Document:

Exhibit 10.38

                              CONVERSION AGREEMENT

         This Agreement is entered into as of ________, 2004, by and among
Allied Healthcare International Inc., a New York corporation (the "COMPANY"),
and __________ (the "HOLDER").

         WHEREAS, the Company intends to conduct an underwritten public offering
of its common stock, par value $.01 per share (the "COMMON STOCK"), during the
next several months; and

         WHEREAS, the Holder desires to exercise their conversion rights with
respect to the shares of Series A convertible preferred stock, $.01 par value
per share (the "PREFERRED STOCK"), of the Company beneficially owned by the
Holder pursuant to Section 5(a) of the Certificate of Amendment to the
Certificate of Incorporation of the Company defining the rights and preferences
of the Preferred Stock.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the Company and the Holder hereby agree
as follows:

         1.     Conversion of the Preferred Stock into Common Stock. Conditioned
upon and effective as of the closing of an underwritten public offering by the
Company of its Common Stock with a minimum of $50 million in gross proceeds to
the Company, which closes on or prior to December 31, 2004 (the "OFFERING"),
each share of Preferred Stock owned by such Holder will be converted (the
"CONVERSION") into one (1) share of Common Stock and the Company will pay each
Holder in cash all accumulated but unpaid dividends thereon, whether or not any
such dividends have been declared, computed through the date of the Conversion
within five (5) business days following the closing of the Offering. In the
event that the Offering is not closed on or prior to December 31, 2004, this
Agreement, including Section 4 hereof, shall be of no further force or effect.

         2.     Certificates. Upon surrender of the certificates representing
the Preferred Stock, the Company shall issue certificates evidencing the
issuance of Common Stock to the Holder in the amount set forth opposite such
Holder's name as set forth on Exhibit A hereto. Upon notice of the closing of
the Offering, the Holder agrees to promptly deliver to the Company (and in any
event within five (5) business days thereafter) all certificates evidencing the
Preferred Stock, duly endorsed for transfer.

         3.     Conversion Fee. The Company shall pay to the Holder within five
(5) business days following the closing of the Offering, a conversion fee equal
to $_____ (the "CONVERSION FEE"). Notwithstanding the foregoing, if at anytime
within the six (6) month period following the closing of the Offering, the
Company's Common Stock trades above $11.32 for ten (10) out of any period of
thirty (30) consecutive trading days during such six (6) month period (the tenth
such day being the "THRESHOLD DATE"), then the Holder shall pay to the Company
an amount equal to the pro rata portion of the Conversion Fee attributable to
such six (6) month period occurring after the Threshold Date. By way of
illustration, if the Offering closes on June 1, 2004 and the Threshold Date
occurs on October 1, 2004, then the Holder shall pay to the Company an amount
equal to 33.33% of the Conversion Fee or $_____. The Holder shall pay such
amount to

the Company within five (5) business days after the end of the six (6) month
period following closing of the Offering.

         4.    Confirmation. The undersigned Holder confirms that (i) this
election is unconditional and irrevocable subject only to the closing of the
Offering, and the conversion date of the Holder's shares of Preferred Stock
shall be deemed to be the closing date of the Offering for all purposes; (ii)
upon delivery of the shares of Common Stock described on Exhibit A, all accrued
or unpaid dividends, and the amount described in Section 3 hereof by the Company
to the Holder, the Holder shall have no other claims against the Company or any
subsidiary or affiliate thereof as Holder of the Preferred Stock or pursuant to
the Certificate of Designations of the Company under which the Preferred Stock
was authorized and issued.

         5.    Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto.

         6.    Amendment and Waiver. This Agreement may be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may be given, provided that any such amendments, modifications or
supplements are in writing and signed by each of the parties hereto.

         7.    Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       2

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                                     ALLIED HEALTHCARE
                                                        INTERNATIONAL INC.

