<PAGE>
 
                                                                    EXHIBIT 2.9



                              DT ACQUISITION INC.
                              4838 JENKINS AVENUE
                         NORTH CHARLESTON, S.C. 29405
                                 (803)566-7293
                              FAX:(803) 747-4092


                                                               November 16, 1997

CONFIDENTIAL
------------

Mr. Charles H. Hantho
Chairman
Dominion Textile Inc.
1950 Sherbrooke Street West
Montreal, Quebec
H3H 1E7

Dear Mr. Hantho

                    RE: DT ACQUISITION INC.
                        OFFERS FOR COMMON AND PREFERRED SHARES
                        OF DOMINION TEXTILE INC.
                    ------------------------------------------

          On October 29, 1997 DT Acquisition Inc. (the "Offeror") mailed an 
offer to purchase (the "Common Share Offer") all of the publicly held common 
shares, together with associated Rights (as defined below), (collectively, the 
"Common Shares") of Dominion Textile Inc. ("Dominion Textile") for a purchase 
price of CDN $11.75 cash per Common Share and an offer (the "Preferred Share 
Offer") to purchase all of the publicly held first preferred shares (the "First 
Preferred Shares") of Dominion Textile for a purchase price of CDN $109.50 cash 
per First Preferred Share. The holders of Common Shares and First Preferred 
Shares are hereinafter referred to as the "Shareholders".  The Common Share 
Offer and Preferred Share Offer are hereinafter referred to as the "Offers".  
Unless the context otherwise requires, all capitalized terms in this letter 
agreement shall have the meanings attributed thereto in the Offers, unless 
otherwise defined in this agreement.

          Until the execution of this letter agreement by Dominion Textile, 
Dominion Textile shall not disclose publicly or to any third party the existence
or any of the terms of this
<PAGE>
 
                                      -2-

letter agreement, without the prior written approval of the Offeror. In the 
event of any such disclosure by Dominion Textile, the proposal represented by 
this letter is immediately and automatically withdrawn and terminated.

1.        COVENANTS OF THE OFFEROR. We are pleased to confirm that upon 
          ------------------------
execution of this letter by Dominion Textile, the Offeror will forthwith:

     (a)  amend the Common Share Offer by increasing the purchase price payable
          pursuant to the Common Share Offer to CDN $14.50 cash per Common
          Share;

     (b)  amend the Common Share Offer by making such Common Share Offer subject
          only to the conditions set forth below;

          (i)    there shall have been validly deposited under the Common Share
                 Offer and not withdrawn that number of Common Shares which
                 represents at least 66 2/3% of the Common Shares on a fully
                 diluted basis, excluding Common Shares held as of the date
                 hereof by the Offeror, its affiliates and associates or by
                 persons whose Common Shares may not be voted as part of the
                 "minority" on any subsequent going private transaction pursuant
                 to Policy 9.1 and Policy Q-27;

          (ii)   the applicable waiting period under the Competition Act
                 (Canada) shall have expired; any applicable waiting periods
                 under the Hart-Scott-Rodino Antritrust Improvements Act of 1976
                 (United States) shall have expired or been earlier terminated;
                 the Minister of Industry (Canada) shall have allowed or have
                 been deemed to allowed the implementation of the proposed
                 transaction and the Purchase Agreement Transaction pursuant to
                 the provisions of the Investment Canada Act;

          (iii)  there shall not exist any prohibition at law against the
                 Offeror making the Common Share Offer or taking up and paying
                 for any Common Shares deposited under the Common Share Offer or
                 completing a Compulsory
<PAGE>
 
                                      -3-

               Acquisition, any Subsequent Acquisition Transaction or the right
               of the Offeror to complete the Purchase Agreement Transaction;

          (iv) that (i) no act, action, suit or proceeding shall have been
               threatened or taken before or by any court or tribunal or
               governmental agency or other regulatory authority or
               administrative agency or commission or by any elected or
               appointed public official, in any case with applicable
               jurisdiction, or by any private person (including, without
               limitation, any individual, corporation, firm, group or other
               entity) in Canada or elsewhere, and (ii) no law or regulation
               shall have been proposed, enacted, promulgated or applied, in the
               case of either (i) or (ii) the legal effect of which is:
               
               (A)  to cease trade, enjoin, prohibit or impose material
                    limitations or conditions on the purchase by or the sale to
                    the Offeror of the Common Shares, the right of the Offeror
                    to own Dominion Textile or exercise full rights of ownership
                    of the Common Shares of the rights of the Offeror to
                    complete the Purchase Agreement Transaction; or

               (B)  which would prevent or make materially uncertain completion
                    of the acquisition by the Offeror of Common Shares pursuant
                    to a Compulsory Acquisition of any Subsequent Acquisition
                    Transaction or completion of the Purchase Agreement
                    Transaction;


          (v)  except as disclosed in Dominion Textile's public filings or as 
               otherwise publicly disclosed as of the date hereof, following the
               date hereof, there shall not exist or have occurred (or, if there
               does exist or shall have previously occurred, there shall not
               have been disclosed, generally or to the Offeror) any change (or
               any condition, event or development involving a prospective
               change) in the operations, assets, capitalization, condition
               (financial or otherwise), results of operations, cash flows,
               properties.

