SECURITY AGREEMENT - GOODS AND CHATTELS



TO:      MILBERG FACTORS, INC.
         99 Park Avenue
         New York, NY 10016

Gentlemen:

                  1.  To  secure  the   payment   of  all  debts,   liabilities,
obligations, covenants and duties owing by us to you under that certain Security
Agreement  (Accounts  Receivable  -  Financing)  bearing the  effective  date of
September  26,  1996,  as well as to  secure  the  payment  in full of the other
Obligations  referred to herein,  we hereby grant to you a  continuing  security
interest  in all goods and general  intangibles  (as defined in Article 9 of the
Uniform  Commercial  Code)  whether  now owned or  hereafter  acquired by us and
wherever  located,  all  replacements and  substitutions  therefor or accessions
thereto and all proceeds thereof,  including,  without limitation, the machinery
and  equipment  described in the annexed  Schedule  "A" (all herein  referred to
collectively  as  "Collateral").  Inventory is  specifically  excluded  from the
Collateral.

                  2.  The  term  "Obligations"  as used  herein  shall  mean and
include the  indebtedness  owing by us to you as  hereinabove  specifically  set
forth  and  also  any and all  other  loans,  advances,  extensions  of  credit,
endorsements,  guaranties,  benefits or financial  accommodations  heretofore or
hereafter  made,  granted  or  extended  by you to us or which  you have or will
become  obligated to make, grant or extend to or for our account and any and all
interest,  commissions,  obligations,  liabilities,   indebtedness,  charges  or
expenses heretofore or hereafter  chargeable against us or owing by us to you or
upon which we may be or have become liable as endorser and guarantor and any and
all  renewals  or  extensions  of any of the  foregoing,  no matter  how or when
arising, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether under any present or future  agreement or  instrument  between us or
otherwise  and the  amount due upon any notes or other  obligations  given to or
received by you for or on account of any of the  foregoing  and the  performance
and  fulfillment  by us of all of the terms,  conditions,  promises,  covenants,
provisions and warranties  contained in this Security  Agreement and any note or
notes secured hereby or in any present or future agreement or instrument between
us.

                  3. Unless  expressly  limited by the  provisions  of paragraph
"1", your security  interest  granted and created in the Collateral shall extend
and  attach to the  entire  Collateral  whether  the same  constitutes  personal
property or fixtures,  including, without limitation, to all dies, jiggs, tools,
benches,  tables,  substitutions,   accretions,  component  parts,  replacements
thereof and additions thereto, as well as to all accessories,  motors,  engines,
auxiliary  parts used in connection  with or attached to the  Collateral and any
packing material in which the Collateral may be contained.  We shall furnish you
from time to time upon request with written statements and schedules identifying
and  describing  the  Collateral  and any  additions  thereto and  substitutions
thereof in such detail as you may require.

                  4.       We hereby warrant and covenant to you that:

                           (a)      the Collateral is presently located at 207
Sheffield Street, Mountainside, N.J. 07092 and we will notify you promptly of
any new location where Collateral may be located;

                           (b)      we are the lawful owner of the Collateral
free from any adverse lien, security or encumbrance whatsoever and have the sole
right to grant a  security  interest  therein  and will  defend  the  Collateral
against all claims and demands of all persons;

                           (c)      we will keep the Collateral free and clear
of all attachments, levies, taxes, liens, security interests and encumbrances of
every kind and nature;
<PAGE>

                           (d)      we will at our own cost and expense keep the
Collateral in good state of repair and will not waste or destroy the same or any
part thereof;

                           (e)      we will not without your prior written
consent, sell, exchange,  lease or otherwise dispose of the Collateral or any of
our rights  therein or permit any lien or  security  interest to attach to same,
except that created by this Agreement;

                           (f)      we will insure the Collateral in your name
against loss or damage by fire, theft, burglary,  pilferage, loss in transit and
such  other  hazards  as you shall  specify in  amounts  and under  policies  by
insurers  acceptable to you and all premiums thereon shall be paid by us and the
policies  delivered to you. If we fail to do so, you may procure such  insurance
and charge the cost to our account;

                           (g)      we will not permit any Collateral to be
removed from its present  location  without your prior written  consent,  and we
will at all times allow you or your representatives free access to and the right
of inspection of the Collateral;

                           (h)     we shall comply with the terms and conditions
of any leases  covering the premises  wherein the  Collateral is located and any
orders,  ordinances,  laws or  statutes  of any  city,  state,  or  governmental
department  having  jurisdiction with respect to such premises or the conduct of
business  thereon,  and,  when  requested  by you,  we will  execute any written
instruments  and do any  other  acts  necessary  to  effectuate  more  fully the
purposes and provisions of this Agreement;

                           (i)      if any of the Collateral is or in your
opinion may become part of any real estate,  we will obtain and deliver to you a
written waiver by the record owner and any mortgagees of said real estate of all
interest in the Collateral and a written  subordination  by any person who has a
lien on said real estate  which is or may be superior to the  security  interest
granted hereby;

                           (j)      we will not permit anything to be done that
may impair or lessen the value of any Collateral or the security intended to be
afforded by this Agreement;

                           (k)      we will indemnify and save you harmless from
all loss, costs, damage,  liability or expense,  including reasonable attorneys'
fees,  that you may  sustain  or  incur  to  enforce  payment,  performance,  or
fulfillment  of  any  of the  debts  or  obligations  secured  hereby  or in the
enforcement of this Agreement and the priority  thereof or in the prosecution or
defense of any action or  proceeding  either  against you or us  concerning  any
matter  growing out of or in connection  with this  Agreement  and/or any of the
Obligations secured hereby and/or any of the Collateral;

                           (l)      the execution of this Agreement has been
duly approved by the undersigned in any manner required by law.

