NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement"), dated this 27th day of
February, 1997, is made by and between GFSI HOLDINGS, INC., a Delaware
corporation ("Holdings"), and XXXXXX X. XXXXX, an individual ("Seller").
W I T N E S S E T H:
WHEREAS, the Seller has been actively involved in the business of Winning
Ways, Inc., a Missouri corporation (the "Company"), as an employee, substantial
stockholder, officer and member of the Board of Directors of the Company; and
WHEREAS, Holdings and GFSI, Inc., a Delaware corporation ("GFSI"), have
agreed to purchase all of the issued and outstanding shares of capital stock of
the Company (the "Shares") pursuant to an Agreement for Purchase and Sale of
Stock dated January 24, 1997, by and among GFSI, Holdings and all of the
stockholders of the Company (the "Purchase Agreement"); and
WHEREAS, the continued involvement by the Seller in a business in
competition with the Company would diminish the value of the Shares to be
purchased by Holdings; and
WHEREAS, as an inducement to Holdings to consummate its purchase of the
Shares, the Seller has agreed not to compete with Holdings and to refrain from
making disclosures to the extent set forth below;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:
1. Restrictive Covenants. In consideration of the annual sum of Two Hundred
Fifty Thousand Dollars ($250,000) to be paid in monthly installments by Holdings
to the Seller during the ten (10) year period following the date hereof, the
Seller agrees that for a period of ten (10) years from the date hereof, the
Seller shall not:
a. directly or indirectly, either individually or as a principal,
partner, agent, employee, employer, consultant, stockholder, joint
venturer, or investor, or as a director or officer of any corporation or
association, or in any other manner or capacity whatsoever, engage in,
assist or have any active interest in a business located anywhere in the
United States that (i) manufactures, distributes or markets custom
imprinted and embroidered activewear or that otherwise competes with or is
similar in concept, design or format to the business conducted by Holdings
or the Company on the date hereof or at any time during
the term of this covenant, or (ii) sells to, supplies, provides goods or
services to, purchases from, or does business in any manner with Holdings
or the Company. Notwithstanding the above, this paragraph shall not be
construed to prohibit the Seller from owning shares of Holdings or from
owning less than ten percent (10%) of the securities of a corporation which
is publicly traded on a securities exchange or over-the-counter; or
b. directly or indirectly, either individually, or as a principal,
partner, agent, employee, employer, consultant, stockholder, joint
venturer, or investor, or as a director or officer of any corporation or
association, or in any other manner or capacity whatsoever, (i) divert or
attempt to divert from Holdings or the Company any business with any
customer or account with which the Seller had any contact or association,
which was under the supervision of the Seller, or the identity of which was
learned by the Seller as a result of the Seller's employment with Holdings
or the Company, or (ii) induce any salesperson, distributor, supplier,
vendor, manufacturer, representative, agent, jobber or other person
transacting business with Holdings or the Company to terminate their
relationship or association with Holdings or the Company, or to represent,
distribute or sell services or products in competition with services or
products of Holdings or the Company, or (iii) induce or cause any employee
of Holdings or the Company to leave the employ of Holdings or the Company;
provided, however, nothing contained in this clause (iii) shall prohibit
the Seller from voting to terminate the employ of any officer of the
Company in connection with the performance of the Seller's obligations as a
member of the Board of Directors of Holdings or any affiliate of Holdings.
2. Non-Disclosure. The Seller shall not at any time or in any manner,
directly or indirectly, use or disclose to any party other than Holdings any
trade secrets or other Confidential Information (as defined below) learned or
obtained by him while a stockholder, officer or director of Holdings or the
Company. As used herein, the term "Confidential Information" means information
disclosed to or known by the Seller as a consequence of his position with
Holdings or the Company and not generally known in the industry in which
Holdings or the Company is engaged and that in any way relates to the Company's
or Holdings' products, processes, services, inventions (whether patentable or
not), formulas, techniques or know-how, including, but not limited to,
information relating to distribution systems and methods, research, development,
manufacturing, purchasing, accounting, engineering, marketing, merchandising and
selling.