<PAGE>
 
                                      -4-

               licenses, permits, rights, privileges or liabilities, whether
               contractual or otherwise, of Dominion Textile or any of its
               subsidiaries, which would be materially adverse to Dominion
               Textile and its subsidiaries and associates taken as a whole,
               other than: (i) any change or effect resulting from general
               economic, financial or market conditions; (ii) any change or
               effect resulting from conditions or circumstances generally
               affecting the Apparel Fabric Business or Nonwovens Business; or
               (iii) any change or effect resulting directly or indirectly from
               the public announcement of the Offeror's acquisition of an
               interest in the Common Shares, the publication of the Offers or
               the expected or actual consummation of the Offers or the Purchase
               Agreement Transaction;

         (vi)  following the date hereof, there shall not have occurred,
               developed or come into effect or existence and be continuing any
               event, action, state, condition or financial occurrence of
               national or international consequence, which adversely affects,
               in any material respect, the financial markets in Canada or the
               United States, generally, provided that for the purposes hereof a
               decline measured from November 15, 1997 in The Toronto Stock
               Exchange ("TSE") 35 Index of less than 20% which does not
               continue for more than five trading days shall not be material;
               and

         (vii) Dominion Textile shall not be, in any material respect, in breach
               of or default under the Letter Agreement and such agreement shall
               not have been terminated in accordance with its terms other than
               by reason of the breach or default of the Offeror thereunder.

    (c)  amend the Preferred Share Offer by increasing the purchase price
         payable pursuant to the Preferred Share Offer to CDN $112.00 cash per
         First Preferred Share;

    (d)  amend the Preferred Share Offer by making such offer subject only to 
         the conditions set forth below:

 

 




























<PAGE>
 
                                      -5-

         (i)   there shall have been validly deposited under the Preferred Share
               Offer and not withdrawn that number of First Preferred Shares 
               which represents at least 66 2/3% of the First Preferred Shares 
               on a fully diluted basis, excluding First Preferred Shares held
               as of the date hereof by the Offeror, its affiliates and
               associates or by persons whose First Preferred Shares may not be
               voted as part of the "minority" on any subsequent going private
               transaction pursuant to Policy 9.1 and Policy Q-27;

         (ii)  the Offeror shall have taken up and paid for Common Shares under
               the Common Share Offer or shall have determined to
               contemporaneously take up and pay for such Common Shares;

         (iii) the applicable waiting period under the Competition Act (Canada)
               shall have expired; any applicable waiting periods under the 
               Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United
               States) shall have expired or been earlier terminated; the
               Minister of Industry (Canada) shall have allowed or have been
               deemed to allow the implementation of the proposed transaction
               pursuant to the provisions of the Investment Canada Act;

         (iv)  there shall not exist any prohibition at law against the Offeror
               making the Preferred Share Offer or taking up and paying for any
               First Preferred Shares deposited under the Preferred Share Offer 
               or completing a Compulsory Acquisition, any Subsequent 
               Acquisition Transaction or the Purchase Agreement Transaction;

         (v)   that (i) no act, action, suit or proceeding shall have been
               threatened or taken before or by any court or tribunal or
               governmental agency or other regulatory authority or
               administrative agency or commission or by any elected or
               appointed public official, in any case with applicable
               jurisdiction, or by any private person (including, without
               limitation, any individual, corporation, firm, group or other
               entity) in Canada or elsewhere, whether or not having the force
               of law, and (ii) no law,
<PAGE>
 
                                      -6-

                    regulation or policy shall have been proposed, enacted, 
                    promulgated or applied, in the case of either (i) or (ii):

                    (A)  to cease trade, enjoin, prohibit or impose material
                         limitations or conditions on the purchase by or the 
                         sale to the Offeror of the First Preferred Shares or 
                         the right of the Offeror to exercise full rights of
                         ownership of the First Preferred Shares; or

                    (B)  which would prevent or make materially uncertain 
                         completion of the acquisition by the Offeror of First
                         Preferred Shares pursuant to a Compulsory Acquisition
                         or any Subsequent Acquisition Transaction or completion
                         of the Purchase Agreement Transaction:
                    
          (e)  except as expressly contemplated above, eliminate any 
               cross-conditionality between the Common Share Offer and the
               Preferred Share Offer such that each is a separate and
               independent offer;

          (f)  extend the Offers in accordance with Canadian securities laws in 
               order to effect such amendment;

          (g)  upon the take-up of Common Shares under the Common Share Offer, 
               proceed expeditiously with a Compulsory Company Acquisition or
               Subsequent Acquisition Transaction whereby holders of Common
               Shares receive at least $14.50 cash per Common Share, in a
               transaction which is at least as favourable to holders of Common
               Shares as the Common Share Offer, as hereby amended;

          (h)  upon the take-up of First Preferred Shares under the Preferred 
               Share Offer, proceed expeditiously with a Compulsory Acquisition
               or Subsequent Acquisition Transaction whereby holders of
               Preferred Shares receive at least $112.00 cash per First
               Preferred Share, in a transaction which is at least as favourable
               to holders of First Preferred Shares as the Preferred Share
               Offer, as hereby amended;
<PAGE>
 
                                      -7-

          (i)  exercise all reasonable best efforts to obtain the regulatory 
               approvals referred to in clause 1 (b)(ii) above;

          (j)  subject to the terms and conditions of the Common Share Offer and
               Preferred Share Offer, as amended, take-up and pay for Shares
               tendered to such Offers in accordance with applicable Canadian
               securities laws; and

          (k)  exercise all reasonable best efforts to complete the Purchase 
               Agreement Transaction.

