[SIGNAL]


                   BNY FINANCIAL CORPORATION
            AMENDED AND RESTATED FACTORING AGREEMENT

                                           As of October 31, 1997


SIGNAL APPAREL COMPANY, INC.
P.O. Box 4296
200A Manufacturers Road
Chattanooga,  TN 37405

      This  agreement amends, restates, replaces and  supersedes,
without  a  break in continuity, that certain Factoring Agreement
between  us  bearing the effective date May 23, 1991  ("Effective
Date")  as heretofore amended, supplemented or otherwise modified
("Existing  Factoring  Agreement), PROVIDED,  HOWEVER,  that  all
defaults  under the Existing Factoring Agreement as of  the  date
hereof  are  preserved  as provided in that  certain  Forbearance
Agreement  dated the date hereof among BNY Financial Corporation,
Signal   Apparel   Company,  Inc.  and  The  Shirt   Shed,   Inc.
("Forbearance Agreement").

     This agreement states the terms and conditions upon which we
will act as your sole factor.

     1.   COVERED SALES; SECURITY INTEREST

           (a)   You  hereby assign and sell to us,  as  absolute
owner,  and  we  hereby purchase from you, all "Receivables"  (as
hereinafter  defined), created before, on or after the  Effective
Date,  which  arose  or arise from your sale  of  merchandise  or
rendition of services.  Our purchase of and acquisition of  title
to  each  Receivable  will be effective as of  the  date  of  its
creation  and  will be entered on our books when you  furnish  us
with a copy of the respective invoice.

           (b)   You  hereby  grant to us a  continuing  security
interest  in  all  of  your present and  future  Receivables,  as
security for all "Obligations" (as hereinafter defined).

     2.   CUSTOMER CREDIT APPROVAL

      You  shall submit to us the principal terms of each of your
customers'  orders for our written credit approval.  We  may,  in
our  discretion,  approve in writing all or  a  portion  of  your
customers'  orders, either by establishing a credit line  limited
to a specific amount for a specific customer, or by approving all
or  a portion of a proposed purchase order submitted by you.   No
credit  approval shall be effective unless in writing and  unless
the  goods are shipped or the services rendered within  the  time
specified in our written credit approval or within 45 days  after
the approval is given, if no time is specified.  Upon the earlier
to occur of (i) the customer

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having  accepted  delivery of the goods  or  performance  of  the
services  or  (ii) the goods have been deposited by  you  with  a
common carrier for delivery to such customer on "f.o.b. point  of
origin"   terms,  we  shall  then  have  the  "Credit  Risk"   as
hereinafter  defined  (but not the risk of  non-payment  for  any
other  reason), to the extent of the dollar amount  specified  in
the  credit  approval, on all Receivables evidenced  by  invoices
which  arise  from  orders approved by us in writing  except  for
those  Receivables evidenced by invoices less  than  $150.00  and
invoices  evidencing  charges  for  samples  supplied   to   your
customers.  We shall have neither the Credit Risk nor the risk of
non-payment  for  any  other reason on Receivables  arising  from
orders not approved by us in writing.  We may withdraw our credit
approval  or withdraw or adjust a credit line at any time  before
the  earliest  to occur of (a) your delivery or  deposit  of  the
goods with a common carrier on "f.o.b. point of origin" terms, as
contemplated above, or (b) rendition of the services, as the case
may be.

     3.   PURCHASE PRICE OF RECEIVABLES

           (a)  The purchase price of Receivables is the net face
amount  thereof less our commission.  The term "net face  amount"
means  the  gross  face  amount of  the  invoice,  less  returns,
discounts  (which shall be determined by us where optional  terms
are  given),  anticipation reductions  or  any  other  unilateral
deductions  taken  by customers, and credits, and  allowances  to
customers  of any nature.  The purchase price will be payable  on
the  "Maturity Date" (hereinafter described).  At  the  close  of
each  month,  we  will  compute  the  average  due  date  of  all
Receivables  purchased by us during the month.  In computing  the
average due date we will take into account all credits issued  to
customers.   The Maturity Date for all such Receivables  will  be
five  (5)  business  days after the average  due  date.   We  may
deduct,  from  the  amount payable to you on any  Maturity  Date,
reserves for all Obligations then chargeable to your account  and
Obligations  which, in our sole judgment, may  be  chargeable  to
your account thereafter including, but not limited to, ineligible
Receivables, Receivables which are not credit approved, disputes,
deductions,  allowances, credits, bill and hold  and  consignment
sales,  other  offsets asserted or granted, ineligible  Inventory
and  such  additional  amounts as we in our  sole  judgment  deem
appropriate (collectively, "Reserves").

          (b)  Notwithstanding anything to the contrary contained
in  this  agreement, if, when you submit to  us  (for  our  prior
written  approval),  the amount, terms and  delivery  date  of  a
proposed sale of goods, (i) you identify such proposed sale  with
the  special number that we give you for this purpose,  and  (ii)
you  advise us in writing and if we concur that the order for the
goods  is a special order by the customer which will require  you
to  have  the  goods  manufactured according  to  the  customer's
specifications  and  that the goods cannot  be  sold  readily  to
buyers  other than such customer at a price reasonably  close  to
the  contract price for such goods (such goods being  hereinafter
referred  to  as  the "Special Goods"), and (iii)  our  approval,
having  been given by us, is thereafter withdrawn by us  pursuant
to   the   terms  hereof  after  the  Special  Goods  have   been
manufactured  but  prior to completion of your delivery  thereof,
then

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you  shall have the following options, provided that the  Special
Goods are available for delivery by you on or before the delivery
date  specified in our approval, free and clear of all liens  and
encumbrances:   (a)  you may complete your sale  of  the  Special
Goods  to the customer at your own risk; or (b) you may use  your
best  efforts promptly to re-sell the Special Goods, at the  best
price available, after first obtaining our written consent to any
such  re-sale (the "Re-sale").  If you proceed under option  (b),
we  shall, upon consummation of the Re-sale, or upon the original
invoice due date under the selling terms specified in the  credit
approval  (whichever is later), credit your account  with  a  sum
equal to the amount by which your "Standard Cost" for the Special
Goods  as  published by you and approved by us (hereinafter,  the
"Manufacturing  Cost") exceeds the proceeds of the  Re-sale.   We
may  at  our option elect to purchase the Special Goods from  you
for  a  purchase price equal to the Manufacturing Cost.  However,
our  obligation  hereunder, to you and  the  Other  Client  on  a
combined basis, shall not exceed $50,000 per annum.

           (c)  We shall not be obligated to pay you, or make any
Advances  or loans against, the purchase price of any  Receivable
which  arises out of your delivery of inventory to  any  of  your
licensors  for which you receive no consideration  other  than  a
credit toward your obligations to such licensor to advertise  the
products  which are the subject of such agreement, and  we  shall
not  be  entitled  to charge our commission on  such  Receivables
provided, however, that the gross face amount of such Receivables
(measured  by  the  amount  of  such  credit  against  your  said
advertising obligations) shall not exceed the aggregate amount of
$500,000 per annum.

           (d)  Until we notify you otherwise, you may retain the
proceeds  of  any sales made on the basis of cash  before  or  on
delivery.  In no event shall we be obligated to make any payments
(including,  but not limited to, Advances or loans)  against  any
such   transactions.   You  warrant  and  represent   that   such
transactions  will not exceed the aggregate amount of  $3,000,000
per annum for you and the Other Client, on a combined basis.

