AMENDED AND RESTATED FACTORING AND FINANCING AGREEMENT The CIT Group/Commercial Services, Inc. (as Lender) and Bernard Chaus, Inc. Cynthia Steffe Acquisition, LLC and S.L. Danielle Acquisition, LLC (as Borrowers) Dated: As of September 10, 2009

Exhibit 10.3

AMENDED AND RESTATED FACTORING AND
FINANCING AGREEMENT

The CIT Group/Commercial Services, Inc.
(as Lender)

and

Bernard Chaus, Inc.
Cynthia Steffe Acquisition, LLC
and
S.L. Danielle Acquisition, LLC
(as Borrowers)

Dated: As of September 10, 2009

TABLE OF CONTENTS

THE CIT GROUP/COMMERCIAL SERVICES, INC. , a New York corporation, with offices located at 11 West 42 ^nd Street, New York, New York 10036 (hereinafter “CIT” or “Lender”) is pleased to confirm the terms and conditions under which the Lender shall act as sole factor and provide other financial accommodations to BERNARD CHAUS, INC. , a New York corporation (“Chaus”), S.L. DANIELLE ACQUISITION, LLC , a New York limited liability company (“Danielle Acquisition”) and CYNTHIA STEFFE ACQUISITION, LLC , a New York limited liability company (“CS Acquisition”) and together with Chaus and Danielle Acquisition, individually, a “Company” and collectively, the “Companies”, each with a principal place of business at 800 Secaucus Road, Secaucus, New Jersey 07094.

WHEREAS, the Companies and Lender are parties to (i) an Amended and Restated Financing Agreement (as amended through the date hereof, the “A&R Financing Agreement”) dated as of September 18, 2008 (the “Original Closing Date”), and related agreements and documents pursuant to which CIT, as agent for the lenders from time to time party thereto (in such capacity, the “Agent”) extended to the Companies a Revolving Line of Credit in the amount of up to $30,000,000 and (ii) a Factoring Agreement dated September 18, 2008 (the “Original Factoring Agreement” and together with the A&R Financing Agreement, the “Original Factoring and Financing Agreements”) and related agreements and documents pursuant to which CIT acted as sole factor (in such capacity, the “Factor”); and

WHEREAS, the Companies have requested that Lender (i) make certain modifications to the terms and conditions set forth in the A&R Financing Agreement and (ii) make certain modifications to the terms and conditions set forth in the Original Factoring Agreement as herein set forth; and

WHEREAS, the Agent has agreed to (i) sell and assign to the Factor all of the Agent’s rights and obligations under the A&R Financing Agreement with respect to 100% of the financing facilities thereunder and (ii) assign to the Factor its security interest in any and all collateral pledged to the Agent pursuant to or in connection with the A&R Financing Agreement; and

WHEREAS, the Agent has agreed to resign as Agent under the A&R Financing Agreement and all parties thereto have agreed that no successor agent shall be appointed; and

WHEREAS, under the terms and conditions hereof the Lender has agreed to amend and restate the A&R Financing Agreement and the Original Factoring Agreement all as provided herein.

NOW THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the Companies and Lender hereby agree as follows:

AMENDMENT AND RESTATEMENT

As of the date of this Amended and Restated Factoring and Financing Agreement among the Companies and Lender (the “ Financing Agreement ”), the terms, conditions, covenants, agreements, representations and warranties contained in the Original Factoring and Financing Agreements shall be deemed amended and restated in their entirety as follows and the Original Factoring and Financing Agreements shall be consolidated with and into and superseded by this Financing Agreement without breaking continuity; provided , however , that nothing contained in this Financing Agreement shall impair, limit or affect the security interests heretofore granted,

pledged and or assigned to Lender as security for the Obligations under the Original Factoring and Financing Agreements and this Financing Agreement does not constitute a novation of the Original Factoring and Financing Agreements or the security interests granted in connection therewith.

SECTION 1. Definitions.

Accounts shall mean any and all of the Companies’ now existing and future: (a) accounts (as defined in the UCC), and any and all other receivables (whether or not specifically listed on schedules furnished to the Lender), including, without limitation, all accounts created by, or arising from, all of the Companies’ sales, leases, rentals of goods or renditions of services to its customers, including but not limited to, those accounts arising under any of the Companies’ trade names or styles, or through any of the Companies’ divisions; (b) any and all instruments, documents, chattel paper (including electronic chattel paper) (all as defined in the UCC); (c) unpaid seller’s or lessor’s rights (including rescission, replevin, reclamation, repossession and stoppage in transit) relating to the foregoing or arising therefrom; (d) rights to any goods represented by any of the foregoing, including rights to returned, reclaimed or repossessed goods; (e) reserves and credit balances arising in connection with or pursuant hereto; (f) guarantees, supporting obligations, payment intangibles and letter of credit rights (all as defined in the UCC); (g) insurance policies or rights relating to any of the foregoing; (h) general intangibles pertaining to any and all of the foregoing (including all rights to payment, including those arising in connection with bank and non-bank credit cards), and including books and records and any electronic media and software thereto; (i) notes, deposits or property of account debtors securing the obligations of any such account debtors to the Companies; and (j) cash and non-cash proceeds (as defined in the UCC) of any and all of the foregoing.

Accounts Receivable shall have the meaning set forth in Section 4.7 hereof.

A&R Financing Agreement shall have the meaning provided for such term in the Recitals to this Agreement.

Anniversary Date shall mean September 18, 2011 and September 18 in every year thereafter.

Anti-Terrorism Laws shall mean any and all laws, regulations, rules, orders, etc. in effect from time to time relating to anti-money laundering and terrorism, including, without limitation, Executive Order No. 13224 (effective September 24, 2001) and the USA Patriot Act.

Applicable Margin shall mean 2.00%

Availability shall mean, at any time, the amount by which (a) the lesser of the Revolving Credit Limit or the Borrowing Base at such time exceeds (b) the sum at such time of the outstanding balance of the Funds In Use Account plus the undrawn amount of all outstanding Letters of Credit.

Availability Reserve shall mean the sum of: (a) (i) three (3) months rental payments or similar charges for any of the Companies’ leased premises which contain material amounts of Collateral for which the Companies have not delivered to the Lender a landlord’s waiver in form and substance reasonably satisfactory to the Lender, plus (ii) three (3) months estimated payments

plus any other fees or charges owing by the Companies to any applicable warehousemen or third party processor (as determined by the Lender in its reasonable business judgment), provided that any of the foregoing amounts shall be adjusted from time to time hereafter upon (x) the opening or closing of a Collateral location and/or (y) any change in the amount of rental, storage or processor payments or similar charges; provided , however , that the foregoing amount, as it relates to any Collateral location, shall be reduced to zero upon delivery to the Lender of acceptable landlord waivers for such Collateral location; (b) any reserve which the Lender may reasonably require from time to time pursuant to the express terms of this Financing Agreement, (c) Ledger Debt and (d) such other reserves against Availability as Lender deems necessary in the exercise of its reasonable business judgment as a result of (i) negative forecasts and/or trends in the Companies’ business, industry, prospects, profits, operations or financial condition or (ii) other issues, circumstances or facts that could otherwise negatively impact any Company or its business, prospects, profits, operations, industry, financial condition or assets.

