EXHIBIT 10.25
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT dated as of December 31, 2002 (this
"Agreement"), is entered into by and between GFSI, Inc., a Delaware corporation
("Gear") and Xxxxxxxxx & Company, Inc., for itself and as Manager of Xxxxxxxxx
Partners Opportunity Fund, LLC, Jefferies Partners Opportunity Fund II, LLC and
Jefferies Employees Opportunity Fund, LLC (such entities being collectively
referred to herein as "Jefferies").
ARTICLE I
EXCHANGE OFFER
1.1 EXCHANGE OF NOTES. On the terms and subject to the conditions
contained herein, Jefferies shall offer and sell to Gear $24,000,000 aggregate
principal amount at maturity of 11.375% Senior Discount Notes (the "ORIGINAL
NOTES") of GFSI Holdings, Inc. ("Parent") issued pursuant to an Indenture, dated
as of September 17, 1997, between Parent and State Street Bank and Trust Company
(as successor in interest to Fleet National Bank), as trustee, and in exchange
therefore Gear shall issue, offer and sell to Jefferies $9,900,000 aggregate
principal amount of its 9 5/8% Senior Subordinated Notes (the "Exchange Notes").
The Exchange Notes will be issued pursuant to an Indenture, dated as of December
31, 2002, between Gear and State Street Bank and Trust Company, as Trustee (the
Exchange Note Indenture"). The Exchange Notes will be offered without being
registered under the Securities Act of 1933, as amended (the "Securities Act")
pursuant to an exemption from the Securities Act.
1.2 CLOSING. On the terms and subject to the conditions set forth
herein, the closing of the sale and purchase of the Original Notes in exchange
for the issuance, sale and purchase of the Exchange Notes (the "Closing") shall
take place at the offices of Mayer, Brown, Xxxx & Maw, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 on December 31, 2002 or at such other place or time as may be
mutually agreed to by Gear and Jefferies. The date of the Closing is referred to
herein as the "Closing Date."
1.3 CLOSING DELIVERIES.
(a) At the Closing, Jefferies shall deliver to Gear: (i)
$24,000,000 aggregate principal amount at maturity of the Original
Notes, deposited in an account specified by Gear; and (ii) this
Agreement duly executed by Jefferies.
(b) At the Closing, Gear shall deliver to Xxxxxxxxx & Company,
Inc.: (i) this Agreement duly executed by Gear; (ii) the Exchange Note
Indenture duly executed by Gear and the Trustee; and (iii) Exchange
Notes in the original principal amount of $9,900,000 (such delivery
shall occur in such names, forms, and amounts as Jefferies shall
specify and delivery shall be made through the facilities of The
Depository Trust Company).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF GEAR.
Gear represents and warrants to Jefferies as follows:
2.1 ORGANIZATION. Gear is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
2.2 AUTHORIZATION OF THIS AGREEMENT. Gear has the requisite corporate
power to execute and deliver this Agreement and to perform the transactions
contemplated hereby to be performed by it. The execution and delivery by Gear of
this Agreement and the performance by it of the transactions contemplated hereby
to be performed by it have been duly authorized by all necessary corporate
action on the part of Gear. This Agreement has been duly executed and delivered
by a duly authorized officer of Gear and constitutes a valid and binding
obligation of Gear, enforceable against Gear in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
2.3 AUTHORIZATION OF EXCHANGE NOTES AND INDENTURE. Gear has the
requisite corporate power to execute and deliver the Exchange Notes and the
Exchange Note Indenture and to perform the transactions contemplated thereby to
be performed by it. The execution and delivery by Gear of each of the Exchange
Notes and the Exchange Note Indenture and the performance by it of the
transactions contemplated thereby to be performed by it will (at the time of the
execution and delivery thereof) be duly authorized by all necessary corporate
action on the part of Gear. Each of the Exchange Notes and the Exchange Note
Indenture will (at the time of execution and delivery thereof) be duly executed
and delivered by a duly authorized officer of Gear and constitute a valid and
binding obligation of Gear, enforceable against Gear in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
2.4 NO CONFLICTS.
(a) None of the execution and delivery by Gear of this
Agreement or the Exchange Note Indenture or the consummation of the
transactions contemplated hereby or thereby, or compliance by Gear with
any of the provisions hereof or thereof will (i) conflict with the
certificate of incorporation, bylaws, or any other organizational or
governing documents of Gear, if applicable, (ii) conflict with,
violate, result in a breach of, or constitute a default under any
contract, agreement, undertaking, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, deed
of trust, franchise, insurance policy, commitment or other instrument,
arrangement or agreement, whether written or oral to which Gear is a
party or by which its properties or assets are bound or affected, or
(iii) violate any law to which Gear, or any of its properties or
assets, is subject.