                  5.       We shall be in default under this Agreement upon the
happening of any of the following events or conditions:

                           (a)      we shall fail to pay when due or punctually
 perform any of the Obligations;

                           (b)      any covenant, warranty, representation or
statement made or furnished to you by us or on our behalf was false in any
material respect when made or furnished;

                           (c)      the loss, theft, substantial damage,
destruction, sale or encumbrance to or of any of the Collateral or the making of
any levy, seizure or attachment thereof or thereon;

                           (d)      we shall become insolvent, cease operations,
dissolve,  terminate our business existence,  make an assignment for the benefit
of  creditors,  suffer the  appointment  of a receiver,  trustee,  liquidator or
custodian of all or any part of our property;

                           (e)      any proceedings under any bankruptcy or
insolvency law shall be commenced by or against us or any guarantor or endorser
of the Obligations; or

                           (f)      any guarantor or endorser of the Obligations
shall  die,  make an  assignment  for the  benefit of  creditors,  or suffer the
appointment  of a  receiver  of any  part  of  such  guarantor's  or  endorser's
property.
<PAGE>

                  6. Upon any such default and at any time  thereafter,  you may
declare all Obligations secured hereby immediately due and payable and you shall
have the remedies of the secured party provided in the Uniform  Commercial Code,
and  in  addition,  those  provided  by  other  provisions  of law  and in  this
Agreement.  You will at all  times  have the  right  to take  possession  of the
Collateral  and to maintain  such  possession  on our  premises or to remove the
Collateral  or any part thereof to such other  premises as you may desire.  Upon
your request, we shall assemble the Collateral and make it available to you at a
place  designated by you. If any  notification  of intended  disposition  of any
Collateral is required by law,  such  notification,  if mailed,  shall be deemed
properly  and  reasonably  given if at least five days before such  disposition,
postage  prepaid,  addressed to us either at our address  shown herein or at any
address appearing on your records for us. Any proceeds of any disposition of any
of the  Collateral  shall be applied by you to the  payment of all  expenses  in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other  legal  expenses  and  disbursements  and the  reasonable  expense  of
retaking,  holding,  preparing for sale,  sale, and the like, and any balance of
such  proceeds  may be  applied by you  toward  the  payment of the  Obligations
secured hereby in such order of  application  as you may elect,  and we shall be
liable for any deficiency.

                  7. If we default in the  performance  or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on our part
to be  performed or fulfilled  under or pursuant to this  Agreement,  you may at
your option without  waiving your right to enforce this  Agreement  according to
its terms,  immediately  or at any time  thereafter  and  without  notice to us,
perform or fulfill the same or cause the  performance or fulfillment of the same
for our  account  and at our sole  cost and  expense,  and the cost and  expense
thereof (including reasonable attorneys' fees) shall be added to the Obligations
secured hereby and shall be payable on demand with interest  thereon at the rate
charged upon the Obligations secured hereby, but not in excess of that permitted
by law.

                  8. No delay or failure on your part in  exercising  any right,
privilege or option  hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing,  signed by you and then only to the extent therein set forth, and no
waiver by you of any default  shall  operate as a waiver of any other default or
of the same  default on a future  occasion.  Your books and  records  containing
entries with respect to the  Obligations  secured  hereby shall be admissible in
evidence in any action or  proceeding,  shall be binding upon us for the purpose
of  establishing  the items therein set forth and shall  constitute  prima facie
proof  thereof.  You  shall  have the  right to  enforce  any one or more of the
remedies available to you, successively,  alternately or concurrently.  We agree
to join with you in executing financing statements or other instruments pursuant
to the Uniform Commercial Code in form satisfactory to you and in executing such
other documents or instruments as may be required or deemed necessary by you for
purposes of affecting or continuing your security interest in the collateral.

                  9. This  Agreement  cannot be  terminated  orally.  All of the
rights, remedies, options, privileges and elections given to you hereunder shall
enure to the benefit of your  successors  and assigns.  The term "you" as herein
used  shall  include  your  company,  any  parent of your  company,  any of your
subsidiaries  and any  co-subsidiaries  of your parent,  whether now existing or
hereafter  created  or  acquired,  and all of the terms,  conditions,  promises,
covenants,  provisions  and  warranties  of this  Agreement  shall  enure to the
benefit of and shall bind the representatives, successors and assigns of each of
us and them.
<PAGE>

                                                     Very truly yours,

(Seal)
                                                     GlenGate Apparel, Inc.

Attest:

/s/ Norman Britman                  By:  /s/ George J. Gatesy
Norman Britman, Secretary                George J. Gatesy
                                         President & Ceo

                             On: September 26, 1996

(Seal)                                   Accepted at New York, New York


                             On: September 26, 1996

Attest:                                     MILBERG FACTORS, INC.


/s/ Harold H. Oertell               By:  /s/ Joseph V. Goldberg, Jr.
Harold H. Oertell                            Joseph V. Goldberg, Jr.
Secretary/Treasurer                          President