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                                                                 Exhibit 10.16

July 8, 2005

Thomas Rende, CFO
Movie Star, Inc.
1115 Broadway
New York, NY  10010

Dear Sir:

         We are pleased to advise you that we have established an uncommitted
discretionary line of credit of up to an aggregate amount of $20,000,000
outstanding at any one time, for Movie Star, Inc. (the "Company") which line may
be used by the Company for working capital and for the issuance of documentary
Letters of Credit in accordance with the terms and conditions set forth herein.
(the "Facility"). This Facility is subject to the Company's compliance with the
cash flows presented by the Company to us and approved by us in our discretion
in the attached Exhibit A (the "Cash Flows"). You will note that in the Cash
Flows, a line item is reflected as "Eligible Accounts Receivable." Eligible
Accounts Receivable shall mean sales of inventory in the ordinary course of the
Company's business which are outstanding no more than (90) ninety days from due
date and no more than (150) one hundred fifty days from shipment date, to credit
worthy customers which are satisfactory to the Bank in its sole and absolute
discretion and shall exclude inter-company and affiliated sales. This Facility
is subject to the provisions set forth herein and other documents entered into
in connection herewith.

         Borrowings under this line of credit shall be evidenced by a Demand
Grid Note, a copy of which is enclosed. Under this Facility borrowings may be
made from time to time and shall be repayable on demand, but may be prepaid in
whole or in part with accrued interest to the date of prepayment. Any amounts
outstanding shall bear interest, payable monthly in arrears, at a variable rate
per annum equal to our Bank's Reference Rate less 3/4% established from time to
time, all as more fully set forth in the Demand Grid Note.

         Or, at your option, you may borrow under a LIBOR Pricing Revolving Note
up to the maximum amount of $20,000,000 in $100,000 increments, with advances
priced at your option of one month, two months, three months or six months LIBOR
plus 2.00% for each LIBOR rate

                                  Page 1 of 6

advance and subject to the terms of the LIBOR Pricing Revolving Note; a copy of
the LIBOR Pricing Revolving Note is attached. Please note that advances under
the LIBOR Pricing Revolving Note may be repaid, but only subject to the terms
and conditions set forth in that note.

         Each letter of credit issued for your account shall be issued only
pursuant to our standard form of application for commercial letter of credit and
our form of Continuing Letter of Credit Agreement, (the "Application"), as
executed by you from time to time. You shall pay a flat fee of $75 when we issue
any letter of credit for your account and each time we amend any such letter of
credit, together with such customary fees and charges in connection with the
issuance or payment of such letters of credit. In addition, you shall pay a fee
of 1/4% of the face amount of any sight draft presented to us in accordance with
the terms of any letter of credit we issue for your account. Such fee shall be
payable when such draft is presented to us and honored by us, all as more fully
set forth in the Application. Any amounts due to us from you under the
Application shall bear interest payable on demand at a variable rate per annum
equal to the rate from time to time in effect under the Demand Grid Note. At our
option such amounts may be deemed additional advances evidenced by and repayable
in accordance with the Demand Grid Note.

         This Facility shall be secured by a first priority lien on Accounts,
General Intangibles, Chattel Paper and Instruments, Inventory and Documents of
the company as more fully set forth in the security agreements referred to
below.

         This Facility may be utilized by the Company for a period ending on
June 30, 2006; provided, however, THE CONTINUING AVAILABILITY OF THIS FACILITY
IS AT ALL TIMES SUBJECT TO THE COMPANY'S COMPLIANCE WITH THE CASH FLOWS AND OUR
CONTINUING SATISFACTION, AS DETERMINED BY THE BANK IN ITS SOLE AND ABSOLUTE
DISCRETION, WITH THE BUSINESS, AFFAIRS AND FINANCIAL CONDITION OF THE COMPANY.
In addition, the continuing availability of this Facility is subject to your
furnishing us, (i) within 120 days after the close of your fiscal year, with
your audited financial statements certified by your independent certified public
accountants as of the end of such period, including a balance sheet and related
income statements; (ii) within 90 days after the close of your second quarter
with your financial statements reviewed by your independent certified public
accountants as of the end of such period, including a balance sheet and related
income statement; (iii) with two field examinations conducted each year by an
independent auditor acceptable to us with results satisfactory to us, conducted
at the Company's expense not to exceed $10,000 per year, so long as there exists
no default; (iv) with monthly aged accounts receivable schedules and monthly
sales and (v) such other information, including interim financial statements,
concerning your business, affairs or financial condition as we may from time to
time request.

         All payments of principal, interest and fees payable by you under this
facility shall be made in immediately available funds at our office at 452 Fifth
Avenue, New York, New York 10018 and may be charged to any account you maintain
with us.

