EMPLOYMENT AGREEMENT
  
  
       THIS EMPLOYMENT AGREEMENT is made between SIGNAL APPAREL
  COMPANY, INC., an Indiana corporation, with its principal
  offices at 200-A Manufacturers Road, Chattanooga, Tennessee
  (the "Company") and GARY LABELLE (the "Employee").
  
                              RECITALS:
                                  
       The Company and the Employee have reached an
  understanding with respect to the employment of the Employee
  by the Company.   The parties desire to set forth their
  understanding with respect to such employment fully and
  completely in writing.
  
       NOW, THEREFORE, the parties agree as follows:
  
       1.   Employment.  The Company shall employ the Employee,
  and the Employee shall work for the Company upon the terms and
  conditions set forth herein.
  
       2.   Exclusive Agreement.  During the term of this
  Agreement, the Employee shall devote his full time and best
  effort to the business of the Company.
  
       3.   Employment Term.  Unless earlier terminated in
  accordance with the terms of this Agreement, the Employee s
  term of employment by the Company (the "Employment Term")
  shall be for a period of three (3) years commencing August 1,
  1995.
  
       4.   Confidential Information.  The Employee acknowledges
  that any use of the Company s Confidential Information
  (defined below) by the Employee other than for the sole
  benefit of the Company would be wrongful and cause irreparable
  harm to the Company.  Accordingly, the Employee shall not, at
  any time during or subsequent to his employment by the
  Company, without the express written consent of the Company,
  publish, disclose or divulge to any person, firm or
  corporation, or use, directly or indirectly, for his own
  benefit or for the benefit of any person, firm or corporation,
  for use other than for the Company, any property, trade
  secrets, or Confidential Information (defined below) of the
  Company or its affiliates.  "Confidential Information"
  includes, but is not limited to all data, reports,
  interpretations, forecasts, records, statements (written and
  oral) and documents of any kind relating to the Company s
  costs and financial information, manufacturing methods or
  processes, market studies, products, existing and potential
  customers, pricing methods and strategies, new product plans
  and sources of supply.  In addition, all other information
  disclosed to the Employee or which the Employee shall obtain
  during such employment with the Company which the Employee has
  a reasonable basis to believe to be confidential, or which the
  Employee has a reasonable basis to believe the Company treats
  as confidential, shall be presumed to be Confidential
  Information.
  
       5.   Salary and Expenses.  The Company shall pay the
  Employee a salary of One Hundred Sixty-Five Thousand Dollars
  ($165,000.00) per year payable in accordance with the normal
  payroll practices of the Company.  The Company shall also
  reimburse the Employee for all reasonable, legitimate and
  documented business expenses incurred by him, on behalf of the
  Company, upon submission of accounts in satisfactory form,
  subject to such limitations as the Company may impose in its
  discretion from time to time.
  
       6.   Additional Benefits.  In addition to the
  compensation described in Section 5, the Employee shall be
  entitled during the Employment Term to receive the following
  additional benefits:
  
            (a)  Health Insurance.  The Company will provide the
  Employee with health insurance coverage consistent with the
  coverage provided to other employees of the Company from time
  to time.
  
            (b)  Retirement Plans.  The Employee will be
  eligible to participate in the Company s 401(k) retirement
  plan and such other retirement plans as may be established by
  the Company from time to time.
  
            (c)  Holidays and Vacations.  The Employee shall be
  entitled to such paid holidays as may be designated by the
  Company.  In addition, the Employee shall be entitled to three
  (3) weeks of paid vacation for each year during which time his
  compensation shall be paid in full.  Notwithstanding any other
  provisions of this Agreement, in the event Employee is
  terminated from the Company for any reason, Employee will be
  entitled to a payment reflecting Employee's unused accrued
  vacation through such date of termination.
  
            (d)  Sick Leave.  The Employee shall be entitled to
  sick leave in accordance with Company practices.
  
