions in and outside the United States in the name of
                the Company or in such other names(s) as the Company shall
                determine.

         6. Employment Period. The Employment Period shall commence on the date
of this Agreement and shall continue for a three year period ending on May 20,
2005, or such earlier date on which any of the following events occurs (the
"Termination Date"):

            (a) the death of the Employee;

            (b) the voluntary resignation of the Employee;

            (c) the termination by the Board of Directors of the Employee's
                employment for Disability (as hereinafter defined);

            (d) the termination by the Board of Directors of the Employee's
                employment for Cause (as hereinafter defined); or

            (e) the termination by the Board of Directors of the Employee's
                employment Without Cause (as hereafter defined)

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         7. Definitions Relating to Termination

            (a)   Disability

                  The term "Disability" shall mean any physical or mental
                  condition of the Employee which, in the reasonable discretion
                  of the Board of Directors, after consultation with the
                  Employee's physician, materially impairs the Employee's
                  ability to render the services to be performed by him
                  hereunder for a period of 180 consecutive days or for at least
                  240 days in any consecutive 360 day period.

            (b)   Cause

                  The term "Cause" shall mean the good faith finding by the
                  Board Directors of the Company upon resolution adopted by it
                  of the existence of any one of the following:

            (i)   The Employee's failure or refusal to perform specific written
                  directives consistent with his duties and responsibilities as
                  set forth in Section 1 hereof, which lack of performance is
                  not cured within 15 days after written notice thereof or 30
                  days if at the 15th day and thereafter the Employee is
                  diligently attempting to cure;

            (ii)  Conviction of a felony or of any crime involving moral
                  turpitude or fraud;

            (iii) The commission by the Employee of any willful or intentional
                  act which the Employee reasonably should have contemplated
                  would  have the effect of injuring the reputation, financial
                  condition, business or business relationships of the Company
                  (and its subsidiaries, individually or taken as a whole)
                  and/or the Employee; or

            (iv)  Any material breach (not covered by any of the clauses (i)
                  through (iii) hereof) of any of the provisions of this
                  Agreement, if such breach is not cured within 30 days after
                  written notice thereof to by the Board of Directors.

            (c)   Without Cause

                  The term "Without Cause" shall mean a determination of the
                  Board of Directors to terminate the Employee for any reason
                  other than death, Disability or for Cause.

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         8. Effect of Termination

            (a) If the Employee's employment is terminated by the Company for
                Cause or the Employment Period expires, then the Employee shall
                be paid the Employee's Base Salary and other benefits hereunder
                through the Termination Date and the Company shall have no
                further obligations to the Employee.

            (b) If the Employee's employment is terminated Without Cause, for
                Disability or upon the Employee's death, then (i) the Employee
                or his estate, as applicable, shall continue to be paid the
                Employee's Base Salary through May 20, 2005, and (ii) the
                Company shall continue to provide to the Employee and his
                eligible dependents health insurance coverage through May 20,
                2005.

            (c) Irrespective of the basis for the termination of the Employee's
                employment with the Company, all benefits (including fringe
                benefits), if any, due the Employee hereunder shall cease as of
                the Termination Date, other than (i) COBRA rights which shall
                continue to the extent provided thereunder, (ii) Base Salary, if
                applicable, to the extent provided in Section 8(b), (iii) health
                insurance coverage, if applicable, to the extent provided in
                Section 8(b), and (iv) rights under any stock options the
                Employee may have been granted.

         9. Arbitration. Except with respect to the Company's right to seek
injunctive or equitable relief, any controversy, dispute, or claim between the
Employee and the Company arising out of or relating to this Agreement, the
Employee's employment by the Company, the cessation of the Employee's employment
with the Company, or any matter relating to the foregoing, shall be submitted to
and settled by arbitration in the State of New Jersey, in accordance with the
then current rules of the American Arbitration Association or any successor
thereto. Within ten (10) days after a request for arbitration by one party to
the other, the Company and the Employee shall each select one arbitrator. Within
ten (10) days after the second of such arbitrators has been selected, the two
arbitrators thereby selected shall choose a third arbitrator who shall be the
Chairman of the panel. If the first two arbitrators selected cannot agree upon a
third arbitrator, the American Arbitration Association shall name the third
arbitrator. The arbitrators may grant injunctions or other relief in such
dispute or controversy. In the arbitration, the parties shall be entitled to
pre-hearing discovery. The decision of the arbitrators shall be final,
conclusive and binding on the parties to the arbitration. In connection with
such arbitration and the enforcement of any award rendered as a result thereof,
the parties hereto irrevocably consent to the personal jurisdiction of the
federal and state courts located in New Jersey, and further consent that any
process or notice of motion or other application to the said Courts or Judges
thereof may be served inside or outside the State of New Jersey by registered
mail or personal service, provided a time period of at least twenty (20) days
for appearance is allowed. The Company shall not be required to seek injunctive
relief from the arbitrators but may seek such injunctive relief in a court
proceeding. The terms of this Section 9 shall apply to all disputes,
controversies and claims, including, without limitation, any rights or claims
the Employee may have under the Age Discrimination in Employment Act of 1967,
Title VII of the Civil Rights Act of 1954, the Equal Pay Act, or any other
federal, state, or local laws, rules or regulations relating to employment
discrimination or otherwise in any way pertaining to the Employee's employment
or termination thereof. This Section 9 shall survive the termination (by
expiration or otherwise) of this Agreement.