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(b) No consent, waiver, approval, order, or authorization of,
or registration or filing with, or notification to any person is
required on the part of Gear in connection with the execution and
delivery of this Agreement or the Exchange Note Indenture or the
compliance by Gear with any of the provisions hereof or thereof, other
than those obtained on or prior to the date hereof and the filing of
any notice or reports as are required to be filed under any applicable
state securities or blue sky laws in order to qualify for exemptions
applicable to the offer and issuance of the Exchange Notes.
2.5 NO REGISTRATION. The offer, issuance, sale, and delivery of the
Exchange Notes contemplated by this Agreement, as provided in this Agreement,
are exempt from the registration requirements of the Securities Act and all
applicable state securities laws, and are otherwise in compliance with such
laws. Gear will not take any action (including any offering of any securities of
Gear under circumstances that would require the integration of such offering
with the offering of the Exchange Notes contemplated by this Agreement under the
Securities Act and the rules and regulations of thereunder) that would subject
the offering, issuance, or sale of the Exchange Notes contemplated by this
Agreement, to the registration requirements of Section 5 of the Securities Act.
2.6 INVESTMENT COMPANY REPRESENTATION. Gear is not and, after giving
effect to the offering and sale of the Exchange Notes, will not be an
"investment company" (as defined in the Investment Company Act of 1940, as
amended).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEFFERIES
Jefferies represents and warrants to Gear as follows:
3.1 AUTHORIZATION. Jefferies has the requisite corporate power to
execute and deliver this Agreement and to perform the transactions contemplated
hereby and thereby to be performed by it. The execution and delivery by
Jefferies of this Agreement and the performance by it of the transactions
contemplated hereby or thereby to be performed by it have been duly authorized
by all necessary corporate action on the part of Jefferies. This Agreement has
been duly executed and delivered by or on behalf of Jefferies and this Agreement
constitutes a valid and binding obligation of Jefferies enforceable against
Jefferies in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.2 SECURITIES ACT MATTERS.
(a) Jefferies is acquiring the Exchange Notes for its own
account, for investment and not with a view to, or for sale in
connection with, any distribution thereof within the meaning of the
Securities Act.
(b) Jefferies understands that (i) the Exchange Notes have not
been registered under the Securities Act or the securities laws of any
state or foreign jurisdiction and are
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being issued by Gear in a transaction exempt from the registration
requirements of the Securities Act and (ii) the Exchange Notes may not
be offered or sold except pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the
Securities Act and any applicable securities laws of any state or
foreign jurisdiction.
(c) Jefferies further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to
Jefferies) promulgated under the Securities Act depends on the
satisfaction of various conditions, and that, if applicable, Rule 144
may afford the basis for sales only in limited amounts.
(d) All information desired by Jefferies concerning Gear,
Parent and the Exchange Notes or any other matter relevant to its
decision to purchase the Exchange Notes is or has been made available
to it.
(e) Jefferies is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3), or (7) under the Securities Act)
purchasing for its own account, and it is acquiring the Exchange Notes
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. Jefferies has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment in the
Exchange Notes and is able to bear the economic risk of its investment.
3.3 NO CONFLICTS; CONSENTS AND APPROVALS.
(a) None of the execution and delivery by Jefferies of this
Agreement or the consummation of the transactions contemplated hereby
or compliance by Jefferies with any of the provisions hereof will (i)
conflict with the certificate of incorporation, bylaws, or any other
organizational or governing documents of Jefferies, if applicable, or
(ii) violate any law to which Jefferies, or any of its properties or
assets, is subject.
(b) No consent, waiver, approval, order, or authorization of,
or registration or filing with, or notification to any person is
required on the part of Jefferies in connection with the execution and
delivery of this Agreement or the compliance by Jefferies with any of
the provisions hereof.
3.4 OWNERSHIP. Jefferies is the sole record and beneficial owner of
all of the Original Notes being offered and sold by it in exchange for the
Exchange Notes and has good title to such Notes, free and clear of any mortgage,
lien, pledge, charge, security interest or other encumbrance.
ARTICLE IV
REGISTRATION OF EXCHANGE NOTES
4.1 FILING OF REGISTRATION STATEMENT. Gear shall prepare and file or
cause to be prepared and filed with the Securities and Exchange Commission (the
"SEC"), within 120 days after the Closing Date, an exchange offer registration
statement on the appropriate form under the Securities Act (the "Registration
Statement") to enable the holders of the Exchange Notes to
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exchange (the "Exchange Offer") the Exchange Notes for publicly registered notes
having terms substantially identical to the Exchange Notes (the "Registered
Notes").
4.2 EFFECTIVENESS OF REGISTRATION STATEMENT. Gear shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective by the SEC within 180 days after the Closing Date. Upon the
effectiveness of the Registration Statement, Gear will offer to the holders of
the Exchange Notes the opportunity to exchange their Exchange Notes for
Registered Notes.
ARTICLE V
MISCELLANEOUS
5.1 AMENDMENTS. This Agreement may be amended, modified, or
supplemented only pursuant to a written instrument making specific reference to
this Agreement and signed by each of the parties hereto.
