WARRANT CERTIFICATE

      THESE  WARRANTS AND ANY SHARES ACQUIRED UPON  THE  EXERCISE
THEREOF  HAVE  NOT  BEEN  REGISTERED  UNDER  THE  UNITED   STATES
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES  LAWS
OF  ANY STATE. THESE WARRANTS AND SUCH SHARES MAY NOT BE SOLD  OR
TRANSFERRED  IN THE ABSENCE OF SUCH REGISTRATION OR AN  EXEMPTION
THEREFROM  UNDER  SUCH  ACT AND LAWS.  THESE  WARRANTS  AND  SUCH
SHARES   MAY  NOT  BE  TRANSFERRED  EXCEPT  UPON  THE  CONDITIONS
SPECIFIED IN THIS WARRANT CERTIFICATE, AND NO TRANSFER  OF  THESE
WARRANTS  OR SUCH SHARES SHALL BE VALID OR EFFECTIVE  UNLESS  AND
UNTIL SUCH CONDITIONS SHALL HAVE BEEN COMPLIED WITH.

                      WARRANT CERTIFICATE
             To Purchase Shares of Common Stock of
                  SIGNAL APPAREL COMPANY, INC.

                                                 500,000 Warrants

      THIS  CERTIFIES THAT, for good and valuable  consideration,
the  receipt  of which is hereby acknowledged, WALSH GREENWOOD  &
CO.  or  its registered assigns (the "Holder"), is the registered
owner  of  the number of Warrants specified above, each of  which
Warrants  entitles  the  Holder, subject to  the  conditions  and
limitations  hereinafter  set  forth,  to  purchase  from  SIGNAL
APPAREL COMPANY, INC. a corporation organized and existing  under
the laws of the State of Indiana(the "Company"), one share of the
Company's Common Stock, $.01 par value (the "Common Stock"), at a
purchase  price of $2.25 per share (the "Exercise  Price").   The
Warrants  shall not be terminable by the Company.  The shares  of
Common  Stock  issuable upon exercise of the  Warrants  (and  any
other  or  additional  shares, securities or  property  that  may
hereafter  be  issuable  upon  exercise  of  the  Warrants)   are
sometimes  referred to herein as the "Warrant  Shares",  and  the
number  of  shares so issuable are sometimes referred to  as  the
"Aggregate  Number" as such number may be increased or decreased,
as more fully set forth herein.

     The Warrants shall be void and all rights represented hereby
shall cease on the Expiration Date (as defined in Section 11).

      The  Warrants represented hereby are issued on  August  10,
1995  (the "Issuance Date") (such Warrants, or such lesser number
thereof  as  shall  from time to time remain  unexercised,  being
herein  collectively called the "Warrants").   The  Warrants  are
being  issued pursuant to a Credit Agreement, dated as  of  March
31, 1995 among the Company, Walsh Greenwood & Co. and certain  of
the  Company's subsidiaries, as amended by a First  Amendment  to
Credit  Agreement dated as of the date hereof (collectively,  the
"Credit Agreement").

      Certain terms used in this Warrant Certificate are  defined
in  Section  11  hereof.  Terms and expressions in  this  Warrant
Certificate having a defined or generally accepted meaning  under
the  securities laws of the United States of America  shall  have
the  same meaning in this Warrant Certificate, unless the express
contrary intention appears.

      The Warrants are subject to the following provisions, terms
and conditions:

      1.    Exercise; Issue of Certificates; Payment for  Shares.
The  rights  represented  by  this  Warrant  Certificate  may  be
exercised by the Holder hereof, in whole or in part (but  not  as
to  fractional shares of Common Stock), to purchase a total of up
to 500,000 shares, vesting at the rate of 100,000 shares for each
$1  million  in  advances  drawn by the  Company  upon  the  loan
extended  under the Credit Agreement (subject to the  adjustments
described in Section 5 hereof), by the surrender of this  Warrant
Certificate (with the Exercise Form annexed hereto as Schedule  1
properly  completed and executed) to the Company at its principal
office specified in Section 17, or its then current address,  and
upon payment to the Company of the Exercise Price for the Warrant
Shares being purchased (i) by cash or check or bank draft in  New
York  Clearing  House  funds, (ii) by tender  of  shares  of  the
Company's Preferred Stock valued at $100,000 per share  plus  any
accrued  but unpaid dividends, or (iii) by the total and complete
reduction  of  obligations  of  the  Company  under  the   Credit
Agreement  in a dollar amount equal to the Exercise  Price.   The
shares  so purchased shall be and will be deemed to be issued  to
the  Holder hereof as the record owner of such shares as  of  the
close  of  business on the date on which this Warrant Certificate
shall  have been surrendered and payment made for such shares  as
aforesaid.   Certificates  for the Warrant  Shares  so  purchased
shall  be  delivered to the Holder within a reasonable time,  not
exceeding  ten  (10) days, after this Warrant  Certificate  shall
have  been so exercised, and unless the Warrants have expired,  a
new  Warrant  Certificate representing the number of  shares,  if
any,  with  respect to which this Warrant Certificate  shall  not
then  have  been exercised shall also be delivered to the  Holder
hereof within such time.  Such certificate or certificates  shall
be  deemed to have been issued and any Person so designated to be
named  therein shall be deemed for all purposes to have become  a
holder  of  record  of such Warrant Shares as  of  the  close  of
business on the date on which this Warrant Certificate shall have
been  surrendered  and  payment of the  Exercise  Price  made  as
aforesaid.  The Warrant Shares initially issued upon the exercise
hereof  shall  be Common Stock. The foregoing right  of  exercise
will  expire  at  the close of business on the  Expiration  Date;
provided,  if  such  date  should not be  a  Business  Day,  such
expiration will not occur until the close of business on the next
Business Day.

      2.    Shares  to  be  Fully  Paid; Reservation  of  Shares;
Listing. The Company covenants and agrees that:  (a) all  Warrant
Shares  will,  upon issuance, be original-issue shares  (and  not
treasury  stock) fully paid and nonassessable and free  from  all
taxes, claims, liens, charges and other encumbrances with respect
to  the issuance thereof; (b) without limiting the generality  of
the foregoing, it will from time to time take all such action  as
may  be required to assure that the par value per share of Common
Stock  shall  at all times be less than or equal to the  Exercise
Price;  (c) during the period within which the rights represented
by this Warrant Certificate may be exercised, the Company will at
all  times have authorized and reserved for the purpose of  issue
or  transfer upon exercise of the Warrants a sufficient number of
original-issue  shares of its Common Stock  to  provide  for  the
exercise  of  all  the  Warrants; (d) upon the  exercise  of  the
Warrants represented by this Warrant Certificate, it will, at its
expense,  promptly notify each securities exchange on  which  any
Common  Stock is at the time listed of such issuance and maintain
a  listing  of  all  shares of Common Stock  from  time  to  time
issuable  upon  the exercise of the Warrants to the  extent  such
shares can be listed.

