[THE INDEBTEDNESS EVIDENCED BY THIS AGREEMENT IS SUBORDINATE TO THE PRIOR
PAYMENT IN FULL OF THE SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT
DEFINED BELOW) PURSUANT TO, AND TO THE EXTENT PROVIDED IN THE SUBORDINATION
AGREEMENT (DEFINED BELOW)].
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Agreement") is made, entered into and
effective as of the 3rd day of October, 2003, by and between Delta
Apparel, Inc., a Georgia corporation ("Pledgor"), in favor of James F. Soffe, a
resident of the State of North Carolina, John D. Soffe, a resident of the State
of North Carolina, and Anthony M. Cimaglia, a resident of the State of North
Carolina (jointly, the "Pledgees").
A. Pledgor owns all of the issued and outstanding capital stock of MJS
Acquisition Company, a North Carolina corporation (the "Company").
B. Simultaneously with the execution of this Agreement, Company has
acquired all of the issued and outstanding shares of capital stock of M.J. Soffe
Co., a North Carolina corporation ("Soffe"), pursuant to the terms of that
certain Amended and Restated Stock Purchase Agreement dated as of the date
hereof among Pledgor, Pledgees, the Company and Soffe (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meaning assigned thereto in the Purchase Agreement.
C. The Company has paid part of the purchase price under the Purchase
Agreement by delivery of a Promissory Note in the original principal amount of
Eight Million Dollars and no/100ths ($8,000,000.00) (the "Note"),
D. Simultaneously with the execution of this Agreement, Pledgor has
entered into a Guaranty wherein it has guaranteed, among other things, the
payment of the Note by the Company (the "Guaranty Agreement"), and such Guaranty
Agreement and Note are to be secured by a second lien in and to all of the
capital stock of the Company.
E. The Company has entered into a Loan and Security Agreement,
Guarantee and other ancillary documents (the "Senior Debt Documents") with, and
in favor of, Congress Financial Corporation (Southern) as Agent and in its
individual capacity (the "Senior Lender"), wherein the Senior Lender will be
given a first and prior lien in and to all of the capital stock of the Company
(the "First Lien").
F. Contemporaneously with the execution and delivery of the Senior Debt
Documents, Pledgees have entered into a Subordination Agreement (the
"Subordination Agreement," as amended, restated, supplemented or otherwise
modified from time to time) with the Senior Lender.
G. Pledgees have required, as a condition to their entering into the
Purchase Agreement and accepting the Note and Guaranty Agreement, that Pledgor
execute, deliver and perform this Agreement.
AGREEMENTS
NOW, THEREFORE, in order to induce Pledgees to accept the Note and the
Guaranty Agreement and enter into the Purchase Agreement, and in consideration
of the benefits to accrue to Pledgee by reason thereof, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Certain Definitions. As used herein, the following terms shall have the
following meanings, respectively, unless otherwise required by the context:
a. "Code" shall mean the Uniform Commercial Code as in effect on the
date of this Agreement, and as the same may be amended from time to time
hereafter, in the State of North Carolina.
b. "Collateral" shall mean, collectively, (i) all of the shares of the
capital stock of the Company now or at any time or times hereafter owned by
Pledgor or its successors or assigns, and the certificates representing the
shares of such capital stock, all options and warrants for the purchase of
shares of the stock of the Company now or hereafter held in the name of the
Pledgor or its successors or assigns (all of said capital stock, options
and warrants and all capital stock held in the name of the Pledgor or its
successors or assigns as a result of the exercise of such options or
warrants being hereinafter collectively referred to as the "Pledged
Shares"), whether or not delivered by Pledgor to Pledgees accompanied by
the stock power in the form of Exhibit A attached hereto and made a part
hereof (the "Powers") duly executed in blank, and, unless otherwise
expressly provided herein, all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, or in exchange for, any or all of the Pledged Shares; (ii) all
additional shares of stock of the Company from time to time acquired by
Pledgor in any manner, and the certificates representing such additional
shares (any such additional shares shall constitute part of the Pledged
Shares), and all options, warrants, and, unless otherwise expressly
provided herein, dividends, cash, instruments and other rights and options
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares; (iii) the property and
interest in property described in Section 3 below; and (iv) all proceeds of
the foregoing.
