BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK - FOUNDED 1784 BY ALEXANDER HAMILTON


                          1290 AVENUE OF THE AMERICAS, NEW YORK, N.Y. 10104
                                                               212-408-7000



Signal Apparel Company, Inc. ("Signal")
P. O. Box 4296
200 Manufacturers Road
Chattanooga, Tennessee 37405

The Shirt Shed, Inc. (Shirt Shed")
570 S. Miami Street
Wabash, Indiana 46992

March 14, 1996

Re:  Our Factoring Agreement with Signal bearing the effective
date of May 23, 1991 as amended and supplemented (the "Signal
Agreement") Factoring Agreement with Shirt Shed bearing the
effective date of July 25, 1991 as amended and supplemented (the
"Shirt Shed Agreement") (the Signal Agreement and the Shirt Shed
Agreement herein collectively, the "Agreements")

Gentlemen:

We refer to each and both of the above mentioned Agreements
between ourselves on the one hand and Signal and Shirt Shed on
the other hand, and in particular to the covenants appearing
therein in subparagraphs 11 (a) (iii) thereof (herein the
"Tangible Net Worth Covenant"), 11 (a) (iv) thereof (herein the
"Working Capital Covenant") and 11 (a) (v) thereof (herein the
"Pre-Tax Operating Earnings Covenant"; together with the Working
Capital Covenant and the Tangible Net Worth Covenant, herein
collectively the "Covenants").

In consideration of payment to us of a fee of $30,000, we hereby
waive any default under the above Agreements to the extent
arising out of the failure of Signal and/or Shirt Shed to have
been in compliance with the above specified Covenants as of
December 31, 1995.

Except to the limited extent set forth herein: (a) no waiver of
any other term, condition, covenant, agreement or any other
aspect of any of the Agreements is intended or implied; and (b)
except for the specific period of time and circumstances covered
by this letter, no other aspect of the Covenants referred to in
this letter is waived, including without limitation for any other
period or circumstance, and no such additional waiver is intended
no such waiver is intended or implied.  This limited waiver is
therefore limited exclusively to the specific purposes and time
period(s) for which it is given.

If the foregoing is in accordance with your understanding, would
you kindly sign below to so indicate.

                              Very truly yours,
                              BNY FINANCIAL CORPORATION



                              By: /s/Wayne Miller
                                 ----------------------
                                 Title:  VP

AGREED:

Signal Apparel Company, Inc.



By: /s/William H. Watts
   -------------------------
   Title:  CFO

Shirt Shed, Inc.


By: /s/William H. Watts
   -------------------------
   Title: CFO