      3.    Representations and Warranties.  All  representations
and warranties contained in Section 5 of the Credit Agreement are
true  and  correct  and incorporated herein as  if  made  by  the
Company to the Holders of the Warrants.

     4.   Registration Rights.

     (a)  Demand Registration Rights.  On any two occasions after
the  Issuance  Date and prior to the Expiration  Date,  upon  the
request  of  Holders  of  at  least 51%  of  the  Warrant  Shares
originally issued pursuant to this Warrant Certificate which  are
then outstanding, which Holders shall request the registration of
such  shares under the United States Securities Act of  1933,  as
amended  (provided that such request covers an  aggregate  of  at
least  250,000 Warrant Shares), the Company shall file  with  the
Commission and use its best efforts to cause to become  effective
as promptly as practicable (subject to the following sentence)  a
registration  statement  covering at least  all  of  the  Warrant
Shares requested to be registered by such requesting Holders (any
Holders  of  Warrant  Shares requesting registration  under  this
Section  4(a) are "Selling Holders"), all to the extent requisite
to  permit  the exercise or disposition in the United States,  as
the case may be, by the Selling Holders of the Warrant Shares  so
registered ("Demand Registration"); provided, however,  that  the
Company  shall  not be obligated to effect a Demand  Registration
(i) prior to the date which is 90 calendar days after the closing
date  of  a previous United States public offering, (ii)  if  the
Company  has  given  notice to the Holders of Warrants  that  the
Company  expects to file a registration statement within 30  days
and  while  the  Company has a public offering  in  registration,
(iii) at any time or in any manner which is in conflict with  the
rights  granted to Holders of registrable securities pursuant  to
that  certain Registration Rights Agreement dated as of  November
22,  1994  by  and  between the Company  and  Kidd,  Kamm  Equity
Partners,  L.P.,  as nominee (the "KKEP Agreement"),  unless  the
holders  of such rights have explicitly waived any such  conflict
in  writing,  or  (iv)  if three such Demand  Registrations  with
respect to all or a portion of the Warrant Shares have previously
been  requested.  Should the Company refuse to  effect  a  Demand
Registration  pursuant to subsections (i), (ii) or  (iii)  above,
such  request shall not be considered on of the three  rights  to
demand  registration grnated by this Section.  The Company  shall
promptly  give written notice to all Holders of the Warrants  and
the Warrant Shares of the receipt by it of a request for a Demand
Registration   pursuant  to  this  Section.  If   other   selling
shareholders or the Company shall also propose to include  shares
of  Common  Stock in a Demand Registration, and if the number  of
includable  shares  shall exceed the total number  of  shares  of
Common  Stock  proposed  to be registered and/or  Warrant  Shares
proposed  to  be registered (all such securities proposed  to  be
registered,   the  "Registrable  Securities"),  the   Registrable
Securities  shall be included in the Demand Registration  in  the
following  priority:  first, the Registrable Securities  held  by
the  Holders  of  Warrant Shares in proportion to the  respective
numbers  of Registrable Securities proposed to be sold  by  them,
and  second, the Registrable Securities proposed to be registered
by  the  Company  or other selling shareholders, allocated  among
them  in  such manner as they shall determine.  If  a  Holder  or
Holders  shall  have  requested a  Demand  Registration  and  the
Company   shall  have  thereafter  withdrawn  such   registration
statement, in addition to such other rights and remedies that the
Holders may be entitled to, such withdrawn registration shall not
be  deemed to be one of the registration statements that  may  be
requested  pursuant to this Section 4(a).  The Holder  agrees  to
exercise  all Warrants for which it has demanded registration  of
Warrant Shares on the effective date of such registration.

      (b)  United States Federal and State Approval.  The Company
shall  effect  the registration or qualification of  the  Warrant
Shares  registered pursuant to this Section 4(a) and  shall  give
such  notifications to, or receive approvals of, any governmental
authority under United States federal or, if reasonably requested
by  the Selling Holders, any United States state securities laws,
or   any  other  applicable  law,  or  effect  listing  with  any
securities exchange on which the Common Stock is listed  at  such
time,  as  may  be necessary to permit the sale of  the  Warrants
and/or  the  exercise  of the Warrants and the  sale  of  Warrant
Shares  in  the manner proposed by the Selling Holders; provided,
the Company shall not for any such purpose be required to qualify
generally  to  do  business  as  a  foreign  corporation  in  any
jurisdiction wherein it is not so qualified, to subject itself to
taxation  in  any  such  jurisdiction or to  consent  to  general
service of process in any such jurisdiction.

     (c)  Expenses.  Subject to the limitations contained in this
paragraph  (c) and except as otherwise specifically  provided  in
this   Section  4,  the  entire  costs  and  expenses   of   each
registration  and  qualification  pursuant  to  this  Section  4,
whether or not such registration shall become effective or  shall
be  consummated, shall be borne by the Company.  Such  costs  and
expenses shall include the fees and expenses of counsel  for  the
Company and of its accountants (including the cost of any special
audit  required by or incidental to such registration), all other
costs  and  expenses of the Company incident to the  preparation,
printing  and filing under the Securities Act of the registration
statement and all amendments and supplements thereto, the cost of
furnishing  copies  of  each preliminary prospectus,  each  final
prospectus   and   each  amendment  or  supplement   thereto   to
underwriters, dealers and other purchasers of the Warrant  Shares
and  the costs and expenses (including fees and disbursements  of
counsel)   incurred  by  the  Company  in  connection  with   the
qualification of the Warrant Shares under the Blue  Sky  laws  of
various jurisdictions.