     2.        RECOMMENDATION. Dominion Textile agrees to recommend to 
               --------------
     Shareholders the acceptance of the Common Share Offer, as amended hereby,
     and of the Preferred Share Offer, as amended hereby, and shall mail
     forthwith to Shareholders an amended directors' circular containing such
     recommendations. The form of such amended directors' circular shall be
     provided to the Offeror in advance of mailing and Dominion Textile agrees
     to discuss with the Offeror such changes as the Offeror shall reasonably
     request. Dominion Textile also agrees to seek to cause its investment
     advisors to provide an opinion to be included in the amended directors'
     circular referred to above, that the Offers, as amended as contemplated by
     this letter agreement, are fair from a financial point of view to the
     Shareholders. The form of amendment to the Offers and accompanying circular
     shall be provided to Dominion Textile in advance of mailing and the Offeror
     agrees to discuss with Dominion Textile such changes as Dominion Textile
     shall reasonably request.

     3.        COVENANTS OF THE COMPANY.
               ------------------------
               (a)  Except as otherwise contemplated by this letter agreement or
                    with the prior written consent of the Offeror, Dominion
                    Textile agrees that, until the Common Shares are taken-up by
                    the Offeror under the Common Share Offer or the obligations
                    of Dominion Textile hereunder shall have been terminated in
                    accordance with paragraph 10 hereof, the business and
                    affairs of Dominion Textile and its subsidiaries shall be
                    operated in the
<PAGE>
 
                                      -8-

          ordinary course of business in substantially the same manner as 
          previously conducted and, in furtherance of the foregoing:

          (i)    Dominion Textile will not declare or pay any dividends on or
                 make other distributions or payments (whether in cash, stock,
                 securities or other property or any combination thereof) in
                 respect of any Common Shares or take or authorize any action to
                 implement any of the foregoing, except for the payment of
                 regular dividends consistent with past practice;

          (ii)   Dominion Textile will not reserve, set aside, issue, authorize
                 or propose or commit to the issuance (whether through the
                 allotment, reservation or issuance of or granting options,
                 warrants, commitments, subscriptions, rights to purchase or
                 otherwise) of any securities of Dominion Textile, including any
                 Common Shares or any securities convertible into or
                 exchangeable for, or rights, warrants or options to acquire,
                 any Common Shares (other than the issuance of Common Shares
                 pursuant to the exercise of options or other rights to purchase
                 Common Shares, in each case as are outstanding as of the date
                 hereof);

          (iii)  Dominion Textile will not, and will not permit any of its
                 subsidiaries, to, acquire or agree to acquire, by amalgamating,
                 merging, consolidating or entering into a business combination
                 with or purchasing or leasing substantially all of the assets
                 of or otherwise, any business or undertaking or any
                 corporation, partnership, association or other business
                 organization or division thereof, except for transactions that,
                 individually or in the aggregate, are not material to Dominion
                 Textile and its subsidiaries taken as a whole;

<PAGE>
 
                                      -9-

          (iv) Dominion Textile will not, and will not permit any of its        
               subsidiaries to, sell, lease, transfer, mortgage or otherwise
               dispose of or encumber any of its property or assets, real or
               personal, that, individually or in the aggregate, are material to
               Dominion Textile and its subsidiaries taken as a whole, except in
               the ordinary course of business;

          (v)  Dominion Textile will not, and will not permit any of its
               subsidiaries to, grant to any executive or senior officers of
               Dominion Textile or any subsidiary any increase in compensation
               or in severance or termination pay, or enter into any employment
               agreement with any executive or senior officer of Dominion
               Textile or any subsidiary, except (A) as may be required under
               employment and termination agreements in effect as of the date
               hereof, (B) compensation increases in the ordinary course of
               business consistent with past practice and (C) amendment to stock
               option, stock purchase or similar plans to ensure that Common
               Shares issuable or held pursuant to such plans may be tendered
               under the Common Share Offer or that the persons entitled to
               Common Shares under such plans will otherwise receive the benefit
               of the Common Share Offer, provided that it is expressly agreed
               that Dominion Textile shall comply with, and the Offeror shall
               not challenge, the compensation arrangements and matters referred
               to under the headings "Service Contracts" and "Arrangements or
               Agreements Between the Corporation and Its Directors and
               Officers" in the directors' circulars of Dominion Textile dated
               November 10, 1997;

          (vi) except as otherwise contemplated hereby and in the ordinary
               course of business, Dominion Textile will not, and will not allow
               any of its subsidiaries to, enter into, amend or terminate any
               
<PAGE>
 
                                     -10-

                  existing agreements, covenants or contracts that, individually
                  or in the aggregate, are material to Dominion Textile and its
                  subsidiaries taken as a whole and will not modify, amend,
                  waive or terminate any confidentiality agreement Dominion
                  Textile has entered into with third parties;

          (vii)   Dominion Textile will not, other than in the ordinary course
                  of business and consistent with past practice, guarantee, or
                  permit is subsidiaries to guarantee, the payment of any
                  material indebtedness or incur, or permit any subsidiary to
                  incur, any material liability or material indebtedness or
                  borrowed money; and

          (viii)  Dominion Textile will advise the Offeror as soon as
                  practicable of any matter coming to its attention that might
                  constitute or give rise to a material change in the affairs
                  of Dominion Textile (within the meaning of the Securities Act
                  (Ontario)).

     (b)  Dominion Textile will take all such actions as may be required to
          redeem the common share purchase rights (the "Rights") outstanding
          pursuant to the rights plan agreement approved by the Board of
          Directors of Dominion Textile on August 9, 1989 effective at such time
          as the Offeror provides written notice to Dominion Textile that it
          will take up and pay for the Common Shares, all conditions of the
          Common Share Offer, as amended, having been satisfied.

