

METLIFE CAPITAL
No. 5006594-003
$760,000.00

FOR VALUE RECEIVED, the undersigned, HAMPSHIRE DESIGNERS, INC. CO-BORROWERS, AND
SAN FRANCISCO KNITWORKS, INC., CO-BORROWER ("Maker"), promises to pay to the
order of MetLife Capital Corporation ("Payee"), at its office at 10900 N.E. 4th
St., Suite 500 Box C-97550, Bellevue, Washington 98009, the principal sum of
Seven Hundred Sixty Thousand ($760,000.00) Dollars together with interest on
unpaid principal from the date of disbursement of such principal amount until
payment in full at a rate of Seven and 85/100ths percent (7.85%) per annum
("Rate") computed on the basis of a 360 day year of twelve consecutive thirty
day months. Interest hereunder shall be paid on the unpaid principal, together
with principal, in Sixty (60) installments of Fifteen Thousand Three Hundred
Fifty-Five Dollars and 56/100ths ($15,355.56) commencing on _________ and
monthly thereafter until ______ on which date the entire balance of principal
and interest unpaid shall be due and payable. It is agreed that each
installment, when paid, shall be applied by the holder hereof, first so much as
shall be required to the payment of interest accrued as specified hereto, and
the balance thereof to the repayment of the principal sum.

Except as may be otherwise expressly provided herein, this Note may not be
prepaid in whole or in part, except with the prior written consent of Payee.
Maker shall have the privilege of prepaying all (but no part) of the then
outstanding balance under this Note on _____ or on any installment due date
thereafter, subject to giving thirty (30) days prior written notice to Payee
specifying the date of prepayment and further subject to payment of a prepayment
premium equal to the amount, if any, required to offset the adverse impact to
Payee of any decline in interest rates. The prepayment premium is determined by
(i) calculating the decrease, expressed in basis points (but not less than zero)
in the current weekly average yield for Three (3) year U.S. Treasury Notes as
published in Federal Reserve Statistical Release H.15(519) (the "Index") from
the weekly average yield of ____% as of _______ to the Friday (or, if Friday is
not a business day, the last business day) of the week immediately preceding the
prepayment date (ii) dividing the difference by 100, (iii) multiplying the
result by the applicable "Premium Factor" set forth below, and (iv) multiplying
the product by the principal to be prepaid. Any prepayment shall be applied
first to the prepayment premium, if any, next to accrued interest and late
charges (if any), and thereafter to the principal then outstanding. The Premium
Factor shall be the amount shown on the following chart for the month in which
prepayment occurs.

         Number of Months Remaining       (Years)           Premium Factor
                  36-25                    (3)                  .014
                  24-13                    (2)                  .010
                  12-1                     (1)                  .005

In the event the Federal Reserve Board ceases to publish Statistical Release
H.15(519), then the decrease in Three (3) - Year U.S. Treasury Notes will be
determined from another source designated by Payee.

If Maker shall have given to Payee notice of Maker's intention to so prepay,
Maker shall not then be entitled to withdraw such notice, and the indebtedness
proposed to be prepaid in such notice together with the aforesaid prepayment
fee, if applicable, shall be due and payable upon the date specified for such
prepayment in such notice. Upon the occurrence of an Event of Default and
acceleration of payment of indebtedness evidenced hereby during a period open to

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prepayment, Maker shall pay to Payee, in addition to any and all other sums due
and payable hereunder, as liquidated damages for the loss of Payee's investment
and not as a penalty, an amount equal to the prepayment fee which would have
been payable hereunder on such date of acceleration in the event of a voluntary
prepayment. Maker and Payee agree that the foregoing amounts do not constitute
penalties but rather constitute reasonable calculations of the investment loss
that would be sustained by Payee in the event of such prepayment.

It is specifically understood and agreed by Maker that, in the event of a
default under this Note or under any instrument securing the Note, a tender of
payment of the unpaid principal and accrued interest then outstanding shall be
deemed a prepayment, and, accordingly, said tender must include the premium
herein above required, or if said tender is made prior to the time this
privilege is operative then said tender must include a premium equal to six (6)
months' interest at the Rate computed on the principal amount so tendered. It is
further understood and agreed by Maker that Payee shall not be obligated to
accept said tender, and said tender shall for all purposes be deemed ineffectual
and deficient, unless and tender shall include the premium herein above
required.