      (d)   Procedures.   In  the case of  each  registration  or
qualification pursuant to this Section 4, the Company  will  keep
all  Holders of Warrants advised in writing as to the  initiation
of  proceedings for such registration and qualification and as to
the  completion thereof, and will advise any such  Holders,  upon
request, of the progress of such proceedings. At its expense, the
Company  will  promptly  prepare and  in  any  event,  except  as
otherwise expressly provided herein, within 90 days after the end
of the period within which requests for registration may be given
to the Company, file with the Commission a registration statement
with  respect to the securities to be registered and use its best
efforts  to cause such registration statement to become effective
and  keep such registration and qualification in effect  by  such
action  as  may  be necessary or appropriate, including,  without
limitation,   the   filing  of  post-effective   amendments   and
supplements to any registration statement or prospectus necessary
to   keep   the   registration  statement  current  and   further
qualification  under  any  applicable Blue  Sky  or  other  state
securities  laws  to  permit such sale or  distribution,  all  as
reasonably  requested by such Holder or Holders. At its  expense,
the  Company  will furnish to each Holder whose  Warrants  and/or
Warrant   Shares   are  included  therein,   at   such   Holder's
expense,such number of copies of such registration statement  and
of  each  such  amendment and supplement thereto  (in  each  case
including  all exhibits), such number of copies of the prospectus
included  in  such  registration  statement  and  covering   such
Holder's  Warrant Shares (including each preliminary prospectus),
in  conformity with the requirements of the Securities  Act,  and
such  other  documents as such Holder may reasonably  request  in
order  to  facilitate  the disposition of such  Holder's  Warrant
Shares  contemplated in such registration statement.  The Company
will notify each Selling Holder of any securities covered by such
registration  statement, at any time when a  prospectus  relating
thereto is required to be delivered under the Securities Act,  of
the  happening  of any event as a result of which the  prospectus
included  in  such  registration statement,  as  then  in  effect
includes an untrue statement of a material fact or omits to state
any  material fact required to be stated therein or necessary  to
make  the statements therein not misleading in the light  of  the
circumstances  then existing, or of any other  occurrence  which,
under  applicable securities laws, requires the prospectus to  be
revised  or updated (and upon receipt of such notice and until  a
supplemented  or  amended  prospectus  as  set  forth  below   is
available,  each Selling Holder will cease to offer or  sell  any
securities covered by the registration statement and will  return
all copies of the prospectus to the Company if requested to do so
by  it  and  will  not  sell any security of  the  Company  until
provided  with  a current prospectus and notice for  the  Company
that  it may resume its selling efforts).  At the request of  any
such  Selling  Holder, the Company shall furnish to such  Selling
Holder  a  reasonable number of copies of a supplement to  or  an
amendment  of  such prospectus as may be necessary  so  that,  as
thereafter  delivered to the purchasers of such securities,  such
prospectus  shall not include an untrue statement of  a  material
fact  or  omit  to state a material fact required  to  be  stated
therein or necessary to make the statement therein not misleading
in the light of the circumstances then existing.  Notwithstanding
anything  to the contrary herein, any prospective Selling  Holder
may  withdraw from a registration under this Section 4 any or all
of  his Warrant Shares, upon written notice to the Company  given
prior to the execution and delivery by such Selling Holder  of  a
binding underwriting agreement with the prospective underwriters.

       (e)   Cross-Indemnity  and  Contribution  Agreements.   In
connection  with the registration of Warrant Shares in accordance
with  this  Section  4,  the Company  agrees  to  enter  into  an
appropriate   cross-indemnity  agreement   and   a   contribution
agreement, each in customary form, with each underwriter, if any,
and  each  Holder of Warrant Shares included in such registration
statement;   and,  if  requested,  enter  into  an   underwriting
agreement  containing  conventional representations,  warranties,
allocation   of   expenses,  and  customary  closing   conditions
including,   but  not  limited  to,  opinions  of   counsel   and
accountants'  comfort letters, with any underwriter who  acquires
the Warrant Shares.

      (f)   Cooperation of Selling Holders.  Every Selling Holder
who  has  any Warrant Shares included in a registration statement
agrees as follows:

            (i)    To  furnish  the  Company,  in  writing,  such
     appropriate information and covenants regarding the proposed
     methods  of sale or other disposition of the Warrant  Shares
     as  the Company, any underwriter, the Commission and/or  any
     state or other regulatory authority may request;

          (ii)  To execute, deliver and/or file with or supply to
     the  Company,  any  underwriter, the Commission  and/or  any
     state   or  other  regulatory  authority  such  information,
     documents,  representations, undertakings and/or  agreements
     as  are  (A) necessary to carry out the provisions  of  this
     Warrant   Certificate,   (B)   necessary   to   effect   the
     registration  or qualification of the  Warrant Shares  under
     the Securities Act and/or any of the laws and regulations of
     any  jurisdiction,  and  (C) as the Company  may  reasonably
     require to ensure the transfer or disposition of the Warrant
     Shares  is  not in violation of the Securities  Act  or  any
     applicable state securities laws;

           (iii)  To furnish to the Company, not later than every
     thirty  (30)  days  after the date of effectiveness  of  the
     registration  statement, a report of the number  of  Warrant
     Shares sold during such thirty (30) day period; and

           (iv)   To cancel any orders to sell and/or to  reverse
     any  sale of Warrant Shares which, in the reasonable  belief
     of  the  Company,  based upon the opinion of  legal  counsel
     experienced  in securities law matters, orders and/or  sales
     were  effected  in violation of the Securities  Act  or  any
     applicable State securities laws.

     5.   Adjustments to Aggregate Number.

     Under certain conditions, the Aggregate Number is subject to
adjustment as set forth herein.

      The  Aggregate  Number shall be subject to adjustment  from
time to time as follows and thereafter the Aggregate Number shall
be deemed to be the Aggregate Number hereunder as adjusted.

      (a)   In  case at any time or from time to time the Company
shall:

           (i)   take a record of the holders of its Common Stock
     for  the  purpose  of entitling them to receive  a  dividend
     payable in, or other distribution of, Common Stock,
           (ii)  subdivide its outstanding shares of Common Stock
     into a larger number of shares of Common Stock, or
           (iii)  combine its outstanding shares of Common  Stock
     into a smaller number of shares of Common Stock,

then  the  Aggregate Number in effect immediately  prior  thereto
shall be adjusted so that the Holder or Holders of Warrants shall
thereafter  be  entitled to receive, upon exercise  thereof,  the
number  of  shares  of Common Stock that such Holder  or  Holders
would  have  owned  or have been entitled to  receive  after  the
occurrence  of  such  event  had  such  Warrants  been  exercised
immediately prior to the occurrence of such event.

      (b)   In  case at any time or from time to time the Company
shall  take a record of the holders of its Common Stock  for  the
purpose  of  entitling  them to receive  any  dividend  or  other
distribution (collectively, a "Distribution") of:

          (i)  cash (other than dividends payable out of earnings
     or   any  surplus  legally  available  for  the  payment  of
     dividends  under  the laws of the state of incorporation  of
     the Company),

           (ii)   any  evidences of its indebtedness (other  than
     Convertible  Securities), any shares of  its  capital  stock
     (other than additional shares of Common Stock or Convertible
     Securities)  or  any  other securities or  property  of  any
     nature whatsoever (other than cash), or

           (iii)   any  options or warrants or  other  rights  to
     subscribe  for  or  purchase  any  of  the  following:   any
     evidences   of  its  indebtedness  (other  than  Convertible
     Securities),  any  shares of its capital stock  (other  than
     additional shares of Common Stock or Convertible Securities)
     or   any   other  securities  or  property  of  any   nature
     whatsoever,

then  the  Holder  or Holders of Warrants shall  be  entitled  to
receive  upon  the exercise thereof at any time on or  after  the
taking of such record the number of shares of Common Stock to  be
received  upon  exercise of such Warrants  determined  as  stated
herein  and, in addition and without further payment,  the  cash,
stock, securities, other property, options, warrants and/or other
rights  to which such Holder or Holders would have been  entitled
by   way  of  the  Distribution  and  subsequent  dividends   and
distributions  if such Holder or Holders (x) had  exercised  such
Warrants  immediately  prior to such Distribution,  and  (y)  had
retained the Distribution in respect of the Common Stock and  all
subsequent  dividends and distributions of any nature  whatsoever
in  respect  of  any stock or securities paid  as  dividends  and
distributions  and originating directly or indirectly  from  such
Common Stock.  A reclassification of the Common Stock into shares
of  Common Stock and shares of any other class of stock shall  be
deemed a distribution by the Company to the holders of its Common
Stock  of  such  shares of such other class of stock  within  the
meaning  of this paragraph (b) and, if the outstanding shares  of
Common Stock shall be changed into a larger or smaller number  of
shares  of Common Stock as a part of such reclassification,  such
event  shall be deemed a subdivision or combination, as the  case
may  be,  of  the outstanding shares of Common Stock  within  the
meaning of paragraph (a) of this Section 5.