                                  Page 2 of 6

         The availability of this Facility, on the terms set forth herein, is
further subject to our receipt in form satisfactory to us of (a) a certified
copy of resolutions of your Board of Directors authorizing your execution,
delivery and performance of this agreement and the documents referred to herein;
and (b) an executed copy of our standard form of Security Agreement covering the
collateral referred to above signed by your duly authorized officer on your
behalf, together with recorded UCC-1 financing statements as we may require;
and, (c) all documentation in connection with the issuance of letters of credit.

         NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT
NOR CONSENT TO ANY DEPARTURE BY OUR BANK THEREFROM SHALL BE EFFECTIVE,
IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME SHALL BE IN WRITING AND
SIGNED BY OUR BANK AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN
THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.

         This agreement shall be governed by and construed in accordance with
the laws of the State of New York. Please note that to the extent any of the
terms or provisions of this agreement conflict with those contained in the
Demand Grid Note or any of the above-mentioned documents, the terms and
provisions of such Note and of such other documents shall govern.

         YOU AND OUR BANK AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT
OF OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO
THIS FACILITY MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS
THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK.

         YOU FURTHER AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR
CONTROVERSY BETWEEN OR AMONG YOU AND US WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT OUR ELECTION, WHICH ELECTION MAY
BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY OUR
BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY YOU AT ANY TIME
PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT
MADE BY YOU, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH
THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT THE ELECTION OF OUR BANK, INCLUDE
ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT, THE DEMAND
GRID NOTE, OR ANY OTHER RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST,
PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY TRANSACTION
CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS

                                  Page 3 of 6

INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE
RELATIONSHIP OF THE PARTIES. We may elect to require arbitration of any Dispute
with us without thereby being required to arbitrate all Disputes between you and
us. Any such Dispute shall be resolved by binding arbitration in accordance with
Article 75 of the New York Civil Practice Law and Rules and the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). In the event
of any inconsistency between such Rules and these arbitration provisions, these
provisions shall supersede such Rules. All statutes of limitations that would
otherwise be applicable shall apply to any arbitration proceeding under this
paragraph. In any arbitration proceeding subject to these provisions, the
arbitration panel (the "arbitrator") is specifically empowered to decide by
documents only, or with a hearing, at the arbitrator's sole discretion
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss and motions for summary adjudication. In any such arbitration
proceeding, the arbitrator shall not have the power or authority to award
punitive damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever arbitration is required, the parties
shall select an arbitrator in the manner provided in this paragraph. No
provision of, nor the exercise of any rights under, this paragraph shall limit
the right of any party (i) to foreclose against any real or personal property
collateral through judicial foreclosure, by the exercise of a power of sale
under a deed of trust, mortgage or other security agreement or instrument,
pursuant to applicable provisions of the Uniform Commercial Code, or otherwise
pursuant to applicable law, (ii) to exercise self help remedies including but
not limited to setoff and repossession, or (iii) to request and obtain from a
court having jurisdiction before, during or after the pendency of any
arbitration, provisional or ancillary remedies and relief including but not
limited to injunctive or mandatory relief or the appointment of a receiver. The
institution and maintenance of an action or judicial proceeding for, or pursuit
of, provisional or ancillary remedies or exercise of self help remedies shall
not constitute a waiver of our right, even if we are the plaintiff, to submit
the Dispute to arbitration if we would otherwise have such right. We may require
arbitration of any Dispute(s) concerning the lawfulness, unconscionableness,
propriety, or reasonableness of any exercise by us of our right to take or
dispose of any collateral or our exercise of any other right in connection with
collateral including, without limitation, judicial foreclosure, exercising a
power of sale under a deed of trust or mortgage, obtaining or executing a writ
of attachment, taking or disposing of property with or without judicial process
pursuant to Article 9 of the Uniform Commercial Code or otherwise as permitted
by applicable law, notwithstanding any such exercise by us. Whenever arbitration
is required under this paragraph, the arbitrator shall be selected, except as
otherwise herein provided, in accordance with the Commercial Arbitration Rules
of the AAA. A single arbitrator shall decide any claim of $100,000 or less and
he or she shall be an attorney with at least five years' experience. Where the
claim of any party exceeds $100,000, the Dispute shall be decided by a majority
vote of three arbitrators, at least two of whom shall be attorneys at least one
of whom shall have not less than five years' experience representing commercial
banks. In the event of any Dispute governed by this paragraph, each of the
parties shall, subject to the award of the arbitrator, pay an equal share of the
arbitrator's fees. The arbitrator shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees, arbitrator's
fees, and court costs) to the prevailing party.

