
EXHIBIT (10)(P)(1)

BANCO POPULAR DE PUERTO RICO
PO BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
TELEFONOS (809) 765-9800, 751-9800

May 23, 1996

REVISED

Mr. Luis R. Hernandez
VP, Finance and Administration
Glamourette Fashion Mills, Inc.
P.O. Box 557
Quebradillas, P.R. 00678-1557

Dear Mr. Hernandez:

We are pleased to confirm  that Banco  Popular de Puerto Rico ("the:  Bank") has
approved credit facilities in the name of Glamourette  Fashion Mills, Inc. ("the
Borrower"),  subject to  Borrower's  credit and  economic  conditions  remaining
essentially unchanged,  and substantially upon the terms and conditions outlined
below:

Facility 1:
-----------
Amount:     $2,000,000

Type:       Revolving line of credit facility

Purpose:    Increased working capital needs due to projected increase in
            production

Repayment:  Advances will be evidenced by short term notes up to 180 days
            on a revolving basis. An annual clean up period during the months of
            February through April must be effected. The facility is
            renewable on an annual basis.

Pricing:    Interest rate to be charged will be calculated based on the
            effective cost of 936 funds to the Bank plus 1.50%. In the event
            that the use of the facility is not deemed as an "Eligible Activity"
            as amended or supplemented from time to time, or in the event that 
            936 funds are no longer available to the Bank, outstandings would be
            priced at Floating New York Prime Rate. Upon an event of default, 
            the default rate shall be set at Prime Rate plus 2.0%. Interest on 
            the outstanding balance will be paid monthly in arrears on a 360 
            days basis.

Facility 2:
------------
Amount:     $600,000

Type:       Five Year Term Loan

Purpose:    To finance the acquisition of machinery and equipment related
            to the upcoming expansion to the plant.

Repayment:  Sixty equal consecutive monthly principal payments of $10,000
            plus interest.

Pricing:    Interest rate to be charged will be calculated based on
            the Bank's 90 days effective cost of 936 funds plus 2.00% in 
            repricing periods of 90 days. In the event that the use of the 
            facility is not deemed as an "Eligible Activity" as amended or 
            supplemented from time to time, or in the event that 936 funds 
            are no longer available to the Bank, outstandings would be priced
            at Floating New York Prime Rate plus 0.5%. Upon an event of  
            default, the default rate shall be set at Prime Rate plus 2.0%. 
            Interest on the outstanding balance will be paid monthly in arrears
            on a 360 days basis.

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Bank Fee:   One half of one percent on the total amount of the facility payable
            at closing.

Collateral: Chattel mortgage over the machinery and equipment being financed.
            Existing chattel mortgages remain in full force and effect on a 
            deficiency basis.

Guarantees: Continuous and Unlimited Guarantees from Hampshire Designers, Inc
            and Hampshire Group Limited.


General Security:
-----------------
Borrower  shall  maintain a multi-peril  insurance,  by a financially  sound and
reputable  company,  to  include  inventory  in  sufficient  amounts  to  insure
replacement,  with the Bank noted as first  mortgage  lender  loss  payee.  This
policy shall not expire prior to the maturity of all the debt.

Affirmative/Negative Covenants:
-------------------------------
Standard negative and affirmative covenants usually found in our loan agreements
for this  type of  financing  to  include  those  stipulated  in  previous  loan
agreements between the Borrower and the Bank.

Events of Default:
-----------------
Including,  but not limited to, the standard  events of default usually found in
our loan  agreements  for this type of  financing,  including  material  adverse
change  provisions,  payment and  covenant  defaults,  breaches  representation,
restrictions  on  sale or  encumbering  of  stock  of  Borrower  and  change  of
ownership.