     (c)  Dominion Textile agrees to fully co-operate with the Offeror in
          structuring a transaction or carrying out a reorganization immediately
          prior to completion of the Offers that is beneficial to the Offeror
          and not detrimental to the Shareholders of Dominion Textile provided
          such transaction or reorganization shall not delay the completion of
          the Offers.
<PAGE>
 
                                     -11-

     (d)  Dominion Textile will use its best efforts to cause all options,
          warrants, rights or convertible securities of Dominion Textile that
          entitle the holders thereof to acquire Common Shares to be exercised
          prior to the expiration of the Common Share Offer.

     (e)  Dominion Textile and its subsidiaries shall participate and co-operate
          in all reasonable respects with the Offeror and should use all
          reasonable efforts to obtain such consents, permits and regulatory
          approvals as may be necessary or desirable in connection with the
          completion of the transactions contemplated by the Offers and the
          Purchase Agreement Transaction.

     (f)  Upon the take-up and payment for Common Shares by the Offeror pursuant
          to the Common Share Offer and provided the Offeror thereby acquires
          not less than 66 2/3% of the outstanding Common Shares, Dominion
          Textile shall (i) take all actions necessary to ensure that the
          Offeror will have the ability to immediately replace the members of
          the Board of Directors of Dominion Textile with individuals designated
          by the Offeror, and (ii) assist the Offeror in acquiring pursuant to a
          Subsequent Acquisition Transaction, or other transaction proposed by
          the Offeror, all of the Common Shares and First Preferred Shares not
          tendered to the Offers, on the terms referred to in Section 1(g) and
          1(h).

     (g)  Effective from the date of the mailing of the Offeror's notice of
          change or variation of the Offers and so long as the Offers are
          outstanding, Dominion Textile shall permit the Offeror and its
          authorized representatives (including representatives of Galey & Lord
          Inc. and of any lenders to the Offeror) to have reasonable access to
          such information concerning the business, operations, assets,
          liabilities, financial condition and affairs of Dominion Textile and
          its subsidiaries as the Offeror may reasonably request, including
          reasonable access to senior management of

<PAGE>
 

                                     -12-

               Dominion Textile, provided that Dominion Textile shall not be
               required to provide access to or furnish information which senior
               management of Dominion Textile believes to be commercially
               sensitive or competitive information (other than such sensitive
               or competitive information as Dominion Textile shall have made
               available to any other third party which is a competitor of
               Dominion Textile) and further provided that the Offeror shall
               sign the Dominion Textile confidentiality agreement in the form
               attached hereto as Schedule "A" along with the other parties to
               such agreement.

4.        REPRESENTATIONS AND WARRANTIES OF THE OFFEROR. The Offeror 
          ---------------------------------------------
represents and warrants to Dominion Textile as follows:

          (a)  The Offeror is a corporation duly organized and validly existing
               under the laws of Canada.

          (b)  The Offeror has the corporate power and authority to enter in
               this letter agreement, to make the Offers and to carry out the
               transactions contemplated hereby and by the Offers. The execution
               and delivery of this letter agreement and the consummation of the
               transactions contemplated hereby have been duly and validly
               authorized by all necessary corporate action on the part of the
               Offeror, and no other corporate proceedings on the part of the
               Offeror are necessary to authorize this letter agreement. This
               letter agreement has been duly executed and delivered by the
               Offeror and constitutes a legal, valid and binding obligation of
               the Offeror.

          (c)  Neither the execution and delivery of this letter agreement nor
               the consummation of the transactions contemplated hereby nor
               compliance with any of the provisions hereof will (i) conflict
               with or result in any breach of any provision of the Offeror's
               Certificate of Incorporation or Bylaws, (ii) result in a
               violation or breach of, or constitute (with or without due notice
               or lapse of time or both) a default (or give rise to any right of



<PAGE>
 
                                     -13-

               termination cancellation or acceleration) under, any of the
               terms, conditions or provisions of any note, bond, mortgage,
               indenture, license, lease, contract, agreement or other
               instrument or obligation to which the Offeror or any of its
               subsidiaries is a party or by which any of them or any of their
               properties or assets may be bound, other than such violations,
               breaches or defaults that shall have been waived, cured or
               otherwise consented to in accordance with the terms of such
               agreements or instruments or (iii) violate any order, writ,
               injunction, decree, statute, rule or regulation applicable to the
               Offeror or any of its subsidiaries or any of their properties or
               assets, except in the case of (ii) and (iii) for violations,
               breaches or defaults that would not in the aggregate materially
               and adversely affect the Offeror and its subsidiaries taken as
               a whole.

          (d)  The Offeror has entered into adequate arrangements sufficient to
               ensure, upon satisfaction of the conditions of the respective
               Offers, as amended hereby, that the required funds are available
               to effect the full payment by the Offeror of the cash
               consideration payable pursuant to Offers, as amended hereby.

          (e)  The Offers comply in all material respects with applicable 
               Canadian securities legislation.

5.        REPRESENTATIONS AND WARRANTIES OF DOMINION TEXTILE. Dominion Textile 
          --------------------------------------------------     
represents and warrants to the Offeror as follows:

          (a)  Dominion Textile is a corporation duly organized and validly
               existing under the laws of Canada and has all requisite corporate
               power and authority to own, lease and operate its properties and
               to carry on its business as now being conducted. Each subsidiary
               of Dominion Textile is a corporation duly organized and validly
               existing under the laws of its jurisdiction of incorporation and
               has all requisite corporate power and
<PAGE>
 
                                     -14-

               authority to own, lease and operate its properties and to carry 
               on its business as now being conducted.

