March 29, 1996

Signal Apparel Company Inc.
Manufacturer's Road
Chattanooga, Tennessee

Gentlemen:

     The June 1, 1992 Agreement between Joan Vass Inc.
("Vass") and you ("Signal") by which Signal is granted
a license to use the "Joan Vass u.s.a" trademark and
Vass' designs in connection with the manufacture and
sale of certain men's and women's garments more
particularly described therein (the "License
Agreement") by its terms expires May 31, 1996 (the
"Termination Date").  The designs for the final
"Collection" - Summer 1996 - provided under the License
Agreement have been delivered by Vass.  Vass and Signal
have been discussing an interim extension of the
License Agreement to cover the Fall 1996 Season (June
1, 1996 - August 31, 1996) and Holiday 1996 Season
(September 1, 1996 - November 30, 1996) pending the
effort of parties to work out the terms of a long term
extension of the License Agreement.

     Signal at present is in default of the License
Agreement in that the Royalty payment for the Contract
Year quarter ended November 30, 1995 was not made on
the due date thereof, December 29, 1995, and continued
to remain partially unpaid through this date.
Nonetheless, Vass is willing to enter into this letter
agreement providing for a conditional


interim extension of the Termination Date upon the
conditions hereinafter set forth:

     1.  In the event the following conditions
precedent shall all have been satisfied, the
Termination Date shall on May 31, 1996 be deemed
extended to November 30, 1996 (subject to the
provisions of Section 4.2 of the License Agreement
dealing with payment of Royalties and of Section 9 of
the License Agreement dealing with the "Disposal
Period" following the Termination Date of the License
Agreement, modified as provided in Paragraph 4 of this
letter agreement).

          a.  Signal shall pay the balance of $78,697
currently due to Vass for the November 30, 1995 Royalty
payment, in full upon execution of this Agreement,
together with interest as provided in Schedule "A"
hereto attached.  Such payment shall be made by wire
transfer in accordance with wire transfer instructions
set forth in Schedule "B" hereto attached.

          b.  On or before execution of this letter
agreement, Signal shall furnish schedule confirming
payment in full of the expenses of Vass' November 1995
Fashion Show and shall pay or have paid the sum of
$25,000 to Vass to cover the expense of Vass' April
1996 Fashion Show, to be held at Vass' showroom.
Notwithstanding the provisions of Section 4.5(c)(iv) of
the License Agreement, the composition


of garments included in the Fashion Show shall be at
Vass' sole discretion, but shall be consistent with
past practices concerning the composition of garments.

          c.  Signal shall make payment of the
following obligations as specified, payment to Vass to
be made by wire transfer pursuant to the instructions
set forth in Schedule "B":

<TABLE>
<CAPTION>
DATE OF PAYMENT              OBLIGATION TO BE PAID
<S>                          <C>
Upon Execution               Payment to Vass of Royalty
                             computed pursuant to  4.1
                             of the License Agreement
                             upon all "Net Sales"
                             ( 4.6) of Joan Vass
                             u.s.a. ("u.s.a.") garments
                             between December 1, 1995
                             and February 29, 1996, in
                             the sum of $189,547.

Upon Execution               Payment to Vass of the sum
                             of $62,500, plus interest
                             thereon at 10.5% from
                             March 1, 1996 to date of
                             payment.

April 30, 1996               Payment to Vass of Royalty
                             on Net Sales of u.s.a.
                             garments in the month of
                             March 1996

May 30, 1996                 Payment to Vass of Royalty
                             on net Sales of u.s.a.
                             garments in the month of
                             April 1996
</TABLE>

          d.  In addition to the foregoing payments,
(i) no uncured event of default specified in Section 10
of the License Agreement shall be in effect as at May
31, 1996, and (ii) as at May 31, 1996, no proceeding by
or against Signal shall be pending under the Bankruptcy
Code.