Base Rate shall mean the rate of interest per annum announced by JPMorgan Chase Bank, N.A. (or its successor) from time to time as its prime rate in effect at its principal office in New York City, which rate is not intended to be the lowest rate of interest charged by JPMorgan Chase Bank to its borrowers.

Base Rate Loans shall mean any loans or advances pursuant to this Financing Agreement made or maintained at a rate of interest based upon the Base Rate.

Blocked Person shall mean any Person: (i) listed in the annex to Executive Order No. 13224, (ii) owned or controlled by, or acting for or on behalf of, any Person listed in the annex to Executive Order No. 13224, (iii) with which CIT is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (iv) that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, (v) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list, (vi) a Person that is named a “denied person” on the most current list published by the U.S. Commerce Department, or (vii) (A) an agency of the government of a Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or (C) a Person resident in a Sanctioned Country to the extent subject to a sanctions program administered by OFAC.

Borrowing Agent shall mean Bernard Chaus, Inc.

Borrowing Base shall mean the sum of (a) eighty-five percent (85%) of the Companies’ aggregate outstanding Eligible Accounts, provided that should dilution of the Borrower’s Trade Accounts Receivable, as determined by Lender, be equal to or exceed 12% in any rolling twelve month period, then such percentage shall be reduced by one percent (1%) with every one percent (1%) increase in dilution over 12%, less (b) any applicable Availability Reserves.

Borrowing Base Certificate shall mean a certificate to be executed and delivered from time to time by the Companies in the form attached hereto as Exhibit A.

Business Day shall mean any day on which the Lender and JPMorgan Chase Bank are open for business.

Capital Expenditures shall mean, for any period, the aggregate expenditures of the Companies during such period on account of, property, plant, equipment or similar fixed assets that, in conformity with GAAP, are required to be reflected in the balance sheet of the Companies.

Capital Lease shall mean any lease of property (whether real, personal or mixed) which, in conformity with GAAP, is accounted for as a capital lease or a Capital Expenditure in the balance sheet of the Companies.

CIT Event shall have the meaning provided in Section 11 hereof.

CIT’s System shall mean CIT’s ACAR or other interest-based loan accounting and reporting system.

Client Position Account shall have the meaning set forth in Section 4.7 hereof.

Client Risk Accounts shall have the meaning provided in Section 3.2(b) hereof.

Closing Date shall mean the date that this Financing Agreement has been duly executed by the parties hereto and delivered to the Lender.

Collateral shall mean all assets of each Company, including, without limitation, present and future Accounts, Equipment, Inventory and other Goods, Documents of Title, General Intangibles, Investment Property, Real Estate and Other Collateral.

Consolidated Balance Sheet shall mean a consolidated balance sheet for Chaus and its Subsidiaries, eliminating all intercompany transactions and prepared in accordance with GAAP.

Contract Year shall have the meaning provided in Section 8.2(a) hereof.

Copyrights shall mean all present and hereafter acquired copyrights, copyright registrations, recordings, applications, designs, styles, licenses, marks, prints and labels bearing any of the foregoing, all reissues and renewals thereof, all licenses thereof, all other general intangible, intellectual property and other rights pertaining to any of the foregoing, together with the goodwill associated therewith, and all income, royalties and other Proceeds of any of the foregoing.

Credit Risk shall have the meaning provided in Section 3.2(b) hereof.

Customer Claims shall mean any dispute, claim, offset, defense, deduction, rejection, recoupment, counterclaim or contra account asserted by a customer with respect to an Account.

Default shall mean any event specified in Section 10 hereof, which with the passage of time or giving of notice or both would constitute an Event of Default.

Default Rate of Interest shall mean a rate of interest per annum on any Obligations hereunder, equal to the sum of: (a) two percent (2%) and (b) the applicable increment over the Base Rate (as set forth in paragraph 8.1 hereof) plus the Base Rate, which the Lender shall be entitled to charge

the Companies on all Obligations due the Lender by the Companies, as further set forth in Paragraph 10.2 of Section 10 of this Financing Agreement.

Depository Accounts shall mean the collection accounts, which are subject to the Lender’s instructions, as specified in Paragraph 4.4 of Section 4 of this Financing Agreement.

Documents of Title shall mean all present and future documents (as defined in the UCC), and any and all warehouse receipts, bills of lading, shipping documents, chattel paper, instruments and similar documents, all whether negotiable or not and all goods and Inventory relating thereto and all cash and non-cash proceeds of the foregoing.

Early Termination Date shall mean the date on which the Companies terminate this Financing Agreement or the Revolving Line of Credit which date is prior to an Anniversary Date.

Early Termination Fee shall (a) mean the fee the Lender is entitled to charge the Companies in the event the Companies voluntarily terminate the Revolving Line of Credit or this Financing Agreement on a date prior to an Anniversary Date; and (b) equal (x) 2.0% of the Revolving Credit Limit if the Early Termination Date occurs on or before September 18, 2009, (y) 1% of the Revolving Credit Limit if the Early Termination Date occurs after September 18, 2009 but on or before September 18, 2010; and (z) 0.50% of the Revolving Credit Limit if the Early Termination Date occurs after September 18, 2010; provided , however , no Early Termination Fee shall be payable in the event the Companies voluntarily terminate the Revolving Line of Credit or this Financing Agreement within 120 days of the Anniversary Date or due to a CIT Event in accordance with Section 11 hereof.

EBITDA shall mean, in any period, the consolidated earnings of Chaus and its Subsidiaries before all (i) interest and tax obligations, (ii) depreciation and (iii) amortization for said period, all determined in accordance with GAAP on a consistent basis with the latest audited consolidated financial statements of Chaus and its Subsidiaries, but excluding the effect of extraordinary and/or non-reoccurring gains or losses for such period.

