July 31, 2001
MOVIE STAR, INC.
New York, NY 10010
It is mutually agreed that the Financing Agreement entered into between us dated April 24, 1996 as amended or
supplemented (the "Financing Agreement") is amended effective June 30, 2001 as follows:
1. The following shall be added as a new section 1.13:
"Maximum Amount" shall mean $30,000,000
2. The following shall be added as a new section 1.14:
"Overadvance" shall mean any amount in the loan account which exceeds (a) 80% of the Net Amount of Eligible
Receivables, plus (b) the lesser of (i) $3,000,000 or (ii) 50% of the Net Amount of Eligible Inventory.
3. The first paragraph of Section 2.1 is hereby deleted in its entirety and the following is substituted in its place
"Lender shall, in its discretion, make loans to Borrower or procure for Borrower Letters of Credit from time to
time, at Borrower's request, which loans and the Letters of Credit in the aggregate shall not exceed (i) the lesser
of (a) the Maximum Amount; or (b) (i) the amount set forth for each specified month on the "Availability Line"
appearing on page three of Exhibit A annexed hereto for the respective period which such Availability Line
relates, plus (ii) $2,500,000; provided, however, that on the last day of each month the aggregate outstanding
amount in the Loan Account shall be limited to the amount of sub-section (b)(i). Any advances in excess of the
advances provided for in the foregoing subparagraph (b) are hereafter referred to as "Additional Advances." The
making of any loan in excess of the percentages or amounts set forth above shall not be deemed to modify such
percentage or amount or create any obligation to make any further such loan. All loans (and all other amounts
chargeable to Borrower under this Agreement or any supplement hereto) shall be charged to a Loan Account in
Borrower's name on Lender's books. Lender shall render to Borrower each month a statement of the Loan
Account (and all credits and charg