3. Affiliate Transactions. For as long as the Seller or any member of his
family is the beneficial owner of any stock of Holdings, neither the Seller, any
member of his family nor any Affiliate (as defined in the Purchase Agreement) of
the Seller shall engage, directly or indirectly, in any business transaction
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with Holdings, the Company or any Affiliate of Holdings.
4. Specific Performance. The Seller acknowledges and agrees that Holdings'
rights hereunder are special and unique and that any violation of this Agreement
by the Seller would not be adequately compensated by money damages, and the
Seller hereby grants Holdings the right to specifically enforce (including
injunctive relief where appropriate) the terms of this Agreement.
5. Termination. The obligation of Holdings to deliver to the Seller the
payments required by Section 1 shall terminate upon the occurrence of any of the
following events:
a. Total or partial disability of the Seller that has continued for at
least 12 months;
b. Conviction of a felony;
c. Frequent drunkenness on the job;
d. The death of Seller; or
e. The Seller's breach of the terms of this Agreement.
If Holdings terminates this Agreement for "cause," but the Seller contests such
termination, Holdings shall continue to make all payments required by Section 1
of this Agreement after the date of such termination until and unless a final
judgment is rendered in favor of Holdings and against the Seller. For purposes
of this section, a final judgment means a judgment from which there is no
possibility of further appeal. If Holdings terminates the payments to the Seller
under Section 1 as a result of the occurrence of any of such events, the
covenants of the Seller under Section 1 shall remain in full force and effect.
6. Notices. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service, with delivery confirmed, or (iv) telecopied, with
receipt confirmed, addressed as follows:
a. If to the Seller:
Xxxxxx X. Xxxxx
0000 Xxxxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
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with a copy to:
Xxxxxxx Xxxx, Esq.
Rose, Xxxxxxxxxxx & Xxxxxxx, P.C.
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
b. If to Holdings to:
GFSI Holdings, Inc.
0 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: A. Xxxxxxx Xxxxxx, Xx.
Telecopier 000-000-0000
with copies to:
GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier 000-000-0000
G. Xxxxxx Xxxxxx, Esq.
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopier 000-000-0000
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telecopy is confirmed, as the case may be,
unless the sending party has actual knowledge that a Notice was not received by
the intended recipient.
7. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by the Seller.
8. Governing Law. This Agreement shall be governed by the law of the State
of Missouri as to all matters, including, but not limited to, matters of
validity, construction, effect and performance, except that no doctrine of
choice of law shall be used to apply any law other than of Missouri.
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9. Severability. Holdings and the Seller believe the covenants against
competition contained in this Agreement are reasonable and fair in all respects,
and are necessary to protect the interests of Holdings. However, in case any one
or more of the provisions or parts of a provision contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement or
any other jurisdiction, but this Agreement shall be reformed and construed in
any such jurisdiction as if such invalid or illegal or unenforceable provision
or part of a provision had never been contained herein and such provision or
part shall be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted in such jurisdiction.
10. Neutral Interpretation. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against any party
based upon the source of the draftsmanship hereof.
11. Attorneys' Fees. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party shall pay the prevailing party's reasonable expenses
incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment, including
contempt, garnishment, levy, discovery and bankruptcy. "Expenses" shall include,
without limitation, court or other proceeding costs and experts' and attorneys'
fees and their expenses. The phrase "prevailing party" shall mean the party who
is determined in the proceeding to have prevailed and who prevails by dismissal,
default or otherwise.
12. Miscellaneous. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and may not be modified orally, but only
by a writing subscribed by the party charged therewith. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings (whether oral or written)
between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
HOLDINGS:
GFSI HOLDINGS, INC.
By /s/ A. Xxxxxxx Xxxxxx, Xx.
----------------------------
A. Xxxxxxx Xxxxxx, Xx.
Vice President
SELLER:
/s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
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