<PAGE>

Exhibit 10.31

               First Amendment dated January 12, 1996 to the
               Fifth Amended and Restated Credit Agreement.



<PAGE>

    AMENDMENT, dated as of January 12, 1996 (the "Amendment"), to
the Fifth Amended and Restated Credit Agreement dated July 31, 1994
(the "Credit Agreement"; terms not otherwise defined herein shall
be used herein as therein defined), among APPAREL AMERICA, INC., a
Delaware corporation (the "Borrower"); CONNECTICUT DEVELOPMENT
AUTHORITY ("CDA") an assignee of Chemical Bank, BINGHAMTON SAVINGS
BANK ("BINGHAMTON") an assignee of Chemical Bank, and A.I.
ASSOCIATES,INC. ("AI") (each a "Bank" and collectively the
"Banks"); and BINGHAMTON SAVINGS BANK as agent for the Banks (and
as successor agent to Chemical Bank) (in such capacity, the
"Agent" ).

                      W I T N E S S E T H :

    WHEREAS, the Borrower has requested that the Credit Agreement
be amended to reflect changes in certain covenants made by
Borrower;   

    WHEREAS, the Borrower, the Agent and the Banks have agreed to
so amend the Credit Agreement on the terms set forth below;      
                                                               
    NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:

    1. AMENDMENTS TO SECTION 1.1 OF THE CREDIT AGREEMENT.
         (a) Section 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions in the proper alphabetical
order:
       "AGREEMENT" means the Fifth Amended and Restated Credit
Agreement dated July 31, 1994, as amended by the Amendment dated
January 12, 1996.

       "SERIES H PREFERRED STOCK" means the $8.50 Preferred
Stock, $.05 par value per share, of the Borrower.

    2. AMENDMENT TO SECTION 8.1 OF THE CREDIT AGREEMENT. 
         Subsection 8.1 (c), item (vii) is hereby amended by
inserting in line 10 thereof, immediately after the phrase "such
budget and financial plan" the phrase ", which may subsequently be
revised by Borrower from time to time,"

    3. AMENDMENTS TO SECTION 8.2 OF THE CREDIT AGREEMENT.
 (a) Subsection 8.2 (a) of the Credit Agreement is hereby
amended by deleting the dollar amount "$15,000,000" from item (ii)
thereof and substituting therefor the dollar amount "$23,000,000.

<PAGE>

    (b) Subsection 8.2 (h) of the Credit Agreement is hereby
amended by inserting at the end thereof, immediately after the word    
"issued", the phrase ", except, however, Borrower may pay cash dividends
on its Series H Preferred Stock".

    (c) Subsection 8.2 (i) of the Credit Agreement is hereby
amended by inserting at the end thereof, immediately after the word    
"Stock", the phrase ", except for its Series H Preferred Stock".

    (d) Subsection 8.2 (k) of the credit Agreement is hereby
amended by deleting the dollar amounts "$250,000" from the third line 
thereof and "$350,000" from the seventh line thereof and substituting 
therefor the dollar amounts "500,000" and "600,000" respectively, for the 
fiscal year ending 7/31/96 only. Thereafter, the amounts shall revert to 
$250,000 and $350,000 respectively.

    4. AMENDMENTS TO SECTION 8.3 OF THE CREDIT AGREEMENT.      
    (a) Subsection. 8.3 (a) of the Credit Agreement is hereby 
amended by deleting the table therein in its entirety and substituting 
in lieu thereof the following table:
                             
                PERIOD                             MINIMUM DEBIT

         1994    Fiscal Year                       $ 1,750,000
         1995    Fiscal Year                         2,250,000
         1996    Fiscal Year                         2,000,000
         1997    Fiscal Year                         2,500,000
         1998    Fiscal Year                         2,500,000
         1999    Fiscal Year                         2,500,000
         2000    Fiscal Year                         2,500,000
         2001    Fiscal Year                         2,500,000
                               

