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.
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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