c. "Debt" shall mean all indebtedness, obligations and liabilities of
the Company or Pledgor, whether for principal, interest, penalties, fees,
expenses, performance or otherwise, now existing or hereafter incurred
under or in connection with the Note or the Additional Consideration (as
defined in the Purchase Agreement) or under or in connection with Pledgor's
obligation under the Guaranty Agreement with respect to the Note and the
Additional Consideration, and any and all extensions, renewals,
refinancings or refundings thereof in whole or in part.
2. Pledge. As security for the full and timely payment and performance of
the Debt in accordance with the terms thereof and of the Note and other
agreements now or hereafter evidencing the Debt, together with Pledgor's
obligations hereunder and all amounts that may be due and owing hereunder, the
Pledgor (a) hereby pledges and hypothecates the Collateral to the Pledgees and
(b) agrees that the Pledgees shall have, and hereby grants to and creates in
favor of the Pledgees, a second priority security interest under the Code in and
to the Collateral. THE SECURITY INTEREST AND PLEDGE TO THE PLEDGEES HEREUNDER IS
SUBORDINATE TO THE LIEN IN FAVOR OF SENIOR LENDER, WHICH SHALL HAVE POSSESSION
OF THE COLLATERAL IN ACCORDANCE WITH AND UNDER THE SENIOR DEBT DOCUMENTS UNTIL
THE SENIOR DEBT DOCUMENTS HAVE BEEN TERMINATED OR THE COLLATERAL IS OTHERWISE
RELEASED FROM THE LIEN OF THE SENIOR LENDER. Upon such termination or release of
the Collateral by the Senior Lender, Pledgor authorizes and directs the Senior
Lender to deliver possession of the Collateral to Pledgees, together with such
other documents as may be necessary to perfect the security interest of Pledgees
therein. Pledgor further agrees that Pledgees may file or record, at the cost
and expense of Pledgor, this Agreement or other notice in the form of financing
statements and such other documents, including extensions and renewals as may be
necessary to perfect and continue the perfection of the security interest of
Pledgees in and to the Collateral. So long as no Event of Default has occurred
2
and is continuing, Pledgees shall hold the Collateral as collateral security
hereunder and shall not transfer, assign or otherwise dispose of any interest
therein.
3. Collateral Adjustments. If, during the term of this Agreement:
a. any stock dividend, reclassification, readjustment or other change
is declared or made in the capital structure of the Company, or any option
included within the Collateral is exercised, or both, or
b. any subscription(s), warrant(s) or any other right(s) or option(s)
shall be issued by the Company or any other party having authority to do so
in connection with the Collateral,
then all new, substituted and additional shares, warrants, rights, options and
other securities issued by reason of any of the foregoing shall constitute
Collateral and, if appropriate, be immediately delivered to and held by Pledgees
under the terms of this Agreement; provided, however, that nothing contained in
this Section 3 shall be deemed to permit any stock dividend, issuance of
additional stock, warrants, rights or options, reclassification, readjustment or
other change in the capital structure of the Company which is not expressly
permitted in this Agreement; and further provided that Pledgor's failure to so
deliver such property to Pledgees shall in no way affect the security interest
granted therein as hereinabove provided.
4. Representations and Warranties. Pledgor represents and warrants as
follows:
a. Pledgor is the sole legal and beneficial owner of the Collateral
(including, without limitation, all of the Pledged Shares), free and clear
of any and all liens, interests, claims or other encumbrances except for
the security interest created by this Agreement and the prior lien of the
Senior Lender, subject to the terms and conditions set forth in the
Subordination Agreement.
b. All of the Pledged Shares have been duly authorized, validly issued
and are fully paid and non-assessable.
c. Pledgor has full power and authority to enter into this Agreement
and is under no restriction, limitation or incapacity with respect to the
execution, delivery and performance of this Agreement, except to the extent
provided in the Senior Debt Documents.
d. There are no restrictions upon the voting rights associated with,
or upon the transfer of, any of the Collateral except as provided herein or
in the Senior Debt Documents.
e. Except as otherwise provided herein, Pledgor has the right to vote,
pledge and grant a security interest in or otherwise transfer the
Collateral free of any liens, interests, claims or other encumbrances,
except as provided herein or in the Senior Debt Documents.
f. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
either (i) for the pledge of the Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement, or (ii) for
the exercise by Pledgees of the voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement (other than under applicable securities law).