      (c)   In  case at any time or from time to time the Company
shall  (except  as  hereinafter  provided)  issue  or  sell   any
additional shares of Common Stock for a consideration  per  share
less  than the Prevailing Market Price, then the Aggregate Number
in effect immediately prior thereto shall be adjusted so that the
Aggregate  Number thereafter shall be determined  by  multiplying
the  Aggregate  Number immediately prior  to  such  action  by  a
fraction, the numerator of which shall be the number of shares of
Common  Stock  outstanding immediately prior to the  issuance  of
such  additional shares of Common Stock plus the number  of  such
additional  shares of Common Stock so issued and the  denominator
of   which  shall  be  the  number  of  shares  of  Common  Stock
outstanding immediately prior to the issuance of such  additional
shares of Common Stock plus the number of shares of Common  Stock
which  the aggregate consideration for the total number  of  such
additional shares of Common Stock so issued would purchase  at  a
price  equal  to the Prevailing Market Price.  The provisions  of
this  paragraph (c) shall not apply to any issuance of additional
shares of Common Stock for which an adjustment is provided  under
Section  5(a).  No adjustment of the Aggregate Number   shall  be
made under this paragraph (c) upon the issuance of any additional
shares  of  Common  Stock which are issued pursuant  to  (1)  the
exercise of any of the Warrants or of any other warrant or option
to  purchase  Common Stock outstanding as of  the  date  of  this
Warrant  Certificate,  (2)  the exercise  of  any  Floating  Rate
Warrants  issued pursuant to the Credit Agreement,  and  (3)  the
exercise  of  stock options to purchase shares  of  Common  Stock
pursuant to any stock options granted to employees of the Company
or  its  subsidiaries pursuant to the Company's 1985 Stock Option
Plan, as amended (collectively, (1), (2) and (3) the "Options").

      (d)   In  case at any time or from time to time the Company
shall  (except  as hereinafter provided) take  a  record  of  the
holders of its Common Stock for the purpose of entitling them  to
receive  a distribution of, or shall in any manner issue or  sell
any warrants or other rights to subscribe for or purchase (x) any
share  of Common Stock or (y) any Convertible Securities, whether
or  not  the  rights to subscribe, purchase, exchange or  convert
thereunder are immediately exercisable, and the consideration per
share for which additional shares of Common Stock may at any time
thereafter be issuable pursuant to such warrants or other  rights
or  pursuant to the terms of such Convertible Securities shall be
less  than the Prevailing Market Price, then the Aggregate Number
in effect immediately prior thereto shall be adjusted so that the
Aggregate  Number thereafter shall be determined  by  multiplying
the  Aggregate  Number immediately prior  to  such  action  by  a
fraction, the numerator of which shall be the number of shares of
Common  Stock  outstanding immediately prior to the  issuance  of
such  warrants  or  other  rights  plus  the  maximum  number  of
additional shares of Common Stock issuable pursuant to  all  such
warrants  or rights and/or necessary to effect the conversion  or
exchange  of  all such Convertible Securities and the denominator
of   which  shall  be  the  number  of  shares  of  Common  Stock
outstanding immediately prior to the issuance of such warrants or
other rights plus the number of shares of Common Stock which  the
aggregate  consideration for such maximum  number  of  additional
shares  of  Common Stock would purchase at a price equal  to  the
Prevailing Market Price.  For purposes of this paragraph (d), the
aggregate  consideration for such maximum  number  of  additional
shares  of  Common  Stock  shall be  deemed  to  be  the  minimum
consideration  received and receivable by  the  Company  for  the
issuance  of  such additional shares of Common Stock pursuant  to
the  terms  of such warrants or other rights or such  Convertible
Securities.  No adjustment of the Aggregate Number shall be  made
under this paragraph (d) upon the issuance of the Options.

      (e)   In  case at any time or from time to time the Company
shall  take a record of the holders of its Common Stock  for  the
purpose of entitling them to receive a distribution of, or  shall
in  any  manner issue or sell Convertible Securities, whether  or
not  the rights to exchange or convert thereunder are immediately
exercisable,  and the consideration per share for the  additional
shares  of  Common  Stock  which may at any  time  thereafter  be
issuable  pursuant  to  the terms of such Convertible  Securities
shall  be  less  than  the  Prevailing  Market  Price,  then  the
Aggregate  Number  in effect immediately prior thereto  shall  be
adjusted  so  that  the  Aggregate  Number  thereafter  shall  be
determined by multiplying the Aggregate number immediately  prior
to such action by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to
the  issuance  of  such Convertible Securities plus  the  maximum
number  of additional shares of Common Stock necessary to  effect
the conversion or exchange of all such Convertible Securities and
the  denominator of which shall be the number of shares of Common
Stock  outstanding immediately prior to the taking of such action
plus the number of Common Stock which the aggregate consideration
for  such  maximum number of additional shares  of  Common  Stock
would  purchase at a price equal to the Prevailing Market  Price.
For   purposes   of  this  paragraph  (e),  (x)   the   aggregate
consideration  for  such maximum number of additional  shares  of
Common  Stock  shall  be  deemed to be the minimum  consideration
received  and receivable by the Corporation for the  issuance  of
such  additional shares of Common Stock pursuant to the terms  of
such  Convertible  Securities. No  adjustment  of  the  Aggregate
Number  shall be made under this paragraph (e) upon the  issuance
of  any  Convertible Securities which are issued pursuant to  the
exercise of any warrants or other subscription or purchase rights
if  an  adjustment shall previously have been made or if no  such
adjustment  shall  have been required upon the issuance  of  such
warrants  or  other  rights pursuant to  paragraph  (d)  of  this
Section 5.

