Exhibit 2.2
INDENTURE, dated as of February 2, 1999, among Bradlees Stores, Inc.,
a Massachusetts corporation, as reorganized pursuant to the Plan described below
(together with its successors and assigns, the "Issuer"), IBJ Whitehall Bank &
Trust Company, a New York banking corporation (the "Trustee"), Bradlees, Inc., a
Massachusetts corporation, as reorganized pursuant to the Plan (together with
its successors and assigns, "BI") and New Horizons of Yonkers, Inc., a Delaware
corporation.
W I T N E S S E T H:
WHEREAS, the Issuer and certain of its Affiliates filed a voluntary
petition (Case Nos. 95 B 42777 through 95 B 42784 (BRL) (Jointly Administered))
(the "Bankruptcy Proceeding") under Chapter 11 of the Bankruptcy Code on June
23, 1995 with the United States Bankruptcy Court Southern District of New York
(the "Bankruptcy Court");
WHEREAS, the Bankruptcy Court confirmed the Second Amended Joint Plan
of Reorganization of Bradlees Stores, Inc. and Certain Affiliates Under Chapter
11 of the Bankruptcy Code on January 27, 1999 (the "Plan");
WHEREAS, the Plan contemplates the issuance of the Notes (as
hereinafter defined) hereunder to certain of the Issuer's pre-petition creditors
(together with certain other consideration provided for in the Plan) in exchange
for relinquishment by such creditors of their claims filed in connection with
the Bankruptcy Proceeding;
WHEREAS, as contemplated by the Plan, the Notes issued hereunder shall
be a full recourse obligation of the Issuer and shall be secured by (A) first
priority mortgage Liens (as hereinafter defined) on the Yonkers Property (as
hereinafter defined), and, subject to Section 12.1(b) hereof, the Additional
Collateral (as hereinafter defined) and the Net Proceeds of the Disposition (as
hereinafter defined) of the Yonkers Property and, subject to Section 12.1(b)
hereof, the Additional Collateral and (B) a first priority Lien on the Pledged
Stock, in each case as described hereunder and in the Security Documents (as
hereinafter defined);
WHEREAS, BI has duly authorized the full and unconditional guarantee
on an unsecured basis by BI of the Issuer's due and punctual payment of the
principal of and interest on the Notes and any other amounts payable on the
Notes, whether at maturity, by declaration of acceleration, upon redemption or
otherwise;
WHEREAS, all acts necessary (i) to make this Indenture a valid and
binding agreement and instrument for the security of the Notes, in accordance
with its and their terms and (ii) to make the Notes, when executed by the Issuer
and authenticated and delivered by the Trustee, valid and binding obligations of
the Issuer, have been done, and the Issuer has duly authorized the execution and
delivery of this Indenture to secure the Notes and to provide for the
authentication and delivery thereof by the Trustee;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and of the covenants continued herein, it is
mutually
covenanted and agreed, for the benefit of the parties hereto and the
equal and proportionate benefit of all Noteholders, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions; Construction.
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(a) For all purposes of this Indenture capitalized terms used herein
shall have the meanings set forth below. For purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:
"Acceleration Notice" has the meaning specified in Section 8.2.
"Additional Collateral" means the Issuer's leasehold interest in the
following leases, each as further described in the Leasehold Mortgage applicable
thereto: (i) Sublease dated July 8, 1992 between The Stop & Shop Supermarket
Company and Bradlees New England, Inc., predecessor in interest to the Issuer
("BNE"), with respect to property located in Danbury, Connecticut; (ii) Lease
dated October 26, 1973 between ASC of Moorestown, Inc. and The Stop & Shop
Companies, Inc., with respect to property located in Saddle Brook, New Jersey,
assigned to Bradlees New Jersey Inc., predecessor in interest to the Issuer
("BNJ"), pursuant to an Assignment of Lease dated June 18, 1988 between the Stop
& Shop Companies, Inc. and BNJ; and (iii) Indenture of Lease dated August 24,
1962 between Postrich Realty Corp. and Stop & Shop, Inc., with respect to
property located in Norwalk, Connecticut, assigned to BNE pursuant to an
Assignment of Lease dated June 18, 1988 between Stop & Shop, Inc. and BNE.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall mean any Person acting as Authenticating
Agent hereunder pursuant to Section 4.13.
"Authorized Agent" shall mean any Paying Agent, Authenticating Agent
or Security Registrar or other agent appointed by the Trustee in accordance with
this Indenture to perform any function that this Indenture authorizes the
Trustee or such agent to perform.
"Authorized Representative" means, with respect to any Person, the
president, vice-president, chief financial officer, treasurer or secretary of
the Person
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authorized to act on behalf of such Person by its Board of Directors
or any other governing body of such Person in matters relating to the Notes and
this Indenture.
"Authorized Signatory" shall mean any officer of the Trustee or any
other individual who shall be duly authorized by appropriate corporate action on
the part of the Trustee to authenticate Notes.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended,
as codified under Title 11 of the United States Code, 11 U.S.C. (S) 101 et
--
seq., and the Bankruptcy Rules promulgated thereunder, as the same may be in
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effect from time to time.
"Bankruptcy Court" shall have meaning specified in the recitals
hereto.
"Bankruptcy Law" means Title 11 of the United States Code, or any
similar Federal or state law for the relief of debtors.
"Bankruptcy Proceeding" shall have meaning specified in the recitals
hereto.
"BI" has the meaning specified in the introductory paragraph hereof.
"BI Credit Facility Guarantee" means the Indebtedness represented by
the guarantee by BI of the Obligations of the Borrower (each as defined in the
New Credit Facility) under the New Credit Facility.
"BI Guarantee" means the guarantee by BI of the BI Guarantee
Obligations, as provided in Article 13.
"BI Guarantee Obligations" has the meaning specified in Section 13.1.
"Board of Directors", when used with respect to a corporation, shall
mean either the board of directors of the corporation, or any committee of that
board duly authorized to act for it hereunder.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuer or BI, as the case may be, to
have been adopted by the Board of Directors of the Issuer or BI, as the case may
be, and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or in the city and State
where the Trustee's Corporate Trust Office is located, are authorized or
obligated by law, executive order or governmental decree to be closed.
"Collateral" means, collectively, all of the property and assets that
are from time to time subject to the Lien of any of the Security Documents.
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"Constituent Entity" has the meaning specified in Section 7.1.
"Conversion Price" has the meaning specified in Section 9.4.
"Conversion Shares" has the meaning specified in Section 9.5(j).
"Corporate Trust Office" means the principal office of the Trustee at
which any particular time corporate trust business of the Trustee shall be
administered, which at the date hereof is One State Street, New York, New York,
or such other office as may be designated by the Trustee to the Issuer and each
Noteholder.
"Credit Facility Guarantees" means, collectively, the BI Credit
Facility Guarantee and the New Horizons Credit Facility Guarantee.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under the Bankruptcy Law.
"Date of Conversion" has the meaning specified in Section 9.2.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depository" means DTC, together with any Person succeeding thereto by
merger, consolidation or acquisition of all or substantially all of its assets,
including substantially all of its securities payment and transfer operations.
"Disposition" means, with respect to any Collateral, the sale,
assignment, transfer, lease, conveyance or other disposition of all or any
portion of such Collateral (including without limitation the disposition of all
of the stock of the entity holding such Collateral). Notwithstanding the
foregoing, any such sale, assignment, transfer, lease, conveyance or other
disposition to a subsidiary of the Issuer or BI shall not be deemed a
"Disposition" hereunder so long as such subsidiary acquires its interest subject
to the Lien on such Collateral for the benefit of the Holders created by the
Security Documents, executes a guarantee under the Notes in substantially the
form of the Guarantee and executes an undertaking to be bound by and perform the
obligations of the Mortgagor or pledgor under the Security Documents applicable
to such Collateral. "Dispose" and "Disposed" shall have the correlative
meaning.
"Distribution Date" has the meaning specified in Section 9.5(j).
"Dollars" means the lawful currency of the United States of America.
"DTC" means The Depository Trust Company, having a principal office at
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
"Effective Date" has the meaning specified in the Plan.
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"Equity Offering" shall mean an offering, sale or issuance for cash by
BI of its common stock, other than offerings to officers, directors, employees
or consultants pursuant to the Plan or pursuant to any compensation, incentive
or benefit plan or arrangement adopted by BI.
"Events of Default" has the meaning specified in Section 8.1 hereof.
"'ex' date" has the meaning specified in Section 9.5(f).
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.
"Expiration Date" has the meaning specified in Section 9.5(e).
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Global Note" means any global security in registered form
representing all or a portion of the Notes.
"Guarantees" means, collectively, the BI Guarantee and the New Horizon
Guarantee.
"Guarantee Obligations" has the meaning specified in Section 13.1.
"Guarantor" shall have the meaning specified in Section 13.1.
"Holders" has the same meaning as Noteholders.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or bankers'
acceptances or letters of credit (or reimbursement agreements in respect
thereof) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to capital leases), except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing indebtedness would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, and also includes, to the
extent not otherwise included, the guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect by such Person in any manner (including, without limitation,
letters of credit and reimbursement agreements in respect thereof), of all or
any part of any of the items which would be included within this definition.
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"Indenture" means this instrument as amended or supplemented from time
to time pursuant to the terms hereof.
"Issue Date" means the date the Notes are issued pursuant to this
Indenture.
"Issuer" means Bradlees Stores, Inc., a Massachusetts corporation,
together with its successors and assigns.
"Issuer Request" and "Issuer Order" mean, respectively, a written
request or order signed in the name of the Issuer by its Authorized
Representative and delivered to the Trustee.
"Last Sale Price" has the meaning specified in Section 9.3.
"Leasehold Mortgages" means, collectively, each of (a) the Leasehold
Mortgage, Security Agreement, Assignment of Leases, Rents and Profits and
Fixture Financing Statement by and between New Horizons, as Mortgagor, and
Trustee, as Mortgagee, on behalf of the Holders, dated as of February 2, 1999,
with respect to the Yonkers Property, in the original principal amount of
$17,760,000; (b) the Leasehold Mortgage, Security Agreement, Assignment of
Leases, Rents and Profits and Fixture Financing Statement by and between New
Horizons, as Mortgagor, and Trustee, as Mortgagee, on behalf of the Holders,
dated as of February 2, 1999, with respect to the Yonkers Property, in the
original principal amount of $11,240,000; (c) the Leasehold Mortgage, Security
Agreement, Assignment of Leases, Rents and Profits and Fixture Financing
Statement by and between Bradlees Stores, Inc., as Mortgagor, and Trustee, as
Mortgagee, on behalf of the Holders, dated as of February 2, 1999, with respect
to property located in Danbury, Connecticut, in the original principal amount of
$6,500,000; (d) the Leasehold Mortgage, Security Agreement, Assignment of
Leases, Rents and Profits and Fixture Financing Statement by and between
Bradlees Stores, Inc., as Mortgagor, and Trustee, as Mortgagee, on behalf of the
Holders, dated as of February 2, 1999, with respect to property located in
Norwalk, Connecticut, in the original principal amount of $6,500,000; and (e)
the Leasehold Mortgage, Security Agreement, Assignment of Leases, Rents and
Profits and Fixture Financing Statement by and between Bradlees Stores, Inc. as
Mortgagor, and Trustee, as Mortgagee, on behalf of the Holders, dated as of
February 2, 1999, with respect to property located in Saddlebrook, New Jersey,
in the original principal amount of $6,500,000.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Majority" has the meaning specified in Section 6.8.
"Maturity Date" means the date, as set forth on the face of the Notes,
on which the Notes will mature.
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"Mortgaged Property", with respect to any Leasehold Mortgage, shall
have the meaning specified in such Leasehold Mortgage.
"Mortgagee" and "Mortgagor", with respect to any Leasehold Mortgage,
have the meanings specified in such Leasehold Mortgage.
"Net Proceeds" means, as appropriate, (i) the proceeds of an Equity
Offering minus all customary out-of-pocket expenses and fees relating to such
Equity Offering or (ii) the proceeds of the Disposition of the Yonkers Property
or the Additional Collateral minus all customary out-of-pocket expenses and fees
relating to such Disposition.
"New Common Stock" means the common stock, par value $.01, of BI
authorized under the amended certificate of incorporation of BI and issued
pursuant to the Plan.
"New Credit Facility" has the meaning specified in the Plan.
"New Credit Facility Waivers and Consents" means all Mortgagee's
Waivers and Consents (or similar documents) entered into from time to time by
the Issuer, BankBoston Retail Finance, Inc., as collateral agent and the
Trustee, as mortgagee, with respect to any Additional Collateral, replacement
collateral or the Yonkers Property.
"New Horizons" means New Horizons of Yonkers, Inc., a Delaware
corporation and wholly-owned subsidiary of the Issuer.
"New Horizons Credit Facility Guarantee" means the Indebtedness
represented by the guarantee by New Horizons of the Obligations of the Borrower
(each as defined in the New Credit Facility) under the New Credit Facility.
"New Horizon Guarantee" means the guarantee by New Horizons of the New
Horizons Guarantee Obligations, as provided in Article 13.
"New Horizons Guarantee Obligations" has the meaning specified in
Section 13.1.
"New Horizons Old Common Stock" means the common stock issued by New
Horizons and outstanding immediately prior to the Effective Date.
"non-electing shares" has the meaning specified in Section 9.6.
"Notes" means the notes issued to the Holders in accordance with the
terms of this Indenture.
"Noteholders" means the registered owners of the Notes as shown on the
Security Register maintained for that purpose.
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"Offer" has the meaning specified in Section 9.5(e).
"Officers' Certificate" of any Person means a certificate signed by
two Authorized Representatives of such Person.
"Opinion of Counsel" means a written opinion of counsel for any Person
reasonably satisfactory to the intended recipient thereof.
"Outstanding" shall mean, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes or portions thereof deemed to have been paid within the
meaning of Section 10.1;
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture; and
(iv) Notes converted to New Common Stock pursuant to Article 9;
provided, however, that in determining whether the Holders of the requisite
principal of Notes outstanding have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or whether or not a quorum is
present at a meeting of Holders, Notes owned by the Issuer, BI or any subsidiary
thereof shall be disregarded and deemed not to be outstanding as provided in
Section 1.4.
"Paying Agent" means any Person acting as Paying Agent pursuant to
this Indenture.
"Person" means an individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, limited liability partnership, institution, public benefit
corporation, firm, joint stock company, estate, government (or agency or
political subdivision thereof) or other entity.
"Place of Payment", when used with respect to the Notes, shall mean
the office or agency maintained pursuant to Section 4.13 hereof.
"Plan" shall have the meaning specified in the recitals hereto.
"Pledged Stock" means 100% of the outstanding New Horizons Old Common
Stock, registered in the name of the Issuer.
"Predecessor Notes", with respect to any particular Note, shall mean
any previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; for the purposes of this definition, any Note
authenticated and delivered
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under Section 2.5 in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"Purchased Shares" has the meaning specified in 9.5(e).
"Redemption Account" has the meaning specified in Section 3.4.
"Redemption Date" means a date set forth for the redemption of Notes
pursuant to Section 3.3.
"Redemption Price" means the price to be paid by the Issuer for the
Notes that are redeemed under Article 3.
"Regular Record Date", for the Stated Maturity of any installment of
principal of any Note or payment of interest thereon, shall mean the 15th day
(whether or not a Business Day) next preceding such Stated Maturity, or any
other date specified for such purpose in the form of the Note.
"Responsible Officer" means, when used with respect to the Trustee,
any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale Agreement" has the meaning specified in Section 6.9.
"SEC" means the Securities and Exchange Commission of the United
States or any successor agency.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Security Agreement" means the Security Agreement from the Issuer to
the Trustee, on behalf of the Holders, dated as of February 1, 1999, as the same
may be amended from time to time in accordance with its terms.
"Security Documents" means the Leasehold Mortgages, the Security
Agreement and any other instruments or documents entered into in connection
therewith (for avoidance of doubt, expressly excluding the New Credit Facility
or related loan documents), as such instruments and documents may from time to
time be amended in accordance with the terms hereof and thereof.
"Security Register" means any register which the Issuer shall cause to
be kept at the Corporate Trust Office of the Trustee (and in any other office or
agency of the Issuer in a place of payment) in which, subject to such reasonable
regulations as it may
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prescribe, the Issuer provides for the registration of Notes and of transfers
and exchanges of Notes.
"Security Registrar" means any person acting as Security Registrar
pursuant to this Indenture.
"Significant Subsidiary" means any subsidiary that would be a
"significant subsidiary" of the Issuer or BI, as the case may be, within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" when used with respect to any Note or any
installment of principal thereof or payment of interest thereon, shall mean the
date specified in such Note as the fixed date on which such Note or such
installment of principal or payment of interest is due and payable.
