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 Jefferies & Company,  Inc.,  for itself and as Manager of Jefferies
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, Rowe & Maw, 1675 Broadway,  New York,
New York 10019 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 Jefferies & 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).
<PAGE>

                                   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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<PAGE>

                  (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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<PAGE>

         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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<PAGE>

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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<PAGE>

         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:

              9700 Commerce Parkway
              Lenexa, Kansas  66219
              Attention: Director of Corporate Finance/Corporate Controller
              Telephone No.: (913) 693-4396
              Facsimile No.: (913) 693-3907

     with a copy to (which shall not constitute notice):

              Mayer, Brown, Rowe & Maw
              1675 Broadway
              New York, New York 10019-5820
              Telephone No.: (212) 506-2500
              Facsimile No.:   (212) 849-5525
              Attention: James B. Carlson, Esq.

     If to Jefferies, to:

              11100 Santa Monica Boulevard, 10th Floor,
              Los Angeles, California  90025
              Attention: Lloyd H. Feller, Esq.
              Telephone No.:  (310) 914-1300
              Facsimile No.:   (301) 914-1014
              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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<PAGE>


         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/ Larry Graveel
                                    -------------------------------------------
                                    Name:  Larry Graveel
                                    Title: President and Chief Operating Officer



                                    JEFFERIES & COMPANY, INC., for itself and as
                                    Manager of  Jefferies  Partners  Opportunity
                                    Fund, LLC,  Jefferies  Partners  Opportunity
                                    Fund  II,   LLC  and   Jefferies   Employees
                                    Opportunity Fund, LLC


                                 By:  /s/ Robert J. Welch
                                    -------------------------------------------
                                    Name: Robert J. Welch
                                    Title: Vice President