      (f)   If, at any time after any adjustment of the Aggregate
Number  shall have been made pursuant to paragraph (d) or (e)  of
this  Section 5 on the basis of the issuance of warrants or other
rights  or  the issuance of Convertible Securities, or after  any
new  adjustments  of the Aggregate Number shall  have  been  made
pursuant to this paragraph (f),

          (i)  such warrants or rights or the right of conversion
     or exchange in such Convertible Securities shall expire, and
     all or a portion of such warrants or rights, or the right of
     conversion  or exchange in respect of all or  a  portion  of
     such  Convertible Securities, as the case may be, shall  not
     have been exercised, and/or

           (ii)  the consideration per share for which shares  of
     Common  Stock  are  issuable pursuant to  such  warrants  or
     rights or the terms of such Convertible Securities shall  be
     irrevocably increased solely by virtue of provisions therein
     contained  for  an automatic increase in such  consideration
     per  share  upon  the  arrival of a specified  date  or  the
     happening  of a specified event, or such warrants or  rights
     shall  have  been  exercised or such convertible  Securities
     converted  at a price in excess of the minimum consideration
     used  in  the calculation of the adjustment to the Aggregate
     Number,

such previous adjustment shall be rescinded and annulled and  the
additional shares of Common Stock which were deemed to have  been
issued by virtue of the computation made in connection with  such
adjustment  shall  no  longer be deemed to have  been  issued  by
virtue of such computation.  Thereupon, a recomputation shall  be
made  of  the  effect of such warrants or rights  or  Convertible
Securities on the basis of:

                    (x)  treating the number of additional shares
          of Common Stock, if any, theretofore actually issued or
          issuable  pursuant  to the previous  exercise  of  such
          warrants  or  rights  or such right  of  conversion  or
          exchange as having been issued on the date or dates  of
          such   exercise  and  for  the  consideration  actually
          received and receivable therefor, and

                     (y)  treating any such warrants or rights or
          any  such  Convertible  Securities  which  then  remain
          outstanding   as   having  been   granted   or   issued
          immediately after the time of such irrevocable increase
          of  the  consideration per share for  which  shares  of
          Common Stock are issuable under such warrants or rights
          or Convertible Securities;

and,  if and to the extent called for by the foregoing provisions
of this paragraph (f) on the basis aforesaid, a new adjustment of
the  Aggregate  Number shall be made, such new  adjustment  shall
supersede the previous adjustments rescinded and annulled.

      (g)  If the Company redeems or exchanges all or any portion
of  its Series A or Series C Preferred Stock through the issuance
or  exchange of the Company's Common Stock, the Aggregate  Number
shall  be  adjusted  by multiplying such Aggregate  Number  by  a
fraction the numerator of which is the total number of issued and
outstanding  shares  of  the Company's Common  Stock  immediately
prior to such redemption or exchange plus the total of all shares
of the Company's Common Stock issued in exchange for the redeemed
or  exchanged Preferred Stock and the denominator of which is the
total  number  of issued and outstanding shares of the  Company's
Common Stock immediately prior to such redemption or exchange.

      (h)   The following provisions shall be applicable  to  the
making  of  adjustments  of  the  Aggregate  Number  hereinbefore
provided for in this Section 5:

           (i)  The sale or other disposition of any issued share
     of  Common Stock owned or held by or for the account of  the
     Company shall be deemed an issuance thereof for the purposes
     of this Section 5.

           (ii)   To  the  extent that any additional  shares  of
     Common  Stock or any Convertible Securities or any  warrants
     or  other rights to subscribe for or purchase any additional
     shares of Common Stock or any Convertible Securities (x) are
     issued  solely  for  cash consideration,  the  consideration
     received by the Company therefor shall be deemed to  be  the
     amount of the cash received by the Company therefor, or  (y)
     are   offered   by   the  Company  for   subscription,   the
     consideration received by the Company shall be deemed to  be
     the subscription price.

           (iii)   The  adjustments  required  by  the  preceding
     paragraphs of this Section 5 shall be made whenever  and  as
     often  as any specified event requiring an adjustment  shall
     occur.   For  the purpose of any adjustment,  any  specified
     event  shall  be  deemed to have occurred at  the  close  of
     business on the date of its occurrence.

           (iv)   In  computing adjustments under this Section  5
     fractional  interests in Common Stock shall  be  taken  into
     account to the nearest one-thousandth (.001) of a share  and
     shall be aggregated until they equal one whole share.

           (v)  If the Company shall take a record of the holders
     of  its  Common Stock for the purpose of entitling  them  to
     receive  a  dividend  or  distribution  or  subscription  or
     purchase  rights  to stockholders thereof, but  abandon  its
     plan   to   pay  or  deliver  such  dividend,  distribution,
     subscription or purchase rights, then no adjustment shall be
     required by reason of the taking of such record and any such
     adjustment  previously  made in  respect  thereof  shall  be
     rescinded and annulled.

     (i)  If any event occurs as to which the other provisions of
this  Section 5 are not strictly applicable but the lack  of  any
provision  for the exercise of the rights of a Holder or  Holders
of  Warrants would not fairly protect the purchase rights of such
Holder  or  Holders of Warrants in accordance with the  essential
intent  and  principles  of  such  provisions,  or,  if  strictly
applicable, would not fairly protect the conversion rights of the
Holder  or  Holders of Warrants in accordance with the  essential
intent and principles of such provisions, then the Company  shall
appoint a firm or independent certified public accountants in the
United  States (which may be the regular auditors of the Company)
of recognized national standing in the United States satisfactory
to the Holder, which shall give their opinion acting as an expert
and not as an arbitrator as to the adjustments, if any, necessary
to  preserve,  without dilution, on a basis consistent  with  the
essential   intent  and  principles  established  in  the   other
provisions of this Section 5, the exercise rights of the  Holders
of  Warrants.   Upon receipt of such opinion, the  Company  shall
forthwith make the adjustments described therein.

      (j)   Within  forty-five (45) days after the  end  of  each
fiscal quarter during which an event occurred that resulted in an
adjustment pursuant to this Section 5, and at any time  upon  the
request of any Holder of Warrants, the Company shall cause to  be
promptly  mailed  to  each  Holder by first-class  mail,  postage
prepaid,  notice  of  each  adjustment  or  adjustments  to   the
Aggregate Number effected since the date of the last such  notice
and a certificate of the Company's Chief Financial Officer or, in
the case of any such notice delivered within forty-five (45) days
after  the  end  of  a fiscal year, a firm of independent  public
accountants  in  the United States selected by  the  Company  and
acceptable  to the Holder(s) (who may be the regular  accountants
employed  by  the  Company),  in each  case,  setting  forth  the
Aggregate Number after such adjustment, a brief statement of  the
facts requiring such adjustment and the computation by which such
adjustment  was made.  The fees and expenses of such  accountants
shall be paid by the Company.
      (k)  The occurrence of a single event shall not trigger  an
adjustment of the Aggregate Number under more than one  paragraph
of this Section 5.

      6.   Taxes on Conversion.  The issuance of certificates for
Warrant  Shares upon the exercise of the Warrants shall  be  made
without charge to the Holder exercising any such Warrant for  any
issue   or  stamp  tax  in  respect  of  the  issuance  of   such
certificates,  and  such  certificates shall  be  issued  in  the
respective names of, or in such names as may be directed by,  the
Holder; provided, however, that the Company shall not be required
to  pay  any  tax that may be payable in respect of any  transfer
involved in the issuance and delivery of any such certificate  in
a  name other than that of the Holder, and the Company shall  not
be required to issue or deliver such certificates unless or until
the  Person or Persons requesting the issuance thereof shall have
paid  to  the  Company  the amount of  such  tax  or  shall  have
established to the satisfaction of the Company that such tax  has
been paid.