"Surviving Entity" has the meaning specified in Section 7.1.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the NASDAQ (or,
if the relevant security is not listed for trading thereon, the principal
securities exchange or market on which the New Common Stock is then listed or
admitted for trading).
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations promulgated thereunder.
"Trustee" means IBJ Whitehall Bank & Trust Company, named as "Trustee"
in the introductory paragraph hereof until a successor Trustee shall have been
appointed pursuant to the applicable provisions hereof, and thereafter means
such successor Trustee.
"Yonkers Property" means that certain leasehold interest owned by New
Horizons located in Yonkers, New York, as further described in the Leasehold
Mortgage encumbering the Yonkers Property.
(b) (i) the terms defined in this Indenture have the meanings
assigned to them in this Indenture and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as in effect on the date
hereof;
(iii) references herein to "Articles", "Sections", "Subsections",
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Indenture;
(iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
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(v) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 1.2 Compliance Certificates and Opinions. Except as otherwise
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expressly provided by this Indenture, upon any application or request by the
Issuer to the Trustee to take any action under any provision of this Indenture,
the Issuer shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any particular application or request
as to which the furnishing of documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion or such other officer or employee of the Issuer on whom such individual
has relied in good faith has read such covenant or condition and the definitions
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, or such
officer or employee, such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with has been made;
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with; and
(e) in the case of an Officers' Certificate, a statement that no
Event of Default has occurred and is continuing.
SECTION 1.3 Form of Documents Delivered to Trustee. In any case
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where several matters are required to be certified by or covered by an opinion
of any specified Person, it is not necessary that all such matters be certified
by or covered by the opinion of only one such Person, or that they be so
certified by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matter in one or several documents.
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Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows or has reason to believe
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate, opinion or an Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Issuer stating that the information with
respect to each factual matters is in the possession of the Issuer unless such
counsel knows or in the exercise of reasonable care (without independent
investigation) should know that the certificate or opinion or representations
with respect to such matters are erroneous.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 When Securities Disregarded. In determining whether the
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Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Issuer, BI or any of their
respective subsidiaries shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes with
respect to which the Trustee has received written notice that such Notes are so
owned shall be so disregarded. Also, subject to the foregoing, only Outstanding
Notes shall be considered in any such determination.
SECTION 1.5 Conflict with Trust Indenture Act. If any provision
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hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provisions shall control.
SECTION 1.6 Execution in Counterparts. This instrument may be
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executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one of the same instrument.
SECTION 1.7 Effect of Headings and Table of Contents. The Article
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and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 1.8 Successors and Assigns. All covenants and agreements
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in this Indenture by the Trustee, the Issuer and BI shall bind and, to the
extent permitted hereby, shall inure to the benefit of and be enforceable by
their respective successors and assigns, whether so expressed or not. The Issuer
may not assign or otherwise transfer any of its rights under this Agreement.
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SECTION 1.9 Severability Clause. In case any provision in this
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Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.10 Benefits of Indenture. Nothing in this Indenture or in
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the Notes, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.11 GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE
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GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTIONS 5-1401 AND 5-
1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
SECTION 1.12 Legal Holidays. In any case where the Redemption Date
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or the Stated Maturity of any Note or of any installment of principal thereof or
payment of interest thereon, is proposed to be paid, shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or such Note)
payment of interest or principal, if any, need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on the Redemption Date or at the Stated Maturity, and if such payment is
timely made, no interest shall accrue for the period from and after such
Redemption Date or Stated Maturity, as the case may be, to the date of such
payment.
SECTION 1.13 No Recourse Against Others. A director, officer,
--------------------------
employee, stockholder or incorporator, as such, of the Issuer or BI shall not
have any liability for any obligations of the Issuer or BI under the Notes or
this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes. This Section 1.13 shall not affect
in any respect the obligations of BI set forth in Article 13.
SECTION 1.14 Notices. Any notices or other communications required
-------
or permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by commercial courier service, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
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(a) if to the Issuer, to:
Bradlees Stores, Inc.
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Senior Vice-President & General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to BI or New Horizons, to such entity at:
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Senior Vice-President & General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
(c) if to the Trustee, to:
IBJ Whitehall Bank & Trust Company
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Each of the Issuer, BI and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Issuer, BI or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when receipt is confirmed if delivered by commercial courier service;
when answered back, if telexed; when receipt is acknowledged, if faxed; and five
(5) calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Security Registrar and shall be sufficiently given
to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
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ARTICLE 2
THE NOTES
SECTION 2.1 Title and Terms. The aggregate principal amount of
---------------
Notes which may be authenticated and delivered under this Indenture is limited
to $28,995,000, except for Notes authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Section 2.3, 2.4, 2.5 or 3.5.
The Maturity Date of the Notes shall be February 3, 2004 and they
shall bear interest at the rate of 9% per annum, from and including the date of
issuance thereof until maturity or earlier redemption, payable semi-annually in
cash on each of January 1 and July 1, commencing July 1, 1999, until the
principal thereof is paid or made available for payment. The Issuer shall pay
interest on overdue principal from time to time on demand at the rate of
interest borne by the Notes and it shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the rate of interest borne by the Notes to the extent lawful.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months, and, in the case of a partial month, the actual number of days
elapsed. It is acknowledged and agreed that the principal of the Notes may not
be repaid prior to the Maturity Date except as specifically provided in this
Indenture.
The principal of and interest on the Notes shall be payable at the
office or agency of the Issuer maintained by the Issuer for such purpose;
provided, however, that at the option of the Issuer, payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register, unless such Person has, at least
30 days prior to the relevant due date for payment, designated in writing a U.S.
dollar account maintained by such Person with a bank in the United States, in
which case the Issuer shall make payments of interest by wire transfer of funds
to such account.
The Notes shall be redeemable as provided in Article 3.
The Notes shall be convertible as provided in Article 9.
The Notes shall be secured by (A) a first priority mortgage Lien on
(i) the Yonkers Property and the Net Proceeds of the Disposition of the Yonkers
Property and (ii) subject to Section 12.1(b) hereof, the Additional Collateral
and the Net Proceeds of the Disposition of the Additional Collateral and (B) a
first priority Lien on the Pledged Stock, in each case as and to the extent
provided in Article 12 and in the Security Documents.
The BI Guarantee Obligations and New Horizons Guarantee Obligations
under the Notes shall be fully and unconditionally guaranteed by BI and New
Horizons, respectively, as provided in Article 13.
SECTION 2.2 Execution, Authentication, Delivery and Dating. The
----------------------------------------------
Notes shall be executed on behalf of the Issuer by one Authorized Representative
of the
15
Issuer. The signature of any Authorized Representative on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at the time of execution the proper officers of the Issuer shall bind the
Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
Subject to Section 2.4 hereof, the Issuer shall deliver the Notes
executed by the Issuer to the Trustee for authentication, together with an
Issuer Order for the authentication and delivery of such Notes, and the Trustee
in accordance with the Issuer Order shall authenticate and deliver the Notes.
The Trustee shall at all times act as the sole authenticating agent for the
authentication of the Notes hereunder unless, and until, the Trustee may appoint
a successor Authenticating Agent pursuant to Section 4.13(c) hereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Issuer, and the Issuer shall deliver such Note to the Trustee
for cancellation as provided in Section 2.8 hereof, for all purposes of this
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 2.3 Temporary Notes. Pending the preparation of definitive
---------------
Notes, the Issuer may execute, and upon Issuer Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers of the Issuer executing the same may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer in a
Place of Payment, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Notes, the Issuer shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive Notes
of any authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
16
SECTION 2.4 Registration; Registration of Transfer and Exchange.
---------------------------------------------------
(a) General. The Issuer shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Issuer in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and of transfers and exchanges of Notes. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering Notes
and transfers and exchanges of Notes as herein provided.
Notwithstanding anything to the contrary set forth herein, the Trustee
shall not be required and shall have no obligation to monitor compliance with
any federal or state securities laws.
Upon surrender for registration of transfer of any Notes at the office
or agency of the Issuer in a Place of Payment, the Issuer shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of
like tenor and aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes,
of any authorized denominations and of like tenor and aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Trustee shall authenticate and deliver, the Notes which the Holder
making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form reasonably satisfactory to the Issuer and the Security
Registrar duly executed, by the Holder thereof or its attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.3, 2.4, 2.5 or 3.5 hereof not involving any transfer.
If any Notes are to be redeemed in part, the Issuer shall not be
required (A) to issue, register the transfer of or exchange such Notes during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of any such Notes selected for redemption
under Section 3.4 hereof and ending at the close of business on the day of such
mailing or (B) to issue, register the transfer of or
17
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
As used in this Section 2.4, the term "transfer" encompasses any sale,
pledge or other transfer or disposition of any Notes referred to herein.
(b) Global Notes. This Section 2.4(b) shall apply to Global Notes.
(i) Each Global Note authenticated under this Indenture shall
be registered in the name of the Depository designated for such Global Note
or a nominee thereof and delivered to such Depository or a nominee thereof
or custodian therefor, and each such Global Note shall constitute a single
Note for all purposes of this Indenture. The Notes may be represented by
one or more Global Notes.
(ii) Notwithstanding any other provision in this Indenture, no
Global Note may be exchanged in whole or in part for Notes registered, and
no transfer of a Global Note in whole or in part may be registered, in the
name of any Person other than the Depository for such Global Note or a
nominee thereof unless (A) such Depository (1) has notified the Issuer that
it is unwilling or unable to continue as Depository for such Global Note or
(2) has ceased to be a clearing agency registered under the Exchange Act,
and, in either case, a successor Depository is not appointed within 90 days
thereof, (B) the Issuer executes and delivers to the Trustee an Issuer
Order providing that such Global Note shall be so transferable, registrable
and exchangeable, and such transfers shall be registrable or (C) there
shall have occurred and be continuing an Event of Default with respect to
the Notes. Any Global Note exchanged pursuant to subclause (A) above shall
be so exchanged in whole and not in part and any Global Note exchanged
pursuant to subclause (B) or (C) above may be exchanged in whole or from
time to time in part as directed by the Depository for such Global Note.
Notwithstanding any other provision in this Indenture, a Global Note to
which the restriction set forth in the second preceding sentence shall have
ceased to apply may be transferred only to, and may be registered and
exchanged for Notes registered only in the name or names of, such Person or
Persons as the Depository for such Global Note shall have directed, and no
transfer thereof other than such a transfer may be registered.
(iii) Subject to clause (ii) above, any exchange of a Global Note
for other Notes may be made in whole or in part, and all Notes issued in
exchange for a Global Note or any portion thereof shall be registered in
such name or names as the Depository for such Global Note shall direct. At
the option of the applicable Noteholder, a Note issued in exchange for an
interest in a Global Note pursuant to this clause (iii) may be issued, in
accordance with the rules and procedures of the Depository, in the form of
a permanent certificated Note in registered form in substantially the form
set forth of Exhibit A attached hereto (each such Note, a "Physical Note").
In connection with any transfer or exchange of a portion of the beneficial
interest in the Global Note to beneficial owners where one or more
18
Physical Notes are to be issued, the Trustee shall reflect on its books and
records the date and decrease in the principal amount of the Global Note in
an amount equal to the principal amount of the beneficial interest in the
Global Note to be transferred, and the Issuer shall execute, and, upon the
direction of the Issuer, the Trustee shall authenticate and deliver, one or
more Physical Notes of like tenor and amount. In connection with the
transfer of the entire Global Note to beneficial owners in exchange for a
Physical Note, the Global Note shall be deemed to be surrendered to the
Trustee for cancellation, and the Issuer shall execute, and, upon the
direction of the Issuer, the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depository in exchange for its
beneficial interest in the Global Note, an equal aggregate principal amount
of Physical Notes of authorized denominations.
(iv) Every Note authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Note or any portion
thereof, whether pursuant to this Section, Section 2.3 or 3.5 hereof or
otherwise, shall be authenticated and delivered in the form of, and shall
be, a Global Note, unless such Note is registered in the name of a Person
other than the Depository for such Global Note or a nominee thereof.
SECTION 2.5 Mutilated, Destroyed, Lost and Stolen Notes. If (a) any
-------------------------------------------
mutilated Note is surrendered to the Trustee or the Issuer, or if the Security
Registrar and the Trustee receive evidence to their reasonable satisfaction of
the destruction, loss or theft of any Note and (b) there is delivered to the
Issuer, the Security Registrar and the Trustee evidence to their reasonable
satisfaction of the ownership and authenticity thereof, and such security or
indemnity as may be reasonably required by them to save each of them harmless,
then, in the absence of notice to the Issuer, the Security Registrar or the
Trustee that such Note has been acquired by a bona fide purchaser, the Issuer
shall execute and, upon the Issuer's request, the Trustee shall authenticate and
make available for delivery in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note, of like tenor (including the same
date of issuance) and equal face amount of principal, registered in the same
manner, dated the date of its authentication and bearing interest from the date
to which interest has been paid on such Note, in lieu of and substitution for
such Note. If, after delivery of such new Note, a bona fide purchaser of the
original Note in lieu of which such new Note was issued presents for payment
such original Note, the Issuer and the Trustee shall be entitled to recover such
new Note from the Person to whom it was delivered or any Person taking
therefrom, except a bona fide purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Issuer or the Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable (excluding any payment of principal other
than the final installment of principal) the Issuer in its discretion may,
instead of issuing a new Note, pay such Note without surrender thereof (except
in the case of a mutilated Note) if the applicant for such payment shall furnish
to the Issuer and the Trustee such reasonable security or indemnity as they may
require to save each of them harmless, and in case of
19
destruction, loss or theft, evidence to the reasonable satisfaction of the
Issuer and the Trustee of the destruction, loss or theft of such Note.
Upon the issuance of any new Note under this Section, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the security and benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Payments; Interest and Principal Rights Preserved.
-------------------------------------------------
Principal and interest on any Note which is payable, and is punctually paid or
duly provided for, on any Stated Maturity shall be paid by the close of
business, State of New York time, on the applicable payment date to the Person
in whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such principal or interest.
Notwithstanding the foregoing, payment of the principal amount of any Note (or
any outstanding installment thereof) upon final maturity (whether by redemption,
acceleration or otherwise) shall be made instead only upon presentation and
surrender of such Note. Each Note delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other Note
shall carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Note.
SECTION 2.7 Persons Deemed Owners. Subject to Section 2.4, prior to
---------------------
due presentment of a Note for registration of transfer, the Issuer, the Trustee
and any agent of the Issuer or the Trustee shall treat the Person in whose name
such Note is registered as the owner of such Note for the purpose of receiving
payment of principal of and any interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
SECTION 2.8 Cancellation; Purchase by the Issuer. All Notes
------------------------------------
surrendered for payment, redemption, conversion, registration of transfer or
exchange or for credit in full against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it following such payment, redemption,
conversion, registration, exchange or credit in full. The Issuer may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the
20
Trustee) for cancellation any Notes previously authenticated hereunder which the
Issuer has not issued and sold, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes previously canceled as provided in this Section, except
as expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of in accordance with its customary procedure in effect from
time to time.
SECTION 2.9 Dating of Notes. Each Note shall be dated the date of
---------------
its authentication.
SECTION 2.10 CUSIP Numbers. The Issuer in issuing the Notes may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption and related materials as a convenience
to Holders; provided that the Trustee shall assume no responsibility for the
accuracy of such numbers and any such redemption or other notice shall not be
affected by any defect in or omission of such numbers.
SECTION 2.11 Parity and Ranking of Notes. All Notes issued and
---------------------------
Outstanding hereunder rank on a parity with each other Note, and each Note shall
be guaranteed equally and ratably under the Guarantee and secured equally and
ratably by this Indenture and the Security Documents.
SECTION 2.12 Book Entry. In the event the Notes are issued as Global
----------
Notes with the Depository: (i) the Trustee may deal with the Depository as the
authorized representative of the Holders who hold interests in such Global
Notes; (ii) the Depository will make book-entry transfers among the direct
participants of the Depository and will receive and transmit distributions of
principal and interest on the Notes to such direct participants; and (iii) the
direct participants of the Depository shall have no rights under this Indenture
under or with respect to any of the Notes held on their behalf by the Depository
other than such rights as are exercised through the Depository, and the
Depository may be treated by the Trustee and its agents, employees, officers and
directors as the absolute owner of the Notes represented by such Global Notes
for all purposes whatsoever; provided, however, that the Trustee may deal
-------- -------
directly with any beneficial Holder of Notes holding interests in such Global
Notes so long as such beneficial Holder provides to the Trustee evidence
satisfactory to the Trustee of such beneficial ownership.