     4.   ADVANCES; INTEREST; COMMISSIONS; LATE PAYMENT CHARGES

           (a)   I.    If you request, we shall, subject  to  the
other  provisions of this agreement, make payments to you of  the
purchase  price  of Receivables in advance of the  Maturity  Date
("Advances")  and additional amounts, subject  to  our  right  to
withhold  Reserves.  All amounts, if any, which we  pay  or  make
available  to  you or for your account in excess of the  purchase
price  of Receivables are loans and shall be chargeable  to  your
account when paid or made available to you.  However, at no  time
shall the aggregate amount of then outstanding Obligations of you
and  the  Other  Client on a combined basis,  including  but  not
limited to Obligations under the $4,157,000 Promissory Note dated
July  29, 1994 and the $1,480,000 Promissory Note dated July  29,
1994,  each  by Signal Apparel Company, Inc. as maker  to  us  as
payee,  as  each  may  now  exist or may  hereafter  be  amended,
restated, replaced, substituted, extended, or otherwise  modified
(collectively, the "Notes"; outstanding Obligations under the

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Notes,  as the same may change from time to time, are hereinafter
called  collectively, the "Note Amounts") but  excluding  amounts
owing by you and the Other Client to any present or future client
of  ours  on  invoices  purchased  by  us  ("Ledger  Debt"),  and
including without limitation, all advances, other loans  and  all
other amounts charged or chargeable to your account and the Other
Client's account, exceed the Facility Amount (as defined herein),
subject in all respects to availability under the Borrowing  Base
(as  defined herein).  The Borrowing Base shall be calculated for
you and the Other Client on a combined basis.  Obligations of you
and the Other Client other than the Note Amounts and Ledger Debt,
as   such  Obligations  shall  change  from  time  to  time,  are
hereinafter  collectively called the "Revolver  Amount".   At  no
time  shall the Revolver Amount exceed the Borrowing Base, EXCEPT
THAT,  in our sole discretion, we may from time to time  at  your
request, permit the Revolver Amount to exceed the Borrowing  Base
by  an  amount  not to exceed the Special Overadvance  amount  in
effect from time to time, PROVIDED THAT, notwithstanding anything
to  the  contrary  contained  herein,  the  aggregate  amount  of
outstanding Obligations of you and the Other Client on a combined
basis,  shall  not  at any one time exceed the  Facility  Amount.
Furthermore, and without limiting your obligations or  our  other
rights,  you shall forthwith pay us the amount, if any, by  which
the Revolver Amount at any time and from time to time exceeds the
Borrowing Base.

                II.  The "Facility Amount" means, for you and the
Other Client, on a combined basis, the sum of $55,000,000.

                III. The "Borrowing Base" means, at any time  for
you  and the Other Client on a combined basis, the sum of (i) the
then "Applicable Percentage" (as hereinafter defined) of the  net
face   amount  of  then  outstanding  credit  approved  "Eligible
Receivables"  (as  hereinafter  defined)  plus,  to  the   extent
included in our sole and absolute discretion, the then Applicable
Percentage  of the net face amount of then outstanding non-credit
approved Receivables, less Reserves, plus (ii) the lesser of  (A)
$16,000,000  or  (B) 50% of "Eligible Inventory" (as  hereinafter
defined)  less  Reserves plus (iii) the amount of  cash  or  cash
equivalents satisfactory to us ("Pledged Amount") pledged  to  us
as   security  for  your  Obligations  on  terms  and  conditions
satisfactory  to  us, so long as (A) we hold the  Pledged  Amount
pursuant  to  said pledge, (B) said pledge and the  validity  and
enforceability thereof are not subject to attack by  any  entity,
(C)  the  pledgor is not in a bankruptcy proceeding, and (D)  the
pledgor is not in any other proceeding in which the pledge or its
validity  or  enforceability is the  subject  of  attack  by  any
entity.   However, we may at any time and from time to  time,  in
our  reasonable  discretion, increase  or  decrease  any  of  the
percentages    referred   to   in   the    preceding    sentence.
Notwithstanding  anything to the contrary contained  herein,  the
Borrowing  Base  shall  not  include,  without  limitation,   the
Applicable Percentage of the net face amount of outstanding  non-
credit  approved  Receivables owing by any account  debtor  where
fifty  (50%)  percent  or  more  of such  outstanding  non-credit
approved  Receivables owing by any such account debtor  are  more
than sixty (60) days past due.

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               IV.  "Applicable Percentage" means, subject to our
right to withhold Reserves, 85% except that said percentage shall
be  90%  after  the  expiry of two consecutive calendar  quarters
during  which less than 3% of all Receivables (measured by  gross
face  amount) becoming due during those quarters fail to be  paid
in  full in accordance with their terms; provided, however,  that
said  percentage  shall revert to 85% after the  passage  of  one
calendar  quarter  during  which 3% or more  of  all  Receivables
(measured  by  gross  face  amount)  becoming  due  during  those
quarters fail to be paid in full in accordance with their terms.

                V.   "Eligible Receivables" means each Receivable
arising  in  the ordinary course of your business and  the  Other
Client's  business  and  which we, in our sole  credit  judgment,
shall   deem  to  be  an  Eligible  Receivable,  based  on   such
considerations as we may from time to time deem appropriate.   In
general,  a  Receivable shall not be deemed eligible unless  such
Receivable is subject to our perfected security interest  and  no
other  lien  and is evidenced by an invoice or other  documentary
evidence satisfactory to us.  In addition, no Receivable shall be
an Eligible Receivable if:

                     (a)  it arises out of a sale made by you  or
the  Other  Client  to  an affiliate of yours  or  to  an  entity
controlled by an affiliate of yours or the Other Client's;

                    (b)  it is not credit approved by us;

                     (c)   fifty  (50%) percent or  more  of  the
Receivables  from  the  account debtor are  not  deemed  Eligible
Receivables   hereunder;  such  percentage  may,  in   our   sole
discretion, be increased or decreased from time to time;

                    (d)  any covenant, representation or warranty
contained  in this Agreement with respect to such Receivable  has
been breached;

                    (e)  the account debtor is also your creditor
or supplier or a creditor or supplier of the Other Client, or the
account debtor has disputed liability, or the account debtor  has
made any claim with respect to any other Receivable due from such
account  debtor  to  you or the Other Client, or  the  Receivable
otherwise is or may become subject to any right of setoff by  the
account debtor;

                     (f)   the  account debtor  has  commenced  a
voluntary  case  under  the  federal  bankruptcy  laws,  as   now
constituted or hereafter amended, or made an assignment  for  the
benefit of creditors, or if a decree or order for relief has been
entered by a court having jurisdiction in the premises in respect
of  the account debtor in an involuntary case under any state  or
federal bankruptcy laws, as now constituted or hereafter amended,
or  if  any other petition or other application for relief  under
any  state  or federal bankruptcy law has been filed against  the
account  debtor,  or if the account debtor has failed,  suspended
business, ceased to be

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solvent,  called a meeting of its creditors, or consented  to  or
suffered  a  receiver, trustee, liquidator  or  custodian  to  be
appointed  for  it  or for all or a significant  portion  of  its
assets or affairs;

                    (g)  the sale is to an account debtor outside
the  continental United States, unless the sale is on  letter  of
credit, guaranty or acceptance terms, in each case acceptable  to
us in our sole discretion;

                     (h)  the sale to the account debtor is on  a
bill-and-hold,   guaranteed  sale,  sale-and  return,   sale   on
approval, consignment or any other repurchase or return basis  or
is evidenced by chattel paper;

                     (i)  the account debtor is the United States
of   America,   any   state   or  any   department,   agency   or
instrumentality or any of them, unless you assign your  right  to
payment  of  such Receivable to us pursuant to the Assignment  of
Claims  Act  of  1940, as amended (31 U.S.C. sub-Section  203  ET
SEQ.)  or  have otherwise complied with other applicable statutes
or ordinances;