Eligible Accounts shall mean Trade Accounts Receivable which are purchased hereunder and which are and continue to be credit approved by Lender, not charged back to the Companies hereunder nor subject to any reserves hereunder. In addition (but without duplication of the foregoing), Trade Accounts Receivable that are purchased and not credit approved hereunder may be deemed Eligible Accounts if such Trade Accounts Receivable are subject to a valid, exclusive, first priority perfected security interest in favor of the Lender, and conform to the warranties contained herein and which, at all times, continue to be acceptable to the Lender in the exercise of its reasonable business judgment, less, without duplication, the sum of:

     (a) actual returns, disputes, discounts, claims, credits and allowances of any nature (whether issued, owing, granted, claimed or outstanding), plus

     (b) reserves for such Trade Accounts Receivable that arise from, or are subject to or include: (i) sales to the United States of America, any state or other governmental entity or to any agency, department or division thereof, except for any such sales as to which the Companies have complied with the Assignment of Claims Act of 1940 or any other applicable statute, rules or regulation to the Lender’s satisfaction in the exercise of its reasonable business judgment; (ii)

foreign sales, other than sales which otherwise comply with all of the other criteria for eligibility hereunder and are (x) secured by letters of credit (in form and substance satisfactory to the Lender) issued or confirmed by, and payable at, banks acceptable to the Lender having a place of business in the United States of America, or (y) to customers residing in Canada, provided that such Accounts are payable in United States Dollars; (iii) Client Risk Accounts that remain unpaid more than ninety (90) days from invoice date; (iv) contra accounts; (v) sales to any Company or other Person affiliated with any Company or any subsidiary of any Company; (vi) bill and hold (deferred shipment) or consignment sales; (vii) sales to any customer which is either (w) insolvent, (x) the debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership or similar proceedings under any federal or state law, (y) negotiating, or has called a meeting of its creditors for purposes of negotiating, a compromise of its debts, or (z) financially unacceptable to the Lender or has a credit rating unacceptable to the Lender; (viii) with respect to Client Risk Accounts, all sales to any customer if fifty percent (50%) or more of the aggregate dollar amount of all outstanding invoices to such customer are unpaid more than the earlier of ninety (90) days from invoice date; and (ix) sales to any customer and/or its affiliates to the extent the aggregate outstanding amount of such sales at any time exceed forty percent (40%) or more of all Eligible Accounts at such time; (x) pre-billed receivables and receivables arising from progress billings; and (xi) sales not payable in United States currency, with respect to Client Risk Accounts; plus

     (c) reserves against Trade Accounts Receivable as the Lender deems necessary in the exercise of its reasonable business judgment and which are customary either in the commercial finance industry or in the lending practices of the Lender; plus

     (d) Trade Accounts Receivable (i) with respect to which any check or other instrument of payment has been returned uncollected for any reason; (ii) that do not comply in all material respects with the requirements of all applicable laws and regulations; and (iii) which represent a sale on a bill-and-hold, guaranteed sale, sale-and-return, consignment which is billed prior to actual sale to the end user, cash-on-delivery or any other repurchase or return basis.

Equipment shall mean all present and hereafter acquired equipment (as defined in the UCC) which is owned by the Companies, including, without limitation, all machinery, equipment, furnishings and fixtures, and all additions, substitutions and replacements thereof, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto and all proceeds thereof of whatever sort.

ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended from time to time and the rules and regulations promulgated thereunder from time to time.

Event(s) of Default shall have the meaning provided for in Section 10 of this Financing Agreement.

Factor Risk Accounts shall have the meaning provided in Section 4.2(b) hereof.

Fiscal Quarter shall mean, with respect to the Companies, each three (3) month period ending December 31, March 31, June 30 and September 30 of each Fiscal Year.

Fiscal Year shall mean each twelve (12) month period commencing on July 1 of each year and ending on the following June 30.

Funds In Use Account shall mean the account on the Lender’s books, in the Companies’ name, in which the Companies will be charged with all Obligations under this Financing Agreement.

GAAP shall mean generally accepted accounting principles in the United States of America as in effect from time to time and for the period as to which such accounting principles are to apply, provided that in the event the Companies modify their accounting principles and procedures as applied as of the Closing Date, the Companies shall provide to the Lender such statements of reconciliation as shall be in form and substance reasonably acceptable to the Lender.

General Intangibles shall mean all of the Companies’ present and hereafter acquired general intangibles (as defined in the UCC), and shall include, without limitation, all present and future right, title and interest in and to: (a) all Trademarks, tradenames, corporate names, business names, logos and any other designs or sources of business identities, (b) Patents, together with any improvements on said Patents, utility models, industrial models, and designs, (c) Copyrights, (d) trade secrets, (e) licenses, permits and franchises, (f) all applications with respect to the foregoing, (g) all right, title and interest in and to any and all extensions and renewals, (h) goodwill with respect to any of the foregoing, (i) any other forms of similar intellectual property, (j) all customer lists, distribution agreements, supply agreements, blueprints, indemnification rights and tax refunds, together with all monies and claims for monies now or hereafter due and payable in connection with any of the foregoing or otherwise, and all cash and non-cash proceeds thereof, including, without limitation, the proceeds or royalties of any licensing agreements between any Company and any licensee of any General Intangibles of any Company.

Goods shall mean all present and hereafter acquired goods (as defined in the UCC) and all proceeds thereof.

Guaranties shall mean the guaranty documents executed and delivered by the Guarantors guaranteeing the Obligations.

Guarantors shall mean (i) Bernard Chaus International (Hong Kong), Inc., a Delaware corporation, (ii) Bernard Chaus International (Korea), Inc., a Delaware corporation and (iii) Bernard Chaus International (Taiwan), Inc., a Delaware corporation.

Guide shall have the meaning provided in Section 3.5 hereof.

Indebtedness shall mean, without duplication, all liabilities, contingent or otherwise, which are any of the following: (a) obligations in respect of borrowed money or for the deferred purchase price of property, services or assets, other than Inventory, or (b) lease obligations which, in accordance with GAAP, have been, or which should be capitalized.

Insurance Proceeds shall mean proceeds or payments from an insurance carrier with respect to any loss, casualty or damage to Collateral.

Interest Expense shall mean the total interest obligations (paid or accrued) of the Companies determined in accordance with GAAP, on a consistent basis with the latest audited statements of the Companies.

Inventory shall mean all of the Companies’ present and hereafter acquired inventory (as defined in the UCC) and including, without limitation, all merchandise, inventory and goods, and all additions, substitutions and replacements thereof, wherever located, together with all goods and materials used or usable in manufacturing, processing, packaging or shipping same in all stages of production from raw materials through work-in-process to finished goods — and all proceeds thereof of whatever sort.

Investment Property shall mean all now owned and hereafter acquired investment property (as defined in the UCC) together will all stock and other equity interest in any Company’s subsidiaries and all proceeds thereof.

Issuer shall mean the financial institution issuing Letters of Credit for the Companies.

Ledger Debt shall mean any Indebtedness for goods or services purchased or obtained by the Companies from any party whose Accounts are factored or financed by Lender.

Letters of Credit shall mean all letters of credit issued with the assistance of the Lender in accordance with Section 5 hereof by the Issuer for or on behalf of the Companies.

Letter of Credit Guaranty shall mean the guaranty delivered by the Lender to the Issuer of the Companies’ reimbursement obligations under the Issuer’s reimbursement agreement, application for Letter of Credit or other like document.

Letter of Credit Guaranty Fee shall mean the fee the Lender may charge the Companies under Paragraph 8.3 of Section 8 of this Financing Agreement for: (a) issuing a Letter of Credit Guaranty, and/or (b) otherwise aiding the Companies in obtaining Letters of Credit, all pursuant to Section 5 hereof.

