UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  SCHEDULE 14A*
                                 (RULE 14A-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
           PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                   EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)

Filed by the Registrant [X] 
Filed by a Party other than the Registrant [_] 

Check the appropriate box:
         [_] Preliminary Proxy Statement    [_] Confidential, For Use of the
         [X] Definitive Proxy Statement         Commission Only (as permitted by
         [_] Definitive Additional Materials    Rule 14a-6(e)(2)
         [_] Soliciting Material Pursuant to
             ss.240.14a-12

                            PEOPLE'S LIBERATION, INC.
================================================================================
                (Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

         [X]      No Fee Required

         [_]      Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
                  and 0-11.

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(1)      Title of each class of securities to which transaction applies:

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(2)      Aggregate number of securities to which transaction applies:

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(3)      Per unit  price  or other  underlying  value  of  transaction  computed
         pursuant to Exchange Act Rule 0-11:

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(4)      Proposed maximum aggregate value of transaction:

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(5)      Total fee paid:

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[_]      Fee paid with preliminary materials:

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[_]      Check box if any part of the fee is offset as provided by Exchange  Act
         Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee
         was paid  previously.  Identify  the  previous  filing by  registration
         statement number, or the form or schedule and the date of its filing.

(1)      Amount previously paid:

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(2)      Form, Schedule or Registration Statement No.:

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(3)      Filing party:

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(4)      Date filed:

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<PAGE>


                            PEOPLE'S LIBERATION, INC.
              -----------------------------------------------------

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
              -----------------------------------------------------


TIME...................    9:00 a.m. Pacific Time on Friday, June 13, 2008.

PLACE..................    Sheraton Los Angeles Downtown,
                           711 Hope Street, Los Angeles, CA  90017

ITEMS OF BUSINESS......    (1)      To  elect  four  members  of  the  Board  of
                                    Directors;

                           (2)      To   amend   and   restate   the   Company's
                                    Certificate  of  Incorporation  to eliminate
                                    Articles  Sixth and Eighth and amend Article
                                    Seventh;

                           (3)      To approve the  amendment  to the  Company's
                                    2005 Stock  Incentive  Plan to increase  the
                                    maximum  number of  shares  of common  stock
                                    that  may  be  issued   pursuant  to  awards
                                    granted under the plan from 3,500,000 shares
                                    to 5,500,000 shares; and

                           (4)      To  transact  such  other  business  as  may
                                    properly  come  before the  Meeting  and any
                                    adjournment or postponement.

RECORD DATE............    You can vote if at the close of business on April 21,
                           2008, you were a stockholder of the Company.

PROXY VOTING...........    All stockholders are cordially  invited to attend the
                           Annual  Meeting in person.  However,  to ensure  your
                           representation  at the Annual Meeting,  you are urged
                           to  vote   promptly  by  signing  and  returning  the
                           enclosed Proxy card.


M
ay 10, 2008               /s/ Colin Dyne                 
                           ---------------------------------
                           COLIN DYNE, CHAIRMAN OF THE BOARD
                           AND CHIEF EXECUTIVE OFFICER



<PAGE>


                                                       PEOPLE'S LIBERATION, INC.
                                                    150 WEST JEFFERSON BOULEVARD
                                                           LOS ANGELES, CA 90007
                                                                  (213) 745-2123
PROXY STATEMENT
--------------------------------------------------------------------------------

         These Proxy materials are delivered in connection with the solicitation
by the Board of Directors of People's  Liberation,  Inc., a Delaware corporation
("People's Liberation", the "Company", "we", or "us"), of Proxies to be voted at
our  2008  Annual  Meeting  of   Stockholders   and  at  any   adjournments   or
postponements.

         You are invited to attend our Annual Meeting of Stockholders on Friday,
June 13, 2008,  beginning at 9:00 a.m. Pacific Time. The meeting will be held at
Sheraton Los Angeles Downtown, 711 Hope Street, Los Angeles, CA 90017.

         It is anticipated  that the 2007 Annual Report and this Proxy Statement
and the  accompanying  Proxy will be mailed to  stockholders on or about May 10,
2008.

         STOCKHOLDERS ENTITLED TO VOTE. Holders of our common stock at the close
of business on April 21,  2008 are  entitled to receive  this notice and to vote
their shares at the Annual Meeting.  As of April 21, 2008, there were 36,002,563
shares of common stock outstanding, our only class of voting securities.

         PROXIES. Your vote is important.  If your shares are registered in your
name,  you are a stockholder  of record.  If your shares are in the name of your
broker or bank, your shares are held in street name. We encourage you to vote by
Proxy so that your shares will be  represented  and voted at the meeting even if
you cannot  attend.  All  stockholders  can vote by  written  Proxy  card.  Your
submission of the enclosed Proxy will not limit your right to vote at the Annual
Meeting  if you later  decide to attend in  person.  IF YOUR  SHARES ARE HELD IN
STREET NAME, YOU MUST OBTAIN A PROXY, EXECUTED IN YOUR FAVOR, FROM THE HOLDER OF
RECORD IN ORDER TO BE ABLE TO VOTE AT THE MEETING.  If you are a stockholder  of
record,  you may revoke  your Proxy at any time  before  the  meeting  either by
filing with the Secretary of the Company,  at its principal executive offices, a
written  notice of revocation or a duly executed  Proxy bearing a later date, or
by attending the Annual  Meeting and  expressing a desire to vote your shares in
person. All shares entitled to vote and represented by properly executed Proxies
received  prior to the Annual  Meeting,  and not  revoked,  will be voted at the
Annual Meeting in accordance with the  instructions  indicated on those Proxies.
If no  instructions  are  indicated  on a properly  executed  Proxy,  the shares
represented  by  that  Proxy  will be  voted  as  recommended  by the  Board  of
Directors.

         QUORUM. The presence, in person or by Proxy, of a majority of the votes
entitled to be cast by the  stockholders  entitled to vote at the Annual Meeting
is necessary to constitute a quorum.  Abstentions  and broker  non-votes will be
included in the number of shares present at the Annual  Meeting for  determining
the presence of a quorum.  Broker non-votes occur when a broker holding customer
securities in street name has not received voting instructions from the customer
on certain  non-routine  matters and,  therefore,  is barred by the rules of the
applicable securities exchange from exercising  discretionary  authority to vote
those securities.

         VOTING.  Each share of our common stock is entitled to one vote on each
matter properly  brought before the meeting.  Abstentions will be counted toward
the  tabulation of votes cast on proposals  submitted to  stockholders  and will
have the same effect as  negative  votes,  while  broker  non-votes  will not be
counted as votes cast for or against such matters.



<PAGE>


         VOTE REQUIRED.

         (i)      ELECTION OF DIRECTORS. Our Amended and Restated Certificate of
                  Incorporation,  as  amended,  does  not  authorize  cumulative
                  voting.  In the  election of  directors,  the four  candidates
                  receiving  the highest  number of votes at the Annual  Meeting
                  will be  elected.  If any  nominee is unable or  unwilling  to
                  serve as a  director  at the time of the Annual  Meeting,  the
                  Proxies  will be voted for such other  nominee(s)  as shall be
                  designated  by the  current  Board  of  Directors  to fill any
                  vacancy. We have no reason to believe that any nominee will be
                  unable or unwilling to serve if elected as a director.

         (ii)     AMENDMENTS   TO   AMENDED   AND   RESTATED    CERTIFICATE   OF
                  INCORPORATION.  The affirmative  vote of the holders of eighty
                  percent  (80%) of our  outstanding  shares,  in  person  or by
                  proxy,  will be required to approve the proposed  amendment to
                  our Amended  and  Restated  Certificate  of  Incorporation  to
                  eliminate   Articles  Sixth  and  Eighth,  and  amend  Article
                  Seventh.

         (iii)    AMENDMENTS TO 2005 STOCK INCENTIVE PLAN. The affirmative  vote
                  of a majority of the votes cast,  in person or by proxy,  will
                  be required to amend the 2005 Stock Incentive Plan to increase
                  the  number of shares  reserved  for  issuance  thereunder  to
                  5,500,000.

         OTHER MATTERS.  At the date this Proxy  Statement went to press,  we do
not know of any other matter to be raised at the Annual Meeting.

         In the event a  stockholder  proposal was not  submitted to us prior to
the date of this Proxy  Statement,  the enclosed Proxy will confer  authority on
the  Proxyholders  to vote the shares in accordance with their best judgment and
discretion  if the proposal is presented at the Meeting.  As of the date hereof,
no stockholder proposal has been submitted to us, and management is not aware of
any other  matters to be presented  for action at the Meeting.  However,  if any
other matters  properly come before the Meeting,  the Proxies  solicited  hereby
will be voted by the Proxyholders in accordance with the  recommendations of the
Board  of  Directors.   Such  authorization  includes  authority  to  appoint  a
substitute  nominee for any Board of Directors'  nominee identified herein where
death,  illness or other  circumstance  arises which  prevents such nominee from
serving in such position and to vote such Proxy for such substitute nominee.


                                       2

<PAGE>



ITEM 1:  ELECTION OF DIRECTORS
--------------------------------------------------------------------------------

         Item 1 is the  election  of four (4)  directors  to hold  office  for a
period of one year or until their  respective  successors have been duly elected
and qualified.  Our Amended and Restated  Certificate of Incorporation  provides
that the number of  directors  of the  Company  shall be fixed from time to time
exclusively  by the Board of  Directors,  but shall not be less than two (2) nor
more than fifteen (15). The Board of Directors has fixed the number of directors
at four (4).

         Unless  otherwise  instructed,  the Proxy holders will vote the Proxies
received by them for the nominees  named  below.  If any nominee is unwilling to
serve as a director at the time of the Annual Meeting, the Proxies will be voted
for such other  nominee(s)  as shall be  designated by the then current Board of
Directors  to fill any  vacancy.  We have no reason to believe  that any nominee
will be unable or unwilling to serve if elected as a director.

         The Board of Directors  proposes the election of the following nominees
as directors:

                                 Colin Dyne
                                 Dean Oakey
                                 Kenneth Wengrod
                                 Susan White

         If elected, the foregoing four nominees are expected to serve until the
2009 Annual Meeting of Stockholders.

         The  principal  occupation  and  certain  other  information  about the
nominees and certain executive officers are set forth on the following pages.

 
        THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE NOMINEES LISTED ABOVE.


                                       3

<PAGE>


CURRENT DIRECTORS/DIRECTOR NOMINEES

         The  following  table sets forth the name,  age and position of each of
our current  directors,  who also  constitute  the  nominees for election at the
Annual Meeting, and our executive officers as of April 21, 2008.

DIRECTORS AND NOMINEES    AGE             POSITION HELD
----------------------    ---             -------------

Colin Dyne                 44             Chief Executive Officer, Secretary and
                                          Chairman of the Board of Directors
Dean Oakey                 49             Director
Kenneth Wengrod            57             Director
Susan White                57             Director

EXECUTIVE OFFICERS

Darryn Barber              32             Chief Financial Officer
Thomas Nields              42             Chief Operating Officer


         COLIN DYNE  became our Chief  Executive  Officer  and a director of the
company on May 21, 2007,  and  Chairman of the Board on October 12, 2007.  Colin
Dyne is a significant  stockholder of the company, and served as a consultant to
the company  from  December  2005 until May 2007,  advising on  strategic  sales
initiatives.  Mr. Dyne also serves as Vice Chairman of the Board of Directors of
Talon International,  Inc. (OTCBB:  TALN), owner of Talon(TM) zippers and a full
service trim management supplier for manufacturers of fashion apparel.  Mr. Dyne
founded Tag-It, Inc., a subsidiary of Talon, in 1991. Mr. Dyne served as Talon's
President from inception  until 2005,  and as its Chief  Executive  Officer from
1997 to 2005.

         DEAN OAKEY has served as a director since November 22, 2005.  From June
1997 to present,  Mr.  Oakey has served as the  Managing  Director of  Corporate
Finance  and Capital  Markets at Sanders  Morris  Harris,  Inc.,  an  investment
banking  firm. In this  capacity,  Mr. Oakey has been  responsible  for business
development and management duties, with a focus on the apparel industry.

         SUSAN WHITE joined our Board of  Directors  on May 21, 2007.  Ms. White
has served as Chief Executive Officer and President of Brand Identity Solutions,
LLC, a branding,  marketing and licensing  consulting  company,  since 1987. Ms.
White also is the CEO and  president  of  Whitespeed,  LLC, an internet  design,
branding and marketing company.  Ms. White also previously served as Director of
Marketing  and  Advertising  Worldwide  for Warnaco from  November  1997 through
August 1999.

         KENNETH  WENGROD  joined our Board of Directors on September  21, 2007.
Mr. Wengrod  currently  serves as President of FTC  Commercial  Corp., a company
which he founded  in 2002 and in which he  continues  to hold a minority  equity
position.  FTC is a global finance  commercial service company primarily focused
in the apparel industry.  From 1996 to 2002, Mr. Wengrod was the Chief Financial
Officer and General Manager of Meridian Textiles f/k/a Mark Fabrics where he was
responsible  for the operations of the  multi-million  dollar fabric  converting
company. Prior to joining Meridian Textiles, Mr. Wengrod was the Chief Operating
Officer  of  Rampage  Clothing  Co.  from  1992 to 1995,  and was a Senior  Vice
President of Barclays  Commercial  Corp.  from 1987 to 1992. Mr. Wengrod holds a
Bachelor of Science degree in Economics from Northeastern University.


                                       4

<PAGE>


OTHER EXECUTIVE OFFICERS

         DARRYN BARBER has served as our Chief Financial  Officer since November
22, 2005. Prior to joining us, Mr. Barber spent five years as a senior associate
at  Europlay  Capital  Advisors,  LLC and its  affiliates.  Mr.  Barber has been
successful  in  evaluating,   developing,   and  operating   businesses  in  the
entertainment  and technology  fields.  Mr. Barber was responsible for preparing
business  models,   financial  planning,   evaluating  and  valuing  businesses,
providing corporate and strategic advice and preparing  businesses for strategic
transactions. Mr. Barber brings over 10 years experience in owning and operating
businesses.  Prior to Europlay  Capital  Advisors,  Mr.  Barber was  Director of
Operations  of  Trademark  Cosmetics,  a private  label  cosmetic  manufacturing
company.  Mr. Barber earned an MBA from California State  University  Northridge
and a BA in business economics from the University of California Santa Barbara.

         THOMAS NIELDS has served as our Chief Operating  Officer since November
8, 2006.  Prior to joining  us,  Mr.  Nields  held  various  positions  at Talon
International,  Inc., a full service trim management  supplier for manufacturers
of fashion apparel, from November 1994 to October 2006. These positions included
Director  of  Global  Operations,  President  of  Talon,  Inc.  (a  wholly-owned
subsidiary  of Talon  International,  Inc.) and Vice  President  of  Production.
During his employment with Talon,  Mr. Nields was  responsible for  implementing
and managing production facilities in eight countries including the U.S., Mexico
and Hong Kong.

FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS

         MEETINGS AND COMMITTEES.  The Board of Directors held thirteen meetings
during fiscal 2007.  All directors  then serving  attended 75% or more of all of
the meetings of the Board of Directors in fiscal 2007. While directors generally
attend annual stockholder  meetings,  the Company has not established a specific
policy  with  respect  to  members of the Board of  Directors  attending  annual
stockholder  meetings.   Last  year's  annual  meeting  was  attended  by  three
directors.

         Our board of directors  currently consists of four members:  Colin Dyne
(our Chief Executive Officer), Dean Oakey, Susan White and Kenneth Wengrod. Each
of Colin  Dyne,  Dean  Oakey and  Susan  White  were  elected  at a  meeting  of
shareholders  and will serve until our next  annual  meeting or until his or her
successor is duly elected and  qualified.  Kenneth  Wengrod was appointed to our
Board of  Directors  on  September  21, 2007 to fill a vacancy  created upon the
expansion in the size of our Board from five  directors to six  directors on the
same date.  Mr.  Wengrod  will serve until our next annual  meeting or until his
successor is duly elected and qualified.

         We  do  not  have  a  separately  designated  audit,   compensation  or
nominating  committee of our board of directors  and the  functions  customarily
delegated to these  committees are performed by our full board of directors.  We
are not a "listed  company"  under SEC rules and are  therefore  not required to
have separate committees comprised of independent  directors.  We have, however,
determined that neither Mr. Wengrod nor Mr. Oakey are "independent" as that term
is defined in Section  4200 of the  Marketplace  Rules as required by the NASDAQ
Stock Market. In addition, we have determined that Susan White is "independent,"
and that Troy Carter,  prior to his  resignation  as a director on April 2, 2008
was "independent",  in accordance with the aforementioned  definition.  As we do
not maintain an audit  committee,  we do not have an audit committee  "financial
expert" within the meaning of Item 407(d) of Regulation S-K.

         We intend to establish an audit committee,  compensation committee, and
nominating and corporate governance committee upon the expansion of our board to
include at least three directors who are independent  under the applicable rules
of the SEC and NASDAQ.


                                       5

<PAGE>


         The functions  customarily  delegated to the  nominating  committee are
performed by our full board of  directors.  Our full board of directors  reviews
those  Board  members  who  are  candidates  for  re-election  to our  Board  of
Directors,  and makes the determination to nominate a candidate who is a current
member of the Board of Directors for  re-election for the next term. The Board's
methods for identifying candidates for election to the Board of Directors (other
than those  proposed  by our  stockholders,  as  discussed  below)  include  the
solicitation of ideas for possible  candidates from a number of sources--members
of the Board of Directors;  our executives;  individuals personally known to the
members of the Board of Directors;  and other research. We may also from time to
time  retain  one  or  more  third-party   search  firms  to  identify  suitable
candidates.  The Board also  nominates  outside  candidates for inclusion on the
Board of Directors.

         A People's Liberation  stockholder may nominate one or more persons for
election as a director at an annual meeting of  stockholders  if the stockholder
complies with the notice,  information and consent  provisions  contained in our
Bylaws. In addition, the notice must be made in writing and set forth as to each
proposed nominee who is not an incumbent  Director (i) their name, age, business
address and, if known,  residence  address,  (ii) their principal  occupation or
employment,  (iii) the  number of  shares of stock of the  Company  beneficially
owned  and (iv) any  other  information  concerning  the  nominee  that  must be
disclosed  respecting nominees in proxy solicitations  pursuant to Rule 14(a) of
the  Exchange  Act of  1934.  The  recommendation  should  be  addressed  to our
Secretary.

         Among other  matters,  our full board of directors  which serves as the
nominating and governance committee:

         o        Reviews  the  desired  experience,  mix of  skills  and  other
                  qualities to assure appropriate Board composition, taking into
                  account the current  Board  members and the specific  needs of
                  People's Liberation and the Board;

         o        Conducts candidate searches, interviews prospective candidates
                  and  conducts   programs  to  introduce   candidates   to  our
                  management and operations,  and confirms the appropriate level
                  of interest of such candidates;

         o        Recommends  qualified  candidates  who bring  the  background,
                  knowledge, experience,  independence, skill sets and expertise
                  that would strengthen and increase the diversity of the Board;
                  and

         o        Conducts   appropriate   inquiries  into  the  background  and
                  qualifications of potential nominees.

         Based on the foregoing,  the Board of Directors  nominated  Colin Dyne,
Dean Oakey,  Susan White and Kenneth Wengrod for re-election as directors on the
Board of Directors,  subject to stockholder approval, for a one-year term ending
on or around the date of the 2009 Annual Meeting of Stockholders.

         COMPENSATION  OF DIRECTORS  AND  OFFICERS.  Our full board of directors
determines  the  compensation  to be paid to our  officers and  directors,  with
recommendations   from   management  as  to  the  amount  and/or  form  of  such
compensation.  While  our board may  utilize  the  services  of  consultants  in
determining  or  recommending  the  amount  or form of  executive  and  director
compensation,  the corporation does not at this time employ consultants for this
purpose.

         STOCKHOLDER  COMMUNICATIONS.  Holders of the Company's  securities  can
send communications to the Board of Directors via email to  BOARD@PEOPLESLIB.COM
or by telephoning the Secretary at the Company's  principal  executive  offices,
who will then relay the communications to the Board of Directors.