        10. Modification. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.

        11. Notices. Any notice or communication to be given hereunder by any
party to the other shall be in writing and shall be deemed to have been given
when personally delivered or transmitted by facsimile, or three (3) days after
the date sent by registered or certified mail, postage prepaid, as follows:

                (a) if to the Company, addressed to it at:

                    210 Sylvan Avenue
                    Englewood Cliffs, NJ  07632
                    Attention: Chairman

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                with copies to:

                    Lowenstein Sandler P.C.
                    65 Livingston Avenue
                    Roseland, NJ  07068
                    Attn: John D. Schupper, Esq.

                (b) If to the Employee, addressed to him at:

                    3333 Henry Hudson Parkway
                    Riverdale, New York  10463

                    or to such other persons or addresses as may be designated
                    in writing by the party to receive such notice.

        12. Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
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        13. Assignment. The Employee's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise. The Company may
assign its rights and obligations hereunder to any of its subsidiaries or
affiliates. The Company will provide notice of such assignment to the Employee.

        14. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure of the benefit of the Employee and his heirs and personal
representatives, and shall be binding upon the Company and inure to the benefit
of the Company, its subsidiaries and affiliates and their respective successors
and assigns.

        16. Headings. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

        17. Injunctive Relief. As it would be very difficult to measure the
damages, which would result to the Company from a breach of any of the covenants
contained in Section 3, 4 or 5 of this Agreement, in the event of such a breach,
the Company shall have the right to have such covenants specifically enforced by
a court of competent jurisdiction. The Employee hereby recognizes and
acknowledges that irreparable injury or damage shall result to the business of
the Company in the event of a breach or threatened breach by the Employee of the
terms and provisions of Section 3, 4 or 5. Therefore, the Employee agrees that
the Company shall be entitled to an injunction-restraining the Employee from
engaging in any activity constituting such breach or threatened breach. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to the Company at law or in equity for such breach or
threatened breach, including, but not limited to, recovery of damages from the
Employee and, if the Employee is still employed by the Company, terminating the
employment of Employee in accordance with the terms and provisions hereof.

        18. Governing Law. Any and all claims, controversies or actions
arising out of this Agreement or the Employee's employment with the Company,
including, without limitation, tort claims, shall be governed by and construed
in accordance with the laws of the State of New Jersey, without reference to
choice of law principles thereof.

        19. Attorney's Fees. If a legal action or other proceeding is brought
for enforcement of this Agreement because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees and cost incurred, in addition to any other relief to
which they may be entitled.

        20. Severability. The provisions of this Agreement are severable and
should any provision hereof be void, voidable or unenforceable under any
applicable law, such void, voidable or unenforceable provision shall not affect
or invalidate any other provision of this Agreement, which shall continue to
govern the relative rights and duties of the parties as though the void,
voidable or unenforceable provision were not a part hereof.

        21. Survival. All warranties, representations, indemnities, covenants
and other agreements of the parties hereto shall survive the execution, delivery
and termination of this Agreement and shall, notwithstanding the execution,
delivery and termination of this Agreement, continue in full force and effect.

        22. Acknowledgment. The Employee specifically acknowledges that: the
Employee has read and understands all of the terms of this Agreement; in
executing this Agreement, the Employee does not rely on any inducements,
agreements, promises or representations of the Company or any agent of the
Company, other than the terms and conditions specifically set forth in this
Agreement; the Employee has had an opportunity to consult with independent
counsel with respect to the execution of this Agreement; and that the Employee
has made such investigation of the facts pertaining to this Agreement and of all
the matters pertaining hereto as he deems necessary.

            IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement on the day and year first above written.

                                           ASTA FUNDING, INC.

                                           By: /S/ Gary Stern
                                               --------------------

                                               /S/ Arthur Stern
                                               --------------------
                                                 Arthur Stern<PAGE>

                                                                    EXHIBIT 10.1

                                  iVILLAGE INC.
                  AMENDED 2001 NON-QUALIFIED STOCK OPTION PLAN
                          EFFECTIVE AS OF JULY 18, 2002

1.    Purposes of the Plan.

      The purposes of this Plan are:

                  (1)   to attract and retain the best available personnel for
                        positions of substantial responsibility,

                  (2)   to provide additional incentive to certain Employees and
                        Consultants, and

                  (3)   to promote the success of the Company's business.

      All Options granted under the Plan shall be Nonstatutory Stock Options.