                     (j)   (i)  the  goods giving  rise  to  such
Receivable have not been shipped and delivered to and accepted by
the  account  debtor  or  (ii) the  goods  giving  rise  to  such
Receivable  have  not been deposited with a  common  carrier  for
delivery to the account debtor on "f.o.b. point of origin terms";
or  (iii)  the services giving rise to such receivable  have  not
been  performed  by you or the Other Client and accepted  by  the
account  debtor  or  (iv)  the  Receivable  otherwise  does   not
represent a final sale;

                     (k)   the Receivables of the account  debtor
exceed a credit limit determined by us in our sole discretion, to
the extent such Receivable exceeds such limit;

                    (l)  the Receivable is subject to any offset,
deduction, defense, dispute, or counterclaim or if the Receivable
is contingent in any respect or for any reason;

                     (m)   you or the Other Client have made  any
agreement  with  any account debtor for any deduction  therefrom,
except for discounts or allowances made in the ordinary course of
business for prompt payment, all of which discounts or allowances
are  reflected  in  the calculation of the  face  value  of  each
respective invoice related thereto;

                    (n)  any return, rejection or repossession of
the merchandise has occurred;

                    (o)  such Receivable is not payable to you or
the Other Client;

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                      (p)    such  Receivable  is  not  otherwise
satisfactory  to  us as determined in good faith  by  us  in  the
exercise of our discretion in a reasonable manner; or

                     (q)  more than one hundred-twenty (120) days
have elapsed after the date of the invoice.

                VI.  "Special Overadvance" means, for you and the
Other Client, on a combined basis, an amount determined by us  in
our  sole  discretion, which amount shall not exceed at  any  one
time outstanding, the aggregate sum of $15,000,000.

                VII.  "Eligible Inventory" means for you and  the
Other Client on a combined basis, T-Shirt and fleece blanks which
are then work-in-process and finished goods (other than inventory
in  retail stores) located in the U.S.A., valued at the lower  of
cost  or market value, determined on a first-in first-out  basis,
(it  being  understood that with respect to finished goods,  cost
shall mean your "Standard Cost" as published by you from time  to
time  subject  to  our approval thereof) which  is  not,  in  our
opinion,  obsolete,  slow  moving, in unacceptable  condition  or
unmerchantable or merchantable only at a price less than cost and
which  we,  in  our  sole discretion, shall not  deem  ineligible
inventory,  based on such considerations as we may from  time  to
time deem appropriate including, without limitation, whether  the
inventory  is  subject  to a perfected, first  priority  security
interest in favor of us and whether the inventory conforms to all
standards  imposed  by  any  governmental  agency,  division   or
department thereof which has regulatory authority over such goods
or  the use or sale thereof.  Without limiting the foregoing,  so
long as you are in default under any licensing agreement relating
to any inventory, or so long as the licensor thereunder shall not
have  entered into an agreement in form and substance  acceptable
to  us  relating  to such inventory and our rights  therein,  the
respective  inventory may, in our sole discretion, be ineligible.
Our  making  loans to you related to the value of such  inventory
despite its ineligibility shall not be deemed a waiver of any  of
our rights to deem such inventory ineligible at any time or times
before  or  after  December  31,  1997  (the  date  specified  in
paragraph 11(c) hereof), or your obligation hereunder to  pay  us
forthwith  the  amount  by  which outstanding  Obligations  shall
exceed the Borrowing Base as a result of such ineligibility.

           (b)  For our services, we shall charge to your account
and  the  Other  Client's account, on a combined  basis,  without
duplication:

                (i)   monthly, as of the last day of each  month,
interest  on the average daily balance of all Advances (which  do
not  include the Note Amounts) and amounts charged and chargeable
to  your  account hereunder (said Advances, loans, which  do  not
include  the  Note Amounts, and amounts being herein collectively
called  "Interest  Bearing Obligations") which  are   outstanding
during  such month at a rate per annum which exceeds the  average
"Alternate  Base Rate" (as hereinafter defined) in effect  during
such month by the then "Applicable Margin" (as

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hereinafter defined); provided, however, that said interest  rate
shall not be less than six percent (6%) per annum and shall in no
event be higher than the highest rate permitted by New York  law.
"Alternate Base Rate" shall mean, for any day, a rate  per  annum
equal  to the higher of (i) the Prime Rate in effect on such  day
and (ii) the Federal Funds Rate in effect on such day plus 1/2 of
1%.  "Prime Rate" shall mean the prime commercial lending rate of
the  "Bank"  as publicly announced to be in effect from  time  to
time, such rate to be adjusted automatically, without notice,  on
the effective date of any change in such rate.  "Bank" shall mean
The  Bank of New York, New York, New York.  "Federal Funds  Rate"
shall  mean,  for any day, the weighted average of the  rates  on
overnight Federal funds transactions with members of the  Federal
Reserve  System arranged by Federal funds brokers,  as  published
for  such day (or if such day is not a business day, for the next
preceding business day) by the Federal Reserve Bank of New  York,
or  if  such  rate is not so published for any  day  which  is  a
business  day,  the average of quotations for such  day  on  such
transactions  received  by  the Bank  from  three  Federal  funds
brokers  of  recognized standing selected by the Bank.   Interest
shall  be  calculated on the basis of the actual number  of  days
elapsed over a year of 360 days.  "Applicable Margin" shall  mean
one  and  one-quarter percent (1 1/4%); provided, however, that  for
each  period during which the Revolver Amount does not exceed  an
amount  equal  to  85%  of  the  net  face  amount  of  the  then
outstanding Eligible Receivables, plus (i) an amount equal to 25%
of  the  then Eligible Inventory, the Applicable Margin shall  be
one  (1%) percent, or (ii) an amount greater than 25% of the then
Eligible  Inventory,  but  less than 36%  of  the  then  Eligible
Inventory,  the  Applicable Margin shall be  one  and  one-eighth
(1_%)  percent,  provided further that, if the  Interest  Bearing
Obligations  and  amounts  due under  letters  of  credit  issued
pursuant  to  the Letter of Credit Supplement outstanding  for  a
period  of five (5) or more days in any month during the  Initial
Term, including any Renewal Term, exceed the sum of the Borrowing
Base  less  Reserves  (such excess, an  "Overadvance")  plus  the
amount  of  the Special Overadvance, on such days, the Applicable
Margin  pertaining to all Interest Bearing Obligations  shall  be
increased  by  one  half  of  one (1/2%)  percent.   Furthermore,
"Applicable  Margin" shall mean three and three-quarters  percent
(3  3/4%)  with  respect to all Obligations  not  paid  when  due
hereunder so long as they remain unpaid.

                (ii) monthly, as of the 15th day of each month, a
commission  at  the  rate of sixty-five  one  hundredths  of  one
percent   (.65%)  of  the  gross  face  amount  of  each  invoice
evidencing a Receivable purchased hereunder during such month  on
terms   not  exceeding  90  days  (including  dating),  plus   an
additional  one-quarter of one percent (1/4%) for each additional
thirty  (30)  days  or  portion thereof of  selling  terms.   Our
commission  on  any  invoice evidencing  a  receivable  purchased
hereunder  shall  not  be  less  than  $4.50.   Furthermore,  the
aggregate amount of Receivables with respect to which you and the
Other  Client,  on  a  combined  basis,  are  obligated  to   pay
commissions and which you sell and assign to us ("Volume")  shall
not  be less than $40,000,000 ("Minimum") per Contract Year (each
successive period of twelve consecutive months the first of which
periods  shall  start on the Effective Date)  during  which  this
agreement  is in effect, EXCEPT THAT, (y) for the first  Contract
Year, the Minimum shall be $30,000,000 and