         CODE OF  ETHICS.  We have  adopted a Code of  Ethical  Conduct  that is
applicable  to all of our  officers,  directors  and  employees,  including  our
principal executive officer, principal financial officer,


                                       6

<PAGE>


principal accounting officer and persons performing similar functions. A copy of
our Code of Ethical  Conduct is filed as an exhibit to our Annual Report on Form
10-KSB.


EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth information  concerning all compensation
paid to all persons serving as our Chief  Executive  Officer and Chief Financial
Officer  during  fiscal year 2007 and our Chief  Operating  Officer for services
rendered during our fiscal years ended December 31, 2007 and 2006. The following
table  also  includes  compensation  related to our  highest  paid  employee  (a
non-officer)  with  compensation  in excess of  $100,000  during  the year ended
December 31, 2007. The aforementioned people are collectively referred to as our
"Named Executive Officers."


<TABLE>
<CAPTION>
NAME AND                                                            OPTION       ALL OTHER
PRINCIPAL POSITION          YEAR      SALARY          BONUS       AWARDS (1)    COMPENSATION      TOTAL
-------------------------   ----   ------------   ------------   ------------   ------------   ------------
<S>                         <C>    <C>            <C>            <C>            <C>            <C>         
Colin Dyne(2) ...........   2007   $    125,010   $     30,000   $       --     $    216,261   $    371,271
  Chief Executive Officer   2006   $       --     $       --     $       --     $    259,000   $    259,000

                            2007   $    313,619   $       --     $       --     $     32,423   $    346,042
Daniel Guez(3) ..........   2006   $    300,000   $    175,000   $       --     $     22,182   $    497,182
  Former Chief Executive
  Officer

Darryn Barber(4) ........   2007   $    213,698   $     25,000   $     55,856   $      8,660   $    303,214
  Chief Financial Officer   2006   $    203,278   $     40,000   $     87,771   $       --     $    331,049

Thomas Nields(5) ........   2007   $    217,190   $     20,000   $     59,619   $      6,052   $    302,861
  Chief Operating Officer   2006   $    165,958   $      7,500   $      6,678   $      1,792   $    181,928

Jennifer Wojinski(6) ....   2007   $    128,263   $     18,750   $     13,520   $       --     $    160,533
  Director of Design ....   2006   $    100,000   $      5,000   $      3,339   $       --     $    108,339
  -William Rast
</TABLE>


------------------
(1)      The amounts in this column represent the dollar amounts  recognized for
         financial  statement  reporting  purposes in the applicable fiscal year
         with respect to stock options granted in the applicable  fiscal year as
         well as prior  fiscal  years,  in  accordance  with  SFAS  123(R).  For
         additional  information  on the valuation  assumptions  with respect to
         option grants,  including the options granted in 2006 and 2007,  please
         see Note 2 to our financial statements for the years ended December 31,
         2007 and 2006.  These  amounts do not reflect the actual value that may
         be realized by the Named Executive  Officers which depends on the value
         of our shares in the future.

(2)      Mr. Dyne became our Chief Executive  Officer on May 21, 2007.  Prior to
         joining the  Company,  Mr.  Dyne  provided  consulting  services to the
         Company  and  received   consulting  fees  amounting  to  approximately
         $192,000  and  $259,000  during the years ended  December  31, 2007 and
         2006. Other  compensation for the year ended December 31, 2007 includes
         consulting fees of $192,479,  medical and disability insurance premiums
         of  $15,382  and car  allowance  of $8,400.  Mr.  Dyne does not have an
         employment agreement with the Company.

(3)      Mr. Guez became our President and Chief  Executive  Officer on November
         22, 2005. On October 2, 2007,  Mr. Guez resigned from his position with
         the  company to pursue  other  opportunities.  In  connection  with Mr.
         Guez's  resignation,  we entered into a Separation  Agreement  with Mr.
         Guez, the terms of which are described  below.  Other  compensation for
         the year ended December 31, 2007 includes medical insurance premiums of
         $16,852 and car allowance and expenses of $15,571.

(4)      Mr. Barber became our Chief Financial Officer on November 22, 2005. Mr.
         Barber was subject to an employment agreement which expired on November
         21,  2007,   the  terms  of  which  are  described   hereafter.   Other
         compensation  for the year ended  December  31, 2007  includes  medical
         insurance premiuns of $8,660.

(5)      Mr. Nields was named our Chief Operating Officer effective  November 6,
         2006.  Mr.  Nields  does  not  have an  employment  agreement  with the
         Company.  Other  compensation  for the year  ended  December  31,  2007
         includes medical insurance premiuns of $6,052.


                                       7

<PAGE>


(6)      Ms.  Wojinski  joined our Company in November  2005 as our  Director of
         Design for our William Rast product line. Ms. Wojinski does not have an
         employment agreement with the Company.

NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE

         In the  fiscal  year  ended  December  31,  2007,  we  compensated  our
executive  officers  through a combination of a base salary,  a cash bonus,  and
options to purchase shares of our common stock.  In addition,  we provided other
perquisites to some of our executive  officers,  which  consisted of medical and
disability insurance, and car expenses and allowances.

         In the second  quarter of 2007,  we  undertook a  restructuring  of our
senior  management team. The restructuring was designed to improve the financial
performance of the company and included the appointment of a new Chief Executive
Officer,  Colin Dyne, at a  compensation  level that we believe is below typical
market  conditions  for  similar  companies.  In order to  further  improve  our
operating cash flow, we reduced the cash  compensation  paid to our other senior
executives,  including  a  reduction  of the base  salary  of our  former  Chief
Executive  Officer,  Daniel Guez,  and the reduction of the base salaries of our
Chief  Financial  Officer and Chief  Operating  Officer.  We also terminated our
President, and eliminated the President position within the company.

         In 2007,  we granted Mr.  Barber  options to purchase an  aggregate  of
700,000  shares of our  common  stock and Mr.  Nields  options  to  purchase  an
aggregate  of 250,000  shares of our common  stock.  These  option  grants  were
intended  to  provide   non-cash   incentives  to  the  executives  to  maximize
shareholder  value. The bonuses paid to our senior management team in the fiscal
year ended  December 31, 2007 were  generally  low, and were  determined  by our
Board of Directors  based on the  performance  of the company and the  executive
officer.

EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT

     COLIN DYNE

         On May 21,  2007,  our Board of Directors  appointed  Colin Dyne as our
Chief Executive  Officer and Co-Chairman of the Board of Directors.  During 2007
and through  March 31,  2008,  Mr. Dyne  received an annual  salary of $200,000,
which was paid in accordance with our standard  payroll  practices,  and an auto
allowance of $1,200 per month.  Effective  April 1, 2008, Mr. Dyne's base salary
was increased to $395,000 per annum, with an auto allowance of $2,000 per month.
Mr.  Dyne's  annual  bonus  amounted to $30,000 for the year ended  December 31,
2007.

     DANIEL GUEZ

         On  October 2,  2007,  Daniel  Guez,  who was  serving as our  Creative
Director,  resigned  from his position  with us. In  connection  with Mr. Guez's
resignation,  we entered into a separation agreement and mutual release with Mr.
Guez. The separation  agreement  provided that the certain  amended and restated
employment  agreement  dated June 19,  2007  between us and Mr.  Guez  (which is
further  described  below) be terminated and of no further force or effect,  and
that except as  provided  in the  separation  agreement,  all  responsibilities,
duties  and  obligations  of Mr.  Guez  to us and of us to Mr.  Guez  under  the
employment  agreement  are  terminated  and of no further  force or effect.  The
separation  agreement  provided  that we pay Mr.  Guez three  months of his base
salary of $16,667 per month,  and three  months of his  automobile  allowance of
$1,200 per month.  In addition,  Mr. Guez and his eligible  family  members will
continue to receive medical benefits for a period of twelve months from the date
of his resignation.


                                       8

<PAGE>


     AMENDED AND RESTATED EMPLOYMENT AGREEMENT WITH DANIEL GUEZ

         On May 21, 2007,  Daniel Guez resigned as our Chief Executive  Officer.
On June 19, 2007,  the Company  entered into an Amended and Restated  Employment
Agreement with Daniel Guez, which amended and restated the employment  agreement
entered  into  between us and Mr. Guez on January  12,  2007,  as  modified  and
supplemented by that certain addendum entered into as of May 21, 2007.  Pursuant
to the  Amended  and  Restated  Employment  Agreement,  Mr.  Guez  served as the
Co-Chairman of our Board of Directors  (until his resignation from this position
on October 12,  2007),  and  continued  to serve as our Creative  Director.  The
Amended and Restated Employment Agreement was for an initial term of three years
beginning  January 12, 2007 and was to be automatically  extended for additional
one year  terms  unless we or Mr.  Guez  elected  not to extend  the term of the
Amended and Restated  Employment  Agreement.  Effective July 1, 2007,  under the
Amended and Restated  Employment  Agreement,  Mr. Guez received a base salary of
$200,000 per annum,  subject to upward adjustment and an automobile allowance of
$1,200 per month,  inclusive of insurance,  gas, and  maintenance  on Mr. Guez's
vehicle.

         The  agreement  provided  that  if  during  the  employment  period  we
terminated  Mr. Guez's  employment  without cause or if Mr. Guez  terminated his
employment  for good  reason,  Mr.  Guez would be paid  $600,000  in  severance.
Alternatively,  if we failed to extend  the period of the  employment  period as
provided above,  and at any time within six months  following  expiration of the
employment period, we terminated Mr. Guez's employment without cause or Mr. Guez
terminated his employment for good reason or without good reason, Mr. Guez would
be paid $300,000 in severance.  In addition to the applicable  severance  amount
payable to Mr. Guez as provided above,  if Mr. Guez's  employment was terminated
for any of the reasons set forth in this  paragraph,  the  employment  agreement
provided that all of Mr. Guez's outstanding stock options,  restricted stock and
other  equity  awards  would  accelerate  and become fully vested on the date of
termination.

         The employment  agreement  also provided that if Mr. Guez's  employment
was  terminated  by reason  of his death or  disability  during  the  employment
period, Mr. Guez, his estate or beneficiaries,  as applicable, would be entitled
to be paid a lump sum payment of $400,000,  and all  outstanding  stock options,
restricted  stock and other equity awards  granted to Mr. Guez would  accelerate
and become fully vested on the date of termination.  In addition, the employment
agreement  provided  that  for a  period  of 18  months  following  the  date of
termination,  the Company  would  continue to provide Mr. Guez and his  eligible
family members with group health  insurance  coverage.  The Amended and Restated
Employment Agreement did not include any contractual bonus provisions.

     ORIGINAL EMPLOYMENT AGREEMENT WITH MR. GUEZ

         Mr.  Guez's  original  employment  agreement  with us  entered  into on
January 12,  2007,  provided  that Mr.  Guez would serve as our Chief  Executive
Officer and/or Creative  Director,  and Chairman of our Board of Directors.  The
agreement  was for the same  duration  as the amended  and  restated  employment
agreement  described  above.  However,  under the original  agreement,  Mr. Guez
received the following compensation:

         o        Base  salary  of  $400,000   per  annum,   subject  to  upward
                  adjustment;

         o        Annual performance bonus in the amount equal to the sum of (i)
                  ten  percent  (10%)  of  the  first  three   million   dollars
                  ($3,000,000)  of the  Company's  consolidated  EBITDA for such
                  fiscal  year,  and (ii) five percent (5%) of the amount of the
                  Company's  consolidated  EBITDA,  if any,  in  excess of three
                  million dollars ($3,000,000) for such fiscal year; and

         o        Automobile and related expense allowance of $2,300 per month.


                                       9

<PAGE>


         The  original   employment   agreement  provided  that  if  during  the
employment  period,  (a) we terminated Mr. Guez's employment without cause or if
Mr. Guez  terminated his employment for good reason,  or (b) if (i) we failed to
extend the period of the employment period as provided in the contract, and (ii)
at any time within six months following  expiration of the employment period, we
terminated  Mr.  Guez's  employment  without  cause or Mr. Guez  terminated  his
employment  for good  reason or  without  good  reason,  Mr.  Guez would be paid
severance  in an amount equal to one and  one-half  times the sum of Mr.  Guez's
base salary in effect on the date of  termination  plus the average annual bonus
received by Mr. Guez for the two complete fiscal years  immediately prior to the
termination date, and all of his outstanding stock options, restricted stock and
other  equity  awards  would  accelerate  and become fully vested on the date of
termination.  The original  employment  agreement  provided  that if Mr.  Guez's
employment  was  terminated  by  reason of his death or  disability  during  the
employment period, Mr. Guez, his estate or beneficiaries,  as applicable,  would
be entitled to be paid a lump sum payment of  one-hundred  percent (100%) of Mr.
Guez's then  current  annual base salary,  and all  outstanding  stock  options,
restricted  stock and other equity awards  granted to Mr. Guez would  accelerate
and become fully vested on the date of  termination.  In addition,  the original
employment  provided  that  for a  period  of 18  months  following  the date of
termination,  the Company  would  continue to provide Mr. Guez and his  eligible
family members with group health insurance coverage.

     DARRYN BARBER

         On January 3, 2006, we entered into an employment agreement with Darryn
Barber  pursuant  to which he served as our Chief  Financial  Officer  and Chief
Operating  Officer.  The  agreement  was for a term of 2 years  commencing as of
November 22, 2005 and  terminating on November 21, 2007.  Mr. Barber  received a
base salary of $212,000 in the first year of his appointment, and was to receive
a base salary of $232,000  during the second  year of his  contract.  On June 5,
2007, in connection with a restructuring of senior management, we and Mr. Barber
agreed to reduce the base salary of Mr.  Barber to 200,000  per annum  beginning
June 5, 2007.  In  addition  to his base  salary,  Mr.  Barber was to receive an
annual  bonus  of not less  than  $25,000  and no more  than  $100,000  based on
objectives determined by our Board of Directors.  On July 7, 2006, in accordance
with his employment agreement, Mr. Barber was granted a stock option to purchase
300,000 shares of our common stock at an exercise price of $1.25 per share which
is now fully vested.  In the event Mr. Barber was terminated  without cause,  we
were to continue to pay Mr.  Barber's then current base salary for the remaining
term of the agreement, without regard to any employment of Mr. Barber by a third
party.

         On November 8, 2006, we and Darryn Barber  entered into an amendment to
his employment  agreement.  Pursuant to the amendment,  Mr. Barber resigned from
his position as Chief Operating Officer of the Company, effective the same date.
Mr.  Barber  will  continue  to serve us as our  Chief  Financial  Officer.  The
amendment also extends the exercise  period of Mr.  Barber's  option to purchase
300,000 shares of our common stock to a period of one year following termination
of Mr. Barber's  service with us for any reason other than for cause (as defined
in the employment  agreement).  Previously,  Mr.  Barber's  option was to remain
exercisable  for a period of at least six months  following  termination  of his
service with us for any reason other than for cause.  Mr.  Barber's annual bonus
amounted to $25,000 for the year ended December 31, 2007.

         Effective  April 1, 2008,  Mr.  Barber's  base salary was  increased to
$250,000 per annum.

     THOMAS NIELDS

         On November 8, 2006,  Thomas Nields was  appointed our Chief  Operating
Officer. Pursuant to an oral agreement between us and Mr. Nields, Mr. Nields was
to be paid an  annual  salary  of  $250,000,  and a  discretionary  bonus  to be
determined annually by our Board of Directors or Compensation


                                       10

<PAGE>


Committee.  On June 5,  2007,  in  connection  with a  restructuring  of  senior
management,  the  company  and Mr.  Nields  agreed to reduce his base  salary to
$200,000 per annum  beginning June 5, 2007. Mr. Nield's annual bonus amounted to
$20,000 for the year ended  December  31,  2007.  Effective  April 1, 2008,  Mr.
Nield's base salary was increased to $235,000 per annum.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2007

         The following table presents information  regarding outstanding options
held by our Named  Executive  Officers  as of the end of our  fiscal  year ended
December 31, 2007. None of the Named Executive Officers exercised options during
the fiscal year ended December 31, 2007.


<TABLE>
<CAPTION>
                          NUMBER OF SECURITIES UNDERLYING
                               UNEXERCISED OPTIONS (#)        OPTION EXERCISE         OPTION
NAME                      EXERCISABLE       UNEXERCISABLE      PRICE RANGE ($)    EXPIRATION DATE
                        ----------------   ----------------   ----------------   -----------------

<S>                              <C>                <C>           <C>            <C>    
Darryn Barber (1) ...            150,000               --         $   0.46       June 5, 2017
                                    --              100,000       $   0.38       August 7, 2017
                                    --              450,000       $   0.50       November 14, 2017

Tom Nields (2) ......            150,000               --         $   0.46       June 5, 2017
                                    --              100,000       $   0.38       August 7, 2017

Jennifer Wojinski (3)               --               50,000       $   1.25       April 9, 2017
                                   8,750             26,250       $   0.46       June 5, 2017
                                    --               15,000       $   0.38       August 7, 2017
</TABLE>


(1)      On June 5, 2007,  our Board of  Directors  approved  an award to Darryn
         Barber of options to purchase  150,000 shares of our common stock.  The
         options have an exercise price of $0.46 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, are fully vested, and have a term of ten years.

         On August 7, 2007,  our Board of Directors  approved an award to Darryn
         Barber of options to purchase  100,000 shares of our common stock.  The
         options have an exercise price of $0.38 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, and have a term of ten years. The options vest 50% on August
         1, 2008, and the remaining 50% shall vest in equal monthly installments
         thereafter through August 1, 2009.

         On  November  14,  2007,  our Board of  Directors  approved an award to
         Darryn  Barber of  options  to  purchase  450,000  shares of our common
         stock.  The  options  have an  exercise  price of $0.50 per share,  the
         closing  price of our  common  stock on the  Over-The-Counter  Bulletin
         Board  on the date of the  award,  and  have a term of ten  years.  The
         options vest in quarterly installments of 45,000 beginning February 14,
         2008 through May 14, 2010.

         On July 7, 2006,  Mr. Barber was granted an option to purchase  300,000
         shares  of our  common  stock at a per share  exercise  price of $1.25,
         which option terminates July 7, 2016. This option is fully vested as of
         December 31, 2007.

(2)      On June 5, 2007,  our Board of  Directors  approved  an award to Thomas
         Nields of options to purchase  150,000 shares of our common stock.  The
         options have an exercise price of $0.46 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, are fully vested, and have a term of ten years.

         On August 7, 2007,  our Board of Directors  approved an award to Thomas
         Nields of options to purchase  100,000 shares of our common stock.  The
         options have an exercise price of $0.38 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, and have a term of ten years. The options vest 50% on August
         1, 2008, and the remaining 50% shall vest in equal monthly installments
         thereafter through August 1, 2009.

         During the year ended  December  31,  2006,  Mr.  Nields was granted an
         option to purchase  100,000  shares of our common  stock at a per share
         price of $1.25,  which option  terminates on June 22, 2016.  The option
         vests 25% on June 22, 2007,  and the  remaining 75% shall vest in equal
         monthly  installments  thereafter through June 22, 2010. As of December
         31, 2007, 37,500 shares of this option were fully vested.

(3)      On April 9, 2007, our Board of Directors  approved an award to Jennifer
         Wojinski of options to purchase 50,000 shares of our common stock.  The
         options  have an  exercise  price of $1.25  per share and a term of ten
         years.  The options vest 25% on April 9, 2008,  and the  remaining  75%
         shall vest in equal monthly  installments  thereafter  through April 9,
         2011.


                                       11

<PAGE>


         On June 5, 2007,  our Board of Directors  approved an award to Jennifer
         Wojinski of options to purchase 35,000 shares of our common stock.  The
         options have an exercise price of $0.46 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, and a term of ten years. The options vest in eight quarterly
         installments beginning July 1, 2007 through April 1, 2009.

         On August 7, 2007, our Board of Directors approved an award to Jennifer
         Wojinski of options to purchase 15,000 shares of our common stock.  The
         options have an exercise price of $0.38 per share, the closing price of
         our common stock on the Over-The-Counter  Bulletin Board on the date of
         the award, and have a term of ten years. The options vest 50% on August
         1, 2008, and the remaining 50% shall vest in equal monthly installments
         thereafter through August 1, 2009.