ARTICLE 3
REDEMPTION OF NOTES
SECTION 3.1 Mandatory Redemption of Notes. The Outstanding Notes
-----------------------------
shall be redeemed pro rata with (a) the Net Proceeds of the Disposition of the
Yonkers Property, (b) subject to Section 12.1(b) hereof, the Net Proceeds of the
Disposition of the Additional Collateral, and (c) the Net Proceeds of any Equity
Offering. The Redemption Price shall equal 100% of the unpaid principal amount
of the Notes to be redeemed plus accrued and unpaid interest thereon to the
Redemption Date. The Redemption Date shall be a date determined by the Issuer
which shall be no later than 30
21
days following receipt by the Trustee or the Issuer, as the case may be, of the
Net Proceeds referred to in the first sentence of this Section 3.1.
SECTION 3.2 Optional Redemption of Notes. The Issuer shall have the
----------------------------
right at any time and from time to time to redeem the Outstanding Notes, in
whole or in part, at a Redemption Price equal to 100% of the unpaid principal
amount thereof plus accrued and unpaid interest thereon to the Redemption Date.
The Redemption Date shall be a date determined by the Issuer.
SECTION 3.3 Delivery of Notices, Certificates and Opinions.
----------------------------------------------
(a) The Issuer shall notify the Trustee of any mandatory or optional
redemption of Notes at least 20 days prior to the applicable Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee), specifying the
Redemption Date and the principal amount of Notes to be redeemed. In the case of
an optional redemption, such notice shall be accompanied by an Issuer Order. In
the case of a mandatory redemption, such notice shall be accompanied or followed
(no later than 12 days prior to the applicable Redemption Date) by an Officers'
Certificate certifying the amount of the Net Proceeds and the calculation
thereof, which amount shall be used for the redemption. In each case, such
notice shall be accompanied by an Officers' Certificate setting forth the clause
of this Indenture or the Notes pursuant to which redemption shall occur and a
statement to the effect that such redemption will comply with the conditions
contained therein.
(b) Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 10 days prior to the Redemption Date, to each
Holder of Notes to be redeemed, at his or her address, appearing in the Security
Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts)
of the particular Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note (or portion thereof) to be redeemed and that
interest thereon will cease to accrue on and after said date,
(5) the Conversion Price, the date on which the right to convert the
principal of the Notes to be redeemed will terminate and the place or places
where such Notes may be surrendered for conversion, and
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
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Notice of redemption of Notes to be redeemed shall be given by the
Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer; provided, however, that the Issuer shall have delivered
to the Trustee, at least 20 days prior to the Redemption Date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
(c) If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed pro rata or by lot or by a method that complies
with applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion considers fair and appropriate; provided,
however, that in the case of a mandatory redemption, selection of the portion of
Notes for redemption shall be made by the Trustee only on a pro rata basis
unless such method is otherwise prohibited by law. Notes and portions thereof
that the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. The Trustee shall notify
the Issuer promptly of the Notes or portions of Notes to be redeemed.
SECTION 3.4 Redemption of and Payment on Notes. Notice of
----------------------------------
redemption having been given as aforesaid, and the conditions, if any, set forth
in such notice having been satisfied, the Notes or portions thereof so to be
redeemed shall, on the Redemption Date, become due and payable, and from and
after such date such Notes or portions thereof shall cease to bear interest.
Upon delivery of any notice of redemption pursuant to Section 3.3 hereof, the
Trustee shall establish a special purpose account (the "Redemption Account").
Following the Disposition of each of the Yonkers Property and the Additional
Collateral, the Issuer shall transfer, or cause to be transferred, to the
Trustee, immediately upon receipt, the full amount of proceeds therefrom, and
the Trustee, immediately upon receipt, shall, in accordance with the terms of
the Security Documents, transfer the full Redemption Price in Dollars to the
Redemption Account which funds shall be held by the Trustee in the Redemption
Account and applied to the redemption of such Notes on the Redemption Date.
Following any Equity Offering, the Issuer shall transfer, or cause to be
transferred, to the Trustee, immediately upon receipt, the full Redemption Price
in Dollars, which amount after transfer to the Trustee by the Issuer shall be
held by the Trustee in the Redemption Account and applied to the redemption of
such Notes on the Redemption Date. In connection with any mandatory redemption
pursuant to Section 3.1 hereof, upon receipt by the Trustee no later than one
Business Day prior to the Redemption Date of one or more Officers' Certificates
of the Issuer certifying the amounts of customary fees and expenses relating to
the transaction resulting in such mandatory redemption, the Trustee shall
promptly cause such fees and expenses to be paid from the funds held in the
Redemption Account. In connection with any mandatory redemption pursuant to
Section 3.1 hereof resulting from a Disposition of the Additional Collateral,
the Issuer shall certify to the Trustee in an Officers' Certificate the maximum
amount of proceeds of such Disposition that are to be used to redeem the Notes
calculated in accordance with Section 12.1(b) hereof. In connection with any
optional redemption by the Issuer pursuant to Section 3.2 hereof, the Issuer
shall deposit with the Trustee or the Paying Agent on or prior to the Redemption
Date money sufficient to pay the Redemption Price on all Notes to be redeemed on
that date. Upon
23
surrender of any such Note for redemption in accordance with the notice thereof
to Holders sent pursuant to Section 3.3 hereof, the Trustee shall pay an amount
in respect of such Note or portion thereof as provided in such notice; provided,
however, that any payment of interest on any Note, the Stated Maturity of which
payment of interest is on or prior to the Redemption Date, shall be payable to
the Holder of such Note or one or more Predecessor Notes, registered as such at
the close of business on the related Regular Record Date according to the terms
of such Note and subject to the provisions of Section 2.6 hereof. The Trustee or
the Paying Agent shall promptly return to the Issuer any money deposited with or
transferred to the Trustee or the Paying Agent by the Issuer in excess of the
amounts necessary to pay the Redemption Price of or on behalf of all Notes to be
redeemed.
SECTION 3.5 Notes Redeemed in Part. Any Note that is to be redeemed
----------------------
only in part shall be surrendered at a Place of Payment therefor (with due
endorsement by, or a written instrument of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder thereof or its attorney duly
authorized in writing), and the Issuer shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of such Note, in each
case as soon as practicable after the surrender of such Note (but in any event
within 10 Business Days), without service charge, a new Note or Notes, of any
authorized denomination requested by such Holder and of like tenor and in
aggregate principal amount equal to and in exchange for the remaining unpaid
principal amount of the Note so surrendered.
SECTION 3.6 Cancellation of Notes. All Notes redeemed under any of
---------------------
the provisions of this Indenture shall forthwith be canceled.
ARTICLE 4
CONCERNING THE TRUSTEE
SECTION 4.1 Duties and Responsibilities of Trustee; During Default;
-------------------------------------------------------
Prior to Default. With respect to the Holders of Notes issued hereunder, the
----------------
Trustee, prior to the occurrence of an Event of Default with respect to the
Notes and after the curing or waiving of all Events of Default which may have
occurred with respect to the Notes, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Notes and after the curing or waiving of all such Events of Defaults with
respect to the Notes which may have occurred:
(i) the duties and obligations of the Trustee with respect to
the Notes shall be determined solely by the express provisions of this
Indenture, and
24
the Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical computations or other facts stated therein);
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders holding a sufficient percentage of Notes to give such direction as
permitted by this Indenture relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(d) none of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Trustee shall have ground for believing
that the repayment of such funds or adequate indemnity against such liability is
not assured to it.
Except as otherwise specifically provided herein, (i) all references
in this Indenture to the Trustee shall be deemed to refer to the Trustee in its
capacity as Trustee and in its capacity as Security Registrar and Paying Agent
and (ii) every provision of this Indenture relating to the conduct or affecting
the liability or offering protection, immunity or indemnity to the Trustee shall
be deemed to apply with the same force and effect to the Trustee acting in its
capacity as Security Registrar and Paying Agent.
SECTION 4.2 Certain Rights and Duties of Trustee. Subject to
------------------------------------
Section 4.1 hereof and the Trust Indenture Act, in performing its duties and
exercising its powers hereunder:
(a) The Trustee may conclusively rely and shall be fully protected in
acting, or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties or with respect to any action it takes
or omits to take in good faith in
25
accordance with a direction received by it from Holders holding a sufficient
percentage of Notes to give such direction as permitted by this Indenture.
(b) Any request, direction, order or demand of the Issuer or BI
mentioned herein shall be sufficiently evidenced by an instrument signed in the
name of the Issuer or BI, as the case may be, by an Authorized Representative
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Issuer.
(c) The Trustee may consult with counsel, and the advice of counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture and may refuse to perform any
duty or exercise any such rights or powers unless it shall have received
security or indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby.
(e) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture
with respect to any action it takes or omits to take in good faith in accordance
with a direction received by it from Holders holding a sufficient percentage of
Notes to give such direction as permitted by this Indenture.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture or other paper or document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal amount of the Notes
then Outstanding; provided, that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require indemnity satisfactory to it against such
expenses or liabilities as a condition to so proceeding. The reasonable expense
of every such investigation shall be paid by the Issuer or, if paid by the
Trustee, shall be repaid by the Issuer upon demand.
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for the willful misconduct
or negligence on the part of or for the supervision of any agent or attorney
appointed with due care by it hereunder.
26
(h) If an Event of Default has occurred and is continuing and the
Trustee receives actual notice of such event, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(i) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Article 4.
(j) The Trustee shall not be charged with knowledge of an Event of
Default unless a Responsible Officer of the Trustee obtains actual knowledge of
such event or the Trustee receives written notice of such event from the Issuer,
BI or Holders owning Notes aggregating not less than 10% of the Outstanding
principal amount of the Notes.
(k) The Trustee shall have no duty to monitor the performance of the
Issuer, nor shall it have any liability in connection with the malfeasance or
nonfeasance by the Issuer or BI. The Trustee shall have no liability in
connection with compliance by the Issuer or BI with statutory or regulatory
requirements related to the transactions contemplated by this Indenture and the
Security Documents.
SECTION 4.3 Trustee Not Responsible for Recitals, Etc. The recitals
-----------------------------------------
contained herein and in the Notes, except the Trustee's certificate of
authentication, shall be taken as the statements of the Issuer or BI, as the
case may be, and the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Notes or of the offering materials used in
connection with the offering for sale or sale of the Notes. The Trustee shall
not be accountable for the use or application by the Issuer of any of the Notes
or of the proceeds of such Notes.
SECTION 4.4 Trustee and Others May Hold Notes. The Trustee, or any
---------------------------------
Paying Agent or Security Registrar or any other Authorized Agent of the Trustee,
or any Affiliate thereof, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Issuer or any
other obligor on the Notes with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other Authorized Agent.
SECTION 4.5 Monies Held by Trustee or Paying Agent. All monies
--------------------------------------
received by the Trustee or any Paying Agent shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by law
or this Indenture. The Trustee shall not be liable for interest on any money
received by it, except as the Trustee may agree in writing with the Issuer.
SECTION 4.6 Compensation of Trustee and Its Lien. The Issuer
------------------------------------
covenants and agrees to pay to the Trustee (all references in this Section 4.6
to the Trustee shall be deemed to apply to the Trustee in its capacities as
Trustee, Paying Agent
27
and Securities Registrar) from time to time, and the Trustee shall be entitled
to, compensation for all services rendered by it hereunder in such amounts as
may be agreed to from time to time by the Trustee and the Issuer, and, except as
herein otherwise expressly provided, the Issuer will pay or reimburse the
Trustee upon its request for all reasonable expenses and disbursements incurred
or made by the Trustee in accordance with any of the provisions of this
Indenture and the Security Documents (including the reasonable compensation and
the reasonable expenses and disbursements of its counsel and of all persons not
regularly employed by it) exce pt any such expense or disbursement as may arise
from its negligence or bad faith. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. If any
property other than cash shall at any time be subject to the Lien of this
Indenture, the Trustee, if and to the extent authorized by a receivership or
bankruptcy court of competent jurisdiction or by the supplemental instrument
subjecting such property to such Lien, shall be entitled, but shall not be
required, to make advances for the purpose of preserving such property or of
discharging tax liens or other prior liens or encumbrances thereon. The Issuer
also covenants and agrees to indemnify the Trustee and its officers, directors,
employees and agents for, and to hold them harmless against, any loss,
liability, claim, damage or expense (including the reasonable compensation and
expenses and disbursements of its counsel) incurred without negligence or bad
faith on the part of the Trustee, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder and the
performance of its duties and the exercise of its powers under this Indenture
and the Security Documents, including the costs and expenses of defending itself
against any claim or liability in the premises. The obligations of the Issuer
under this Section 4.6 shall constitute additional Indebtedness hereunder. The
rights of the Trustee and the obligations of the Issuer under this Section 4.6
shall survive the resignation or removal of the Trustee, the payment of the
Notes, and the satisfaction, discharge or termination of this Indenture.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 8.1(d) or (e) hereof, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
SECTION 4.7 Right of Trustee to Rely on Officers' Certificates and
------------------------------------------------------
Opinions of Counsel. Before the Trustee acts or refrains from acting with
-------------------
respect to any matter contemplated by this Indenture, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to the
provisions of Section 1.2 hereof. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such certificate or
opinion.
SECTION 4.8 Persons Eligible for Appointment as Trustee. The
-------------------------------------------
Trustee shall be a bank or trust company, shall be a Person organized and doing
business under the laws of the United States or any State thereof, with a
combined capital and surplus of at least US$100,000,000, and shall be authorized
under such laws to exercise corporate trust powers, subject to supervision by
Federal or state authorities. If such corporation publishes reports of condition
at least annually, then, for the purposes of this
28
Section 4.8, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with this Section 4.8, the Trustee shall resign
immediately in the manner and with the effect specified in Section 4.9 hereof.
SECTION 4.9 Conflicting Interests; Resignation and Removal of
-------------------------------------------------
Trustee; Appointment of Successor.
---------------------------------
(a) If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to the Notes.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice to the Issuer and by giving notice
of such resignation to the Holders of such Notes in the manner provided in
Section 1.14 hereof. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor trustee or trustees by written instrument executed
by order of the Board of Directors, one copy of which instrument shall be
delivered to each of the resigning trustee and the successor trustee. If no
successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after the mailing of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Holder who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper, appoint a successor trustee.
(c) In case at any time any of the following shall occur:
(i) the Trustee shall cease to be eligible under Section 4.8
hereof with respect to the Notes and shall fail to resign after written
request therefor by the Issuer or by any Holder, or
(ii) the Trustee shall become incapable of acting with respect to
the Notes, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
Notes and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors of the Issuer, one copy of which
instrument shall be delivered to each of the Trustee so removed and the
successor Trustee, or, subject to the Trust Indenture Act, any Holder who has
been a bona fide Holder of a Note may, on behalf of himself
29
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor Trustee.
(d) The Holders of a majority in aggregate principal amount of the
Notes at the time Outstanding may at any time remove the Trustee and appoint a
successor Trustee by delivering to the Trustee so removed, the successor Trustee
so appointed and the Issuer a written instrument executed by such Holders
evidencing the action taken by the Holders.
(e) Any resignation or removal of the Trustee and any appointment of
a successor Trustee pursuant to this Section 4.9 shall become effective only
upon acceptance of appointment by the successor Trustee as provided in Section
4.10 hereof.
SECTION 4.10 Acceptance of Appointment by Successor Trustee. Any
----------------------------------------------
successor Trustee appointed under Section 4.9 hereof shall execute, acknowledge
and deliver to the Issuer and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor Trustee hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written request of the Issuer or of the successor Trustee, the Trustee
ceasing to act shall, upon payment of any such amounts then due it pursuant to
the provisions of Section 4.6 hereof, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
Trustee so ceasing to act. Upon request of any such successor Trustee, the
Issuer shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a Lien upon
all property or funds held or collected by such Trustee to secure any amounts
then due it pursuant to Section 4.6 hereof.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
qualified under the requirements of the Trust Indenture Act and eligible under
the provisions of Section 4.8.
Upon acceptance of appointment by a successor Trustee, the Issuer
shall give notice of the succession of such Trustee hereunder to the Holders of
Notes in the manner provided in Section 1.14 hereof. If the Issuer fails to
give such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Issuer.
SECTION 4.11 Merger, Conversion or Consolidation of Trustee. Any
----------------------------------------------
Person into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder
30
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such successor Trustee shall be
eligible under the provisions of Section 4.8 hereof and Section 310(a) of the
Trust Indenture Act.
SECTION 4.12 Preferential Collection of Claims Against Issuer and BI.
-------------------------------------------------------
If and when the Trustee shall be or become a creditor of the Issuer or BI (or
any other obligor upon the Notes or the Guarantee Obligations), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Issuer or BI (or any such other obligor).
