FORBEARANCE AGREEMENT


           WHEREAS,  BNY  Financial  Corporation  ("Factor")  and
Signal  Apparel Company, Inc. ("Signal") have heretofore  entered
into  a Factoring Agreement bearing an effective date of May  21,
1991  and  various documents, notes, instruments, guaranties  and
agreements executed and delivered in connection therewith (all of
the  foregoing,  as  heretofore amended,  amended  and  restated,
supplemented  or otherwise modified, collectively, the  "Existing
Signal Factoring Agreements"); and

           WHEREAS, Factor and The Shirt Shed, Inc. ("Shed") have
heretofore   entered  into  a  Factoring  Agreement  bearing   an
effective  date  of  July 25, 1991 and various documents,  notes,
instruments, guaranties and agreements executed and delivered  in
connection  therewith (all of the foregoing, as amended,  amended
and  restated,  supplemented or otherwise modified, collectively,
the  "Existing  Shed  Factoring Agreements";  together  with  the
Existing Signal Factoring Agreements, collectively, the "Existing
Factoring Agreements"); and

           WHEREAS, Signal and Shed (collectively, the "Clients")
acknowledge,  confirm and agree that (a) defaults  have  occurred
under  the Existing Factoring Agreements, which defaults continue
to  exist  and which the Factor has suffered to exist,  including
without  limitation, paragraphs 11(a)(iii) [TANGIBLE NET  WORTH],
11(a)(iv)  [WORKING  CAPITAL]  and  11(a)(v)  [PRE-TAX  OPERATING
EARNINGS], (collectively, the "Existing Defaults"); and (b) as  a
result  of the Existing Defaults, the Factor is entitled,  as  of
the  date  hereof, to terminate the Existing Factoring Agreements
and  to exercise any and all of its rights and remedies under the
Existing  Factoring Agreements, applicable law  or  otherwise  to
realize  upon  its collateral and to collect the Obligations  (as
such term is defined in the Existing Factoring Agreements); and

           WHEREAS,  in  order  for the Clients  to  continue  to
operate  their  businesses  and to make  efforts  to  meet  their
respective  financial  obligations  to  the  Factor   and   other
creditors, the Clients have requested that the Factor forbear for
a  limited period of time from exercising its rights and remedies
under the Existing Factoring Agreements; and

          WHEREAS, the Factor has advised the Clients that Factor
desires  to  preserve the Existing Defaults and  the  rights  and
remedies  arising under the Existing Factoring  Agreements  as  a
result of the existence and continuance of the Existing Defaults;
and

           WHEREAS, subject to the terms and conditions set forth
herein, Factor has agreed to accommodate the Clients' request  to
forbear  from  exercising  its  rights  and  remedies  under  the
Existing Factoring Agreements.


<PAGE>

           NOW THEREFORE, in consideration of the foregoing,  and
for  good  and  other  valuable consideration,  the  receipt  and
sufficiency  of which is hereby acknowledged, the parties  hereto
hereby agree as follows:

           1.    ACKNOWLEDGMENT OF OUTSTANDING OBLIGATIONS.  Each
of  the Clients hereby acknowledges, confirms and agrees that  as
of October 31, 1997, the Obligations due and owing to the Factor,
jointly  and  severally  by the Clients,  are  in  the  aggregate
principal amount of not less than $____________, plus accrued and
unpaid  interest, plus all costs, fees, expenses and  other  sums
and  charges  due  and  owing to the Factor  under  the  Existing
Factoring  Agreements, including, without limitation,  all  costs
and  expenses  incurred  by the Factor  in  connection  with  the
negotiation,  preparation  and  execution  of  this   Forbearance
Agreement,   and   all  documents,  instruments  and   agreements
delivered in connection with this Forbearance Agreement  (all  of
the  foregoing  is  collectively referred  to  as  the  "Existing
Debt").   Each  of the Clients hereby acknowledges, confirms  and
agrees  that as of the date hereof, the Existing Debt is due  and
owing  by  the Clients to the Factor without offset,  defense  or
counterclaim of any kind, nature or description whatsoever.

           2.    BINDING EFFECT OF EXISTING FACTORING AGREEMENTS.
Each  of  the  Clients hereby acknowledges, confirms  and  agrees
that: (a) each of the Existing Factoring Agreements to which such
Client  is  a party has been duly executed and delivered  to  the
Factor,  and  each is in full force and effect  as  of  the  date
hereof;  (b)  the covenants, agreements and Obligations  of  each
Client  contained  in  or incurred under the respective  Existing
Factoring  Agreements to which such Client is a party  constitute
the   legal,  valid  and  binding  Obligations  of  such  Client,
enforceable against such Client in accordance with the terms  and
conditions  of  the Existing Factoring Agreements to  which  such
Client  is a party, and each such Client has no valid defense  to
the  enforcement  of such Obligations or such Existing  Factoring
Agreements  to  which it is a party; and (c) the  Factor  is  and
shall  be  entitled to the rights, remedies and benefits provided
for  in  the  Existing  Factoring  Agreements  and  pursuant   to
applicable  law,  subject to the terms  and  conditions  of  this
Forbearance Agreement.