In the event that Payee does not receive any payment on the date due, Maker will
pay Payee a late charge of five percent (5%) of the payment outstanding together
with the payment and, provided said sum is received within ten (10) days of the
date due, Payee agrees not to demand immediate payment of the whole sum of
principal and interest as otherwise permitted herein.

If, from any circumstances whatsoever, payment of any obligation due under this
Note at the time such performance shall be due shall involve exceeding the
maximum amount currently prescribed by any applicable usury statute or any other
applicable law, then such obligation shall be reduced to such maximum amount, so
that in no event shall any payment be possible under this Note, or under any
other instrument evidencing or securing the indebtedness evidenced hereby, that
is in excess of such maximum amount.

In the event that an Event of Default shall occur under the Loan and Security
Agreement (as hereinafter defined) or any other instrument now or hereafter
securing repayment hereof, following any required notice and/or the expiration
of any applicable period of grace, the, and in such event, the principal
indebtedness evidenced hereby, and any other sums advanced hereunder, together
with all unpaid interest accrued thereon, shall, at the option of Payee, at once
become due and payable and may be collected forthwith, regardless of the
stipulated date of maturity. TIME IS OF THE ESSENCE WITH RESPECT TO THIS NOTE.
Interest shall accrue on the outstanding principal for so long as such default
continues, regardless of whether or not there has been an acceleration of the
indebtedness evidenced hereby as set forth herein, at the rate equal to the
lesser of fifteen percent (15%) per annum or the maximum rate allowable under
law. All such interest shall be paid at the time of an as a condition precedent
to the curing of any such default should Payee, at its sole option, allow such
default to be cured. in the event this Note, or any part thereof, is collected
by or through an attorney-at-law. Maker agrees to pay all costs of collection
including, but not limited to, reasonable attorneys' fees, whether or not suit
is filed.

This Note is one of the notes referred to in and is secured by the Loan and
Security Agreement dated April 19, 1994 between Maker and Payee. The terms of
the Loan and Security Agreement are incorporated herein by reference.

Maker waives any right of exemption and waives presentment, protest and demand
and notice of protest, demand and of dishonor and nonpayment of this Note, and
consents that any holder hereof shall have the right, without notice to grant
any extension or extensions of time for payment of this Note or any part thereof
or any other indulgences or forbearances whatsoever, or may release any of the
security for this Note without any way affecting the liability of any other
party for the payment of this Note.

The due payment and performance of Maker's obligations hereunder shall be
without regard to any counterclaim, right of offset, or any other counterclaim
whatsoever which Maker may have against Payee and without regard to any other
obligations of any nature whatsoever which Payee may have to Maker, and no such

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counterclaim or offset shall be asserted by Maker in any action, suit or
proceeding instituted by Payee for payment of Maker's obligations hereunder.

This Note and the Loan and Security Agreement shall be governed by and construed
in accordance with the laws of the State of Washington.

Maker acknowledges that there is no presumption that the value of the property
securing this Note is equal to the face amount of the Note, and that a
deficiency judgment many be necessary in proceedings taken for enforcement
hereof.

No amendment to this Note shall be binding upon Payee unless it is in writing
and duly signed by Payee.

IN WITTINESS WHEREOF, the Maker has caused these presents to be duly signed and
the date first above written.

Co Borrower: Hampshire Designers, Inc.  Borrower:San Francisco Knitworks, Inc.
By:/s/ Charles W. Clayton               By: /s/ Charles W. Clayton
Witness: /s/ H. Edward Hurley           Witness: /s/ H. Edward Hurley
(Print name):  Charles W. Clayton       (Print name): Charles W. Clayton
Title: Vice President                   Title: Vice President

<PAGE>
                                 METLIFE CAPITAL
                    SUPPLEMENTAL SECURITY AGREEMENT NO. THREE

LOAN # 5006594-003

This Supplemental Security Agreement is executed by HAMPSHIRE DESIGNERS, INC.,
CO- BORROWER AND SAN FRANCISCO KNITWORKS, INC., CO-BORROWER ("BORROWER")
pursuant to the terms of a Loan and Security Agreement dated April 19, 1994
between Borrower and MetLife Capital Corporation ("Lender"). All capitalized
terms used herein that are not otherwise defined herein shall have the
respective meanings given to such terms in the Loan and Security Agreement.

In order to provide security for the payment and performance of Borrower's
obligations under the Loan Documents, Borrower has granted to Lender a first
priority security interest in the Collateral. In addition to said grant,
Borrower intends by this Supplemental Security Agreement to grant to Lender a
first priority security interest in the items of Equipment identified herein.