          (b)  Dominion Textile has the corporation power and authority to enter
               into this letter agreement and to carry out the transactions
               contemplated hereby; the execution and delivery of this letter
               agreement and the consummation of the transactions contemplated
               hereby have been duly and validly authorized by all necessary
               corporate action on the part of Dominion Textile and no other  
               corporate proceedings on the part of Dominion Textile are
               necessary to authorize this letter agreement; and this letter
               agreement has been duly executed and delivered by Dominion
               Textile and constitutes a legal, valid and binding obligation of
               Dominion Textile.

          (c)  Neither the execution and delivery of this letter agreement nor
               the consummation of the transactions contemplated hereby nor
               compliance with any of the provisions hereby will (i) conflict
               with or result in any breach of any provision of Dominion
               Textile's Articles of Incorporation or By-laws, (ii) to the best
               of its knowledge, result in a violation or breach of, or
               constitute (with or without due notice or lapse of time or both)
               a default (or give rise to any right of termination, cancellation
               or acceleration) under, any of the terms, conditions or
               provisions of any note, bond, mortgage, indenture, license,
               lease, contract, agreement or other instrument or obligation to
               which Dominion Textile or any of its subsidiaries is a party or
               by which any of them or any of their properties or assets may be
               bound, other than the effect of the change in control of Dominion
               Textile under the terms of its outstanding Guaranteed Senior
               Notes due 2003 and 2006, and the Nationsbank credit agreement of
               April 9, 1996 or (iii) to the best of its knowledge, violate any
               order, writ, injunction, decree, statute, rule or regulation
               applicable to Dominion Textile or any of its subsidiaries or any
               of their properties or assets, except in the case of (ii) and
               (iii), for violations, breaches or defaults that would
<PAGE>
 
                                     -15-

               not in the aggregate materially and adversely affect Dominion 
               Textile and its subsidiaries taken as a whole.

          (d)  Dominion Textile has filed all material forms, reports and
               documents with Canadian securities commissions since December 31,
               1996 required to be filed by it under applicable Canadian
               securities legislation (collectively, the "Reports"). None of the
               Reports, including without limitation any financial statements or
               schedules included therein, at the time filed, contained any
               untrue statement of a material fact or omitted to state a
               material fact required to be stated therein or necessary in order
               to make the statements therein, in light of the circumstances
               under which they are made, not misleading. The consolidated
               financial statements of Dominion Textile as of and for the year
               ended June 30, 1997 have been prepared in accordance with
               Canadian generally accepted accounting principles applied on a
               consistent basis (except as otherwise stated in such financial
               statements) and present fairly the consolidated financial
               position of Dominion Textile and its subsidiaries for the periods
               and as of the date thereof.

          (e)  The authorized capital of Dominion Textile consists of (i) an
               unlimited number of Common Shares of which 41,092,037 Common
               Shares were issued and outstanding as at October 29, 1997, 4,306
               First Preferred Shares of which 370 First Preferred Shares were
               issued and outstanding as at June 30, 1997, and an unlimited
               number of second preferred shares issuable in series of which
               1,919,600 redeemable second preferred shares, series D and
               600,000 redeemable second preferred shares, series E were issued
               and outstanding as at June 30, 1997, (ii) as at November 5, 1997
               1,400,800 options to acquire Common Shares that have been granted
               to directors, officers and employees of Dominion Textile, and
               (iii) the Rights. No securities have been issued since the
               respective dates referred to above other than Common Shares
               issuable upon the exercise of currently

<PAGE>
 
                                     -16-

          outstanding options, warrants or rights to purchase Common Shares, the
          dividend reinvestment plan or the employee share purchase plan.

     (f)  Except for changes resulting from the transactions contemplated
          hereby or as disclosed in material change reports, the directors'
          circulars of Dominion Textile dated November 10, 1997 and press
          releases filed by Dominion Textile with Canadian securities
          commissions since June 30, 1997, as at the date hereof, there has been
          no material adverse change in the working capital, financial
          condition, assets, liabilities or operations of Dominion Textile and
          its subsidiaries taken as a whole since June 30, 1997.

     (g)  Except as adequately provided for or reserved against in the balance
          sheet of Dominion Textile dated as of June 30, 1997 or the notes
          thereto, or except as publicly disclosed or as referred to elsewhere
          in this letter agreement or in the public disclosure of Dominion
          Textile or its subsidiaries, as at the date hereof, there are no
          material (measured in the context of Dominion Textile on a
          consolidated basis) undisclosed liabilities of any nature, contingent
          or otherwise, of Dominion Textile which should have been reflected or
          reserved against in a balance sheet (including the notes thereto)
          prepared in accordance with Canadian generally accepted accounting
          principles, consistently applied, including:

          (i)   any actions, suits or proceedings pending, taken or, to Dominion
                Textile's knowledge, threatened, before any governmental entity
                or by any elected or appointed public official or private person
                in Canada or elsewhere, whether or not having the force of law,
                which are likely to have a material adverse effect on Dominion
                Textile and its subsidiaries taken as a whole:

          (ii)  any taxes, interest and penalties, if any, which have become due
                pursuant to any tax returns, pursuant to any reassessment
                received
<PAGE>
 
                                     -17-

                    by Dominion Textile or its subsidiaries or in connection
                    with any of its or its subsidiaries property by any relevant
                    taxing authority which would be material to Dominion Textile
                    and its subsidiaries taken as a whole, and adequate
                    provision for payment has been made for taxes not yet due;
                    and

          (iii)     any material proceeding or order before any governmental
                    entity requiring Dominion Textile or any of its subsidiaries
                    to comply with or take action under any environmental laws
                    (including all applicable laws relating to the environment,
                    health and safety matters or condition, hazardous
                    substances, pollution or protection of the environment) or
                    any state of affairs on the properties of Dominion Textile
                    or its subsidiaries which is likely to give rise to a future
                    claim of any nature whatsoever, including any demand,
                    liability, obligation, cause of action, suit, proceeding,
                    judgement, award, assessment or reassessment and which is
                    likely to have a material adverse effect on Dominion Textile
                    and its subsidiaries taken as a whole.