                                  Page 4 of 6

         ANYTHING IN THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO
THIS FACILITY TO THE CONTRARY NOTWITHSTANDING, THE ENUMERATION IN THIS
AGREEMENT, THE NOTE OR IN SUCH OTHER DOCUMENTS OF SPECIFIC OBLIGATIONS TO OUR
BANK AND/OR CONDITIONS TO THE AVAILABILITY OF THIS FACILITY AND THE NOTE SHALL
NOT BE CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE LIMIT OUR RIGHT, POWER OR
ABILITY, AT ANY TIME, UNDER APPLICABLE LAW, TO MAKE DEMAND FOR PAYMENT OF THE
ENTIRE OUTSTANDING PRINCIPAL OF AND INTEREST DUE UNDER THIS FACILITY AND THE
NOTE OR OUR RIGHT NOT TO MAKE ANY EXTENSION OF CREDIT UNDER THIS FACILITY AND
YOU AGREE THAT YOUR BREACH OF OR DEFAULT UNDER ANY SUCH ENUMERATED OBLIGATIONS
OR CONDITIONS IS NOT THE ONLY BASIS FOR DEMAND TO BE MADE OR FOR A REQUEST FOR
AN EXTENSION OF CREDIT TO BE DENIED, AS YOUR OBLIGATION TO MAKE PAYMENT SHALL AT
ALL TIMES REMAIN A DEMAND OBLIGATION. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, THIS AGREEMENT DOES NOT CREATE A COMMITMENT OR OBLIGATION TO
LEND BY THE BANK AND YOU ACKNOWLEDGE THAT THE BANK HAS NO OBLIGATION TO LEND.

         EACH OF YOU AND WE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT
OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE
OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY. YOU ALSO HEREBY WAIVE THE
RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY CLAIM OF LACHES OR SET-OFF OR
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL
DAMAGES.

                                  Page 5 of 6

         If this agreement is acceptable to you, please sign and return to us
one copy each of the enclosed copy of this letter and the other documents
referred to above on or before August 15, 2005.

Very truly yours,

                        HSBC BANK USA, National Association

                        By:  /s/ Kathleen Hanrahan
                             ----------------------------
                                Kathleen Hanrahan
                                 Vice President

AGREED TO AND ACCEPTED:

Movie Star Inc.

By:  /s/ Thomas Rende
     ---------------------------
     Thomas Rende, CFO

                                  Page 6 of 6Exhibit 10.17

                                DEMAND GRID NOTE

                                                 New York, New York
$20,000,000.00                                   Date: July 8, 2005
 -------------

                  ON THE EARLIER OF DEMAND OR MATURITY, the undersigned
("Maker") promises to pay to the order of HSBC Bank USA, National Association
("Bank") at the branch office of Bank located at 452 Fifth Avenue, New York, New
York 10018 or at any of its other banking offices in New York as Bank may
designate by written notice to Maker, the principal sum of TWENTY MILLION
DOLLARS, or so much thereof as shall be advanced by Bank to Maker, in Bank's
sole discretion, and not repaid, together with interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until the date
on which this Note is paid in full, at the rate set forth below.

                  Interest on the unpaid principal of this Note will be due and
payable on the first day of the month unless otherwise provided for.

                  Prior to Maturity or the date that demand is made for payment
of the principal hereof, this Note shall bear interest at a rate (the "Adjusted
LIBOR Rate" or the "Adjusted Prime Rate") as set forth below.

         As used in this Note, the following terms shall have the meanings set
forth below:

         Adjusted LIBOR Rate:  the LIBOR Rate plus 2.0%

         Adjusted Prime Rate:  the Prime Rate minus 0.75%

         Advance: the aggregate unpaid principal amount of all advances made by
the Bank to the Maker from time to time, (each an "Advance" and collectively,
the "Advances").

         Business Day: any day other than a Saturday, Sunday or other day on
which commercial banks in London and/or New York, New York are authorized or
required by law to close.

         LIBOR Period: a period, if available to the Bank, of not less than
thirty (30) days or more than ninety (90) days.

         LIBOR Period Request: the written request by the Maker to the Bank for
the LIBOR Rate Advance, and including a LIBOR Period, the date of the LIBOR Rate
Advance and amount.

         LIBOR Rate: the per annum interest rate equal to the London Interbank
Offered Rate as shown on the Dow Jones & Company's Telerate Screen, at
approximately 11:00 a.m. (London time) on the proposed borrowing date for
deposits of United States dollars in an amount and for a

                                       1

period of time comparable to the principal amount of the proposed LIBOR Rate
Advance.

         LIBOR Rate Advance: any Advance bearing interest at the Adjusted LIBOR
Rate.