            (e)  Stock Options.  Subject to the approval of the
  Company's Compensation Committee, the Company agrees to grant
  to the Employee options to purchase 50,000 shares of common
  stock which will be exercisable one year from the date of
  grant and will be governed by the terms of the Company's 1985
  Stock Option Plan.
  
            (f)  Bonus.  The Employee has the following bonus
  plan in effect for the three year term of this employment
  agreement: 
  
       Employee is eligible to receive a year end bonus based
  upon the pre-tax earnings of the Company for each fiscal year,
  if any.   
  
       This bonus will be paid in cash and stock options issued
  pursuant to the Company's 1985 Stock Option Plan according to
  the formula set forth below.  The exercise price for the stock
  options will be based upon the "Fair Market Value" of the
  Company's Common Stock on the date of grant, as defined in the
  Stock Option Plan, and all options shall be fully exercisable
  one year from the date of grant.  All bonuses earned pursuant
  to this Section, whether in cash or stock options, will be
  subject to a cap of five million dollars in pre-tax earnings
  of the Company and no bonus will be paid on any pre-tax
  earnings in excess of five million dollars.
  
       The cash component of the bonus will be equal to 1%, or
  fraction thereof, of Employee's annual salary for each
  $100,000, or portion thereof, of pre-tax earnings of the
  Company for each fiscal year.  The cash component of the bonus
  will be capped at 50% of Employee's annual salary per fiscal
  year.  The Company's pre-tax earnings will be rounded to the
  nearest thousand dollars for the purpose of this calculation. 
  
       By way of example, if the Company has $1,625,000 in pre-
  tax earnings in a given fiscal year, Employee will be entitled
  to a cash bonus equal to 16.25% of Employee's annual salary.
  
       The stock option component of the bonus will be equal to
  an option to purchase ten shares of the Company's Common Stock
  for each $1,000 in pre-tax earnings of the Company, subject to
  a cap of 50,000 shares per fiscal year.  The Company's pre-tax
  earnings will be rounded to the nearest thousand dollars for
  purposes of this calculation.
  
       By way of example, if the Company has $2,325,000 in pre-
  tax earnings in any given fiscal year, Employee will be
  entitled to stock options to purchase 23,250 shares of the
  Company's Common Stock.
  
       Bonus payments payable pursuant to this Section shall be
  made in a lump sum payment within two weeks of the
  finalization of the Company's year end audit.  Stock Options
  to be granted pursuant to this Section will also be granted
  within such two week period.
  
       Notwithstanding the foregoing, Employee must be employed
  with the Company on December 31 of any given year in order to
  be eligible to receive the above bonus for that year.  In the
  event Employee is not so employed, the following provisions
  shall apply:
  
       (1)  If Employee is terminated for cause by the Company,
              or if Employee voluntarily terminates Employee's
              employment with the Company prior to December 31 of
              any given year (except as described under the
              circumstances in Section 7(d)), Employee shall
              receive no bonus for that year or any subsequent
              year;
  
       (2)  If Employee is terminated by the Company without
              cause, prior to December 31 of any given year or if
              Employee exercises Employee's rights under Section
              7(d), whether or not Employee is in breach of this
              Agreement or if this Agreement is terminated prior
              to December 31 upon the death or disability of
              Employee as provided in Section 7(a), Employee
              shall receive only a prorata portion of any bonus
              earned pursuant to this Section 6 which prorata
              portion shall be based upon the percentage of 365
              calendar year days for which Employee is employed
              during said calendar year.  Any bonus due pursuant
              to this subsection (2) shall be paid as provided in
              this Section 6.
  
       Any direct or indirect payments made by the Company to or
  on behalf of the Employee determined by the Company s
  accountants to be reportable for tax purposes shall be treated
  as compensation to the Employee.
  