6.   EXCLUSIVITY.   Dominion Textile, on behalf or itself and its affiliated 
     -----------
entities and subsidiaries, agrees that neither it nor any of its
representatives, directors, officers, agents or affiliates nor any of their
respective representatives, directors, officers, stockholders (unless such
stockholders are also Shareholders and are acting in their capacity as such),
agents or affiliates will, without the Offeror's prior written consent,
encourage, entertain, solicit or initiate any inquiries, proposal or offers
from, entertain, engage in or participate in any discussions or negotiations
with, or provide any information to, any person or entity (or group thereof) in
connection with or for the purpose of soliciting a competing offer or
transaction, an alternate proposal, indication of interest or letter of intent
with respect to (i) an offer for or the acquisition of Dominion Textile's
capital stock, or any part thereof, (ii) the sale of all or any portion of the
assets of Dominion Textile or its subsidiaries other than in the ordinary course
of business, (iii) any amalgamation, merger or other business combination
involving Dominion Textile or its
<PAGE>
 
                                     -18-

subsidiaries, (iv) any reorganization, recapitalization, liquidation or 
winding-up of or similar transaction involving Dominion Textile or its 
subsidiaries, or (v) any similar transaction which would accomplish the goals(s)
to be achieved pursuant to the Offers or any of the transactions described in 
clauses (i), (ii), (iii) or (iv) above or which would prevent the successful 
completion of the Offers. Without limiting the generality of the foregoing, 
Dominion Textile shall immediately close any data room which it has established,
shall cease to provide any access whatsoever to any third party to any 
non-public information (whether or not in writing) of Dominion Textile (other 
than access provided pursuant to a legal obligation of Dominion Textile entered 
into prior to the date hereof) and shall not after the date hereof enter into 
any confidentiality or other agreement with any third party under which it 
agrees to provide access to such non-public information. Nothing contained in 
this Section 6 or any other provision of this Agreement shall prevent the Board 
of Directors of Dominion Textile from taking such actions as the Board 
determines are reasonably required in the exercise of its fiduciary duties to 
respond to an unsolicited inquiry, proposal or offer received from any third 
party, if the Board of Directors of Dominion Textile concludes that such 
inquiry, proposal or offer, would, if consummated in accordance with its terms, 
result in a transaction at least $0.50 per Common Share more favourable to the 
holders of Common Shares than the Common Share Offer (a "Superior Proposal"). 
Dominion Textile shall immediately inform the Offeror of, and immediately 
provide the Offeror with full details and complete copies of and any other 
information regarding, any other such offers, proposals or expressions of 
interest (whether oral or in writing).

7.        FEES AND EXPENSES. Dominion Textile and the Offeror will each pay 
          -----------------
their respective fees and expenses (including fees and expenses of legal 
counsel, investment bankers, brokers or other representatives or consultants) in
connection with the transactions contemplated hereby.

8.        COMMISSIONS. Dominion Textile represents and warrants to the Offeror 
          -----------
that, except as noted below, it has not dealt with any broker or finder in 
connection with this letter or the transactions contemplated herein and that no 
other person or entity is entitled to any brokerage or finder's fee, commission 
or other compensation on account of any such dealings with Dominion Textile. 
Dominion Textile represents that it has retained Nesbitt Burns Inc. and
<PAGE>
 
                                     -19-

Goldman, Sachs & Co. to advise it with respect to implementing transactions to 
maximize shareholder value and that a true copy of the agreements under which 
such persons have been retained will be provided to the Offeror not later than 
November 17, 1997. Dominion Textile shall indemnify, save and hold the Offeror 
harmless from and against any and all losses, costs or expenses (including, 
without limitation, any and all attorneys' fees related to suits, actions or 
judgements incident hereto), whether direct, contingent or consequential, and no
matter how arising, in any way related to or arising from any breach of the 
representations and warranties contained in this paragraph.

9.   BINDING NATURE. The parties acknowledge that this letter agreement 
     --------------
represents the binding and legally enforceable obligations of the parties hereto
with respect of the matters covered hereby. The parties each agree to proceed in
good faith to cause their respective counsel, accountants and personnel to
obtain any and all necessary authorizations, regulatory approvals and consents
as may be required or desirable to consummate the Offers.

