GMAC
                              COMMERCIAL CREDIT LLC
                1290 AVENUE OF THE AMERICAS o NEW YORK, NY 10104
                                  212-408-7000


                                                  May 5, 2000




SIGNAL APPAREL COMPANY, INC.
500 7th Avenue, 7th Floor
New York, New York 10018

Gentlemen:

     Reference  is  made  to  the  Revolving  Credit,  Term  Loan  and  Security
Agreement,  dated  March 12,  1999 (as  amended  from time to time,  the "Credit
Agreement")  by and among SIGNAL APPAREL  COMPANY,  INC.  ("Borrower")  and GMAC
COMMERCIAL  CREDIT LLC,  as Agent (in such  capacity,  "Agent")  for the Lenders
("Lenders")  parties from time to time to the Credit Agreement.  All capitalized
terms used and not otherwise  defined herein shall have the respective  meanings
ascribed to them in the Credit Agreement.

     1. The Borrower  has advised  Lenders  that for the fiscal  quarter  ending
March 31, 2000, its Tangible Net Worth was less than ($71,500,000),  the minimum
Tangible Net Worth  permitted as of March 31, 2000 under  Section 6.5  (Tangible
Net  Worth)  of the  Credit  Agreement;  (ii) the  Current  Ratio  was less than
0.70:1.00,  the  minimum  Current  Ratio  permitted  as of March 31,  2000 under
Section 6.6 (Current Ratio) of the Credit  Agreement;  (iii) Working Capital was
less than  ($5,500,000),  the minimum Working Capital  permitted as of March 31,
2000 under Section 6.7 (Working Capital) of the Credit  Agreement;  and (iv) net
loss, excluding any extraordinary or non-recurring items was greater than the $0
permitted as of March 31, 2000 under Section 6.13(a) of the Credit Agreement. As
a result of such  noncompliance,  Events of Default have occurred  under Section
10.2 of Article X (Events of Default) of the Credit  Agreement  ("Subject Events
of Default").  Borrowers  have  requested  Lender to waive the Subject Events of
Default, and Lenders hereby waives the Subject Events of Default.

     2.  Borrower  hereby  acknowledges,  confirms  and agrees  that all amounts
charged or credited to the  Borrower's  account as of April 15, 2000 are correct
and binding upon the Borrower and that all amounts reflected to be due and owing
in the  Borrower's  account  as of  April  15,  2000 are due and  owing  without
defense,  setoff,  offset,  recoupment,  claim  or  counterclaim.   Furthermore,
Borrower  hereby also  irrevocably  releases  and forever  discharges  Agent and
Lenders and each of Agent's and Lenders' respective affiliated concerns, as well
as all of  Agent's  and  Lenders'  respective  directors,  officers,  employees,
shareholders  and agents  from any and all  liabilities,  demands,  obligations,
causes of action and other claims, of every kind, nature and description,  known
and unknown,  which  Borrower now has or may  hereafter  have,  by reason of any
matter,  cause or thing occurred,  done, omitted or suffered to be done prior to
the date hereof.



<PAGE>


     3.  Except  as  specifically   set  forth  herein,   no  other  changes  or
modification  to the Credit  Agreement are intended or implied and, in all other
respects the Credit  Agreement shall continue to remain in full force and effect
in accordance with its terms as of the date hereof.  Except as specifically  set
forth herein,  nothing  contained herein shall evidence a waiver or an amendment
by Agents or Lenders of any other  provision of the Credit  Agreement nor of the
specific provisions referred to above for any other time period.

     4. In  consideration  of the  waiver  given by Agent  and  Lenders  herein,
Borrower agrees to pay a non-refundable  waiver fee to Agent, for the benefit of
Lenders in the amount of  $40,000,  which fee shall be in  addition to any fees,
charges or interest  otherwise  payable by borrower under the Credit  Agreement,
and which fee shall be fully  earned as of the date  hereof and payment of which
may be effectuated by charging Borrower's loan account.

     5. The terms and provisions of this  Agreement  shall be for the benefit of
the parties hereto and their respective successors and assigns; no other person,
entity or  corporation  shall have any right,  benefit  or  interest  under this
agreement.

     6. This Agreement may be signed in counterparts,  each of which shall be an
original and all of which taken together  constitute  one  agreement.  In making
proof of this  Agreement,  it shall not be  necessary  to produce or account for
more than one counterpart signed by the party to be charged.

     7. This Agreement sets forth the entire agreement and  understanding of the
parties with respect to the matters set forth herein.  This agreement  cannot be
changed,  modified,  amended or terminated  except in a writing  executed by the
party to be changed.



                                        Very truly yours,


                                        GMAC COMMERCIAL CREDIT LLC, as Agent


                                        By: /s/ Wayne Miller VP
                                            -------------------




Acknowledge and Agreed:

Signal Apparel Company, Inc.

By: /s/ Kenneth L. Larsen
    ---------------------

Title: Controller
       ----------