         During the year ended  December 31, 2006,  Ms.  Wojinski was granted an
         option to  purchase  50,000  shares of our common  stock at a per share
         price of $1.25,  which option  terminates on June 22, 2016.  The option
         vests 25% on June 22, 2007,  and the  remaining 75% shall vest in equal
         monthly  installments  thereafter through June 22, 2010. As of December
         31, 2007, 18,750 shares of this option were fully vested.

DIRECTOR COMPENSATION

         The general policy of our Board is that  compensation  for non-employee
directors should be a mix of cash and equity based  compensation.  We do not pay
management  directors for Board  service in addition to their  regular  employee
compensation.  Currently,  we pay our  non-employee  directors  an annual fee of
$10,000. In July 2007, our non-employee directors,  Mr. Oakey, Ms. White and Mr.
Carter, also received 24,000 options each to purchase shares of our common stock
and $5,000 each in payment for service on the Board of directors  from July 2007
through  December 2007. In September 2007, our  non-employee  director,  Kenneth
Wengrod, also received 24,000 options to purchase shares of our common stock and
$2,500 in payment  for service on the Board of  directors  from  September  2007
through  December  2007. Our directors are also  reimbursed for travel  expenses
associated with attendance at Board meetings.  There were no reimbursements  for
travel expenses for the fiscal year ended December 31, 2007.

         The following table presents information regarding compensation paid to
our non-employee directors for our fiscal year ended December 31, 2007.

                       FEES EARNED
                            OR           OPTION       ALL OTHER
NAME                   PAID IN CASH    AWARDS (6)    COMPENSATION       TOTAL
---------------------  ------------   ------------   ------------   ------------
Dean Oakey(1) .......  $     10,000   $      3,353   $       --     $     13,353
Kevin Keating(2) ....  $      2,000   $       --     $       --     $      2,000
Susan White(3) ......  $      5,000   $      3,353   $     93,994   $    102,347
Troy Carter(4) ......  $      5,000   $      3,353   $       --     $      8,353
Kenneth Wengrod(5) ..  $      2,500   $      4,694   $       --     $      7,194

-------------------
(1)      Mr.  Oakey has been a member of our Board of Directors  since  November
         2005.  On July 6, 2007,  Mr.  Oakey was  granted an option to  purchase
         24,000  shares of our  common  stock at a per share  exercise  price of
         $0.31.  This option vested 12,000 shares on the date of grant and vests
         1,000  shares  monthly   thereafter  through  July  2008.  This  option
         terminates  on July 6,  2017.  Mr.  Oakey did not  exercise  any of his
         option awards during the fiscal years ended December 31, 2007 and 2006.

(2)      Mr.  Keating  served as a member of our  Board of  Directors  beginning
         February  2005. On June 22, 2006,  Mr. Keating was granted an option to
         purchase  36,000  shares of our  common  stock at a per share  exercise
         price of $1.25.  This option  vested 18,000 shares on the date of grant
         and 1,500 shares monthly thereafter through July 2007. On May 21, 2007,
         Mr. Keating  resigned from our Board of Directors.  Options to purchase
         36,000  shares of our common  stock were  cancelled  as a result of Mr.
         Keating's termination.

(3)      Ms. White  joined our Board of  Directors  on May 21, 2007.  On July 6,
         2007, Ms. White was granted an option to purchase  24,000 shares of our
         common stock at a per share exercise price of $0.31. This option vested
         12,000  shares  on the date of grant  and vests  1,000  shares  monthly
         thereafter  through July 2008. This option  terminates on July 6, 2017.
         Ms. White did not  exercise  any of her options  during the fiscal year
         ended December 31, 2007. Ms. White also provided consulting services to
         the Company and received  $93,994 of consulting  fees during the fiscal
         year ended December 31, 2007.


                                       12

<PAGE>


(4)      Mr.  Carter  joined our Board of Directors on May 21, 2007.  On July 6,
         2007, Mr. Carter was granted an option to purchase 24,000 shares of our
         common stock at a per share exercise price of $0.31. This option vested
         12,000  shares  on the date of grant  and vests  1,000  shares  monthly
         thereafter  through July 2008. This option  terminates on July 6, 2017.
         Mr.  Carter did not exercise any of his options  during the fiscal year
         ended December 31, 2007. On April 2, 2008, Mr. Carter resigned from our
         Board of  Directors.  Vested  options to purchase  20,000 shares of our
         common  stock will be  cancelled  if Mr.  Carter does not  exercise the
         options within three months of the date of termination.

(5)      Mr.  Wengrod  joined our Board of Directors on September  21, 2007.  On
         September  21,  2007,  Mr.  Wengrod  was  granted an option to purchase
         24,000  shares of our  common  stock at a per share  exercise  price of
         $0.50.  This option vested 12,000 shares on the date of grant and vests
         1,000 shares monthly  thereafter  through  September  2008. This option
         terminates on September 21, 2017.  Mr.  Wengrod did not exercise any of
         his options during the fiscal year ended December 31, 2007.

(6)      The amounts in this column represent the dollar amounts  recognized for
         financial  statement  reporting  purposes in the applicable fiscal year
         with respect to stock options granted in the applicable  fiscal year as
         well as prior  fiscal  years,  in  accordance  with  SFAS  123(R).  For
         additional  information  on the valuation  assumptions  with respect to
         option grants,  including the options granted in 2006 and 2007,  please
         see Note 2 to our financial statements for the years ended December 31,
         2007 and 2006.  These  amounts do not reflect the actual value that may
         be realized by the  Directors  which depends on the value of our shares
         in the future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The following table sets forth certain information regarding our equity
compensation plans as of December 31, 2007.


<TABLE>
<CAPTION>
                        NUMBER OF SECURITIES TO     WEIGHTED-AVERAGE         NUMBER OF SECURITIES
                        BE ISSUED UPON EXERCISE     EXERCISE PRICE OF       REMAINING AVAILABLE FOR
                        OF OUTSTANDING OPTIONS,   OUTSTANDING OPTIONS,   FUTURE ISSUANCE UNDER EQUITY
                          WARRANTS AND RIGHTS      WARRANTS AND RIGHTS        COMPENSATION PLANS
                        -----------------------   --------------------   ----------------------------
<S>                            <C>                       <C>                        <C>      
Equity compensation
plans approved by
security holders ....          4,916,000                 $  1.37                    1,084,000
Equity compensation
plans not approved by
security holders ....          1,025,000                 $  0.94                         --
Total ...............          5,941,000                 $  1.30                    1,084,000
</TABLE>


MATERIAL  FEATURES  OF  INDIVIDUAL  EQUITY  COMPENSATION  PLANS NOT  APPROVED BY
STOCKHOLDERS

         Sanders Morris Harris Inc. acted as placement  agent in connection with
our  capital  raise,  which we  completed  on  November  23,  2005.  In  partial
consideration for their services as placement agent, we issued to Sanders Morris
Harris and its  employees,  Dean Oakey and Jonah Sulak,  warrants to purchase an
aggregate of 625,000  shares of common  stock at an exercise  price of $1.25 per
share. The warrants are fully vested and have a term of 5 years.

         Effective October 1, 2007, we entered into a consulting  agreement with
Europlay  Capital  Advisors,  LLC. Under the terms of the consulting  agreement,
Europlay  Capital  Advisors  will be our  exclusive  financial  advisor to raise
capital and provide other financial  advisory and investment banking services to
us for a term of one year. In  conjunction  with the  consulting  agreement,  we
issued to Europlay  Capital Advisors a warrant to purchase 250,000 shares of our
common stock at an exercise  price of $0.50 per share.  The warrant vests over a
period of twelve  months in equal  monthly  installments  and has a term of five
years. No proceeds were received by us as a result of the warrant issuance.

         On November 13, 2007, we issued a warrant to purchase 150,000 shares of
our common stock to William Rast  Enterprises,  LLC. The warrant has an exercise
price of $0.40,  vested  immediately  and has a term of five years.  No proceeds
were received by us as a result of the warrant issuance.


                                       13

<PAGE>


REPORT OF BOARD OF DIRECTORS ON AUDIT COMMITTEE FUNCTIONS 

         We do not have an Audit  Committee.  For the fiscal year ended December
31, 2007, the Company's  Board of Directors has performed the duties of an Audit
Committee and is responsible for providing  objective oversight of the Company's
internal controls and financial reporting process.

         In fulfilling  its  responsibilities  for the financial  statements for
fiscal year 2007, the Board of Directors:

         o        Reviewed and discussed the audited  financial  statements  for
                  the  year  ended   December  31,  2007  with   management  and
                  Grobstein,  Horwath  &  Company,  LLP  (the  "Auditors"),  the
                  Company's independent auditors; and

         o        Received written  disclosures and the letter from the Auditors
                  regarding  its   independence   as  required  by  Independence
                  Standards  Board Standard No. 1. The Board  discussed with the
                  Auditors their independence.

         In fulfilling  its  responsibilities  for the financial  statements for
fiscal year 2007, the Board of Directors discussed with the Auditors the matters
required to be discussed by Statement on Auditing  Standards  No. 61 relating to
the conduct of the audit.

         Based on the  Board  of  Directors'  review  of the  audited  financial
statements  and  discussions  with  management  and the  Auditors,  the Board of
Directors  approved the  inclusion of the audited  financial  statements  in the
Corporation's  Annual Report on Form 10-KSB for the year ended December 31, 2007
for filing with the SEC.

         The  Board  of  Directors   also   considered  the  status  of  pending
litigation,  if any,  and other areas of  oversight  relating  to the  financial
reporting and audit process that the Board determined appropriate.

         The  Board  of  Directors  has  considered  whether  the  provision  of
non-audit  services,  if any,  is  compatible  with  maintaining  the  principal
accountant's independence.

                               BOARD OF DIRECTORS

                               Colin Dyne
                               Dean Oakey
                               Susan White
                               Kenneth Wengrod

         The  information  in this  Report  of Board of  Directors  shall not be
deemed to be  "soliciting  material," or to be "filed" with the  Securities  and
Exchange  Commission or to be subject to Regulation 14A or 14C as promulgated by
the Securities and Exchange  Commission,  or to the liabilities of Section 18 of
the Exchange Act.


                                       14

<PAGE>


I
NDEPENDENT PUBLIC ACCOUNTANTS

         Effective  as of November  30, 2005,  we engaged  Grobstein,  Horwath &
Company LLP as our principal  independent  accounting  firm. The  appointment of
Grobstein,  Horwath & Co. was approved by the unanimous  written  consent of our
Board of  Directors.  All audit work for the year ended  December  31,  2007 was
performed  by the full time  employees  of  Grobstein,  Horwath  & Company  LLP.
Representatives of Grobstein,  Horwath & Company, LLP are expected to be present
at our Annual Meeting and will have the  opportunity to make a statement if they
desire  to do so. In  addition,  at the  Annual  Meeting,  Grobstein,  Horwath &
Company,  LLP is expected to be  available to respond to  appropriate  questions
posed by our stockholders.

     AUDIT FEES

         Fees for audit and review  services  provided by  Grobstein,  Horwath &
Company, LLP totaled  approximately  $146,000 during the year ended December 31,
2007,  including  fees  associated  with the  December  31, 2006 audit,  and the
reviews of our quarterly  financial  statements  for the periods ended March 31,
2007, June 30, 2007 and September 30, 2007.

         Fees for audit and review  services  provided by  Grobstein,  Horwath &
Company, LLP totaled  approximately  $117,000 during the year ended December 31,
2006,  including  fees  associated  with the  December  31, 2005 audit,  and the
reviews of our quarterly  financial  statements  for the periods ended March 31,
2006, June 30, 2006 and September 30, 2006.

     AUDIT-RELATED FEES

         There  were no  audit-related  services  provided  for the years  ended
December 31, 2007 and 2006.

     TAX FEES

         Fees for tax services  provided by  Grobstein,  Horwath & Company,  LLP
during the year ended December 31, 2007 amounted to approximately  $27,175.  Tax
services provided during the year ended December 31, 2007 primarily consisted of
the  preparation  of the  Federal  and State tax returns for the Company and its
subsidiaries and other tax compliance services.

         Fees for tax services  provided by  Grobstein,  Horwath & Company,  LLP
during the year ended December 31, 2006 amounted to approximately  $29,000.  Tax
services provided during the year ended December 31, 2006 primarily consisted of
the  preparation  of the  Federal  and State tax returns for the Company and its
subsidiaries and other tax compliance services.

     ALL OTHER FEES

         No other fees were  incurred  during the years ended  December 31, 2007
and 2006 for services provided by Grobstein,  Horwath & Company,  LLP, except as
described above.

POLICY  ON  PRE-APPROVAL  OF  AUDIT  AND  PERMISSIBLE   NON-AUDIT   SERVICES  OF
INDEPENDENT AUDITORS

         Consistent  with  policies of the  Securities  and Exchange  Commission
regarding auditor  independence,  our Board of Directors has  responsibility for
appointing,  setting  compensation  and overseeing  the work of the  independent
auditor.  In  recognition  of this  responsibility,  our Board of Directors  has
established a policy to pre-approve all audit and permissible non-audit


                                       15

<PAGE>


services  provided  by the  independent  auditor.  Our  Board of  Directors  has
considered  whether the  provision  of  non-audit  services is  compatible  with
maintaining the independent accountant's independence, and has approved any such
services.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

         Other than the employment  arrangements  described  above in "Executive
Compensation" and the transactions described below, since January 1, 2006, there
has not been,  nor is there  currently  proposed,  any  transaction or series of
similar transactions to which we were or will be a party:

         o        in which the amount involved exceeds the lessor of $120,000 or
                  1% of the average of our assets at year-end for the last three
                  completed fiscal years; and

         o        in which any  director,  executive  officer,  shareholder  who
                  beneficially owns 5% or more of our common stock or any member
                  of  their  immediate  family  had or  will  have a  direct  or
                  indirect material interest.

TRANSACTIONS WITH OFFICERS AND DIRECTORS AND 5% SHAREHOLDERS

         Colin Dyne  became our Chief  Executive  Officer  and a director of the
company on May 21, 2007. Colin Dyne is a significant  stockholder and has served
as a consultant to the company since December 2005,  advising on strategic sales
initiatives. We paid $192,000 and $259,000 in consulting fees to Mr. Dyne during
the years ended December 31, 2007 and 2006.

         Mr. Dyne also  serves as Vice  Chairman  of the Board of  Directors  of
Talon  International,  Inc.  (OTCBB:  TALN),  owner of Talon  zippers and a full
service trim management supplier for manufacturers of fashion apparel.  Mr. Dyne
founded Tag-It, Inc., a subsidiary of Talon, in 1991. Mr. Dyne served as Talon's
President from inception and as its Chief  Executive  Officer from 1997 to 2005.
During the year ended  December 31, 2007, we purchased  trim products from Talon
amounting to approximately $395,000.

         Kenneth Wengrod,  a member of our Board of Directors,  currently serves
as President of FTC Commercial  Corp., a company which he founded in 2002 and in
which he continues to hold a minority equity  position.  We are party to various
factoring  agreements  with FTC  pursuant to which FTC  purchases a  substantial
portion of the Company's trade accounts  receivable and assumes credit risk with
respect to certain  accounts.  As of December 31, 2007, total factored  accounts
receivable  included in due from factor  amounted to  approximately  $2,552,000.
Outstanding advances as of December 31, 2007 amounted to approximately $649,000,
and are included in the due from factor balance.

         We are party to a consulting  arrangement  with Susan White pursuant to
which Ms. White provides image and marketing  consulting  services to us. During
2007, we have paid Ms. White approximately $94,000 for such consulting services.

PROMOTERS AND CONTROL PERSONS

         On December  15, 2004,  Keating  Reverse  Merger Fund,  LLC, a Delaware
limited liability company,  David L. Hadley (our former chief executive officer)
and Natural  Technologies,  Inc., an Arizona corporation entered into a purchase
agreement  pursuant to which certain  shareholders of the company sold 5,625,287
shares (on a pre-reverse  stock split basis) of the common stock of the company,
representing  approximately  70.99% of the outstanding shares of common stock of
the company,  to Keating  Reverse  Merger Fund,  LLC, for an aggregate  purchase
price of $375,000.


                                       16

<PAGE>


         On January 31,  2005,  we entered  into an  Assumption  Agreement  with
Global Medical  Technologies,  Inc., Natural  Technologies,  Inc. and Mr. Hadley
pursuant  to which we  contributed  all of the  shares  of  common  stock of our
inactive  subsidiaries,  Century  Pacific  Financial  Corp. and Century  Pacific
Investment Management Corporation,  to Global Medical Technologies,  Inc. Global
Medical  Technologies,  Inc.  agreed to  assume  all of our  liabilities  and to
indemnify  us for any loss we incur with  respect to such  assumed  liabilities.
Global Medical,  Natural Technologies,  and Mr. Hadley also released us from all
obligations and claims.  In February 2005, we distributed all of the outstanding
shares of common stock of Global Medical Technologies,  Inc. on a pro rata basis
to our stockholders.  Following the distribution,  Global Medical  Technologies,
Inc.  continued to operate its medical equipment  reconditioning  business as an
independent  company.  After this distribution,  we existed as a "shell company"
under the name of Century  Pacific  Financial  Corporation  with nominal  assets
whose sole business was to identify,  evaluate and investigate various companies
to acquire or with which to merge.

         On February 16, 2005,  we received a  non-interest  bearing,  unsecured
demand loan from Keating Reverse Merger Fund in the amount of $50,000 to provide
working  capital for operating  expenses.  On June 28, 2005 we issued  5,000,000
restricted common shares (on a pre-reverse stock split basis) in full payment of
the $50,000 note payable to Keating  Reverse  Merger  Fund.  We granted  Keating
Reverse Merger Fund piggyback registration rights with respect to these shares.

         On November 22, 2005, we consummated  an exchange  transaction in which
we acquired all of the  outstanding  ownership  interests of Bella Rose,  LLC, a
California limited liability company ("Bella Rose") and Versatile Entertainment,
Inc., a California corporation  ("Versatile") from their respective shareholders
and members, in exchange for an aggregate of 2,460,106.34 shares of our series A
convertible preferred stock which, on January 5, 2006, converted into 26,595,751
shares of our common stock on a post reverse  stock split basis.  At the closing
of the exchange  transaction,  Versatile and Bella Rose became our  wholly-owned
subsidiaries.  The exchange  transaction  was accounted for as a reverse  merger
(recapitalization)  with  Versatile  and Bella Rose deemed to be the  accounting
acquirers, and People's Liberation, Inc. the legal acquirer.

         On November 22,  2005,  we entered  into a certain  financial  advisory
agreement with Keating Securities,  LLC under which Keating Securities,  LLC was
compensated by us for its advisory  services  rendered to us in connection  with
the closing of the exchange transaction with Versatile  Entertainment,  Inc. and
Bella Rose,  LLC. The  transaction  advisory fee was $350,000,  with the payment
thereof made at the closing of the exchange transaction.

         Kevin R. Keating,  a former  director of the company,  is the father of
the principal member of Keating Investments,  LLC. Keating  Investments,  LLC is
the  managing  member of Keating  Reverse  Merger Fund and is also the  managing
member and 90% owner of Keating Securities, LLC, a registered broker-dealer.


                                       17

<PAGE>



SECURITY  OWNERSHIP  OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT  AND RELATED
STOCKHOLDER MATTERS

         The following  table  presents  information  regarding  the  beneficial
ownership of our common stock as of April 21, 2008 by:

         o        each  of  the  executive   officers   listed  in  the  summary
                  compensation table;

         o        each of our directors;

         o        all of our directors and executive officers as a group; and

         o        each  shareholder  known to us to be the  beneficial  owner of
                  more than 5% of our common stock.

         Beneficial  ownership is determined in accordance with the rules of the
SEC  and  generally   includes  voting  or  investment  power  with  respect  to
securities.  Unless otherwise indicated below, to our knowledge, the persons and
entities  named in the table  have sole  voting and sole  investment  power with
respect to all shares  beneficially  owned,  subject to community  property laws
where applicable. Shares of our common stock subject to options from the Company
that are currently  exercisable or exercisable  within 60 days of April 21, 2008
are deemed to be outstanding and to be beneficially  owned by the person holding
the options for the purpose of computing the percentage ownership of that person
but are not treated as  outstanding  for the purpose of computing the percentage
ownership of any other person.