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(z)   for  the  second  Contract  Year,  the  Minimum  shall   be
$35,000,000.  If the Volume in any Contract Year is less than the
Minimum, we shall charge to your account the difference ("Minimum
Volume  Charge")  between the commission on the Minimum  and  the
commission on the Volume for the Contract Year.  We shall compute
the  Minimum Volume Charge, if any, on a calendar quarterly basis
and  charge your account and the Other Client's account  therefor
for  each calendar quarter in the month following the end of such
calendar quarter, or in the month following the effective date of
termination of this agreement, whichever is earlier.  If  you  do
not  meet  the  Minimum  Volume with respect  to  any  particular
calendar  quarter period within a Contract Year and you therefore
pay  to  us  a  yearly Minimum Volume Charge for such  particular
calendar  quarter  period and in the subsequent calendar  quarter
period  in the same Contract Year, your Minimum Volume for  which
commissions have been paid by you to us under this agreement then
exceeds  the  Minimum  applicable  to  such  subsequent  calendar
quarter   period,  by  reason  of  such  Minimum  Volume   Charge
previously paid, you shall then be entitled to receive  a  rebate
from  us  to  your account, to the extent of the lesser  of  such
excess or the Minimum Volume Charges previously paid to us in any
such  prior  calendar quarter period of the same  Contract  Year.
Similarly, if for any calendar quarter period within a particular
Contract  Year,  the commissions paid to us under this  agreement
exceed the Minimum applicable to such calendar quarter period and
in any subsequent calendar quarter period we otherwise would have
been entitled to receive and you would have been responsible  for
paying  to  us  any  Minimum  Volume Charge  applicable  to  such
subsequent calendar quarter period, in calculating the amount  of
such  Minimum  Volume Charge payable in such subsequent  calendar
quarter period you shall be entitled to a credit against the same
to  the extent of the lesser of such excess or the Minimum Volume
Charge that would otherwise then have been due from you to us  in
relation  to such subsequent calendar quarter period  within  the
same  Contract  Year.  Except however to the extent  specifically
set  forth above, nothing contained herein is or shall be  deemed
to  change,  limit  or otherwise adversely affect  our  right  to
charge  and  receive and your obligation to pay to us commissions
and/or  any  Minimum Volume Charges payable with respect  to  any
Contract Year or part thereof during which this agreement remains
in  effect, or to entitle you to receive any rebate and/or credit
with   respect  to  any  commissions  payable  to  us  hereunder.
Notwithstanding  the  foregoing, should  the  Volume  during  any
Contract Year or part thereof during which this agreement remains
in   effect,  exceed  the  Minimum  applicable  thereto,  nothing
contained  herein shall entitle you to receive any rebate  and/or
credit other than strictly as provided for above.  However, if an
Event  of Default occurs, and if we so elect, and whether or  not
we  then  or thereafter exercise any of our rights of termination
hereunder  (including  but  not  limited  to  our  rights   under
Paragraph  9(a)(ii)),  we  may  on  or  at  any  time  after  the
occurrence  of  such  Event of Default compute  and  charge  your
account for the Minimum Volume Charge for the period starting  on
such  occurrence and ending on the next date as of which you  may
terminate  this agreement under Paragraph 9(a)(i), and,  for  the
purpose  only  of computing such Minimum Volume  Charge,  we  may
assume that your Volume for the period will be zero, subject,  of
course,  to subsequent adjustment if such Volume in fact is  more
than zero.

                                - 9 -

<PAGE>

               (iii)     all bank charges for wire transfers.

                (iv)  quarterly, as of the 15th day of the  month
next  occurring after the end of each of your fiscal quarters,  a
fee  at  the  rate of one quarter of one percent (1/4%) per  annum,
calculated  and payable quarterly, on the difference between  the
Facility  Amount and the sum of (x) average outstanding  Revolver
Amount during such quarter, and (y) the average outstanding  Note
Amounts during such quarter.

                (v)   Customer late payment charges, not paid  by
the customer, but only if the charge exceeds five ($5.00) dollars
and  the payment is five (5) business days or more past due, said
charges  are  to be computed at the rate specified  in  paragraph
4(b)(i)  of  this  Agreement  (subject  to  change  as  indicated
therein).

     5.   MATURED FUNDS

      On the last day of each month, we shall credit your account
with  interest  at the Matured Funds Rate in effect  during  such
month  on  the  average daily balance during such  month  of  any
amounts payable by us to you or the Other Client, as the case may
be,  hereunder (as confirmed by us by appropriate credit to  your
account  with us or the Other Client's account, as the  case  may
be)  which are not drawn by you on the Maturity Date, while  held
by  us after the Maturity Date.  "Matured Funds Rate" shall  mean
the  rate of interest, announced by us from time to time, as  the
rate  applicable  to  matured funds, such  rate  to  be  adjusted
automatically on the effective date of any change  in  such  rate
announced by us.

     6.   CHARGES; BALANCES; RESERVES

      We may charge to your account all Obligations.  Recourse to
security  will not be required at any time.  All credit  balances
or  other  sums  at  any time standing to  your  credit  and  all
Reserves on our books, and all of your property in our possession
at  any  time  or in the possession of any parent,  affiliate  or
subsidiary  of ours or on or in which we or any of  them  have  a
lien  or  security interest, may be held and reserved  by  us  as
security for all Obligations.  We will account to you monthly and
each  monthly accounting statement will be fully binding  on  you
and will constitute an account stated, unless, within thirty (30)
days  after such statement is mailed to you or within thirty (30)
days after the mailing of any adjustment thereof we may make, you
give us specific written notice of exceptions.

      7.    REPRESENTATIONS  AND WARRANTIES;  DISPUTES;  RETURNS;
CHARGEBACKS

          (a)  You warrant and represent that you have good title
to  the  Receivables free of any encumbrance except in our favor;
each Receivable purchased hereunder is a bona fide,

                                - 10 -

<PAGE>

enforceable obligation created by the absolute sale and  delivery
of  goods  (including, without limitation, the deposit  of  goods
with  a common carrier as contemplated in Paragraph 2 hereof)  or
the  rendition  of services in the ordinary course  of  business;
when   you  assign  each  Receivable  to  us  your  customer   is
unconditionally obligated to pay at maturity the full  amount  of
each Receivable purchased hereunder without defense, counterclaim
or offset, real or alleged; all documents in connection therewith
are  genuine;  and  when you assign each  Receivable  to  us  the
customer  will accept the goods or services without alleging  any
defense,  counterclaim, offset, dispute or  other  claim  whether
arising from or relating to the sale of such goods or services or
arising  from or relating to any other transaction or  occurrence
(a "Dispute").

           (b)   You further represent and warrant that (i)  your
address  set forth above is that of your chief place of  business
and  chief  executive office and the location of all "Collateral"
(as  hereinafter defined) and of your books and records  relating
to the Receivables; (ii) by a separate writing you have disclosed
to  us  the locations of all of your other places of business  as
well as all trade names or styles, trademarks, divisions or other
names  under which you conduct business (hereinafter collectively
defined  as  the "Trade Names"); and (iii) except after  30  days
prior  written notice to us of your intention to do so, you  will
not  make any change in your name or corporate structure (whether
by  merger,  reorganization or otherwise) or sell or acquire  any
assets  except in the ordinary course of your business, nor  make
any change which would have the effect of rendering inaccurate or
incomplete  the  representations contained in  this  subparagraph
(b).   If you make or propose to make any changes referred to  in
the immediately preceding subdivision (iii), we may, before or at
any  time  after  such  change occurs, terminate  this  agreement
effective  immediately  by  giving you  written  notice  of  such
termination.