2.    Definitions.

      As used herein, the following definitions shall apply:

      (a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

      (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

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

      (d) "Code" means the Internal Revenue Code of 1986, as amended.

      (e) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

      (f) "Common Stock" means the common stock of the Company.

      (g) "Company" means iVillage Inc., a Delaware corporation.

      (h) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.

      (i) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

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<PAGE>

      (j) "Employee" means any person employed by the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary, or any successor.

      (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      (l) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

          (i) If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation The Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

          (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

          (iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.

      (m) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

      (n) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.

      (o) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.

      (p) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

      (q) "Option" means a Nonstatutory Stock Option granted pursuant to the
Plan.

      (r) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

      (s) "Option Exchange Program" means a program whereby outstanding Options
are surrendered in exchange for Options with a lower exercise price.

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<PAGE>

      (t) "Optioned Stock" means the Common Stock subject to an Option.

      (u) "Optionee" means the holder of an outstanding Option granted under the
Plan.

      (v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

      (w) "Plan" means this iVillage Inc. Amended 2001 Non-Qualified Stock
Option Plan.

      (x) "Section 16(b)" means Section 16(b) of the Exchange Act.

      (y) "Service Provider" means an Employee or Consultant.

      (z) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 12 of the Plan.

      (aa) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3.    Stock Subject to the Plan.

      Subject to the provisions of Section 12 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan shall be
2,000,000.

      If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

4.    Administration of the Plan.

      (a) Procedure. The Plan shall be administered by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy Applicable Laws.

      (b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

          (i) to determine the Fair Market Value;

          (ii) to select the Service Providers to whom Options may be granted
hereunder;

          (iii) to determine the number of shares of Common Stock to be covered
by each Option granted hereunder;

          (iv) to approve forms of agreement for use under the Plan;

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<PAGE>

          (v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

          (vi) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined since the date the Option was granted;

          (vii) to institute an Option Exchange Program;

          (viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

          (ix) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans established for
the purpose of qualifying for preferred tax treatment under foreign tax laws;

          (x) to modify or amend each Option (subject to Section 14(c) of the
Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;

          (xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

          (xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously granted by the
Administrator;

          (xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.

      (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.

                                       4
<PAGE>

5.    Eligibility.

      Options may be granted only to Service Providers who are not, at the time
of grant, "directors" within the meaning of the rules of The Nasdaq Stock
Market, unless such directors then are also Employees of the Company; provided,
however, that no Options may be granted to "officers" of the Company (within the
meaning of the rules of The Nasdaq Stock Market) if, immediately after giving
effect to the grant of such Options to an officer or officers, (i) the
percentage of then outstanding options granted to officers exceeds the
percentage of then outstanding options granted to Employees who are not officers
of the Company or (ii) the percentage of options granted to all current and
former officers since adoption of the Plan exceeds the percentage of Options
granted to all current and former Employees who are not officers of the Company
since the adoption of the Plan.

6.    Limitations.

          (a) Each Option shall be designated in the Option Agreement as a
Nonstatutory Stock Option.

          (b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

7.    Term of Plan. Subject to Section 18 of the Plan, the Plan shall become
effective on June 18, 2001. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 14 of the Plan. Term of Option.

8.    The term of each Option shall be stated in the Option Agreement.

9.    Option Exercise Price and Consideration.

      (a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator.

      (b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions that must be satisfied before the Option may
be exercised.

      (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:

          (i) cash;

          (ii) check;

          (iii) promissory note;

          (iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

                                       5
<PAGE>

          (v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;

          (vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

          (vii) any combination of the foregoing methods of payment; or

          (viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.

10.   Exercise of Option.

      (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.

      An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.

      Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

      (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

                                       6
<PAGE>

      (c) Disability of Optionee. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

      (d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's death. If, at the
time of death, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall immediately revert to
the Plan. The Option may be exercised by the executor or administrator of the
Optionee's estate or, if none, by the person(s) entitled to exercise the Option
under the Optionee's will or the laws of descent or distribution. If the Option
is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

      (e) Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

11.   Non-Transferability of Options.

      Unless determined otherwise by the Administrator, an Option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option transferable, such Option shall contain such
additional terms and conditions as the Administrator deems appropriate.

                                       7
<PAGE>

12.   Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
      Sale.

      (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

      (b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

      (c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

                                       8
<PAGE>

13.   Date of Grant.

      The date of grant of an Option shall be, for all purposes, the date on
which the Administrator makes the determination granting such Option, or such
other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.

14.   Amendment and Termination of the Plan.

      (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

      (b) Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

      (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

15.   Conditions Upon Issuance of Shares.

      (a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

      (b) Investment Representations. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

16.   Inability to Obtain Authority.

      The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

                                       9
<PAGE>

17.   Reservation of Shares.

      The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

18.   Stockholder Approval.

      The Plan shall not be subject to approval by the stockholders of the
Company.

                                       10

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