REGISTERED REGISTERED
NUMBER
R
GFSI, INC.
9 5/8% SERIES B SENIOR SUBORDINATED NOTE DUE 2007
CUSIP
promises to pay to
or registered assigns,
the principal sum of DOLLARS on March 1, 2007.
Interest Payment Dates:
Record Dates:
Dated : April , 1997
GFSI, INC.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION By:
This is one of the Notes referred to in the
within-mentioned Indenture:
FLEET NATIONAL BANK,
as Trustee
By:
Authorized Signatory
9 5/8% SERIES B SENIOR SUBORDINATED NOTE DUE 2007
1. INTEREST. GFSI, Inc. (the "Company ") promises to pay interest on the
principal amount of the Notes at the rate and in the manner specified below.
Interest on the Notes will accrue at 9 5/8% per annum from the date this
Subordinated Note is issued until maturity. The Company will pay Liquidated
Damages pursuant to Section 5 of the Registration Rights Agreement referred to
below. Interest and Liquidated Damages, if any, will be payable semiannually in
cash in arrears on March 1 and September 1 of each year, or if any such day is
not a Business Day on the next succeeding Business Day (each, an "Interest
Payment Date "). Interest on the Notes will accrue from the most recent date on
which interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that the first Interest Payment Date shall be
September 1, 1997. The Company shall pay interest on overdue principal and
premium, if any, from time to time on demand at the interest rate then in effect
and shall pay interest on overdue installments of interest and Liquidated
Damages, if any, (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
holders of Notes at the close of business on the record date for the next
Interest Payment Date even if such Notes are cancelled after such record date
and on or before such Interest Payment Date. Holders must surrender Notes to a
Paying Agent to collect principal payments on such Notes. The Company will pay
principal, premium, if any, interest and Liquidated Damages, if any, in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. The Company will pay principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders or, if no such account
is specified, by mailing a check to each such Holder's registered address;
provided that payment by wire transfer of immediately available funds will be
required with respect to principal, premium, if any, interest and Liquidated
Damages, if any, on all Global Notes.
3. PAYING AGENT AND REGISTRAR. Fleet National Bank (the "Trustee ") will
initially act as the Paying Agent and Registrar. The Company may appoint
additional paying agents or co-registrars, and change the Paying Agent, any
additional paying agent, the Registrar or any co-registrar without prior notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as
of February 27, 1997 (the "Indenture"), among the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the original issuance of the
Notes (the "Trust Indenture Act"). The Notes are subject to, and qualified by,
all such terms, certain of which are summarized herein, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of such terms (all
capitalized terms not defined herein shall have the meanings assigned them in
the Indenture). The Notes are unsecured senior obligations of the Company
limited to $125,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION. (a) Except as described in paragraph 5(b) below,
the Notes may not be redeemed at the option of the Company prior to March 1,
2002. During the twelve (12) month period beginning November 15 of the years
indicated below, the Notes will be redeemable at the option of the Company, in
whole or in part, on at least 30 but not more than 60 days' notice to each
Holder of Notes to be redeemed, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus any accrued and
unpaid interest and Liquidated Damages, if any, to the date of redemption:
Year Percentage
---- ----------
2002.................................... 104.813%
2003.................................... 103.208%
2004.................................... 101.604%
2005 and thereafter..................... 100.000%
(b) Notwithstanding the foregoing, prior to March 1, 2000, the Company
may (but shall not have the obligation to) redeem up to 40% of the original
aggregate principal amount of the Notes at a redemption price of 110.000% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings; provided that at least 60% of the aggregate principal amount
of Notes originally issued remain outstanding immediately after the occurrence
of any such redemption; and provided, further, that any such redemption shall
occur within 60 days of the date of the closing of such Equity Offering.
6. MANDATORY REDEMPTION. Subject to the Company's obligation to make an
offer to purchase Notes under certain circumstances pursuant to Sections 4.14
and 4.15 of the Indenture (as described in paragraph 7 below), the Company is
not required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes.
7. MANDATORY OFFERS TO PURCHASE NOTES. (a) Upon the occurrence of a
Change of Control (such date being the "Change of Control Trigger Date "), each
Holder of Notes shall have the right to require the Company to purchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to an offer (a "Change of Control Offer") at a purchase price in
cash equal to 101% of the aggregate principal amount thereof, plus any accrued
and unpaid interest and Liquidated Damages, if any, to the date of purchase.
(b) If the Company or any Restricted Subsidiary consummates one or more
Asset Sales and does not use all of the Net Proceeds from such Asset Sales as
provided in the Indenture, the Company will be required, under certain
circumstances, to utilize the Excess Proceeds from such Asset Sales to offer (an
"Asset Sale Offer ") to purchase Notes at a purchase price equal to 100% of the
principal amount of the Notes, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. If the Excess Proceeds are
insufficient to purchase all Notes tendered pursuant to any Asset Sale Offer,
the Trustee shall select the Notes to be purchased in accordance with the terms
of the Indenture.
(c) Holders may tender all or, subject to paragraph 8 below, any portion
of their Notes in a Change of Control Offer or Asset Sale Offer (collectively,
an "Offer ") by completing the form below entitled "OPTION OF HOLDER TO ELECT
PURCHASE."