     In the event any one or more of the foregoing
conditions precedent shall have not been complied with,
the


conditional interim extension of the Termination Date
shall be of no force and effect and the License
Agreement shall expire according to its terms on May
31, 1996 (subject to the post-termination provisions of
Sections 4.2 and 9 of the License Agreement, modified
as provided in Paragraph 4 of this letter agreement).

     2.  In the event that the License Agreement shall
not have terminated on May 31, 1996, and Signal has
complied with the provisions of Paragraph 1 of this
letter on the dates and in the manner specified, then
and only then the Term of the License Agreement shall
be deemed extended to November 30, 1996 with the same
force and effect as if the Termination Date originally
set forth in the License Agreement had been November
30, 1996, subject, however, to the satisfaction of the
following conditions subsequent:

          a.  Signal shall make payment of the
following obligations to Vass on the dates specified,
by wire transfer pursuant to the instructions set forth
in Schedule "B":

<TABLE>
<CAPTION>
DATE OF PAYMENT                OBLIGATION TO BE PAID
<S>                            <C>
June 1, 1996                   Payment of the sum of
                               $62,500

June 30, 1996                  Payment of Royalty on
                               Net Sales of u.s.a.
                               garments between March
                               1, 1996 and May 31,
                               1996, in excess of the
                               payments scheduled to be
                               made April 30, 1995 and
                               May 30, 1996


July 30, 1996                  Payment of Royalty on
                               Net Sales of u.s.a.
                               garments in the month of
                               June 1996

August 30, 1996                Payment of Royalty on
                               Net Sales of u.s.a.
                               garments in the month of
                               July 1996

September 1, 1996              Payment of the sum of
                               $62,500

September 30, 1996             Payments of Royalty on
                               Net Sales of u.s.a.
                               garments between June 1,
                               1996 and August 30,
                               1996, in excess of the
                               payments scheduled to be
                               made July 30, 1996 and
                               August 30, 1996

October 30, 1996               Payment of Royalty on
                               Net Sales of u.s.a.
                               garments in the month of
                               September 1996

November 30, 1996              Payment of Royalty on
                               Net Sales of u.s.a.
                               garments in the month of
                               October 1996
</TABLE>

          b.  In addition to the foregoing payments,
Signal shall not have failed to cure any event of
default specified in Section 10 of the License
Agreement within the grace periods provided.

     In the event of the breach of any one or more of
the foregoing conditions subsequent, the License
Agreement shall forthwith terminate with the same force
and effect as if the date on which the breach occurred
had been the date originally set forth in the License
Agreement as the Termination Date (subject to the post-
termination provisions of Section 4.2 and 9 of the
License Agreement, modified as provided in Paragraph 4
of this letter agreement).


     3.  The parties recognize that in order that
prototypes of Joan Vass u.s.a. garments for Fall 1996
be available to permit Signal to manufacture sales
samples for Fall selling in a timely fashion, it was
necessary that Vass work on the development of the Fall
1996 prototypes for Vass' Fall 1996 designs at Signal's
Heritage facility in Marion, South Carolina.  Vass has
heretofore undertaken the development of the prototypes
for Fall 1996 in the absence of an applicable license
agreement and shall continue such work subject to this
letter agreement upon the following conditions:

          a.  Signal acknowledges that Vass' designs
for Fall 1996 and Holiday 1996 are and at all times
shall be and remain the property of Vass.

          b.  All prototypes, patterns and
specification sheets for Fall 1996 and Holiday 1996
garments developed by Vass and Signal (Heritage) shall
at all times be and remain the property of Vass.  Upon
the termination of the License Agreement, the same
shall be delivered to Vass at its offices in New York
within five (5) days of Vass' written demand therefor.
Vass shall be responsible for the expense of shipping
and shall have the option to credit Signal for such
shipping expense and the direct expense of preparation
of the prototypes, patterns and specification sheets
against


the amounts due and to come due to it as Royalties
under the License Agreement.

