Document:

<PAGE>   1
                        AMERICAN ARBITRATION ASSOCIATION

                               NEW YORK, NEW YORK

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HOSPITALITY WORLDWIDE SERVICES, INC.

                  Claimant,

            - against -                                     No. 13 180 00289 99

PRIME HOSPITALITY CORP.,

                  Respondent.

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                  STIPULATION OF SETTLEMENT AND MUTUAL RELEASE

         WHEREAS, Hospitality Worldwide Services, Inc. ("HWS") has commenced
and continued this action (the "Arbitration") against Prime Hospitality Corp.
("Prime"); and

         WHEREAS, Prime has filed its answer to the claims of HWS and asserted
a counterclaim in the Arbitration; and

         WHEREAS, the parties hereto have agreed to compromise and settle all
disputes, claims and causes of action between them to avoid further expense,
inconvenience and burden, and to put to rest all disputes between them,
including all claims which have been, could have been or could be asserted in
this action or elsewhere; and

         IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned
counsel for the parties, as follows:

         1.       Prime will pay HWS a total sum of $300,000 within 5 business
days of Prime's receipt of an executed copy of this Stipulation from HWS.

<PAGE>   2
         2.      MUTUAL RELEASE OF CLAIMS. In exchange for the promises made
herein and other good and valuable consideration:

                  (a)   HWS and its present and former officers, agents,
                        directors, employees, partners, principals,
                        subsidiaries, affiliates, successors and assigns,
                        including, but not limited to, any person or entity
                        acting for on or behalf of, or claiming under, any of
                        the foregoing, and their heirs and representatives
                        (hereinafter "the HWS Releasors"), hereby remise,
                        release and forever discharge Prime and its present and
                        former officers, agents, directors, employees,
                        shareholders, partners, principals, subsidiaries,
                        affiliates, successors and assigns, and any person or
                        entity acting for or on behalf of, or claiming under,
                        any of the foregoing, and their respective heirs and
                        representatives from and against, and waive and
                        relinquish, all causes and rights of action, suits,
                        losses, debts, sums of money, accounts, contracts,
                        controversies, agreements, promises, awards, damages,
                        judgments, claims, liens, liabilities, obligations, and
                        demands whatsoever, whether asserted, unasserted or
                        threatened, whether hidden or concealed, whether
                        conditional or absolute, whether personal,
                        representative or derivative, whether known or unknown,
                        whether suspected or unsuspected, and whether now or
                        previously or hereafter recognized in law or in equity
                        or in contract on in tort, whether liquidated or
                        unliquidated, which the HWS Releasors had or may have
                        against Prime arising out of any act, event, matter,
                        omission, representation, or transaction involving or
                        related to the Arbitration; and

                  (b)   Prime and its present and former officers, agents,
                        directors, employees, shareholders, partners,
                        principals, subsidiaries, affiliates, successors and
                        assigns, and any person or entity acting for or on
                        behalf of, or claiming under, any of the foregoing, and
                        their heirs and representatives (hereinafter "the Prime
                        Releasors"), hereby remise, release and forever
                        discharge HWS and its present and former officers,
                        agents, directors, employees, shareholders, partners,
                        principals, subsidiaries, affiliates, successors and
                        assigns, including, but not limited to, any person or
                        entity acting for or on behalf of, or claiming under,
                        any of the foregoing, and their respective heirs and
                        representatives from and against, and waive and
                        relinquish, all causes and rights of action, suits,
                        losses, debts, sums of money, accounts, contracts,
                        controversies, agreements, promises, awards, damages
                        judgments, claims, liens, liabilities, obligations, and
                        demands whatsoever, whether asserted, unasserted or
                        threatened, whether hidden or concealed, whether
                        conditional or absolute, whether personal,

                                      -2-

<PAGE>   3
                        representative or derivative, whether known or unknown,
                        whether suspected or unsuspected, and whether now or
                        previously or hereafter recognized in law or in equity
                        or in contract or in tort, whether liquidated or
                        unliquidated, which the Prime Releasors had or may have
                        against HWS arising out of any act, event, matter,
                        omission, representation or transaction involving or
                        related to the Arbitration.

            3.          Each of the parties represents and warrants (a) that it
               has full authority to execute this Stipulation and to perform
               all of its obligations set forth herein: (b) that the
               performance of such obligations shall not conflict with any
               other agreement to which it is a party or by which it is bound;
               and (c) that it intends this Stipulation to be legal, valid and
               binding upon it.