         The information  presented in this table is based on 36,002,563  shares
of our common stock outstanding on April 21, 2008.  Unless otherwise  indicated,
the  address of each of the  executive  officers  and  directors  and 5% or more
shareholders  named below is c/o People's  Liberation,  Inc., 150 West Jefferson
Boulevard, Los Angeles, CA 90007.

 
                                        NUMBER OF SHARES      PERCENTAGE OF
NAME OF BENEFICIAL OWNER                BENEFICIALLY OWNED   SHARES OUTSTANDING
-------------------------------------   ------------------   ------------------
EXECUTIVE OFFICERS AND DIRECTORS:
Colin Dyne (1) ......................            7,731,560                 21.5%
   Director, Chief Executive
   Officer and Secretary
Darryn Barber (2) ...................              672,560                  1.8%
   Chief Financial Officer
Thomas Nields (3) ...................              487,941                  1.3%
   Chief Operating Officer
Dean Oakey (4) ......................              430,983                  1.2%
   Director
Susan White (5) .....................               23,000                    *
   Director
Kenneth Wengrod (6) .................               20,000                    *
   Director
Named Directors and officers
  as a group (6 persons) (7) ........            9,366,044                 25.2%

5% SHAREHOLDERS:
Microcapital Fund LP and
  Microcapital Fund Ltd (8) .........            2,800,000                  7.7%
Gerard Guez (9) .....................           10,698,387                 29.7%
Bristol Investment Fund Ltd (10) ....            2,900,000                  8.1%

------------------
* Less than 1%

(1)      Consists of 7,731,560 shares of common stock.


                                       18

<PAGE>


(2)      Consists  of  132,560  shares of common  stock and  540,000  options to
         purchase common stock.

(3)      Consists  of  290,024  shares of common  stock and  197,917  options to
         purchase common stock.

(4)      Consists of 93,483 shares of common stock, warrants to purchase 278,500
         shares of common stock and options to purchase  59,000 shares of common
         stock.

(5)      Consists of 23,000 options to purchase common stock.

(6)      Consists of 20,000 options to purchase common stock

(7)      Consists  of  8,247,627  shares of common  stock,  warrants to purchase
         278,500  shares of common stock and options to purchase  839,917 shares
         of common stock

(8)      Consists of  1,333,600  shares of common stock and warrants to purchase
         533,440  shares of common stock at an exercise price of $2.00 per share
         owned by  Microcapital  Fund LP and 666,400  shares of common stock and
         warrants  to  purchase  266,560  shares of common  stock at an exercise
         price of $2.00  owned by  Microcapital  Fund  Ltd.  Ian P.  Ellis,  the
         general  partner of  MicroCapital  Fund LP and as  Director  of Fund of
         Microcapital Fund Ltd.,  exercises voting and investment authority over
         the shares held by these companies. The address of Microcapital Fund LP
         and Microcapital Fund Ltd is 201 Post Street, San Francisco, California
         94108.

(9)      Consists of 10,698,387  shares of common  stock.  On December 10, 2007,
         Gerard Guez entered into a purchase agreement with Daniel Guez, whereby
         Gerard Guez purchased  10,698,387 shares of common stock held by Daniel
         Guez.  The address of Gerard Guez is 9000 Sunset  Boulevard,  Penthouse
         West Hollywood, CA 90069.

(10)     Consist of 2,900,000 shares of common stock. Paul Kessler, as Director,
         exercises voting and investment  authority over the shares held by this
         company.  The address of Bristol  Investment  Fund,  Ltd. Is Caledonian
         House, 69 Dr. Roy's Drive, P.O. Box 1043, Grand Cayman KY1-1102, Cayman
         Islands.


                                       19

<PAGE>



ITEM 2:  PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
--------------------------------------------------------------------------------

         The Board of Directors has approved an Amended and Restated Certificate
of  Incorporation  (the  "Restated  Certificate")  which amends and restates our
Certificate  of  Incorporation  to eliminate  Article  Sixth and Article  Eighth
thereof,  and amends Article Seventh to eliminate reference to Article Sixth and
Article Eighth.  Stockholders  are now being asked to approve the elimination of
Article Sixth and Article Eighth of our  Certificate of  Incorporation,  and the
amendment to Article Seventh.  The text of the Restated  Certificate is attached
to this proxy statement as Appendix A.

         Article  Sixth and  Article  Eighth are  measures  which  limit a 5% or
greater  shareholder  from  engaging  in certain  transactions  with the company
without first obtaining the approval of at least 80% of our  outstanding  voting
securities.  The  elimination  of Article  Sixth and Article  Eighth will remove
significant restrictions on our ability to engage in a multitude of transactions
with existing and future  stockholders  of the company,  including  transactions
that our Board of Directors  have  determined  are in the best  interests of the
company  and  our   stockholders.The   Board  believes  that  eliminating  these
restrictions  will  increase  the value of the company by,  among other  things,
increasing the attractiveness of the company to potential third-party acquirers,
and to investors  who desire to hold greater than 5% of our  outstanding  common
stock.

DESCRIPTION OF ARTICLE SIXTH

         Article Sixth of our Certificate of Incorporation  provides that before
we may engage in certain transactions with an "Interested Stockholder",  we must
first obtain the  super-majority  approval of the  transaction  by holders of at
least 80% or our  outstanding  voting  securities.  An "Interested  Stockholder"
includes any corporation,  person or entity that  beneficially owns or controls,
directly  or  indirectly,  five  percent  or  more  of  our  outstanding  voting
securities.

         The following transactions  ("Restricted  Transactions") are subject to
the super-majority voting provisions of Article Sixth:

         (i)      any merger or consolidation  of People's  Liberation or any of
                  our subsidiaries with or into such Interested Stockholder;

         (ii)     any sale,  lease,  exchange or other disposition of all or any
                  substantial  part of our assets or any of our  subsidiaries to
                  or with such Interested Stockholder;

         (iii)    the  issuance or delivery of any of our voting  securities  or
                  those  of  any  of  our   subsidiaries   to  such   Interested
                  Stockholder in exchange for cash,  other assets or securities,
                  or a combination thereof, or

         (iv)     any dissolution or liquidation of this corporation.

         An exception to the  super-majority  voting provisions of Article Sixth
exists, which permits us to engage in any of the Restricted Transactions with an
Interested  Stockholder  if  our  Board  of  Directors  first  approved  of  the
transaction  with the  corporation,  person  or  entity  before  they  become an
Interested  Stockholder.  This exception,  however,  is very limited, in that it
requires the Board of Directors to approve a Restricted  Transaction,  the terms
of  which  may not be  known or even  contemplated,  at the time the  Interested
Stockholder  acquires  beneficial  ownership  of  five  percent  or  more of our
outstanding voting securities.


                                       20

<PAGE>


DESCRIPTION OF ARTICLE EIGHTH

         Article Eighth of our Certificate of Incorporation  provides additional
limitations  on our ability to engage in Restricted  Transactions,  even if such
transactions  are  approved  by  our  Board  of  Directors  or  stockholders  in
accordance with Article Sixth.

         Article  Eighth  provides  that  we  may  not  engage  in a  Restricted
Transaction with an Interested Stockholder unless:

         (i)      The cash or fair market value of the  property,  securities or
                  other consideration to be received per share by holders of our
                  capital stock in the  Restricted  Transaction is not less than
                  the highest per share price paid by the Interested Stockholder
                  or by any persons whose stock it beneficially owns or controls
                  in acquiring any of its or their  holdings of capital stock of
                  this corporation;

         (ii)     After  becoming  an  Interested   Stockholder   and  prior  to
                  consummation   of  the   Restricted   Transaction:   (a)  such
                  Interested  Stockholder shall not have acquired from us or any
                  of our subsidiaries newly issued or treasury shares of capital
                  stock or any  newly  issued  securities  convertible  into our
                  capital  stock  or  any  of  our  subsidiaries,   directly  or
                  indirectly  (except upon conversion of convertible  securities
                  acquired by it prior to becoming an Interested  Stockholder or
                  as a result of a pro rata  stock  dividend  or stock  split or
                  other distribution of stock to all shareholders pro rata); (b)
                  such  Interested  Stockholder  shall  not  have  received  the
                  benefit directly or indirectly  (except  proportionately  as a
                  stockholder) of any loans,  advances,  guarantees,  pledges or
                  other  financial  assistance or tax credits  provided by us or
                  any of our  subsidiaries,  or made any major changes in our or
                  any of our subsidiaries,  businesses or capital  structures or
                  reduced the current rate of  dividends  payable on our capital
                  stock below the rate in effect  immediately  prior to the time
                  such Interested Stockholder became an Interested  Stockholder;
                  and (c) such  Interested  Stockholder  shall  have  taken  all
                  required  actions to ensure our Board includes  representation
                  by  "continuing  directors"  at  least  proportionate  to  the
                  stockholdings  of our remaining  public  stockholders  (with a
                  continuing  director  to occupy any board  position  resulting
                  from  a  fraction  and,  in  any  event,  with  at  least  one
                  continuing director to serve on the board so long as there are
                  any remaining public stockholders); and

         (iii)    A  proxy  statement  responsive  to  the  requirements  of the
                  Securities  Exchange Act of 1934, as amended, is mailed to the
                  stockholders of this corporation for the purpose of soliciting
                  stockholder  approval  of such  Restricted  Transaction  which
                  contains at the front of the document,  in a prominent  place,
                  any  recommendations  as to the advisability or inadvisability
                  of the action or transaction  which the  continuing  directors
                  may choose to state.

         The   requirements   listed  above  do  not  apply  to  any  Restricted
Transaction if our Board of Directors approved the Restricted Transaction before
any corporation, person or entity became an Interested Stockholder.

         For purposes of Article Eighth, the term "continuing  director" means a
director  who was a member of our board of  directors  immediately  prior to the
time  that  any  Interested  Stockholder  involved  in the  proposed  action  or
transaction  became an  Interested  Stockholder  or a  director  nominated  by a
majority of the remaining continuing  directors;  and the term "remaining public
stockholders"  means the holders of our capital stock other than the  Interested
Stockholder   and   stockholders   whose  shares  the   Interested   Stockholder
beneficially owns or controls.


                                       21

<PAGE>


REASONS FOR ELIMINATION OF ARTICLE SIXTH AND ARTICLE EIGHTH

         THE PROVISIONS IMPOSE SIGNIFICANT RESTRICTIONS AND COSTS ON THE COMPANY
AND GIVE CERTAIN SHAREHOLDERS A VETO RIGHT

         Articles Sixth and Eighth of our  Certificate of  Incorporation  impose
significant restrictions on our ability to engage in a multitude of transactions
with existing and future  stockholders  of the company,  including  transactions
that our Board of Directors  have  determined  are in the best  interests of the
company and our stockholders.

         For instance, the super-majority requirement contained in Article Sixth
places in considerable doubt the ultimate approval of a Restricted  Transaction.
As a  small,  micro-cap  company,  obtaining  the  requisite  vote of 80% of our
stockholders  is  difficult,  and there is no guarantee  that we will be able to
obtain the approval of our shareholders for a Restricted  Transaction  which the
Board  concludes  is otherwise in the best  interests  of our  stockholders.  In
addition,  the considerable doubt surrounding  whether a Restricted  Transaction
will be approved  has the effect of  deterring an  Interested  Stockholder  from
pursuing a Restricted  Transaction in the first place. The mere existence of the
voting requirement may preclude a Restricted Transaction,  even if it ultimately
would be approved by at least 80% of our stockholders.  Third parties may not be
willing to move  forward  with the  uncertainty  inherent  in such a high voting
requirement.

         The high voting requirement also gives a small minority of stockholders
the ability to veto a  transaction  desired by the  substantial  majority of our
outstanding voting securities. The approval of any party beneficially owning 20%
or more of our common stock is required to approve all  Restricted  Transactions
as a consequence of Article Sixth and Article Eighth.  Therefore,  Article Sixth
and Article Eighth provide  stockholders  holding 20% or more of our outstanding
common stock with  considerable  negotiating  power and leverage  over us in the
event that we desire to proceed with a Restricted Transaction.  Currently, these
provisions  give both our Chief Executive  Officer,  Colin Dyne, and Gerard Guez
the ability to veto a transaction,  as they  beneficially own 21.5% and 29.7% of
our common stock, respectively.

         In addition to  hindering  our ability to engage in  transactions  as a
result of the  super-majority  voting  requirement,  Article  Sixth and  Article
Eighth  are also  financially  burdensome  to us. For  example,  if we desire to
proceed with a Restricted  Transaction,  we will need to incur  additional costs
associated with convening a shareholder meeting.  These costs include the hiring
of  professional  advisors,  the  preparation,  filing  and  mailing  of a proxy
statement,  and the  need to hire  proxy  solicitation  firms  to  ensure a high
turnout of company stockholders which is necessary to approve the transaction.

         STOCKHOLDERS   WILL  STILL  HAVE  SIGNIFICANT   PROTECTIONS  AFTER  THE
ELIMINATION OF ARTICLE SIXTH AND ARTICLE EIGHTH

         After the elimination of Articles Sixth and Eighth,  stockholders  will
still  have  anti-takeover  protections  afforded  under  Delaware  law  and the
company's internal policies governing approval of related party transactions.

         (a)      FIDUCIARY DUTIES OWED BY DIRECTORS

         Under Delaware law, the Board owes fiduciary duties of care and loyalty
to  all  stockholders,  and  will  not  approve  any  transaction,  including  a
transaction  with an  Interested  Stockholder,  without first  satisfying  these
fundamental duties.

         The duty of care  requires  that  directors  inform  themselves  of all
material  information  reasonably  available before making a business  decision.
This duty also  requires  directors to inform  themselves of  alternatives  to a
proposed business decision or transaction.  The more important that any decision
is to the corporation


                                       22

<PAGE>


and its  stockholders,  the  greater  the  need  is for  directors  to  consider
additional  information and alternatives.  Once a director has become adequately
informed, the director must act with the requisite care in performing his or her
duties.

         The "duty of loyalty"  requires that a director act in good faith, in a
manner the  director  reasonably  believes  to be in or not  opposed to the best
interests of the corporation and its stockholders. There are three components to
the duty of  loyalty.  This  first is that a  director  should act to the extent
possible in a  disinterested  manner,  which means not being  influenced  by any
financial or personal interest in the matter under consideration.  The second is
full disclosure of possible  financial or personal interests in any matter under
consideration.  The third is substantive fairness.  This means that the decision
or transaction should be "fair to the corporation."

         A  fiduciary  duty is the  highest  duty  known at law.  When in doubt,
courts will usually enforce the duty against the fiduciary,  which can result in
severe  penalties  including fines,  imprisonment,  and such other remedies as a
court deems appropriate. The fiduciary duties under Delaware law ensure that our
Board will not approve a transaction, including a transaction with an Interested
Stockholder, without sufficient diligence, inquiry, and care.

         (b)      CODE OF ETHICAL CONDUCT.

         We  have  adopted  a Code  of  Ethical  Conduct  which  applies  to our
directors,  officers, and employees.  Our Code of Ethical Conduct is intended to
provide a clear  understanding  of the ethical  principles  of business  conduct
expected of each of the  aforementioned  persons,  and we view  compliance  with
these  standards  as vital to the  integrity  and  continued  well  being of our
business  and  our  employees.  Because  members  of our  Board  have a  special
responsibility  to the company,  to avoid  conflicts of interest (and to satisfy
their  fiduciary  duties to the company  and its  stockholders),  directors  are
expected to disclose to their fellow  directors  any personal  interest they may
have in a  transaction,  including any  Restricted  Transaction,  upon which the
Board  passes and to recuse  themselves  from  participation  in any decision in
which there is a conflict  between their personal  interests and the interest of
the company.

         (c)      SECTION  203 OF THE  GENERAL  CORPORATION  LAW OF THE STATE OF
                  DELAWARE.

         Section 203 contains  similar  provisions  to Article Sixth and Article
Eighth which are designed to prevent  significant  stockholders from engaging in
transactions with the company without Board involvement. In general, Section 203
provides,  with some exceptions,  that a Delaware  corporation may not engage in
any of a broad range of business  combinations  with a person or  affiliate,  or
associate  of the person,  who is an  "interested  stockholder"  for a period of
three years from the date that the person became an interested  stockholder.  An
"interested  stockholder"  means any person that is (a) the owner of 15% or more
of the  outstanding  voting  stock of the  corporation  or (b) an  affiliate  or
associate of the corporation and was the owner of 15% or more of the outstanding
voting  stock  of the  corporation  at any time  within  the  three-year  period
immediately prior to the date on which it is sought to be determined whether the
person is an interested stockholder.

         The three year moratorium  imposed on business  combinations by Section
203 does not apply if: (i) the  transaction  resulting  in a person  becoming an
interested stockholder, or the business combination, is approved by the board of
directors  of  the   corporation   before  the  person   becomes  an  interested
stockholder;  (ii)  the  interested  stockholder  acquires  85% or  more  of the
outstanding  voting stock of the corporation in the same  transaction that makes
it an  interested  stockholder,  excluding  shares owned by persons who are both
officers and  directors  of the  corporation,  and shares held by some  employee
stock  ownership  plans;  or (iii) on or after the date the  person  becomes  an
interested   stockholder,   the   business   combination   is  approved  by  the
corporation's  board of directors  and by the holders of at least 66 2/3% of the
corporation's  outstanding  voting  stock  at  an  annual  or  special  meeting,
excluding shares owned by the interested stockholder.


                                       23

<PAGE>


         Although  similar to Article  Sixth and  Article  Eighth,  Section  203
differs from the provisions  contained in our  Certificate of  Incorporation  in
several important ways. Most importantly, Section 203 does not apply to business
combinations  if the  transaction  resulting in a person  becoming an interested
stockholder was approved by the board of directors of the corporation before the
person became an interested stockholder.  In contrast, Articles Sixth and Eighth
eliminate Board discretion,  which signtificantly  undermines the ability of the
company  to  enter  into a  multitude  of  transactions  that may  otherwise  be
desirable.

         Section 203 is also  significantly  different  than Articles  Sixth and
Eighth as Section  203  applies to  stockholders  owning at least 15% (or having
owned at least 15%) of the  outstanding  voting stock of the  corporation.  This
threshold is much more  realistic  than the 5%  threshold  contained in Articles
Sixth and Eighth,  especially  for a closely  held company like ours where it is
not  unusual  to have  stockholders  which  own  more  than 5% of the  company's
outstanding securities.

         EXAMPLES OF TRANSACTIONS HINDERED BY ARTICLE SIXTH AND ARTICLE EIGHTH

         There  are  many  instances  in  which we may  desire  to enter  into a
Restricted  Transaction with an Interested  Stockholder for legitimate  business
purposes as determined by our Board of  Directors.  For instance,  we may desire
to:

         (i)      sell additional equity to an existing stockholder who holds 5%
                  or more of our outstanding common stock, as it is common for a
                  company  to  seek  capital  from   stockholders   who  have  a
                  significant equity stake in the company;

         (ii)     issue options and other equity  compensation  to holders of 5%
                  or more of our outstanding  common stock,  including our Chief
                  Executive Officer, Colin Dyne;

         (iii)    enter into a joint venture with a third party which is coupled
                  with a 5% or greater  upfront  equity  investment by the third
                  party in the company,  and leave  available the opportunity to
                  consummate a Restricted  Transaction  with that joint  venture
                  partner at a later date.

         We could not consummate the aforementioned  transactions  without first
obtaining  the approval of the holders of 80% of our  outstanding  common stock.
This  may  preclude  us from  engaging  in  transactions  that  are in our  best
interests as well as those of our stockholders.

