EMPLOYMENT AGREEMENT



         THIS  EMPLOYMENT  AGREEMENT,  dated as of May 20, 2003,  by and between

Factory 2-U  Stores,  Inc.  (the "Company"), a Delaware corporation, and

Norman G. Plotkin ("Executive").



                               W I T N E S S E T H



         WHEREAS, the Company desires to employ Executive, and Executive desires

to accept such employment on the terms and conditions set forth in this

Agreement.



         NOW, THEREFORE, in consideration of the promises and mutual covenants

contained herein and for other good and valuable consideration, the Company and

Executive agree as follows:



         1. Term of Employment. Except upon earlier termination as provided in

Section 9 hereof, Executive's employment under this Agreement shall be for a

one-year term commencing on the date of this Agreement (the "Effective Date")

and terminating on May 19, 2004; provided, however, that at the scheduled end of

the employment term, and on each anniversary of such date, the employment term

shall automatically be extended for a one-year period unless the Company or the

Executive gives notice to the other at least 90 days before an extension is to

take effect that they do not desire the employment term to be extended. The term

of employment, as so extended from time to time, is referred to in this

Agreement as the "Employment Term."



         2. Positions.



                  (a) Executive shall serve as Executive Vice President-Store

Development and Human Resources and General Counsel of the Company. Executive

shall report to the Chief Executive Officer of the Company ("CEO") and shall

have such duties and authority, consistent with his position as Executive Vice

President-Store Development and Human Resources & General Counsel of the

Company, as shall be assigned to him from time to time by the CEO.



                  (b) During the -Employment Term, Executive shall, without

additional compensation, perform such executive and consulting services for, or

on behalf of, such subsidiaries or affiliates of the Company as the CEO may,

from time to time, request. The Company and such subsidiaries and affiliates are

hereinafter referred to, collectively, as the "Company" and, individually, as a

"Constituent Corporation." For purposes of this Agreement, the term "Affiliate"

shall have the meaning given in the Securities Exchange Act of 1934, as amended

(the "Act").



                  (c) During the Employment Term, Executive shall devote

substantially all of his business time and efforts to the performance of his

duties hereunder; provided, however, that Executive shall be permitted, to the

extent that such activities do not materially interfere with the performance of

his duties and responsibilities hereunder, to manage his personal financial and

legal affairs and to serve on not more than three corporate, civic or charitable

boards or committees. Notwithstanding the foregoing, the Executive shall not

serve on any corporate board of directors or similar body if such service would

be inconsistent with his fiduciary responsibilities to any Constituent

Corporation and in no event shall Executive serve on any such board or other

body unless approved by the CEO, which approval shall not be unreasonably

withheld.







         3. Base Salary. During the Employment Term, the Company shall pay to

the Executive a base salary at the annual rate of not less than Two Hundred

Eighty-Five Thousand Dollars ($285,000). Base salary shall be payable in

accordance with the usual payroll practices of the Company. Executive's base

salary shall be subject to annual review by the CEO and may be increased, but

not decreased, from time to time at the discretion of the CEO. The base salary,

as determined as aforesaid from time to time, shall constitute "Base Salary" for

purposes of this Agreement.



         4. Annual Bonus. Not later than 30 days after the Effective Date,

Executive shall prepare and present to the CEO written financial, operational

and other objectives (the "Performance Objectives") for the Company's fiscal

year ending February 3, 2004. If such Performance Objectives are approved and

accepted by the CEO, Executive's target bonus for such fiscal year shall be

equal to 50% of Executive's annual Base Salary for such year. For each fiscal

year during the Employment Term thereafter, Executive shall prepare and submit

Performance Objectives to the CEO during the normal course of the Company's

planning cycle and before the commencement of the new fiscal year. If such

subsequent Performance Objectives are accepted and approved by the CEO,

Executive's target bonus for such fiscal years shall be based on 50% of

Executive's Base Salary in effect as of the start of such fiscal year. In the

event of any disagreement between the CEO and Executive concerning the

acceptance and approval of Performance Objectives, the CEO and Executive shall

negotiate in good faith to attempt to resolve such differences. Annual bonuses

shall be reduced pro rata for any fiscal year that is not a full year (based on

the actual number of days of such year included in the Employment Term). Each

annual bonus shall be paid no later than 30 days after the Company's audited

financial statements with respect to the year for which the annual bonus is

awarded are available. If the Performance Objectives accepted by the CEO are

exceeded in any year, the annual bonus shall be increased by 1% of Base Salary

for each 1% of excess, up to a maximum bonus of 100% of Base Salary for the

achievement of 150% of the Performance Objectives. If the Performance Objectives

accepted by the CEO are not met, the Executive shall not be entitled to any

bonus.



         5.       Equity Compensation.



                  (a) Non-Qualified Stock Options. The Company will grant to

Executive, pursuant to the Company's Amended and Restated 1997 Stock Option

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