      7.   Limitation of Liability.  No provision hereof  in  the
absence  of  the exercise of the Warrants by the  Holder  and  no
enumeration  herein  of the rights or privileges  of  the  Holder
shall  give  rise to any liability on the part of the Holder  for
the  Exercise Price of the Warrant Shares or as a stockholder  of
the Company, whether such liability is asserted by the Company or
by any creditor of the Company.

     8.  Closing of Books.  The Company will at no time close its
transfer  books  against the transfer of any Warrant  or  of  any
shares  of  Common Stock issued or issuable upon the exercise  of
any  warrant  in  any  manner  that interferes  with  the  timely
exercise of the Warrants.

      9.   Availability of Information.  The Company will use its
best  efforts  to comply with the reporting requirements  of  the
United  States  Securities Exchange Act of 1934, as  amended,  if
applicable,  and  will use its best efforts to  comply  with  all
other public information reporting requirements of the Commission
(including  rules and regulations promulgated by  the  Commission
under  the  Securities  Act) from time  to  time  in  effect  and
relating  to the availability of an exemption from the Securities
Act  for  the sale of any Warrant Shares.  The Company will  also
cooperate  with  each Holder of any Warrants  in  supplying  such
information  as may be necessary for such Holder to complete  and
file  any  information  reporting forms  presently  or  hereafter
required by the Commission as a condition to the availability  of
an  exemption from the Securities Act for the sale of any Warrant
Shares.   The  Company will deliver to any Holder, promptly  upon
their  becoming  available, copies of all  financial  statements,
reports,  notices  and proxy statements sent  or  made  available
generally by the Company to its shareholders, and copies  of  all
regular and periodic reports and all registration statements  and
prospectuses filed by the Company with any securities exchange or
with the Commission.

     10.  Restrictions on Transfer.

     10.1  Restrictive Legends.  Each certificate for any Warrant
Shares  issued upon the exercise of any Warrant, and  each  stock
certificate  issued upon the transfer of any such Warrant  Shares
(except  as  otherwise  permitted by this Section  10)  shall  be
stamped or otherwise imprinted with a legend in substantially the
following form:
           "THE SHARES REPRESENTED BY THIS CERTIFICATE  HAVE
     NOT  BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
     ACT  OF 1933, AS AMENDED, OR UNDER THE SECURITIES  LAWS
     OF   ANY  STATE.   SUCH  SHARES  MAY  NOT  BE  SOLD  OR
     TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR  ANY
     EXEMPTION THEREFROM UNDER SUCH ACT AND LAWS."

      Each  Warrant  Certificate issued in substitution  for  any
Warrant  Certificate pursuant to Section 13, 14 or  15  and  each
Warrant  Certificate  issued upon the  transfer  of  any  Warrant
(except  as  otherwise  permitted by this Section  10)  shall  be
stamped or otherwise imprinted with a legend in substantially the
following form:

           "THESE WARRANTS AND ANY SHARES ACQUIRED UPON  THE
     EXERCISE  THEREOF  HAVE NOT BEEN REGISTERED  UNDER  THE
     UNITED  STATES SECURITIES ACT OF 1933, AS  AMENDED,  OR
     UNDER THE SECURITIES LAWS OF ANY STATE.  THESE WARRANTS
     AND  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN  THE
     ABSENCE  OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
     UNDER  SUCH  ACT  AND LAWS.  THESE  WARRANTS  AND  SUCH
     SHARES   MAY  NOT  BE  TRANSFERRED  EXCEPT   UPON   THE
     CONDITIONS  SPECIFIED IN THIS WARRANT CERTIFICATE,  AND
     NO  TRANSFER OF THESE WARRANTS OR SUCH SHARES SHALL  BE
     VALID  OR  EFFECTIVE UNLESS AND UNTIL  SUCH  CONDITIONS
     SHALL HAVE BEEN COMPLIED WITH."

     10.2  Termination of Restrictions.  The restrictions imposed
by  this  Section  10 upon the transferability  of  Warrants  and
Warrant  Shares  shall cease and terminate as to  any  particular
Warrants  or Warrant Shares, (a) as to Warrant Shares, when  such
securities  shall  have  been effectively  registered  under  the
Securities   Act   and  disposed  of  in  accordance   with   the
registration statement covering such securities, or (b)  when  in
the  reasonable  opinion of counsel for the Holder  thereof  such
restrictions are no longer required in order to comply  with  the
Securities Act.  Whenever such restrictions shall terminate as to
any  Warrants  or  Warrant Shares, the Holder  thereof  shall  be
entitled  to  receive  from  the Company,  without  expense,  new
certificates  of  like tenor not bearing the restrictive  legends
set forth in Section 10.1.

      11.   Definitions.   As  used in this Warrant  Certificate,
unless  the context otherwise requires, the following terms  have
the following respective meanings:

           Aggregate Number: as set forth in the first  paragraph
     of  this  Warrant  Certificate and  as  subsequently  varied
     pursuant to Section 5.

          Business Day:  any day other than a Saturday, Sunday or
     other  day on which commercial banks in New York,  New  York
     are authorized or required by law to close.

           Commission:  the United States Securities and Exchange
     Commission and any other similar or successor agency of  the
     United  States federal government administering  the  United
     States  Securities  Act or the Securities  Exchange  Act  of
     1934, as amended.

           Common  Stock:  the shares of Common Stock,  $.01  par
     value  per share, of the Company, currently provided for  in
     the  Restated Articles of Incorporation of the  Company,  as
     amended,  and  any other capital stock of the  Company  into
     which  such  shares  of Common Stock  may  be  converted  or
     reclassified  or  that  may  be issued  in  respect  of,  in
     exchange  for, or in substitution of, such Common  Stock  by
     reason  of any stock splits, stock dividends, distributions,
     mergers, con-solidations or like events.

           Company:   Signal  Apparel Company, Inc.,  an  Indiana
     corporation, and its successors and assigns.

           Convertible  Securities:  securities  which  by  their
     terms are convertible into or exchangeable for Common Stock.

           Credit Agreement:  the Credit Agreement, dated  as  of
     March 31, 1995, among the Company, Walsh Greenwood & Co. and
     certain  of  the  Company's subsidiaries as amended  by  the
     First Amendment to Credit Agreement, dated as of August  10,
     1995.

           Demand  Registration: as set forth in  Section  4.1(a)
     hereof.

           Distribution:   shall  have the meaning  specified  in
     Section 5(b).

          Exercise Price:  as set forth in the first paragraph of
     this Warrant Certificate.

           Expiration Date: this Warrant Certificate will  expire
     and the Warrants issued hereby will become null and void  on
     the  earlier of three years from the date the last  Warrants
     vest  or three years from the Termination Date of the Credit
     Agreement.

          Issuance Date:  August 10, 1995.