3
g. The pledge of the Collateral pursuant to this Agreement creates a
valid and perfected second priority security interest in the Collateral in
favor of Pledgees for the benefit of Pledgees securing the payment and
performance of the Debt.
h. The Powers are duly executed and give the Pledgees the authority
they purport to confer.
The representations and warranties set forth in this Section 4 shall
survive the execution and delivery of this Agreement and shall continue until
the termination of this Agreement in accordance with Sections 12 and 13 hereof.
Notwithstanding anything to the contrary contained herein, Pledgor shall not be
deemed to have breached or to be in breach of any of the representations and
warranties herein to the extent that such breach results from a breach by any
Pledgee of any of the representations, warranties, or covenants in the Purchase
Agreement.
5. Voting Rights. Subject to the First Lien and the Subordination
Agreement, during the term of this Agreement, and except as provided in the next
sentence of this Section 5 and as provided in Section 9 hereof, Pledgor shall
have the right to vote the Pledged Shares on all corporate questions in a manner
not inconsistent with the terms of this Agreement, the Note, the Purchase
Agreement and any other agreement, instrument or document executed pursuant
thereto or in connection therewith. Subject to the First Lien and the
Subordination Agreement, after the occurrence and during the continuation of an
Event of Default (as hereinafter defined), Pledgees may, at their option,
exercise all voting powers pertaining to the Collateral, including the right to
take shareholder action by written consent, and Pledgor hereby irrevocably
constitutes and appoints Pledgees as Pledgor's proxy and attorney-in-fact, with
full power of substitution, to do so. This proxy shall be irrevocable and shall
continue in full force and effect until the termination of this Agreement in
accordance with Sections 12 and 13 hereof.
6. Dividends and Other Distributions.
a. Subject to the First Lien and the Subordination Agreement, so long
as no Event of Default shall have occurred or is continuing, and subject to
Sections 3 and 9:
i. Pledgor shall be entitled to receive and retain all cash
dividends and interest paid in respect of the Collateral; and
ii. Pledgees shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to
receive the cash dividends or interest payments which it is authorized
to receive and retain pursuant to clause (i) above.
b. Subject to the First Lien and the Subordination Agreement, after
the occurrence and during the continuation of an Event of Default, or if
any of the following would result in an Event of Default if paid to
Pledgor:
i. All rights of Pledgor to receive dividends and interest
payments in respect of the Collateral shall cease, and all such rights
shall thereupon become vested in Pledgees, for the benefit of
Pledgees, who shall thereupon have the sole right to receive and hold
as Collateral such dividends and interest payments; and
ii. All dividends and interest payments which are received by
Pledgor contrary to the provisions of clause (i) of this Section 6(b)
shall be received in trust for Pledgees, for the benefit of Pledgees,
shall be segregated from other funds of Pledgor and shall be paid over
4
immediately to Pledgees as Collateral in the same form as so received
(with any necessary endorsements).
7. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default":
a. An Event of Default (as defined in the Note) under the Note;
b. The Pledgor breaches or fails in any manner to satisfy or perform
any of its obligations or covenants under this Agreement, provided that
Pledgees give notice to Pledgor of such breach or failure, identifying such
notice as a default notice given pursuant to this Agreement, and such
breach or failure remains uncured for 30 days after Pledgor's receipt of
such notice (or, in the case of a breach or failure that is not capable of
being cured in such 30-day period, for such longer period as may be
required for Pledgor to cure such failure acting with due diligence, but in
no event exceeding 120 days), and provided further, however, that the
foregoing notice and cure periods shall not apply if the breach or failure
is a result of an intentional breach by Pledgor;
c. The Pledgor or the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts as they
mature;
d. A trustee or receiver of the Pledgor or the Company or of any
substantial part of the assets of the Pledgor or the Company is appointed,
and the Pledgor or the Company (if appointment is made in a proceeding
brought against it) by any action indicates approval of, consent to or
acquiescence in such appointment or if any such trustee or receiver is not
discharged within a period of sixty (60) days; or
e. Any proceedings are commenced by or against the Pledgor or the
Company under any bankruptcy, reorganization, insolvency, readjustment of
debt law or statute of the Federal government or any state government, and
the Pledgor or the Company by any action indicates approval of, consent to
or acquiescence therein or if the same shall remain undismissed for a
period of sixty (60) days.
Notwithstanding the foregoing, neither the failure of the Company to make any
payment under this Agreement or the Note or with respect to the Additional
Consideration nor the failure by Pledgor to make, pursuant to the Guaranty, any
such payment that the Company has not made shall constitute an Event of Default
to the extent that the Pledgees are prohibited from accepting such payment
pursuant to the terms of the Subordination Agreement dated as of the date hereof
among the Company, Pledgor, Pledgees, and the Senior Lender.
8. Remedies.
a. Subject to the First Lien and the Subordination Agreement, after
the occurrence and during the continuation of an Event of Default, Pledgees
may at their option, at any time and with or without notice or demand of
any kind (except as set forth in the next sentence), exercise any and all
rights and remedies granted Pledgees under this Agreement, to a secured
party under the Code and otherwise at law or in equity, including, without
limitation, accelerating the Debt and/or (i) transferring any of the
Collateral into its name or that of its nominee(s) or (ii) cause a sale or
other transfer of all or substantially all of the Collateral. Upon an
election to cause a sale or transfer of the Collateral, Pledgees shall have
absolute authority to negotiate the terms of such sale, and Pledgor shall
cooperate fully in such negotiations and sale. In the event that any such
5
sale closes, the proceeds from the sale shall be first paid in satisfaction
of the costs and expenses referred to in the next sentence, then to
satisfaction of the Debt and, finally, with any remaining amount paid to
Pledgor or such other party as may be entitled thereto. Pledgor will pay to
Pledgees all reasonable expenses (including, without limitation, court
costs and reasonable attorneys' and paralegals' fees and expenses) of, or
incident to, the enforcement of any of the provisions hereof or the
negotiation and closing of any such sale.
b. The Pledgor recognizes that the Pledgees may be unable to effect a
public sale of all or a portion of the Collateral by reason of certain
provisions contained in the Securities Act of 1933, as amended, and
applicable state securities laws and, under the circumstances then
existing, may reasonably resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such Collateral for their own account for investment and
not with a view to the distribution or resale thereof. The Pledgor agrees
that private sales so made may be at prices and on other terms less
favorable to the seller than if such Collateral were sold at public sale
and that the Pledgees have no obligation to delay sale of any of the
Collateral for the period of time necessary to permit the issuers of such
Collateral, even if such issuers would agree, to register or qualify such
Collateral for public sale under the Securities Act of 1933, as amended,
and applicable state securities laws. The Pledgor agrees that private sales
made under the foregoing circumstances shall be deemed to have been made in
a commercially reasonable manner hereunder and under the Code.
c. Pledgor agrees that following the occurrence and during the
continuation of an Event of Default it will not at any time plead, claim or
take the benefit of any appraisal, valuation, stay, extension, moratorium
or redemption law now or hereafter in force in order to prevent or delay
the enforcement of this Agreement, or the absolute sale of the whole or any
part of the Collateral or the possession thereof by any purchaser at any
sale hereunder, and Pledgor waives the benefit of all such laws to the
extent it lawfully may do so. Pledgor agrees that it will not interfere
with any right, power and remedy of Pledgees provided for in this Agreement
or now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by Pledgees of any
one or more of such rights, powers or remedies. No failure or delay on the
part of Pledgees to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon Pledgor by Pledgees with
respect to any such remedies shall operate as a waiver thereof, or limit or
impair Pledgees' right to take any action or to exercise any power or
remedy hereunder, without notice or demand, or prejudice their rights as
against Pledgor in any respect.
