GMAC COMMERCIAL FINANCE LLC
                           1290 Avenue of the Americas
                            New York, New York 10104


                                                     September 30, 2005

DELTA MILLS, INC.
700 North Woods Drive
Fountain Inn, SC 29644

                            Re: Waiver and Amendments

Gentlemen:

         Reference is made to the Revolving Credit and Security Agreement, dated
as of March  31,  2000 (as the same now  exists  or may  hereafter  be  amended,
restated, renewed, replaced, substituted,  supplemented,  extended, or otherwise
modified, the "Credit Agreement"), by and between DELTA MILLS, INC. ("Borrower")
and GMAC  COMMERCIAL  FINANCE LLC, as  successor by merger with GMAC  COMMERCIAL
CREDIT  LLC,  as a  lender  and as agent  for the  lenders  party to the  Credit
Agreement from time to time (in such capacity, "Agent").

         Borrower has advised  Agent that Borrower  anticipates  that the annual
financial  statements  for  Borrower's  fiscal  year  ended  July 2,  2005 to be
furnished to Agent pursuant to Section 9.7 of the Credit  Agreement will include
a qualified report by Borrower's independent  accountants and that, as a result,
it is not anticipated that such financial  statements will meet the requirements
therefor set forth in Section 9.7.

         Borrower has requested  that Agent and Lenders agree to waive the Event
of Default that would arise from Borrower's anticipated failure to furnish Agent
with annual  financial  statements that satisfy the requirements of Section 9.7,
and make certain  amendments to the Credit  Agreement as  hereinafter  provided.
Agent and Lenders have agreed to accommodate  Borrower's  request subject to the
terms and conditions set forth herein, all as more particularly set forth below.

         In  consideration  of the  foregoing,  and for good and other  valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

         1.  DEFINITIONS.  Capitalized  terms used in this Letter re: Waiver and
Amendments (this  "Agreement") and not otherwise defined shall have the meanings
ascribed to such terms, respectively, in the Credit Agreement.


<PAGE>

         2. WAIVER.

                  A. AGREEMENT TO WAIVE. Subject to the terms and conditions set
forth  herein,  Agent and Lenders  hereby  waive the Event of Default that would
arise  under  Section  9.7  of  the  Credit  Agreement  solely  from  Borrower's
furnishing  Agent with  financial  statements  for the fiscal year ended July 2,
2005 that include a qualified report of Borrower's  accountants;  provided, that
no other Default or Event of Default exists or is continuing.

                  B. RESERVATION OF RIGHTS. Agent and Lenders hereby reserve all
rights and remedies granted to Agent and Lenders under the Credit Agreement, the
Other Documents,  applicable law or otherwise and nothing contained herein shall
be construed to limit,  impair or otherwise affect the right of Agent to declare
a Default or an Event of Default  with  respect to any  non-compliance  with the
Credit  Agreement or the Other  Documents of which Agent does not have knowledge
as of the date hereof and any future  non-compliance with any covenant,  term or
provision of the Credit Agreement, the Other Documents or any other document now
or hereafter  executed and delivered in connection  therewith.  Without limiting
the foregoing,  nothing herein contained shall, or shall be deemed to, waive any
Default or Event of Default that  Borrower has failed to disclose to Agent as of
the date hereof.


         3.  APPLICABLE  MARGIN  FOR  DOMESTIC  RATE LOANS.  The  definition  of
"Applicable  Margin for  Domestic  Rate  Loans" set forth in Section  1.2 of the
Credit  Agreement  is hereby  amended and  restated  in its  entirety to read as
follows:

             "Applicable   Margin  for  Domestic  Rate Loans" shall mean two and
seventy-five hundredths percent (2.75%)."

         4.  APPLICABLE  MARGIN FOR  EURODOLLAR  RATE LOANS.  The  definition of
"Applicable  Margin for  Eurodollar  Rate Loans" set forth in Section 1.2 of the
Credit  Agreement  is hereby  amended and  restated  in its  entirety to read as
follows:

             "Applicable  Margin for Eurodollar  Rate  Loans"  shall  mean  five
percent (5.00%)."