5.2 CONSTRUCTION. Unless the context otherwise requires, (i) all
references to Articles, Sections, Schedules, or Exhibits contained in this
Agreement are references to articles, sections, schedules, exhibits of or to
this Agreement, (ii) words in the singular include the plural and VICE VERSA,
and (iii) words of any gender include each other gender. As used in this
Agreement the following words or phrases have the following meanings: (i)
"hereby," "herein," "hereof," "hereto," "hereunder," and words of similar import
refer to this Agreement as a whole and not to any particular provision hereof;
(ii) "include," "including," or derivatives thereof means "including without
limitation"; (viii) "or" means "and/or"; and (iii) "person" means any
individual, corporation, joint venture, partnership, limited partnership,
limited liability company, trust, unincorporated association, or other form of
business or legal entity or Governmental Body. The Article and Section headings
of this Agreement are for convenience of reference only and shall not be deemed
to alter or affect the meaning or interpretation of any provision hereof.
5.3 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
5.4 ENTIRE AGREEMENT. This Agreement, the Exchange Notes and the
Indenture (collectively, the "Related Instruments") constitute the entire
agreement of the parties hereto in respect of the subject matter hereof and
thereof, and supersede all prior agreements or understandings among the parties
hereto or thereto in respect of such subject matter.
5.5 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect
to the principles of conflict of laws thereof.
(b) Each of the parties hereto submits to the exclusive
jurisdiction of any state or federal court of the United States located
in the State of New York with respect to any
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claim or cause of action arising out of this Agreement or the
transactions contemplated hereby.
5.6 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally,
(ii) on the third day (other than a Saturday, Sunday or any other day on which
commercial banks are required by law or authorized to close in New York, New
York (a "Business Day")) after being mailed by certified mail, return receipt
requested, (iii) the next Business Day after delivery to a recognized overnight
courier, or (iv) upon transmission and confirmation of receipt by a facsimile
operator if sent by facsimile (and shall also be transmitted by facsimile to the
persons receiving copies thereof), to the parties at the following addresses or
facsimile numbers (or to such other address and facsimile number as a party may
have specified by notice given to the other party pursuant to this provision):
If to Gear, to:
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Director of Corporate Finance/Corporate Controller
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to (which shall not constitute notice):
Mayer, Brown, Xxxx & Maw
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to Jefferies, to:
00000 Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or at such other address as Jefferies shall have
specified to Gear in writing.
5.7 PUBLIC STATEMENTS. Neither Jefferies nor Gear shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless such party determines that disclosure is otherwise required by applicable
law; provided, however, that to the extent any such disclosure is so required,
the party intending to make such release shall use its commercially reasonable
efforts consistent with such applicable law to consult with the other party in
respect of the text thereof.
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5.8 SEVERABILITY. If any provision of this Agreement or any
Related Instrument or the application of such provision to any person or
circumstance shall be held by a court of competent jurisdiction to be invalid,
illegal, or unenforceable under the applicable law of any jurisdiction, (i) the
remainder of this Agreement or the application of such provision to other
persons or circumstances or in other jurisdictions shall not be affected
thereby, and (ii) such invalid, illegal, or unenforceable provision shall not
affect the validity or enforceability of any other provision of this Agreement
or any Related Instrument.
5.9 SUCCESSORS AND ASSIGNS. This Agreement and each Related
Instrument and the rights evidenced hereby and thereby shall inure to the
benefit of and be binding upon the successors and assigns of each of Gear and
Jefferies. The provisions of this Agreement are intended to be for the benefit
of all holders from time to time of any of the Exchange Notes and shall be
enforceable by any such holder.
5.10 SURVIVAL. The representations, warranties, and covenants set
forth in this Agreement shall survive the consummation of the transactions
contemplated.
5.11 SPECIFIC PERFORMANCE. Damages in the event of breach of Article
IV of this Agreement by Gear would be difficult or impossible to ascertain and
it is therefore agreed that Jefferies, in addition to and without limiting any
other remedy or right it may have, will have the right to an injunction or other
equitable relief in any court of competent jurisdiction enjoining any such
breach of Article IV and enforcing specifically the terms and provisions thereof
subject to any restrictions under applicable law with respect to Gear's ability
to perform thereunder, and Gear hereby waives any and all defenses it may have
on the ground of lack of jurisdiction or competence of the court to grant such
an injunction or other equitable relief or lack of proof of actual damages. The
existence of the rights under this Section 5.11 will not preclude Jefferies from
pursuing any other right or remedy which may be available at law or in equity.
* * * * *
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IN WITNESS WHEREOF, the undersigned have cause this Agreement to be
duly executed as of the date first written above.
GFSI, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President and Chief Operating Officer
XXXXXXXXX & COMPANY, INC., for itself and as
Manager of Xxxxxxxxx Partners Opportunity
Fund, LLC, Jefferies Partners Opportunity
Fund II, LLC and Jefferies Employees
Opportunity Fund, LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
