Document:

Debt Exchange Agreement

 Exhibit 10.25 
 DEBT EXCHANGE AGREEMENT 
 THIS DEBT EXCHANGE AGREEMENT (this “Agreement”) is
made and entered into as of March 2, 2007 by and among International Textile Group, Inc. (the “Issuer”), a Delaware corporation and successor-by-merger of ITG Holdings, Inc. (f/k/a International Textile Group, Inc.)
(“Old ITG”), and WLR Recovery Fund II, L.P. (the “Investor”). 
 RECITALS 
 A. The Investor has heretofore made certain loans to Old ITG pursuant to those promissory notes, made by Old ITG in favor of the Investor, set forth on
Exhibit A hereto (collectively, the “Notes”); 
 B. Effective on December 31, 2006, Old ITG merged with and into
its sole stockholder, the Issuer, which in accordance with the terms and conditions of such merger resulted in the Issuer becoming the successor obligor under the Notes; 
 C. The Issuer desires to cause the Notes to be repaid, and the obligations of the Issuer represented thereby to be cancelled, by exchanging shares of Series A Convertible Preferred Stock (the “Preferred
Stock”) of the Issuer for the Notes, as set forth herein; 
 D. The Investor desires to acquire shares of the Preferred Stock in
exchange for the satisfaction and cancellation of the Notes; and 
 E. The Issuer and the Investor are entering into this Agreement to set
forth the terms and conditions applicable to the exchange of the Notes for shares of Preferred Stock; 
 NOW, THEREFORE, for good and
valuable consideration, the receipt of which is hereby acknowledged by the parties hereto, the parties hereby agree as follows: 
 Article 1 
 EXCHANGE OF STOCK AND DEBT SECURITIES 
 1.1 Exchange. 
 (a) The Investor
hereby agrees, subject to the terms and conditions set forth herein, to exchange the aggregate principal amount of the Notes, together with all interest thereon accrued up to but not including the effective date of such exchange, for shares of the
Preferred Stock (the “Exchange Shares”) at an exchange price of $25.00 per share (the “Debt Exchange”). 
 (b) Subject to the terms and conditions of this Agreement, the consummation of the Debt Exchange shall take place at a closing (the “Closing”) to be held at 10:00 a.m., local time, on March 2, 2007, at the offices of
Jones Day, 1420 Peachtree Street, Suite 800, Atlanta, Georgia 30309, or at such other time, date or place as the parties hereto may mutually agree upon. At the Closing, the Investor shall deliver the Notes for cancellation and the Issuer shall
deliver to the Investor certificates representing the Exchange Shares. 

 (c) The Exchange Shares will be issued in full satisfaction and payment of the Notes, and from and after
the consummation of the Debt Exchange the Notes shall represent solely the right to receive the Exchange Shares. In the event that as a result of the Debt Exchange, fractional shares of Preferred Stock would be required to be issued, such fractional
shares shall be rounded up or down to the nearest whole share. The Issuer shall pay any documentary, stamp or similar issue or transfer tax due with respect to the Debt Exchange. 
 1.2 Legend. Any certificate or certificates representing the Preferred Shares (or any part thereof) will bear the following legend, together with
any and all other legends as may be required pursuant to applicable law (and the Issuer may issue appropriate corresponding stop transfer instructions to any transfer agent for any of such securities): 
 “The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under any applicable state
law and may not be transferred, sold or otherwise disposed of unless registered under such act and applicable state laws or unless an exemption from the registration requirements under such act or applicable state law requirements is
available.” 
 Such legend and the stop transfer instructions shall be removed and the Issuer shall issue a certificate representing such securities
without such legend to the holder thereof if (i) such securities are registered under the Securities Act of 1933, or (ii) if such securities are sold pursuant to Rule 144 under the Securities Act of 1933, or (iii) if such securities
are eligible for transfer under Rule 144(k) under the Securities Act of 1933, and, in the case of (ii) or (iii), when the Investor has furnished to the Issuer evidence to such effect that Issuer finds reasonably satisfactory which may include,
without limitation, an opinion of counsel reasonably acceptable to issuer (as to form and substance and counsel). 
 Article 2

 REPRESENTATIONS AND WARRANTIES OF THE ISSUER 
 The Issuer hereby represents and warrants to the Investor that: 
 2.1 Corporate Status. The Issuer is
a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or other power and authority to carry on its business as now being conducted. 
 2.2 Capitalization. The authorized capital stock of the Issuer consists (or will consist upon the filing with the Secretary of State of the State
of Delaware and effectiveness of the Certificate of Designation creating the Preferred Stock) of 250,000,000 shares, consisting of 150,000,000 shares of common stock, par value $0.01 per share (the “Common Stock”), and 100,000,000
shares of preferred stock, of which 12,000,000 shares are designated as Series A Convertible Preferred Stock. As of the date of this Agreement, 17,481,596 shares of Common Stock are issued and outstanding and no shares of preferred stock are issued
or outstanding. 
  