Letter of Credit Sub-Line shall mean the commitment of the Lender to assist the Companies in obtaining Letters of Credit, pursuant to Section 5 hereof, in an aggregate amount not to exceed $12,000,000.

Leverage Ratio shall mean the ratio determined by dividing Total Liabilities by Tangible Net Worth.

Loan Documents shall mean this Financing Agreement, the Guaranties, the other closing documents and any other ancillary loan and security agreements executed from time to time in connection with the Original Factoring and Financing Agreement and/or this Financing Agreement, all as may be renewed, amended, extended, increased or supplemented from time to time.

Loan Facility Fee shall mean the fee payable to the Lender in accordance with, and pursuant to, the provisions of Paragraph 8.8 of Section 8 of this Financing Agreement.

Minimum Factoring Fees shall have the meaning provided in Section 8.2(a) hereof.

Obligations shall mean all loans, advances and extensions of credit made or to be made by the Lender to the Companies, or to others for the Companies’ account (including, without limitation, all Revolving Loans and Letter of Credit Guaranties); any and all indebtedness and obligations which may at any time be owing by the Companies to the Lender howsoever arising, whether now in existence or incurred by the Companies from time to time hereafter; whether principal, interest, fees, costs, expenses or otherwise; whether secured by pledge, lien upon or security interest in any of the Companies’ Collateral, assets or property or the assets or property of any other Person; whether such indebtedness is absolute or contingent, joint or several, matured or unmatured, direct or indirect and whether the Companies are liable to the Lender for such indebtedness as principal, surety, endorser, guarantor or otherwise. Obligations shall also include indebtedness owing to the Lender by the Companies under any Loan Document, or under any other agreement or arrangement now or hereafter entered into between any Company and the Lender; indebtedness or obligations incurred by, or imposed on, the Lender as a result of environmental claims arising out of any Company’s operations, premises or waste disposal practices or sites in accordance with paragraph 7.7 hereof; any Company’s liability to the Lender as maker or endorser of any promissory note or other instrument for the payment of money; any Company’s liability to the Lender under any instrument of guaranty or indemnity, or arising under any guaranty, endorsement or undertaking which the Lender may make or issue to others for such Company’s account, including any Letter of Credit Guaranty or other accommodation extended by CIT with respect to applications for Letters of Credit, the Lender’s acceptance of drafts or the Lender’s endorsement of notes or other instruments for the Companies’ account and benefit and Ledger Debt.

Operating Leases shall mean all leases of property (whether real, personal or mixed) other than Capital Leases.

Original Closing Date shall have the meaning provided for such term in the Recital to this Agreement.

Other Collateral shall mean all now owned and hereafter acquired lockbox, blocked account and any other deposit accounts maintained with any bank or financial institutions into which the proceeds of Collateral are or may be deposited; all other deposit accounts and all Investment Property; all cash and other monies and property in the possession or control of the Lender; all books, records, ledger cards, disks and related data processing software at any time evidencing or containing information relating to any of the Collateral described herein or otherwise necessary or helpful in the collection thereof or realization thereon; and all cash and non-cash proceeds of the foregoing.

Out-of-Pocket Expenses shall mean all of the Lender’s present and future out-of-pocket expenses actually incurred relative to this Financing Agreement or any other Loan Documents, whether incurred heretofore or hereafter, which expenses shall include, but shall not be duplicative of any other fees or expenses set forth in this Agreement, without being limited to: the cost of record searches, all out-of-pocket costs and expenses incurred by the Lender in opening bank accounts, depositing checks, receiving and transferring funds, and wire transfer charges, any charges imposed on the Lender due to returned items and “insufficient funds” of

deposited checks and the Lender’s standard fees relating thereto, any amounts paid by, incurred by or charged to, the Lender by the Issuer under a Letter of Credit Guaranty or the Companies’ reimbursement agreement, application for Letters of Credit or other like document which pertain either directly or indirectly to such Letters of Credit, and the Lender’s standard fees relating to the Letters of Credit and any drafts thereunder, travel, lodging and similar expenses of the Lender’s personnel in connection with inspecting and monitoring the Collateral from time to time hereunder, any applicable reasonable counsel fees and disbursements, fees and taxes relative to the filing of financing statements, all expenses, costs and fees set forth in Paragraph 10.3 of Section 10 of this Financing Agreement.

Patents shall mean all of the Companies’ present and hereafter acquired patents, patent applications, registrations, any reissues or renewals thereof, licenses, any inventions and improvements claimed thereunder, and all general intangible, intellectual property and patent rights with respect thereto of the Companies, and all income, royalties, cash and non-cash proceeds thereof.

Period shall have the meaning provided in Section 8.2(a) hereof.

Permitted Acquisition shall mean the acquisition by a Company (whether of stock or substantially all of the assets of a business or business division as a going concern or by means of a merger or consolidation) which satisfies each of the following conditions: (i) such other Person shall operate in the same line of business as the Companies, (ii) no Default or Event of Default shall have occurred and be continuing and none shall exist after giving effect to such Permitted Acquisition, (iii) the Companies shall have furnished the Lender with ten (10) Business Days prior notice of such intended acquisition and shall have furnished the Lender with (A) a current draft of the acquisition agreement and other acquisition documents, (B) a summary of any due diligence undertaken by the Companies in connection with such acquisition subject to customary disclaimers from advisors to the Companies, (C) appropriate financial statements of the Person which is the subject of such acquisition to the extent and in the form available to the Companies, (D) pro forma projected financial statements of the Companies after giving effect to such acquisition, together with a pro forma compliance certificate with respect to the financial covenants set forth in Section 7 Paragraph 7.10 of this Financing Agreement for the following twelve (12) month period, and (E) such other information as the Lender may reasonably require (including, without limitation, discussions with management of the acquired Person and a review of its books and records), (iv) if a Company or its Subsidiary shall merge with such other Person, such Company or Subsidiary shall be the surviving party of such merger, (v) the cash portion of the purchase price for the acquisition shall be funded solely from equity contributions to the Companies and not from the proceeds of any Revolving Loans or the incurrence of any Indebtedness (other than Subordinated Debt) or from any other assets of the Companies, (vi) if such Person shall become a Subsidiary of a Company, such new Subsidiary shall, in the discretion of the Lender, either become a party hereto (pursuant to documentation in form and substance satisfactory to the Lender) or execute a guaranty in form and substance satisfactory to the Lender pursuant to which such new Subsidiary guarantees to the Lender the payment and performance of the Obligations, (vii) the Companies, and if such Person becomes a Subsidiary of a Company, such new Subsidiary, shall take such steps as are necessary to grant to the Lender, a legal, valid and enforceable first priority security interest in all of the assets (including stock) acquired in connection with such Permitted Acquisition (subject to Permitted Encumbrances),

(viii) such acquisition shall have been approved by a majority of the board of directors (or the equivalent governing body) of the Person which is the subject of such acquisition and such Person shall not have announced that it will oppose such acquisition or shall not have commenced any action which alleges that such acquisition will violate applicable law, and (ix) after giving effect to such acquisition, the Lender shall be satisfied in its reasonable discretion that, on a pro forma basis for the twelve months following the consummation of such acquisition and after giving effect thereto, the Companies shall be in compliance with the financial performance covenants set forth in Section 7 Paragraph 7.10 of this Financing Agreement, whether or not then applicable.

