DELTA WOODSIDE INDUSTRIES, INC.
                             COMPENSATION COMMITTEE
           RESOLUTION RESPECTING FISCAL YEAR 2005 INCENTIVE BONUS PLAN

         The Compensation  Committee (the "Committee") of the Board of Directors
(the "Board") of Delta  Woodside  Industries,  Inc. (the  "Company")  adopts the
following resolutions:

         WHEREAS,  the best interests of the Company and its shareholders  would
be served by the  establishment  of an  incentive  bonus plan for the  Company's
management employees with respect to the Company's 2005 fiscal year;

         NOW, THEREFORE, the Committee hereby resolves as follows:

         1. The Committee  adopts a 2005 fiscal year  incentive  bonus plan (the
"Bonus Plan") for the Company's  management  employees.  The Bonus Plan will pay
out  cash  bonuses  from a cash  bonus  pool,  the size of  which  pool  will be
determined  in  accordance  with the attached  schedule and will be based on the
EBITDA  achieved by Delta Mills,  Inc.  during its 2005 fiscal year  (calculated
without  deduction for amounts  payable  under the Bonus Plan).  EBITDA is to be
calculated in accordance with the definition of that term in Delta Mills, Inc.'s
Revolving  Credit and Security  Agreement dated as of March 31, 2000, as amended
through October 2004 (the "Credit Agreement") (but without deduction for amounts
payable under the Bonus Plan), and based on the audited financial  statements of
Delta  Mills,  Inc. for the 2005 fiscal  year.  Pursuant to the Bonus Plan,  the
bonus pool will first be comprised of the amount,  if any, of Delta Mills,  Inc.
fiscal 2005 EBITDA in excess of $6,400,000 up to an aggregate  bonus pool amount
of  $768,439,  and  then,  between  Delta  Mills,  Inc.  fiscal  2005  EBITDA of
$7,168,439 and Delta Mills,  Inc. fiscal 2005 EBITDA of  $10,860,439,  the bonus
pool shall be  increased  in  accordance  with the  attached  schedule  up to an
aggregate maximum bonus pool of $1,989,123.  Bonuses out of the bonus pool shall
be allocated  among the Company's  management  employees in accordance  with the
attached allocation schedule.  Payment of any bonuses pursuant to the Bonus Plan
shall be conditioned on:

                  (a)  Filing by the  Company  and Delta  Mills,  Inc.  with the
Securities and Exchange  Commission of their  respective Forms 10-K for the 2005
fiscal year containing audited financial statements for such fiscal year;

                  (b) Receipt by the  Compensation  Committee of a certification
from the Company's  chief  financial  officer  setting forth the  calculation of
EBITDA for purposes of the Bonus Plan and the bonuses to be paid pursuant to the
Bonus Plan; and

                  (c) At the time of such payment,  there is no Default or Event
of Default under the Credit Agreement,  and the payment of such bonuses will not
create a Default or Event of Default under the Credit Agreement.

         2.  Adoption of the Bonus Plan is subject to (a)  approval of the Bonus
Plan by the Agent under the Credit  Agreement and (b) the Company's  independent
auditor not objecting to the Bonus Plan.

         3. The Committee recommends that the Board approve the Bonus Plan.

         Adopted as of January 21, 2005.