            4.          The parties executing this Stipulation, individually or
               in a representative capacity, acknowledge that they have read
               this Stipulation, that they understand the Stipulation, that
               they have been fully advised by counsel and that they intend to
               be bound, either individually or in their representative
               capacity, to the terms and conditions of this Stipulation.

            5.          The parties agree that this Stipulation contains the
               full, complete and entire understanding and agreement between
               them with respect to the matters referred to herein, and
               supersedes and replaces any prior negotiations or agreements
               between the parties, whether written or oral. This Stipulation
               may not be amended, waived, altered, modified, changed,
               rescinded or terminated except by an instrument in writing and
               signed by both parties.

                                      -3-
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            6.          This stipulation shall be governed, interpreted and
               enforced by, and in accordance with, the laws of the State of
               New York, without giving effect to the conflict of laws
               principles thereof.

            7.          This Stipulation may be executed in one or more
               counterparts. All executed counterparts and each of them shall
               be deemed to be one and the same instrument.

Date:       New York, New York
            December 14, 1999

                                    Hospitality Worldwide Services, Inc.

                                    By: /s/ Douglas Parker
                                       ---------------------------------
                                       Douglas Parker
                                       The Chief Executive Officer

                                    Prime Hospitality Corporation

                                    By: /s/ A. F. Petrocelli
                                       ---------------------------------
                                       A. F. Petrocelli
                                      Title: President & Chief Executive
                                             Officer<PAGE>   1
                      HOSPITALITY WORLDWIDE SERVICES, INC.

                             1999 STOCK OPTION PLAN

         1. PURPOSE OF THE PLAN.

         This 1999 Stock Option Plan (the "Plan") is intended as an incentive,
to retain in the employ of and as directors, consultants and advisors to
Hospitality Worldwide Services, Inc., a New York corporation (the "Company") and
any Subsidiary of the Company, within the meaning of Section 424(f) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), persons of
training, experience and ability, to attract new employees, directors,
consultants and advisors whose services are considered valuable, to encourage
the sense of proprietorship and to stimulate the active interest of such persons
in the development and financial success of the Company and its Subsidiaries.

         It is further intended that certain options granted pursuant to the
Plan shall constitute incentive stock options within the meaning of Section 422
of the Code (the "Incentive Options") while certain other options granted
pursuant to the Plan shall be nonqualified stock options (the "Nonqualified
Options"). Incentive Options and Nonqualified Options are hereinafter referred
to collectively as "Options."

         The Company intends that the Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan is generally intended to satisfy
the performance-based compensation exception to the limitation on the Company's
tax deductions imposed by Section 162(m) of the Code. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.

         2. ADMINISTRATION OF THE PLAN.

         The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of two or more directors who are "Non-Employee Directors" (as such term is
defined in Rule 16b-3) and "Outside Directors" (as such term is defined in
Section 162(m) of the Code), which shall serve at the pleasure of the Board. The
Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent any Option does not qualify as an Incentive
Option, it shall constitute a separate Nonqualified Option.

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         Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable to carry into effect the Plan or any
Options. The act or determination of a majority of the Committee shall be the
act or determination of the Committee and any decision reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority at a meeting duly held. Subject to the provisions of
the Plan, any action taken or determination made by the Committee pursuant to
this and the other Sections of the Plan shall be conclusive on all parties.

         In the event that for any reason the Committee is unable to act or if
the Committee at the time of any grant, award or other acquisition under the
Plan of Options or Stock as hereinafter defined does not consist of two or more
directors who are "Non-Employee" and "Outside," or if there shall be no such
Committee, then the Plan shall be administered by the Board, and references
herein to the Committee (except in the proviso to this sentence) shall be deemed
to be references to the Board, and any such grant, award or other acquisition
may be approved or ratified in any other manner contemplated by subparagraph (d)
of Rule 16b-3; PROVIDED, HOWEVER, that options granted to the Company's Chief
Executive Officer or to any of the Company's other four most highly compensated
officers that are intended to qualify as performance-based compensation under
Section 162(m) of the Code may only be granted by the Committee.

         3. DESIGNATION OF OPTIONEES.

         The persons eligible for participation in the Plan as recipients of
Options (the "Optionees") shall include employees, officers and directors of (in
addition to what such director has received or may receive under Section 6 of
the Plan), and consultants and advisors to, the Company or any Subsidiary;
provided that Incentive Options may only be granted to employees of the Company
or any Subsidiary. In selecting Optionees, and in determining the number of
shares to be covered by each Option granted to Optionees, the Committee may
consider the office or position held by the Optionee or the Optionee's
relationship to the Company, the Optionee's degree of responsibility for and
contribution to the growth and success of the Company or any Subsidiary, the
Optionee's length of service, age, promotions, potential and any other factors
that the Committee may consider relevant. An Optionee who has been granted an
Option hereunder may be granted an additional Option or Options, if the
Committee shall so determine.