                       
    (b) Subsection 8.3 (b) of the Credit Agreement is hereby
amended by deleting the dollar amount "4,000,000" from item (i) thereof 
and substituting therefor the dollar amount "$2,000,000"; deleting the
dollar amount "$4,500,000" from item (i) thereof and substituting 
therefor the dollar amount "$3,000,000"; deleting the dollar amount 
"$5,500,000" from item (iii) thereof and substituting therefor the dollar 
amount "$5,000,000"; and deleting the dollar amount "$5,500,000" from item 
(iv) thereof and substituting therefor the dollar amount "$3,000,000".    

    (c) Subsection 8.3 (c) of the Credit Agreement is hereby
amended by inserting immediately after the phrase "projected budget and 
financial plan" the phrase ", or any revisions thereof,".

    5. BORROWER'S CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The Borrower, by signing below, represents that it has the 
power and authority, and the legal right, to make, deliver and perform all 
terms and obligations set forth in this Amendment and that the Borrower has 
taken all necessary corporate action to authorize the terms and obligations 
set forth in this Amendment.   No consent or authorization of, filing with or 
other Act by or in


<PAGE>


respect of, any Governmental Authority or any other person in  required in 
connection with the execution, delivery, performance,  validity or 
enforceability of this Amendment. This Amendment has  been duly executed end 
delivered on behalf of the Borrower. This  Amendment constitutes a legal, 
valid and binding obligation of the  Borrower, enforceable against it in 
accordance with its terms, except as enforceability may be limited by 
applicable bankruptcy,  insolvency, reorganization, moratorium or similar 
laws affecting  the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings  in 
equity or at law).

    6. SCOPE. This Amendment is to be narrowly construed. Except as expressly
amended herein, all of the covenants and provisions of the Credit Agreement 
are and shall continue to be in full force and effect.   

    7. COUNTERPARTS. This Amendment may be simultaneously
executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.                                        

    IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized officers as
of the day and year first above written.                            

Address:                                 APPAREL AMERICA, INC.
1175 State Street                       
New Haven, Connecticut                                               
  06501                                  By: /s/ Frederick M. D'Amato 
Telecopy No.:                               --------------------------
(203) 772-2512                           Name:  Frederick M. D'Amato 
Attn: Burton I. Koffman                  Title: Vice President-Financial
      President

with a copy to:
Shustak Jalil Sanders & Heller    
545 Madison Avenue                
New York, New York 10022                     
Telecopy No.: (212) 688-6151
Attn: James P. Jalil, Esq.

Address:                                  BINGHAMTON SAVINGS BANK, AS
58-68 Exchange Street                      AGENT AND BANK
Binghamton, NY 13902                               
Telecopy No.: (607) 772-6287                                
Attn: Glenn Small                       By: /s/ John B. Westcott
                                            --------------------------
                                             Name: John B. Westcott
                                             Title: Vice President
                                                          
<PAGE>

with a copy to:
Howard Rittberg, Esq.
Levene, Gouldin & Thompson
450 Plaza Drive  
Vestal, NY 13850

Address:                                 A.I. ASSOCIATES, INC., AS BANK
300 Plaza Drive                                               
Vestal, New York  13850
Telecopy No.:                            By: /s/ Milton Koffman 
 (607) 797-7103                             -------------------------
Attn: Milton Koffman                     Name: Milton Koffman 
      President                          Title: President     
                      


Address:                                 CONNECTICUT DEVELOPMENT    
845 Brook Street                           AUTHORITY, AS BANK
Rocky Hill, CT 06067                      
Telecopy No.:                                                      
   (203) 257-8331                         By: /s/ Richard P. Graff  
Attn: Loan Administration                   -------------------------
                                          Name: Richard P. Graff  
                                          Title: Vice President   

with a copy to:
William G. Rock, Esq.
Shipman & Goodwin
One American Row
Hartford, CT 06103