         SUMMARY

         In  general,   although   Article  Sixth  and  Article  Eighth  of  our
Certificate of Incorporation are designed to discourage  accumulations of blocks
of stock by third parties who wish to gain control of the Company and to prevent
transactions  with  affiliates,  the provisions  contained in our Certificate of
Incorporation  are far  more  restrictive  than  those  required  by law.  These
provisions  deprive  stockholders of  opportunities  to realize a premium on the
shares of common  stock  owned by them and deprive the company of the ability to
engage in legitimate  transactions that our board has determined are in the best
interests  of our  stockholders,  all of which  may also  adversely  affect  the
prevailing  market price of our common stock.  If our  stockholders  approve the
elimination of Article Sixth and Eighth,  stockholders  will retain the benefits
of the  fiduciary  duties owed by  directors  under  Delaware law as well as the
protections  afforded by Section 203 of the Delaware General Corporation Law and
by our Code of Ethical  Conduct.  In  combination,  these  laws and  regulations
ensure that Restricted  Transactions  will only be approved if it is in the best
interests of the company and its stockholders.

         For the above reasons, our Board of Directors has determined that it is
in the best interests of our stockholders to eliminate Articles Sixth and Eighth
of our Amended and Restated Certificate of Incorporation.


                                       24

<PAGE>


VOTE REQUIRED AND RECOMMENDATION

         The  affirmative  vote of the  holders  of eighty  (80)  percent of our
outstanding  shares  will be  required  to amend the  Company's  Certificate  of
Incorporation to eliminate  Article Sixth and Article Eighth,  and amend Article
Seventh to eliminate  reference  to Article  Sixth and Article  Eighth.  Because
brokers  are not  permitted  to vote on this  proposal  in the absence of voting
instructions  from beneficial  owners,  broker non-votes will have the effect of
negative votes. Abstentions also will have the effect of negative votes.

         Holders of our common stock who beneficially own greater than 5% of our
outstanding  capital stock,  which includes our Chief Executive  Officer,  Colin
Dyne,  have an interest in this proposal since the  elimination of Article Sixth
and Article  Eighth will  increase  their  opportunity  to enter into  strategic
transactions with us.

 
        THE BOARD OF DIRECTORS UNANIMOUSLY  RECOMMENDS A VOTE "FOR" APPROVAL OF
THE PROPOSED AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION.


                                       25

<PAGE>



ITEM 3:  PROPOSAL TO AMEND THE 2005 STOCK INCENTIVE PLAN
--------------------------------------------------------------------------------

         The Board of Directors has approved an amendment (the "Plan Amendment")
to the  People's  Liberation,  Inc.  2005 Stock  Incentive  Plan to increase the
number of shares of common  stock  available  for  issuance  under the plan from
3,500,000 shares to 5,500,000 shares. The 2005 Stock Incentive Plan, as proposed
to be amended,  is attached  hereto as Appendix B. The Plan  Amendment  is being
submitted to the company's stockholders for approval.

         The Board of  Directors  approved  the Plan  Amendment to ensure that a
sufficient number of shares of common stock are available for issuance under the
2005  Stock  Incentive  Plan.  At April  21,  2008,  1,257,000  shares  remained
available for grants of awards under the 2005 Stock Incentive Plan. The Board of
Directors  believes that the ability to grant stock-based awards is important to
our future success.  The grant of stock options and other stock-based awards can
motivate  high  levels  of  performance   and  provide  an  effective  means  of
recognizing  employee  contributions  to our success.  In addition,  stock-based
compensation  can be valuable  in  recruiting  and  retaining  highly  qualified
technical  and other key  personnel who are in great demand as well as rewarding
and providing incentives to our current employees. The increase in the number of
shares  available for awards under the 2005 Stock  Incentive Plan will enable us
to continue to realize the benefits of granting stock-based compensation.

         At April 21, 2008, the last reported sales price of our common stock on
the Over-The-Counter Bulletin Board was $0.40 per share.

SUMMARY OF THE 2005 STOCK INCENTIVE PLAN

         The principal terms and provisions of the 2005 Stock Incentive Plan are
summarized  below.  As a  summary,  the  description  below  is  not a  complete
description  of  all of the  terms  of the  2005  Stock  Incentive  Plan  and is
qualified  in its  entirety  by  reference  to the full  text of the 2005  Stock
Incentive  Plan,  as proposed to be amended,  which is appended as Appendix B to
this Proxy Statement.

         TYPES  OF  AWARDS.   Both  incentive   stock  options,   or  ISOs,  and
nonqualified  stock  options,  or NSOs,  may be  granted  under  the 2005  Stock
Incentive  Plan.  ISOs receive  favorable  tax  treatment  on exercise,  and may
receive  favorable tax treatment on a qualifying  disposition  of the underlying
shares.  However, ISOs must comply with certain requirements  regarding exercise
price,  maximum term and post termination  exercise  period,  and must be issued
under a  shareholder-approved  plan. NSOs are not subject to these requirements,
nor may they receive this favorable tax treatment upon exercise.  The 2005 Stock
Incentive  Plan also  permits  the grant of stock  purchase  rights  whereby the
recipient is permitted the right to purchase  shares reserved under the plan for
a period of time.

         NUMBER OF SHARES. Subject to adjustment as described herein, the number
of shares of common  stock that would be  available  for grant of stock  options
under the 2005 Stock  Incentive  Plan is  5,500,000,  less  2,243,000  shares of
common  stock  that  already  have been  issued  under  the  plan.  There are no
additional  shares of common stock that have been reserved for issuance pursuant
to outstanding awards under the plan.

         ADMINISTRATION.  The 2005 Stock  Incentive Plan is  administered by the
Board of  Directors.  The Board of  Directors  has the  authority  to select the
eligible  participants  to whom awards are granted,  to  determine  the types of
awards and the number of shares  covered  and to set the terms,  conditions  and
provisions of such awards, to cancel or suspend awards under certain conditions,
and to  accelerate  the  exercisability  of awards.  The Board is  authorized to
interpret the 2005 Stock  Incentive Plan, to establish,  amend,  and rescind any
rules and  regulations  relating to the 2005 Stock  Incentive Plan, to determine
the terms of  agreements  entered  into  with  recipients  under the 2005  Stock
Incentive Plan, and to make all other  determinations  which may be necessary or
advisable for the administration of the 2005 Stock Incentive Plan.


                                       26

<PAGE>


         ELIGIBILITY. Options and rights to purchase shares may be granted under
the 2005 Stock Incentive Plan to officers, directors,  employees and consultants
of the company and its subsidiaries, as the Board from time to time selects.

         STOCK  OPTION  GRANTS.  The  exercise  price per share of common  stock
purchasable  under any stock option will be determined by the Board,  but cannot
in any event be less than 100% of the fair market  value of the common  stock on
the date the option is granted. The Board shall determine the term of each stock
option  (subject to a maximum of 10 years) and each  option will be  exercisable
pursuant to a vesting schedule determined by the Board. The grants and the terms
of ISOs shall be restricted to the extent required for  qualification as ISOs by
the Code. Subject to approval of the Board,  options may be exercised by payment
of the exercise price in cash, shares of common stock,  which have been held for
at  least  six  months,   or  pursuant  to  a  "cashless   exercise"  through  a
broker-dealer under an arrangement approved by us. We may require the grantee to
pay to us any applicable withholding taxes that we are required to withhold with
respect to the grant or exercise of any award.  The  withholding tax may be paid
in cash or,  subject to  applicable  law,  the Board may  permit the  grantee to
satisfy  such  obligations  by the  withholding  or delivery of shares of common
stock.  We may withhold from any shares of common stock issuable  pursuant to an
option or from any cash amounts  otherwise  due from us to the  recipient of the
award an amount equal to such taxes.

         STOCK  PURCHASE  RIGHTS.  An award or sale of shares of stock under the
2005 Stock  Incentive  Plan  (other  than upon  exercise  of an option)  will be
evidenced by a Stock Purchase  Agreement,  and will be subject to all applicable
provisions  of the 2005  Stock  Incentive  Plan and may be  subject to any other
terms and conditions which the Board deems  appropriate for inclusion in a Stock
Purchase Agreement.  Each Stock Purchase Agreement will state the price at which
the stock subject to such agreement may be purchased. The purchase price will be
no less than 100% of the fair market  value of the shares of stock on either the
date of grant or the date of the purchase  right,  and will be determined by the
Board. Unless otherwise provided in the Stock Purchase  Agreement,  any right to
acquire  shares of stock  under the 2005 Stock  Incentive  Plan  (other  than an
option) will  automatically  expire if not exercised by the purchaser  within 30
days  after the grant of such right was  communicated  to the  purchaser  by the
Company.  As a condition to the purchase of shares, the purchaser will make such
arrangements  as the Board may  require  for the  satisfaction  of any  federal,
state, local or foreign withholding tax obligations that may arise in connection
with such purchase.

         ADJUSTMENTS.  In the event of any change affecting the shares of common
stock by reason  of any  stock  dividend  or  split,  recapitalization,  merger,
consolidation,  spin-off,  combination  or exchange  of shares or other  similar
corporate change, or any distribution to shareholders other than cash dividends,
the Board shall make such  substitution or adjustment in the aggregate number of
shares which may be distributed  under the 2005 Stock  Incentive Plan and in the
number and option price as it deems to be  appropriate  in order to maintain the
purpose of the original grant.

         TRANSFERABILITY. No option will be assignable or otherwise transferable
by the grantee other than by will or the laws of descent and  distribution  and,
during the grantee's lifetime, an option may be exercised only by the grantee.

         TERMINATION  OF  SERVICE.   If  a  grantee's  service  to  the  company
terminates  on account of death,  disability or  retirement,  then the grantee's
unexercised  options,  if exercisable  immediately prior to the grantee's death,
disability or  retirement,  may be exercised in whole or in part, not later than
one year after such event. If a grantee's service to the company  terminates for
cause, then the grantee's  unexercised option terminates  effective  immediately
upon such termination.  If a grantee's service to the company terminates for any
other reason, then the grantee's  unexercised options, to the extent exercisable


                                       27

<PAGE>


immediately  prior to such  termination,  shall remain  exercisable,  and may be
exercised  in  whole  or in  part,  for a period  of  three  months  after  such
termination of employment

         CHANGE OF CONTROL  AND CERTAIN  CORPORATE  TRANSACTIONS.  Generally,  a
"Change of Control" shall mean (i) the consummation of a merger or consolidation
of  the  Company   with  or  into   another   entity  or  any  other   corporate
reorganization,  if more than 80% of the combined  voting  power  (which  voting
power shall be  calculated by assuming the  conversion of all equity  securities
convertible  (immediately  or at some future time) into shares entitled to vote,
but not  assuming  the  exercise  of any  warrant  or right to  subscribe  to or
purchase  those  shares) of the  continuing  or  surviving  entity's  securities
outstanding immediately after such merger, consolidation or other reorganization
is owned,  directly or indirectly,  by persons who were not  shareholders of the
Company immediately prior to such merger, consolidation or other reorganization;
provided,  however,  that  in  making  the  determination  of  ownership  by the
shareholders  of the  Company,  immediately  after  the  reorganization,  equity
securities  which  persons  own  immediately   before  the   reorganization   as
shareholders of another party to the transaction  shall be disregarded;  or (ii)
the sale,  transfer  or other  disposition  of all or  substantially  all of the
Company's assets.

         A  transaction  shall not  constitute  a Change of  Control if its sole
purpose is to change  the state of the  Company's  incorporation  or to create a
holding company that will be owned in substantially  the same proportions by the
persons who held the Company's securities immediately before such transaction.

         If a Change of Control occurs,  the Board will  determine,  in its sole
discretion,  whether to accelerate any vested or unvested  portion of any option
grant.  Additionally,  if a Change of Control occurs,  any agreement between the
Company  and any other  party to the Change of Control  may  provide for (1) the
continuation  of any  outstanding  awards,  (2) the assumption of the 2005 Stock
Incentive  Plan  or  any  awards  by  the  surviving  corporation  or any of its
affiliates,  (3)  cancellation  of awards and  substitution of other awards with
substantially  the same terms or economic value as the cancelled  awards, or (4)
cancellation of any vested or unvested  portion of awards,  subject to providing
notice to the option holder.

         LOANS AND  GUARANTEES.  Subject to  applicable  law, the Board has sole
discretion  to allow a grantee to defer payment to the Company of all or part of
the option  price or to cause the  Company to loan or  guarantee  a  third-party
loan,  to the grantee for all or part of the option  price or all or part of the
taxes resulting from the exercise of an award.

         AMENDMENT  AND  TERMINATION.  The Board of Directors may amend the 2005
Stock  Incentive  Plan in any and all  respects  without  shareholder  approval,
except as such  shareholder  approval  may be  required  pursuant to the listing
requirements of any national  market system or securities  exchange on which the
Company's equity securities are listed. Unless sooner terminated by the Board of
Directors, the 2005 Stock Incentive Plan will terminate on November 22, 2015.

FEDERAL INCOME TAX CONSEQUENCES

         The following is a general  discussion  of the principal  United States
federal income tax consequences of incentive stock options,  or ISOs, within the
meaning  of  Section  422  of the  United  States  Internal  Revenue  Code,  and
nonstatutory  stock  options,  or NSOs,  based  upon  the Code and the  Treasury
Regulations promulgated thereunder,  all of which are subject to modification at
any time.  The 2005 Plan does not constitute a qualified  retirement  plan under
Section  401(a) of the Internal  Revenue  Code (which  generally  covers  trusts
forming part of a stock bonus, pension or profit sharing plan funded by employer
and/or employee  contributions which are designed to provide retirement benefits
to participants under certain  circumstances) and is not subject to the Employee
Retirement  Income  Security Act of 1974 (the pension reform law which regulates
most types of  privately  funded  pension,  profit  sharing  and other  employee
benefit plans).


                                       28

<PAGE>


         Generally,  no federal income tax is payable by a participant  upon the
grant  of a  stock  option,  and  we  are  not  entitled  to a  deduction.  If a
participant  exercises an NSO, he or she will have  taxable  income equal to the
difference between the market price of the common stock on the exercise date and
the  stock  option  exercise  price.  We will  be  entitled  to a  corresponding
deduction  on our income tax  return.  A  participant  will not have any taxable
income upon  exercising  an ISO  (except  that the  alternative  minimum tax may
apply),  and we will not receive a deduction  when an ISO is exercised.  The tax
treatment for a  participant  of a disposition  of shares  acquired  through the
exercise  of an option  depends on how long the shares  were held and on whether
the shares were acquired by exercising an ISO or an NSO. We may be entitled to a
deduction  in the case of a  disposition  of  shares  acquired  pursuant  to the
exercise of an ISO before the applicable holding periods have been satisfied.

EFFECT OF SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934

         The acquisition and disposition of common stock by officers,  directors
and more than 10%  shareholders  (referred  to as  insiders)  pursuant to awards
granted to them under the 2005  Stock  Incentive  Plan may be subject to Section
16(b) of the  Securities  Exchange  Act of 1934.  Pursuant to Section  16(b),  a
purchase of common stock by an insider  within six months before or after a sale
of  common  stock by the  insider  could  result in  recovery  by us of all or a
portion of any amount by which the sale  proceeds  exceed  the  purchase  price.
Insiders are required to file reports of changes in beneficial  ownership  under
Section  16(a) of the  Securities  Exchange  Act of 1934 upon  acquisitions  and
dispositions  of shares.  Rule 16b-3  provides an exemption  from Section  16(b)
liability for certain  transactions  pursuant to certain employee benefit plans.
The 2005 Stock Incentive Plan is designed to comply with Rule 16b-3.

NEW PLAN BENEFITS

         Because awards under the 2005 Stock  Incentive Plan are  discretionary,
benefits or amounts  that will  hereinafter  be received by or  allocated to the
named  executive  officers,  all  current  executive  officers  as a group,  the
non-executive  directors as a group,  and all  employees  who are not  executive
officers, are not presently determinable.

VOTE REQUIRED AND RECOMMENDATION

         The affirmative  vote of a majority of the votes cast on this proposal,
in person or by proxy,  will be required to amend the 2005 Stock  Incentive Plan
to increase  the number of shares  reserved  for  issuance  thereunder.  Because
brokers  are not  permitted  to vote on this  proposal  in the absence of voting
instructions  from beneficial  owners,  broker  non-votes will not be counted or
deemed present or represented for determining whether stockholders have approved
this proposal. Abstentions will have the effect of negative votes.

         The Board of Directors and our  executive  officers have an interest in
this proposal as they may receive awards under the 2005 Stock Incentive Plan.

 
        THE BOARD OF DIRECTORS UNANIMOUSLY  RECOMMENDS A VOTE "FOR" APPROVAL OF
THE  AMENDMENT TO INCREASE THE SHARES  RESERVED  UNDER THE 2005 STOCK  INCENTIVE
PLAN BY 2,000,000 SHARES.


                                       29

<PAGE>



SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities  Exchange Act of 1934 requires that our
executive officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, file reports of ownership and changes
in ownership with the SEC. Executive  officers,  directors and  greater-than-ten
percent  stockholders  are  required by SEC  regulations  to furnish us with all
Section  16(a) forms they file.  Based solely on our review of the copies of the
forms received by us and written  representations from certain reporting persons
that they have complied with the relevant filing requirements,  we believe that,
during  the  year  ended  December  31,  2007,  all of our  executive  officers,
directors and greater-than-ten  percent  stockholders  complied with all Section
16(a) filing requirements, except for Dean Oakey, who did not timely file a Form
4 to report one transaction and Kenneth Wengrod,  who did not timely file a Form
4 to report one transaction.

S
TOCKHOLDER PROPOSALS

         Any  stockholder  who  intends to present a proposal at the 2009 Annual
Meeting of Stockholders for inclusion in the Company's Proxy Statement and Proxy
form relating to such Annual Meeting must submit such proposal to the Company at
its principal executive offices by February 4, 2009. In addition, in the event a
stockholder proposal is not received by the Company by April 20, 2009, the Proxy
to be  solicited  by the Board of  Directors  for the 2009 Annual  Meeting  will
confer discretionary authority on the holders of the Proxy to vote the shares if
the proposal is presented at the 2009 Annual  Meeting  without any discussion of
the proposal in the Proxy Statement for such meeting.

         SEC rules and  regulations  provide  that if the date of the  Company's
2009 Annual  Meeting is  advanced or delayed  more than 30 days from the date of
the 2008 Annual Meeting,  stockholder  proposals  intended to be included in the
proxy  materials  for the 2009  Annual  Meeting  must be received by the Company
within a reasonable  time before the Company  begins to print and mail the proxy
materials for the 2009 Annual Meeting.  Upon  determination  by the Company that
the date of the 2009 Annual  Meeting will be advanced or delayed by more than 30
days from the date of the 2008 Annual  Meeting,  the Company will  disclose such
change in the earliest possible Quarterly Report on Form 10-Q.

SOLICITATION OF PROXIES

         It is expected that the  solicitation  of Proxies will be by mail.  The
cost of  solicitation  by management  will be borne by the Company.  The Company
will reimburse brokerage firms and other persons representing  beneficial owners
of shares for their reasonable disbursements in forwarding solicitation material
to such  beneficial  owners.  Proxies  may also be  solicited  by certain of our
directors and officers, without additional compensation,  personally or by mail,
telephone, telegram or otherwise.


                                       30

<PAGE>


ANNUAL REPORT ON FORM 10-KSB

         THE COMPANY'S  ANNUAL REPORT ON FORM 10-KSB,  WHICH HAS BEEN FILED WITH
THE  SECURITIES  AND EXCHANGE  COMMISSION  FOR THE YEAR ENDED DECEMBER 31, 2007,
WILL BE MADE AVAILABLE TO  STOCKHOLDERS  WITHOUT CHARGE UPON WRITTEN  REQUEST TO
PEOPLE'S LIBERATION, INC., 150 WEST JEFFERSON BOULEVARD, LOS ANGELES, CALIFORNIA
90007 ATTN: DARRYN BARBER.


                                   ON BEHALF OF THE BOARD OF DIRECTORS

May 10, 2008                       /s/ Colin Dyne    
                                   -----------------------------------
                                   Colin Dyne
                                   Chairman of the Board and
                                   Chief Executive Officer


                                       31

<PAGE>


                                  APPENDIX "A"


                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION

                                       OF

                            PEOPLE'S LIBERATION, INC.