           Holder or Holders: as set forth in the first paragraph
     of this Warrant Certificate.

          KKEP Agreement:  as set forth in Section 4(a) hereof.

          Options:  as set forth in Section 5(c) hereof.

          Person:  an individual, corporation, partnership, trust
     or  unincorporated  organization, or  a  government  or  any
     agency or political subdivision thereof.

           Prevailing  Market Price:  The average  of  the  daily
     closing  prices  of 30 consecutive trading days  immediately
     preceding  the day in question after appropriate  adjustment
     for  stock dividends, subdivisions, combinations or  reclas-
     sifications  occurring  within  said  30-day  period.    The
     closing  price  for  each day shall be the  average  of  the
     closing  bid  and asked prices as furnished by  a  New  York
     Stock  Exchange  member  firm  or  National  Association  of
     Securities Dealers, Inc. member firm, selected from time  to
     time  by the Corporation for that purpose, or, in the  event
     that  the  Common Stock is listed or admitted to trading  on
     one  or  more national securities exchanges (or as a  NASDAQ
     National Market System security), the last sale price on the
     NASDAQ  system  or  on  the  principal  national  securities
     exchange on which the Common Stock is listed or admitted  to
     trading  or,  in case no reported sale takes place  on  such
     day,  the  average  of the reported closing  bid  and  asked
     prices on the NASDAQ system or such principal exchange.

           Registrable  Securities: as set forth in Section  4(a)
     hereof.

           Securities Act:  the United States Securities  Act  of
     1933, as amended (or any successor statute).

          Selling Holders: as set forth in Section 4(a) hereof.

           Warrants:  as set forth in the third paragraph of this
     Warrant Certificate.

          Warrant Shares:  as set forth in the first paragraph of
     this Warrant Certificate.

      12.  Acquisition of Warrants.  Holder represents that it is
acquiring  the  Warrants represented by this Warrant  Certificate
and,  upon  any  exercise of such Warrants, will  acquire  Common
Stock   hereunder  for  its  own  account  for  the  purpose   of
investment,  and  not  with  a view to  the  public  distribution
thereof within the meaning of the Securities Act, subject to  any
requirement  of  law that the disposition thereof  shall  at  all
times  be  within the control of the Holder.  The Holder  further
represents  and acknowledges that it is an "Accredited  Investor"
within the meaning of Regulation D under the Securities Act.

      13.   Warrants Transferable.  These Warrants are issued  as
unregistered Warrants.  Subject to the provisions of Section  10,
the transfer of any Warrant and all rights hereunder, in whole or
in  part,  is registrable at the office of agency of the  Company
referred to in Section 1 hereof by the Holder hereof in person or
by  duly  authorized  attorney, upon surrender  of  this  Warrant
Certificate with the properly completed Form of Assignment in the
form  annexed hereto as Schedule 2.  The transfer of any  Warrant
or any rights thereunder may be effected only by the surrender of
such Warrant at the office or agency of the Company and until due
presentment  for  registration of transfer  on  such  books,  the
Company  may treat the registered Holder hereof as the owner  for
all purposes, and the Company shall not be affected by notice  to
the  contrary.  No transfer shall be effective until this Warrant
Certificate  has  been  surrendered to the  Company  as  provided
herein  and  the replacement Warrant Certificate  issued  to  the
transferee  has been duly executed by the Company. Only  Warrants
which  shall have vested in accordance with Paragraph 1 shall  be
transferable,  and  the replacement Warrant Certificate(s)  shall
indicate that such Warrants are fully vested.

       14.    Warrant  Certificates  Exchangeable  for  Different
Denominations.   This Warrant Certificate is  exchangeable,  upon
the  surrender hereof by the Holder at such office or  agency  of
the  Company,  for  a  new  Warrant  Certificate  of  like  tenor
representing in the aggregate the right to purchase   the  number
of  shares  that  may be purchased hereunder, each  of  such  new
Warrant  Certificates  to represent the right  to  purchase  such
number  of  shares as shall be designated by such Holder  at  the
time  of such surrender.  Such Warrant Certificate shall  not  be
valid until duly executed by the Company.

      15.  Replacement of Warrant Certificates.  Upon receipt  of
evidence  reasonably  satisfactory to the Company  of  the  loss,
theft, destruction or mutilation of this Warrant Certificate and,
in the case of any such loss, theft or destruction, upon delivery
of  an  indemnity  bond (or, in the case of the  original  Holder
hereof  or  any substantial financial institution  to  which  any
Warrants   represented  by  this  Warrant  Certificate   may   be
transferred,   an   unsecured  indemnity  agreement)   reasonably
satisfactory in form and amount to the Company or, in the case of
any  such  mutilation,  upon surrender and cancellation  of  such
Warrant Certificate, the Company at its expense will execute  and
deliver,  in  lieu  thereof, a new Warrant  Certificate  of  like
tenor.  Such  Warrant Certificate shall not be valid  until  duly
executed by the Company.

      16.  Certificate Rights and Obligations Survive Exercise of
Warrants.   The  rights and obligations of the Company  contained
herein shall survive until the exercise of all of the Warrants or
the Expiration Date, whichever is earlier.

       17.    Notices.    All   notices,   requests   and   other
communications required or permitted to be given or delivered  to
the  Holders  of  Warrants  shall be in  writing,  and  shall  be
delivered or shall be sent by airmail, if overseas, certified  or
registered mail postage prepaid and addressed, to each Holder  at
the  address  shown on such Holder's Warrant certificate,  or  at
such other address as shall have been furnished to the Company by
notice  from  such  holder.   All  notices,  requests  and  other
communications required or permitted to be given or delivered  to
the Company shall be in writing, and shall be delivered, or shall
be  sent  by  certified or registered mail, postage  prepaid  and
addressed   to  the  office  of  the  Company,  (return   receipt
requested)  P.O.  Box  4296,  Manufacturer's  Road,  Chattanooga,
Tennessee  37405,  Attention: Treasurer, with  a  copy  to  Witt,
Gaither  &  Whitaker, P.C., 1100 American National Bank Building,
Chattanooga,  Tennessee 37402-2608, Attention:   John  F.  Henry,
Jr.,  Esquire,  or  at  such other address  as  shall  have  been
furnished to the Holders of Warrants by notice from the  Company.
Any  such notice, request or other communication may be  sent  by
telegram  or  telex,  but  shall in  such  case  be  subsequently
confirmed  by  a  writing  delivered  or  sent  by  certified  or
registered mail as provided above.   All notices shall be  deemed
to  have been given either at the time of the delivery thereof to
(or  the  receipt  by, in the case of a telegram  or  telex)  any
officer or employee of the person entitled to receive such notice
at  the  address of such person for purposes of this Section  17,
or,  if mailed, at the completion of the third full day following
the time of such mailing thereof to such address, as the case may
be.