         Prime Rate: the rate established by Bank from time to time at its
principal domestic office as its base lending rate for calculating interest on
certain loans. Bank may make loans to customers below, at or above the Prime
Rate.

         Prime Rate Advance: any Advance bearing interest at the Adjusted Prime
Rate.

         Prime Rate Request: the written request by the Maker to the Bank for a
Prime Rate Advance and including the term of borrowing, date of borrowing and
amount.

         Regulatory Change: after the date hereof, the introduction of any new,
or any change in existing, applicable laws, rules or regulations or in the
interpretation or administration thereof by any court or governmental authority
charged with the interpretation or administration thereof, or compliance by Bank
with any new request or directive by any such court or authority (whether or not
having the force of law.)

         Each Advance shall be payable on the earlier of Demand, the end of the
applicable LIBOR Period, or June 30, 2006 ("Maturity").

         Maker may request a Prime Rate Advance by calling in a Prime Rate
Request to the Bank not later than 1:00 p.m. (New York, New York time) on the
date of the proposed Prime Rate Advance.

         Maker may request a LIBOR Rate Advance and LIBOR Period by calling in a
LIBOR Period Request to the Bank not later than 1:00 p.m. (New York, New York
time) on the date of the proposed LIBOR Rate Advance. Maker may not select a
LIBOR Period having an expiration date later than June 30, 2006. Notwithstanding
any provision herein to the contrary, any LIBOR Rate Advance shall be made in a
minimum amount of $500,000.

         If Maker fails to timely select an applicable LIBOR Period for
calculation of a LIBOR Rate Advance, then the Advance shall bear interest at the
Adjusted Prime Rate and shall be deemed to be a Prime Rate Advance.

         If by reason of any Regulatory Change, the Bank determines that, by
reason of circumstances affecting the London interbank market generally,
adequate and fair means do not or will not exist for determining the LIBOR Rate,
(ii) by reason of any Regulatory Change, the Bank becomes restricted in the
amount which it may hold of a category of liabilities which includes deposits by
reference to the LIBOR Rate or a category of assets which includes loans which
bear interest a rate determined in part by reference to the LIBOR Rate, (iii) by
reason of any Regulatory Change, it shall be unlawful for the Bank to maintain a
LIBOR Rate Advance, or any portion thereof, bearing interest at the Adjusted
LIBOR Rate, (iv) in the exclusive judgment of the Bank, deposits are not
available to the Bank in the international interbank market in the

                                       2

requisite amounts and for the requisite durations, (v) in the exclusive judgment
of the Bank, the Adjusted LIBOR Rate does not adequately reflect the cost to the
bank of making or maintaining a LIBOR Rate Advance then, in any such case, any
LIBOR Rate Advance shall bear interest at the Adjusted Prime Rate. If the Bank
determines that because of a change in circumstances the Adjusted LIBOR Rate is
again available to the Maker hereunder, the Bank will so advise the Maker, and
the Maker may convert the rate of interest payable hereunder to the Adjusted
LIBOR Rate at any time (provided the Adjusted LIBOR Rate is otherwise available
hereunder) by making such election in accordance with, and subject to the
conditions of, this Note.

         If, at any time, any Regulatory Change: (i) shall subject the Bank to
any tax, duty or other charge with respect to this Note, except an income tax,
based upon the charging and collecting of interest hereunder at the Adjusted
LIBOR Rate, shall change the basis of taxation or payments to the Bank of the
principal of or interest on this Note; (ii) shall result in the imposition,
modification or deemed applicability of any reserve, special deposit or similar
requirements against assets of, deposits with or for the account of, or credit
extended by, the Bank; (iii) shall, because of the existence of this Note,
affect the amount of capital required or expected to be maintained by the Bank,
or any corporation controlling the Bank; or (iv) shall impose on the Bank or the
London interbank market any other condition affecting this Note or the charging
and collecting of interest hereunder at the Adjusted LIBOR Rate and the result
of any of the foregoing is, in the Bank's reasonable judgment, (a) to increase
the cost to the Bank of charging and collecting interest hereunder at the
Adjusted LIBOR Rate, or (b) to reduce the return on the Bank's capital or the
amount of any sum received or receivable by the Bank under this Note by an
amount deemed by the Bank to be material, upon demand then, by the Bank, the
Maker agrees to pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction. Such payments shall be
made on the first date for payment of interest hereunder following the date of
the demand by the Bank and on each such payment date thereafter or shall be paid
promptly on demand if the Maker is not advised of the amount of such payment
prior to any such payment date. Determinations by the Bank for purposes of this
paragraph of the effect of any Regulatory Change on its costs of making or
maintaining Advances bearing interest at the Adjusted LIBOR Rate and of the
additional amounts required to compensate the Bank in respect thereof, shall be
conclusive absent manifest error in calculation, provided that such
determinations are made in good faith.