          c.  The provisions of Section 4.5(a) and (o)
shall not be applicable during the period from June 1,
1996 to November 30, 1996; except that Signal shall
continue the program of cooperative advertising for
Fall 1996 and Holiday 1996 of u.s.a. garments
customarily offered by it during the Term of the
License Agreement to Signal customers.

          d.  So long as Signal is in compliance with
the License Agreement and the terms of this letter
agreement, Signal shall be entitled to offer for sale
and accept any orders for Fall or Holiday 1996 garments
without further approval of Vass.

          e.  Upon termination of the License
Agreement, (i) Vass shall have the option to purchase
all Fall and/or Holiday 1996 samples manufactured by it
to Vass at Signal's (Heritage's) direct cost; (ii) Vass
shall have the option to purchase at Signal's
(Heritage's) cost all inventoried yarns and other
materials and accessories, allocated to u.s.a. garments
and (iii) Vass shall also have the option to assume any
yarn contracts held by Signal (Heritage) allocated to
u.s.a. garments.

     Such options shall be exercised by Vass by written
notice following the termination of the License
Agreement given within twenty days (20) after receipt
of notice from


Signal (Heritage) of the (a) inventory of samples
available for Vass' purchase and Signal's (Heritage's)
cost, (b) inventory of yarn, other materials and
accessories available for Vass' purchase and Signal's
(Heritage's) cost and (c) a description of the yarn
contracts held by Heritage which Vass may assume.  Vass
shall also have the option to make any payment required
to be made by credit against the amounts due and to
come due to it as Royalties under the License
Agreement.

     4.  The applicability of the provisions of Section
9 of the License Agreement are conditioned upon timely
compliance by Signal with the provisions of Section 4.2
of the License Agreement governing the payment of
Royalties during the Disposal Period as well as payment
on December 30, 1996 of Royalty on Net Sales of u.s.a.
garments between September 1, 1996 and November 30,
1996 in excess of the payments scheduled to be made
October 30, 1996 and November 30, 1996.  If Signal
shall fail to make the required payment in full when
due, the provisions of Section 9 of the License
Agreement shall be deemed null and void, and Signal
shall forthwith cease all further work on Vass garments
(with or without u.s.a. label) in progress and shall
not sell or offer for sale any Vass garment (with or
without u.s.a. label) so long as the default in payment
of the Royalty continues.


     5.  It shall also be a condition of the extension
of the License Agreement that Signal shall restore the
monthly retainer for Sara Vass public relations
services contracted for pursuant to Section 4.5(e) of
the License Agreement to $3,500 per month retroactive
to January 1, 1996 and shall make such monthly payment
for each month of the period of extension of the
Termination Date.  Payment to Sara Vass of $3,000 upon
the execution of this letter agreement and payment of
the sum of $3,500 to Sara Vass on or before the third
business day of April and May 1996 shall be further
conditions precedent pursuant to Paragraph 1 hereof.
Payment of the full retainer on or before the third
business day of each month commencing June 1996 and
continuing for the balance of the Term of the License
Agreement shall be conditions subsequent, in default of
which the License Agreement shall terminate as provided
in Paragraph 2 hereof.  Payment of the $3,000 due upon
the execution of this letter agreement shall be wired
to Sara Vass c/o Rose & Boxer, as provided in Schedule
"B".

     6.  This letter agreement shall not be deemed
delivered by Vass until the funds required to be wired
to Vass and Sara Vass upon execution of this letter
agreement have been received in the escrow account
specified in Schedule "B".


     Please signify your consent to and approval of the
foregoing by signing at the foot hereof.

                               Very truly yours,

                               JOAN VASS INC.

                               By /S/ Joan Vass
                                  --------------------
                                  Joan Vass, President

Consented to and Agreed

SIGNAL APPAREL COMPANY INC.

By /s/ Robert Powell
   ------------------
   Vice President