SECTION 4.13 Maintenance of Offices and Agencies.
-----------------------------------
(a) There shall at all times be maintained in the Borough of
Manhattan, The City of New York, an office or agency where Notes may be
presented or surrendered for registration of transfer or exchange and for
payment of principal and interest, and where notices and demands to or upon the
Trustee in respect of such Notes or this Indenture may be served. Such office or
agency shall be initially at the Corporate Trust Office. Written notice of the
location of each of such other office or agency and of any change of location
thereof shall be given by the Trustee to the Issuer and the Holders in the
manner specified in Section 1.14 hereof. In the event that no such office or
agency shall be maintained or no such notice of location or of change of
location shall be given, presentations, surrenders and demands may be made and
notices may be served at the Corporate Trust Office.
(b) There shall at all times be a Security Registrar and a Paying
Agent hereunder. Any Paying Agent (other than the Trustee) from time to time
appointed hereunder shall execute and deliver to the Trustee an instrument in
which said Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 4.13, that such Paying Agent will:
(i) hold all sums held by it for the payment of principal and
interest on the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(ii) give the Trustee within three days thereafter notice of
any default by any obligor upon the Notes in the making of any such payment
of principal or interest; and
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the Borough of Manhattan, The City of New York, for the account of the
Trustee.
31
The Trustee at its Corporate Trust Office is hereby appointed as a
Paying Agent hereunder.
(c) At any time when any Notes remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to the Notes which shall
be authorized to act on behalf of the Trustee to authenticate Notes issued upon
original issuance, exchange, registration of transfer or partial redemption
thereof or pursuant to Section 2.4 hereof, and Notes so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder (it being understood
that wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent). If an appointment
of an Authenticating Agent shall be made pursuant to this Section 4.13(c) with
respect to the Notes, the Notes may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternate certificate of
authentication in the following form:
This Note is one of the Notes referred to in the within-mentioned
Indenture.
IBJ Whitehall Bank & Trust Company,
as Trustee
By:______________________________________
Authenticating Agent
By:______________________________________
Authorized Signatory
(d) Any Authorized Agent shall be a bank or trust company, shall be a
Person organized and doing business under the laws of the United States or any
State thereof, with a combined capital and surplus of at least US$100,000,000,
and shall be authorized under such laws to exercise corporate trust powers,
subject to supervision by Federal or state authorities. If such Authorized Agent
publishes reports of its condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 4.13, the combined capital and surplus of such
Authorized Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authorized Agent shall cease to be eligible in accordance with the provisions of
this Section 4.13, such Authorized Agent shall resign immediately in the manner
and with the effect specified in this Section 4.13.
32
(e) Any Person into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, consolidation or conversion to which any Authorized Agent shall be a
party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor Person is otherwise eligible under this Section 4.13, without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authorized Agent or such successor Person.
(f) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee and the Issuer. The Issuer may, and at the
request of the Trustee shall, at any time, terminate the agency of any
Authorized Agent by giving written notice of such termination to the Authorized
Agent and to the Trustee. Upon the resignation or termination of an Authorized
Agent or in case at any time any such Authorized Agent shall cease to be
eligible under this Section 4.13 (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall have been
appointed), the Issuer shall promptly appoint one or more qualified successor
Authorized Agents approved by the Trustee to perform the functions of the
Authorized Agent which has resigned or whose agency has been terminated or who
shall have ceased to be eligible under this Section 4.13. The Issuer shall give
written notice of any such appointment to all Holders pursuant to Section 1.14
hereof.
(g) The Paying Agent shall comply with all applicable withholding,
information reporting and back-up withholding tax requirements under the United
States Internal Revenue Code of 1986, as amended, and the Treasury regulations
issued thereunder in respect of any payment on, or in respect of a Note.
SECTION 4.14 Trustee Risk. None of the provisions contained in this
------------
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Trustee shall have ground
for believing that the repayment of such funds or liability is not assured to
it. Whether or not expressly provided herein, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to Section 4.2 hereof and the requirements of the
Trust Indenture Act.
SECTION 4.15 Appointment of a Co-Trustee. If the Trustee deems it
---------------------------
necessary or desirable in order to carry out the purposes of this Indenture, the
Trustee may appoint a co-Trustee, who shall be reasonably acceptable to the
Issuer, with such powers of the Trustee as may be designated by the Trustee at
the time of such appointment, and the Issuer shall, on request, execute and
deliver to such co-Trustee any deeds, conveyances or other instruments
reasonably required by such co-Trustee so appointed by the Trustee to more fully
and certainly vest in and confirm to such co-Trustee its rights, powers, trusts,
duties and obligations hereunder. In case any separate trustee or co-trustee, or
a successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligation of such separate trustee or co-trustee, so far as permitted by law,
shall vest in and be
33
exercised by the Trustee until the appointment of a new trustee or successor to
such separate trustee or co-trustee.
ARTICLE 5
HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND ISSUER
SECTION 5.1 Issuer to Furnish Trustee Names and Addresses of Holders.
--------------------------------------------------------
The Issuer will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than January 15 and July 15 in each year,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of a date not more than 15 days prior to
the time such list is furnished, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuer of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 5.2 Preservation of Information; Communications to Holders.
------------------------------------------------------
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished
to the Trustee as provided in Section 5.1 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 5.1 upon receipt of a
new list so furnished.
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Notes, by receiving and holding the same, agrees with
the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 5.3 Reports by Trustee. On or before March 1 in every year,
------------------
so long as any Notes are Outstanding hereunder, the Trustee shall transmit to
the Holders a brief report, dated as of the preceding December 31, to the extent
required by Section 313(a) of the Trust Indenture Act in accordance with the
procedures set forth in said Section. The Trustee shall also transmit to the
Holders any report required by Section 313(b) during the time specified in such
subsection. A copy of each such report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange, if any, on which the Notes
are listed. The Issuer shall promptly notify the Trustee if the
34
Notes become listed on any stock exchange, and the Trustee shall comply with
Section 313(d) of the Trust Indenture Act.
SECTION 5.4 Reports by Issuer and BI. The Issuer and BI shall file
------------------------
with the Trustee and the SEC, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act.
ARTICLE 6
COVENANTS
SECTION 6.1 Payment of Notes. The Issuer shall pay the principal of
----------------
and interest on the Notes on the dates and in the manner provided in the Notes
and in this Indenture. An installment of principal of or interest on the Notes
shall be considered paid on the date it is due if the Trustee or Paying Agent
holds on that date U.S. legal tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture. Notwithstanding anything to the
contrary contained in this Indenture, the Issuer may, to the extent it is
required to do so by law, deduct or withhold income or other similar taxes
imposed by the United States of America from principal or interest payments
hereunder.
SECTION 6.2 Corporate Existence. Except as otherwise permitted by
-------------------
Article 7, each of the Issuer and BI shall do or cause to be done, at its own
cost and expense, all things necessary to preserve and keep in full force and
effect its corporate existence in accordance with its organizational documents.
SECTION 6.3 Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Issuer shall deliver to the Trustee within 120 days after the
end of the Issuer's fiscal year, an Officers' Certificate stating that a review
of its activities and the activities of BI's and its subsidiaries during the
preceding fiscal year, has been made under the supervision of the signing
officer with a view to determining whether they have complied with their
obligations under this Indenture and further stating that to the best of such
officers' knowledge such entities during such preceding fiscal year have
complied with each and every such covenant and no Default or Event of Default
occurred during such year and at the date of such certificate there is no
Default or Event of Default that has occurred and is continuing or, if such
officer does know of such Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status with particularity.
(b) Upon becoming aware of any Default or Event of Default in the
performance of any covenant, agreement or condition contained in this Indenture,
the Issuer shall deliver to the Trustee, at its address set forth in Section
1.14 hereof, by registered or certified mail or by telegram, telex or facsimile
transmission followed by hard copy by registered or certified mail, an Officers'
Certificate specifying such event, notice or other action and any action the
Issuer is taking or proposing to take in connection therewith.
35
SECTION 6.4 Impairment of Security Interest. Each of BI and the
-------------------------------
Issuer shall not, and shall not permit any of its subsidiaries to, take or omit
to take, any action which would have the result of impairing or adversely
affecting the security interest with respect to the Collateral for the benefit
of the Holders of the Notes. Notwithstanding the foregoing, nothing herein or in
the Security Documents shall prohibit (i) the Disposition, at any time and from
time to time, of all or any portion of the Collateral so long as the Net
Proceeds of any such sale are applied in accordance with the provisions of the
Security Documents and this Indenture or (ii) the release of any Collateral or
Lien in accordance with the provisions of the Security Documents and this
Indenture.
SECTION 6.5 Amendments to Security Documents. Each of BI and the
--------------------------------
Issuer shall not, and shall not permit any of its subsidiaries to, amend, modify
or supplement, or permit or consent to any amendment, modification or supplement
of, the Security Documents, other than amendments, modifications or supplements
which are otherwise permitted pursuant to the provisions of this Indenture and
the Security Documents.
SECTION 6.6 Reports of Holders. The Issuer will file with the
------------------
Trustee and provide to the Holders of the Notes, within 15 days after filing is
or would have been required with the SEC, copies of the quarterly and annual
reports (without exhibits) and of the other information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Issuer (i) files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act or (ii) would have been
required to so file with the SEC if the Issuer was subject to Section 13 or
15(d) of the Exchange Act. Nothing herein shall require the Issuer to provide
financial statements of the Issuer which are separate and unconsolidated from
the financial statements of BI unless such unconsolidated financial statements
are otherwise required to be filed with the SEC.
SECTION 6.7 Limitation on Indebtedness. BI shall not, the Issuer
--------------------------
shall not and the Issuer shall not permit any of its subsidiaries to, incur any
Indebtedness; provided that the Issuer and its subsidiaries may incur the
Indebtedness described in clauses (i) through (v) below and BI may incur the
Indebtedness described in clauses (i) through (iii) below; provided that any
indebtedness incurred by BI pursuant to clause (iii) below shall rank pari passu
with the BI Guarantee:
(i) Indebtedness under the New Credit Facility, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or
in part from time to time by one or more other agreements, instruments or
documents; provided, however, that any such amendment, restatement,
modification, renewal, refunding, replacement or refinancing pursuant to
this Section 6.7(i) shall not cause the amount of such Indebtedness to
exceed $270 million plus any guarantees thereof;
(ii) the Notes, the Guarantees and any other Indebtedness
incurred pursuant to the Plan, as amended, restated, modified, renewed,
refunded, replaced
36
or refinanced in whole or in part from time to time by one or more other
agreements, instruments or documents;
(iii) Indebtedness, which may be in addition to Indebtedness
incurred pursuant to clause (i) above, incurred in connection with the
acquisition (by purchase, lease or otherwise) of additional store sites
(including Indebtedness incurred under any agreement, instrument or document
referred to under Section 6.7(i) hereof or otherwise) to finance the fixtures,
equipment, inventory and other costs and expenses associated with such store
sites);
(iv) Indebtedness incurred to finance or refinance capital
expenditures; and
(v) Indebtedness incurred in the ordinary course of business
of the Issuer and BI and their subsidiaries as of the date hereof in
accordance with past practices.
SECTION 6.8 Delivery of Title Policies.
---------------------------
(a) The Issuer agrees that it shall deliver to the Trustee the
following documents, in form and substance satisfactory to the Trustee, as
directed by the Holders of a majority of the outstanding aggregate
principal amount of the Notes (the "Majority"), and/or take the following
actions in a manner acceptable to the Trustee, as directed by the Majority:
As promptly as practicable, and in any event within forty-five
(45) days following the Effective Date, the Issuer shall deliver to
the Trustee title policies (and any endorsements thereto reasonably
requested by the Trustee, as directed by the Majority; provided such
endorsements are available from the insurer selected by the Issuer and
provided further that in no event shall the costs of such endorsements
exceed $50,000 in the aggregate) insuring the Liens of the Leasehold
Mortgages on property leased by the Issuer or Yonkers (as the case may
be) located in Yonkers, New York, Saddle Brook, New Jersey and Danbury
and Norwalk, Connecticut with ALTA Extended Coverage Mortgagee Loan
Policies (10-17-92 or if available with respect to New Jersey and
Connecticut properties ALTA 1970 amended 10-17-70 and 10-17-84) as
valid liens prior and superior to all other liens, security interests,
encumbrances or other interests in and to such leaseholds, subject
only to standard printed exceptions therein and to such additional
exceptions that do not adversely affect the value or use of each
mortgaged property or the Trustee's ability to effectively realize the
benefits of the liens and security interests created pursuant to such
Leasehold Mortgages in any material respect. If the Lien of any of the
Leasehold Mortgages is not insurable in accordance with the foregoing
standards for any reason, the Issuer shall, within such forty-five
(45) day period, either (A) correct the condition giving rise to such
title defect or (B) provide the Trustee with (i) an insurable
replacement mortgage or mortgages encumbering other leasehold
interests held by the Issuer and mutually acceptable to the Issuer and
the Trustee, as directed by the Majority, which satisfies the
foregoing requirements, (ii) legal opinions
37
regarding such replacement mortgages substantially consistent with the
opinions delivered to the Trustee on the Effective Date, and (iii)
title insurance insuring such replacement mortgages consistent with
this Section 6.8(a). The Issuer shall pay all costs and expenses,
including the cost of title insurance, legal opinions, mortgage taxes
and filing fees, incurred in connection with the Leasehold Mortgages
and any replacement mortgages. The Trustee shall respond promptly to
written requests by the Issuer to consent to any proposed title
policies or replacement properties, provided that any failure by the
Trustee to respond to the Issuer within five (5) business days of any
such request shall result in a one (1) day extension of the forty-five
(45) day period for each day or portion thereof that the Trustee fails
to so respond.
(b) If the Issuer fails to timely comply with any of the requirements
set forth in Section 6.8(a) for any reason whatsoever (including, without
limitation, the Issuer's inability to agree on any replacement collateral),
the Noteholders will suffer monetary and other damages. The amount of such
damages, however, will be impossible to determine, and thus the Issuer
agrees to pay to the Trustee as liquidated damages for the ratable benefit
of the Noteholders, $5,000 per day (payable on demand in one or more
payments) commencing on the date of failure to comply with such obligations
and continuing to the date upon which the Issuer's obligations hereunder
have been satisfied.
(c) Upon receipt of any amounts received by the Trustee pursuant to
Section 6.8(b) hereof, the Trustee shall distribute such amounts to the
Noteholders ratably as their interests shall appear on the registrar books
of the Trustee five (5) Business Days prior to such distribution; provided,
however, that such payments shall not be credited towards principal or
interest payable under the Notes. The Trustee may set the date for such
distribution, which shall be at least once a month.
(d) Any and all actions or approvals required to be taken or given by
the Trustee pursuant to Section 6.8 shall be taken or given solely upon the
written direction of the Majority; provided that such direction shall not
be otherwise than in accordance with applicable law.