         4. STOCK RESERVED FOR THE PLAN.

         Subject to adjustment as provided in Section 8 hereof, a total of
2,500,000 shares of the Company's Common Stock, $0.01 par value per share (the
"Stock"), shall be subject to the Plan. The maximum number of shares of Stock
that may be subject to options granted under the Plan to any individual in any
calendar year shall not exceed 750,000, and the method of counting such shares
shall conform to any requirements applicable to performance-based compensation
under Section 162(m) of the Code. The shares of Stock subject to the Plan shall
consist of unissued shares

                                       -2-

<PAGE>   3

or previously issued shares held by any Subsidiary of the Company, and such
amount of shares of Stock shall be and is hereby reserved for such purpose. Any
of such shares of Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be canceled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore subject to such Option may be subject to future Options under the
Plan, except where such reissuance is inconsistent with the provisions of
Section 162(m) of the Code.

         5. TERMS AND CONDITIONS OF OPTIONS.

         Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

                  (a) OPTION PRICE. The purchase price of each share of Stock
purchasable pursuant to an Incentive Option shall be determined by the Committee
at the time of grant, but shall not be less than 100% of the Fair Market Value
(as defined below) of such share of Stock on the date the Option is granted;
PROVIDED, HOWEVER, that with respect to an Optionee who, at the time an
Incentive Option is granted, owns (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company or of any Subsidiary, the purchase price per share of Stock shall
be at least 110% of the Fair Market Value per share of Stock on the date of
grant. The purchase price of each share of Stock purchasable under a
Nonqualified Option shall not be less than 75% of the Fair Market Value of such
share of Stock on the date the Option is granted; PROVIDED, HOWEVER, that if an
Option granted to the Company's Chief Executive Officer or to any of the
Company's other four most highly compensated officers is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the exercise
price of such Option shall not be less than 100% of the Fair Market Value (as
such term is defined below) of such share of Stock on the date the Option is
granted. The exercise price for each Option shall be subject to adjustment as
provided in Section 8 below. "Fair Market Value" means the closing price of
publicly traded shares of Stock on the principal securities exchange on which
shares of Stock are listed (if the shares of Stock are so listed), or on the
NASDAQ Stock Market (if the shares of Stock are regularly quoted on the NASDAQ
Stock Market), or, if not so listed or regularly quoted, the mean between the
closing bid and asked prices of publicly traded shares of Stock in the
over-the-counter market, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company, or as determined by the Committee in a manner consistent with
the provisions of the Code. In no event shall the purchase price of a share of
Stock be less than the minimum price permitted under the rules and policies of
any national securities exchange on which the shares of Stock are listed.
Notwithstanding anything to the contrary in this Section 5(a), the purchase
price of each share of Stock purchasable pursuant to an Option granted to a
director under Section 6 of the Plan shall be the Fair Market Value of such
share of Stock on the date such Option is granted.

                                       -3-

<PAGE>   4

                  (b) OPTION TERM. The term of each Option shall be fixed by the
Committee, however, no Option shall be exercisable more than ten years after the
date such Option is granted. Notwithstanding anything to the contrary in this
Section 5(b), in the case of an Incentive Option granted to an Optionee who, at
the time such Incentive Option is granted, owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, no such Option shall be
exercisable more than five years after the date such Option is granted; and in
the case of an Option granted to a director under Section 6 of the Plan, the
term of such Option shall be five years from the date of grant of such Option,
subject to earlier termination as provided in the Plan.

                  (c) EXERCISABILITY. Subject to Section 5(j) hereof, Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant;
however, Options granted to directors under Section 6 of the Plan shall only be
exercisable in three equal installments commencing on the first anniversary of
the grant of such Option. Upon a Change of Control, the Committee may declare
all options granted under the Plan and then outstanding to be exercisable in
full at such time or times, and under such conditions, as the Committee shall
determine. A "Change of Control" shall mean: (i) the sale of all or
substantially all of the assets of the Company in one or a series of related
transactions to any person or entity or group of persons or entities acting in
concert or (ii) the merger or consolidation of the Company with or into another
corporation with the effect that the then existing stockholders of the company
hold less than 50% of the combined voting power of the then outstanding
securities of the surviving corporation of such merger or the corporation
resulting from such consolidation or (iii) the acquisition by any person or
entity or group of persons or entities acting in concert of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) of 50% or more of the outstanding shares of the voting
stock of the Company or (iv) the adoption of a plan relating to the liquidation
or dissolution of the Company.