 2 

 2.3 Power and Authority; Binding Agreement. The Issuer has the requisite corporate power and
authority to execute and deliver, and when the Certificate of Designation has been adopted and filed with the Secretary of State of the State of Delaware, to perform its obligations under, this Agreement, and the Issuer has taken all necessary
corporate action to authorize the execution, delivery and performance of this Agreement and the consummation of the Debt Exchange. This Agreement has been duly executed and delivered by the Issuer and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes the valid and binding agreement of the Issuer enforceable against the Issuer in accordance with its terms. 
 2.4 Non-Contravention. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement, and compliance with the provisions hereof, will not,
conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under the Certificate of Incorporation or By-laws of the Issuer. The execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement and compliance with the provisions hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit under, or result in the creation of any lien or encumbrance upon any of the properties or assets of the Issuer or any of its subsidiaries under, (i) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement, obligation, instrument, permit, concession, franchise, license or similar authorization applicable to the Issuer or any of its subsidiaries or their respective properties
or assets or (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Issuer or any of its subsidiaries or their respective properties or assets, other than any such conflicts, violations, defaults,
rights, losses, liens or encumbrances that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on (x) the business condition of the Issuer and its subsidiaries taken as a whole or (y) the ability
of the Issuer to perform its obligations under this Agreement. 
 2.5 Consents and Governmental Approvals. No consent, approval, order
or authorization of, action by or in respect of, or registration, declaration or filing with, any federal, state, local or foreign government, any court, administrative, regulatory or other governmental agency, commission, body or authority or any
non-governmental self-regulatory agency, commission, body or authority (each a “Governmental Entity”) is required by the Issuer in connection with the execution and delivery of this Agreement by the Issuer or the consummation by the
Issuer of the Debt Exchange or the other transactions contemplated by this Agreement, except for the filing of the Certificate of Designation with the Secretary of State of the State of Delaware, and such other consents, approvals, orders or
authorizations the failure of which to be made or obtained, individually or in the aggregate, is not reasonably likely to have a material adverse effect on the Issuer. 
 2.6 Valid Issuance. When issued pursuant to this Agreement in connection with the Debt Exchange, the Exchange Shares will be duly authorized, validly issued, fully paid and nonassessable, and the Investor will
receive good title to such shares, free and clear of any liens, claims, security interest or encumbrances. 
  

 3 

 Article 3 
 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR 
 The Investor represents and warrants to the Issuer
that: 
 3.1 Authority. The Investor has all requisite power and authority to execute and deliver, and perform its obligations under,
this Agreement. All acts required to be taken by the Investor to enter into this Agreement and consummate the transactions contemplated hereby have been properly taken. 
 3.2 Title to the Notes. The Investor is the record and beneficial holder of the Notes, and holds the Notes free and clear of all claims, liens, security interests, title defects and objections or any other
encumbrances of any kind or nature whatsoever. 
 3.3 Investment Intent. Investor is acquiring the Exchange Shares being delivered to
Investor under this Agreement for its own account and with no present intention of distributing or selling any of them in violation of the Securities Act of 1933 or any applicable state securities law. Investor will not sell or otherwise dispose of
any of such Exchange Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act of 1933 and has been registered or qualified or is exempt from registration or qualification under
applicable state securities laws. Investor understands that the Exchange Shares it is acquiring under this Agreement have not been registered under the Securities Act of 1933 by reason of their contemplated issuance in transactions exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933 and that the reliance of the Issuer on this exemption is predicated in part on these representations and warranties of Investor. Investor acknowledges and agrees that a
restrictive legend consistent with the foregoing has been or will be placed on the certificates for the Exchange Shares and related stop transfer instructions will be noted in the transfer records of the Issuer and/or its transfer agent for the
Exchange Shares, and that such Investor will not be permitted to sell, transfer or assign any of the Exchange Shares acquired hereunder until such Exchange Shares are registered or an exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933 is available. 
 3.4 Investor Status. Investor (i) is either (x) a
“Qualified Institutional Buyer” as such term is defined in Rule 144A under the Securities Act of 1933 or (y) an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933; (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investments to be made by it hereunder; (iii) has the ability to bear the
economic risks of its investments for an indefinite period of time; and (iv) has sole investment discretion with respect to the Debt Exchange; and (v) has been given an opportunity to obtain such information from the Issuer as Investor
deems necessary or appropriate with respect to the Debt Exchange. 
  