SECTION 6.9 Disposition of Yonkers Property. If the Yonkers
-------------------------------
Property is not sold to a third party by August 27, 1999, New Horizons shall use
its best efforts to extend the Yonkers Effective Date (as defined in the Plan)
to a date specified by the Trustee and shall seek such further extensions as may
be reasonably requested by the Trustee. The Issuer and New Horizons shall use
reasonable efforts to market and sell the Yonkers Property; provided, however,
that any listing or similar agreement entered into by the Issuer or New Horizons
shall provide that as of August 1, 1999, the Trustee shall have the right to
market the Yonkers Property. The Issuer and New Horizons agree that if they
receive a bona fide cash offer to purchase the Yonkers Property in an amount
equal to or greater than $15,000,000 (excluding customary prorations and
transaction costs), then the Issuer shall seek to cause New Horizons to sell the
Yonkers Property to such offeror. If New Horizons has not conveyed the Yonkers
Property to a third party purchaser on or before July 31, 1999, then, upon
receiving written notice from the Trustee (and, with respect to the following
clauses (i), (ii) and (iii), upon receipt of an
38
order of the United States Bankruptcy Court with jurisdiction over the Chapter
11 case of New Horizons authorizing clauses (i), (ii) and (iii) or an order of
dismissal of such case),
(i) the Trustee shall have the right to market the Yonkers Property,
(ii) the Trustee shall have the right to negotiate and agree to the sale
price and other terms and conditions relating to the sale of the Yonkers
Property, including, without limitation, the form of sale agreement (the "Sale
Agreement"),
(iii) New Horizons and the Issuer shall promptly execute, deliver and
agree to be bound by any Sale Agreement approved by the Trustee, regardless if
New Horizons and the Issuer did not negotiate and do not approve the terms of
such Sale Agreement,
(iv) at the option of the Trustee and without notice to the Issuer, the
Trustee may transfer to or register in the name of the Trustee or any other
party designated by the Trustee, for the benefit of the Holders, the Pledged
Stock (provided that in no event shall the Trustee be obligated to accept a
conveyance of the Pledged Stock unless the Trustee agrees to accept such
conveyance), in which event,
(a) the Pledged Stock shall remain subject to the Security
Agreement and the Yonkers Property shall remain subject to the Leasehold
Mortgage,
(b) the Issuer shall indemnify the entity accepting the Pledged
Stock for and against all liability and costs relating to the use and ownership
of the Yonkers Property arising from any events or acts occurring prior to the
date the Pledged Stock is conveyed to the party designated by the Trustee,
(c) New Horizons shall, and the entity accepting the conveyance of
the Pledged Stock shall cause New Horizons to, enter into a use agreement with
the Issuer providing, among other things, that the Issuer may operate a Bradlees
store at the Yonkers Property, the Issuer shall comply with the Yonkers
Property lease and all other documents, laws and regulations applicable to the
use and ownership of the Yonkers Property, the Issuer shall pay to and indemnify
New Horizons from and against all costs, expenses, liabilities and claims
relating to the use and ownership of the Yonkers Property, and, subject to any
agreements or laws applicable to the Yonkers Property or such sale, the Issuer
may remove its property from the Yonkers Property (including, without
limitation, (i) all inventory and equipment and (ii) all other personal property
other than fixtures and personal property not subject to a lien in favor of the
Trustee, all as defined or used in the Uniform Commercial Code as in effect in
the State of New York) and/or conduct a going-out-of-business or other public or
private sale at the Yonkers Property during the one hundred twenty (120) day
period prior to the date the Yonkers Property is sold to a third party,
(d) New Horizons shall comply with the terms of the lease with
respect to the Yonkers Property at all times prior to the date the Yonkers
Property is sold to a third party,
39
(v) if the Trustee collects any money or property pursuant to this
Section 6.9, it shall pay out such money or property in the following order: (a)
First, all costs incurred by the Trustee in connection with the marketing, sale
-----
and ownership of the Yonkers Property shall be paid from the proceeds resulting
from the sale of the Yonkers Property, including, without limitation, brokerage
and listing fees and costs, attorneys fees and costs, title insurance costs and
recording fees and taxes, and (b) Second, all proceeds from the sale of the
------
Yonkers Property shall be distributed to the Holders in accordance with the
Indenture and the Security Documents,
(vi) the Issuer and New Horizons shall seek to enter into all documents
necessary to effect the obligations set forth in this Section 6.9, which
documents shall be subject to the approval of the Trustee, which approval the
Trustee may withhold in its sole discretion,
(vii) notwithstanding anything to the contrary in this Indenture, the
Trustee, on behalf of the Noteholders, shall exercise its rights set forth in
this Section 6.9 only as authorized in writing by the Holders of a majority of
the then outstanding aggregate principal amount due under the Notes, and
(viii) failure by the Issuer and/or New Horizons to perform their
obligations under this Section 6.9 shall be an Event of Default and shall
entitle the Trustee to exercise any and all rights and remedies available at
law, in equity or pursuant to this Indenture, including, without limitation,
specific performance.
It being understood that the Trustee shall be under no obligation to exercise
any rights or powers described in this Section 6.9 and may refuse to perform any
duty or exercise any such rights or powers unless it shall have received
security or indemnity, in the Trustee's sole discretion, satisfactory to it
against any and all costs, expenses and liabilities which may be incurred
therein or thereby.
ARTICLE 7
SUCCESSOR CORPORATION;
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 7.1 Merger, Consolidation and Sale of Assets. Each of BI
----------------------------------------
and the Issuer (each a "Constituent Entity") will not, in a single transaction
or series of related transactions, consolidate or merge with or into any Person,
or sell, assign, transfer, lease, convey or otherwise dispose all or
substantially all of the Constituent Entity's assets whether as an entirety or
substantially as an entirety to any Person unless: (i) either (1) such
Constituent Entity shall be the surviving or continuing entity or (2) the Person
or Persons (if other than such Constituent Entity) formed by such consolidation
or into which such Constituent Entity is merged or the Person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all the properties and assets of such Constituent Entity (the
"Surviving Entity") shall be a Person or Persons organized and existing under
the laws of any jurisdiction of the United States and shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, (a) in the case of a
40
transaction involving the Issuer, the due and punctual payment of the principal
and interest on all of the Notes and the performance of every covenant and
obligation of the Issuer under the Notes and the Indenture and the Security
Documents to be performed or observed or (b) in the case of a transaction
involving BI, the Guarantee Obligations and the other obligations of BI under
the Indenture; (ii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated above, no Default or Event of
Default shall have occurred or be continuing; and (iii) such Constituent Entity
or the Surviving Entity shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to such
transaction have been satisfied. Notwithstanding the preceding sentence, so long
as no Default or Event of Default shall have occurred or be continuing, (a) any
subsidiary of BI or the Issuer may consolidate with, merge into or transfer all
or part of its properties and assets to BI or the Issuer; (b) BI or the Issuer
may merge with an Affiliate incorporated solely for the purpose of
reincorporating in another jurisdiction in the United States; and (c) the Issuer
and BI may merge with or into each other.
SECTION 7.2 Successor Corporation Substituted. Upon any
---------------------------------
consolidation, combination or merger or any transfer of all or substantially all
of the assets of a Constituent Entity in accordance with the foregoing, in which
such Constituent Entity is not the continuing corporation, the successor Person
formed by such consolidation or into which such Constituent Entity is merged or
to which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, such Constituent
Entity under this Indenture and the Notes with the same effect as if such
surviving entity had been named as such; provided that the predecessor entity in
the case of a conveyance, transfer or lease shall not be released from the
obligation to pay the principal of and interest on the Notes or honor the
Guarantee Obligations, as applicable.
ARTICLE 8
DEFAULT
SECTION 8.1 Events of Default. It shall be an Event of Default
-----------------
hereunder if any of the following events shall have occurred and be continuing:
(a) the Issuer fails to pay interest on any Notes when the same
becomes due and payable and such default continues for a period of 15 days; or
(b) failure to pay the principal on any Notes when such principal
becomes due and payable, at maturity, acceleration, upon redemption or
otherwise; or
(c) the Issuer, New Horizons or BI defaults in the observance or
performance of any other covenant or agreement on its part contained in this
Indenture or the Security Documents, which default continues for a period of 30
days after the Issuer, New Horizons or BI, as the case may be, receive written
notice specifying the default
41
(and demanding that such default be remedied) from the Holders of at least
25% of the principal amount of the Outstanding Notes (it being understood
that the failure to have obtained the United States Bankruptcy Court order
referred to in Section 13.21 hereof shall not result in a Default or Event
of Default hereunder); or
(d) subject to the last paragraph of this Section 8.1, the Issuer,
BI, New Horizons or a Significant Subsidiary (A) commences a voluntary case
or proceeding under any Bankruptcy Law with respect to itself, (B) consents
to the entry of a judgment, decree or order for relief against it in an
involuntary case or proceeding under any Bankruptcy Law, (C) consents to
the appointment of a Custodian of it or for substantially all of its
property, (D) consents to or acquiesces in the institution of a bankruptcy
or an insolvency proceeding against it, (E) makes a general assignment for
the benefit of its creditors, or (F) takes any corporate action to
authorize or effect any of the foregoing; or
(e) subject to the last paragraph of this Section 8.1, a court of
competent jurisdiction enters a judgment, decree or order for relief in
respect of the Issuer, BI, New Horizons or a Significant Subsidiary in an
involuntary case or proceeding under any Bankruptcy Law, which shall (A)
approve as properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Issuer, BI, New Horizons or a
Significant Subsidiary, (B) appoint a Custodian of the Issuer, BI, New
Horizons or a Significant Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of the affairs of the
Issuer, BI, New Horizons or a Significant Subsidiary; and such judgment,
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(f) subject to the last paragraph of this Section 8.1, a petition
under any Bankruptcy Law seeking reorganization, arrangement, adjustment or
composition in respect of the Issuer, BI, New Horizons or a Significant
Subsidiary is filed and not controverted within the time prescribed by
applicable law or court order or dismissed within 90 days; or
(g) any one or more judgments or orders as to a liability or debt for
the payment of money (not covered by insurance or workers' compensation
payments) in excess of $5 million in the aggregate shall be rendered
against the Issuer, BI, New Horizons or a Significant Subsidiary and either
(i) enforcement proceedings shall have been commenced and shall be
continuing by any creditor upon such judgment or order or (ii) there shall
be any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal, payment or
otherwise, shall not be in effect; or
(h) BI fails to deliver shares of New Common Stock in accordance with
Article 9 hereof when such delivery is required upon conversion of any Note
and such failure continues for a period of three Trading Days; or
(i) the BI Guarantee ceases to be in full force and effect or BI
denies or disaffirms its obligations under the BI Guarantee and such
default continues for a period of 10 days after the notice specified in
clause (c) above; or
42
(j) any of the Liens created by the Security Documents shall cease to
be enforceable and of the same effect and priority purported to be created
thereby for any reason other than satisfaction in full of all obligations
under this Indenture and discharge of this Indenture or any reason other
than a cessation permitted by and in accordance with this Indenture and the
Security Documents; provided that the Issuer shall have 30 days to cure any
such cessation; or
(k) the collateral agent under the New Credit Facility, has commenced
the exercise of its remedies with respect to amounts outstanding under the
New Credit Facility or the collateral securing the Issuer's obligations
under the New Credit Facility; provided that neither the termination of the
Issuer's right to receive loans, advances and other financial
accommodations under the New Credit Facility nor the acceleration and
demand for payment of Indebtedness under the New Credit Facility shall
constitute or be deemed to constitute an "exercise of remedies" for
purposes of this Section 8.1(k).
For purposes of this Section 8.1, the following conditions or events
which would otherwise constitute a Default or Event of Default under clause (d),
(e) or (f) above shall not so constitute a Default or Event of Default: any
condition or event which is in existence on the issue date of the Notes.
SECTION 8.2 Acceleration. If an Event of Default (other than an
------------
Event of Default specified in Section 8.1(d), (e) or (f) with respect to the
Issuer, New Horizons or BI) occurs and is continuing and has not been waived
pursuant to Section 8.10, then the Holders of at least 25% in principal amount
of Outstanding Notes may declare the principal of and accrued interest on all
the Notes to be due and payable by notice in writing to the Issuer and the
Trustee specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same shall become immediately
due and payable after receipt by the Issuer of such Acceleration Notice but only
if such Event of Default is then continuing. Upon any such declaration, but
subject to the immediately preceding sentence, such amount shall be immediately
due and payable.
If an Event of Default specified in Section 8.1(d), (e) or (f) occurs
and is continuing with respect to the Issuer, New Horizons or BI, all unpaid
principal and accrued and unpaid interest on all of the outstanding Notes shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes in accordance with this Section 8.2, the Holders of a majority in
principal amount of the outstanding Notes may, on behalf of the Holders of all
of the Notes, rescind and cancel such declaration and its consequences (i) if
the rescission would not conflict with any judgment or decree, (ii) if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration,
(iii) to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid and (iv) if the Issuer
has paid the Trustee
43
its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances, and all other amounts due the Trustee under Section
4.6. No such rescission shall affect any subsequent Event of Default or impair
any right consequent thereto.
SECTION 8.3 Collection of Indebtedness by Trustee; Trustee May
--------------------------------------------------
Prove Debt. If an Event of Default in payment of principal of or interest on
----------
any of the Notes specified in clause (a) or (b) of Section 8.1 occurs and is
continuing, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer, New Horizons or BI upon such
Notes or Guarantee Obligations, as the case may be, and collect in the manner
provided by law out of the property of the Issuer (including, without
limitation, the Collateral), New Horizons or BI upon such Notes or Guarantee
Obligations, as the case may be, wherever situated, the moneys adjudged or
decreed to be payable.
All rights of action and of asserting claims under this Indenture, the
Security Documents or under any of the Notes may be enforced by the Trustee
without the possession of any of the Notes or the production thereof on any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture, the Security
Documents or the Notes to which the Trustee shall be a party), the Trustee
shall be held to represent all the Holders of the Notes in respect to which such
action was taken, and it shall not be necessary to make any Holders of such
Notes parties to any such proceedings.
SECTION 8.4 Application of Proceeds. If the Trustee collects any
-----------------------
money or property pursuant to this Article 8, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under Section 4.6;
-----
Second: to Holders for amounts due and unpaid on the Notes for
------
interest and all other amounts (excluding principal) payable on the Notes to the
Holders hereunder by the Issuer, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for interest and
such other amounts, respectively;
44
Third: to Holders for amounts due and unpaid on the Notes for
-----
principal, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal; and
Fourth: to the Issuer or any other obligor on the Notes, as their
------
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Issuer, may fix a record date and payment
date for any payment to Holders pursuant to this Section 8.4.
SECTION 8.5 Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on the Notes or to
enforce the performance of any provision of the Notes, this Indenture or the
Security Documents.
Each Noteholder, by accepting a Note, acknowledges that the exercise
of remedies by the Trustee with respect to the Collateral is subject to the
terms and conditions of the Security Documents and the proceeds received upon
realization of the Collateral shall be applied by the Trustee in accordance with
Section 8.4 hereof and applicable law.
SECTION 8.6 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any right under this
Indenture or the Security Documents and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee, then and in every such case the Issuer and the Trustee
shall be restored respectively to their former positions and rights hereunder
and under the Security Documents, and all rights, remedies and powers of the
Issuer, the Trustee and the Noteholders shall continue as though no such
proceedings had been taken.
SECTION 8.7 Limitations on Suits by Noteholders. No Holder of any
-----------------------------------
Note shall have any right by virtue or by availing itself of any provision of
this Indenture or of the Notes to institute any action or proceeding at law or
in equity or in bankruptcy or otherwise upon or under or with respect to this
Indenture or the Security Documents, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar official or for any other
remedy hereunder or under the Notes, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless also the Holders of not less than 25% in
aggregate principal amount of the Notes then Outstanding shall have made written
request upon the Trustee to institute such action or proceedings in its own name
as trustee hereunder and shall have provided to the Trustee such indemnity
satisfactory to it as it may require against the costs, expenses and liabilities
to be incurred therein or thereby and the Trustee for 10 days after its receipt
of such notice, request and indemnity shall have failed to institute any such
action or proceeding and no direction inconsistent with such written request
shall have been given to the Trustee pursuant to Section 8.9, it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Note with every other taker and Holder and the Trustee, that no one or
more Holders of Notes shall
45
have any right in any manner whatever by virtue or by availing itself of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder of Notes, or to obtain or seek to obtain priority over or
preference to any other Holder or to enforce any right under this Indenture or
under the Notes, except in the manner herein provided and for the equal, ratable
and common benefit of all Holders of Notes. For the protection and enforcement
of the provisions of this Section, each and every Noteholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 8.8 Powers and Remedies Cumulative; Delay or Omission Not
-----------------------------------------------------
Waiver of Default. No right or remedy herein conferred upon or reserved to the
-----------------
Trustee or to the Noteholders is intended to be exclusive or any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Noteholder to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and every power
and remedy given by this Indenture or the Security Documents or by law to the
Trustee or to the Noteholders may be exercised from time to time, and as often
as shall be deemed expedient, by the Trustee or by the Noteholders.
SECTION 8.9 Control by Noteholders. The Holders of a majority in
----------------------
aggregate principal amount of the Notes at the time Outstanding shall have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the Notes by this Indenture or the Security
Documents; provided that such direction shall not be otherwise than in
accordance with applicable law (including, without limitation, the Trust
Indenture Act) and the provisions of this Indenture and provided further that
(subject to the provisions of Section 4.1 hereof) the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, shall determine that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by action of Responsible
Officers of the Trustee shall determine that the action or proceedings so
directed would involve the Trustee in personal liability or if the Trustee in
good faith shall so determine that the actions or forbearance specified in or
pursuant to such direction would be unduly prejudicial to the interests of
Holders of the Notes not joining in the giving of said direction, it being
understood that (subject to Section 4.1 hereof) the Trustee shall have no duty
to ascertain whether or not such actions or forbearance are unduly prejudicial
to such Holders.
Nothing in this Indenture or the Security Documents shall impair the
right of the Trustee in its discretion to take any action deemed proper by the
Trustee and which is not inconsistent with such direction or directions by
Noteholders.