10.  TERMINATION: BREAK-UP FEE.
     -------------------------

     (a)  This letter agreement may be terminated (i) at the option of the
          Offeror, by written notice to Dominion Textile, if (A) the Board of
          Directors of Dominion Textile makes any material amendment, supplement
          or other modification to, or withdraws, its recommendation to holders
          of Common Shares described in paragraph 2, or recommends a Superior
          Proposal, or (B) Dominion Textile is in breach of or in default under
          any material obligation contained in this letter agreement or any of
          the representations and warranties of Dominion Textile set forth in
          paragraph 5 hereof is inaccurate or untrue in any material respect as
          at the date hereof, or (C) the Offeror fails to take-up and pay for
          Common Shares under the Common Share Offer sufficient to give the
          Offeror a majority of the outstanding Common Shares and a third party
          acquires, directly or indirectly, pursuant to a competing offer or
          transaction of the nature referred to in paragraph 6 at least a
          majority of the outstanding Common Shares (and for purposes of
<PAGE>
 
                                     -20-

          the foregoing a "competing" offer or transaction is one which is
          publicly announced, initiated or commenced prior to the expiry of the
          Common Share Offer); or (ii) at the option of Dominion Textile, by
          written notice to the Offeror, if (A) Dominion Textile shall have
          received an unsolicited bona fide Superior Proposal that is, in the
          opinion of the Board of Directors of Dominion Textile, acting in good
          faith, financially superior to the price per Common Share payable
          under the Common Share Offer, which proposal the Board of Directors of
          Dominion Textile is recommending to Shareholders, provided that such
          right of termination may be exercised by Dominion Textile only if
          after giving written notice to the Offeror of the terms of such
          Superior Proposal, the Offeror has not within a period of three days
          following receipt of such notice, agreed to increase the cash
          consideration payable pursuant to the Common Share Offer to an amount
          at least equal to the consideration offered pursuant to the Superior
          Proposal, or (B) the Offeror is in breach of or in default under any
          material obligation contained in this letter agreement or any of the
          representations and warranties of the Offeror set forth in paragraph 4
          hereof is inaccurate or untrue in any material respect.
          Notwithstanding anything to the contrary in this paragraph, the
          termination of this letter agreement shall not affect any right any
          party has with respect to the breach of this letter by another party
          prior to the termination of this letter agreement.

     (b)  In the event that (i) this letter agreement is terminated by the
          Offeror pursuant to paragraph 10(a)(i), or this letter agreement is
          terminated by Dominion Textile under paragraph 10(a)(ii)A, then
          Dominion Textile shall immediately pay to the Offeror a termination
          fee equal to CDN $22 million.

     (c)  In the event that the Offeror fails to take-up and pay for Common
          Shares under the Common Share Offer, as amended, other than the
          failure of the
<PAGE>
 
                                     -21-

               Offeror to do so by reason of its failure to obtain any
               regulatory consents or approvals necessary in order to do so or
               the failure to satisfy the condition set forth in Section 1(b)(i)
               in circumstances in which a Superior Proposal has not been
               publicly announced or made, Dominion Textile shall forthwith pay
               to the Offeror an amount equal to CDN $3 million on account of
               the costs, fees and expenses of the Offeror in entering into this
               letter agreement and making the Offers, as amended, and any
               payment under this Section 10(e) shall be in addition to any
               amount payable under Section 10(b) hereof.

11.       PUBLICATION/DISCLOSURE. Except as may otherwise be required by law or 
          ----------------------
by regulatory authorities having discretion over such matters, each party hereto
agrees that it will not make any public disclosure with respect to this letter 
agreement or the negotiations related to such agreement in each case without the
prior approval of the other party, which approval will not be unreasonably 
withheld. If any party deems that it is required by law or such regulatory 
authority to make any public announcement or release concerning this letter 
agreement, such party agrees to provide a written copy thereof to the other 
party in advance of any such announcement or release and to reasonably consider 
any suggested modifications, which will be provided by the other party in a 
timely matter. The parties acknowledge that the terms of this letter agreement 
will be summarized in the amended Offers and in the amendment to the directors' 
circular of Dominion Textile referred to in paragraph 2 hereof.

12.       OFFICERS' AND DIRECTORS' INSURANCE. The Offeror agrees to use 
          ----------------------------------
reasonable efforts to secure directors and officers liability insurance coverage
for Dominion Textile's current and former directors and officers on a seven year
"trailing" or "run off" basis from and after the successful completion of the 
Offers. If a trailing policy is not available, then the Offeror agrees that for 
the entire period from the successful completion of the Offers until three years
after the successful completion of the Offers, the Offeror will cause Dominion 
Textile or any successor to Dominion Textile to maintain Dominion Textile's 
current directors' and officers' insurance policy or an equivalent policy, 
subject in either case to terms and conditions no less advantageous to the 
directors and officers of Dominion Textile than those contained in the policy
<PAGE>
 
                                     -22-

in effect on the date hereof, for all present and former directors and officers 
of Dominion Textile covering claims made prior to or within three years after 
the successful completion of the Offers. Further, the Offeror agrees that after 
the expiration of such three year period it will use reasonable efforts to cause
such directors and officers to be covered under its then existing directors and 
officer insurance policy.

13.       NOTICES. Any notice required or permitted to be given hereunder shall 
          -------
be written, and shall be either (i) personally delivered, (ii) sent by Federal 
Express or other reputable common carrier guaranteeing next business day 
delivery, or (iii) sent by facsimile, to the respective addresses of the parties
set forth below, or to such other place as any party hereto may by notice given 
as provided herein designate for receipt of notices hereunder. Any such notice 
shall be deemed given and effective upon receipt or refusal of receipt thereof 
by the primary party to whom it is to be sent.