           (c)   You  shall  promptly provide us  with  duplicate
originals  of  all credits which you issue to your customers  and
immediately  notify  us of any merchandise returns  or  Disputes.
You  will  settle all Disputes at no cost or expense to  us;  our
practice is to allow you a reasonable time to do so.  If  you  so
request,  provided  no  Event  of Default  has  occurred  and  is
continuing,  you  may  enforce your rights against  any  of  your
customers on any Receivable which is subject to a Dispute  if  we
have   charged  your  account  for  such  Receivable.   We   will
reasonably  cooperate with you in such enforcement  but  at  your
sole cost and expense.  However, the settlement of any such claim
shall be subject to our prior written approval.  Furthermore, all
proceeds  of such enforcement shall be promptly delivered  to  us
for  credit to your account.  Should we so elect, we may  at  any
time  in  our  discretion (i) withdraw your  authority  to  issue
credits to your customers without our prior written consent; (ii)
litigate  Disputes or settle them directly with the customers  on
terms  acceptable  to  us;  or (iii) direct  you  to  set  aside,
identify as our property and procure insurance satisfactory to us
on  any returned or repossessed merchandise or other goods  which
by  sale  resulted  in  Receivables theretofore  assigned  to  us
("Retained  Goods").   All  Retained  Goods  (and  the   proceeds
thereof)  shall  be  (A)  held by you in  trust  for  us  as  our
property; and (B) subject to a security interest in our favor  as
security  for  the  Obligations; and  (C)  disposed  of  only  in
accordance with our express written instructions.

                                - 11 -

<PAGE>

           (d)   Our  Credit Risk, if any, on a Receivable  shall
immediately terminate without any action on our part in the event
that (i) your customer asserts a Dispute (regardless of merit) as
a ground for non-payment of the Receivable or returns or attempts
to  return the goods represented thereby; or (ii) any warranty as
to  the Receivable is breached.  We may charge to your account at
any  time  the  gross  face  amount of any  Receivable  purchased
hereunder (or portion thereof) on which we do not then  have  the
Credit Risk, whether or not we had the Credit Risk before we make
such charge, together with interest thereon from the due date  of
such  Receivable to the date of chargeback; such  action  on  our
part  shall  not be deemed a reassignment of such Receivable  and
will  not impair our rights thereto or security interest therein,
which  will  continue to be effective until all  Obligations  are
fully satisfied.

           (e)   YOU  WARRANT THAT YOU WILL NOT GRANT A  SECURITY
INTEREST  IN ANY OF YOUR RECEIVABLES OR IN ANY OF YOUR  INVENTORY
TO ANYONE EXCEPT US WITHOUT OUR PRIOR WRITTEN CONSENT.

           (f)   You warrant and represent  that you are now  and
will at all times hereafter be and remain in compliance with  all
laws,  rules  and  regulations of all federal,  state  and  local
governmental  agencies  having jurisdiction,  including  but  not
limited  to those relating to environmental protection (including
EPA) and employees (including ERISA, FLSA and PBGC).

           (g)  You warrant and represent that (x) you are not  a
party  to  any  litigation or proceeding the adverse  outcome  of
which could have a material adverse effect on your business,  and
(y)  the only litigation and proceedings to which your are  party
as set forth on Exhibit A hereto.

           (h)   You  may sell equipment which in your reasonable
opinion is obsolete, but no such sale shall be for less than  the
reasonable value of such equipment.  You agree not to make during
any  calendar  year any such sales of equipment,  the  receivable
value  of  which  exceeds $50,000 per sale  or  $500,000  in  the
aggregate, without our prior written consent.  You will  promptly
deliver  the proceeds of such sales to us for application against
installments  of the $4,157,000 Promissory Note  dated  July  29,
1994  by Signal Apparel Company, Inc., as maker, to us as  payee,
as  hereafter  amended  or  supplemented,  in  inverse  order  of
maturity.

     8.   INVOICING; PAYMENTS; RETURNS

      Each  of your invoices and all copies thereof shall bear  a
notice  (in  form  satisfactory to us) that it is  owned  by  and
payable  directly and only to us at locations designated  by  us,
and  you  shall  furnish  us  with duplicate  originals  of  your
invoices accompanied by a confirmatory assignment thereof.   Your
failure  to furnish such specific assignments shall not  diminish
our  rights.   You  shall procure and hold in trust  for  us  and
furnish  to  us  at  our request satisfactory  evidence  of  each
shipment  and  delivery or rendition of services.   Each  invoice
shall bear the

                                - 12 -

<PAGE>

terms stated on the customer's order, as submitted to us, whether
or  not the order has been approved by us, and no change from the
original  terms  of  the order shall be made  without  our  prior
written  consent.  Any such change not so approved  by  us  shall
automatically  terminate  our  Credit  Risk,  if  any,   on   the
Receivable arising from your performance of the order.  You  will
hold in trust for us and deliver to us any payments received from
your  customers  in  the  form received, and  hereby  irrevocably
authorize  us to endorse your name on all checks and other  forms
of  payment.   Each  payment made by a customer  shall  first  be
applied to Receivables, if any, on which we have the Credit Risk,
and  the  balance, if any, of such payment shall  be  applied  to
other Receivables due from such customer.  You understand that we
shall  not be liable for any selling expenses, orders, purchases,
contracts  or  taxes  of  any kind resulting  from  any  of  your
transactions, and you agree to indemnify us and hold us  harmless
with  respect thereto, which indemnity shall survive  termination
of this agreement.

     9.   TERMINATION

           (a)   This  agreement shall remain in full  force  and
effect  until the expiration of the Term unless sooner terminated
as set forth below.  The Term shall be automatically extended for
successive  periods  of one year each unless either  party  shall
have  provided  the other with written notice of termination  (by
Certified  Mail,  Return Receipt Requested) not less  than  sixty
(60)  days  prior to and effective on expiration of  the  Initial
Term or any Renewal Term.

               (i)  You may terminate this agreement effective at
any time by giving written notice of termination to us sixty (60)
days  prior to the effective date of such termination,  and  upon
payment  in  full of all Obligations, including, but not  limited
to, the Minimum Volume Charge for the Contract Year in which such
termination occurs, as well as any Contract Year remaining in the
Initial Term or any Renewal Term (as the case may be), and we may
terminate  this agreement effective as of March 31, 2000  or  any
time thereafter, by giving you written notice of termination  not
less  than  sixty  (60)  days prior  to  the  effective  date  of
termination.  You and we each acknowledge and agree that  you  or
we may exercise the right to terminate under this subdivision (i)
even  if the other party is not in breach of or in default  under
this agreement.

                (ii) If you shall suspend business, sell all or a
significant portion of your assets, become insolvent or unable to
pay  debts as they mature, make an assignment for the benefit  of
creditors,  or  apply for an extension from creditors;  or  if  a
meeting  of your creditors is called; or if a Receiver or Trustee
shall  be appointed for you or your property; or if your property
shall  become subject to any lien or attachment; or if a petition
under  the  Federal Bankruptcy Code shall be filed by or  against
you;  or  if you shall seek relief under any insolvency  statute,
federal, state or other; or if a custodian shall be appointed for
all  or  substantially all of your property; or if any  agreement
between  ourselves and any of your existing or future  parent  or
wholly  owned  subsidiaries including,  without  limitation,  the
Other  Client  (collectively,  the  "Related  Concerns")  or  any
instrument now or hereafter held by us or

                                - 13 -

<PAGE>

to  our  order  and  made by you or any of such Related  Concerns
shall  be  breached  by any of such Related Concerns  or  if  any
Related  Concerns  shall  be in default  thereunder;  or  if  any
separate  factoring agreement between ourselves and  any  of  the
Related Concerns is terminated, for any reason whatsoever, or any
event  or  circumstance exists which would permit us to terminate
any such factoring agreement in accordance with its terms; or  if
you  shall  breach this agreement or any other agreement  between
us;  or if you are or become in default under this agreement,  or
if  any  warranty, or representation hereunder or any portion  of
the contents of any document heretofore or hereafter furnished in
connection with this agreement is or becomes untrue or misleading
(except  for  future  performance against projections  heretofore
furnished to us); or if you shall fail to pay any Obligation when
due;  or  if any guaranty of the Obligations shall be terminated;
then  in any such event, we may terminate this agreement  at  any
time  without  notice,  and  this agreement  shall  automatically
terminate  in  the  event of a filing of  a  petition  under  the
Federal Bankruptcy Code by or against you; or

               (iii)     If this agreement is terminated pursuant
to paragraph 7 (b) above.