         The  undersigned,  Collin  Dyne,  Chief  Executive  Officer of People's
Liberation,  Inc., a corporation organized and existing by virtue of the General
Corporation  Law (the  "GCL")  of the State of  Delaware,  does  hereby  certify
pursuant to Section 103 of the GCL as to the following:

         1.       The name of the corporation is People's  Liberation,  Inc. The
original name of the corporation is Philco Financial  Management  Corp., and the
original  Certificate of Incorporation  was filed with the Secretary of State of
the State of Delaware on December 29, 1982.

         2.       The Certificate of Incorporation of this corporation  shall be
amended and restated to read as follows:

         FIRST. The name of this Corporation is: People's Liberation, Inc.

         SECOND.  The street address of the registered office of the Corporation
is 32 Loockerman Street,  #201, City of Dover,  County of Kent,  Delaware l9904,
and the  name of its  registered  agent  at such  address  is  Registered  Agent
Solutions, Inc.

         THIRD.  The nature of the business of this  Corporation and the objects
or purposes proposed to be transacted, promoted or conducted by it are to engage
in and transact a financial  services business in any and all of its branches in
the United States and  throughout  the world;  and to engage in any other lawful
act or  activity  for which  corporations  may be  organized  under the  General
Corporation  Law of Delaware.  The foregoing  shall be construed both as objects
and powers,  and the foregoing  enumeration of specific powers shall not be held
to limit or restrict in any manner the powers of this Corporation.

         FOURTH.

         A.       CAPITAL STOCK.

         The  aggregate  number  of  shares of all  classes  of stock  which the
Corporation  shall  have  authority  to issue is  160,000,000  shares,  of which
150,000,000  shares shall be classified  as common  stock,  $0.001 par value per
share ("Common  Stock"),  and 10,000,000 shares shall be classified as preferred
stock, $0.001 par value per share ("Preferred Stock").

         B.       AUTHORIZATION  OF BOARD OF DIRECTORS  TO  ESTABLISH  SERIES OF
PREFERRED STOCK AND FIX CONSIDERATION THEREFORE.

         The board of  directors  is hereby  expressly  authorized,  within  the
limitations and restrictions stated herein from time to time, by resolution:

         (i)      to divide the Preferred Stock into series;

         (ii)     to fix the  consideration for which such Preferred Stock shall
                  be issued;

         (iii)    to  determine  the voting  powers of each series of  Preferred
                  Stock;



<PAGE>


         (iv)     to  determine   and  fix  the  number  of  shares  which  will
                  constitute any series of Preferred  Stock and the  distinctive
                  designation of each series;

         (v)      to make any series of Preferred Stock subject to redemption at
                  such  time or times  and at such  price or  prices as shall be
                  stated and expressed in such resolution;

         (vi)     to determine whether or not the shares of such series shall be
                  subject to the  operation of a retirement or sinking fund and,
                  if so subject,  the extent to and the manner in which it shall
                  be applied to the purchase or redemption of the shares of such
                  series and the terms and provisions  relative to the operation
                  thereof;

         (vii)    to fix the rights of the  holders of shares of each  series of
                  the  Preferred  Stock to receive  dividends at such rates,  on
                  such  conditions  and at such  times as shall  be  stated  and
                  expressed in the resolution and whether  payable in preference
                  to, or in  relation  to,  the  dividends  payable on any other
                  class or  classes  of stock or other  series of the same class
                  and whether cumulative or non-cumulative as shall be so stated
                  and expressed;

         (viii)   to fix the rights of the  holders of shares of each  series of
                  the  Preferred  Stock  upon the  dissolution  of,  or upon any
                  distribution of the assets of, this Corporation;

         (ix)     to  make  any  series  of  Preferred   Stock   convertible  or
                  automatically converted into or exchangeable for shares of any
                  other  class or classes or of any other  series of the same or
                  any other class or classes of the stock of this Corporation at
                  such  price or prices or at such  rates of  exchange  and with
                  such  adjustments  as shall be stated  and  expressed  in such
                  resolution; and

         (x)      to determine  whether or not the shares of any series shall be
                  subject or entitled to any other  preferences,  and  relative,
                  participating,   optional   or  other   special   rights   and
                  qualifications,  limitations  or  restrictions  which shall be
                  stated and expressed in such resolution and which shall not be
                  inconsistent  with the terms and.  provisions  of this Article
                  Fourth.

         C.       RANK.

         Each  series of  Preferred  Stock  shall  have such  preferences  as to
dividends and assets and amounts  distributable  on liquidation,  dissolution or
winding up or otherwise as shall be declared by such  resolution or  resolutions
establishing such series.

         D.       DIVIDENDS.

         (i)      The  holders of  Preferred  Stock shall be entitled to receive
                  cash  dividends when and as declared by the board of directors
                  at such rate per share per annum, cumulatively if so provided,
                  and with such  preferences,  as shall  have been  fixed by the
                  board of directors,  and not more,  before any dividends shall
                  be declared or paid upon or set apart for the Common  Stock or
                  any other class of stock  ranking  junior  thereto,  and such,
                  dividends on each series of Preferred Stock shall cumulate, if
                  at all,  from  and  after  the  dates  fixed  by the  board of
                  directors with respect to such  cumulation.  Unpaid  cumulated
                  dividends shall bear no interest.

         (ii)     If dividends on any shares of Preferred Stock are not declared
                  in full, then such dividends as are declared shall be declared
                  ratably  on all  shares  of  stock  of each  series  of  equal
                  preference in proportion to the respective  unpaid  cumulative
                  dividends,  if any,  to the end of the then  current  dividend
                  period. No ratable  distribution shall be made with respect to
                  any  series  until  cumulative  dividends  in full  have  been
                  declared and paid on any series standing senior in preference.



<PAGE>


         (iii)    Unless dividends on all outstanding  shares of Preferred Stock
                  having  cumulative  dividend rights shall have been fully paid
                  for all past quarterly dividend periods and the full dividends
                  thereon for the quarterly  dividend period current at the time
                  shall have been paid or declared and funds set apart therefor,
                  and unless all required  sinking fund payments,  if any, shall
                  have been made or provided for, no dividend (except a dividend
                  payable in Common Stock) shall be paid upon or declared or set
                  apart for the Common Stock.

         (iv)     Subject to the  foregoing  provisions,  the board of directors
                  may  declare and pay  dividends  on the Common  Stock,  to the
                  extent permitted by law.

         E.       LIQUIDATION OR DISSOLUTION.

         (i)      In the event of any  liquidation  or dissolution or winding up
                  of this Corporation (hereinafter referred to as "liquidation")
                  the holders of Preferred Stock shall be entitled to receive in
                  cash, out of the assets of this  Corporation,  full payment of
                  the applicable  liquidation  preference  fixed for each series
                  pursuant to paragraph B above, together with unpaid cumulative
                  dividends thereon to the date of liquidation, and no more.

         (ii)     If upon liquidation the assets of this  Corporation  available
                  for  distribution  to  stockholders  shall be  insufficient to
                  permit the payment in full of the preferential amounts payable
                  to the holders of  Preferred  Stock,  then all assets shall be
                  distributed  ratably  among the holders of all shares of stock
                  of each  series  of  equal  preference  in  proportion  to the
                  respective  amounts  that would be  payable  per share if such
                  assets were  sufficient to permit  payment in full. No ratable
                  distribution  shall be made with  respect to any series  until
                  distributions  in full have been  paid to the  holders  of all
                  series standing senior in preference.

         (iii)    After  satisfaction  of the  preferential  requirements of the
                  Preferred Stock upon any liquidation of this Corporation,  the
                  holders of Common Stock shall be entitled to share  ratably in
                  the  distribution of all remaining  assets of this Corporation
                  available for distribution.

         (iv)     A consolidation or merger of this Corporation with or into any
                  other  corporation or  corporations  or the sale or conveyance
                  (whether  for cash,  securities  or other  property) of all or
                  substantially  all of the  assets  of this  Corporation  as an
                  entirety  shall not be deemed or construed to be a liquidation
                  of  this   Corporation   for  the  purpose  of  the  foregoing
                  provisions of this paragraph E.

         F.       VOTING RIGHTS.

         The holders of the Common  Stock shall be entitled to one vote for each
share held by them of record on the books of this  Corporation.  The  holders of
each series of Preferred  Stock shall have such voting rights,  if any, as shall
be provided  for in the  resolution  or  resolutions  of the board of  directors
establishing such series.

         FIFTH.

         A.       NUMBER OF DIRECTORS.  The authorized number of directors shall
be not less than two nor more than 15 and the board of directors may, within the
limits specified by this Article Fifth, increase or decrease the exact number of
directors  from  time to time by  resolution  duly  adopted  by such  board.  No
decrease in the number of directors shall have the effect of shortening the term
of any incumbent director.  The exact number of directors shall be four until so
increased or decreased. In case of any increase in the number of directors,  the
additional  directors may be elected by the shareholders at an annual or special
meeting, as provided in the bylaws.

         B.       CLASSES OF DIRECTORS. At the option of the board of directors,
the directors shall be divided into three classes, designated Class I, Class II,
and Class III as nearly equal in number as  possible,  and the term of office of



<PAGE>


directors of one class shall expire at each annual meeting of  stockholder,  and
in all cases as to each director until his successor  shall be elected and shall
qualify  or  until  his  earlier  resignation,  removal  from  office,  death or
incapacity. Additional directorships resulting from an increase in the number of
directors shall be apportioned among the classes as equally as possible.  In the
event of  classification  hereunder,  at each annual meeting of stockholders the
number of  directors  equal to the number of  directors  of the class where term
expires  at the time of such  meeting  (or,  if less,  the  number of  directors
properly  nominated and qualified for election)  shall be elected to hold office
until the third  succeeding  annual  meeting  of the  stockholders  after  their
election.

         C.       VACANCIES. In case of any increase in the number of directors,
the additional directors may be elected by the board of directors to hold office
until the next  election of directors  or of the class for which such  directors
shall have been chosen and until their successors are elected and qualified.  In
case of vacancies in the board of directors, a majority of the remaining members
of the board may elect directors to fill such vacancies to hold office until the
next election of directors or of the class for which such  directors  shall have
been chosen and until their successors are elected and qualified.

         D.       DIRECTOR LIABILITY. No director shall have personal ability to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director,  provided that this  provision  shall not eliminate or limit
the  liability  of a  director  (i) for,  any breach of the  director's  duty of
loyalty to the Corporation or its  stockholders,  (ii) for acts or omissions not
in good faith or which involve intentional  misconduct or a knowing violation of
law, (iii) under section 174 of the Delaware General Corporation law or (iv) for
any transaction from which the director derived an improper personal benefit.

         SIXTH. Intentionally omitted.

         SEVENTH. The amendment or repeal of Articles Fifth, Seventh,  Tenth and
paragraph  F of Article  Fourth of this  Amended  and  Restated  Certificate  of
Incorporation  shall require the approval of the holders of shares  representing
at least 80% of the shares of this Corporation  entitled to vote in the election
of directors, voting as one class.

         EIGHTH. Intentionally omitted.

         NINTH. In furtherance and not in limitation of the powers  conferred by
statute, the board of directors is expressly authorized to make, alter, amend or
repeal the  bylaws of this  Corporation,  without  any action on the part of the
stockholders, by the affirmative vote of at least two-thirds of the directors of
this  Corporation,  which  shall  include the  affirmative  vote of at least one
director  of each class of the board of  directors,  if the board  shall then be
divided into classes. The bylaws may also be altered, amended or repealed by the
affirmative  vote of the  holders  of  shares  representing  at least 80% of the
shares of this Corporation entitled to vote in the election of directors, voting
as one class.

         TENTH.  This Corporation may in its bylaws confer powers upon its board
of  directors  in  addition to the  foregoing  and in addition to the powers and
authorities expressly conferred upon them by the laws of the State of Delaware.

         ELEVENTH.  The stockholders and board of directors shall have power, if
the  bylaws so  provide,  to hold their  meetings  and to keep the books of this
Corporation  (except such as are required by the law of the State of Delaware to
be kept in Delaware) and documents  and papers of this  Corporation  outside the
State of Delaware,  and to have one or more offices  within or without the State
of Delaware at such places as may be  designated  from time to time by the board
of directors.

         TWELFTH. All of the powers of this Corporation, insofar as the same may
be lawfully vested by this Restated Certificate of Incorporation in the board of
directors, are hereby conferred upon the board of directors of this Corporation.



<PAGE>


         The foregoing  Amended and Restated  Certificate of  Incorporation  has
been duly adopted by this  corporation's  Board of Directors and stockholders in
accordance  with the  applicable  provisions of Sections 222, 242 and 245 of the
Delaware General Corporation Law.

         IN WITNESS  WHEREOF,  the Chief  Executive  Officer of the  Corporation
hereto has caused this Amended and Restated  Certificate of  Incorporation to be
duly executed as of June __, 2008.


                                     ___________________________________
                                     Colin Dyne, Chief Executive Officer



<PAGE>



                                 APPENDIX "B"

                            2005 STOCK INCENTIVE PLAN
                                       OF
                            PEOPLE'S LIBERATION, INC.

         As Amended and  Restated  effective  June 13, 2008 (if  approved at the
2008 Annual Meeting)


                       SECTION 1: GENERAL PURPOSE OF PLAN

         The name of this plan is the 2005 Stock  Incentive  Plan (the  "PLAN").
The purpose of the Plan is to enable Century Pacific  Financial  Corporation,  a
Delaware corporation (the "COMPANY"), and any Parent or any Subsidiary to obtain
and retain the services of the types of Employees, Consultants and Directors who
will  contribute to the Company's  long range success and to provide  incentives
which are linked  directly to  increases  in share value which will inure to the
benefit of all shareholders of the Company.

                             SECTION 2: DEFINITIONS

         For purposes of the Plan,  the following  terms shall be defined as set
forth below:

         "ADMINISTRATOR"  shall  have the  meaning  as set forth in  SECTION  3,
hereof.

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

         "CAUSE"  means (i)  failure  by an  Eligible  Person  to  substantially
perform his or her duties and  obligations  to the Company  (other than any such
failure resulting from his or her incapacity due to physical or mental illness);
(ii)  engaging in misconduct or a fiduciary  breach which is or  potentially  is
materially  injurious to the Company or its shareholders;  (iii) commission of a
felony;  (iv)  the  commission  of a  crime  against  the  Company  which  is or
potentially is materially injurious to the Company; or (v) as otherwise provided
in the Stock Option Agreement or Stock Purchase Agreement.  For purposes of this
Plan,  the existence of Cause shall be determined  by the  Administrator  in its
sole discretion.

         "CHANGE IN CONTROL" shall mean:

         a)       The  consummation of a merger or  consolidation of the Company
with or into another entity or any other corporate reorganization,  if more than
80% of the  combined  voting power (which  voting power shall be  calculated  by
assuming the conversion of all equity securities convertible  (immediately or at
some future time) into shares entitled to vote, but not assuming the exercise of
any warrant or right to subscribe to or purchase those shares) of the continuing
or Surviving  Entity's  securities  outstanding  immediately  after such merger,
consolidation  or other  reorganization  is owned,  directly or  indirectly,  by
persons  who were not  shareholders  of the  Company  immediately  prior to such
merger, consolidation or other reorganization; PROVIDED, HOWEVER, that in making
the  determination of ownership by the shareholders of the Company,  immediately
after the reorganization, equity securities which persons own immediately before
the  reorganization as shareholders of another party to the transaction shall be
disregarded; or

         b)       The   sale,   transfer   or  other   disposition   of  all  or
substantially all of the Company's assets.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's  incorporation  or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

         "COMMITTEE"  means a committee of the Board  designated by the Board to
administer the Plan.

         "COMPANY"  means  People's  Liberation,  Inc., a corporation  organized
under the laws of the State of Delaware (or any successor corporation).



<PAGE>


         "CONSULTANT"  means a consultant or advisor who is a natural person and
who  provides  bona fide  services  to the  Company,  a Parent or a  Subsidiary;
provided  such  services  are  not in  connection  with  the  offer  or  sale of
securities in a  capital-raising  transaction  and do not directly or indirectly
promote or maintain a market for the Company's securities.

         "DATE OF  GRANT"  means the date on which  the  Administrator  adopts a
resolution  expressly  granting a Right to a Participant or, if a different date
is set forth in such  resolution as the Date of Grant,  then such date as is set
forth in such resolution.

         "DIRECTOR" means a member of the Board.

         "DISABILITY"  means  that the  Optionee  is  unable  to  engage  in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment; provided, however, for purposes of determining the term of an
ISO pursuant to SECTION 6.6 hereof,  the term Disability  shall have the meaning
ascribed to it under Code  Section  22(e)(3).  The  determination  of whether an
individual has a Disability shall be determined under procedures  established by
the Plan Administrator.

         "ELIGIBLE  PERSON"  means an  Employee,  Consultant  or Director of the
Company, any Parent or any Subsidiary.

         "EMPLOYEE"  shall  mean any  individual  who is a  common-law  employee
(including officers) of the Company, a Parent or a Subsidiary.

         "EXERCISE  PRICE"  shall  have the  meaning  set forth in  SECTION  6.3
hereof.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "FAIR  MARKET  VALUE"  shall  mean  the fair  market  value of a Share,
determined  as  follows:  (i) if the Stock is listed  on any  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National Market,  the Fair Market Value of a share of Stock shall be the closing
sales price for such stock (or the closing  bid, if no sales were  reported)  as
quoted on such system or exchange (or the exchange  with the greatest  volume of
trading  in the  Stock)  on the  last  market  trading  day  prior to the day of
determination,  as reported in the WALL STREET  JOURNAL or such other  source as
the  Administrator  deems  reliable;  (ii) if the Stock is quoted on the  Nasdaq
System (but not on the Nasdaq National Market) or any similar system whereby the
stock is  regularly  quoted by a recognized  securities  dealer but closing sale
prices are not reported,  the Fair Market Value of a share of Stock shall be the
mean between the bid and asked  prices for the Stock on the last market  trading
day prior to 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  Stock,  the  Fair  Market  Value  shall  be
determined in good faith by the  Administrator and such  determination  shall be
conclusive and binding on all persons.

         "ISO" means a Stock Option  intended to qualify as an "incentive  stock
option" as that term is defined in Section 422(b) of the Code.

         "NON-EMPLOYEE  DIRECTOR"  means a  member  of the  Board  who is not an
Employee of the Company, a Parent or Subsidiary,  who satisfies the requirements
of such term as defined in Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission.

         "NON-QUALIFIED  STOCK  OPTION"  means a Stock  Option not  described in
Section 422(b) of the Code.

         "OFFEREE"  means a Participant who is granted a Purchase Right pursuant
to the Plan.

         "OPTIONEE"  means a Participant  who is granted a Stock Option pursuant
to the Plan.

         "OUTSIDE  DIRECTOR"  means a member of the Board who is not an Employee
of the Company,  a Parent or Subsidiary,  who satisfies the requirements of such
term as defined in Treasury  Regulations (26 Code of Federal  Regulation Section
1.162-27(e)(3)).



<PAGE>


         "PARENT" means any corporation  (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock  possessing 50% or more of the total combined voting
power of all classes of stock in one of the other  corporations in such chain. A
corporation  that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

         "PARTICIPANT"  means any Eligible Person selected by the Administrator,
pursuant to the  Administrator's  authority  in SECTION 3, to receive  grants of
Rights.

         "PLAN" means this 2005 Stock Incentive Plan, as the same may be amended
or supplemented from time to time.

         "PURCHASE PRICE" shall have the meaning set forth in SECTION 7.3.

         "PURCHASE  RIGHT" means the right to purchase Stock granted pursuant to
SECTION 7.

         "RIGHTS" means Stock Options and Purchase Rights.

         "REPURCHASE  RIGHT"  shall have the meaning set forth in SECTION 8.7 of
the Plan.

         "SERVICE" shall mean service as an Employee, Director or Consultant.

         "STOCK" means Common Stock, par vaule $0.001 per share, of the Company.

         "STOCK OPTION" or "OPTION" means an option to purchase  shares of Stock
granted pursuant to SECTION 6.

         "STOCK  OPTION  AGREEMENT"  shall have the meaning set forth in SECTION
6.1.