     If to Dominion Textile Inc.:   Dominion Textile Inc.
                                    1950 Sherbrooke Street West
                                    Montreal, Quebec
                                    H3H 1E7


                                    Attention: Charles H. Hantho
                                               Chairman
                                    Facsimile: (514) 989-6073

     with a required copy to:       Osler, Hoskin & Harcourt
                                    1 First Canadian Place
                                    P.O. Box 50, Stn. First Canadian Place
                                    Toronto, Ontario
                                    M5X 1B8

                                    Attention: Stan Magidson
                                    Facsimile: (416) 862-6666
<PAGE>
 
                                     -23-

     If to the Offeror:            DT Acquisition Inc.
                                   4838 Jenkins Avenue
                                   North Charleston, SC 29405

                                   Attention: Jerry Zucker
                                              Chairman, President and Chief 
                                                Executive Officer
                                   Facsimile: (803) 747-4092

     If to Polymer:                Polymer Group, Inc.
                                   4838 Jenkins Avenue
                                   North Charleston, SC 29405

                                   Attention: Jerry Zucker
                                              Chairman, President and Chief
                                                Executive Officer
                                   Facsimile: (803) 747-4092

     with a required copy to:      Kirkland & Ellis
                                   200 East Randolph Drive
                                   Chicago, ILL. 60601

                                   Attention: H. Kurt von Moltke
                                   Facsimile: (312) 861-2200

     with a required copy to:      Tory Tory DesLauriers & Binnington
                                   Suite 3000, Aetna Tower
                                   P.O. Box 270
                                   Toronto-Dominion Centre
                                   Toronto, Ontario
                                   M5K 1N2

                                   Attention: James E.A. Turner
                                   Facsimile: (416) 865-7380

14.       GOVERNING LAW. This agreement shall be governed by and construed in 
          -------------
accordance with the laws of the Province of Ontario and the laws of Canada 
applicable therein.

15.       COUNTERPARTS. This letter may be executed by facsimile signature, or 
          ------------
otherwise, in two or more counterparts, all of which taken together will 
constitute one binding agreement.

16.       ENTIRE AGREEMENT. This letter constitutes and comprises the entire 
          ----------------
agreement and understanding between Dominion Textile, the Offeror and Polymer 
Group, Inc. ("Polymer") as of the date hereof with regard to the subject matter 
hereof and there is no other prior or
<PAGE>
 
                                     -24-

contemporaneous written, oral or collateral agreements, undertakings, promises, 
warranties or covenants respecting such subject matter not expressly set forth 
herein.

17.       POLYMER PROVISIONS. Polymer represents and warrants to Dominion
          ------------------
Textile as follows:

     (a)  Polymer is a corporation duly organized and validly existing under the
          laws of the state of Delaware;

     (b)  Polymer has the corporate power and authority to enter into this
          letter agreement. The execution and delivery of this letter agreement
          has been duly and validly authorized by all necessary corporate action
          on the part of Polymer, and no other corporate proceedings on the part
          of Polymer are necessary to authorize this letter agreement. This
          letter agreement has been duly executed and delivered by Polymer and
          constitutes a legal, valid and binding obligation of Polymer;

     (c)  the execution and delivery of this letter agreement will not (i)
          conflict with or result in any breach of any provision of Polymer's
          Certificate of Incorporation or By-laws, (ii) to the best of its
          knowledge result in a violation or breach of, or constitute (with or
          without due notice or lapse of time or both) a default (or give rise
          to any right of termination, cancellation or acceleration) under, any
          of the terms, conditions or provisions of any note, bond, mortgage,
          indenture, license, lease, contract, agreement or other instrument or
          obligation to which Polymer or any of its subsidiaries is a party or
          by which any of them or any of their properties or assets may be
          bound, (iii) to the best of its knowledge violate any order, writ,
          injunction, decree, statute, rule or regulation applicable to Polymer
          or any of its subsidiaries or any of their properties or assets,
          except in the case of (ii) and (iii), for violations, breaches or
          defaults that would not in the aggregate materially and adversely
          affect Polymer and its subsidiaries taken as a whole, or (iv) have any
          adverse effect on the financing for the Offers, as amended, or the
          ability of the Offeror to draw down on its financing and consummate
          the Offers, as amended; and

<PAGE>
 
                                     -25-

     (d)  the Offeror has entered into adequate arrangements sufficient to
          ensure, upon satisfaction of the conditions of the respective Offers,
          as amended, that the required funds are available to effect the full
          payment by the Offeror of the cash consideration payable pursuant to
          the Offers, as amended, and the Offeror will, upon satisfaction of the
          conditions of the Offers, as amended, be able to obtain the funds
          under such arrangements.

18.       COVENANT OF POLYMER.  Upon execution of this letter agreement by 
          -------------------
     Dominion Textile, Polymer agrees, in its capacity as a shareholder of the
     Offeror, to cause the Offeror to take whatever action may be necessary in
     order to obtain the financing under its financing arrangements, subject to
     the satisfaction of the conditions of the Offers, as amended, required for
     consummation of the Offers, as amended, and to comply with all of its
     covenants and agreements contained in, or contemplated by, this letter
     agreement, subject to the terms and conditions hereof.
<PAGE>
 
     If the foregoing accurately expresses Dominion Textile's understanding and
agreement with respect to the matters described in this letter, please execute
this letter below and return it to us.


                                             Very truly yours

                                             DT ACQUISITION INC.


                                             By: /s/ James G. Boyd
                                                 -----------------------------
                                                 James G. Boyd
                                                 Executive Vice President, Chief
                                                 Financial Officer, Secretary 
                                                 and Treasurer


                                             Very truly yours


                                             POLYMER GROUP, INC.


                                             By: /s/ James G. Boyd
                                                 -----------------------------
                                                 James G. Boyd
                                                 Executive Vice President, Chief
                                                 Financial Officer, Secretary 
                                                 and Treasurer


Accepted and Agreed as of November    , 1997

DOMINION TEXTILE INC.

By:  /s/ C.H. Hantho
     ---------------------