         The Bank may elect (but shall be under no obligation) to send to the
Maker written confirmation of the LIBOR Period of each Advance, but any failure
to do so shall not relieve the Maker of the obligation to repay the LIBOR Rate
Advance at the end of such LIBOR Period. Unless the Maker shall object to such
confirmation in writing within five (5) days after receipt thereof, such
confirmation shall be prima facie evidence of the facts stated therein.

         Before Maturity, Prime Rate Advances shall bear interest at the
Adjusted Prime Rate, LIBOR Rate Advances shall bear interest at the Adjusted
LIBOR Rate.

         Any principal amount not paid when due (at Maturity, by acceleration or
otherwise) shall bear interest thereafter until paid in full, payable on demand,
at a rate per annum equal to:

                                       3

         (a)      For each Prime Rate Advance at a rate equal to Prime Rate plus
                  3%; and

         (b)      For each LIBOR Rate Advance at the applicable LIBOR Rate plus
                  3% from such date until the end of the then current LIBOR
                  Period, and thereafter at a rate equal to the Prime Rate plus
                  3%.

         If any payment to be made under this Note shall be stated to be due on
a Saturday, Sunday or banking holiday the Maker will pay interest thereon at the
applicable rate until the date of actual receipt of such payment by the holder
of this Note.

         In no event shall the interest rate on this Note exceed the maximum
rate authorized by applicable law. Any change in interest rate on this Note
resulting from a change in the Bank's Prime Rate shall be effective on the date
of such change. Interest on Advances will be calculated for each day at 1/360th
of the applicable per annum rate, which will result in a higher effective annual
rate. Accrued Interest on Prime Rate Advances shall be payable monthly on the
first day of each month and on the date any Prime Rate Advance is paid in full.
Accrued Interest on LIBOR Rate Advances shall likewise be payable on the first
day of each month and on the date any LIBOR Advance is paid in full.

         This Note evidences loans made by Bank to Maker in Bank's sole
discretion, from time to time. The unpaid principal balance of this Note at any
time shall be the total amount advanced by Bank to Maker in Bank's sole
discretion, less the total amount of principal payments made hereon by Maker.
The date and amount of each such Advance and the applicable LIBOR period,if any,
interest rate and each payment on account of principal thereof may be endorsed
by Bank on the grid attached to and made a part of this Note, and when so
endorsed shall represent evidence thereof binding upon Maker in the absence of
manifest error. Any failure by Bank to so endorse shall in no way mitigate or
discharge the obligation of Maker to repay any loans actually made. Maker may
prepay this Note in whole at any time with all accrued interest to the date of
prepayment. So long as Maker is not in default under this Note, Maker may prepay
this Note in part at any time with accrued interest to the date of prepayment on
the principal amount prepaid. Notwithstanding the provision of the immediately
preceding sentence, (i) the Bank must receive written notice of any prepayment
of a LIBOR Rate Advance not less than three (3) Business Days prior to such
prepayment, and (ii) any prepayment of a LIBOR Rate Advance must be for the
entire amount of such Advance.

         The Maker understands and acknowledges that in connection with LIBOR
Rate Advances the Bank may enter into funding arrangements on terms and
conditions which could result in substantial losses, costs and expenses to the
Bank if LIBOR Rate Advances are prepaid on a date other than the expiration of
the selected LIBOR period. Therefore, if there is a prepayment of any LIBOR Rate
Advance on a date other than the expiration of the selected LIBOR Period for any
reasons whatsoever including, but not limited to, any payments made by the Maker
because the holder of this Note has accelerated payment in accordance with the
terms hereof or any other document relating to the indebtedness hereunder, then
the Maker shall pay to the Bank, as liquidated damages and not as a penalty, a
fee (the "Liquidation Fee") equal to the losses (including but not limited to,
lost profits of the Bank), costs and expenses of the Bank in

                                       4

connection with such prepayment as determined by the Bank, which payment shall
be made by the Maker to the Bank on the date on which such prepayment is made.
The calculations made by the Bank to ascertain such Liquidation Fee shall be
conclusive absent manifest error in calculation by the Bank, provided that such
calculations are made in good faith. The Bank, upon the written request of the
Maker, shall advise the Maker in writing of the amount of the Liquidation Fee
applicable to any such prepayment.