            (b)   On  the  effective  date  of  termination   all
Obligations  (including, without limitation, any Overadvance  and
any Special Overadvance) shall become immediately due and payable
in  full  without further notice or demand and we shall  have  no
further  obligation to provide any Advances or  loans  hereunder.
Our rights with respect to Obligations owing to us, or chargeable
to  your  account,  arising  out  of  transactions  having  their
inception prior to the effective date of termination, will not be
affected by termination.  Without limiting the foregoing, all  of
our   security  interests  and  other  rights  in  and   to   all
Receivables,   whether  then  existing  or   arising   thereafter
(including  assignments  and remittance  of  payments),  Retained
Goods,  credit balances, and any other property in our possession
or  the possession of any parent, affiliate or subsidiary of ours
and  any  other security for the Obligations (including  but  not
limited to inventory and machinery and equipment), whether coming
into  existence  or into our or their possession  before,  on  or
after  the effective date of termination and all proceeds thereof
(collectively "Collateral") shall continue to be operative  until
such  Obligations  have been fully and finally satisfied  or  you
have furnished us an indemnity from an indemnitor satisfactory to
us.

           (c)   If  you  terminate  this agreement  pursuant  to
paragraph  9 (a)(i), effective as of any date prior to March  31,
2000,  or  if  you  cease for a period of  thirty  (30)  or  more
consecutive  calendar days prior to March  31,  2000  to  request
Advances  or  loans from us, or if this agreement  is  terminated
pursuant to paragraph 9(a)(ii) or (iii), or if we suspend  making
Advances, loans or any other extensions of credit to you pursuant
to  Paragraph 9(d) of this agreement, then, in any such case,  in
addition  to  your  other Obligations, you will  pay  us  on  the
effective  date of termination, cessation or suspension,  as  the
case  may  be,  an "Early Termination Fee" in the amount  of  (x)
$500,000  if  the  effective  date of termination,  cessation  or
suspension  occurs during the period from April 1,  1997  through
and including March 31, 1998; (y)

                                - 14 -

<PAGE>

$300,000  if  the  effective  date of termination,  cessation  or
suspension  occurs during the period from April 1,  1998  through
and  including  March 31, 1999; or (z) $200,000 if the  effective
date  of  termination, cessation or suspension occurs during  the
period  from April 1, 1999 through and including March 31,  2000;
provided,  however,  that  the aforesaid  Early  Termination  Fee
applicable to your termination under Paragraph 9(a)(i)  shall  be
reduced by fifty (50%) percent if such termination occurs  on  or
before  the  effective date of any sale of substantially  all  of
your assets to any entity which or who is not affiliated with you
in any way and if such termination occurs in connection with such
sale.

           (d)   If  any  of  the events specified  in  paragraph
9(a)(ii)  hereof occurs, we may, if we so elect, in  addition  to
our   other  rights,  suspend  indefinitely  the  making  of  any
additional Advances or loans to you, and/or reduce the  Borrowing
Base  in  a manner and in amounts in our sole discretion, without
at  the  same  time  terminating this agreement.   However,  such
suspension  shall not be a waiver of or otherwise deprive  us  of
any  of our other rights, including but not limited to the  right
at any time to terminate this agreement because of the occurrence
of  such event or any other event, or the right to terminate this
agreement  pursuant to paragraph 9 (a)(i) hereof,  all  of  which
rights  are now hereby, and then shall be automatically, reserved
without any other action on our part.

       10.    DEFINITIONS:  "RECEIVABLES;"  "OBLIGATIONS;"  OTHER
CLIENT;"  "CREDIT RISK;" "INITIAL TERM"; "RENEWAL TERM";  "TERM";
"LETTER OF CREDIT SUPPLEMENT;

     As used herein

           (a)  "RECEIVABLES" means all amounts and all forms  of
obligations  now  or  hereafter owing to you (including  but  not
limited to accounts, instruments, contract rights, documents  and
chattel paper) and general intangibles; all security therefor and
guaranties  thereof; all of your rights as an  unpaid  seller  of
goods  and  your  rights to goods sold which may  be  represented
thereby (including but not limited to your rights of replevin and
stoppage  in  transit); all of your books  of  account,  records,
files,   and   documents  relating  thereto  and  the   equipment
containing said books, records, files and documents; all of  your
rights  under  insurance policies relating to the foregoing;  the
right  to use the Trade Names in connection with our rights  with
respect to the goods; and all proceeds of the foregoing.

           (b)   "OBLIGATIONS" means all amounts  of  any  nature
whatsoever, direct or indirect, absolute or contingent, due or to
become  due, arising or incurred heretofore or hereafter, arising
under this or any other agreement or by operation of law, now  or
hereafter  owing  by  you to us or to any parent,  subsidiary  or
affiliate of ours.  Said amounts include, but are not limited to,
loans, debts and liabilities heretofore or hereafter acquired  by
purchase  or assignment from other present or future  clients  of
ours, or through participation.  Without

                                - 15 -

<PAGE>

limiting the foregoing, Obligations shall include Advances, loans
(including  but  not  limited to the Note Amounts),  amounts  due
under  letters  of  credit,  interest, commission,  bank  related
charges,  costs,  fees, expenses, taxes, and all Receivables  and
other amounts charged or chargeable to your account hereunder.

           (c)  "OTHER CLIENT" means The Shirt Shed, Inc. and its
successors  and  assigns,  as  permitted  by  us  in   our   sole
discretion.

           (d)   "CREDIT  RISK" means the risk of loss  resulting
solely  and  exclusively  from the financial  inability  of  your
customer to pay at maturity a Receivable purchased hereunder.

           (e)   "INITIAL TERM" means the Effective Date  through
March 31, 2000.

           (f)   "RENEWAL TERM" means each annual renewal of this
agreement after the Initial Term.

           (g)  "TERM" means the Effective Date through March 31,
2000  and  each  annual  renewal of  this  agreement  thereafter,
subject  to  acceleration  upon the occurrence  of  an  Event  of
Default or other termination hereunder.

           (h)  "LETTER OF CREDIT SUPPLEMENT" means the Letter of
Credit  Financing Supplement to Factoring Agreement dated January
31, 1992 between us and Signal Apparel Company, Inc., as the same
may be hereafter amended, supplemented or otherwise modified.

      11.   COVENANTS.   You covenant and agree that,  until  the
later of the termination of this Agreement or the satisfaction in
full of all of the Obligations

          (a)  you and the Other Client will not

                (i)   permit  any of your or the  Other  Client's
property  (including  but not limited to Receivables,  inventory,
machinery,  equipment,  furniture,  fixtures,  plant,  and   real
estate)  to  be encumbered by any security interest, encumbrance,
mortgage,  or other lien of any nature whatsoever except  (x)  in
favor  of  us  or  (y)  pursuant  to  a  subordination  agreement
acceptable to us in our sole and absolute discretion, executed in
our favor.