Financial Covenants:
-------------------
1.  Provide annual audited financial statements within 120 days of fiscal
    year-end and quarterly financials within 60 days of quarter end.
2.  Provide annual audited consolidated and consolidating financial statements
    of Hampshire Group Limited within 120 days after close of fiscal year
    and quarterly unaudited consolidated and consolidating statements
    within 60 days after quarter end.
3.  Provide any other information (financial or non-financial) regarding the
    Borrower's business affairs that the Bank may reasonably request and
    considers relevant to the credit.
4.  Maintain a Net Worth of $8,500M at all times. Net Worth being defined as
    Total Assets minus Total Liabilities.
5.  Not let Leverage Ratio exceed 0.5:1.0 at any given time. The Leverage ratio
    being defined as Total Liabilities divided by Net Worth.
6.  Not declare and/or pay dividends in excess of 100% of its Net Income for
    every fiscal year, non-cumulative, with final determination of
    net income not later than March 31 of the following year. Dividends can
    be declared if they are used to pay down accounts receivable due from
    parent. Preferred stock dividends are permitted only up to a maximum of
    $250M or 4% of net income, whichever is lower.
7.  Management fees not to exceed present levels.
8.  Intercompany receivables not to exceed 150 days.

Conditions Precedent:
---------------------
Prior to the execution of the loan documents,  the Bank shall have received each
of the following, in form and substance satisfactory to the Bank:

1.  A copy of the Borrower's Certificate of Incorporation.
2.  Invoice and description of all equipment to be financed.
3.  Certified copies of all corporate action taken by Borrower, including
    resolutions of its Board of Directors, authorizing the execution,
    delivery and performance of the loan documents.
4.  A certificate of the Secretary or Assistant Secretary of the Borrower
    certifying the names and true signatures of the officers authorized to
    sign the loan documents.
5.  A certificate evidencing insurance policy with the Bank as first
    mortgagee/loss payee.

Other Terms and Conditions:
-----------------------------------
1.  In consideration for the facility herein delineated, Borrower will commit
    while indebted to Banco Popular de Puerto Rico to maintain its main
    depository accounts with the Bank.
2.  Borrower must certify that the proceeds of the loans will be used in Puerto
    Rico and in such manner as to meet the requirements of eligible activities
    as per Regulations 5105 and any amendments thereon.
3.  Documents acceptable to the bank, including, without limitation, Loan or
    Financing Agreement and Chattel Mortgage.

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4.  Execution of Master Promissory Note for the line of Credit and Promissory
    Note for the Term Loan.
5.  Borrower to pay a prepayment penalty of 1.0% should it prepay either totally
    or partially the notes with funds borrowed from another financial
    institution.
6.  Right of set-off.

All terms and conditions stipulated on previous Loan/Financing Agreements remain
in full force and effect.

We  appreciate  the  opportunity  you have given us to meet your  needs,  and we
sincerely look forward to further  working with you. If any questions arise from
your review of this letter, please do not hesitate to call us at 765-9800, ext.
5905.

Upon  concurrence  with the  terms  and  conditions  delineated  herein,  kindly
acknowledge  your  acceptance  by signing this letter on the space  provided and
returning it to us on or before May 28, 1996, date this commitment expires.

Cordially,

/s/ Sylma Suarez
----------------------------------
Assistant Vice President
Corporate Banking Division



Agreed and Accepted:
GAMOURETTE FASHION MILLS, INC.

By:   /s/ Luis R. Hernandez
      -------------------------------------
Name:   Luis R. Hernandez
      -------------------------------------
Title:Vice President Finance and Administration
      -------------------------------------
Date: May 30, 1996
      -------------------------------------









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                             MASTER PROMISSORY NOTE
                           060-7177/ For Various Notes


      FOR VALUE  RECEIVED the  undersigned,  jointly,  severally  and in solido,
promise  to pay  on  demand  to the  order  of  BANCO  POPULAR  DE  PUERTO  RICO
(hereinafter called the "Bank") at its main office or at such other place as the
Bank my designate, the principal amount then outstanding hereunder, shown on the
reverse  hereof or on  attachments  hereto not exceeding  **TWO MILLION  Dollars
($2,000,000.00),  lawful money of the United  States of America,  together  with
interest on all unpaid principal amount from time to time outstanding,  computed
on a (check one) ___ 365-day,  X 360-day,  simple interest basis and actual days
elapsed, payable monthly on the twenty-fifth (25th) day of each month and on the
date of payment  in full,  at the Fixed Rate or at the Index Rate or at the Cash
Collateral Rate as designated below (check and complete one):

_____ Fixed Rate. The unpaid  principal shall bear interest at the rate of % per
annum; provided,  however, that in case of any event of default under this note,
the unpaid principal shall,  thereafter until paid, bear interest at the rate of
% per annum.