          5. EBITDA  COVENANT.  Section  6.9 of the Credit  Agreement  is hereby
amended  and  restated  in its  entirety to read as follows:

             "6.9  EBITDA.  Maintain,  as of the last day of each fiscal quarter
         of  Borrower in its fiscal year ending July 1, 2006, EBITDA (calculated
         quarterly on a trailing 12-month basis) of not less than the following:

                                   Fiscal Quarter 1: ($5,115,000)

                                   Fiscal Quarter 2: ($3,720,000)

                                   Fiscal Quarter 3: ($2,265,000)


<PAGE>

                                   Fiscal Quarter 4: ($1,340,000).

         The failure of Agent and Borrower to execute a written amendment hereto
         establishing an EBITDA covenant for the period subsequent to Borrower's
         2006 Fiscal Year shall constitute an Event of Default hereunder. "

         6. WAIVER AND  ACCOMMODATION  FEE. In  consideration  of the waiver and
amendments  agreed to by Agent  hereunder,  Borrower shall pay to Agent a waiver
and  accommodation  fee in the amount of $50,000 (the "Waiver and  Accommodation
Fee").  The Waiver and  Accommodation  Fee shall be fully  earned and due on the
date hereof,  and shall not be subject to refund,  rebate or  proration  for any
reason  whatsoever.  Agent  shall  charge the Waiver  and  Accommodation  Fee to
Client's account as of the date hereof.

         7. INVENTORY  APPRAISAL.  Borrower  agrees that within  forty-five (45)
days of the date hereof, Borrower shall, at its sole expense, furnish Agent with
an  updated  appraisal  of  Borrower's   Inventory  conducted  by  an  appraiser
acceptable to Agent in its sole and absolute discretion.

         8. NO OTHER MODIFICATIONS.  Except as specifically set forth herein, no
other changes or  modifications  to the Credit  Agreement or the Other Documents
are intended or implied,  and, in all other respects,  the Credit  Agreement and
the  Other  Documents  shall  continue  to remain  in full  force and  effect in
accordance  with  their  respective  terms  as of the  date  hereof.  Except  as
specifically set forth herein,  nothing contained herein shall evidence a waiver
by Agent or Lenders of any other provision of the Credit  Agreement or the Other
Documents nor shall anything contained herein be construed as a consent by Agent
or Lenders to any transaction other than that specifically consented to herein.

         9. ACKNOWLEDGEMENTS.

         (a)  Borrower  hereby  acknowledges,   confirms  and  agrees  that  all
Obligations  of Borrower in respect of  Revolving  Advances,  Letters of Credit,
accrued  and unpaid  interest,  and  costs,  fees,  expenses  and other sums and
charges  incurred by Agent and the  Lenders  that are due and owing to Agent and
the  Lenders  under the  Credit  Agreement  and the Other  Documents  (including
attorneys'  fees and  expenses)  are owed by  Borrower  to Agent and the Lenders
without  offset,  defense or  counterclaim  of any kind,  nature or  description
whatsoever.

           (b)  Borrower  hereby  acknowledges,  confirms  and  agrees  that the
covenants, agreements and obligations of Borrower contained in or incurred under
the Credit  Agreement and the Other  Documents  constitute the legal,  valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
the terms and  conditions  of the  Credit  Agreement  and Other  Documents,  and
Borrower has no valid offset, defense or counterclaim to the enforcement of such
covenants, agreements and obligations.


<PAGE>

           (c) Borrower hereby ratifies and confirms its grant to Agent, for the
ratable benefit of the Lenders,  of the first priority perfected liens upon, and
security interests in, its properties and assets located in the United States of
America  heretofore  mortgaged,  pledged,  granted or  assigned to Agent for the
ratable  benefit  of the  Lenders  under  the  Credit  Agreement  and the  Other
Documents  (to the  extent  not  heretofore  released  by Agent and  Lenders  in
writing), and acknowledges and confirms that such first priority perfected liens
and security  interests secure, and shall continue to secure, the Obligations of
Borrower  to Agent and the  Lenders  under the  Credit  Agreement  and the Other
Documents, subject only to Permitted Encumbrances.

         10. NO EVENT OF DEFAULT. Borrower represents and warrants to Agent that
no Default or Event of Default has occurred and is continuing.