                (ii)  permit your and the Other Client's Tangible
Net  Worth  (equity  plus subordinated debt  minus  goodwill  and
intangible  assets), on a combined basis, to  be  less  than  the
following amounts on the dates indicated;

                           AS AT       AMOUNT

                                - 16 -

<PAGE>

                    (a)  09/30/97       ($51,400,000)
                         12/31/97       ( 54,800,000)
                         03/31/98       ( 56,100,000)
                         06/30/98       ( 57,350,000)
                         09/30/98       ( 58,600,000)
                         12/31/98       ( 59,850,000)
                         03/31/99       ( 60,000,000)
                         06/30/99       ( 60,000,000)
                         09/30/99       ( 60,000,000)
                         12/31/99       ( 60,000,000)
                         03/31/00       ( 60,000,000)

                PLUS  (b)   an  amount equal to sixty-five  (65%)
percent  of  the  aggregate  amount of any  capital  contribution
and/or  equity  infusion  into  or any  other  additional  equity
hereafter  derived  from any source by you or the  Other  Client,
excluding the conversion of any subordinated debt existing on the
date hereof into equity of you or the Other Client.

                          Intangible  assets  include  write-ups,
unamortized  debt  discount  and  expense,  unamortized  deferred
charges,  patents, licenses, R&D expenses, and  other  intangible
items.

                (iii)      permit  your  and the  Other  Client's
Working  Capital (the amount by which your current assets  exceed
your  current liabilities) to be less than the following  amounts
on the dates indicated:

                           AS AT                      AMOUNT

                      (a)    09/30/97             ($35,000,000)
                            12/31/97              ( 38,000,000)
                            03/31/98              ( 41,000,000)
                            06/30/98              ( 43,000,000)
                            09/30/98              ( 45,000,000)              
                            02/31/98              ( 47,000,000)              
                            03/31/99              ( 47,000,000)
                            06/30/99              ( 47,000,000)
                            09/30/99              ( 47,000,000)
                            12/31/99              ( 47,000,000)
                            03/31/00              ( 47,000,000)

                PLUS (b)  an amount equal to eighty (80%) percent
of the aggregate amount of any capital contribution and/or equity
infusion into or any other additional equity

                                - 17 -

<PAGE>

hereafter  derived  from any source by you or the  Other  Client,
excluding the conversion of any subordinated debt existing on the
date hereof into equity of you or the Other Client.

                         Current assets means cash and marketable
securities,   accounts   receivable   and   inventory.    Current
liabilities are accounts payable, accrued expenses, the  Advances
and our loans to you (other than the then current portions of the
Note Amounts), short term debt and other short term liabilities.

               (iv) permit your and the Other Client's Cumulative
Pre-Tax  Operating  Earnings  (net  income  or  loss-taken  as  a
cumulative whole-and amortization of goodwill before taxes,  from
operations only, excluding (x) gains or losses from the sales  of
assets and (y) and extraordinary items), on a combined basis,  to
be less than the following amounts for the periods indicated:

                           PERIOD                 AMOUNT

                    01/01/97  to  09/30/97        ($18,000,000)
                    01/01/97  to  12/31/97        ( 25,000,000)
                    01/01/98  to  03/31/98        (  3,000,000)
                    01/01/98  to  06/30/98        (  5,000,000)
                    01/01/98  to  09/30/98        (  7,000,000)
                    01/01/98  to  12/31/98        ( 10,000,000)
                    01/01/99  to  03/31/99        (  2,000,000)
                    01/01/99  to  06/30/99        (  3,000,000)
                    01/01/99  to  09/30/99        (  4,000,000)
                    01/01/99  to  12/31/99        (  5,000,000)
                    01/01/00  to  03/31/00             -0-

PROVIDED THAT, notwithstanding anything to the contrary contained
herein,  your and the Other Client's Cumulative Pre-Tax Operating
Earnings  (as defined above), on a combined basis, shall  not  be
less  than  (A)  commencing  with the  fiscal  quarter  beginning
October  1,  1997, ($6,500,000) during any  one  fiscal  quarter
occurring  in fiscal year 1997, (B) ($3,000,000) during  any  one
fiscal quarter occurring in fiscal year 1998 and (C) ($2,000,000)
during any one fiscal quarter occurring in fiscal year 1999.

                (v)   permit your and the Other Client's  Capital
Expenditures  to exceed the following applicable  amounts  during
the years indicated:

                         PERIOD              AMOUNT

                         1997 -         $2,000,000

                                - 18 -

<PAGE>

                         1998 -          1,000,000
                         1999 -          1,000,000

                (vi) incur or permit to exist any indebtedness or
guaranty  by  you of the obligations of any other entity,  except
that you and the Other Client, on a combined basis may incur  (i)
unsecured  debt  to  suppliers in the  ordinary  course  of  your
business;  (ii) such other indebtedness and guaranties,  if  any,
which  are  subordinated  in our favor on  terms  and  conditions
acceptable to us (iii) indebtedness to us, and guaranties  to  us
of  the  Obligations to us of others, including, but not  limited
to, the Other Client and American Marketing Works, Inc., and (iv)
unsecured  debt for Capital Expenditures but only to  the  extent
permitted by Paragraph 11(a)(v) hereof.

                (vii)     pay or permit the payment (either  with
Advances,  loans or other amounts, if any, extended to you  under
either  this  agreement or with any other funds) or your  capital
stock  now or hereafter outstanding of, for or on account of  any
indebtedness which is the subject of any subordination  agreement
to  which you are a party unless you give us (i) advance  written
notice  of  the  proposed payment, and (ii) financial  and  other
statements, in form and substance acceptable to us, certified  by
your  Chief Financial Officer, confirming that before  and  after
giving  effect to such payment, you are and will be in compliance
with all of the provisions of the agreement and that no event has
occurred  or will have occurred which, with or without notice  or
the  passage of time, would constitute a breach or default under,
or would permit us to terminate this agreement.

          (b)  you will give us

                (i)   twice in each calendar year (but  not  more
than  six months shall elapse between the first and second report
in  each  calendar  year)  a physical  count  of  your  inventory
observed by an independent public accountant acceptable to us  in
a  manner consistent with procedures followed in connection  with
the certification of your annual financial statements.

                (ii)  not later than five (5) business days after
the  end  of each week, fifteen business days after the close  of
each  month and twenty (20) business days after the close of each
quarter, inventory designations certified by your Chief Financial
Officer  or Treasurer, all in form and substance satisfactory  to
us.

                (iii)      from  time  to  time  at  our  request
financial projections in form and substance satisfactory to us;

                (iv)  prompt  written notice  of  any  breach  or
default under this agreement or any of your Obligations to us, or
any  other agreement material to your business (including but not
limited  to  all license agreements relating to inventory),  your
failure to comply with any

                                - 19 -

<PAGE>

applicable  law,  rule or regulation of any  governmental  agency
having  jurisdiction, and the commencement by or against  you  of
any  suit,  action  or  proceeding of a  civil,  criminal  or  an
administrative  nature.  We may, but shall not  be  obligated  to
cure  any such breach or default and, if elect to do so, you will
on demand reimburse us for the cost thereof.

               (v)  within 30 days after the close of each month,
except January, and within 45 days after the close of January and
each  of  the  first three quarters in each of your fiscal  years
consolidated  and consolidating balance sheets of  you  and  your
subsidiaries   as   at  the  end  of  such  month   or   quarter,
respectively,  and  the  related consolidated  and  consolidating
statements  of  income, retained earnings and statement  of  cash
flows of you and your subsidiaries for the elapsed portion of the
fiscal  year  ended with the last day of such month  or  quarter,
respectively, setting forth in each case in comparative form  the
figures  for  the  corresponding periods of the  previous  fiscal
year, each of which shall be accompanied by a certificate of your
Chief Financial Officer in form and substance satisfactory to us.