                                                     By:
                                                        -----------------------
                                                        Name:
                                                        Title:

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

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                                    EXHIBIT A
                                    ---------

Holder                                              Shares of Common Stock
------                                              ----------------------

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

                                       A-1<PAGE>

                                                                  EXHIBIT 10.111

                               BERNARD CHAUS, INC.
                               530 Seventh Avenue
                                   18th Floor
                               New York, NY 10018

                                 Effective as of
                                December 1, 2003

Mr. Nicholas DiPaolo
530 Seventh Avenue
18th Floor
New York, NY 10018

Dear Mr. DiPaolo:

         We have agreed to amend your employment agreement with Bernard Chaus,
Inc. (the "Company"), dated January 20, 2001 (the "Agreement"), as set forth
below. This amendment shall be effective as of the date hereof. Defined terms
shall have the meaning ascribed to them in the Agreement.

         1. The caption "Term", is amended to extend the term until June 30,
2005. Mr. DiPaolo and Ms. Josephine Chaus shall meet to review the Company's
objectives on or about the first anniversary of the date hereof.

         2. It is acknowledged that the Cumulative EBITDA Target, as referred to
under the caption "Put Options" was not met.

         3. The Company agrees to amend the Stock Option Agreements with respect
to the Sign-On Options and Put Options (collectively, the "Options"), to provide
that the Options shall be transferable to Mr. DiPaolo's children and/or
grandchildren and/or one or more trusts established for the benefit of his
children and/or grandchildren.

         4. It is understood that no rights of Mr. DiPaolo with respect to the
Options or the Put shall be exercisable after November 1, 2005, the expiration
date of the Options.

         5. It is agreed that Mr. DiPaolo may continue to serve on the Board of
Directors of each of JPS Industries, Inc. and Foot Locker, Inc.

         Except as amended hereby, the Agreement shall remain in full force and
effect.

<PAGE>

         Please indicate your acceptance of the terms of this amendment of the
Agreement by your signature below. Once signed by both parties, this letter
shall be binding on both parties.

                                                    Sincerely,

                                                    BERNARD CHAUS, INC.

                                                    By: /s/ Josephine Chaus
                                                        --------------------
                                                        Josephine Chaus
                                                        Chief Executive Officer

Accepted and Agreed to as of the date set forth above:

/s/ Nicholas DiPaolo
--------------------
Nicholas DiPaolo<PAGE>
                                                                  EXHIBIT 10.112

            Bernard Chaus, Inc.; S.L. Danielle Acquisition, LLC; and
                         Cynthia Steffe Acquisition, LLC
                               530 Seventh Avenue
                            New York, New York 10018

                                 March 31, 2004

The CIT Group/Commercial Services, Inc.
1211 Avenue of the Americas
New York, New York 10036

                            Re: NOTICE OF DEFACTORING

Ladies and Gentlemen:

     Reference is made to that certain Restated Factoring Termination Agreement
("Termination Agreement") dated January 30, 2004, by and between, Bernard Chaus,
Inc. ("Chaus"), S.L. Danielle Acquisition, LLC ("Danielle Acquisition"), Cynthia
Steffe Acquisition, LLC ("CS Acquisition") and The CIT Group/Commercial
Services, Inc. ("CIT"). All capitalized terms not otherwise defined herein shall
have the meanings given to them in the Termination Agreement.

     Pursuant to the terms and conditions of the Defactoring Arrangement set
forth in the Termination Agreement, we hereby notify you that Chaus and Danielle
Acquisition elect to terminate the Chaus Factoring Agreement and the Danielle
Factoring Agreement, respectively, effective as of March 31, 2004.

     Except as expressly specifically provided herein, all of the
representations, warranties, terms, covenants and conditions of the CS Factoring
Agreement shall remain unamended and shall continue to be and shall remain, in
full force and effect in accordance with its terms. This letter agreement shall
be limited precisely as provided for herein and shall not be deemed an amendment
of, consent to or modification of any term or provision of the CS Factoring
Agreement or of any transaction or future action on your part requiring our
consent under the Factoring Agreement.

     Kindly acknowledge your agreement with the terms hereof by signing where
indicated below. This agreement may be executed in any number of and by
different parties hereto, on separate counterparts, all of which when so
executed shall be deemed an original, but all such counterparts shall constitute
one and the same agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.

                                       1
<PAGE>

                                       Very truly yours,

                                       THE CIT GROUP/COMMERCIAL SERVICES, INC.
                                        as Lender

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

ACKNOWLEDGED AND AGREED:

Bernard Chaus, Inc.

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

S.L. DANIELLE ACQUISITION, LLC

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

CYNTHIA STEFFE ACQUISITION, LLC

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

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