      18.  Amendments.  Neither this Warrant Certificate nor  any
term  or  provision  may  be  changed,  waived,  discharged,   or
terminated orally, but only by an instrument in writing signed by
the  party  against  which enforcement  of  the  change,  waiver,
discharge  or termination is sought, provided that any change  or
waiver  of  any  term  or provision hereof, and  any  consent  or
direction given hereunder by the Holders may be effected  by  the
Holders  of  51%  in  interest of the Warrants originally  issued
pursuant to this Warrant Certificate on the Issuance Date, except
that no change or waiver that  would  (i)  increase the Exercise
Price of any  Warrant  or reduce  the  Aggregate Number, (ii)
change or waive  any  of  the provisions  of  Section  4 in
connection  with  the  registration rights of Holders of Warrants
or (iii) change or waive any of the provisions  of this Section
18 as to the requisite percentage of the  Holders  of the
Warrants required to effect  any  change  or wavier  of  any
provision of this Warrant Certificate,  shall  be effective as to
any Holder without the consent of such Holder.

     19.  Governing Law.  This Agreement shall be governed by and
construed  in accordance with the laws of the State of New  York,
without regard to principles of conflicts of laws thereunder.

      IN  WITNESS  WHEREOF, the Company has caused  this  Warrant
Certificate  to  be executed by its duly authorized  officer  and
this Warrant Certificate to be dated August 10, 1995.

                                   SIGNAL APPAREL COMPANY, INC.

                                   By /s/William H. Watts, CFO
                                     --------------------------


                           Schedule 1

                 EXERCISE FORM FOR CASH EXERCISE

[To  be  executed only upon exercise of Warrant with cash payment
of exercise price]

To:  SIGNAL APPAREL COMPANY, INC.

      The  undersigned irrevocably exercises ________________  of
the   Warrants  for  the  purchase  of  one  share  (subject   to
adjustment) of Common Stock, $.01 par value per share, of  SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the  within
Warrant  Certificate  and herewith makes  payment  of  $_________
(such payment being in cash or by check or bank draft in New York
Clearing  House  funds  payable to the order  of  Signal  Apparel
Company,  Inc., all at the exercise price and on  the  terms  and
conditions   specified   in  the  within   Warrant   Certificate,
surrenders  the within Warrant Certificate and all  right,  title
and  interest therein (except as to any unexercised Warrants)  to
Signal  Apparel  Company, Inc. and directs  that  the  shares  of
Common  Stock deliverable upon the exercise of such  Warrants  be
registered  or  placed in the name and at the  address  specified
below and delivered thereto.

Date:_______________________

                              ______________________________
                              (Signature of Owner)

                              ______________________________

                              ______________________________
                              (Address)
________________________
(1)  The  signature must correspond with the name as written upon
     the   face  of  the  within  Warrant  Certificate  in  every
     particular, without alteration or enlargement or any  change
     whatsoever.

Any   unexercised  Warrants  evidenced  by  the  within   Warrant
Certificate to be issued to:

Please insert social security or identifying number:

Name:

Address:

        EXERCISE FORM FOR EXERCISE WITH PREFERRED SHARES

[To  be  executed only upon exercise of Warrant with  payment  of
exercise price in shares of the Company's Preferred Stock]

To:  SIGNAL APPAREL COMPANY, INC.

      The  undersigned irrevocably exercises ________________  of
the   Warrants  for  the  purchase  of  one  share  (subject   to
adjustment) of Common Stock, $.01 par value per share, of  SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the  within
Warrant  Certificate  and herewith makes  payment  of  $_________
(such  payment  being made through surrender  of  shares  of  the
Preferred Stock of SIGNAL APPAREL COMPANY, INC., having a  stated
value equal to such amount plus all accrued but unpiad dividends)
all  at  the  exercise  price and on  the  terms  and  conditions
specified  in  the  within  Warrant Certificate,  surrenders  the
within  Warrant  Certificate and all right,  title  and  interest
therein (except as to any unexercised Warrants) to SIGNAL APPAREL
COMPANY,  INC.  and  directs  that the  shares  of  Common  Stock
deliverable  upon the exercise of such Warrants be registered  or
placed  in  the  name  and  at the address  specified  below  and
delivered thereto.

Date:_______________________



                              ______________________________
                              (Signature of Owner)

                              ______________________________


                              ______________________________
                              (Address)
________________________
(1)  The  signature must correspond with the name as written upon
     the   face  of  the  within  Warrant  Certificate  in  every
     particular, without alteration or enlargement or any  change
     whatsoever.

Any   unexercised  Warrants  evidenced  by  the  within   Warrant
Certificate to be issued to:

Please insert social security or identifying number:

Name:

Address:
                                
                                
      EXERCISE FORM FOR EXERCISE THROUGH DEBT CANCELLATION

[To  be  executed only upon exercise of Warrant with  payment  of
exercise price through cancellation of the Company's indebtedness
under the related Credit Agreement]

To:  SIGNAL APPAREL COMPANY, INC.

      The  undersigned irrevocably exercises ________________  of
the   Warrants  for  the  purchase  of  one  share  (subject   to
adjustment) of Common Stock, $.01 par value per share, of  SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the  within
Warrant  Certificate  and herewith makes  payment  of  $_________
(such  payment  being  made through extinguishment  of  an  equal
amount  of the principal debt due to the undersigned pursuant  to
that  certain Credit Agreement dated as of March ___, 1995  among
SIGNAL  APPAREL COMPANY, INC., WALSH GREENWOOD & CO. and  certain
subsidiaries  of  Signal  Apparel  Company,  Inc.),  all  at  the
exercise price and on the terms and conditions specified  in  the
within   Warrant  Certificate,  surrenders  the  within   Warrant
Certificate and all right, title and interest therein (except  as
to  any unexercised Warrants) to SIGNAL APPAREL COMPANY, INC. and
directs  that  the  shares of Common Stock deliverable  upon  the
exercise of such Warrants be registered or placed in the name and
at the address specified below and delivered thereto.

Date:_______________________
                              WALSH GREENWOOD & CO.

                              ______________________________
                              (Signature of Owner)

                              ______________________________

                              ______________________________
                              (Address)
________________________
(1)  The  signature must correspond with the name as written upon
     the   face  of  the  within  Warrant  Certificate  in  every
     particular, without alteration or enlargement or any  change
     whatsoever.

Any   unexercised  Warrants  evidenced  by  the  within   Warrant
Certificate to be issued to:

Please insert social security or identifying number:

Name:

Address:
                           Schedule 2



                        FORM OF TRANSFER


      FOR VALUE RECEIVED the undersigned registered Holder of the
within  Warrant  Certificate hereby transfers to the  Assignee(s)
named below the following number of Warrants:


Names of                                     Number of
Assignees           Address                  Warrants







Date:_______________________


                              ___________________________(1)
                              (Signature of Holder)


                              ______________________________



                              ______________________________
                              (Address)





________________________

(1)  The  signature must correspond with the name as written upon
     the   face  of  the  within  Warrant  Certificate  in  every
     particular, without alteration or enlargement or any  change
     whatsoever.