                  Requests for loans to Maker from Bank and directions as to the
disposition of the proceeds thereof may be given orally (including by telephone)
or in writing to Bank by the officers of Maker or other persons authorized to
borrow on Maker's behalf by borrowing resolutions of Maker's Board of Directors
heretofore delivered to Bank, as such resolutions may be amended or superseded
from time to time, provided that any such amending or superseding resolutions
shall have been certified by the Secretary or an Assistant Secretary of Maker,
and a copy thereof, so certified, shall have been delivered to an officer of
Bank at its office for payment. Bank may conclusively rely on the authorities
contained in said resolutions. Any such loan so made shall be conclusively
presumed to have been made to or for the benefit of Maker and Maker shall be
liable in respect thereof when made in accordance with any such request or
direction, or when deposited to any account of Maker with Bank, even though
persons other than those authorized to borrow on behalf of Maker may have
authority to draw against such account. Bank may rely on any such request or
direction which it believes to be genuine, and Bank shall be fully protected in
so doing without any duty to make further inquiry as to such genuineness or in
otherwise acting in good faith in the premises. By making a request for a loan,
Maker shall be deemed to be representing to Bank that all of the representations
and warranties of Maker set forth in this Note are true and correct as of the
date of such request as if made on and as of such date and shall also be deemed
to be representing and warranting to Bank that on such date Maker is not in
breach of any of its covenants to Bank set forth in this Note or in any other
document or instruments of Maker to Bank and no event of default has occurred
and is continuing with respect to any Obligations (as defined below).

                  This Note shall be payable in lawful money of the United
States of America in immediately available funds. Except as otherwise provided
herein with respect to prepayments, all payments on this Note shall be applied
to the payment of accrued interest before being applied to the payment of
principal. Any payment which is required to be made on a day which is not a
banking business day in the City of New York shall be payable on the next
succeeding banking business day and such additional time shall be included in
the computation of interest. In the event that any other Obligations are due at
any time that Bank receives a payment from Maker on account of this Note or any
such other Obligations, Bank may apply such payment to amounts due under this
Note or any such other Obligations in such manner as Bank, in its discretion,
elects, regardless of any instructions from Maker to the contrary.

                  MAKER ACKNOWLEDGES THAT THIS NOTE IS AN OBLIGATION WHICH IS
PAYABLE ON DEMAND AND THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY IN ANY OTHER
INSTRUMENT, AGREEMENT OR OTHER DOCUMENT TO WHICH MAKER AND/OR BANK IS A PARTY,
THE ENUMERATION IN ANY SUCH DOCUMENT OF SPECIFIC EVENTS OF DEFAULT, CONDITIONS
AND/OR COVENANTS RELATING TO THE LOAN EVIDENCED BY THIS NOTE OR TO ANY OTHER
OBLIGATION, SHALL NOT BE CONSTRUED TO QUALIFY,

                                       5

DEFINE OR OTHERWISE LIMIT IN ANY WAY BANK'S RIGHT, POWER OR ABILITY, AT ANY
TIME, TO MAKE DEMAND FOR PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS NOTE,
AND MAKER AGREES THAT THE OCCURRENCE OF ANY EVENT OF DEFAULT OR BREACH OF ANY
CONDITION OR COVENANT IN ANY SUCH DOCUMENT IS NOT THE ONLY BASIS FOR DEMAND TO
BE MADE ON THIS NOTE.

                  To induce Bank, in its sole discretion, to make loans to
Maker: (A) Maker (if not a natural person) represents, warrants and covenants to
Bank that (i) Maker is duly incorporated or organized and validly existing in
good standing under the laws of the jurisdiction of its formation, with full
power and authority to make, deliver and perform this Note; (ii) the execution,
delivery and performance by Maker of this Note have been duly authorized by all
necessary corporate or other action and do not and will not violate or conflict
with its charter or by-laws or other constituent documents; (iii) this Note has
been fully executed by an authorized officer of Maker; and (B) Maker represents,
warrants and covenants to Bank that (i) the execution, delivery, and performance
by Maker of this Note does not and will not violate or conflict with any law,
rule, regulation or order binding on Maker or any agreement or instrument to
which Maker is a party or which may be binding on Maker; (ii) this Note
constitutes a legal, valid, binding and enforceable obligation of Maker; (iii)
no authorization, consent, approval, license, exemption of or filing or
registration with, any court or government or governmental agency is or will be
necessary to the valid execution, delivery or performance by Maker of this Note;
(iv) the loans evidenced by this Note will be used solely for working capital
purposes; (v) there are no pending or threatened actions, suits or proceedings
against or affecting Maker by or before any court, commission, bureau or other
governmental agency or instrumentality, which, individually or in the aggregate,
if determined adversely to Maker, would have a material adverse effect on the
business, properties, operations, or condition, financial or otherwise, of
Maker; and (vi) the most recent financial statements of Maker heretofore
delivered to Bank are complete and correct and since the date thereof there has
not occurred any material adverse change in the financial condition or
operations of Maker from that shown on said financial statements.