d. Pledgor further agrees that a breach of any of the covenants
contained in this Agreement will cause irreparable injury to Pledgees, that
Pledgees may have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
Agreement shall be specifically enforceable against Pledgor, and, to the
extent permitted by law, Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Debt is not then due and payable in
accordance with the agreements and instruments governing and evidencing the
Debt.
9. Negative Covenants. Pledgor covenants and agrees that so long as any of
the Debt is outstanding (and at all times prior to the termination of this
Agreement), unless Pledgees shall otherwise give Pledgor prior written consent,
which consent shall not be unreasonably withheld, and (except for subsection (b)
below) unless permitted by the Senior Loan Documents:
a. Pledgor shall not (and shall not permit the Company to) (i) sell,
transfer or otherwise dispose of, or grant any option with respect to, any
of the Collateral or (ii) create or permit to exist any lien, claim,
6
interest or other encumbrance upon or with respect to any of the
Collateral.
b. Pledgor shall not permit the Company, directly or indirectly, to
declare or pay any dividends on account of any shares of any capital stock
of the Company ("Capital Stock") now or hereafter outstanding, or redeem,
retire, purchase or otherwise acquire any shares of any class of Capital
Stock for any consideration, or make any other distribution (by reduction
of capital or otherwise) in respect of any such shares or agree to do any
of the foregoing, except in the form of shares of Capital Stock consisting
of common stock, and Pledgor shall not permit the Company to make any loan
to any Affiliate (as defined in the Purchase Agreement) or make any
extraordinary payment for any management fee or administrative or overhead
charges to or on behalf of an Affiliate, and Pledgor shall not accept any
of the foregoing from the Company, except that, notwithstanding the
foregoing, the following are permitted:
i. payments for goods in the ordinary course of business;
ii. payments by the Company to any Affiliate for actual and
necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll, information systems and similar types of services
paid for by the Company or any Affiliate on behalf of the Company, in
the ordinary course of their respective businesses or as the same may
be directly attributable to the Company; provided that such payments
are approved by James F. Soffe (or, in the event of his death or
incapacity, Anthony M. Cimaglia, or, in the event of the death or
incapacity of James F. Soffe and Anthony M. Cimaglia, John D. Soffe),
which approval shall not be unreasonably withheld;
iii. dividends or other distributions by the Company to Pledgor
with respect to the Capital Stock that in the aggregate after the date
of this Agreement do not exceed ten percent (10%) of the Company's
cumulative net after tax income from the date of this Agreement to the
end of the fiscal month ending on or immediately prior to the
applicable dividend or distribution payment date (provided, however,
that no such dividend or distribution may be paid if at such time any
payment of principal of or interest on the Note or any payment of
Additional Consideration has become due and for any reason (including,
without limitation, by reason of the Subordination Agreement) such
payment has not been made to the Pledgees or the next scheduled
payment of principal of or interest on the Note or any payment of
Additional Consideration would be prohibited by reason of the
Subordination Agreement as a result of the payment of such dividend or
distribution); provided, however, that in any event the payment by the
Company to Pledgor of the $370,000 per annum management fee described
in the Purchase Agreement is permitted; and
iv. the Company may pay (by dividend or otherwise) to Pledgor the
amount of Federal and state taxes that are attributable to the income
or assets of Pledgor (after giving effect to any "carry forward
losses" or other net losses to which Pledgor may be entitled).
c. Pledgor shall not permit the Company to engage in or enter into any
agreement relating to any merger, consolidation, liquidation, winding up,
dissolution, restructuring or any other transaction that is not in the
ordinary course of the Company's business.