         "STOCK PURCHASE  AGREEMENT" shall have the meaning set forth in SECTION
7.1.

         "SUBSIDIARY"  means any  corporation  (other  than the  Company)  in an
unbroken  chain  of  corporations  beginning  with the  Company,  if each of the
corporations  other than the last  corporation  in the unbroken chain owns stock
possessing  50% or more of the total  combined  voting  power of all  classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a  Subsidiary  on a date after the  adoption  of the Plan shall be
considered a Subsidiary commencing as of such date.

         "SURVIVING  ENTITY"  means the  Company if  immediately  following  any
merger,  consolidation or similar transaction, the holders of outstanding voting
securities of the Company  immediately  prior to the merger or consolidation own
equity  securities  possessing  more  than  50%  of  the  voting  power  of  the
corporation existing following the merger, consolidation or similar transaction.
In all other  cases,  the other  entity to the  transaction  and not the Company
shall be the Surviving  Entity.  In making the determination of ownership by the
shareholders of an entity immediately after the merger, consolidation or similar
transaction,  equity securities which the shareholders  owned immediately before
the merger,  consolidation  or similar  transaction as  shareholders  of another
party to the  transaction  shall be  disregarded.  Further,  outstanding  voting
securities of an entity shall be  calculated  by assuming the  conversion of all
equity securities  convertible  (immediately or at some future time) into shares
entitled to vote.

         "TEN PERCENT SHAREHOLDER" means a person who on the Date of Grant owns,
either  directly or through  attribution as provided in Section 424 of the Code,
Stock  constituting  more than 10% of the  total  combined  voting  power of all
classes  of  stock  of his or  her  employer  corporation  or of any  Parent  or
Subsidiary.

                           SECTION 3: ADMINISTRATION

         3.1.     ADMINISTRATOR.  The Plan shall be  administered  by either (i)
the Board or (ii) the Committee (the group that administers the Plan is referred
to as the "ADMINISTRATOR").

         3.2.     POWERS IN GENERAL.  The Administrator shall have the power and
authority to grant to Eligible  Persons,  pursuant to the terms of the Plan, (i)
Stock Options, (ii) Purchase Rights or (iii) any combination of the foregoing.



<PAGE>


         3.3.     SPECIFIC POWERS. In particular,  the Administrator  shall have
the authority:  (i) to construe and interpret the Plan and apply its provisions;
(ii) to  promulgate,  amend and rescind  rules and  regulations  relating to the
administration of the Plan; (iii) to authorize any person to execute,  on behalf
of the Company,  any instrument  required to carry out the purposes of the Plan;
(iv) to determine when Rights are to be granted under the Plan; (v) from time to
time to  select,  subject  to the  limitations  set  forth in this  Plan,  those
Eligible  Persons to whom Rights shall be granted;  (vi) to determine the number
of shares of Stock to be made subject to each Right;  (vii) to determine whether
each Stock Option is to be an ISO or a  Non-Qualified  Stock  Option;  (viii) to
prescribe  the terms and  conditions  of each Stock Option and  Purchase  Right,
including,  without limitation, the Exercise Price, Purchase Price and medium of
payment,  vesting  provisions  and  repurchase  provisions,  and to specify  the
provisions of the Stock Option Agreement or Stock Purchase Agreement relating to
such grant or sale;  (ix) to amend any  outstanding  Rights  for the  purpose of
modifying the time or manner of vesting,  the Purchase Price or Exercise  Price,
as the case may be, subject to applicable legal  restrictions and to the consent
of the other party to such agreement;  (x) to determine the duration and purpose
of leaves of absences which may be granted to a Participant without constituting
termination of their employment for purposes of the Plan; (xi) to make decisions
with  respect to  outstanding  Stock  Options that may become  necessary  upon a
change in corporate control or an event that triggers anti-dilution adjustments;
(xii) to the extent  permitted by law, by  resolution  adopted by the Board,  to
authorize  one or  more  officers  of the  Company  to do  one  or  both  of the
following:  (a) designate  eligible officers and employees of the Company or any
of its  subsidiaries  to be recipients of Awards and (b) determine the number of
such Awards to be received by such  officers and  employees,  provided  that the
resolution  so  authorizing  such  officer or officers  shall  specify the total
number of Awards such officer or officers may award;  and (xiii) to make any and
all other  determinations  which it  determines to be necessary or advisable for
administration of the Plan.

         3.4.     DECISIONS  FINAL.  All  decisions  made  by the  Administrator
pursuant to the provisions of the Plan shall be final and binding on the Company
and the Participants.

         3.5.     THE  COMMITTEE.  The  Board  may,  in its  sole  and  absolute
discretion,  from  time to time,  and at any  period  of time  during  which the
Company's Stock is registered  pursuant to Section 12 of the Exchange Act shall,
delegate any or all of its duties and authority  with respect to the Plan to the
Committee  whose  members are to be appointed by and to serve at the pleasure of
the Board. From time to time, the Board may increase or decrease the size of the
Committee,  add  additional  members to, remove  members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies,  however
caused,  in the  Committee.  The  Committee  shall act pursuant to a vote of the
majority of its members  or, in the case of a  committee  comprised  of only two
members, the unanimous consent of its members, whether present or not, or by the
unanimous  written  consent of the majority of its members and minutes  shall be
kept of all of its meetings and copies  thereof  shall be provided to the Board.
Subject to the limitations  prescribed by the Plan and the Board,  the Committee
may  establish  and follow  such rules and  regulations  for the  conduct of its
business as it may determine to be  advisable.  During any period of time during
which the Company's  Stock is registered  pursuant to Section 12 of the Exchange
Act, all members of the Committee  shall be  Non-Employee  Directors and Outside
Directors.

         3.6.     INDEMNIFICATION.   In  addition   to  such  other   rights  of
indemnification  as they may have as Directors or members of the Committee,  and
to the extent  allowed by  applicable  law,  the  Administrator  and each of the
Administrator's  consultants  shall be  indemnified  by the Company  against the
reasonable expenses,  including attorney's fees, actually incurred in connection
with any action, suit or proceeding or in connection with any appeal therein, to
which the  Administrator or any of its consultants may be party by reason of any
action  taken or  failure  to act  under or in  connection  with the Plan or any
option granted under the Plan, and against all amounts paid by the Administrator
or any of its  consultants in settlement  thereof  (provided that the settlement
has been  approved by the  Company,  which  approval  shall not be  unreasonably
withheld) or paid by the Administrator or any of its consultants in satisfaction
of a judgment  in any such  action,  suit or  proceeding,  except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such  Administrator or any of its consultants did not act in good faith and in a
manner which such person reasonably  believed to be in the best interests of the
Company, and in the case of a criminal proceeding, had no reason to believe that
the conduct complained of was unlawful;  PROVIDED,  HOWEVER, that within 60 days
after institution of any such action, suit or proceeding,  such Administrator or
any of its consultants  shall, in writing,  offer the Company the opportunity at
its own expense to handle and defend such action, suit or proceeding.



<PAGE>


                      SECTION 4: STOCK SUBJECT TO THE PLAN

         4.1.     STOCK  SUBJECT TO THE PLAN.  Subject to adjustment as provided
in SECTION 9,  5,500,000  shares of Common Stock shall be reserved and available
for issuance under the Plan. Stock reserved  hereunder may consist,  in whole or
in part, of authorized and unissued shares or treasury shares.

         4.2.     BASIC LIMITATION. The maximum number of shares with respect to
which  Options,  awards or sales of Stock may be  granted  under the Plan to any
Participant  in any one calendar year shall be 1,000,000  shares.  The number of
shares that are subject to Rights  under the Plan shall not exceed the number of
shares that then remain  available  for  issuance  under the Plan.  The Company,
during the term of the Plan,  shall at all times  reserve  and keep  available a
sufficient number of shares to satisfy the requirements of the Plan.

         4.3.     ADDITIONAL SHARES. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise  terminated,  the
shares allocable to the unexercised  portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that shares issued
under  the Plan are  reacquired  by the  Company  pursuant  to the  terms of any
forfeiture  provision  or  right  of  repurchase,  such  shares  shall  again be
available for the purposes of the Plan.

                             SECTION 5: ELIGIBILITY

         Eligible  Persons  who  are  selected  by the  Administrator  shall  be
eligible to be granted Rights hereunder subject to limitations set forth in this
Plan;  PROVIDED,  HOWEVER,  that only Employees  shall be eligible to be granted
ISOs hereunder.

                   SECTION 6: TERMS AND CONDITIONS OF OPTIONS

         6.1.     STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be  evidenced  by a Stock  Option  Agreement  between the Optionee and the
Company  (the "STOCK  OPTION  AGREEMENT").  Such Option  shall be subject to all
applicable  terms and  conditions  of the Plan and may be  subject  to any other
terms  and  conditions  which are not  inconsistent  with the Plan and which the
Administrator  deems appropriate for inclusion in a Stock Option Agreement.  The
provisions  of the various Stock Option  Agreements  entered into under the Plan
need not be identical.

         6.2.     NUMBER OF SHARES.  Each Stock Option  Agreement  shall specify
the number of shares of Stock that are  subject to the Option and shall  provide
for the  adjustment  of such number in  accordance  with SECTION 9, hereof.  The
Stock  Option  Agreement  shall also  specify  whether the Option is an ISO or a
Non-Qualified Stock Option.

         6.3.     EXERCISE PRICE.

                  6.3.1    IN GENERAL.  Each Stock Option  Agreement shall state
                           the price at which shares subject to the Stock Option
                           may be purchased (the "EXERCISE PRICE"),  which shall
                           be not less than 100% of the Fair Market Value of the
                           Stock on the Date of Grant.

                  6.3.2    TEN PERCENT  SHAREHOLDER.  A Ten Percent  Shareholder
                           shall not be eligible for  designation as an Optionee
                           or  Purchaser,  unless  (i) the  Exercise  Price of a
                           Non-Qualified  Stock  Option is at least  110% of the
                           Fair Market Value of a Share on the Date of Grant, or
                           (ii) in the case of an ISO, the Exercise  Price is at
                           least 110% of the Fair Market Value of a Share on the
                           Date  of  Grant  and  such  ISO by its  terms  is not
                           exercisable  after the  expiration of five years from
                           the Date of Grant.

                  6.3.3    NON-APPLICABILITY.  The  Exercise  Price  restriction
                           applicable to Non-Qualified Stock Options required by
                           SECTIONS 6.3.1 and 6.3.2(I) shall be inoperative if a
                           determination is made by counsel for the Company that
                           such Exercise Price  restrictions are not required in
                           the circumstances  under applicable  federal or state
                           securities laws.

                  6.3.4    PAYMENT.  The  Exercise  Price  shall be payable in a
                           form described in SECTION 8 hereof.



<PAGE>


         6.4.     WITHHOLDING  TAXES.  As a  condition  to  the  exercise  of an
Option,  the Optionee shall make such  arrangements as the Board may require for
the  satisfaction  of any  federal,  state,  local or  foreign  withholding  tax
obligations  that  may  arise  in  connection  with  such  exercise  or with the
disposition of shares acquired by exercising an Option.

         6.5.     EXERCISABILITY.  Each Stock Option Agreement shall specify the
date when all or any installment of the Option becomes exercisable.  In the case
of an Optionee who is not an officer of the Company, a Director or a Consultant,
an Option shall become  exercisable at least as rapidly as 20% per year over the
five-year  period  commencing  on the Date of Grant.  Subject  to the  preceding
sentence,  the  exercise  provisions  of any  Stock  Option  Agreement  shall be
determined by the Administrator, in its sole discretion.

         6.6.     TERM. The Stock Option Agreement shall specify the term of the
Option. No Option shall be exercised after the expiration of ten years after the
date the  Option is  granted.  In the case of an ISO  granted  to a Ten  Percent
Shareholder,  the ISO shall not be exercised  after the expiration of five years
after the date the ISO is granted. Unless otherwise provided in the Stock Option
Agreement,  no  Option  may be  exercised  (i) three  months  after the date the
Optionee's Service with the Company,  its Parent or its Subsidiaries  terminates
if such  termination  is for any reason other than death,  Disability  or Cause,
(ii) one year after the date the  Optionee's  Service  with the  Company and its
subsidiaries  terminates if such termination is a result of death or Disability,
and  (iii) if the  Optionee's  Service  with the  Company  and its  Subsidiaries
terminates for Cause,  all  outstanding  Options  granted to such Optionee shall
expire as of the commencement of business on the date of such  termination.  The
Administrator  may, in its sole  discretion,  waive the  accelerated  expiration
provided for in (i) or (ii). Outstanding Options that are not vested at the time
of  termination  of  employment  for any  reason  shall  expire  at the close of
business on the date of such termination.

         6.7.     LEAVES OF ABSENCE.  For purposes of SECTION 6.6 above,  to the
extent required by applicable law, Service shall be deemed to continue while the
Optionee is on a bona fide leave of absence.  To the extent  applicable law does
not  require  such a leave to be deemed to continue  while the  Optionee is on a
bona fide leave of absence,  such leave shall be deemed to continue if, and only
if,  expressly  provided in writing by the  Administrator  or a duly  authorized
officer of the Company,  Parent or Subsidiary for whom Optionee  provides his or
her services.

         6.8.     MODIFICATION,  EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations  of the  Plan,  the  Administrator  may  modify,  extend  or  assume
outstanding  Options  (whether  granted by the Company or another issuer) or may
accept the  cancellation of outstanding  Options (whether granted by the Company
or  another  issuer) in return  for the grant of new  Options  for the same or a
different  number  of  shares  and at the same or a  different  Exercise  Price.
Without limiting the foregoing, the Administrator may amend a previously granted
Option to fully  accelerate  the  exercise  schedule of such  Option  (including
without  limitation,  in  connection  with a Change in Control).  The  foregoing
notwithstanding,  no modification of an Option shall, without the consent of the
Optionee,  impair the Optionee's  rights or increase the Optionee's  obligations
under such Option.  However,  a termination  of the Option in which the Optionee
receives a cash payment  equal to the  difference  between the Fair Market Value
and the Exercise Price for all shares subject to exercise under any  outstanding
Option  shall not be deemed to impair any rights of the Optionee or increase the
Optionee's obligations under such Option.

               SECTION 7: TERMS AND CONDITIONS OF AWARDS OR SALES

         7.1.     STOCK  PURCHASE  AGREEMENT.  Each  award or sale of  shares of
Stock under the Plan (other than upon  exercise of an Option) shall be evidenced
by a Stock Purchase Agreement between the Purchaser and the Company.  Such award
or sale shall be subject to all applicable  terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Board deems appropriate for inclusion in a Stock Purchase
Agreement.  The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.

         7.2.     DURATION  OF OFFERS.  Unless  otherwise  provided in the Stock
Purchase  Agreement,  any right to acquire shares of Stock under the Plan (other
than an Option)  shall  automatically  expire if not  exercised by the Purchaser
within 30 days after the grant of such right was  communicated  to the Purchaser
by the Company.



<PAGE>


         7.3.     PURCHASE PRICE.

                  7.3.1    IN GENERAL. Each Stock Purchase Agreement shall state
                           the price at which the Stock  subject  to such  Stock
                           Purchase  Agreement may be purchased  (the  "PURCHASE
                           PRICE"),   which,  with  respect  to  Stock  Purchase
                           Rights, shall be determined in the sole discretion of
                           the  Administrator;   PROVIDED,   HOWEVER,  that  the
                           Purchase Price shall be no less than 100% of the Fair
                           Market  Value of the  shares of Stock on  either  the
                           Date of Grant or the date of purchase of the Purchase
                           Right.

                  7.3.2    TEN PERCENT  STOCKHOLDERS.  A Ten Percent Stockholder
                           shall not be eligible for  designation as a Purchaser
                           unless the  Purchase  Price (if any) is at least 100%
                           of the Fair Market Value of a Share.

                  7.3.3    NON  APPLICABILITY.  The Purchase Price  restrictions
                           required  by  SECTIONS   7.3.1  and  7.3.2  shall  be
                           inoperative if a determination is made by counsel for
                           the Company that such Purchase Price restrictions are
                           not required in the  circumstances  under  applicable
                           federal or state securities laws.

                  7.3.4    PAYMENT OF PURCHASE  PRICE.  The Purchase Price shall
                           be payable in a form described in SECTION 8.

         7.4.     WITHHOLDING  TAXES.  As a condition to the purchase of shares,
the  Purchaser  shall make such  arrangements  as the Board may  require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such purchase.

                        SECTION 8: PAYMENT; RESTRICTIONS

         8.1.     GENERAL RULE.  The entire  Purchase Price or Exercise Price of
shares issued under the Plan shall be payable in full by, as applicable, cash or
check for an amount equal to the aggregate  Purchase Price or Exercise Price for
the number of shares being purchased, or in the discretion of the Administrator,
upon  such  terms  as the  Administrator  shall  approve,  (i) in the case of an
Option,  by a copy of instructions to a broker directing such broker to sell the
Stock for  which  such  Option is  exercised,  and to remit to the  Company  the
aggregate  Exercise Price of such Options (a "CASHLESS  EXERCISE"),  (ii) in the
case of an Option or a sale of Stock, by paying all or a portion of the Exercise
Price or Purchase  Price for the number of shares  being  purchased by tendering
Stock owned by the Optionee,  duly endorsed for transfer to the Company,  with a
Fair Market Value on the date of delivery equal to the aggregate  Purchase Price
of the Stock with  respect to which  such  Option or portion  thereof is thereby
exercised  or  Stock  acquired  (a  "STOCK-FOR-STOCK  EXERCISE")  or  (iii) by a
stock-for-stock exercise by means of attestation whereby the Optionee identifies
for delivery  specific  shares of Stock already owned by Optionee and receives a
number of shares of Stock  equal to the  difference  between  the Option  shares
thereby   exercised  and  the  identified   attestation   shares  of  Stock  (an
"ATTESTATION EXERCISE").

         8.2.     WITHHOLDING  PAYMENT.  The  Purchase  Price or Exercise  Price
shall  include  payment  of the  amount of all  federal,  state,  local or other
income,  excise or  employment  taxes  subject  to  withholding  (if any) by the
Company or any parent or subsidiary corporation as a result of the exercise of a
Stock Option.  The Optionee may pay all or a portion of the tax  withholding  by
cash  or  check  payable  to  the  Company,   or,  at  the   discretion  of  the
Administrator,  upon  such  terms as the  Administrator  shall  approve,  by (i)
cashless exercise or attestation exercise; (ii) stock-for-stock  exercise; (iii)
in the case of an Option,  by paying all or a portion of the tax withholding for
the number of shares being purchased by withholding  shares from any transfer or
payment to the Optionee ("STOCK  WITHHOLDING");  or (iv) a combination of one or
more of the  foregoing  payment  methods.  Any  shares  issued  pursuant  to the
exercise  of an Option and  transferred  by the  Optionee to the Company for the
purpose of satisfying any  withholding  obligation  shall not again be available
for purposes of the Plan.  The Fair Market Value of the number of shares subject
to Stock Withholding shall not exceed an amount equal to the applicable  minimum
required tax withholding rates.

         8.3.     SERVICES  RENDERED.  At the  discretion of the  Administrator,
shares  of Stock may be  awarded  under the Plan in  consideration  of  services
rendered to the Company, a Parent or a Subsidiary prior to the award.



<PAGE>


         8.4.     PROMISSORY  NOTE. To the extent that a Stock Option  Agreement
or Stock Purchase Agreement so provides, in the discretion of the Administrator,
upon such  terms as the  Administrator  shall  approve,  all or a portion of the
Exercise Price or Purchase Price (as the case may be) of shares issued under the
Plan may be paid with a full-recourse  promissory note; PROVIDED,  HOWEVER, that
payment of any portion of the  Exercise  Price by  promissory  note shall not be
permitted  where such loan would be prohibited by applicable  laws,  regulations
and rules of the Securities and Exchange  Commission and any other  governmental
agency having jurisdiction. However, in the event there is a stated par value of
the shares and  applicable law requires,  the par value of the shares,  if newly
issued,  shall be paid in cash or cash equivalents.  The shares shall be pledged
as  security  for payment of the  principal  amount of the  promissory  note and
interest  thereon.  The interest rate payable under the terms of the  promissory
note  shall not be less than the  minimum  rate (if any)  required  to avoid the
imputation of additional interest under the Code. Subject to the foregoing,  the
Administrator  (at its sole discretion)  shall specify the term,  interest rate,
amortization requirements (if any) and other provisions of such note. Unless the
Administrator  determines otherwise,  shares of Stock having a Fair Market Value
at least  equal to the  principal  amount of the loan  shall be  pledged  by the
holder to the Company as security for payment of the unpaid  balance of the loan
and such pledge  shall be evidenced  by a pledge  agreement,  the terms of which
shall be determined by the Administrator, in its discretion;  PROVIDED, HOWEVER,
that each loan shall comply with all applicable  laws,  regulations and rules of
the Board of Governors of the Federal Reserve System and any other  governmental
agency having jurisdiction.