          3.   ACKNOWLEDGEMENT OF LIENS AND SECURITY INTERESTS BY
CLIENTS.   Each of the Clients hereby ratifies and  confirms  its
grant  to the Factor of the liens upon and security interests  in
the  properties  and assets of the Clients heretofore  mortgaged,
pledged,  granted  or assigned to the Factor under  the  Existing
Factoring Agreements and the New Factoring Agreements (as defined
herein),  and  acknowledges  and confirms  that  such  liens  and
security  interests  secure  and shall  continue  to  secure  the
Obligations.

           4.    PRESERVATION OF EXISTING DEFAULTS.  Each of  the
Clients   hereby   acknowledges,   confirms   and   agrees   that
notwithstanding the execution and delivery of the  New  Factoring
Agreements, (a) the Existing Defaults are preserved and shall

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<PAGE>

continue  to exist after the execution and delivery  of  the  New
Factoring Agreements; and (b) subject to the conditions set forth
in  this  Forbearance Agreement, the Factor's rights and remedies
arising by reason of the Existing Defaults are preserved  in  all
respects without prejudice to the Factor.

          5.   FORBEARANCE.

                (a)   Factor and each of the Clients agree  that,
until  the  occurrence of an Additional Default  (as  defined  in
paragraph  7 below), the Factor will forbear from exercising  any
of  its  rights and/or remedies arising by reason of the Existing
Defaults or applicable law to realize upon its collateral, or any
part  thereof, and/or to commence any action against the Clients,
individually or collectively, to collect the Obligations  or  any
part  thereof.  The period commencing as of the date  hereof  and
terminating  on  the  date  of the occurrence  of  an  Additional
Default is hereinafter referred to as the "Forbearance Period".

                (b)   Upon  the  termination of  the  Forbearance
Period,   the   agreement  of  the  Factor   to   forbear   shall
automatically and without further action or notice terminate  and
be  of no further force or effect, it being expressly agreed that
the effect of such termination of the Forbearance Period will  be
to  permit  the  Factor, without notice, demand or  advertisement
(all  of  which are expressly waived by the Clients), to exercise
its  rights  and  remedies  arising by  reason  of  the  Existing
Defaults or applicable law with respect to the collateral and the
Obligations,  all  without further notice,  passage  of  time  or
forbearance of any kind or nature.

            6.     EXECUTION   AND  DELIVERY  OF  NEW   FACTORING
AGREEMENTS.

                (a)  As an inducement to the Factor to enter into
this   Forbearance  Agreement,  the  Clients  have   agreed   to,
simultaneously   with  the  execution  and   delivery   of   this
Forbearance  Agreement, execute and deliver  (or  causing  to  be
executed  and delivered) and comply with the terms and provisions
of the following:

                                   (i)    Amended  and   Restated
                        Factoring  Agreement between  Factor  and
                        Signal;

                                              (ii)  Amended   and
                             Restated     Factoring     Agreement
                             between Factor and Shed;

                                                            (iii)
                             Termination  of  Right  to   Request
                             Advances   and   Incur   Obligations
                             Under  Factoring  Agreement  between
                             Factor    and   American   Marketing
                             Works, Inc. ("AMW");

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<PAGE>

                                              (iv)  Amendment  to
                             Inventory     Security     Agreement
                             between Factor and Signal;

                                   (v)   Amendment  to  Inventory
                        Security  Agreement  between  Factor  and
                        Shed;

                                              (vi)  Amendment  to
                             Inventory     Security     Agreement
                             between Factor and AMW;

                                             (vii)      Amendment
                             to   Equipment  Security   Agreement
                             between Factor and Signal;

                                             (viii)     Amendment
                             to   Equipment  Security   Agreement
                             between Factor and Shed;

                                              (ix)  Amendment  to
                             Equipment     Security     Agreement
                             between Factor and AMW;

                                   (x)   Secretary's  Certificate
                        of Directors' Resolutions for Signal;

                                               (xi)   Secretary's
                             Certificate      of       Directors'
                             Resolutions for Shed;

                                                            (xii)
                             Secretary's      Certificate      of
                             Directors' Resolutions for AMW;

                                             (xiii)    Letter re:
                             Cash Deposits between Factor and  WG
                             Trading        Company       Limited
                             Partnership; and

                                              (xiv)       Amended
                             and   Restated   Intercreditor   and
                             Subordination  Agreement  among   WG
                             Trading        Company       Limited
                             Partnership,   WG   Partner,   L.P.,
                             Walsh  Greenwood & Co., and  Factor;
                             and

the   various  documents,  notes,  instruments,  guaranties   and
agreements  executed  and  delivered  in  connection   with   the
foregoing  (all  of  the  foregoing,  as  amended,  amended   and
restated,  supplemented or otherwise modified, collectively,  the
"New Factoring Agreements").

