[DANSKIN, INC. LETTERHEAD]


March 27, 1997

Mr. Donald Schupak
Schupak Group
730 Fifth Avenue
Suite 1901
New York, New York 10019

         Re:      Heads of Agreement

Dear Donald:

         The following sets forth the binding terms and conditions of your
engagement by the Company as its Chairman of the Board of Directors.

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<S>      <C>                            <C>

1.       Title                          Chairman of the Board of Directors.

2.       Term                          Earlier of (i) consummation of the Equity Transaction (as defined
                                       below), (ii) consummation of the Refinancing Transaction (as
                                       defined below) and (iii) December 31, 1997.

3.       Reporting                     Report to other members of the Board.

4.       Duties                        Devote a significant part of your business time and attention to
                                       duties as Chairman, and, in particular, undertake a leadership role with
                                       respect to (a) the raising of equity capital needed by the Company for its
                                       on-going operations and as required to avoid the $3 million fee (the
                                       "Additional Equity Fee") payable pursuant to the Sixth Amendment to the
                                       First Union Amended and Restated Credit Agreement, and (b) the development
                                       of a long-term business plan. These efforts are intended to 
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Mr. Donald Schupak              -2-          March 27, 1997


                                       culminate in either (i) the consummation prior to or on December 31, 1997 of
                                       a transaction or a series of transactions resulting in the Company's
                                       obtaining of aggregate net proceeds of Equity (as defined below) of at least
                                       $6.0 million (the "Equity Transaction"), (ii) the Company's being relieved
                                       of its obligation to pay the Additional Equity Fee by reason of a
                                       refinancing of the First Union bank debt prior to or on December 31, 1997
                                       (the "Refinancing Transaction") or (iii) the Company's being relieved of its
                                       obligation to pay the Additional Equity Fee by reason of a waiver or other
                                       agreement by First Union in effect as of December 31, 1997 (the "Non-Payment
                                       Condition").

5.       Compensation                  In consideration for your agreement to act, and the services you will
                                       provide to the Company, as Chairman, you are hereby granted an option (the
                                       "Equity Transaction Option") to acquire 4% of the outstanding common stock
                                       of the Company, on a fully diluted basis (taking into account all
                                       convertible preferred stock, common stock equivalents and any other common
                                       stock based instruments or securities, including warrants and convertible
                                       debt), immediately after giving effect to the Equity Transaction. Upon the
                                       consummation of the Equity Transaction, the Equity Transaction Option shall
                                       no longer be convertible into the 4% Conversion Stock or the 3% Conversion
                                       Stock (each as defined below).

                                       In the event that either prior to or on December 31, 1997 the Refinancing
                                       Transaction is consummated or the Non-Payment Condition is satisfied as of
                                       December 31, 1997, then immediately prior to the consummation of the
                                       Refinancing Transaction or as of December 31, 1997 in the case of the
                                       satisfaction of the Non-Payment Condition, the 

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Mr. Donald Schupak              -3-          March 27, 1997

                                       Equity Transaction Option shall convert into, and the Company shall
                                       immediately issue to you, stock certificates representing 4% of the
                                       outstanding shares of the Company's common stock, on a fully diluted basis
                                       (taking into account all convertible preferred stock, common stock
                                       equivalents and any other common stock based instruments or securities
                                       (including warrants and convertible debt) that are outstanding immediately
                                       prior to the consummation of the Refinancing Transaction or the satisfaction
                                       of the Non-Payment Condition, as the case may be) (the "4% Conversion
                                       Stock"). 

                                       In the event that (i) neither the Equity Transaction nor the Refinancing
                                       Transaction occurs on or prior to December 31, 1997, (ii) a petition for
                                       relief under title 11 of the United States Code is filed by or against the
                                       Company on or prior to December 31, 1997 or (iii) the Non-Payment Condition
                                       has not been satisfied as of December 31, 1997, then on the earlier to occur
                                       of December 31, 1997 or the date of such filing of a petition referred to in
                                       clause (ii) above, the Equity Transaction Option shall convert into, and the
                                       Company shall immediately issue to you, stock certificates representing 3%
                                       of the then outstanding shares of the Company's common stock, on a fully
                                       diluted basis (taking into account all convertible preferred stock, common
                                       stock equivalents and any other common stock based instruments or
                                       securities, including warrants and convertible debt that are outstanding
                                       immediately prior to the issuance of such shares of common stock) (the "3%
                                       Conversion Stock").


