EXHIBIT 10.31
March 10, 2006
Mr. Herbert M. Mueller
375 Oxford Meadow Run
Alpharetta, Georgia 30004
This letter confirms our agreement on the terms and conditions of the
termination of your employment with Delta Apparel, Inc. (“Corporation”), as a
result of your voluntary resignation which will be effective on March 10, 2006
(“Termination Date”).
As a result of your termination of employment, we have agreed that you are
entitled to receive the following benefits:

  1.   Severance Benefits. You shall be paid a total amount of $225,000.00 less
applicable statutory deductions and voluntary deductions. You will be paid at
the rate of your current annual base salary on the normal payroll dates
(semi-monthly) beginning with payroll period ending March 15, 2006 through the
payroll period ending December 29, 2006. You will be paid the balance of the
$225,000.00 in the gross amount of $42,944.38 less applicable statutory
deductions and voluntary deductions on December 29, 2006.     2.   Medical,
Dental, and Vision Benefits. You will have the customary continuation rights
under COBRA beginning March 16, 2006 which include the option of continuing
health coverage. Your COBRA rates will be supplemented by the difference between
COBRA rates at the time of coverage and active rates at the time of coverage. A
COBRA letter will be mailed to your home shortly after your Termination Date.  
  3.   Stock Options. As of your Termination Date, you will be fully vested in
the following number of options at the applicable option price listed:

             
 
  Number of Shares     14,000  
 
  Grant Date     July 5, 2004  
 
  Vesting Date     July 5, 2005  
 
  Option Price     $11.28  

      These options must be exercised within twenty-one (21) days of your
Termination Date.     4.   Other Welfare Plan Benefits. You will be entitled to
all other employee benefit plans in which you currently participate through your
Termination Date and in accordance with plan documents. However, your coverage
under these benefit plans will end as your Termination Date. You will be
entitled to conversion rights of benefits as allowable by the plans.     5.  
Vacation Pay Benefits. You will be entitled to all accrued, unused vacation pay
as of March 10, 2006.

     For the consideration provided above, you agree that for a period of twelve
(12) months after your Termination Date you shall not directly or indirectly,
either as an independent contractor, employee, consultant, agent, partner, joint
venturer or otherwise through another person or entity, including but not
limited to a Competitor, (i) solicit, induce or attempt to induce (or aid any
person or entity in doing so) any employee of the Corporation to leave the
employ of the Corporation or in any way interfere with the relationship between
Corporation and any employee thereof, (ii) hire or engage any person who was an
employee of Company or any subsidiary at any time during the six month period
preceding your hiring or engagement of such employee, or (iii) solicit or induce
or attempt to induce (or aid any person or entity in doing so) any customer,
supplier, or other person or entity in a business relation with Corporation to
cease doing business with Corporation, or in any way interfere with the
relationship between any such customer, supplier, or person or entity in a
business relation with the Company. For purposes of this paragraph, the phrase
“customer, supplier or other person or entity in a business relation with
Corporation” shall mean those persons or entities with whom the Company did
business, had work in progress or delivered an offer to perform services during
the 18-month period prior to your termination.

24

--------------------------------------------------------------------------------

 

     You agree that you will not make disparaging comments about the Corporation
or any of its representatives or engage in any conduct that causes an unfair
business disadvantage to the Corporation.
     Irreparable harm shall be presumed if you breach any covenant of this
Agreement. The faithful observance of all covenants in this Agreement is an
essential condition to the terms of this Agreement and the Corporation depends
upon absolute compliance. You agree that any court of competent jurisdiction
should immediately enjoin any breach of this Agreement, upon the request of the
Corporation and you specifically release the Corporation from the requirement to
post any bond in connection with a temporary or interlocutory injunctive relief,
to the extent permitted by law.
          You agree that the consideration you receive under this contract is
greater than amounts you would otherwise have been entitled to. In return for
the above described benefits, you agree unconditionally to release and discharge
forever the Corporation, its officers, directors, agents, employees, successors,
assigns, subsidiaries, affiliates, attorneys, and owners (hereafter collectively
referenced as “Employer”) from any and all claims or demands whatsoever, known
or unknown, which you may have against the Employer, arising out of or in
connection with your employment with the Employer, employment agreement with the
Company dated September 30, 2003, and termination of employment from the
Employer, including but not limited to any claim arising from or under any
policies, handbooks; the Age Discrimination in Employment Act of 1967, 29 U.S.C.
§§ 621, et seq., as amended; Title VII of the Civil Rights Act of 1964, 42
U.S.C. §§ 2000-e et seq.; the Employee Retirement Income Security Act, 29 U.S.C.
§§ 1001, et seq.; the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq.; the
Americans With Disabilities Act of 1990, 42 U.S.C. §§ 12101, et seq.; Executive
Orders 11246 and 11141; the Rehabilitation Act of 1973; or any other applicable
federal, state, or local law and any other acts or omissions by the Employer
through the date of this contract, including but not limited to any statutory,
common law, or public policy claims, whether based in tort or contract, and
which you, or any personal successor, heir or assign of yours, otherwise may now
or hereafter assert against the Employer by reason of the termination of your
employment or anything whatsoever which may have occurred before the termination
of your employment or by reason of the rights you may forego in exchange for
benefits under is contract.
     This is a complete agreement between you and the Corporation and supercedes
any and all other agreements, whether written or oral.
     This full and complete release will bind you, your heirs, personal
representatives, and assigns. This release will survive all other aspects of
this letter. This is a complete and final release of all claims, which you may
have against the Corporation.
     Should any provision of this Agreement be declared or be determined by any
court to be unenforceable or invalid, the validity of the remaining parts, terms
or provisions of this Agreement shall not be affected thereby and the
unenforceable or invalid part, term or provision shall be deemed modified to
eliminate the invalid part, and, as so modified, such part, term or provision
shall be deemed a part of this Agreement as though originally contained herein.
Each party also agrees that, without receiving further consideration, such party
will sign and deliver such documents and do anything else that is necessary in
the future to make the provisions of this Agreement effective.
     We appreciate your services to Delta Apparel, Inc. and wish you the best
for the future. If you have any questions concerning your termination of
benefits, please call me. Also, if you agree to the terms of this letter, please
sign the acknowledgment below and return it to me.

                  Sincerely,         DELTA APPAREL, INC.    
 
           
 
  By:        
 
     
 
Robert W. Humphreys    
 
  Title:   President & CEO    

ACKNOWLEDGMENT
I agree to and accept the terms of this letter related to the termination of my
employment.

               
 
Date
     
 
Herbert M. Mueller    

25