Contribution Agreement

CONTRIBUTION AGREEMENT


This CONTRIBUTION AGREEMENT dated as of September 26, 2003 (this "Agreement") is by and between GFSI Holdings, Inc., a Delaware corporation (the "Parent"), and GFSI, Inc., a Delaware corporation (the "Subsidiary").


W I T N E S S E T H:
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WHEREAS, Subsidiary is a wholly-owned subsidiary of Parent;


WHEREAS, Parent has agreed to contribute to Subsidiary and Subsidiary has agreed to accept from Parent all of its right, title and interest in at least $20 million in aggregate principal amount at maturity of Parent's 11.375% Senior Discount Notes (the "Contributed Notes");


NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1. Contribution and Acceptance.


1.1 Contribution and Acceptance. Parent agrees to contribute to the capital of Subsidiary, and to transfer and assign to Subsidiary all of its right, title and interest in, to and under the Contributed Notes, which contribution, transfer and assignment Subsidiary hereby accepts. This transaction is intended to qualify as a transfer governed by Section 351 of the Internal Revenue Code of 1986, as amended.


1.2 Effective Date. The contribution of the Contributed Notes shall be effective immediately after Parent acquires the Contributed Notes from Gearcap LLC.


2. Representations, Warranties and Covenants of Parent. Parent represents, warrants and covenants to Subsidiary as follows:


2.1 Organization. Parent is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own and operate its business and assets and to perform the actions contemplated hereby.


2.2 Authority; Binding Obligation. The execution, delivery and performance of this Agreement by Parent has been duly authorized and this Agreement is a valid and legally binding obligation of Parent, enforceable against Parent in accordance with its terms, except as such enforceability may be limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws of general application (including general equitable principles) relating to or affecting the enforcement of creditors' rights generally. There is no action, suit or proceeding pending against Parent, and no law or any order, writ, injunction, decree, rule or regulation of any court, administrative agency or other governmental authority binding upon Parent that questions the validity of, or might in any way impair, the execution, delivery or performance by Parent of this Agreement. No consent to or approval of this Agreement or the transactions contemplated hereby from governmental authorities or third parties is required.


2.3 Inconsistent Agreements. The execution, delivery and performance by Parent of this Agreement and the transactions contemplated hereby do not contravene, violate or conflict with any provisions of any law or any order, writ, injunction, decree, rule or regulation of any court, administrative agency o ...