Permitted Encumbrances shall mean: (a) liens existing on the date hereof on specific items of Equipment and other liens expressly permitted, or consented to in writing by the Lender; (b) Purchase Money Liens; (c) liens of local or state authorities for franchise or other like Taxes, provided that the aggregate amounts of such liens shall not exceed $100,000.00 in the aggregate at any one time; (d) statutory liens of landlords and liens of carriers, warehousemen, bailees, mechanics, materialmen and other like liens imposed by law, created in the ordinary course of business and for amounts not yet due (or which are being contested in good faith, by appropriate proceedings or other appropriate actions which are sufficient to prevent imminent foreclosure of such liens) and with respect to which adequate reserves or other appropriate provisions are being maintained by the Companies in accordance with GAAP; (e) deposits made (and the liens thereon) in the ordinary course of business of the Companies (including, without limitation, security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, contracts (other than for the repayment or guarantee of borrowed money or purchase money obligations), statutory obligations and other similar obligations arising as a result of progress payments under government contracts; (f) easements (including, without limitation, reciprocal easement agreements and utility agreements), encroachments, minor defects or irregularities in title, variation and other restrictions, charges or encumbrances (whether or not recorded) affecting the Real Estate, if applicable, and which in the aggregate (A) do not materially interfere with the occupation, use or enjoyment by the Companies of its business or property so encumbered and (B) in the reasonable business judgment of the Lender do not materially and adversely affect the value of such Real Estate; and (g) liens granted the Lender by the Companies; (h) liens of judgment creditors provided such liens do not exceed, in the aggregate, at any time, $100,000.00 (other than liens bonded or insured to the reasonable satisfaction of the Lender); and (i) tax liens which are not yet due and payable or which are being diligently contested in good faith by the Companies by appropriate proceedings, and which liens are not (x) filed on any public records, (y) other than with respect to Real Estate, senior to the liens of the Lender or (z) for Taxes due the United States of America or any state thereof having similar priority statutes, as further set forth in paragraph 7.6 hereof .

Permitted Indebtedness shall mean (a) current Indebtedness maturing in less than one year and incurred in the ordinary course of business for raw materials, supplies, equipment, services, Taxes or labor; (b) the Indebtedness secured by Purchase Money Liens; (c) Indebtedness arising under the Letters of Credit and this Financing Agreement; (d) deferred Taxes and other expenses incurred in the ordinary course of business; (e) the Indebtedness arising by and between a Company and another Company or a Company and a Guarantor to the extent such Guarantor is domiciled in the United States and Lender has a first priority perfect security interest on all of its

assets, (f) other Indebtedness existing on the date of execution of this Financing Agreement and listed in the most recent financial statement delivered to the Lender or otherwise disclosed to the Lender in writing prior to the Closing Date, (g) Subordinated Debt and (h) Indebtedness of the Companies owed to the seller in any acquisition permitted hereunder constituting part of the purchase price thereof, or issued to finance any portion of the purchase price thereof.

Permitted Investments shall mean: (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within ninety (90) days from the date of acquisition thereof; (b) commercial paper maturing no more than ninety (90) days from the date issued (i) by Lender (or its holding company) or (ii) at the time of acquisition, having a rating of at least A-1 from Standard & Poor’s Rating Services or at least P-1 from Moody’s Investors Service, Inc.; (c) certificates of deposit or bankers’ acceptances maturing within ninety (90) days from the date of issuance thereof issued by, or repurchase agreements backed by United States governmental securities from (i) Lender or (ii) any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 and whose debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency and not subject to setoff rights in favor of such bank; and (d) United States money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof.

Person shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, institution, public benefit corporation, joint venture, entity or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

Purchase Money Liens shall mean liens on any item of Equipment acquired after the date of this Financing Agreement provided that (a) each such lien shall attach only to the property to be acquired, (b) a description of the Equipment so acquired is furnished to the Lender and (c) the debt incurred in connection with such acquisitions shall not exceed, in the aggregate, $250,000 in any Fiscal Year.

Purchase Price shall have the meaning provided in Section 3.3(a) hereof.

Real Estate shall mean the Companies’ fee interests in its real property.

Reports shall have the meaning provided in Section 4.7 hereof.

Returned Goods shall have the meaning provided in Section 4.4(a) hereof.

Revolving Credit Commitment shall mean Lender’s commitment in accordance with this Financing Agreement to make Revolving Loans.

Revolving Credit Limit shall mean $30,000,000.

Revolving Line of Credit shall mean the commitment of the Lender to make loans and advances pursuant to Section 4 of this Financing Agreement and issue Letters of Credit Guaranties pursuant to Section 5 hereof to the Companies, in an aggregate amount not to exceed the Revolving Credit Limit.

Revolving Line of Credit Fee shall: (a) mean the fee due the Lender at the end of each month for the Revolving Line of Credit, and (b) be determined by multiplying the difference between (i) the Revolving Line of Credit, and (ii) the sum, for said month, of (x) the average daily balance of Revolving Loans plus (y) the average daily balance of Letters of Credit outstanding for said month, by three-eighths of one percent (3/8%) per annum for the number of days in said month.

Revolving Loans shall mean the loans and advances made, from time to time, to or for the account of the Companies by the Lender pursuant to Section 4 of this Financing Agreement.

Subordinated Debt shall mean all indebtedness of the Companies (and the notes evidencing such indebtedness) that is subordinated to the prior payment and satisfaction of the Obligations pursuant to subordination agreements and/or subordination provisions of the respective debt instruments in each case in form and substance reasonably satisfactory to the Lender.

Subsidiaries shall mean the wholly-owned subsidiaries of any Company.

Tangible Net Worth shall mean at any date of determination, an amount equal to (a) the sum of (i) Total Assets excluding such other assets as are properly classified as intangible assets under GAAP plus (ii) the unamortized portion of the $4,000,000 supply premium paid to the Borrowing Agent by China Ting Group Holdings Limited pursuant to that Exclusive Supply Agreement dated July 24, 2009, as set forth on the balance sheet as current or long term deferred income, minus (b) Total Liabilities, and shall be determined in accordance with GAAP (other than with respect to clause (ii) hereof), on a consistent basis with the latest audited consolidated financial statements of Chaus and its Subsidiaries.

Taxes shall mean all federal, state, municipal and other governmental taxes, levies, charges, claims and assessments which are or may be due by any Company with respect to its business, operations, Collateral or otherwise.

