Date: September 10, 2001
Innovo Apparel, Inc.
5804 East Slauson Ave.
Commerce, Ca 90040
FACTORING AGREEMENT
Ladies and Gentlemen:
We are pleased to confirm the terms and conditions that will govern our funds in use accounting, notification
factoring arrangement with advances (the "Agreement").
1. SALE OF ACCOUNTS
You sell and assign to us, and we purchase as absolute owner, all accounts arising from your sales of inventory or
rendition of services which you in your discretion choose to factor with us, including those under any trade names,
through any divisions and through any selling agent (collectively, the "Accounts" and individually, an "Account")
2. CREDIT APPROVAL
2.1 Requests for credit approval for all of your orders must be submitted to our Credit Department via computer
by either: (a) On-Line Terminal Access, or (b) Electronic Batch Transmission. If you are unable to submit orders
via computer, then orders can be submitted over the phone, by fax or in writing. All credit decisions by our
Credit Department (including approvals, declines and holds) will be sent to you daily by a Credit Decisions
Report, which constitutes the official record of our 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 our credit
approval. Credit approval of any Account may be withdrawn by us any time before delivery is made or services
are rendered.
2.2 We assume the Credit Risk on each Account approved in the Credit Decision Report. "Credit Risk" means
the customers failure to pay the Account 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 8
below), you must submit a change of terms request to us, and, if such pertains to a Factor Risk