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                                 AMENDMENT NO. 2

                                       TO

                               FACTORING AGREEMENT


          THIS AMENDMENT NO. 2 TO FACTORING AGREEMENT (this "Amendment") is
entered into as of January 30, 2004, by and between BERNARD CHAUS, INC. a New
York corporation (the "Company") and THE CIT GROUP/COMMERCIAL SERVICES, INC.
("CIT").


                                   BACKGROUND

         Chaus and CIT are parties to a Factoring Agreement dated as of
September 27, 2002 (as amended, modified, restated or supplemented from time to
time, the "Factoring Agreement") pursuant to which CIT provides financial
accommodations to the Company.

         The Company has requested that CIT make certain amendments to the
Factoring Agreement, and CIT is willing to do so on the terms and conditions
hereafter set forth.

         NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of the Company by CIT,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

         1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Factoring Agreement.

         2. Amendment to Factoring Agreement.

          (a) Section 15.1 is amended in its entirety to provide as follows:

               "15.1. For our services hereunder, you will pay us a factoring
               fee or charge of four-tenths of one percent (.40%) of the gross
               face amount of all Accounts factored with us, but in no event
               less than $1.50 per invoice. In addition, you will pay a fee of
               one-quarter of one percent (1/4 of 1%) of the gross face amount
               of each Account for each thirty (30) day period or part thereof
               by which the longest terms of sale applicable to such Account
               exceed sixty (60) days (whether as originally stated or as a
               result of a change of terms requested by you or the customer).
               For Accounts arising from sales to customers located outside the
               fifty states of the United States of America, you will pay us an
               additional factoring fee of one percent (1%) of the gross face
               amount of all such Accounts. All factoring fees or charges are
               due and charged to your account upon our purchase of the
               underlying Account. Commencing on even date herewith, if the
               actual


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               factoring fees or charges collectively paid to us by (i) you
               pursuant to this Agreement, (ii) S.L. Danielle Acquisition, LLC
               ("Danielle Acquisition") pursuant to that certain Factoring
               Agreement dated as of November 27, 2002 by and between us and
               Danielle Acquisition, and (iii) Cynthia Steffe Acquisition LLC
               ("CS Acquisition") pursuant to that certain Factoring Agreement
               dated as of January 15, 2004 by and between us and CS Acquisition
               during any year or part thereof (each a "Period"), are less than
               five hundred thousand dollars ($500,000) in the aggregate
               ("Minimum Factoring Fees"), we shall charge your account as of
               the end of such Period with an amount equal to the difference
               between the actual factoring fees or charges paid during such
               Period and said Minimum Factoring Fees."

          (b) Section 15.4 is amended in its entirety to provide as follows:

               "15.4 In addition to the fees and charges which may be payable by
               you to us under this Agreement, you will also pay to us upon our
               performance of any field examination or other business analysis
               (including, without limitation, audits or inspections), the need
               for which is to be determined by us, on demand, a fee in an
               amount equal to Seven Hundred Fifty Dollars ($750.00) per day,
               per person, for each person employed to perform such field
               examination, together with all actual out-of-pocket costs and
               expenses incurred in conducting any such audit or inspection
               (including, without limitation, the fees, costs and expense of
               third parties), but in no event shall any such fees be
               duplicative of any other fees or expenses set forth in this
               Agreement or in the Factoring Agreement with Danielle Acquisition
               dated November 27, 2002 or in the Factoring Agreement with CS
               Acquisition dated January 15, 2004."

         3. Conditions of Effectiveness. This Amendment shall become effective
upon satisfaction of the following conditions precedent: CIT shall have received
(i) five (5) copies of this Amendment executed by the Company and CIT and (ii)
such other certificates, instruments, documents, agreements and opinions of
counsel as may be required by CIT or its counsel, each of which shall be in form
and substance satisfactory to CIT and its counsel.

         4. Representations and Warranties. The Company hereby represents and
warrants as follows:

          (a) This Amendment and the Factoring Agreement, as modified hereby,
constitute legal, valid and binding obligations of the Company and are
enforceable against the Company in accordance with their respective terms.

          (b) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment.


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          (c) As of the date hereof, the Company has no defense, counterclaim or
offset with respect to the Factoring Agreement.

         5. Governing Law. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York without regard to any conflicts of laws principles thereto that would
call for the application of the laws of any other jurisdiction.

         6. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

         7. Counterparts, Facsimile Signatures. This Amendment may be executed
by the parties hereto in one or more counterparts, each of which shall be deemed
an original and all of which taken together shall be deemed to constitute one
and the same agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.

         8. Effect on the Factoring Agreement.

          (a) Upon the effectiveness of this Amendment, each reference in the
Factoring Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Factoring Agreement as
modified hereby.

          (b) Except as specifically modified hereby, the Factoring Agreement,
and all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of CIT, nor constitute a
waiver of any provision of the Factoring Agreement, or any other documents,
instruments or agreements executed and/or delivered under or in connection
therewith.






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         IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.


                                      BERNARD CHAUS, INC.


                                      By:  /s/ Barton Heminover
                                           -------------------------
                                           Name:  Barton Heminover
                                           Title: Chief Financial Officer


                                      THE CIT GROUP/COMMERCIAL SERVICES, INC.


                                      By:  /s/ John M. Szwalek
                                           -------------------------
                                           Name:  John M. Szwalek
                                           Title: Vice President
















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