                (vi) within 90 days after the end of each of your
fiscal  years, consolidated and consolidating balance  sheets  of
you  and your subsidiaries as at the end of such fiscal year  and
the  related consolidated and consolidating statements of income,
retained  earnings and statement of cash flows of  you  and  your
subsidiaries  for such fiscal year, setting forth in  comparative
form  the  figures as at the end of and for the  previous  fiscal
year,  in  each  case certified by independent  certified  public
accountants  of  recognized standing satisfactory  to  us,  whose
certificates shall be in scope and substance satisfactory to  us.
Together  with  such  financial statements you  shall  deliver  a
certificate of your Chief Financial Officer in form and substance
satisfactory  to  us  and  a  certificate  of  such   accountants
addressed  to us (x) stating that you are authorized  to  deliver
such financial statements and their certifications thereof to  us
pursuant  to  this  agreement  and that  they  have  caused  this
agreement  to  be  reviewed and that, in making  the  examination
necessary  for  the  certification of such financial  statements,
nothing has come to their attention to lead them to believe  that
any default hereunder or breach hereof exists, or, if such is not
the  case, specifying such default or breach and its nature, when
it  occurred and whether it is continuing and (y) having attached
the  calculations required to establish whether or  not  you  and
your subsidiaries were in compliance with the covenants contained
in paragraph 11(a)(ii) through 11(a)(v).

                (vii)      such  other reports  as  and  when  we
reasonably request

           (c)   you will, not later than December 31, 1997 cause
each  licensor of any trademark, trade style, copyright or  other
property (collectively "Properties") you use or will use in  your
business  under  licenses heretofore granted  to  enter  into  an
agreement with us, in form and substance acceptable to us, giving
us  such  rights as we may request with respect to the Properties
in  connection with your inventory.  With respect to future  such
licenses,  you will use your best efforts to cause the  licensors
to enter into such agreements with us when or before you

                                - 20 -

<PAGE>

enter  into  such licenses, PROVIDED THAT, if after  exercise  of
your  best efforts you are unable to cause the licensors to enter
into  the  aforementioned agreements with us, when or before  you
enter into such licenses, you shall nevertheless cause each  such
licensor to execute and deliver such an agreement with us  within
90  days  after  you have entered into a license with  each  such
licensor.  You will at all times be in full compliance with,  and
perform timely all of your obligations under your agreements with
each such licensor.

     12.  PLACE OF PAYMENT; NEW YORK LAW AND COURT

          (a)  All Obligations shall be paid at our office in New
York, New York.

           (b)  This agreement shall be governed by and construed
according  to the laws of the State of New York.  All terms  used
herein,  unless otherwise defined herein, shall have the meanings
given in the New York Uniform Commercial Code.

           (c)  Each of us expressly submits and consents to  the
exclusive jurisdiction of the Supreme Court of the State  of  New
York,  and  the  United States District Court  for  the  Southern
District of New York, with respect to any controversy arising out
of  or relating to this agreement or any supplement hereto or  to
any  transactions  in  connection  therewith  and  hereby  waives
personal  service of the summons, complaint or other  process  or
papers  to  be issued therein and hereby agrees that  service  of
such  summons,  complaint,  process or  papers  may  be  made  by
registered or certified mail addressed to the other party at  the
address appearing herein.

     13.  REPORTS; RECORDS; ASSURANCES; WAIVERS; REMEDIES; ETC.

           (a)   We  may at all times during business hours  have
access  to,  and inspect, audit, and make extracts from,  all  of
your  records, files and books of account, and we may charge your
account  with the costs, fees or expenses incurred in  connection
therewith  and  our then standard charges for  each  examiner  or
auditor.

           (b)   You  shall perform all acts requested by  us  to
perfect  and maintain our security interest and other  rights  in
the Collateral.

           (c)   Failure by us to exercise any right,  remedy  or
option under this agreement or delay by us in exercising the same
will  not  operate as a waiver; no waiver by us will be effective
unless  we  confirm  it in writing and then only  to  the  extent
specifically stated.

           (d)   We may charge to your account, when incurred  by
us, the amount of reasonable legal fees (including fees, expenses
and  costs payable or allocable to attorneys retained or employed
by  us)  and  other costs, fees and expenses incurred  by  us  in
negotiating   or   preparing  this  agreement   and   any   legal
documentation required by us or requested by you in

                                - 21 -

<PAGE>

connection  with this agreement or any amendments or  supplements
thereof,  or  in enforcing our rights hereunder or in  connection
with  the  litigation  of any controversy  arising  out  of  this
agreement,  or  in  protecting,  preserving  or  perfecting   our
interest  in,  any Collateral, including without  limitation  all
taxes assessed or payable with respect to any Collateral, and the
costs  of  all  public  record filings, appraisals  and  searches
relating  to  any  Collateral.  We may file Financing  Statements
under  the Uniform Commercial Code without your signature or,  if
we so elect, sign and file them as your agent.

           (e)  Our rights and remedies under this agreement will
be  cumulative and not exclusive of any other right or remedy  we
may  have  hereunder  or  under the Uniform  Commercial  Code  or
otherwise.   Without limiting the foregoing, if we  exercise  our
rights  as a secured party we may, at any time or times,  without
demand,  advertisement or notice, all of which you hereby  waive,
sell  the  Collateral, or any part of it, at  public  or  private
sale, for cash, upon credit, or otherwise, at our sole option and
discretion, and we may bid or become purchaser at any such  sale,
free  of  any right of redemption which you hereby waive.   After
application of all Collateral to your Obligations (in such  order
and  manner  as  we in our sole discretion shall determine),  you
shall remain liable to us for any deficiency.

           (f)  We shall have no liability hereunder (i) for  any
losses  or  damages (including indirect, special or consequential
damages)  resulting  from our refusal  to  assume,  or  delay  in
assuming,  the  Credit  Risk,  or  any  malfunction,  failure  or
interruption  of communication facilities, or labor difficulties,
or other causes beyond our control; or (ii) for indirect, special
or  consequential  damages arising from  accounting  errors  with
respect  to your account with us.  Our liability for any  default
by  us  hereunder  shall  not exceed  a  refund  to  you  of  any
commission  paid  by  you  during  the  period  starting  on  the
occurrence of the default and ending when it is cured or  waived,
or when this agreement is terminated, whichever is earlier.

           (g)   This  agreement cannot be changed or  terminated
orally and is for the benefit of and binding upon the parties and
their  respective successors and assigns.  However, you  may  not
assign  any  of  your rights hereunder without our prior  written
consent.   This  agreement,  and  any  concurrent  or  subsequent
written supplements thereto or amendments thereof signed by  both
of  us,  represent  our entire understanding  and  supersede  all
inconsistent  agreements  and communications,  written  or  oral,
between  your  and  our  officers, employees,  agents  and  other
representatives.

           (h)   This  agreement  shall not be  effective  unless
signed  by  you  below, and signed by us at  the  place  for  our
acceptance.

          (i)  TO THE EXTENT LEGALLY PERMISSIBLE, BOTH YOU AND WE
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO

                                - 22 -

<PAGE>

TRANSACTIONS UNDER THIS AGREEMENT, WHETHER SOUNDING IN  CONTRACT,
TORT OR OTHERWISE.

           (j)  References herein to written notice shall include
but shall not be limited to notice by telecopier, mail, messenger
or any courier service.

           (k)   This agreement is subject in all respect to  the
Forbearance Agreement.  In the event of any conflict of any  term
or  provision of this agreement with any term or provision of the
Forbearance  Agreement, the term or provision of the  Forbearance
Agreement shall control.

                                   Very truly yours,

                                   BNY FINANCIAL CORPORATION


                                   By:/s/ Joseph A. Grimaldi
                                         
                                   Title:President

AGREED TO as of the 31st day of October, 1997.

ATTEST: /s/ Robert J. Powell

SIGNAL APPAREL COMPANY, INC.


By: /s/  David E. Houseman


Title: Chief Executive Officer

[SEAL]