_____       Index Rate.  Floating with the interest rate referred to as the
"prime rate" as (check one):

      _____ published in general-circulation  newspapers such as The Wall Street
Journal;  provided that in the event of more than one such published rate on any
given date, the highest of such rates shall apply.

      _____  define by the interest Rates and Finance Charges Regulation Board
of Puerto Rico.

            The designated  reference  checked above is  hereinafter  called the
"Index Rate".  The unpaid  principal  shall bear interest at a floating rate per
annum equal to the sum of the Index Rate plus %; provided,  however that in case
of any event of default under this note, the unpaid  principal shall  thereafter
until paid,  bear  interest at a floating rate per annum equal to the sum of the
Index Rate plus %.  Changes in the  interest  rate shall be  effective  upon the
effective date of any change in the Index Rate; provided, however, that the rate
of interest shall not be less than % per annum at all times, nor more than % per
annum absent any event of default.  We recognize and fully  understand  that the
rate of interest  herein provided is not necessarily the lowest rate of interest
charged by the Bank and that  credits may be granted by the Bank at rates above,
at, and below, the Index Rate.

_____ Cash  Collateral  Rate.  The unpaid  principal  amounts  from time to time
outstanding  under this note shall bear  interest at the rate per annum equal to
the sum of (a) the interest  rate paid by the Bank from time to time on the time
deposit  pledged as security  for the payment of all unpaid  amounts  under this
note,  including  all renewals of said  deposit,  plus (b) %. Upon the effective
date of any change in the  interest  rate paid by the Bank on the  pledged  time
deposit and all  renewals  thereof,  corresponding  changes  shall be  effective
simultaneously  in the  interest  rate on the unpaid  principal  balance of this
note.

      The Bank shall record on the reverse hereof or on  attachments  hereto all
advances and repayments of principal and the principal balance from time to time
outstanding.  Each such  record of any  advance  hereunder  shall be  conclusive
evidence that the advance was made to the undersigned. Advances hereunder may be
made at any time and from time to time,  notwithstanding  that from time to time
there may be no principal balance outstanding  hereunder.  The Bank in accepting
this note incur no obligation to make any advance.

      In the event of  commencement  of legal action to enforce  payment of this
note, we agree to pay, jointly,  severally and in solido, all cost, expenses and
disbursements  arising  from such process  plus  attorney's  fees of ten percent
(10%) of the total indebtedness was outstanding hereunder.

      We agree that the Bank may,  at its  option,  at any time and from time to
time,  reduce or cancel the  amount  owing  under  this note by setting  off and
charging the  indebtedness,  or any part thereof,  against any obligation of the
Bank with the  undersigned,  or any of them for deposits or otherwise.  We waive
notice of nonpayment, presentment, demand for payment, and protest.

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      In support of any "due  diligence"  requirement  under  regulations of the
Treasury Department of Puerto Rico that may be applicable to us or to our use of
the funds advanced hereunder, we agree, affirm and warrant that we will use said
funds only for  "eligible  activities"  as defined  in such  regulations  and as
represented by us to the Bank.

      The use of the plural in this note shall be  understood as singular if the
same is singed by only one person.

Quebradillas, Puerto Rico,  this 17th day of June, 1996.


GLAMOURETTE FASHION MILLS, INC.
BASED ON 936 funds up to 180 DAYS TO BE NEGOTIATED AT TIME OF DISBURSEMENT.

/s/ Luis R. Hernandez
---------------------------------------------
LUIS R. HERNANDEZ,
VICE PRESIDENT FINANCE
AND ADMINISTRATION


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