         11. RELEASES.

             AS MATERIAL  CONSIDERATION  FOR  THE EXECUTION OF THIS AGREEMENT BY
AGENT AND  LENDERS  (THE  "RELEASED  PARTIES")  AND FOR OTHER GOOD AND  VALUABLE
CONSIDERATION,  THE RECEIPT AND  SUFFICIENCY  OF WHICH ARE HEREBY  ACKNOWLEDGED,
EFFECTIVE  AS OF THE DATE  HEREOF,  BORROWER  FOR  ITSELF  AND ON  BEHALF OF ITS
RESPECTIVE    DIRECTORS,    OFFICERS,    ADMINISTRATIVE    AGENTS,    EMPLOYEES,
REPRESENTATIVES,  SUCCESSORS AND ASSIGNS (COLLECTIVELY,  THE "RELEASORS") HEREBY
WAIVES,  RELEASES,  REMISES, ACQUITS AND DISCHARGES THE RELEASED PARTIES AND ALL
OF THEIR RESPECTIVE  AFFILIATES,  DIRECTORS,  OFFICERS,  ADMINISTRATIVE  AGENTS,
EMPLOYEES,  REPRESENTATIVES,  SHAREHOLDERS, ATTORNEYS, ACCOUNTANTS, CONSULTANTS,
ADVISORS,  SUCCESSORS,  AND ASSIGNS  (THE  RELEASED  PARTIES  TOGETHER  WITH THE
FOREGOING COLLECTIVELY,  THE "RELEASEES") OF AND FROM ANY AND ALL CONTROVERSIES,
DAMAGES, COSTS, LOSSES, CAUSES OF ACTION, SUITS, JUDGMENTS, CLAIMS, RECOUPMENTS,
COUNTERCLAIMS OR DEMANDS, OF EVERY TYPE, KIND, NATURE, DESCRIPTION OR CHARACTER,
WHETHER  NOW  EXISTING  OR THAT  COULD,  MIGHT,  OR MAY BE CLAIMED TO EXIST,  OF
WHATEVER  KIND OR NAME,  WHETHER KNOWN OR UNKNOWN,  LIQUIDATED OR  UNLIQUIDATED,
FIXED OR  CONTINGENT,  FORESEEABLE  OR  UNFORESEEABLE,  EACH AS THOUGH FULLY SET
FORTH HEREIN AT LENGTH.

         12. NO THIRD  PARTY  BENEFICIARIES.  The terms and  provisions  of this
Agreement  shall be for the benefit of the parties  hereto and their  respective
successors and assigns; no other person,  firm, entity or corporation shall have
any right, benefit or interest under this Agreement.

         13.  CONDITION  TO  EFFECTIVENESS.  The  terms and  provisions  of this
Agreement shall not be effective until this Agreement has been duly  authorized,
executed and delivered by Borrower and Agent.


<PAGE>

         14.  COUNTERPARTS.  This  Agreement  may be  executed  in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it shall not be necessary
to produce or account for more than one  counterpart  thereof  signed by each of
the parties hereto.  This Agreement may be executed and delivered via telecopier
with the same force and effect as if it were a manually  executed and  delivered
counterpart.

         15. GOVERNING LAW. The rights and obligations  hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with  the  laws of the  State of New  York,  but  excluding  any  principles  of
conflicts  of law or other rule of law that would result in the  application  of
the law of any jurisdiction other than the laws of the State of New York.

         16.  MERGER.  This  Agreement  sets  forth  the  entire  agreement  and
understanding of the parties with respect to the matters set forth herein.  This
Agreement cannot be changed, modified, amended or terminated except in a writing
executed by the party to be charged.


                               Very truly yours,

                               GMAC COMMERCIAL FINANCE LLC, as Agent and Lender

                               By:   /s/ Alexander J. Chobot
                                   --------------------------------------------

                               Title:    Vice President
                                      -----------------------------------------



ACKNOWLEDGED AND AGREED:

DELTA MILLS, INC.

By:      /s/ William J. Hardman, Jr.
    -------------------------------------------------

Title:   Chief Financial Officer
       ----------------------------------------------