1. To further secure the payment and performance of all of Borrower's
obligations to lender under the Loan Documents, Borrower hereby grants to Lender
a first priority security interest in the items of Collateral described below,
including all present and future additions, attachments and accessories thereto,
all substitutions therefor and replacements thereof and all proceeds thereof,
including all proceeds of insurance: Cost or Qty. Model/Mfr. Description Serial
No. Appraised Value

TWELVE  (12) 1993 Shima SES Electronic Knitting more             $760,000
             completely described on the attached Exhibit         $15,355.56/
             "A" herein incorporated by this reference           Month
                                                                 60 months

2. Borrower hereby (a) affirms that the representations and warranties set forth
in Section 5 of the Loan and Security Agreement are true and correct as of the
date hereof; (b) represents and warrants that Lender has a first priority
security interest in the Collateral; and (c) represents and warrants that the
above described equipment will be maintained at the following locations(s):

375 ALABAMA STREET, SAN FRANCISCO, CA  94110

3. The Loan Amount for loans to be made pursuant to this Supplemental Security
Agreement is $760,000.00.

4. The Commitment Expiration Date for loans to be made pursuant to this
Supplemental Security Agreement is September 22, 1995.

5. The amount of liability insurance required to be maintained by Borrower
pursuant to Section 6(d) of the Loan and Security Agreement is $1,000,000.00.

6. All of the terms and provisions of the Loan and Security Agreement are hereby
incorporated in and made a part of this Supplemental Security Agreement to the
same extent as if fully set forth herein. 7.85%

In witness whereof, Borrower has executed and delivered this supplemental
Security Agreement this 22nd day of September, 1995.

Co-Borrower:      HAMPSHIRE DESIGNERS, INC.
By:               /s/ Charles W. Clayton
(Print name):     Charles W. Clayton
Title:            Vice President

Co-Borrower:      SAN FRANCISCO KNITWORKS, INC.
By:               /s/ Charles W. Clayton
(Print name):     Charles W. Clayton
Title:            Vice President
<PAGE>

REQUEST FOR ADVANCE OF LOAN PROCEEDS

LOAN  #5006594-003
NO. THREE

In accordance with the Loan and Security Agreement dated April 19, 1994, the
undersigned, as Borrower, hereby requests Lender to make a disbursement of the
Loan Amount in the amount of $760,000.00. To the extent that any item of
Equipment has been delivered to Borrower, Borrower represents and warrants that
it has inspected and accepted such item of Equipment and that such item has been
duly assembled and is in good working order.

__X__ The undersigned further authorizes and directs Lender to disburse the
proceeds of this Loan in payment of the following invoices, copies of which are
attached hereto:

AND

__X__ the undersigned has previously paid the following invoices and requests
MetLife to disburse the proceeds of this Loan to the undersigned. Copies of the
invoices and proof of such payment are attached hereto.

VENDOR                               Invoice No.                    Amount
Reimbursement to San Francisco          046258                   $372,000.00
Knitworks, Inc. from Moss Knitting
Machines
Reimbursement to San Francisco             099                    116,000.00
Knitworks, Inc. for Moss Knitting
Machines
Shima Seiki U.S.A.                        2110                    244,800.00
Reimbursement to San Francisco            2110                     27,200.00
Knitworks, Inc. for Shima Seik invoice
                                            Total                $760,000.00
 
Date:  9/29/95
(Co-Borrower):  Hampshire Designers, Inc.
By:  /s/ Charles W. Clayton
(Print Name):  Charles W. Clayton
Title: Vice President
Date: 9/29/95
(Co-Borrower): San Francisco Knitworks, Inc.
By:  /s/ Charles W. Clayton
(Print Name):  Charles W. Clayton
Title: Vice President

<PAGE>
#5006594-003


To:      MetLife Capital Corporation
         C-97550
         Bellevue, Washington  98009

Gentlemen:

By way of this letter, we hereby certify that neither Hampshire Designers, Inc.,
Co-Borrower, or San Francisco Knitworks, Inc., Co-Borrower has not granted a
security interest to any creditor nor signed a UCC financing statement which
would give another creditor any interest in twelve (12) 1993 Shima SES
Electronic Knitting located at 375 Alabama Street, San Francisco, California
94110 which MetLife has agreed to finance.

Date:  9/22/95

Hampshire Designers, Inc., Co-Borrower

By:  /s/ Charles W. Clayton
Its: Vice President

San Francisco Knitworks, Inc., Co-Borrower

By:  /s/ Charles W. Clayton
Its: Vice President