7
d. Pledgor shall not permit the Company to issue or sell any capital
stock to any person without the prior written consent of Pledgees. The
recipients of any such stock shall be required (as a condition to the
issuance of such stock) to pledge the shares in accordance with the terms
of this Agreement.
e. Pledgor shall not (and shall not permit the Company to) amend,
modify or otherwise change any of the terms or provisions in any of the
Company's corporate or charter documents in effect on the date hereof.
10. Pledgees Appointed Attorney in Fact. Pledgor hereby irrevocably
appoints Pledgees as Pledgor's attorney-in-fact (coupled with an interest) to
(a) prior to or after the occurrence of an Event of Default, execute, deliver
and file financing statements covering the Collateral; and (b) upon the
occurrence of an Event of Default and during the continuance of such Event of
Default, in either or both its own name or as "attorney-in-fact for Pledgor" and
without prior notice to and prior demand on Pledgor, perform (but Pledgees shall
not be obligated to and shall incur no liability to Pledgor and any third party
for failure to do so) any act which Pledgor is obligated by this Agreement to
perform and any other acts which the Pledgees deem appropriate to perfect and
continue the security interests in the Collateral, unless such action is
prohibited by the Subordination Agreement.
11. Waivers. Pledgor waives presentment and demand for payment of any of
the Debt, protest and notice of dishonor or Event of Default with respect to any
of the Debt and all other notices to which Pledgor might otherwise be entitled,
except as otherwise expressly provided herein or in the Note.
12. Term. This Agreement shall remain in full force and effect until the
Debt and all other obligations due and owing hereunder have been fully and
indefeasibly paid, satisfied and performed and the Note has been canceled
pursuant to its terms. Upon the termination of this Agreement as provided above
(other than as a result of the sale of the Collateral), Pledgees will release
the security interest created hereunder and will deliver the Collateral to
Pledgor.
13. Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective, or be reinstated, as the case may be, if at any time
payment and performance of the Debt, or any part thereof, or any other
obligation secured hereby, is, pursuant to applicable law, rescinded or reduced
in amount, whether as a "voidable preference," "fraudulent conveyance" or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Debt shall be reinstated and deemed reduced only by any amount
paid and not so rescinded, reduced, restored or returned.
14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Pledgor and Pledgees and their respective successors and
assigns. Pledgor's successors and assigns shall include, without limitation, a
receiver, trustee and debtor-in-possession of or for Pledgor. Except to the
Senior Lender, neither Pledgor nor any Pledgee may assign this Agreement without
the prior written consent of the other parties, which consent shall not be
unreasonably withheld.
15. Applicable Law; Severability. This Agreement shall be governed by and
construed according to the laws of the State of North Carolina (excluding
therefrom any provisions that would result in the application of the laws of
another jurisdiction). Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law, but, if any provision of this Agreement shall be held to be prohibited or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8
16. Further Assurances. Pledgor agrees that it will cooperate with Pledgees
and will execute and deliver, or cause to be executed and delivered, all such
other certificates, stock powers, proxies, instruments and documents, and will
take all such other actions, including, without limitation, the execution and
filing of financing statements, as Pledgees may reasonably request from time to
time in order to carry out the provisions and purposes of this Agreement.
Pledgees also has the right to file financing statements without the signature
of Pledgor and to state thereon all information relating to Pledgor as Pledgees
may reasonably deem necessary or advisable to prepare and file such financing
statements.
17. Pledgees' Duty of Care. Pledgees shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact or law with respect to the
exercise of their rights or remedies under this Agreement including, without
limitation, acts, omissions, errors or mistakes with respect to the exercise of
their rights or remedies under this Agreement with respect to the Collateral,
except for those arising out of or in connection with Pledgees' negligence or
willful misconduct with respect to the custody of the Collateral in Pledgees'
possession. Without limiting the generality of the foregoing, Pledgees shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at their option. All
reasonable expenses incurred in connection therewith shall be for the sole
account of Pledgor, and shall constitute part of the obligations secured hereby.