46
SECTION 8.10 Waiver of Defaults. The Holders of a majority of the
------------------
aggregate principal amount of the Notes Outstanding (or of such lesser
percentage as may act at a meeting of Noteholders) may on behalf of the Holders
of all the Notes Outstanding waive any past default or Event of Default with
respect to the Notes, except a default in the payment of the principal of or
interest on any Note or a default in respect of a covenant or provision hereof
that cannot be modified or amended without the consent of each Holder affected
as provided in Section 11.2 hereof. Any such waiver shall be accompanied by
notice to the Trustee of such waiver. In case of any such waiver, the Issuer,
the Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively.
Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 8.11 Unconditional Right of Holders to Receive Principal and
-------------------------------------------------------
Interest. Notwithstanding any other provision in this Indenture, the Holder of
--------
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on its Stated Maturity as
expressed in such Note (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 8.12 Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit other than the Trustee of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder or group of Noteholders
holding in aggregate more than 10% in principal amount of Outstanding Notes, or
any suit instituted by a Noteholder for enforcement of payment of the principal
of, or interest on, any Note on or after the date such amount is required to be
paid or for the enforcement of the right to convert any Note in accordance with
Article 9.
SECTION 8.13 Trustee May File Proofs of Claim. In case of any
--------------------------------
judicial proceeding relative to the Issuer (or any other obligor upon the
Notes), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
47
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments dire ctly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 4.6.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any proceeding; provided, however, that
the Trustee may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors' or other similar
committee.
SECTION 8.14 New Credit Facility Waivers and Consents. With respect
----------------------------------------
to the Trustee's exercise of its rights and remedies under Sections 8.3, 8.5 and
8.8, the Trustee shall comply with the New Credit Facility Waivers and Consents,
if and to the extent applicable.
ARTICLE 9
CONVERSION OF NOTES
SECTION 9.1 Conversion Privilege. Subject to and upon compliance
--------------------
with the provisions of this Article 9, at the option of the Holder thereof, the
then outstanding principal amount of any Note may at any time after the first
anniversary of the original issuance of the Notes be converted, in whole, or in
part in multiples of $1,000 principal amount, into fully paid and non-assessable
shares of New Common Stock issuable upon conversion of the Notes, at the
Conversion Price in effect at the Date of Conversion, until and including, but
not after the close of business on the second Business Day prior to the Maturity
Date, or unless such Note or some portion thereof shall have been called for
redemption prior to such date and no default is made in making due provision for
the payment of the Redemption Price in accordance with the terms of this Article
9 and the Notes, in which case, with respect to such Note or portion thereof as
has been so called for redemption, such Note or portion thereof may be so
converted until and including, but not after, the close of business on the
second Business Day prior to the Redemption Date for such Note, unless the
Issuer subsequently fails to pay the applicable Redemption Price.
SECTION 9.2 Exercise of Conversion Privilege. In order to exercise
--------------------------------
the conversion privilege, the Holder of any Note to be converted shall surrender
such Note to BI at any time during usual business hours at its office or agency
maintained for the purpose as provided in this Indenture, accompanied by a fully
executed written notice, in substantially the form set forth on the reverse of
the Note, that the Holder elects to convert such Note or a stated portion
thereof constituting a multiple of $1,000 principal amount, and, if such Note is
surrendered for conversion during the period between the close of business on
any Regular Record Date and the opening of business
48
on the next following Stated Maturity for the payment of interest and has not
been called for redemption on a Redemption Date which occurs within such period,
accompanied also by payment to the Issuer of an amount equal to the interest
payable on such Stated Maturity on the principal amount of the Note being
surrendered for conversion, notwithstanding such conversion. The Holder of any
Note at the close of business on a Regular Record Date will be entitled to
receive the interest payable on such Note on the corresponding Stated Maturity
for the payment of interest notwithstanding the conversion thereof after such
Regular Record Date. The interest payment with respect to a Note called for
redemption on a date during the period from the close of business on or after
any Regular Record Date to the close of business on the Business Day following
the corresponding Stated Maturity will be payable on the corresponding Stated
Maturity to the registered Holder at the close of business on that Regular
Record Date (notwithstanding the conversion of such Note after the corresponding
Stated Maturity) and a Holder who elects to convert need not include funds equal
to the interest paid.
A notice of conversion shall state the name or names (with address) in
which the certificate or certificates for shares of New Common Stock shall be
issued. Notes surrendered for conversion shall (if reasonably required by BI or
the Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to BI duly executed by the Holder
or his attorney duly authorized in writing. As promptly as practicable after
the receipt of such notice and the surrender of such Note as aforesaid, BI
shall, subject to the provisions of Section 9.9 herein, issue and deliver at
such office or agency to such Holder, or in accordance with the written
instruction of the Holder, a certificate or certificates for the number of full
shares of New Common Stock issuable on such conversion of New Notes in
accordance with the provisions of this Article 9 and cash, as provided in
Section 9.3 in respect of any fraction of a share of New Common Stock otherwise
issuable upon such conversion.
Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (the "Date of Conversion") on which
such Note shall have been surrendered as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of New Common
Stock shall be issuable upon such conversion shall be deemed to have become on
the Date of Conversion the holder or holders of record of the shares represented
thereby; provided, however, that any such surrender on any date when the stock
transfer books of BI are closed shall cause the person or persons in whose name
or names the certificate or certificates for such shares are to be issued to be
deemed to have become the recordholder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock transfer
books are open but such conversion shall nevertheless be at the Conversion Price
in effect at the close of business on the date when such Note shall have been so
surrendered with the conversion notice. In the case of conversion of a portion,
but less than all, of a Note, the Issuer shall as promptly as practicable
execute, and the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Issuer, a Note or Notes in the aggregate principal amount
of the unconverted portion of the Note surrendered. Except as otherwise
expressly provided in this Indenture, no payment or adjustment shall be made for
interest accrued on any Note (or portion thereof) converted
49
or for dividends or distributions on any New Common Stock issued upon conversion
of any Note.
SECTION 9.3 Fractional Interests. No fractions of shares or scrip
--------------------
representing fractions of shares shall be issued upon conversion of any Note. If
more than one Note shall be surrendered for conversion at one time by the same
holder, the number of full shares which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate principal amount of the
Notes so surrendered. If any fraction of a share of New Common Stock would,
except for the foregoing provisions of this Section 9.3, be issuable on the
conversion of any Note or Notes, The Issuer shall make payment in lieu thereof
in an amount of cash equal to the value of such fraction computed on the basis
of the last sale price of the New Common Stock as reported on the NASDAQ (or if
not listed for trading thereon, then on the principal national securities
exchange on which the New Common Stock is listed or admitted to trading) at the
close of business on the Date of Conversion or if no such sale takes place on
such day, the last sale price for such day shall be the average of the closing
bid and asked prices regular way on the NASDAQ (or if not listed for trading
thereon, on the principal national securities exchange on which the New Common
Stock is listed or admitted to trading) for such day (any such last sale price,
the "Last Sale Price"). If on such Trading Day the New Common Stock is not
quoted by any such organization, the closing price on the prior Trading Day
shall be used.
SECTION 9.4 Conversion Price. The Conversion Price per share of New
----------------
Common Stock issuable upon conversion of the Notes shall initially be the price
equal to the arithmetic unweighted average closing price of such stock (or, for
any day on which no closing price is reported, the average of the bid and ask
prices) during the 20 Business Days prior to the one year anniversary of the
original issuance of the Notes.
SECTION 9.5 Adjustment of Conversion Price; Notice of Adjustments.
-----------------------------------------------------
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) In case BI shall (1) make or pay a dividend (or other
distribution) in shares of New Common Stock on any class of capital stock of BI,
(2) subdivide its outstanding shares of New Common Stock into a greater number
of shares, or (3) combine or reclassify its outstanding shares of New Common
Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Note thereafter surrendered for conversion shall be entitled to receive the
number of shares of New Common Stock that such Holder would have owned
immediately following such action had such Note been converted immediately prior
thereto. An adjustment made pursuant to this subsection (a) shall become
effective immediately, except as provided in subsection (h) below, after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination.
(b) In case BI shall issue rights, options or warrants to all holders
of New Common
50
Stock entitling them to subscribe for or purchase shares of New Common Stock at
a price per share less than the then current market price per share of the New
Common Stock (as determined pursuant to subsection (f) below) on the record date
mentioned below, the Conversion Price shall be adjusted to a price, computed to
the nearest cent, so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction of which:
(i) the numerator shall be (A) the number of shares of New
Common Stock outstanding on the date of issuance of such rights, options or
warrants, immediately prior to such issuance, plus (B) the number of shares
which the aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights, options or warrants and dividing the product so
obtained by such current market price); and
(ii) the denominator shall be (A) the number of shares of New
Common Stock outstanding on the date of issuance of such rights, options or
warrants, immediately prior to such issuance, plus (B) the number of
additional shares of New Common Stock which are so offered for subscription
or purchase.
Such adjustment shall become effective immediately, except as provided in
subsection (h) below, after the record date for the determination of holders
entitled to receive such rights, options or warrants; provided, however, that if
any such rights, options or warrants issued by BI as described in this
subsection (b) are only exercisable upon the occurrence of certain triggering
events relating to changes in control and provided for in shareholder rights
plans, then the Conversion Price will not be adjusted as provided in this
subsection (b) until such triggering events occur.
(c) In case BI or any subsidiary of BI shall distribute to all
holders of New Common Stock, any of its assets, evidences of Indebtedness, cash
or other assets or shares of capital stock other than New Common Stock
(including securities, but other than (x) dividends or distributions exclusively
in cash or (y) any dividend or distribution for which an adjustment is required
to be made in accordance with subsection (a) or (b) above), then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the then current market price per share of the New Common Stock (determined as
provided in subsection (f) below) on the record date mentioned below less the
then fair market value (as reasonably determined in good faith by the Board of
Directors of BI) of the portion of the assets so distributed applicable to one
share of New Common Stock, and of which the denominator shall be such current
market price per share of the New Common Stock. Such adjustment shall become
effective immediately, except as provided in subsection (h) below, after the
record date for the determination of stockholders entitled to receive such
distribution. Notwithstanding the foregoing, in the event that the fair market
value of the assets , evidences of Indebtedness or other securities so
distributed applicable to one share of New Common Stock equals or exceeds
51
such current market price per share of New Common Stock, or such current market
price exceeds such fair market value by less than $0.10 per share, the
Conversion Price shall not be adjusted pursuant to this subsection (c) and, to
the extent applicable, the provisions of subsection (k) shall apply to such
distribution.
(d) In case BI or any subsidiary of BI shall make any distribution
consisting exclusively of cash (excluding any cash portion of distributions for
which an adjustment is required to be made in accordance with (c) above, or cash
distributed upon a merger or consolidation) to all holders of New Common Stock
in an aggregate amount that, combined together with (i) all other such all-cash
distributions made within the then preceding 12 months in respect of which no
adjustment has been made and (ii) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by BI or any of its
subsidiaries for New Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 15% of BI's market
capitalization (defined as being the product of the then current market price of
the New Common Stock (determined as provided in subsection (f) below) times the
number of shares of New Common Stock then outstanding) on the record date of
such distribution, then in each such case the Conversion Price shall be adjusted
so that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
of which the numerator shall be the then current market price per share of the
New Common Stock on such record date less the amount of the cash so distributed
applicable to one share of New Common Stock, and of which the denominator shall
be such current market price per share of the New Common Stock. Such adjustment
shall become effective immediately, except as provided in subsection (h) below,
after the record date for the determination of stockholders entitled to receive
such distribution. Notwithstanding the foregoing, in the event that the cash so
distributed applicable to one share of New Common Stock equals or exceeds such
current market price per share of New Common Stock, or such current market price
exceeds such amount of cash by less than $0.10 per share, the Conversion Price
shall not be adjusted pursuant to this subsection (d), and, to the extent
applicable, the provisions of subsection (k) shall apply to such distribution.
(e) In case there shall be completed a tender or exchange offer made
by BI or any subsidiary of BI for all or any portion of the New Common Stock
(any such tender or exchange offer being referred to as an "Offer") that
involves an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Date") that, together with (i) any
cash and the fair market value of any other consideration payable in respect of
any other Offer, as of the expiration of such other Offer, expiring within the
12 months preceding the expiration of such Offer and in respect for which no
Conversion Price adjustment pursuant to this subsection (e) has been made and
(ii) the aggregate amount of any all-cash distributions referred to in
subsection (d) of this Section 9.5 to all holders of New Common Stock within the
12 months preceding the expiration of such Offer for which no conversion price
adjustment pursuant to such subsection (d) has been made, exceeds 15% of the
product of the then current market price per share (determined as provided in
subsection (f) below) of the New Common Stock on the Expiration Date times the
number of shares of New Common Stock outstanding (including any tendered shares)
on the Expiration Date, the Conversion
52
Price shall be reduced by multiplying such Conversion Price in effect
immediately prior to the Expiration Date by a fraction of which the numerator
shall be (i) the product of the then current market price per share (determined
as provided in subsection (f) below) of the New Common Stock on the Expiration
Date times the number of shares of New Common Stock outstanding (including any
tendered shares) on the Expiration Date minus (ii) the fair market value of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the Offer) of all shares validly tendered
and not withdrawn as of the Expiration Date (the shares deemed so accepted being
referred to as the "Purchased Shares") and the denominator shall be the product
of (i) such current market price per share on the Expiration Date times (ii)
such number of outstanding shares on the Expiration Date less the number of
Purchased Shares, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Date. For purposes of
this subsection (e), the fair market value of any consideration with respect to
an Offer shall be reasonably determined in good faith by the Board of Directors
of BI and described in a Board Resolution.
(f) For the purpose of any computation under subsections (b), (c),
(d) and (e) above, the current market price per share of New Common Stock on any
date shall be deemed to be the average of the Last Sale Prices of a share of New
Common Stock for the five consecutive Trading Days selected by BI commencing not
more than 20 Trading Days before, and ending not later than the earlier of the
date in question and the date before the "'ex' date" with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the New Common Stock is not quoted by any organization referred to
in the definition of Last Sale Price in Section 9.3, the fair value of the New
Common Stock on such day, as reasonably determined in good faith by the Board of
Directors of BI, shall be used. For purposes of this paragraph, the term "'ex'
date" when used with respect to any issuance, distribution or payments with
respect to an Offer, means the first date on which the New Common Stock trades
regular way on the NASDAQ (or if not listed or admitted to trading thereon, then
on the principal national securities exchange on which the New Common Stock is
listed or admitted to trading) without the right to receive such issuance,
distribution or Offer.
(g) In addition to the foregoing adjustments in subsections (a), (b),
(c), (d) and (e) above, BI will be permitted to make such reductions in the
Conversion Price as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the holders of the shares of New Common Stock.
(h) In the event BI elects to make such a reduction in the Conversion
Price, BI will comply with the requirements of Rule 14e-1 of the Exchange Act
and any other Federal and state laws and regulations thereunder if and to the
extent that such laws and regulations are applicable in connection with the
reduction of the Conversion Price of the Notes; provided that any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the relevant provisions of such laws.
53
(i) In any case in which this Section 9.5 shall require that an
adjustment (including by reason of the last sentence of subsection (a) or (c)
above) be made immediately following a record date, BI may elect to defer the
effectiveness of such adjustment (but in no event until a date later than the
effective time of the event giving rise to such adjustment), in which case BI
shall, with respect to any Note converted after such record date and on and
before such adjustment shall have become effective, (i) defer paying any cash
payment pursuant to Section 9.3 or issuing to the Holder of such Note the number
of shares of New Common Stock and other capital stock of BI (or other assets or
securities) issuable upon such conversion in excess of the number of shares of
New Common Stock and other capital stock of BI issuable thereupon only on the
basis of the Conversion Price prior to adjustment, and (ii) not later than five
Business Days after such adjustment shall have become effective, pay to such
Holder the appropriate cash payment pursuant to Section 9.3 of this Article 9
and issue to such Holder the additional shares of New Common Stock and other
capital stock of BI issuable on such conversion.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1.0%) of the Conversion Price; provided, that any adjustments which by reason
of this subsection (i) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article 9 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Whenever the Conversion Price is adjusted as herein
provided, BI shall promptly (i) file with the Trustee and each conversion agent
an Officers' Certificate setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the correctness of
such adjustment, and (ii) mail or cause to be mailed a notice of such adjustment
to each Holder of Notes at the Holder's address as the same appears on the
Security Register.