 4 

 Article 4 
 CONDITIONS 
 4.1 Issuer’s Conditions. The obligations of the Issuer to consummate the
transactions contemplated by this Agreement shall be subject to fulfillment of the following conditions on or prior to the date of Closing: 
 (a) The representations and warranties of the Investor set forth in Article 3 shall be true and correct on and as of the date of Closing. 
 (b) All proceedings, corporate or otherwise, required to be taken by the Investor on or prior to the date of Closing in connection with this Agreement, and the Debt Exchange contemplated hereby, shall have been duly and validly taken, and
all necessary consents, approvals or authorizations required to be obtained by the Investor on or prior to the Closing shall have been obtained. 
 (c) The Investor shall have delivered the Notes to the Issuer for cancellation. 
 (d) The Investor shall have delivered to the
Issuer such other documents, certificates or other information as the Issuer or its counsel may reasonably request. 
 4.2 Investor’s
Conditions. The obligations of the Investor to consummate the transaction contemplated by this Agreement shall be subject to fulfillment of the following conditions on or prior to the date of Closing: 
 (a) The representations and warranties of the Issuer set forth in Article 2 shall be true and correct on and as of the date of Closing. 
 (b) All proceedings, corporate or otherwise required to be taken by the Issuer on or prior to the date of Closing in connection with this Agreement, and
the Debt Exchange contemplated hereby, shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Issuer on or prior to the Closing shall have been obtained. 
 (c) A copy of the Certificate of Designation, as filed with, and certified as of a recent date by, the Secretary of State of the State of Delaware, shall
have been delivered to the Investor. 
 (d) The Issuer shall have issued and delivered, or cause to be issued and delivered, to the Investor,
stock certificates, registered in the name of the Investor, representing duly authorized, validly issued, fully paid and non-assessable Exchange Shares. 
 (e) The Issuer shall have delivered to the Investor such other documents, certificates or other information as the Investor or its counsel may reasonably request. 
  

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 Article 5 
 MISCELLANEOUS 
 5.1 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective must be in writing and, unless otherwise expressly provided herein, are deemed to have been duly given or made when delivered by hand or by courier, or by certified mail, or, when transmitted by facsimile and a
confirmation of transmission printed by sender’s facsimile machine. A copy of any notice given by facsimile also must be mailed, postage prepaid, to the addressee. Notices to the respective parties hereto must be addressed as follows:

  

			
	 If to the Investor:
	 	 c/o WL Ross & Co. LLC
 600 Lexington Avenue,
19th Floor
 New York,
New York 10022

		 	Attention:     David L. Wax
		 	Telephone:   (212) 826-2111
		 	Telecopier:   (212) 317-4891
		
		 	With a copy to:
		
		 	 Jones Day
 1420 Peachtree Street, Suite 800

Atlanta, Georgia 30309

		 	Attention:     Mark L. Hanson, Esq.
		 	Telephone:   (404) 521-3939
		 	Telecopier:   (404) 581-8330
		
	 If to the Issuer:
	 	 International Textile Group, Inc.
 804 Green Valley
Road, Suite 300
 Greensboro, North Carolina 27408

		 	Attention:     Joseph L. Gorga
		 	Telephone:   (336) 379-2200
		 	Telecopier:   (336) 379-2221
		
		 	With a copy to:
		
		 	 Kilpatrick Stockton LLP
 Suite 2500
 1100 Peachtree Street
 Atlanta, Georgia 30309

		 	Attention:     David Stockton, Esq.
		 	Telephone:   (404) 815-6500
		 	Telecopier:   (404) 541-3402

 6 

			
		
	 If to the Special
	 	Special Committee of the Board of Directors
	 Committee
	 	of International Textile Group, Inc.
		 	c/o David Stockton, Esq.
		 	Kilpatrick Stockton LLP
		 	Suite 2800
		 	1100 Peachtree Street
		 	Atlanta, Georgia 30309
		 	 Telephone: (404) 815-6500

		 	 Telecopier: (404) 541-3402

 Any party may alter the address to which communications or copies are to be sent by giving notice
of the change of address under this Section. 
 5.2 Headings. The headings in this Agreement are for purposes of reference only and
are not to be considered in construing this Agreement. 
 5.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered constitutes an original and all together shall constitute one Agreement. 
 5.4
Enforceability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, is, to any extent, invalid or unenforceable, the remaining terms and provisions of this Agreement or application to other
Persons and circumstances are not invalidated thereby, and each term and provision hereof is to be construed with all other remaining terms and provisions hereof to effect the intent of the parties hereto to the fullest extent permitted by law.