18. Notices. Any notice, demand or other communication under this Agreement
to any party hereto shall be effective if delivered by hand delivery or sent via
telecopy, recognized overnight courier service or certified mail, return receipt
requested, and shall be presumed to be received by a party hereto (i) on the
date of delivery if delivered by hand or sent by telecopy, (ii) on the next
business day if sent by recognized overnight courier service and (iii) on the
third business day following the date sent by certified mail, return receipt
requested. Each such notice, demand or other communication shall be addressed to
such party at the address set forth below (or at such other address as such
party shall specify to the other parties hereto in writing):
If to Pledgees at: James F. Soffe, as Representative
for the Pledgees
1414 Lakeview Drive
Fayetteville, NC 28305
With a copy to: Poyner & Spruill LLP
3600 Glenwood Avenue
Raleigh, NC 27612
Fax: (919) 783-1075
Attn.: James M. O'Brien, III, Esq.
If to Pledgor at: Delta Apparel, Inc.
2750 Premier Parkway
Suite 100
Duluth, GA 30097
Attention: Robert W. Humphreys
With a Copy to: Wyche, Burgess, Freeman & Parham, P.A.
44 East Camperdown Way
Greenville, SC 29601
Attention: Eric B. Amstutz, Esq.
9
19. Amendments, Waivers and Consents. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Pledgor herefrom
shall in any event be effective unless the same shall be in writing and signed
by Pledgees and Pledgor, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
21. Execution in Counterparts. This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement.
22. No Strict Construction; Access to Counsel. This Agreement shall be
strictly construed neither against the Pledgor nor Pledgees. Each party hereto
acknowledges and agrees that it has had access to and consulted with an
attorney.
23. Representative. Each Pledgee named herein has designated and appointed
James F. Soffe and his successors (the "Representative") as his representative
to act in the name of, for and on behalf of each such party with respect to any
and all matters relating to this Agreement. Each and every act of Representative
shall be in the name of, for and on behalf of such parties and shall bind each
of the Pledgees. All notices to and consents of the Pledgees permitted or
required hereunder shall be delivered to or obtained from the Representative and
such notices and consents shall be deemed notices to and consents of each of the
Pledgees.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
PLEDGOR:
DELTA APPAREL, INC.
By: /s/ Robert W. Humphreys
-----------------------------
Its: President and CEO
PLEDGEES:
/s/ James F. Soffe
---------------------------------
James F. Soffe
/s/ John D. Soffe
---------------------------------
John D. Soffe
/s/ Anthony M. Cimaglia
---------------------------------
Anthony M. Cimaglia
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ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Pledge Agreement executed by Delta Apparel, Inc., James F. Soffe, John D. Soffe
and Anthony M. Cimaglia, and dated as of October 3, 2003, agrees to be bound
by the terms and provisions of the Pledge Agreement applicable to the
undersigned, agrees promptly to note on its books and records the security
interests granted under the Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Pledge Agreement in
connection with the registration of any Collateral in the name of Pledgees or
their nominee(s) or the exercise of voting rights by Pledgees.
MJS Acquisition Company
By: /s/ Robert W. Humphreys
------------------------------------
Name: Robert W. Humphreys
Title: President and CEO
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EXHIBIT A
Form of Stock Power
FOR VALUE RECEIVED, the undersigned ("Transferor") does hereby sell,
assign and transfer to ___________________________________________________ (the
"Transferee") _________________________________ shares of the capital stock of
MJS Acquisition Company, a North Carolina corporation (the "Company"),
represented by Certificate Nos. _____________ (the "Stock") and standing in the
name of the Transferor on the books of the Company, and the Transferor does
hereby irrevocably constitute and appoint _______________________________ as
Transferor's true and lawful attorney, for and in Transferor's name and stead,
to sell, assign and transfer all or any of the Stock, and for that purpose to
make and execute all necessary acts of assignment and transfer thereof; and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or substitutes shall lawfully do
by virtue hereof.
Dated:______________
TRANSFEROR:
DELTA APPAREL, INC.
By: /s/ Robert W. Humphreys
----------------------------------------
Name: Robert W. Humphreys
Title: President and Chief Executive Officer
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