       7.   Termination of Employment.
  
       (a)  The Employee s employment pursuant to this Agreement
  shall terminate upon the death of the Employee or upon his
  inability, by reason of a mental or physical condition, to
  perform his duties hereunder for an uninterrupted period of
  sixty (60) days ("Disability"), and may be terminated for
  "cause" (as defined below) by the Company at any time during
  the Term immediately upon written notice of termination given
  by the Company to the Employee describing such cause.  For
  purposes of this Agreement, "cause" for termination shall be
  deemed to exist if:  (i) the Employee is convicted of a felony
  which involves an intentional act of the Employee; (ii) the
  Employee engages in dishonesty or fraud; (iii) the Employee
  breaches any of his material obligations under this Agreement;
  (iv) the Employee has been materially negligent or grossly
  inefficient in the performance of his duties under this
  Agreement; or (v) the Employee refuses or fails to take
  reasonable and material actions directed by the President.
  
       Any written notice of termination for cause pursuant to
  this Section shall be a written notice which (a) indicates the
  specific termination provision relied upon, (b) sets forth in
  reasonable detail the facts and circumstances claimed to
  provide a basis for termination of Employee's employment, and
  (c) if the date of termination is other than the date of
  receipt of such notice, specifies the termination date.  In
  the event that Employee's employment is terminated pursuant to
  subsections (iii), (iv) or (v) above, Employee shall have a
  period of thirty (30) days to cure the breach of Employee's
  obligations under this Agreement as described in the Notice of
  Termination.  In the event that Employee cures such breach
  within said thirty (30) day period, the notice of termination
  shall be considered rescinded.  In the event that Employee
  fails to cure such breach, then this Agreement will terminate
  without further notice to Employee as set forth in the notice
  of termination, and the provisions of 7(b) shall be
  applicable.  Employee shall not have the opportunity to cure
  any termination for cause pursuant to subsections (i) and (ii)
  above.  
  
            (b)  In the event (i) the Employee s employment
  under this Agreement is terminated for cause as provided
  above, or (ii) the Employee voluntary terminates his
  employment with the Company, other than pursuant to Section
  7(d), prior to the end of the Employment Term, the Company
  shall promptly pay to the Employee (or to the Employee s legal
  representatives) the amount of any compensation attributable
  to periods prior to such termination, plus the amount of any
  reimbursable expenses.  No other payments shall be due
  Employee.  
  
            (c)  In the event the Employees employment is
  terminated without cause, whether or not Employee is in breach
  of this Agreement, or the Employee loses his employment for
  any other reason, other than pursuant to Section 7(b),
  including but not limited to bankruptcy, closure,
  reorganization, buyout, merger, consolidation or for any other
  reason, the Employee is automatically entitled to severance
  payments equal only to one year's salary as provided in
  Section 5 above and continuation of existing health care
  benefits for one year.  No other payments shall be due
  Employee except any bonus payments which may be due pursuant
  to Section 6(f).  Said severance payments shall be paid in the
  same manner and on the same schedule (i.e. monthly, weekly,
  etc.) as Employee was being paid on the date of termination. 
  To the extent possible under the Company's Stock Option Plan,
  all stock options shall automatically vest and become
  immediately exercisable under this provision.  Severance
  payments being made pursuant to this Section shall survive the
  death of Employee.
  
            (d)  Notwithstanding the provisions of Section 7(b),
  in the event of a merger, consolidation, buyout,
  reorganization or any other similar occurrence, Employee shall
  have the option of terminating Employee's employment with the
  Company and receiving the salary and benefits as provided in
  Section 7(c) above.  In the event Employee exercises this
  option prior to December 31 of any given year, the provisions
  of 6(f)(2) shall apply.  Such option shall be exercised by
  written notice from Employee to the Company which Notice must 
  be given within thirty (30) days of the definitive closing
  date of any such occurrence.
  
       8.   Duty of the Employee upon Termination.  The Employee
  shall, upon termination of this Agreement, return to the
  Company all of the Company s records of any type and all
  literature, supplies, letters, written or printed forms,
  and/or memorandum pertaining to the Company s business.
  