Total Assets shall mean total assets determined in accordance with GAAP, on a basis consistent with the latest audited consolidated financial statements of any Company and its Subsidiaries.

Total Liabilities shall mean total liabilities determined in accordance with GAAP, on a basis consistent with the latest audited consolidated financial statements of any Company and its Subsidiaries.

Trade Accounts Receivable shall mean that portion of any Companies’ Accounts which arises from the sale of Inventory or the rendition of services in the ordinary course of such Company’ business.

Trademarks shall mean all present and hereafter acquired trademarks, trademark registrations, recordings, applications, tradenames, trade styles, service marks, prints and labels (on which any

of the foregoing may appear), licenses, reissues, renewals, and any other intellectual property and trademark rights pertaining to any of the foregoing, together with the goodwill associated therewith, and all cash and non-cash proceeds thereof.

UCC shall mean the Uniform Commercial Code as the same may be amended and in effect from time to time in the state of New York.

Waiver shall mean the Waiver to Amended and Restated Financing Agreement executed on the date hereof.

Working Day shall mean any Business Day on which dealings in foreign currencies and exchanges between banks may be transacted.

SECTION 2. Conditions Precedent.

     The obligation of the Lender to make the initial loans hereunder is subject to the satisfaction of, extension of or waiver of (in writing), on or prior to, the Closing Date, the following conditions precedent:

          (a) Financing Agreement and Other Loan Documents . The Lender shall have received copies of this Financing Agreement from each of the parties hereto, including from each of the Companies in sufficient quantities as determined by the Lender, together with copies of all Loan Documents necessary to consummate the lending arrangements contemplated by this Financing Agreement.

          (b) Officer’s Certificate - The Lender shall have received an executed Officer’s Certificate of the Companies, satisfactory in form and substance to the Lender, certifying that to the best of his or her knowledge (i) the representations and warranties contained herein are true and correct in all material respects on and as of the Closing Date; (ii) the Companies are in compliance with all of the terms and provisions set forth herein; and (iii) no Default or Event of Default has occurred.

          (c) Absence of Default – Other than those waived pursuant to the Waiver Letter, no Default or Event of Default shall have occurred and be continuing and, since June 30, 2009, no material adverse change shall have occurred in the financial condition, business, assets or prospects, of the Companies and its Subsidiaries.

          (d) Legal Restraints/Litigation - As of the Closing Date, there shall be no: (x) litigation, investigation or proceeding (judicial or administrative) pending or, to the knowledge of the Companies, threatened against the Companies or the Guarantors or their assets, by any agency, division or department of any county, city, state or federal government arising out of this Financing Agreement; (y) injunction, writ or restraining order restraining or prohibiting the financing arrangements contemplated under this Financing Agreement; or (z) suit, action, investigation or proceeding (judicial or administrative) pending against the Companies or the Guarantors or their assets, which, in the opinion of the Lender, if adversely determined, could reasonably be expected to have a material adverse effect on the business, operation, assets, financial condition or Collateral of the Companies and/or the Guarantors.

          (e) Examination & Verification; Net Availability; Projections . The Lender shall have completed and be satisfied with an updated examination and verification of the Accounts, Inventory and the books and records of the Companies, and such examination shall indicate that no material adverse change has occurred in the financial condition, business, prospects, profits, operations or assets of Chaus, the Companies’ Subsidiaries or the Guarantors since March 31, 2009. It is understood that such requirement contemplates that all debts and obligations are current, and that all payables are being handled in the normal course of the Companies’ business and consistent with its past practice. In addition, the Companies shall have delivered to the Lender, and the Lender shall be satisfied with, balance sheet, income statement, cash flows and Availability projections for the Companies on a consolidated basis for not less than twelve (12) months following the Closing Date.

          (f) Compliance with Laws - Neither this Financing Agreement nor any of the transactions contemplated in connection herewith: (i) present any material exposure under any laws relating to bulk sales, fraudulent conveyances or similar matters, or (ii) could reasonably be expected to have a material adverse effect on any license agreement of the Companies or any of their affiliates.

          (g) Guaranties - The Guarantors shall have executed and delivered to the Lender affirmations of their guaranties, in form acceptable to the Lender.

          (h) Collateral Assignment of Licenses . Lender shall have received true and correct copies of all material licensing agreements with respect to Patents, Trademarks and other intellectual property with respect to which any Company is licensor or licensee.

          (i) Additional Documents - The Companies shall have executed and delivered to the Lender all Loan Documents necessary to consummate the factoring and lending arrangement contemplated between the Companies and the Lender.

          (j) Schedules - The Companies or their counsel shall provide the Lender with schedules of: (a) any of the Companies’ and its Subsidiaries (i) Trademarks, (ii) Patents, and (iii) Copyrights, as applicable and all in such detail as to provide appropriate recording information with respect thereto, but only to the extent that there have been any changes to the information previously provided by the Companies in connection with the A&R Financing Agreement, (b) any tradenames, (c) monthly rental payments for any leased premises or any other premises where any Collateral may be stored or processed, and (d) Permitted Liens, all of the foregoing in form and substance satisfactory to the Lender.

          (k) Outstanding Documents – The Companies shall have delivered the documents listed on Schedule 2(k) hereto.

Upon the execution of this Financing Agreement and the initial disbursement of loans hereunder, all of the above Conditions Precedent shall have been deemed satisfied except as otherwise set forth hereinabove or as the Companies and the Lender shall otherwise agree in writing .

     2.1. Conditions to Each Extension of Credit . Subject to the terms of this Financing Agreement, including without limitation the Lender’s rights pursuant to paragraph 10.2 of Section 10 hereof, the agreement of the Lender to make any extension of credit requested to be

made by it to the Companies on any date (including without limitation, the initial extension of credit) is subject to the satisfaction of the following conditions precedent:

          (a) Representations and Warranties - Each of the representations and warranties made by the Companies in or pursuant to this Financing Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent such representation expressly relates to an earlier date.

          (b) No Default - No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extension of credit requested to be made on such date.

          (c) Borrowing Base - Except as may be otherwise agreed to from time to time by the Lender and the Companies in writing, after giving effect to the extension of credit requested to be made by the Companies on such date, the aggregate outstanding balance of the Revolving Loans and outstanding Letters of Credit owing by the Companies will not exceed the lesser of (i) the Revolving Line of Credit or (ii) the Borrowing Base.

Each borrowing by the Companies hereunder shall constitute a representation and warranty by the Companies as of the date of such loan or advance that each of the representations, warranties are true and correct and that the Companies are not then in default under any of the covenants contained in the Financing Agreement, except as the Companies and the Lender shall otherwise agree herein or in a separate writing.

SECTION 3. Factoring

     3.1. Sale of Accounts . Each Company sells and assigns to Lender, and Lender purchases as absolute owner, all of its Accounts due from any customer as to which any of such Accounts have been credit approved by Lender pursuant to Section 3.2 below. All sales of Accounts to Lender by each Company shall be deemed to include all of its right, title and interest in and to all of its books, records and files and all other data and documents relating to Accounts.