(k) In the event that BI distributes rights (including rights to
distributions referred to by paragraphs (c) and (d) of this Section 9.5 to the
extent this paragraph (k) applies thereto) or warrants (other than those
referred to in subsection (b) above) pro rata to holders of New Common Stock, so
long as any such rights or warrants have not expired or been redeemed by BI, BI
shall make proper provision so that the Holder of any Note surrendered for
conversion will be entitled to receive upon such conversion, in addition to the
shares of New Common Stock issuable upon such conversion (the "Conversion
Shares"), a number of rights or warrants to be determined as follows: (i) if
such conversion occurs on or prior to the date for the distribution to the
holders of rights or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or warrants to
which a holder of a number of shares of New Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the rights or warrants, and (ii)
if such conversion occurs after such Distribution Date, the same number of
rights or warrants to which a holder of the number of shares of New Common Stock
into which the principal amount of such Note so converted was convertible
immediately prior to such Distribution Date would have been
54
entitled on such Distribution Date in accordance with the terms and provisions
of and applicable to the rights or warrants.
SECTION 9.6 Continuation of Conversion Privilege in Case of
-----------------------------------------------
Reclassification, Change, Merger, Consolidation or Sale of Assets. If any of the
-----------------------------------------------------------------
following shall occur, namely: (a) any reclassification or change of outstanding
shares of New Common Stock issuable upon conversion of the Notes (other than a
change in par value, or from par value to no par value, or from no par value, to
par value, or as a result of a subdivision or combination), (b) any
consolidation or merger of BI with or into any other Person, or the merger of
any other Person with or into BI (other than a merger which does not result in
any reclassification, change, conversion, exchange or cancellation of
outstanding shares of New Common Stock) or (c) any sale, transfer or conveyance
of all or substantially all of the assets of BI (computed on a consolidated
basis), then BI, or such successor or purchasing entity, as the case may be,
shall, as a condition precedent to such reclassification, change, consolidation,
merger, sale or conveyance, execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Note then outstanding shall have the
right to convert such Note only into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance by
a holder of the number of shares of New Common Stock issuable upon conversion of
such Note immediately prior to such reclassification, change, consolidation,
merger, sale, transfer or conveyance assuming such holder of New Common Stock of
BI failed to exercise his rights of an election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
(provided that if the kind or amount of securities, cash, and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance is not the same for each share of New Common Stock of BI
held immediately prior to such reclassification, change, consolidation, merger,
sale, transfer or conveyance in respect of which such rights of election shall
not have been exercised ("non-electing share"), then for the purpose of this
Section 9.6 the kind and amount of securities, cash and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares).
Such supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 9. If, in the case of any such consolidation, merger, sale or
conveyance, securities and property (including cash) receivable thereupon by a
holder of shares of New Common Stock includes shares of stock or other
securities and property (including cash) of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
merger, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Notes as the Board of Directors
of BI shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 9.6 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
55
Notice of the execution of each such supplemental indenture shall be
mailed to each Holder of Notes at his address as the same appears in the
Security Register.
SECTION 9.7 Notice of Certain Events.
------------------------
In the event (a) BI shall declare a dividend (or any other
distribution) payable to the holders of New Common Stock (other than cash
dividends);
(b) BI shall authorize the grant to holders of New Common Stock of
rights, warrants or options to subscribe for or purchase any shares of stock of
any class or of any other rights;
(c) BI shall authorize any reclassification or change of the New
Common Stock (including a subdivision or combination of its outstanding shares
of New Common Stock), or any consolidation or merger to which BI is a party and
for which approval of any stockholders of BI is required, or the sale or
conveyance of all or substantially all the property or business of BI;
(d) there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of BI; or
(e) BI or any of its subsidiaries shall complete an Offer;
then, BI shall cause to be filed at the office or agency maintained for the
purpose of conversion of the Notes as provided in Section 9.12 and shall cause
to be mailed to each Holder of Notes, at its address as it shall appear on the
registry books of BI, at least 20 days before the date hereinafter specified (or
the earlier of the dates hereinafter specified, in the event that more than one
date is specified), a notice stating the date on which (1) a record is expected
to be taken for the purpose of such dividend, distribution, rights, warrants or
options or Offer, or if a record is not to be taken, the date as of which the
holders of New Common Stock of record to be entitled to such dividend,
distribution, rights, warrants or options or to participate in such Offer are to
be determined, or (2) such reclassification, change, consolidation, merger,
sale, conveyance, dissolution, liquidation or winding-up is expected to become
effective and the date, if any is to be fixed, as of which it is expected that
holders of New Common Stock of record shall be entitled to exchange their shares
of New Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up.
SECTION 9.8 Taxes on Conversion. BI will pay any and all
-------------------
documentary, stamp or similar taxes payable to the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
the issue or delivery of shares of New Common Stock on conversion of Notes
pursuant thereto; provided, however, that BI shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issue or
delivery of shares of New Common Stock in a name other than that of the Holder
of the Notes to be converted and no such issue or delivery shall be made unless
and until the person requesting such issue or delivery has
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paid to BI the amount of any such tax or has established, to the satisfaction of
BI, that such tax has been paid. BI extends no protection with respect to any
other taxes imposed in connection with conversion of Notes.
SECTION 9.9 BI to Provide Stock. BI shall reserve, free from
-------------------
preemptive rights, out of its authorized but unissued shares, sufficient shares
to provide for the conversion of the Notes from time to time as such Notes are
presented for conversion, provided, that nothing contained herein shall be
construed to preclude BI from satisfying its obligations in respect of the
conversion of Notes by delivery of repurchased shares of New Common Stock which
are held in the treasury of BI.
If any shares of New Common Stock to be reserved for the purpose of
conversion of Notes hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then BI covenants that it will in
good faith and as expeditiously as possible use its best efforts to secure such
registration or approval, as the case may be, provided, however, that nothing in
this Section 9.9 shall be deemed to limit in any way the obligations of BI
provided in this Article 9.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the New Common Stock, BI
will take all corporate action which may be necessary in order that BI may
validly and legally issue fully paid and nonassessable shares of New Common
Stock at such adjusted Conversion Price.
BI covenants that all shares of New Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and nonassessable by BI
and free of preemptive rights.
SECTION 9.10 Disclaimer of Responsibility for Certain Matters.
------------------------------------------------
Neither the Trustee nor any agent of the Trustee shall at any time be under any
duty or responsibility to any Holder of Notes to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the Officers' Certificate referred to in Section 9.5 or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor any agent of the Trustee shall be
accountable with respect to the validity or value (or the kind or amount) of any
shares of New Common Stock, or of any securities or property (including cash),
which may at any time be issued or delivered upon the conversion of any Note;
and neither the Trustee nor any conversion agent makes any representation with
respect thereto. Neither the Trustee nor any agent of the Trustee shall be
responsible for any failure of BI to issue, register the transfer of or deliver
any shares of New Common Stock or stock certificates or other securities or
property (including cash) upon the surrender of any Note for the purpose of
conversion or to comply with any of the covenants of BI contained in this
Article 9.
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SECTION 9.11 Return of Funds Deposited for Redemption of Converted
-----------------------------------------------------
Note . Any funds which at any time shall have been deposited with the Trustee or
----
any other Paying Agent for the purpose of paying the principal of and interest
on any of the Notes and which shall not be required for such purposes because of
the conversion of such Notes, as provided in this Article 9, shall after such
conversion be repaid to the Issuer by the Trustee or such other Paying Agent
upon receipt of an Officers' Certificate of the Issuer to that effect.
SECTION 9.12 Registrar and Paying Agent. The Issuer shall maintain
--------------------------
or cause to be maintained an office or agency in the Borough of Manhattan, The
City of New York, where Notes may be presented for conversion and where notices
and demands to or upon the Issuer in respect of the conversion of the Notes may
be served. Such office or agency shall initially be the Corporate Trust Office.
ARTICLE 10
SATISFACTION AND DISCHARGE
SECTION 10.1 Defeasance of Notes. Except as otherwise provided in
-------------------
the terms of any Notes, the Issuer shall be deemed to have made all payments due
on the Notes prior to the Maturity Date thereof for all purposes of this
Indenture, and the entire Indebtedness of the Issuer in respect thereof shall be
deemed to have been satisfied and discharged, and the Guarantee Obligations of
BI shall be released, upon satisfaction of each of the following conditions:
(a) The Issuer shall have irrevocably deposited with the Trustee, in
trust, for the benefit of the Holders, cash in Dollars or obligations of the
United States Government, or a combination thereof, in such amount as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of and interest on, the Outstanding Notes on
and prior to the Maturity Date thereof as such payments become due or upon
redemption;
(b) If any such deposit of money shall have been made prior to the
Maturity Date or Redemption Date of such Notes, the Issuer shall have delivered
to the Trustee an Issuer Order stating that such money shall be held by the
Trustee, in trust, as provided in Section 10.3 hereof;
(c) In the case of redemption of Notes, the notice requisite to the
validity of such redemption shall have been given, or irrevocable instructions
shall have been given by the Issuer to the Trustee to give such notice, under
arrangements satisfactory to the Trustee;
(d) The Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of the Outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such defeasance as set forth in this Section 10.1 and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred, and such
opinion must refer to and be based upon a
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published ruling of the U.S. Internal Revenue Service or a change in applicable
federal U.S. income tax laws since the date hereof;
(e) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit, both before and after giving effect
thereto and no Event of Default referenced in Section 8.1(d), (e) or (f) shall
occur on or before the 91st day following the deposit referred to above;
(f) The Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that, after the 91st day following the deposit referred to
above, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; and
(g) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel satisfactory to the Trustee which, taken
together, shall state that all conditions precedent under this Indenture to such
defeasance have been complied with.
In the event that Notes which shall be deemed to have been paid as
provided in this Section 10.1 do not mature and are not to be redeemed within
the 60-day period commencing on the date of the deposit with the Trustee of
monies, the Issuer shall, as promptly as practicable, give or cause to be given
a notice, in the same manner as a notice of redemption with respect to such
Notes, to the Holders of such Notes to the effect that the Issuer is deemed to
have made full payment on such Notes and the circumstances thereof.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited obligations of the United
States Government or the principal and interest received in respect thereof.
Notwithstanding the satisfaction and discharge of any Notes as
aforesaid, the obligations of the Issuer and the Trustee in respect of such
Notes under Sections 2.5, 2.6, 2.7 and 2.12, Section 4.6 and this Article 10
hereof shall survive.
SECTION 10.2 Satisfaction and Discharge of the Indenture. This
-------------------------------------------
Indenture shall upon Issuer Request cease to be of further effect (except as
hereinafter expressly provided), and the Trustee, at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when:
(a) the Issuer has paid and discharged the entire Indebtedness by (i)
paying in full the outstanding principal of, and accrued and unpaid interest on,
the Notes and all other payment obligations under the Notes, the Indenture and
the Security Documents, as and when payable, (ii) depositing with the Trustee
cash in a sufficient amount (in the opinion of a nationally recognized firm of
independent public accountants) to redeem all Outstanding Notes in accordance
with their terms together with proof that notice of redemption has been given or
waived as required under this Indenture or an irrevocable order of the Issuer
directing the Trustee to give such notice
59
together with an amount sufficient to pay any and all amounts due and owing to
the Trustee or (iii) delivering to the Trustee for cancellation all Outstanding
Notes; and
(b) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Upon satisfaction of the aforesaid conditions, the Trustee shall, upon
receipt of an Issuer Request, acknowledge in writing the satisfaction and
discharge of this Indenture and take all other action reasonably requested by
the Issuer to evidence the termination of any and all Liens created by or with
respect to this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture as
aforesaid, the obligations of the Issuer and the Trustee under Sections 2.5,
2.6, 2.7 and 2.14, Section 4.6 and this Article 10 hereof shall survive.
Upon satisfaction and discharge of this Indenture as provided in this
Section 10.2, the Trustee shall assign, transfer and turn over to or upon the
order of the Issuer any and all money, securities and other property then held
by the Trustee for the benefit of the Holders, other than money deposited with
the Trustee pursuant to Section 10.1(a) or Section 10.2(a)(ii) hereof and
interest and other amounts earned or received thereon.
SECTION 10.3 Application of Trust Money. The money deposited with
--------------------------
the Trustee pursuant to Section 10.1 or Section 10.2(a)(ii) hereof shall not be
withdrawn or used for any purpose other than, and shall be held in trust for,
the payment of the principal of, and interest on, the Notes or portions of
principal amount thereof in respect of which such deposit was made.
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent
-------------------------------------------------
Unclaimed for One Year. Unless otherwise required by mandatory
----------------------
provisions of the applicable escheat or abandoned or unclaimed property law, any
moneys deposited with or paid to the Trustee or any Paying Agent for the payment
of principal of, or interest on, any Note, other than amounts held pursuant to
Section 10.1 or Section 10.2(a)(ii) hereof, and not applied but remaining
unclaimed for one year after the date upon which such principal or interest
shall have become due and payable, shall, upon written request of the Issuer,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Issuer by the Trustee or
such Paying Agent, and the Holder of such Note shall thereafter look only to the
Issuer for any payment that such Holder may be entitled to collect, and all
liability of the Trustee or any paying agent with respect to such moneys shall
thereupon cease.
ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1 Without Consent of Holders. The Issuer, when authorized
--------------------------
by a Board Resolution, BI, when authorized by a Board Resolution, and the
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Trustee, together, may amend or supplement this Indenture, any Security Document
or the Notes without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency, provided that
such amendment or supplement does not, in the opinion of the Trustee, adversely
affect the rights of any Holder in any respect; in formulating its opinion on
such matters, the Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely an Opinion of Counsel;
(b) to give effect to the release of any Collateral or of any Lien in
accordance with the provisions of the Security Documents;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to make any other change that does not adversely affect the
rights of any Noteholder hereunder in any respect;
(e) to maintain compliance with any requirements of the SEC in order
to effect or maintain the qualification of this Indenture under the Trust
Indenture Act;
(f) to evidence the succession of another Person to the Issuer as
obligor under the Indenture to the extent permitted under this Indenture;
(g) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trust under the Indenture by
more than one Trustee; or
(h) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder;
provided that the Issuer has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 11.1.
SECTION 11.2 With Consent of Holders. The Issuer, when authorized by
-----------------------
a Board Resolution, BI and the Trustee, together, with the written consent of
the Holder or Holders of at least a majority in aggregate principal amount of
the outstanding Notes, may amend or supplement this Indenture, any Security
Document or the Notes, and the Holder or Holders of a majority in aggregate
principal amount of the outstanding Notes may waive compliance by the Issuer
with any provision of this Indenture or the Notes; provided, however, no
amendment, supplement or waiver, including a waiver pursuant to Section 8.10,
shall, without the consent of each Holder of each Note:
(a) reduce the percentage of any outstanding Notes necessary to
modify or amend the Indenture with respect to such Notes or to waive compliance
with certain provisions thereof or certain Events of Default and consequences
thereunder;
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(b) reduce the rate of interest or change or have the effect of
changing the Stated Maturity for payment of interest on any Notes;
(c) reduce the principal of or change or have the effect of changing
the Stated Maturity of any Notes, or change the date on which any Notes may be
subject to redemption, or reduce the Redemption Price therefor;
(d) change the Place of Payment or make any Notes payable in money
other than that stated in the Notes;
(e) make any change in the provisions of this Indenture protecting
the right of each Holder to receive payment of principal of and interest on such
Note on or after the due date thereof or to bring suit to enforce such payment,
or permitting Holders of a majority in principal amount of Notes to waive
Events of Default;
(f) change any material provision of any of the Security Documents
that releases the Collateral securing the Notes (other than a release in
accordance with the provisions of the Security Documents) or adversely affects
the interest of any Holder of the Notes;
(g) adversely affect the right of the Holders of the Notes to convert
the Notes into New Common Stock as provided in Article 9;
(h) waive a Default in the payment of principal of or interest on any
Note (except payment Defaults resulting from acceleration where acceleration has
been rescinded);
(i) release BI from any of its Guarantee Obligations or release
Collateral in either case other than pursuant to the terms of this Indenture and
the Security Documents; or
(j) amend, modify, change or waive any provision of this Section
11.2.
It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Issuer shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver and a copy of the
supplemental indenture relating thereto. At the Issuer's request, such notice
shall be given in the name and at the expense of the Issuer, provided that the
Issuer shall have delivered to the Trustee an Officers' Certificate requesting
that the Trustee give such notice and setting forth the information to be stated
in such notice. Any failure to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amendment,
supplement or waiver.
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SECTION 11.3 Compliance with Trust Indenture Act. Every amendment,
-----------------------------------
waiver or supplement of this Indenture or the Notes shall comply with the Trust
Indenture Act as then in effect.
SECTION 11.4 Revocation and Effect of Consents. Until an amendment,
---------------------------------
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. Subject to the
following paragraph, any such Holder or subsequent Holder may revoke the consent
as to such Holder's Note or portion of such Note by written notice to the
Trustee or the Issuer received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of outstanding Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver (at which time such amendment,
supplement or waiver shall become effective).