         8.5.     EXERCISE/PLEDGE.  To the extent that a Stock Option  Agreement
or Stock Purchase  Agreement so allows, in the discretion of the  Administrator,
upon such terms as the Administrator  shall approve,  payment may be made all or
in  part by the  delivery  (on a form  prescribed  by the  Administrator)  of an
irrevocable direction to pledge shares to a securities broker or lender approved
by the Company,  as security for a loan,  and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise  Price and any
withholding taxes.

         8.6.     WRITTEN  NOTICE.  The purchaser shall deliver a written notice
to the  Administrator  requesting  that the Company direct the transfer agent to
issue to the  purchaser  (or to his  designee) a  certificate  for the number of
shares  of  Common  Stock  being  exercised  or  purchased  or, in the case of a
cashless  exercise or share withholding  exercise,  for any shares that were not
sold in the cashless exercise or withheld.

         8.7.     REPURCHASE  RIGHTS.  Each Stock Purchase Agreement may provide
that the Company may  repurchase  the  Participant's  Rights as provided in this
SECTION 8.7 (the "REPURCHASE RIGHT").

                  a.       REPURCHASE  PRICE.  The  Repurchase  Right  shall  be
                           exercisable at a price equal to the Purchase Price.

                  b.       EXERCISE OF REPURCHASE  RIGHT. A Repurchase Right may
                           be   exercised   only   within  90  days   after  the
                           termination of the Participant's  Service for cash or
                           for   cancellation   of   indebtedness   incurred  in
                           purchasing  the  shares;   PROVIDED,   HOWEVER,   the
                           Repurchase  Right  shall lapse at least as rapidly as
                           to 20% of the Restricted  Stock  purchased  hereunder
                           each year over a period of five  years  from the date
                           the Restricted Stock is purchased.

         8.8.     TERMINATION OF REPURCHASE RIGHT. Each Stock Purchase Agreement
shall provide that the  Repurchase  Rights shall have no effect with respect to,
or shall lapse and cease to have effect when a determination  is made by counsel
for the Company that such Repurchase  Rights are not permitted under  applicable
federal or state securities laws.

         8.9.     NO  TRANSFERABILITY.  Except as provided herein, a Participant
may not assign, sell or transfer Rights, in whole or in part, other than by will
or by operation of the laws of descent and distribution.

                  8.9.1.   PERMITTED  TRANSFER  OF  NON-QUALIFIED   OPTION.  The
                           Administrator,  in its sole discretion may permit the
                           transfer of a Non-Qualified Option (but not an ISO or
                           Stock  Purchase  Right) as follows:  (i) by gift to a
                           member of the Participant's  immediate family or (ii)
                           by transfer by instrument to a trust  providing  that
                           the  Option  is to be passed  to  beneficiaries  upon
                           death  of the  trustor  (either  or both  (i) or (ii)
                           referred  to  as  a  "PERMITTED   TRANSFEREE").   For
                           purposes of this SECTION  8.9.1,  "IMMEDIATE  FAMILY"
                           shall mean the Optionee's  spouse (including a former
                           spouse  subject  to  terms  of a  domestic  relations
                           order); child, stepchild,  grandchild,  child-in-law;
                           parent,   stepparent,   grandparent,   parent-in-law;
                           sibling  and   sibling-in-law,   and  shall   include
                           adoptive relationships.



<PAGE>


                  8.9.2.   CONDITIONS   OF   PERMITTED   TRANSFER.   A  transfer
                           permitted  under this  Section 8.9 hereof may be made
                           only upon written  notice to and approval  thereof by
                           Administrator. A Permitted Transferee may not further
                           assign,  sell or transfer the transferred  Option, in
                           whole or in part,  other than by will or by operation
                           of the laws of descent and distribution.  A Permitted
                           Transferee  shall agree in writing to be bound by the
                           provisions of this Plan.

                    SECTION 9: ADJUSTMENTS; MARKET STAND-OFF

         9.1.     EFFECT OF CERTAIN CHANGES.

                  9.1.1.   STOCK DIVIDENDS,  SPLITS, ETC. If there is any change
                           in the  number  of  outstanding  shares  of  Stock by
                           reason of a stock split,  reverse stock split,  stock
                           dividend,     recapitalization,     combination    or
                           reclassification,  then (i) the  number  of shares of
                           Stock available for Rights, (ii) the number of shares
                           of Stock covered by outstanding  Rights and (iii) the
                           Exercise  Price or Purchase Price of any Stock Option
                           or Purchase  Right,  in effect  prior to such change,
                           shall   be    proportionately    adjusted    by   the
                           Administrator  to reflect any increase or decrease in
                           the  number  of issued  shares  of  Stock;  provided,
                           however,  that any fractional  shares  resulting from
                           the adjustment shall be eliminated.

                  9.1.2.   LIQUIDATION, DISSOLUTION, MERGER OR CONSOLIDATION. In
                           the  event of a  dissolution  or  liquidation  of the
                           Company,  or any  corporate  separation  or division,
                           including,   but  not  limited  to,  a  split-up,   a
                           split-off or a spin-off,  or a sale of  substantially
                           all of  the  assets  of  the  Company;  a  merger  or
                           consolidation   in  which  the  Company  is  not  the
                           Surviving  Entity;  a  reverse  merger  in which  the
                           Company is the  Surviving  Entity,  but the shares of
                           Company stock outstanding  immediately  preceding the
                           merger are  converted  by virtue of the  merger  into
                           other  property,  whether in the form of  securities,
                           cash or  otherwise;  or the transfer of more than 80%
                           of the then  outstanding  voting stock of the Company
                           to another person or entity,  then,  the Company,  to
                           the extent permitted by applicable law, but otherwise
                           in its  sole  discretion  may  provide  for:  (i) the
                           continuation of outstanding Rights by the Company (if
                           the  Company  is  the  Surviving  Entity);  (ii)  the
                           assumption of the Plan and such outstanding Rights by
                           the  Surviving  Entity  or  its  parent;   (iii)  the
                           substitution by the Surviving Entity or its parent of
                           Rights  with  substantially  the same  terms for such
                           outstanding  Rights; or (iv) the cancellation of such
                           outstanding    Rights   without    payment   of   any
                           consideration,  provided that if such Rights would be
                           canceled  in  accordance  with  the  foregoing,   the
                           Participant shall have the right,  exercisable during
                           the later of the ten-day  period  ending on the fifth
                           day prior to such merger or consolidation or ten days
                           after the Administrator  provides the Rights holder a
                           notice  of  cancellation,   to  exercise  the  vested
                           portion  of such  Rights in whole or in part,  or, if
                           provided  for by the  Administrator  using  its  sole
                           discretion in a notice of  cancellation,  to exercise
                           such Rights in whole or in part without regard to any
                           vesting provisions in the Rights agreement.

                  9.1.3.   FURTHER  ADJUSTMENTS.  Subject to Section 9.1.2,  the
                           Administrator shall have the discretion,  exercisable
                           at any  time  before a sale,  merger,  consolidation,
                           reorganization,  liquidation or Change in Control, to
                           take  such  further  action  as it  determines  to be
                           necessary  or  advisable,  and fair and  equitable to
                           Participants, with respect to Rights. Such authorized
                           action may  include  (but  shall not be  limited  to)
                           establishing,  amending or waiving  the type,  terms,
                           conditions or duration of, or restrictions on, Rights
                           so as to provide  for  earlier,  later,  extended  or
                           additional time for exercise and other modifications,
                           and the  Administrator  may take  such  actions  with
                           respect to all Participants, to certain categories of
                           Participants or only to individual Participants.  The
                           Administrator  may take such  action  before or after
                           granting  Rights  to which  the  action  relates  and
                           before or after any public  announcement with respect
                           to such sale, merger, consolidation,  reorganization,
                           liquidation  or Change in Control  that is the reason
                           for such action.

                  9.1.4.   PAR  VALUE  CHANGES.  In the event of a change in the
                           Stock of the Company as presently  constituted  which
                           is  limited  to a  change  of all  of its  authorized
                           shares with par value, into the same number of shares
                           without par value, or a change in the par value,  the
                           shares  resulting  from  any  such  change  shall  be
                           "Stock" within the meaning of the Plan.

         9.2.     DECISION  OF  ADMINISTRATOR  FINAL.  To the  extent  that  the
foregoing  adjustments  relate  to  stock or  securities  of the  Company,  such
adjustments  shall be made by the  Administrator,  whose  determination  in that
respect shall be final, binding and conclusive; PROVIDED, HOWEVER, that each ISO
granted  pursuant to the Plan shall not be adjusted in a manner that causes such
Stock Option to fail to continue to qualify as an ISO without the prior  consent
of the Optionee thereof.



<PAGE>


         9.3.     NO OTHER RIGHTS. Except as hereinbefore  expressly provided in
this  SECTION  9,  no  Participant  shall  have  any  rights  by  reason  of any
subdivision  or  consolidation  of shares of Company stock or the payment of any
dividend  or any other  increase  or decrease in the number of shares of Company
stock of any class or by reason of any of the events  described  in SECTION 9.1,
above,  or any other  issue by the  Company of shares of stock of any class,  or
securities  convertible  into  shares  of stock of any  class;  and,  except  as
provided in this SECTION 9, none of the foregoing  events shall  affect,  and no
adjustment by reason  thereof shall be made with respect to, the number or price
of shares of Stock subject to Rights.  The grant of a Right pursuant to the Plan
shall  not  affect  in any  way  the  right  or  power  of the  Company  to make
adjustments,  reclassifications,  reorganizations  or changes of its  capital or
business  structures or to merge or to consolidate or to dissolve,  liquidate or
sell, or transfer all or part of its business or assets.

         9.4.     MARKET  STAND-OFF.  Each  Stock  Option  Agreement  and  Stock
Purchase Agreement may provide that, in connection with any underwritten  public
offering  by the  Company  of its equity  securities  pursuant  to an  effective
registration  statement filed under the Securities Act of 1933, as amended,  the
Participant shall agree not to sell, make any short sale of, loan,  hypothecate,
pledge, grant any option for the repurchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to any Stock  without  the prior  written  consent of the Company or its
underwriters,  for such period of time from and after the effective date of such
registration  statement as may be requested by the Company or such  underwriters
(the "MARKET STAND-OFF").

                     SECTION 10: AMENDMENT AND TERMINATION

         The Board may amend,  suspend or terminate the Plan at any time and for
any  reason.  At the time of such  amendment,  the Board shall  determine,  upon
advice from counsel,  whether such  amendment  will be contingent on shareholder
approval.

                         SECTION 11: GENERAL PROVISIONS

         11.1.    GENERAL RESTRICTIONS.

                  11.1.1.  NO VIEW TO DISTRIBUTE.  The Administrator may require
                           each person acquiring shares of Stock pursuant to the
                           Plan to  represent  to and agree with the  Company in
                           writing  that such  person is  acquiring  the  shares
                           without  a view  towards  distribution  thereof.  The
                           certificates  for such  shares may include any legend
                           that the  Administrator  deems appropriate to reflect
                           any restrictions on transfer.

                  11.1.2.  LEGENDS.   All   certificates  for  shares  of  Stock
                           delivered  under the Plan  shall be  subject  to such
                           stop transfer  orders and other  restrictions  as the
                           Administrator  may deem  advisable  under the  rules,
                           regulations and other  requirements of the Securities
                           and  Exchange  Commission,  any stock  exchange  upon
                           which the  Stock is then  listed  and any  applicable
                           federal   or   state   securities   laws,   and   the
                           Administrator may cause a legend or legends to be put
                           on  any  such   certificates   to  make   appropriate
                           reference to such restrictions.

                  11.1.3.  NO RIGHTS  AS  SHAREHOLDER.  Except  as  specifically
                           provided in this Plan, a Participant  or a transferee
                           of a Right shall have no rights as a shareholder with
                           respect to any shares covered by the Rights until the
                           date of the issuance of a Stock certificate to him or
                           her for such shares,  and no adjustment shall be made
                           for dividends (ordinary or extraordinary,  whether in
                           cash,  securities or other property) or distributions
                           of other rights for which the record date is prior to
                           the date such Stock certificate is issued,  except as
                           provided in Section 9.1, hereof.

         11.2.    OTHER  COMPENSATION  ARRANGEMENTS.  Nothing  contained in this
Plan shall  prevent the Board from  adopting  other or  additional  compensation
arrangements,  subject to shareholder approval if such approval is required; and
such  arrangements  may be either  generally  applicable or  applicable  only in
specific cases.

         11.3.    DISQUALIFYING  DISPOSITIONS.  Any Participant who shall make a
"DISPOSITION"  (as  defined in Section 424 of the Code) of all or any portion of
an ISO  within  two years  from the date of grant of such ISO or within one year
after the  issuance of the shares of Stock  acquired  upon  exercise of such ISO
shall be  required  to  immediately  advise  the  Company  in  writing as to the
occurrence  of the sale and the price  realized  upon the sale of such shares of
Stock.



<PAGE>


         11.4.    REGULATORY  MATTERS.  Each Stock  Option  Agreement  and Stock
Purchase  Agreement  shall  provide  that no shares  shall be  purchased or sold
thereunder  unless and until (i) any then  applicable  requirements  of state or
federal laws and regulatory  agencies shall have been fully complied with to the
satisfaction of the Company and its counsel and (ii) if required to do so by the
Company,  the  Optionee or Offeree  shall have  executed  and  delivered  to the
Company  a  letter  of  investment  intent  in such  form  and  containing  such
provisions as the Board or Committee may require.

         11.5.    RECAPITALIZATIONS.  Each  Stock  Option  Agreement  and  Stock
Purchase Agreement shall contain  provisions  required to reflect the provisions
of SECTION 9.

         11.6.    DELIVERY.  Upon  exercise of a Right  granted under this Plan,
the Company shall issue Stock or pay any amounts due within a reasonable  period
of time  thereafter.  Subject  to any  statutory  obligations  the  Company  may
otherwise  have,  for purposes of this Plan,  thirty days shall be  considered a
reasonable period of time.

         11.7.    OTHER  PROVISIONS.  The  Stock  Option  Agreements  and  Stock
Purchase Agreements  authorized under the Plan may contain such other provisions
not inconsistent with this Plan,  including,  without  limitation,  restrictions
upon the exercise of the Rights, as the Administrator may deem advisable.

                    SECTION 12: INFORMATION TO PARTICIPANTS

         To the extent necessary to comply with California law, the Company each
year shall furnish to Participants its balance sheet and income statement unless
such  Participants  are limited to key  Employees  whose duties with the Company
assure them access to equivalent information.

                       SECTION 13: EFFECTIVE DATE OF PLAN

         The effective  date of this Plan is November 23, 2005.  The adoption of
the Plan is subject to approval by the Company's  shareholders,  which  approval
must be  obtained  within 12  months  from the date the Plan is  adopted  by the
Board.  In the event that the  shareholders  fail to approve  the Plan within 12
months after its adoption by the Board, any grants of Options or sales or awards
of shares that have  already  occurred  shall be  rescinded,  and no  additional
grants, sales or awards shall be made thereafter under the Plan.

                            SECTION 14: TERM OF PLAN

         The Plan shall  terminate  automatically  on November 22, 2015,  but no
later than prior to the 10th  anniversary of the effective  date. No Right shall
be granted pursuant to the Plan after such date, but Rights theretofore  granted
may extend  beyond that date.  The Plan may be  terminated  on any earlier  date
pursuant to SECTION 10 hereof.

                             SECTION 15: EXECUTION

         To record the adoption of the Plan by the Board, the Company has caused
its authorized officer to execute the same as of November 23, 2005.



                                      PEOPLE'S LIBERATION, INC.

                                      /s/ Darryn Barber
                                      -----------------------------
                                      By:   Darryn Barber
                                      Its:  Chief Financial Officer



<PAGE>


                            PEOPLE'S LIBERATION, INC.
                    PROXY FOR ANNUAL MEETING OF STOCKHOLDERS

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

         The undersigned, a stockholder of PEOPLE'S LIBERATION, INC., a Delaware
corporation (the "Company"),  hereby  nominates,  constitutes and appoints Colin
Dyne and Darryn Barber, or either one of them, as proxy of the undersigned, each
with full power of substitution,  to attend, vote and act for the undersigned at
the Annual Meeting of Stockholders of the Company,  to be held on June 13, 2008,
and any postponements or adjournments thereof, and in connection  therewith,  to
vote and represent all of the shares of the Company which the undersigned  would
be entitled to vote with the same effect as if the undersigned were present,  as
follows:

A VOTE FOR ALL PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:

Proposal 1.       To elect the Board of Directors' four nominees as directors:

             Colin Dyne       Dean Oakey      Susan White     Kenneth Wendgrod


                  |_|      FOR ALL NOMINEES  LISTED  ABOVE  (except as marked to
                           the contrary below)

                  |_|      WITHHELD for all nominees listed above

         (INSTRUCTION: To withhold authority to vote for any individual nominee,
         write that nominee's name in the space below:)

         -----------------------------------------------------------------------

         The  undersigned  hereby  confer(s)  upon the  proxies and each of them
         discretionary  authority  with  respect to the election of directors in
         the event  that any of the above  nominees  is unable or  unwilling  to
         serve.

Proposal 2.       To approve  an  amendment  and  restatement  of the  Company's
                  Certificate of  Incorporation  to eliminate  Article Sixth and
                  Article Eighth and amend Article Seventh:

                       |_| FOR        |_| AGAINST      |_| ABSTAIN

Proposal 3.       To approve an amendment to the Company's 2005 Stock  Incentive
                  Plan to increase the maximum  number of shares of common stock
                  that may be issued  pursuant to awards  granted under the plan
                  to 5,500,000 shares:

                       |_| FOR        |_| AGAINST      |_| ABSTAIN

         The  undersigned  hereby  revokes any other proxy to vote at the Annual
Meeting,  and hereby  ratifies and confirms all that said attorneys and proxies,
and each of them, may lawfully do by virtue hereof.  With respect to matters not
known at the time of the  solicitation  hereof,  said proxies are  authorized to
vote in accordance with their best judgment.

         THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE  INSTRUCTIONS SET FORTH
ABOVE OR, TO THE EXTENT NO CONTRARY DIRECTION IS INDICATED, WILL BE TREATED AS A
GRANT OF AUTHORITY TO VOTE FOR ALL PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED
AT THE ANNUAL  MEETING,  THIS PROXY  CONFERS  AUTHORITY TO AND SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE PROXIES.

         The undersigned  acknowledges receipt of a copy of the Notice of Annual
Meeting and  accompanying  Proxy Statement  dated May 10, 2008,  relating to the
Annual Meeting.

                                         Dated:___________________________, 2008

                                         Signature:_____________________________

                                         Signature:_____________________________
                                         Signature(s) of Stockholder(s)
                                         (See Instructions Below)

The  Signature(s)  hereon  should  correspond  exactly  with the  name(s) of the
Stockholder(s) appearing on the Share Certificate. If stock is held jointly, all
joint owners  should sign.  When signing as attorney,  executor,  administrator,
trustee or guardian, please give full title as such. If signer is a corporation,
please sign the full corporation name, and give title of signing officer.

           |_| Please indicate by checking this box if you anticipate
                         attending the Annual Meeting.

      PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
      ENCLOSED ENVELOPE OR FAX DIRECTLY TO STALT, INC. AT (650) 321-7113.