MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement"), is executed as of the 1st day of
October, 2003, by and between GEARCAP LLC, a Delaware limited liability
company ("Gearcap"), and GFSI HOLDINGS, INC., a Delaware corporation, on
behalf of itself and its subsidiaries (the "Company").
W I T N E S S E T H:
WHEREAS, Gearcap has and/or has access to personnel who are highly
skilled in operating business concerns such as the Company; and
WHEREAS, the Company desires to retain Gearcap to provide business,
management and financial advice to the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as
follows:
1. The Company hereby retains Gearcap, through Gearcap's own personnel or
through personnel available to Gearcap, to render day-to-day Management
Services (as defined below) to the Company and its subsidiaries (whether now
existing or hereafter acquired), including GFSI, Inc. The term of this
Agreement shall commence on the date hereof and continue until the tenth
anniversary of the date hereof unless extended, or sooner terminated, as
provided in Section 6 below. Gearcap's personnel shall be reasonably available
to the Company's auditors and other personnel for consultation and advice. In
consideration for rendering Management Services, the Company shall make
payments to Gearcap in amounts determined in accordance with this Agreement.
"Management Services" shall consist of accounting, professional and
administrative services relating to the business, operations and finances of
the Company and its subsidiaries, including GFSI, Inc. The Company and Gearcap
acknowledge and agree that the Management Services to be provided by Gearcap
to GFSI, Inc. and its subsidiaries are substantially similar to those
currently provided internally by the employees of GFSI, Inc.
2. During the term of this Agreement, the Company shall pay to Gearcap an
annual fee of $2,300,000. The fee shall be payable monthly. Subject to the
provisions of Section 2.4(b) of the Company's Stockholders Agreement, the
amount of this fee shall be adjusted on September 1 of each calendar year
during the term of this Agreement based on the agreement of the Company and
Gearcap which determination shall be based upon the planned services that
Gearcap shall provide to the Company for the upcoming twelve (12) month
period. If, after a reasonable period of negotiation, the parties are unable
to agree on an adjustment to the annual fee, then the parties shall refer such
dispute to an independent third party evaluator (i.e. either an accounting
firm, investment bank, arbitrator or any other third party experienced in
evaluating the services performed by Gearcap under this Agreement) mutually
agreeable to the parties to resolve such dispute. During the interim period
Gearcap shall be entitled to receive the annual fee on the terms in effect for
the prior year. The effect of a resolution of such dispute shall be
retroactive to September 1 and any increase or decrease in the annual fee
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shall be reflected in the remaining installment payments of the annual fee
payable through the remainder of the current year in which such dispute was
resolved. The fees and expenses of the third party evaluator shall be split
equally by the parties. The amount of this annual fee shall be pro rated for
any partial year during the term of this Agreement.
3. Reasonable out-of-pocket expenses incurred by Gearcap and its personnel in
performing services hereunder to the Company and its subsidiaries shall be
promptly reimbursed to it by the Company upon presentation of such supporting
data as the Company shall reasonably require.
4. During the term of this Agreement each executive officer of Gearcap will be
entitled to participate in any and all benefit plans maintained by the Company
on the same basis as executive officers of the Company.
5. During the term of this Agreement Holdings shall supply to Gearcap, free of
charge, all office space and office services requested by Gearcap.
6. Gearcap may terminate this Agreement at any time by notifying the Company
in writing of such termination. Upon the termination, cancellation or
expiration of this Agreement, the Company shall pay to Gearcap all accrued and
unpaid amounts owing to Gearcap hereunder.
7. Gearcap shall have no liability to the Company on account of (i) any advice
which it renders to the Company, provided Gearcap believed in good faith that
such advice was useful or beneficial to the Company at the time it was
rendered, (ii) Gearcap's inability to obtain financing or achieve other
results desired by the Company, or (iii) the failure of any acquisition to
meet the financial, operating or other expectations of the Company.
8. The Company will, to the fullest extent permitted by applicable law,
indemnify and hold harmless Gearcap, its affiliates and associates, and each
of the respective owners, employees, members, managers and affiliates of each
of the foregoing, from and against any loss, liability, damage, claim or
expenses (including the fees and expenses of counsel) (collectively "Damages")
arising as a result of or in connection with this Agreement, Gearcap's
services hereunder or other activities on behalf of the Company and its
subsidiaries, unless such Damages resulted from Gearcap's lack of good faith
at the time it rendered any services or advice to the Company.
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9. Miscellaneous
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9.1 This Agreement sets forth the entire understanding of the parties
with respect to Gearcap's rendering of services to the Company. This
Agreement may not be modified, waived, terminated or amended
except expressly by an instrument in writing signed by Gearcap
and the Company.
9.2. This Agreement may not be assigned by either party without
the consent of the other party, but shall be binding upon
and inure to the benefit of the parties and their respective
successors and assigns upon such permitted assignment.
9.3. In the event that any provision of this Agreement shall be
held to be void or unenforceable in whole or in part, the
remaining provisions of this Agreement and the remaining
portion of any provision held void or unenforceable in part
shall continue in full force and effect.
9.4. Except as otherwise specifically provided herein, notice
given hereunder shall be deemed sufficient if delivered
personally or sent by registered or certified mail to the
address of the party for whom intended at the principal
executive offices of such party, or at such other address as
such party may hereinafter specify by written notice to the
other party.
9.5. No waiver by either party of any breach of any provision of
this Agreement shall be deemed a continuing waiver or a
waiver of any preceding or succeeding breach of such
provision or of any other provision herein contained.
9.6. Gearcap and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the
Company.
9.7. This Agreement shall be governed by the internal laws (and
not the law of conflicts) of the state of Kansas.
(Signatures on next page)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CONSULTANT:
GEARCAP LLC, a Delaware limited liability
company
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: President
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COMPANY:
GFSI HOLDINGS, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: President
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