HAMPSHIRE GROUP, LIMITED
                            AUDIT COMMITTEE CHARTER

     The Audit  Committee of the Board of Directors of Hampshire  Group  Limited
(the  "Company")  has been  established  to assist the Board of  Directors  (the
"Board") in fulfilling its responsibility to oversee management's conduct of the
financial   reporting   process,   the  system  of  internal,   financial,   and
administrative  controls,  and the  annual  independent  audit of the  Company's
financial statements.

     The  Audit  Committee's  role  is one of  oversight,  and  recognizes  that
management is responsible for preparing the Company's  financial  statements and
that  the  external   auditor  is  responsible   for  auditing  those  financial
statements.

     The Audit  Committee is empowered to investigate  any matter brought to its
attention  with full  access to  Company  records,  personnel,  facilities,  and
outside experts as needed and requested.

MEMBERSHIP
- ----------

- -    The Audit  Committee will be comprised of at least three  directors who are
     independent  and  financially  literate as  required by SEC Release  NASDAQ
     34-42331.

- -    At least one member must have  significant  past  employment  experience in
     finance or accounting,  relevant  professional  certification or comparable
     experience or background with financial oversight responsibilities, such as
     having been a chief financial officer or chief executive officer.

RESPONSIBILITIES
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     The Audit Committee will fulfill its responsibilities to the Board by:

- -    Ensuring  accountability  of the  external  auditor  to the Board and Audit
     Committee  by  interviewing  and  recommending  to the  Board  the  firm of
     external  auditors to be appointed as independent  auditors of the Company,
     and  reviewing  their  qualifications,  scope  of  work,  performance,  and
     professional fees;

- -    Approving the external auditor's annual audit plans for the Company;

- -    Ensuring  receipt from the external  auditor of a formal written  statement
     delineating  all  relationships  between the auditor and the  Company,  its
     directors and  management  consistent  with  Independence  Standards  Board
     Standard Number 1;

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- -    Discussing  any  disclosed  relationships  and their impact on the external
     auditor's independence, and recommending any actions to the Board necessary
     to satisfy itself of the auditor's independence;

- -    Reviewing the results of internal and external  audit work  performed,  the
     quality and  adequacy of internal  controls,  and  focusing on material and
     significant controls issues resulting from audit activities;

- -    Follow-up of management's  implementation  of  recommendations  made by the
     external auditors;

- -    Reviewing and approving major changes in accounting policies and practices;

- -    Meeting   periodically  with  management  to  review  the  Company's  major
     financial risk exposures;

- -    Reviewing the annual audited  financial  statements,  and interim financial
     statements,  prior  to  submission  to the  Board.  This  includes  review,
     understanding  and  approval of  significant  adjustments,  estimates,  and
     accounting  policy changes per the Statement on Audit  Standards  Number 61
     (SAS 61);

- -    Provide an independent, direct communication between the Board and external
     auditors;

- -    Oversee legal and regulatory compliance,  and compliance with the Company's
     Business Ethics Policy; and

DISCLOSURES
- -----------

     The Audit Committee will conform to external disclosure requirements by:

- -    Certifying  to  the  National  Association  Security  Dealers  as  required
     regarding the  independence  and financial  literacy of all Audit Committee
     members; and

- -    Preparing for inclusion in the annual proxy  statement,  per the Securities
     and  Exchange  Commission  requirements,  a statement  certifying  that the
     Committee has reviewed and discussed the audited financial statements,  and
     SAS 61 items as described above.

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