                  Bank shall have a continuing lien and/or right of setoff on,
and is hereby granted a security interest in, all deposits (general and special)
and credits with Bank or any Bank Affiliate of any Maker and indorser, and may
apply all or part of the same to any Obligations, at any time or times, without
notice. Bank shall have a continuing lien on, and is hereby granted a security
interest in, all property of every Maker and indorser and the proceeds thereof
held or received by or for Bank or any Bank Affiliate for any purpose, whether
or not for the express purpose of serving as collateral security for the
Obligations. As used in this Note, the term "Bank Affiliate" includes any
individual, partnership or corporation acting as nominee or agent for Bank, and
any corporation or bank which is directly or indirectly owned or controlled by,
or under common control with, Bank. Any notice of disposition of property shall
be deemed reasonable if mailed at least five days before such disposition to the
last address of Maker or indorser on Bank's records. If the Obligations
evidenced by this Note are secured by a security agreement and/or other security
documents which Maker has separately delivered to Bank (whether or not such
documents make specific reference to this Note), reference to such documents is
made for a description of the collateral provided thereby and of the rights of
Maker and Bank therein. The rights and remedies of Bank provided hereunder are
cumulative with the rights and remedies available to Bank under any other
instruments or agreements or under applicable law. As used in this Note, the
term "Obligations" means all

                                       6

amounts payable under this Note and any and all other indebtedness, obligations
and liabilities of Maker to Bank, and all claims of Bank against Maker, now
existing or hereafter arising, direct or indirect (including participations or
any interest of Bank in indebtedness of Maker to others), acquired outright,
conditionally, or as collateral security from another, absolute or contingent,
joint or several, secured or unsecured, matured or unmatured, monetary or
non-monetary, arising out of contract or tort, liquidated or unliquidated,
arising by operation of law or otherwise, and all extensions, renewals,
refundings, replacements and modifications of any of the foregoing.

                  In case any principal of or interest on this Note is not paid
when due, each Maker and indorser shall be jointly and severally liable for all
costs of enforcement and collection of this Note incurred by Bank or any other
holder of this Note, including but not limited to reasonable attorneys' fees,
disbursements and court costs. In addition, in the event of a default hereunder,
Maker shall pay all reasonable attorneys' fees and disbursements incurred by
Bank in obtaining advice as to its rights and remedies in connection with such
default.

                  Maker and each indorser hereby separately waive presentment,
notice of dishonor, protest and notice of protest, and any or all other notices
or demands (other than demand for payment) in connection with the delivery,
acceptance, performance, default, endorsement or guarantee of this Note. The
liability of any Maker or indorser hereunder shall be unconditional and shall
not be in any manner affected by any indulgence whatsoever granted or consented
to by the holder hereof, including, but not limited to any extension of time,
renewal, waiver or other modification. Any failure of the holder to exercise any
right hereunder shall not be construed as a waiver of the right to exercise the
same or any other right at any time and from time to time thereafter. Bank or
any holder may accept late payments, or partial payments, even though marked
"payment in full" or containing words of similar import or other conditions,
without waiving any of its rights. No amendment, modification or waiver of any
provision of this Note nor consent to any departure by Maker therefrom shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. This
Note cannot be changed or terminated orally or by estoppel or waiver or by any
alleged oral modification regardless of any claimed partial performance
referable thereto.

                  Any notice from Bank to Maker or any indorser shall be deemed
given when delivered to Maker or such indorser by hand or when deposited in the
United States mail and addressed to Maker or such indorser at the last address
of Maker or such indorser appearing on Bank's records.

                  This Note shall be governed by and construed in accordance
with the laws of the State of New York applicable to instruments made and to be
performed wholly within that state. If any provision of this Note is held to be
illegal or unenforceable for any reason whatsoever, such illegality or
unenforceability shall not affect the validity of any other provision hereof.

                  MAKER AND EACH INDORSER AGREE THAT ANY ACTION, DISPUTE,
PROCEEDING, CLAIM OR CONTROVERSY BETWEEN MAKER OR SUCH INDORSER AND BANK,
WHETHER SOUNDING IN CONTRACT, TORT OR