(d) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-I, in connection
with an offer required to be made by the Company to repurchase the Notes as a
result of a Change of Control or an Asset Sale Trigger Date. To the extent that
the provisions of any securities laws or regulations conflict with provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Indenture by virtue thereof.
8. NOTICE OF REDEMPTION OR PURCHASE. Notice of an optional redemption or
an Offer will be mailed to each Holder at its registered address at least 30
days but not more than 60 days before the date of redemption or purchase. Notes
may be redeemed or purchased in part, but only in whole multiples of $1,000
unless all Notes held by a Holder are to be redeemed or purchased. On or after
any date on which Notes are redeemed or purchased, interest ceases to accrue on
the Notes or portions thereof called for redemption or accepted for purchase on
such date.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. Holders seeking to transfer or exchange their Notes may be
required, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption or tendered pursuant to an Offer.
Also, it need not exchange or register the transfer of any Notes for a period of
15 Business Days before a selection of Notes to be redeemed or between a record
date and the next succeeding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the then outstanding Notes, and any
existing Default (except a payment Default) may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder, the Indenture or the Notes may be amended to:
cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in
addition to or in place of certificated Notes; provide for the assumption by
another corporation of the Company's obligations to Holders in the event of a
merger or consolidation of the Company in which the Company is not the surviving
corporation or a sale of substantially all of the Company's assets to such other
corporation; comply with the Securities and Exchange Commission's requirements
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act; provide for additional Guarantees with respect to the Notes; or,
make any change that does not materially adversely affect any Holder's rights
under the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: default for 30
days in payment of interest on, or Liquidated Damages, if any, with respect to,
the Notes; default in payment of principal of, or premium, if any, on the Notes;
failure by the Company for 30 days after notice to it to comply with any of its
other agreements or covenants in, or provisions of, the Indenture or the Notes;
certain defaults under and acceleration prior to maturity of, or failure to pay
at maturity, certain other Indebtedness; certain final judgments that remain
undischarged; certain judicial findings of unenforceability or invalidity as to
any guarantee of the Notes or the disaffirmance or denial by any guarantor of
its guarantee of the Notes; and certain events of bankruptcy or insolvency
involving the Company or any Restricted Subsidiary that is a Significant
Subsidiary. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes may declare all the
Notes to be immediately due and payable in an amount equal to the principal of,
premium, if any, and any accrued and unpaid interest on, and Liquidated Damages,
if any, with respect to such Notes; provided, however, that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, the
principal of, premium, if any, and any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to the Notes becomes due and payable
immediately without further action or notice. Subject to certain exceptions,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power, provided that the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of Holders unless such Holders have offered
to the Trustee security and indemnity satisfactory to it. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may withhold from Holders notice of any continuing default (except a
payment Default) if it determines that withholding notice is in their interests.
The Company must furnish an annual compliance certificate to the Trustee.
13. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or any Affiliate, and may otherwise deal with the
Company or any Affiliate, as if it were not Trustee.
14. NO RECOURSE AGAINST OTHERS. No officer, employee, director,
stockholder or Subsidiary of the Company shall have any liability for any
Obligations of the Company under the Notes or the Indenture, or for any claim
based on, in respect of, or by reason of, such Obligations or the creation of
any such Obligation, except, in the case of a Subsidiary, for an express
guarantee or an express creation of any Lien by such Subsidiary of the Company's
Obligations under the Notes. Each Holder by accepting a Note waives and releases
all such liability, and such waiver and release is part of the consideration for
the issuance of the Notes. The foregoing waiver may not be effective to waive
liabilities under the Federal securities law and the Commission is of the view
that such a waiver is against public policy.
15. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED NOTES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of February 27, 1997 among the Company,
and Donaldson, Lufkin & Jenrette Securities Corporation and Jefferies & Company,
Inc. (the "Registration Rights Agreement ").
16. SUCCESSOR SUBSTITUTED. Upon the consolidation or merger by the
Company with or into another corporation, or upon the sale, lease, conveyance or
other disposition of all or substantially all of its assets to another
corporation, in accordance with the Indenture, the corporation surviving any
such merger or consolidation (if not the Company) or the corporation to which
such assets were sold or transferred to shall succeed to, and be substituted
for, and may exercise every right and power of the Company under the Indenture
with the same effect as if such surviving or other corporation had been named as
the Company in the Indenture.
17. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflict of laws provisions thereof.
18. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
19. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers printed on the Notes.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, which has in it the text of this Note in larger
type. Request may be made to:
GFSI, Inc.
9700 Commerce Parkway
Lenexa, Kansas 66219
Attention: director of finance
Telecopier: (913) 752-3336
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
___________________________________________________________________as agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_______________________ Your Signature:_______________________
(Sign exactly as your
name appears on the
other side of this Note)
Signature Guarantee:
____________________________
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by the Company pursuant to Section
4.14 of the Indenture, check the box: [ ]
If you elect to have this Note purchased by the Company pursuant to Section
4.15 of the Indenture, check the box: [ ]
If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.14 or 4.15 of the Indenture, state the amount (multiples
of $1000 only):
$_______________________
Date:_______________________ Your Signature:_______________________
(Sign exactly as your
name appears on the
other side of this Note)
Signature Guarantee:
____________________________