     3.2. Credit Approval .

          (a) Each Company shall submit all of the orders arising from its sales to Lender for credit approval. Requests for credit approval for all orders must be submitted to Lender’s Credit Department via computer by either: (i) On Line Terminal Access, or (ii) Electronic Batch Transmission. If any Company is unable to submit orders via computer, then orders can be submitted over the phone, by fax or in writing. All credit decisions by Lender’s Credit Department (including approvals, declines and holds) will be sent to the Borrowing Agent daily by a Credit Decisions Report, which constitutes the official record of Lender’s credit decisions. Credit approvals will be effective only if shipment is made or services are rendered within thirty (30) days from the completion date specified in Lender’s credit approval. Credit approval of any Account may be withdrawn by Lender any time before delivery is made or services are rendered.

          (b) Lender assumes the Credit Risk on each Trade Account Receivable approved in the Credit Decision Report. “Credit Risk” means the customer’s failure to pay the

Trade Account Receivable in full when due on its longest maturity solely because of its financial inability to pay. If there is any change in the amount, terms, shipping date or delivery date for any shipment of goods or rendition of services (other than accepting returns and granting allowances as provided in section 4.5 below), the Company must submit a change of terms request to Lender, and, if such pertains to a Factor Risk Account, then Lender shall advise the Company of its decision either to retain the Credit Risk or to withdraw the credit approval. Trade Accounts Receivable on which Lender bears the Credit Risk are referred to collectively as “Factor Risk Accounts”, and individually as a “Factor Risk Account”. Trade Accounts Receivable on which any Company bears some or all of the Client Risk are referred to collectively as “Client Risk Accounts”, and individually as a “Client Risk Account”. All Trade Accounts Receivable that are not credit approved pursuant to clause (a) above or otherwise assigned to Lender hereunder shall remain the property of the applicable Company and shall not be sold to or purchased by the Lender, but shall be subject, at all times, to the security interest of the Lender granted hereunder.

          (c) Lender shall have no liability to the Company or to any person, firm or entity for declining, withholding or withdrawing credit approval on any order. If Lender declines to credit approve an order and furnish to the Company any information regarding the credit standing of that customer, such information is confidential and each Company agrees not to reveal same to the customer, its sales agent or any third party. Each Company agrees that Lender has no obligation to perform, in any respect, any contracts relating to any Trade Accounts Receivable.

     3.3. Purchase of Accounts .

          (a) Lender shall purchase the Accounts assigned hereunder for the gross amount of the respective invoices, less: factoring fees or charges, trade and cash discounts allowable to, or taken by, customers, credits, cash on account and allowances (“Purchase Price”). Lender’s purchase of such Accounts will be reflected on the Statement of Account, which Lender shall render, which will also reflect all credits and discounts made available to customers.

          (b) All payments received by Lender on the Accounts will be promptly applied to the Funds In Use Account in accordance with Paragraph 4.4(a). The amount of the Purchase Price of any Factor Risk Account which remains unpaid will be deemed collected and will be credited to the Funds In Use Account as of the earlier of the following dates:

               (i) the date of the Factor Risk Account’s longest maturity if a proceeding or petition is filed by or against the customer under any state or federal bankruptcy or insolvency law, or if a receiver or trustee is appointed for the customer; or

               (ii) the last day of the third month following the Factor Risk Account’s longest maturity date if such Factor Risk Account remains unpaid as of said date without the occurrence of any of the events specified in clause (i) above.

If any Factor Risk Account credited to any Company was not paid for any reason other than Credit Risk, as determined in Lender’s reasonable discretion, Lender shall reverse the credit and

charge such Company’s account accordingly, and such Account is then deemed to be a Client Risk Account.

     3.4. Chargeback s.

          (a) Lender may at any time charge back to the Companies’ account the amount of: (i) any Factor Risk Account which is not paid in full when due for any reason other than Credit Risk as determined by Lender in its reasonable discretion; (ii) any Factor Risk Account which is not paid in full when due because of an act of God, civil strife, or war; (iii) anticipation (interest) deducted by a customer on any Account; (iv) Customer Claims; (v) any Client Risk Account which is not paid in full when due; and (vi) any Account for which there is a breach of any representation or warranty. A charge back does not constitute a reassignment of an Account; provided, however, Lender has the right in its sole discretion to reassign to any Company any Client Risk Account. Lender shall not bear the Credit Risk on any Account charged back to any Company. Lender shall immediately charge any deduction taken by a customer to the appropriate Company’s account.

          (b) Lender may at any time charge to the appropriate Company’s account the amount of: (i) payments Lender receives on Client Risk Accounts which Lender is required at any time to turnover or return (including preference claims); (ii) all remittance expenses (including incoming wire charges, currency conversion fees and stop payment fees), other than stop payment fees on Factor Risk Accounts; (iii) expenses, collection agency fees and reasonable attorneys’ fees incurred by Lender in collecting or attempting to collect any Client Risk Account or any Obligation; (iv) Lender’s fees for handling collections on Client Risk Accounts which any Company has requested Lender to process, as provided in the Guide; and (v) any loss, liability, claim or expense covered by the indemnity in the immediately following sentence. Each Company shall indemnify Lender for, and hold Lender harmless against, any loss, liability claim or expense of any kind (including attorneys’ fees and disbursements) arising from: (i) any Customer Claims, (ii) any claim for a return of any payment on or relating to any Client Risk Account, or (iii) any other matter, except for any claim for a return of any payment on or relating to any Factor Risk Account and except for a claim resulting directly from and to the extent of Lender’s gross negligence or willful misconduct. The foregoing indemnity shall survive any termination of this Agreement.

     3.5. The Client Service Guide .

          (a) The Client Service Guide, as supplemented and amended from time to time (the “Guide”) has been furnished to the Companies, and by its signature below each Company acknowledges receipt thereof. The Guide provides information on credit approval processes, accounting procedures and fees. The procedures for Electronic Batch Transmission are covered in supplemental instructions to the Guide. From time to time, Lender may provide the Companies with amendments, additions, modifications, revisions or supplements to the Guide, which will be operative for transactions between Lender and the Companies. All information and exhibits contained in the Guide, on any screen accessed by the Companies, and on any print outs, reports, statements or notices received by the Companies are, and will be, Lender’s exclusive property and are not to be disclosed to, or used by, anyone other than each

Company, its employees or its professional advisors, in whole or in part, unless Lender has consented in writing.

