Exhibit 4.2
11 3/8% Series A Senior Discount Note due 2009
No. G-1 $108,467,780
CUSIP No. 36169L AA 2
GFSI HOLDINGS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of One Hundred Eight Million, Four Hundred Sixty Seven
Thousand, Seven Hundred Eighty and xx/100 Dollars
on September 15, 2009.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: October 23, 1997
GFSI HOLDINGS, INC.
By: /s/ Richard Caputo
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Name: A. Richard Caputo, Jr.
Title: Vice President
Trustee's Certificate of Authentication
Dated: October 23, 1997
This is one of the
Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Jacqueline Connor
-----------------------------------
(Authorized Signatory)
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Senior Discount Note may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. The Depository Trust Company shall act as the Depository
until a successor shall be appointed by Holdings and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY Person IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF HOLDINGS THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), (2) TO
HOLDINGS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED
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WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS
SECURITY, THE ISSUE PRICE IS $487.20, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT
IS $512.80, THE ISSUE DATE IS SEPTEMBER 17, 1997 AND THE YIELD TO MATURITY
IS 11 3/8% PER ANNUM.
Additional provisions of this Senior Discount Note are set forth on the other
side of this Senior Discount Note.
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(Back of Note)
11 3/8% SERIES A SENIOR DISCOUNT NOTES DUE 2009
1. Interest. No interest will accrue on the Notes until September 15,
2004, but the Accreted Value (as defined in the Indenture) will accrete
(representing the amortization of original issue discount) between the date of
original issuance and such date, on a semi-annual basis using a 360-day year of
twelve 30-day months such that the Accreted Value shall be equal to the full
principal amount of the Notes on September 15, 2004. GFSI Holdings, Inc.
("Holdings") 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 11 3/8% per annum from September 15, 2004 until maturity. Interest if any,
will be payable semiannually in cash in arrears on March 15 and September 15 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 September 15, 2004; provided that the first
Interest Payment Date shall be March 15, 2005. Holdings 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. Holdings 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 canceled 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. Holdings 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. Holdings will pay principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds by 11 a.m. New York City time 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. State Street Bank and Trust Company (the
"Trustee") will initially act as the Paying Agent and Registrar. Holdings 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. Holdings or any of its Subsidiaries may act in any such
capacity.
4. Indenture. Holdings issued the Notes under an Indenture, dated as of
September 17, 1997 (the "Indenture"), among Holdings 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 (S)(S)
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
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have the meanings assigned them in the Indenture). The Notes are unsecured
senior obligations of Holdings.
5. Optional Redemption. (a) Except as described in paragraph 5(b) below,
the Notes may not be redeemed at the option of Holdings prior to March 15, 1998.
During the twelve-month period beginning September 15 of the years indicated
below, the Notes will be redeemable at the option of Holdings, 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
Accreted Value for all redemption dates prior to September 15, 2004 and of the
principal amount for all redemption dates including September 15, 2004 and
thereafter) set forth below, plus any accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption:
Year Percentage
---- ----------
2002................................................. 105.688%
2003................................................. 103.792%
2004................................................. 101.986%
2005 and thereafter.................................. 100.000%
(b) Notwithstanding the foregoing, on or after March 15, 1998 and prior to
September 15, 2002, Holdings may (but shall not have the obligation to) redeem,
in whole or in part, the outstanding Notes at a redemption price in cash equal
to 105.688% of the Accreted Value (determined at the date of redemption)
thereof, with the net proceeds of one or more Equity Offerings of Holdings or
Holdings; provided, that any such redemption shall occur within 60 days of the
date of the closing of any such Equity Offering. In addition, upon the
occurrence of a Change of Control on or after March 15, 1998 and prior to
September 15, 2002, Holdings, at its option, may redeem, in whole or in part,
the outstanding Notes at a redemption price in cash equal to 105.688% of the
Accreted Value (determined at the date of redemption) thereof. Holdings shall
give not less than 30 and not more than 60 days' notice of such redemption
within 30 days following a Change of Control.
6. Mandatory Redemption. Subject to Holdings' obligation to make an offer
to purchase Notes under certain circumstances pursuant to Sections 4.13 and 4.14
of the Indenture (as described in paragraph 7 below), Holdings 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 Holdings to purchase all or any part
(equal to $500 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
100% of the Accreted Value (determined at the date of redemption) thereof (if
such Offer is prior to September 15, 2004) to the date of purchase, or 100% of
the aggregate principal amount thereof (if such Offer is on or after September
15, 2004), plus any accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase.
(b) If Holdings 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, Holdings 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 Accreted
Value (determined at the date of redemption) thereof to the date of purchase (if
such date of purchase is prior to September 15, 2004), or 100% of the principal
amount of the Notes (if
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such date of purchase is on or after September 15, 2004), 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) Holdings shall comply with any tender offer rules under the Exchange
Act which may then be applicable, including Rule 14e-1, in connection with an
offer required to be made by Holdings 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, Holdings 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 $500 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 $500 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 at maturity 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 at maturity 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 Holdings' obligations to Holders in
the event of a merger or consolidation of Holdings in which Holdings is not the
surviving corporation or a sale of substantially all of Holdings' assets to such
other corporation; comply with the SEC'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.
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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 Holdings 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; and certain events of bankruptcy or insolvency involving Holdings
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 at maturity 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 at maturity 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.
Holdings must furnish an annual compliance certificate to the Trustee.
13. Trustee Dealings with Holdings. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for Holdings or any Affiliate, and may otherwise deal with Holdings or any
Affiliate, as if it were not Trustee.
14. No Recourse Against Others. No officer, employee, director,
stockholder or Subsidiary of Holdings shall have any liability for any
Obligations of Holdings 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 Holdings' 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 SEC is of the view that
such a waiver is against public policy.
15. Successor Substituted. Upon the consolidation or merger by Holdings
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 Holdings) 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 Holdings under the Indenture with the same
effect as if such surviving or other corporation had been named as Holdings in
the Indenture.
16. 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.
17. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
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18. 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).
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, Holdings has caused CUSIP
numbers to be printed on the Notes and have 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.
16. 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 September 17, 1997 between Holdings,
and Donaldson, Lufkin & Jenrette Securities Corporation (the "Registration
Rights Agreement").
Holdings 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 Holdings, Inc.
9700 Commerce Parkway
Lenexa, Kansas 66219
Attention: director of finance
Telecopier: (913) 752-3336
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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 Holdings. 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 must be guaranteed by an eligible guarantor institution (bank, stock
broker, savings and loan association or credit union) with membership in an
approved signature guarantee program pursuant to Securities and Exchange
Commission Rule 17Ad-15.
Signature Guarantee:_____________________________
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OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by Holdings pursuant to Section
4.13 of the Indenture, check the box: [_]
If you elect to have this Note purchased by Holdings pursuant to Section
4.14 of the Indenture, check the box: [_]
If you elect to have only part of this Note purchased by Holdings pursuant
to Section 4.13 or 4.14 of the Indenture, state the amount (multiples of $500
only):
$
Date: Your
Signature:_______________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature must be guaranteed by an eligible guarantor institution (bank, stock
broker, savings and loan association or credit union) with membership in an
approved signature guarantee program pursuant to Securities and Exchange
Commission Rule 17Ad-15.
Signature Guarantee:_____________________________
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SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of this Principal Amount of following such decrease Trustee or Note
Date of Exchange Global Note this Global Note (or increase) Custodian
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