          7.   ADDITIONAL DEFAULTS; REMEDIES.

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<PAGE>

                (a)   The  occurrence of any one or more  of  the
following  shall  constitute an "Additional Default"  under  this
Forbearance  Agreement  and a default  under  the  New  Factoring
Agreements:

                     (i)   the  breach  of  any  representations,
warranties, covenants or agreements contained in this Forbearance
Agreement,  which  breach  shall be material,  as  determined  in
Factor's sole discretion;

                     (ii)       the occurrence of a default under
the New Factoring Agreements;

                     (iii)     any payment made by either or both
of  the Clients to any entity which is a party to a subordination
agreement  as of the date hereof in favor of the Factor regarding
obligations of either or both of the Clients to such  entity  and
Factor; or

                     (iv) initiation of any action against either
or  both of the Clients to collect monies allegedly owed  by  any
entity  which is a party to a subordination agreement as  of  the
date  hereof  in  favor  of the Factor regarding  obligations  of
either or both of the Clients to such entity and Factor.

               (b)  Upon the occurrence of any Additional Default
hereunder, and notwithstanding anything to the contrary contained
in the New Factoring Agreements, the Factor may thereupon, and at
any  time  and  from  time to time thereafter,  demand  immediate
payment of the Obligations, in full or in part, exercise any  and
all  of its rights and remedies under this Forbearance Agreement,
the New Factoring Agreements, applicable law or otherwise, all of
which  rights and remedies shall be non-exclusive and  cumulative
and exercisable in whatever order or manner as the Factor, in its
sole discretion, may deem appropriate.

          8.   GENERAL PROVISIONS.

                (a)   Upon the request of the Factor, the Clients
shall execute and deliver to Factor, or cause to be executed  and
delivered,   all  such  additional  documents,  instruments   and
agreements  as the Factor may determine, in its sole  discretion,
are  necessary or desirable to effectuate the purposes and intent
of this Forbearance Agreement.

                (b)   This Forbearance Agreement shall be binding
upon  each  of  the Clients and their respective  successors  and
assigns.

                (c)   The validity of this Forbearance Agreement,
its  construction,  interpretation  and  enforcement,  shall   be
determined under and according

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<PAGE>

to  the  laws of the State of New York, without any reference  to
its  principles of conflicts of law.  The Clients hereby  consent
to  the  non-exclusive jurisdiction of the Supreme Court  of  the
State  of  New  York for the County of New York  and  the  United
States  District Court for the Southern District of New  York  in
any action or proceeding under, arising out of or related to this
Forbearance Agreement, the Existing Factoring Agreements and  the
New Factoring Agreements.

                (d)  THE CLIENTS AND THE FACTOR HEREBY WAIVE  ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER, ARISING
OUT OF OR RELATED TO THIS FORBEARANCE AGREEMENT.

               (e)  The unenforceability or invalidity of any one
or  more  provisions hereof shall not render any other provisions
herein contained unenforceable or invalid.

               (f)  This Forbearance Agreement is the result of a
full  and  complete negotiation at arm's length  by  all  parties
hereto.  No term sheets or prior drafts or memoranda prepared  by
any  parties shall be used to construe or interpret any provision
hereof,  nor  shall  any  one  party  hereto  be  considered  the
"drafter"  of  this  Forbearance Agreement for  the  purposes  of
construing  the  terms,  conditions  and  obligations  set  forth
herein.   This  Forbearance  Agreement  sets  forth  the   entire
understanding  of  the parties with respect to  the  matters  set
forth  herein  and  supersedes in  their  entirety  any  and  all
understandings and agreements, whether written or  oral,  of  the
parties  with  respect  to the foregoing.   Except  as  expressly
amended   or   otherwise  modified  hereby  (including,   without
limitation, the preservation of the Existing Defaults),  the  New
Factoring   Agreements  remain  in  full  force  and  effect   in
accordance  with their existing terms and provisions  as  of  the
date  hereof,  EXCEPT THAT, in the event of any conflict  between
any  term or provision of this Forbearance Agreement and any term
or  provision  of  the  New  Factoring Agreements,  the  term  or
provision  of  this  Forbearance Agreement shall  control.   This
Forbearance  Agreement  cannot  be  changed,  modified,  amended,
waived or terminated in any respect, except by a writing executed
by the party to be charged.

               (g)  This Forbearance Agreement may be executed in
one  or more counterparts, each of which shall constitute but one
and the same Forbearance Agreement.

           IN  WITNESS  WHEREOF,  the parties  hereto  have  duly
executed  this  Forbearance Agreement  as  of  the  31st  day  of
October, 1997.

                              BNY FINANCIAL CORPORATION

                              By:/s/ Frank Imperati


                              Title: Vice President

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           [SIGNATURES CONTINUED FROM PREVIOUS PAGE]


                              SIGNAL APPAREL COMPANY, INC.

                              By: /s/ David E. Houseman

                              Title: Chief Executive Officer


                              THE SHIRT SHED, INC.

                              By: /s/ Robert Powell

                              Title: Vice President