SECTION 4. Revolving Loans

     4.1. (a) The Lender agrees, subject to the terms and conditions of this Financing Agreement, from time to time, to make loans and advances to the Companies on a revolving basis (i.e. subject to the limitations set forth herein, the Companies may borrow, repay and re-borrow advances). Such requests for loans and advances shall be in amounts not to exceed the lesser of (a) the Borrowing Base or (b) the Revolving Line of Credit Limit. All requests for loans and advances must be received by an officer of the Lender no later than (i) 11:00 a.m., New York time, of the Business Day on which any loans and advances are required. The Companies hereby request, and the Lender shall, on any day on which the Lender purchases Trade Accounts Receivable from the Companies in accordance with Section 3.1, make an advance to the Companies to the extent that such advance does not cause the Revolving Loans to exceed the lesser of (a) the Borrowing Base or (b) the Revolving Line of Credit Limit.

          (b) Whenever the Companies request the Lender to make a Revolving Loan pursuant to this Section 4, it shall give the Lender notice in writing or irrevocable telephonic notice confirmed promptly in writing, specifying (A) the amount to be borrowed, and (B) the requested borrowing date (which shall be a Business Day and shall be prior to: the Anniversary Date, and if applicable, any Early Termination Date, or prior to any effective termination date of this Financing Agreement, all as further set forth herein). All requests for loans and advances must be received by an officer of the Lender no later than 11:00 a.m. New York time on any borrowing date. The procedure for Revolving Loans to be made on a requested borrowing date may be such other procedure as is mutually satisfactory to the Companies and the Lender. The Lender shall make loans and advances to the Depository Account of the Companies.

     4.2. In furtherance of the continuing purchase and assignment of and security interest in the Companies’ Accounts and security interest in the Inventory, the Companies will, upon the creation of Accounts and purchase or acquisition of Inventory, execute and deliver to the Lender in such form and manner as the Lender may reasonably require, solely for the Lender’s convenience in maintaining records of Collateral, such confirmatory schedules of Accounts and Inventory as the Lender may reasonably request, including, without limitation, weekly schedules of Accounts and Inventory, all in form and substance satisfactory to the Lender, and such other appropriate reports designating, identifying and describing the Accounts and Inventory as the Lender may reasonably request, and provided further that the Lender may request any such information more frequently, from time to time, upon its reasonable prior request. In addition, upon the Lender’s reasonable request, the Companies shall provide the Lender with copies of agreements with, or purchase orders from, the Companies’ customers, and copies of invoices to customers, proof of shipment or delivery, access to its computers, electronic media and software programs associated therewith (including any electronic records, contracts and signatures) and such other documentation and information relating to said Accounts and other Collateral as the Lender may reasonably require. Failure to provide the Lender with any of the foregoing shall in no way affect, diminish, modify or otherwise limit the security interests granted herein. The Companies hereby authorize the Lender to regard the Companies’ printed name or rubber stamp

signature on assignment schedules or invoices as the equivalent of a manual signature by one of the Companies’ authorized officers or agents.

     4.3. Each Company hereby represents and warrants that: each Trade Account Receivable is based on an actual and bona fide sale and delivery of Inventory or rendition of services to its customers, made by such Company in the ordinary course of its business; the Inventory being sold, and the Trade Accounts Receivable created, are the exclusive property of such Company and are not and shall not be subject to any lien, consignment arrangement, encumbrance, security interest or financing statement whatsoever, other than the Permitted Encumbrances; the invoices evidencing such Trade Accounts Receivable are in the name of such Company; and the customers of such Company has accepted the Inventory or services, owe and are obligated to pay the full amounts stated in the invoices according to their terms, without dispute, offset, defense, counterclaim or contra, except for disputes, allowances and other matters arising in the ordinary course of business with respect to which such Company has complied with the notification requirements of Paragraph 4.5 of this Section 4 (if applicable). Each Company confirms to the Lender that any and all Taxes or fees relating to its business, its sales, the Accounts or Inventory relating thereto, are its sole responsibility and that same will be paid by the Companies when due, subject to Paragraph 7.6 of Section 7 of this Financing Agreement, and that none of said Taxes or fees represent a lien on or claim against the Accounts. Each Company hereby further represents and warrants that it shall not acquire any Inventory on a consignment basis, nor co-mingle its Inventory with any of its customers or any other Person (excluding Guarantors), including pursuant to any bill and hold sale or otherwise, and that its Inventory is marketable to its customers in the ordinary course of business of such Company, except as it may otherwise report in writing to the Lender pursuant to Paragraph 4.5 hereof from time to time. Each Company warrants and represents that it is a duly and validly existing corporation or limited liability company, as applicable, and is qualified in all states where the failure to so qualify would have an adverse effect on the business of such Company or the ability of such Company to enforce collection of Accounts due from customers residing in that state. Each Company agrees to maintain such books and records regarding Accounts and Inventory as the Lender may reasonably require and agrees that the books and records of each Company will reflect the Lender’s interest in the Accounts and Inventory. All of the books and records of each Company will be available to the Lender during normal business hours, including any records handled or maintained for the Companies by any other company or entity.

     4.4. (a) With respect to each Trade Account Receivable purchased hereunder, each Company agrees to place a notice (in form and content acceptable to Lender) on each invoice and invoice equivalent that such Trade Account Receivable evidenced thereby is sold, assigned and payable only to Lender, and to take all necessary steps so that payments and remittance information are directed to Lender. As owners of such Trade Accounts Receivable, Lender has the right to: (a) bring suit, or otherwise enforce collection, in the Companies’ name or its own; (b) modify the terms of payment, (c) settle, compromise or release, in whole or in part, any amounts owing, and (d) issue credits in the Companies’ name or its own. To the extent applicable, each Company waives any and all claims and defenses based on suretyship. If moneys are due and owing from a customer for both Factor Risk Accounts and Client Risk Accounts, each Company agrees that any payments or recoveries received on such Accounts may be applied first to reduce Lender’s liability to the Companies on any Factor Risk Accounts. Once a Company has granted or issued a discount, credit or allowance on any Account, such

Company has no further interest therein. Upon Lender’s written notice, the Companies will, at their expense, comply with Lender’s instructions relative to any and all returned, rejected, reclaimed or repossessed inventory (“Returned Goods”). Any checks, cash, credit card sales and receipts, notes or other instruments or property received by the Companies with respect to any Collateral, including Accounts, shall be held by the Companies in trust for the Lender, separate from the Companies’ own property and funds, and promptly turned over to the Lender with proper assignments or endorsements by deposit to the Depository Accounts. Each Company shall: (i) indicate on all of its invoices that funds should be delivered to and deposited in a Depository Account; (ii) direct all of its customers to deposit any and all proceeds of Collateral into the Depository Accounts; (iii) irrevocably authorize and direct any banks which maintain the initial receipt of cash, checks and other items to promptly wire transfer all available funds to a Depository Account; and (iv) advise all such banks of the Lender’s ownership and/or security interest in such funds. The Companies shall provide the Lender with prior written notice of any and all deposit accounts opened or to be opened subsequent to the Closing Date. All amounts received by the Lender in payment of Accounts will be credited to the Funds In Use Account when the Lender i