                  (d) METHOD OF EXERCISE. Options may be exercised, to the
extent then exercisable, in whole or in part at any time during the term of the
Option, by giving written notice to the Company specifying the number of shares
of Stock to be purchased, accompanied by payment in full of the purchase price,
in cash, or by check or such other instrument as may be acceptable to the
Committee. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may be made at the election of the Optionee
(i) in the form of Stock owned by the Optionee (based on the Fair Market Value
of the Stock on the trading day before the Option is exercised) which is not the
subject of any pledge or security interest, (ii) in the form of shares of Stock
withheld by the Company from the shares of Stock otherwise to be received with
such withheld shares of Stock having a Fair Market Value on the date of exercise
equal to the exercise price of the Option, or (iii) by a combination of the
foregoing, provided that the combined value of all cash and cash equivalents and
the Fair Market Value of any shares surrendered to the Company is at least equal
to such exercise price and except with respect to (ii) above, such method of
payment will not cause a disqualifying disposition of all or a portion of the
Stock received upon exercise of an Incentive Option. An Optionee shall have the
right to dividends and other rights of a stockholder with respect to shares of
Stock purchased upon exercise of an Option at such time as the Optionee has
given written notice of exercise and has paid in full for such shares and (ii)
has satisfied such conditions that may be imposed by the Company with respect to
the withholding of taxes.

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                  (e) NON-TRANSFERABILITY OF OPTIONS. Options are not
transferable and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order. The Committee, in its sole discretion, may permit a transfer of a
Nonqualified Option to (i) a trust for the benefit of the Optionee, or (ii) a
member of the Optionee's immediate family (or a trust for his or her benefit).
Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject
to execution, attachment or similar process, any Option contrary to the
provisions hereof shall be void and ineffective and shall give no right to the
purported transferee.

                  (f) DEATH. Unless otherwise determined by the Committee at the
time of grant, if any Optionee's employment with, retention by or service to the
Company or any Subsidiary (including that as a director of the Company)
terminates by reason of death, the Option may thereafter be exercised, to the
extent then exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the estate or by
the legatee of the Optionee under the will of the Optionee, for a period of one
year after the date of such death or until the expiration of the stated term of
such Option as provided under the Plan, whichever period is shorter.
Notwithstanding anything to the contrary in this Section 5(f), in the case of
the death of a director holding Options granted under Section 6 of the Plan,
such Options shall become immediately exercisable.

                  (g) DISABILITY. Unless otherwise determined by the Committee
at the time of grant, if any Optionee's employment with, retention by or service
to the Company or any Subsidiary (including that as a director of the Company)
terminates by reason of total and permanent disability, any Option held by such
Optionee may thereafter be exercised, to the extent such Option was exercisable
at the time of termination due to such disability (or on such accelerated basis
as the Committee shall determine at or after grant), but may not be exercised
after 90 days of the date of such termination of employment or service or the
expiration of the stated term of such Option, whichever period is shorter;
PROVIDED, HOWEVER, that, if the Optionee dies within such 90-day period, any
unexercised Option held by such Optionee shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of one year
after the date of such death or for the stated term of such Option, whichever
period is shorter. Notwithstanding anything to the contrary in this Section
5(g), in the case of termination by reason of disability of a director holding
Options granted under Section 6 of the Plan, such Options may not be exercised
after one year of the date of such termination or the expiration of the stated
term of the Option, whichever period is shorter, PROVIDED, HOWEVER, that if such
a director dies within such one-year period, any unexercised Option held by such
director shall thereafter be exercisable to the extent to which it is
exercisable at the time of the death of such director for a period of one year
after the date of such death or for the stated term of such Option, whichever
period is shorter.

                  (h) RETIREMENT. Unless otherwise determined by the Committee
at the time of grant, if any Optionee's employment with, retention by or service
to the Company or any Subsidiary terminates by reason of Normal or Early
Retirement (as such terms are defined below), any Option held by such Optionee
may thereafter be exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall determine at or
after grant), but may

                                       -5-

<PAGE>   6

not be exercised after 90 days after the date of such termination of employment
or service or the expiration of the stated term of such Option, whichever period
is shorter; provided, however, that, if the Optionee dies within such 90-day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
a period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.