       9.   Covenants on Termination. 
  
            (a)  During the Employment Term and for a period of
  one (1) year thereafter, the Employee shall not, directly or
  indirectly, on Employee's own behalf or on behalf of any other
  person, corporation, partnership or any other entity, whether
  as an employee, officer, director, proprietor, partner,
  investor, consultant, advisor, agent or in any other capacity,
  induce or attempt to induce any customer of the Company to
  reduce its business with the Company, or solicit or attempt to
  solicit any employees of the Company to leave the employ of
  the Company, nor shall Employee affiliate with any party
  engaging in the above actions.
  
            (b)  The Employee acknowledges that the restrictions
  contained in this Section are reasonable and necessary to
  protect the business and interests of the Company and that any
  violation of these restrictions will cause substantial and
  irreparable injury to the Company.  Therefore, notwithstanding
  the provisions of Section 13 below, the Employee agrees that
  the Company is entitled, in addition to any other remedies, to
  preliminary and permanent injunctive relief to secure specific
  performance, and to prevent a breach or contemplated breach of
  this Agreement.
  
       10.  Severability.  In the event any clause or provision
  of this Agreement shall be held to be invalid or
  unenforceable, the same shall not affect the validity or
  enforceability of any other provision herein, and this
  Agreement shall remain in full force and effect in all other
  respects.  If a claim of invalidity or unenforceability of any
  provision of this Agreement is predicated upon the length of
  the terms of any covenant or the area covered thereby, such
  provision shall not be deemed to be invalid or unenforceable;
  rather, such provision shall be deemed to be modified to the
  maximum area or the maximum duration as any court of competent
  jurisdiction shall deem reasonable, valid and enforceable.
  
       11.  Entire Agreement.  The parties understand and agree
  that this Employment Agreement is the entire Agreement between
  the parties regarding the terms and conditions of the
  Employee s employment and there are no other agreements.  The
  terms of this Agreement may not be varied, modified,
  supplemented or in any other way changed by extraneous verbal
  or written representations by the Company or its agents to the
  Employee, unless by amendment to this Agreement executed in
  writing by both parties.
  
       12.  Governing Law.  The Agreement shall be governed by,
  construed and enforced in accordance with the laws of the
  state of Tennessee.
  
       13.  Arbitration.  Each party agrees not to bring suit
  against the other party in the courts of any jurisdiction in
  connection with any dispute which might be the subject of a
  civil action arising from the interpretation or application of
  this Agreement.  Each party agrees that any such dispute shall
  be finally resolved by submission to compulsory commercial
  arbitration to be held in Chattanooga, Tennessee according to
  the American Arbitration Association rules, by one or several
  arbitrators appointed. The parties agree to be bound by the
  decision of the arbitration and that a judgment of any court
  of competent jurisdiction may be rendered upon the award made
  pursuant to said submission to arbitration.
  
       14.  Survival.  The Covenants of Paragraphs 4, 9, 10, 11
  and 13 shall survive the termination of this Agreement.
  
       15.  Notice.  All notices, demands, requests, consents,
  reports, approvals, or other communications which may be or
  are required to be given, served, or sent pursuant to this
  Agreement shall be in writing and shall be mailed by first
  class, registered or certified mail, return receipt requested,
  postage prepaid, or transmitted by telegram or hand delivery,
  addressed as first set forth above, or such other address as
  a party may subsequently specify in writing.
  
       IN WITNESS WHEREOF, the parties have executed this
  Agreement this 30th day of November, 1995_.
  
                           SIGNAL APPAREL COMPANY, INC.
  
  
  Dated: 11/30/95          By:  /s/Bruce Krebs
        -------------           -----------------------
                                Its: President & COO
                                     ------------------
  
                           
  
  Dated: 11/30/95          /s/Gary Labelle
        -------------      ----------------------------
                           GARY LABELLE