                                       7

OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION, WHICH ELECTION
MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY
BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY MAKER OR SUCH
INDORSER AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS
AND/OR COMPLAINT MADE BY MAKER OR SUCH INDORSER, BE RESOLVED BY ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT THE ELECTION OF
BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (1) THIS NOTE OR
ANY RELATED AGREEMENTS OR INSTRUMENTS, (2) ALL PAST, PRESENT AND FUTURE
AGREEMENTS INVOLVING MAKER OR SUCH INDORSER AND BANK, (3) ANY TRANSACTION
RELATED TO THIS NOTE AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING
MAKER OR SUCH INDORSER AND BANK, AND (4) ANY ASPECT OF THE PAST, PRESENT OR
FUTURE RELATIONSHIP OF MAKER OR SUCH INDORSER AND BANK. Bank may elect to
require arbitration of any Dispute with Maker or any indorser without thereby
being required to arbitrate all Disputes between Bank and Maker or such
indorser. Any such Dispute shall be resolved by binding arbitration in
accordance with Article 75 of the New York Civil Practice Law and Rules and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In
the event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any arbitration
proceeding under this paragraph. In any arbitration proceeding subject to this
paragraph, the arbitrator(s) shall be deemed specifically empowered to decide
(by documents only, or with a hearing, at the arbitrator(s) sole discretion)
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss and motions for summary adjudication. In any such arbitration
proceeding, the arbitrator(s) shall not have the power or authority to award
punitive damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever an arbitration is required, the
arbitrator(s) shall be selected in the manner provided in this paragraph. No
provision of, nor the exercise of any rights under, this paragraph shall limit
the right of Bank (1) to foreclose against any real or personal property
collateral through judicial foreclosure, by the exercise of the power of sale
under a deed of trust, mortgage or other security agreement or instrument,
pursuant to applicable provisions of the Uniform Commercial Code, or as
otherwise herein provided or pursuant to applicable law, (2) to exercise
self-help remedies including but not limited to setoff and repossession, or (3)
to request and obtain from a court having jurisdiction before, during or after
the pendency of any arbitration, provisional or ancillary remedies and relief
including but not limited to injunctive or mandatory relief or the appointment
of a receiver. The institution and maintenance of an action or judicial
proceeding for, or pursuit of, provisional or ancillary remedies or exercise of
self-help remedies shall not constitute a waiver of the right of Bank, even if
Bank is the plaintiff, to submit the Dispute to arbitration if Bank would
otherwise have such right. Whenever an arbitration is required under this
paragraph, the arbitrator(s) shall be selected in accordance with the Commercial
Arbitration Rules of the AAA, except as otherwise herein provided. A single
arbitrator shall decide any claim of $100,000 or less and he or she shall be an
attorney with at least five years' experience. Where the claim of any party
exceeds $100,000, the Dispute shall be decided by a majority of three
arbitrators, at least two of whom shall be attorneys (at least one of whom shall
have not less than five years' experience representing commercial

                                       8

banks). The arbitrator(s) shall have the power to award recovery of all costs
and fees (including attorneys' fees, administrative fees, arbitrator(s) fees,
and court costs) to the prevailing party. In the event of any Dispute governed
by this paragraph, each of the parties shall, subject to the award of the
arbitrator(s), pay an equal share of the arbitrator(s) fees.

                  MAKER AND EACH INDORSER AGREE THAT ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND
PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW
YORK COUNTY, NEW YORK AND ANY ARBITRATION PROCEEDING PURSUANT HERETO SHALL BE
CONDUCTED IN NEW YORK, NEW YORK. MAKER AND EACH INDORSER CONSENT TO AND SUBMIT
TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER, WAIVE PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO MAKER OR SUCH INDORSER AT ITS ADDRESS SET FORTH
BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR IN BANK'S RECORDS AS THE ADDRESS OF
MAKER OR SUCH INDORSER.

                  IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT
OF THIS NOTE, BANK, MAKER AND EACH INDORSER WAIVE TRIAL BY JURY, AND MAKER AND
EACH INDORSER ALSO WAIVE (I) THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM
OF ANY NATURE OR DESCRIPTION, (II) ANY OBJECTION BASED ON FORUM NON CONVENIENS
OR VENUE, AND (III) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

                  If this Note is executed by more than one person, then each
such person shall be jointly and severally liable on this Note, and the term
"Maker" shall mean each, any or all of such persons.

                  Bank is authorized to fill in any blank spaces and to
otherwise complete this Note and correct any patent errors herein.

                                   Movie Star, Inc.
                                   ----------------

                                   By:  /s/ Thomas Rende
                                      -------------------------------------
                                       Signature of Authorized Signatory

                                   Thomas Rende, CFO

                                   Print Name and Title

                                   1115 Broadway
                                   -------------
                                   New York, NY  10010
                                   -------------------

                                       9

                                   Address for Notices

                                   The Maker signing above is a  corporation
                                   organized under  the laws of the State of
                                   New York.

                                       10

                      ADVANCES AND PAYMENTS OF PRINCIPAL
                      ----------------------------------

                                    Amount                               Amount of
                   Advance            of           Principal             Principal             Interest
    Date             No.            Advance        Payments               Balance                Rate
    ----            ----            -------     --------------           ---------               ----

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