                  For purposes of this Section 5(h) "Normal Retirement" shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and "Early
Retirement" shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company
or Subsidiary pension plan or if no such pension plan, age 55.

                  (i) OTHER TERMINATION. Unless otherwise determined by the
Committee at the time of grant, if any Optionee's employment with, retention by
or service to the Company or any Subsidiary (including that as a director of the
Company) terminates for any reason other than death, disability, Normal
Retirement or Early Retirement, the Option shall thereupon terminate, except
that the portion of any Option that was exercisable on the date of such
termination of employment or service may be exercised for the lesser of 90 days
after the date of termination or the balance of such Option's term if the
Optionee's employment or service with the Company or any Subsidiary is
terminated by the Company or such Subsidiary without cause (the determination as
to whether termination was for cause to be made by the Committee). The transfer
of an Optionee from the employ of or service to the Company to the employ of or
service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall
not be deemed to constitute a termination of employment or service for purposes
of the Plan.

                  (j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair
Market Value, determined as of the date the Incentive Option is granted, of
Stock for which Incentive Options are exercisable for the first time by any
Optionee during any calendar year under the Plan (and/or any other stock option
plans of the Company or any Subsidiary) shall not exceed $100,000.

                  (k) TRANSFER OF INCENTIVE OPTION SHARES. The stock option
agreement evidencing an Incentive Option granted under this Plan shall provide
that if the Optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any share or shares of
Stock issued to him upon exercise of an Incentive Option granted under the Plan
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Incentive Option, he shall, within 10 days after such disposition, notify
the Company thereof and immediately deliver to the Company any amount of United
States federal, state and local income tax withholding required by law.

                                       -6-

<PAGE>   7

         6. GRANTS TO NON-EMPLOYEE DIRECTORS.

         Each Non-Employee Director who becomes a director of the Company after
December 15, 1999 shall automatically receive a grant of an Option to purchase
15,000 shares of Stock on the date that such Non-Employee director becomes a
director. Thereafter, to the extent that shares of Stock remain available for
the grant of Options under the Plan, each year on April 1, commencing April 1,
2000, each Non-Employee Director shall be granted an Option to purchase 10,000
shares of Stock

         7. TERM OF PLAN.

         No Option shall be granted pursuant to the Plan on or after November 4,
2009, but Options theretofore granted may extend beyond that date.

         8. CAPITAL CHANGE OF THE COMPANY.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.

         9. PURCHASE FOR INVESTMENT.

         Unless the Options and shares covered by the Plan have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he or she is acquiring the shares for his or her
own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.

         10. TAXES.

         The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes or any other tax matters.

                                       -7-

<PAGE>   8

         11. EFFECTIVE DATE OF PLAN.

         The Plan shall be effective on November 4, 1999, provided however that
the Plan shall subsequently be approved by majority vote of the Company's
stockholders not later than November 3, 2000.

         12. AMENDMENT AND TERMINATION.

         The Board may amend, suspend or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without the Optionee's consent, and except that no
amendment shall be made which, without the approval of the stockholders of the
Company would:

                  (a) materially increase the number of shares that may be
issued under the Plan, except as is provided in Section 8;

                  (b) materially increase the benefits accruing to the Optionees
under the Plan;

                  (c) materially modify the requirements as to eligibility for
participation in the Plan;

                  (d) decrease the exercise price of an Incentive Option to less
than 100% of the Fair Market Value per share of Stock on the date of grant
thereof, decrease the exercise price of a Nonqualified Option to less than 75%
of the Fair Market Value per share of Stock on the date of grant thereof; or
decrease the exercise price of an Option granted to a director under Section 6
of the Plan, or

                  (e) extend the term of any Option beyond that provided for in
Section 5(b).

         The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without the Optionee's consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.

         13. GOVERNMENT REGULATIONS.

         The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, national securities exchanges and interdealer
quotation systems as may be required.

                                       -8-

<PAGE>   9

         14. GENERAL PROVISIONS.

                  (a) CERTIFICATES. All certificates for shares of Stock
delivered under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.

                  (b) EMPLOYMENT MATTERS. The adoption of the Plan shall not
confer upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.

                  (c) LIMITATION OF LIABILITY. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

                  (d) REGISTRATION OF STOCK. Notwithstanding any other provision
in the Plan, no Option may be exercised unless and until the Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration in the United States. The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option, although the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company's transfer agent.

                                HOSPITALITY WORLDWIDE SERVICES, INC.
                                November 4, 1999

                                       -9-

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