 5.5 Law Governing. This Agreement is to be construed and enforced in accordance with and shall be governed by the laws of the State
of New York applicable to contracts executed in and to be fully performed in that state. 
 5.6 Confidentiality. Until the Issuer
makes a press release or other public announcement about the Exchange, the Investor will maintain the confidentiality of the Debt Exchange and the terms of the Debt Exchange. 
 [Signatures on following page] 
  

 7 

 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the
day and year first above written. 
  

					
	INTERNATIONAL TEXTILE GROUP, INC.
	
	 /s/ Gary L. Smith

	Name: Gary L. Smith
	Title: EVP and CEO
	
	WLR RECOVERY FUND II, L.P.
		
	By:	 	WLR RECOVERY ASSOCIATES II, LLC,
		 	its General Partner
			
		 	By:	 	 /s/ David L. Wax

		 	Name:	 	David L. Wax
		 	Title:	 	Principal MemberForm of Common Stock Certificate

 Exhibit 4.1 
  

									
		 	COMMON STOCK	 		  	COMMON STOCK	  	
		 	PAR VALUE $.0001	 		  		  	
	CERTIFICATE	 		 		  		  	SHARES
	        NUMBER    	 		 		  		  	
	CAI INTERNATIONAL, INC.
	INCORPORATED UNDER THE LAWS OF DELAWARE
		 		 		  	                CUSIP
                
		 		 		  	                SEE REVERSE SIDE FOR CERTAIN DEFINITIONS

 THIS CERTIFIES THAT 
 is the owner of 
 FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF 
 CAI International, Inc. (hereinafter called “Company”), transferable on the books of the Company in person or by duly authorized attorney, under
surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Certificate of Incorporation, as amended, and the By-Laws, as amended, of the
Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and the
Registrar. 
 Witness the facsimile seal of the Company and the facsimile signature of its duly authorized officers. 
  

									
	By	  		  	CAI International, Inc.	  		  	
		  		  	CORPORATE	  		  	DATED
		  	  	  	THE STATE OF DELAWARE	  		  	  

		  	President	  	SEAL	  		  	COUNTERSIGNED AND REGISTERED:
		  		  	2007	  		  	COMPUTERSHARE INVESTOR SERVICES, LLC
		  		  		  		  	(CHICAGO)
		  		  		  		  	TRANSFER AGENT AND REGISTRAR,
		  	Secretary	  		  	By:	  	  

		  		  		  		  	AUTHORIZED SIGNATURE

  

 CAI International, Inc. 
 The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
  

									
	TEN COM -	  	as tenants in common	  	UNIF GIFT MIN ACT	 	  
	TEN ENT -	  	as tenants by the entireties	  		 	(Cust)	  	                (Minor)
	JT TEN -	  	as joint tenants with right of survivorship	  		 	under Uniform Gifts to Minors Act
		  	and not as tenants in common	  		 	(State)
		  		  	UNIF TRF MIN ACT	 	Custodian  	  	
		  		  		 	(Cust)	  	                (Minor)
		  		  	Under Uniform Transfer to Minors Act	  	
		  		  		 		  	(State)
		  	Additional Abbreviations may also be used though not in the above list.	  	

 THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS,
PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO
DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL
REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE. 

 PLEASE INSERT SOCIAL SECURITY OR OTHER 
 IDENTIFYING NUMBER OF ASSIGNEE                  

							
	For value received,                                
                                        
                hereby sell, assign and transfer unto
                                        
                                        
          
	  
	(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)
	 
	
	 
		
	  	 	Shares
	of the capital stock represented by the within Certificate, an do hereby irrevocably constitute and appoint
		
	  	 	Attorney
	to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.

  

									
	Dated:	 	  	 	20	 	  	 	
	Signature:	 	  	 		 		 	
	Signature:	 	  	 		 		 	
	Signature:	 	  	 		 		 	
		 	Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular,
without alteration or enlargement, or any change whatever.

  

			
	Signature(s) Guaranteed: Medallion Guarantee Stamp	 	
	 THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
 (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
 MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM,
 PURSUANT TO S.E.C. RULE 17Ad-15).

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