5.1     Exercisability of the          Immediately exercisable following consummation of the Equity 
        Equity Transaction             Transaction. 
        Option: 

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Mr. Donald Schupak              -4-          March 27, 1997

5.2     Exercise Price of the          The exercise price will be the per share price of common stock of 
        Equity Transaction             the Company purchased or otherwise acquired in the Equity 
        Option:                        Transaction, whether through a purchase of common stock directly, or
                                       indirectly through the purchase of an instrument convertible or otherwise
                                       exchangeable into common stock (collectively, the "Equity"). If the exercise
                                       price of the Equity Transaction Option is based in whole or in part on the
                                       exercise or conversion price of warrants, convertible preferred stock or
                                       convertible debt issued in the Equity Transaction, the exercise price of the
                                       Equity Transaction Option shall be reduced by any premium in the exercise or
                                       conversion price of such securities attributable to their yield and/or
                                       seniority, as determined by the Company's financial advisor. 

5.3     Term of the                    Five years from the date of the Equity Transaction. 
        Equity Transaction
        Option: 

5.4     Termination of the             Right to exercise the Equity Transaction Option, retain stock 
        Equity Transaction             following exercise or retain either the 4% Conversion Stock or 
        Option and 4%                  the 3% Conversion Stock (as the case may be) will immediately 
        Conversion Stock and           terminate if the Company terminates you as Chairman for "cause" or you
        3% Conversion Stock:           resign as Chairman during the term of your engagement.
                                       
5.5     Equity Transaction             The Equity Transaction Option will be formalized in a standard 
        Option                         option agreement. Option documentation shall contain usual and
        Documentation:                 customary provisions with respect to changes in capitalization
                                       that impact all of the outstanding shares of the Company's common stock.
                                       Subsequent to the Equity Transaction, the Equity Transaction Option will not
                                       be afforded anti-dilution protection other than that applicable to all
                                       holders of the 

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Mr. Donald Schupak              -5-          March 27, 1997

                                       Company's common stock. You will have unlimited piggy-back registration
                                       rights (subject to usual and customary cut-backs) in respect of the shares
                                       of common stock issuable to you upon exercise of the Equity Transaction
                                       Option, the 4% Conversion Stock and the 3% Conversion Stock. 

5.6     Reservation of Shares          The Company shall reserve adequate shares of common stock to at 
        and Other Corporate            least cover all shares subject to the Equity Transaction Option and/or
        Action:                        the 4% Conversion Stock and the 3% Conversion Stock, and shall take all 
                                       other corporate action reasonably necessary to implement the terms of the
                                       proposed engagement agreement (including the terms of the Equity Transaction
                                       Option). 

6.      Expenses, etc.                 $7,500 per month for the first three months of engagement and $10,000 per
                                       month thereafter to defray office overhead. In addition, direct
                                       reimbursement of properly documented and reasonable travel and other
                                       expenses incidental to your performance of duties as Chairman (including
                                       your activities as Chairman in furtherance of the consummation of the Equity
                                       Transaction or the Refinancing Transaction or the satisfaction of the
                                       Non-Payment Condition). 

7.      Contingent Equity              If you are retained by the Company in any capacity immediately following
                                       consummation of the Equity Transaction, the percentage of outstanding equity
                                       of the Company that may be acquired upon exercise of the Equity Transaction
                                       Option will increase from 4% to 12%, on a fully diluted basis (taking into
                                       account all convertible preferred stock, common stock equivalents and any
                                       other common stock based instruments or securities, including warrants and
                                       convertible debt), immediately after giving effect to the Equity
                                       Transaction.


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Mr. Donald Schupak              -6-          March 27, 1997

8.      Confidentiality Agreement      Standard confidentiality provision.
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        The Company looks forward to great success as you take on your new role.

                                      Very truly yours,

                                      s/ Henry T. Mortimer, Jr.
                                      -----------------------------------
                                      Henry T. Mortimer, Jr.,
                                      Chairman of the Executive Committee
                                      of the Board of Directors


AGREED AND ACCEPTED
this 27 day of March, 1997

s/Donald Schupak
---------------------------
Donald Schupak