The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (h) of Section 11.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 11.5 Notation on or Exchange of Notes. If an amendment,
--------------------------------
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder of such Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note about the changed terms and return it to the
Holder. Alternatively, if the Issuer or the Trustee so determines, the Issuer in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Any such notation or exchange shall be made at
the sole cost and expense of the Issuer.
SECTION 11.6 Trustee to Sign Amendments, Etc. The Trustee shall
-------------------------------
execute any amendment, supplement or waiver authorized pursuant to this Article
11; provided that the Trustee may, but shall not be obligated to, execute any
such amendment, supplement or waiver which affects the Trustee's own rights,
duties or
63
immunities under this Indenture. The Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each complying with Sections 11.4 and 11.5 and stating that the
execution of any amendment, supplement or waiver authorized pursuant to this
Article 11 is authorized or permitted by this Indenture. Such Opinion of Counsel
shall not be an expense of the Trustee.
SECTION 11.7 Payment for Consent. Neither the Issuer nor any
-------------------
subsidiary of the Issuer shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture, the Security Documents or the Notes unless such
consideration is offered to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
ARTICLE 12
COLLATERAL AND SECURITY DOCUMENTS
SECTION 12.1 Collateral and Security Documents.
---------------------------------
(a) To secure the due and punctual payment of the principal of and
interest on the Notes when and as the same shall become due and payable, whether
on an interest payment date, at maturity, by acceleration, redemption or
otherwise, and the performance of all other obligations of the Issuer to the
Holders under this Indenture and the Notes, the Issuer, New Horizons and the
Trustee have entered into the Security Documents pursuant to which (i) New
Horizons has granted to the Trustee, for the benefit of the Holders, a first
priority mortgage Lien on the Yonkers Property and the Net Proceeds of the
Disposition of the Yonkers Property, (ii) subject to Section 12.1(b) below, the
Issuer has granted to the Trustee, for the benefit of the Holders, a first
priority mortgage Lien on the Additional Collateral and the Net Proceeds of the
Disposition of the Additional Collateral and (iii) the Issuer has granted to the
Trustee, for the benefit of the Holders, a first priority Lien on the Pledged
Stock. Each such Lien shall be subject to modification, and certain portions of
the Collateral shall be subject to release, upon the terms and provisions set
forth herein and in the Security Documents.
(b) The Additional Collateral only shall secure Indebtedness under
the Notes in an amount equal to the sum of (A) $6.5 million (the "Differential
Amount") plus (B) an amount (the "Assumed Unpaid Interest Amount") from time to
time equal to the amount of interest (including interest on interest to the
extent payable under the Notes) that would accrue on $6.5 million of Outstanding
Notes from January 29, 1999 to the date of calculation of the extent of the Lien
on the Additional Collateral (but excluding any period for which interest has in
fact been paid under the Notes) and all costs and expenses payable by the Issuer
under the Leasehold Mortgages encumbering the Additional Collateral. The Issuer
shall not be under any obligation to seek to Dispose of the Additional
Collateral to prepay the Notes.
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(c) The Lien on the Pledged Stock shall be terminated and released
upon the Disposition of the Yonkers Property and the application of the Net
Proceeds of such Disposition in accordance with Article 3 hereof.
(d) With respect to any Leasehold Mortgage, if (i) all of the
outstanding principal of and interest on all of the Notes shall be paid in
accordance with the terms thereof and hereof and any and all sums payable by the
Issuer or the Mortgagor hereunder and under the Security Documents shall be paid
or (ii) if all of the interests of the Mortgagor in the Mortgaged Property under
such Leasehold Mortgage shall be Disposed of and if each of the Issuer and the
Mortgagor shall be in compliance with all the terms, covenants and conditions
applicable to it to be complied with under the Notes, the Indenture and the
Security Documents (including, without limitation, payment of the Net Proceeds
(subject, in the case of Additional Collateral, to Section 12.1(b)) to the
Trustee), then in either such case, such Leasehold Mortgage shall be null and
void and of no further force and effect and the Mortgaged Property thereunder
shall thereupon be, and shall be deemed to have been, reconveyed, released and
discharged from such Leasehold Mortgage without further notice on the part of
the Mortgagor or Mortgagee thereunder, and the Mortgagee, at the Mortgagor's
expense, will execute and deliver such reasonable or necessary instruments, if
any, as the Mortgagor may request evidencing or confirming the reconveyance,
release and discharge of the Mortgaged Property from such Leasehold Mortgage,
and any such instrument, when duly executed by the Mortgagee and duly recorded
in the place where such Leasehold Mortgage is recorded, shall conclusively
evidence such reconveyance, release and discharge. Notwithstanding the
foregoing, if (i) or (ii) above shall occur, then the Mortgagor shall have the
option to request an assignment of such Leasehold Mortgage, without recourse,
representation or warranty in lieu of the satisfaction of such Leasehold
Mortgage as described above, and, at the Mortgagor's written request, the
Leasehold Mortgage shall remain in full force and effect and the Mortgagee shall
assign such Leasehold Mortgage, and the Mortgagee, at the Mortgagor's expense,
will execute and deliver such reasonable or necessary instruments, if any, as
the Mortgagor may request evidencing or confirming the assignment of such
Leasehold Mortgage, and any such instrument, when duly executed by the Mortgagee
and duly recorded in the place where such Leasehold Mortgage is recorded, shall
conclusively evidence the assignment of such Leasehold Mortgage, and the release
and discharge of the Mortgagor from its obligations thereunder. Notwithstanding
the foregoing, any release of such Leasehold Mortgage in connection with a sale
of the Mortgaged Property shall not include a release of the security interest
of the Mortgagee in the proceeds of such sale and shall expressly reserve the
Mortgagee's security interests in such proceeds unless and until such proceeds
are actually received by the Mortgagee.
(e) Each Holder of a Note, by accepting a Note, agrees to all of the
terms and provisions of the Security Documents, as the same may be amended from
time to time pursuant to the provisions of the Security Documents and this
Indenture.
SECTION 12.2 Release of Lien. The Trustee, in its capacity as
---------------
trustee for the Holders under this Indenture, will not at any time permit the
release of any Collateral from the security interest created by the Security
Documents unless such
65
release is in accordance with the provisions of this Indenture and the Security
Documents. To the extent applicable, the Issuer shall cause (S) 314(d) of the
Trust Indenture Act relating to the release of property or securities from the
security interest pursuant hereto and the Security Documents to be complied
with. Any certificate or opinion required by (S) 314(d) of the Trust Indenture
Act may be made by an Officer of the Issuer, except in cases which (S) 314(d) of
the Trust Indenture Act requires that such certificate or opinion be made by an
independent person.
SECTION 12.3 Recording, Certificates and Opinions.
------------------------------------
(a) The Issuer will take or cause to be taken all action required to
perfect, maintain, preserve and protect the security interest in the Collateral
granted by or pursuant to this Indenture and the Security Documents.
(b) The Issuer shall deliver to the Trustee promptly after the
execution and delivery of this Indenture, an Opinion of Counsel either stating
that in the opinion of such counsel the Indenture and the Security Documents
have been properly recorded and filed so as to perfect and make effective the
mortgage liens and security interests intended to be created for the benefit of
the Holders of Notes, and reciting the details of such action, or stating that
in the opinion of such counsel no such action is necessary to perfect and make
effective such mortgage liens and security interests.
(c) The Issuer shall deliver to the Trustee on or before January 1 of
each year, an Opinion of Counsel either stating that in the opinion of such
counsel such action has been taken with respect to the recording, filing,
re-recording and re-filing of the Indenture and the Security Documents as is
necessary to maintain the security interests intended to be created thereby for
the benefit of the Holders of Notes, and reciting the details of such action, or
stating that in the opinion of such counsel no such action is necessary to
maintain such security interest.
(d) The Issuer shall comply with Trust Indenture Act (S) 314(d),
relating to, among other matters, the release of Collateral from the Liens of
the Security Documents and Officers' Certificates or other documents regarding
fair value of the Collateral, to the extent such provisions are applicable. Any
certificate or opinion required by Trust Indenture Act (S) 314(d) may be
executed and delivered by an Authorized Representative of the Issuer to the
extent permitted by Trust Indenture Act (S) 314(d).
SECTION 12.4 Authorization of Actions to Be Taken by the Trustee
---------------------------------------------------
Under the Security Documents. Subject to the provisions of the Security
----------------------------
Documents, (i) the Trustee, in its sole discretion and without the consent of
the Holders, may take all actions it deems necessary or appropriate in order to
(x) enforce any of the terms of the Security Documents, and (y) collect and
receive any and all amounts payable in respect of the obligations of the Issuer;
and (ii) the Trustee may institute and maintain such suits and proceedings, as
it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of this Indenture or the Security
Documents, and such suits and proceedings as the Trustee may deem expedient to
66
preserve or protect its interests and the interests of the Holders in the
Collateral (including the power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest thereunder or be prejudicial to the interests
of the Holders or of the Trustee). Article 4 of this Indenture applies to all
duties and obligations of the Trustee with respect to the Security Documents and
the Collateral.
SECTION 12.5 Authorization of Receipt of Funds by the Trustee Under
------------------------------------------------------
the Security Documents. The Trustee is authorized to receive any funds for the
----------------------
benefit of Holders received under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions of
this Indenture, the Security Documents and applicable law.
SECTION 12.6 Trustee's Disclaimer. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
the Security Documents, the Collateral or the perfection of the Collateral
(except with respect to taking the actions specifically set forth in Opinions of
Counsel delivered to the Trustee pursuant to Section 12.3(b) with respect to the
perfection of the Collateral) and it shall not be responsible for any statement
contained in the Security Documents.
SECTION 12.7 Release upon Termination of the Issuer's Obligations.
----------------------------------------------------
In the event that the Issuer delivers an Officers' Certificate certifying that
all the obligations under this Indenture, the Notes and the Security Documents
have been satisfied and discharged by complying with the provisions of Article
10 (and all such obligations have been satisfied and discharged as provided in
this Indenture), the Trustee shall deliver to the Issuer a notice stating that
the Trustee, on behalf of the Holders, disclaims and gives up any and all rights
it has in or to the Collateral and any rights it has under the Security
Documents, and, upon and after receipt by the Issuer of such notice, the Trustee
shall not be deemed to hold any Liens in the Collateral for the benefit of the
Holders.
ARTICLE 13
GUARANTEE
SECTION 13.1 Guarantee. Each of BI and New Horizons (each a
---------
"Guarantor") hereby severally fully and unconditionally guarantees to each
Holder of a Note, and to the Trustee on behalf of each such Holder, the due and
punctual payment of the principal of and interest on such Note, and the due and
punctual payment of any redemption payment with respect to such Note, when and
as the same shall become due and payable, whether at Stated Maturity, upon
redemption, upon acceleration or otherwise, according to the terms thereof and
of this Indenture and all other payment obligations of the Issuer to the Trustee
for the benefit of the Holders under the Indenture, the Notes and the Security
Documents (the "BI Guarantee Obligations" and the "New Horizons Guarantee
Obligations", respectively and collectively the "Guarantee Obligations"). In
case of the failure of the Issuer punctually to pay any such Guarantee
67
Obligations, each Guarantor hereby agrees to cause any such payment to be made
punctually when and as the same shall become due and payable, whether at Stated
Maturity, upon redemption, upon declaration of acceleration or otherwise, as if
such payment were made by the Issuer.
Each Guarantor hereby agrees that its Guarantee Obligations hereunder
shall be as if it were principal debtor and not merely surety and shall be
absolute and unconditional, irrespective of the granting of time, renewals,
extensions, compromises, concessions, waivers, releases, discharges and other
indulgences to the Issuer or any other Person, the validity, regularity or
enforceability of any such Note, this Indenture or any Security Documents, the
absence of any action to enforce the same, any waiver, consent or extension by
the Holder of any such Note with respect to any provisions thereof, the recovery
of any judgment against the Issuer or any action to enforce the same, or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that its Guarantee will not be discharged except by complete performance of its
obligations contained in such Note and in this Guarantee. Each Guarantor's
Guarantee shall be a guaranty of payment and not of collection.
Each Guarantor agrees, to the fullest extent that it may lawfully do
so, that, as between such Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, the maturity of the obligations guaranteed hereby
may be accelerated as provided in Article 8 hereof for the purposes of the
applicable Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable Bankruptcy Law preventing such acceleration in
respect of the obligations guaranteed hereby.
Each Guarantor shall be subrogated to all rights of the Holders of the
Notes against the Issuer in respect of any amounts paid by the applicable
Guarantor on account of such Notes or this Indenture; provided, however, that
such Guarantor shall not be entitled to enforce or to receive any payments
arising out of, or based upon, such right of subrogation until the principal of
and interest, if any, on all such Notes shall have been paid in full.
SECTION 13.2 Guarantees Subordinated to Credit Facility Guarantees.
-----------------------------------------------------
Each Guarantor and the Trustee covenant and agree, and each Holder, by its
acceptance of a Note and the corresponding Guarantee, likewise covenants and
agrees, that the BI Guarantee Obligations and the New Horizons Guarantee
Obligations shall, to the extent and in the manner set forth in this Article 13,
be obligations of the corresponding Guarantor, ranking equally in right of
payment with other nonsubordinated Indebtedness of such Guarantor, except that
(i) the BI Guarantee Obligations and the New Horizons Guarantee Obligations
shall be junior and expressly subordinated in right of payment to the BI Credit
Facility Guarantee and the New Horizons Credit Facility Guarantee, respectively;
(ii) this subordination is for the benefit of the holders of the BI Credit
68
Facility Guarantee and the New Horizons Credit Facility Guarantee, respectively;
and (iii) such subordination shall not in any way apply to any shares of BI
stock distributed to the Trustee for the benefit of the Holders or directly to
any Holder upon exercise of conversion rights under this Indenture or to the Net
Proceeds of a Disposition of the Yonkers Property.
SECTION 13.3 Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of BI or New Horizons to creditors upon a
liquidation or dissolution of BI or New Horizons or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to BI or
New Horizons or its property (other than any such bankruptcy, reorganization,
insolvency or similar proceedings in existence on the issue date of the Notes):
(1) holders of the BI Credit Facility Guarantee or the New Horizons
Credit Facility Guarantee, as the case may be, shall be entitled to receive
payment in full of such Credit Facility Guarantee (including interest after
the commencement of any such proceedings at the rate specified in such
Credit Facility Guarantee) from BI or New Horizons, as the case may be, in
cash before Noteholders shall be entitled to receive any payment pursuant
to the corresponding Guarantee Obligations; and
(2) until the BI Credit Facility Guarantee or the New Horizons Credit
Facility Guarantee, as the case may be, is paid or discharged in full, any
distribution to which Noteholders would be entitled but for this Article 13
shall be made to holders of such Credit Facility Guarantee as their
interests may appear, except that Noteholders may receive (i) shares of
stock as provided in Section 13.2(iii) above, and (ii) any debt securities
of BI or New Horizons, as the case may be, that are subordinated to the
corresponding Credit Facility Guarantee, and to any debt securities
received by holders of such Credit Facility Guarantee, of BI or New
Horizons, as the case may be, to at least the same extent as the
corresponding Guarantee Obligations are subordinated to such Credit
Facility Guarantee.
SECTION 13.4 Execution and Delivery of Guarantees. To evidence its
------------------------------------
Guarantee with respect to the Notes, each Guarantor hereby agrees to execute its
Guarantee, substantially in the form of Exhibit B hereto, to be endorsed on each
Note authenticated and delivered by the Trustee. Each such Guarantee shall be
executed on behalf of such Guarantor by an Authorized Representative and
attested by its Secretary or one of its Assistant Secretaries or Assistant
Clerks or an Authorized Representative. The signature of any of these officers
on such Guarantee may be manual or facsimile.
A Guarantee bearing the manual or facsimile signatures of the
individuals who were the proper officers of the Guarantor thereof shall bind
such Guarantor, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of the Notes upon
which such Guarantee is endorsed or did not hold such offices at the date of
such Notes.
69
The delivery of any Notes by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantees endorsed
thereon on behalf of the Guarantors. Each Guarantor hereby agrees that its
Guarantee set forth in this Article shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guarantee.
SECTION 13.5 Obligations Reinstated. The obligations of each
----------------------
Guarantor under its Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment which would otherwise
have reduced such obligations of such Guarantor (whether such payment shall have
been made by or on behalf of the Issuer or by or on behalf of such Guarantor) is
rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy,
liquidation or reorganization of the Issuer or such Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Issuer is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Issuer, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
such Guarantor as provided herein subject to Section 13.3.
SECTION 13.6 When Distribution Must Be Paid Over. If a distribution
-----------------------------------
is made to Noteholders that because of this Article 13 should not have been made
to them, the Noteholders who receive the distribution shall hold it in trust for
holders of the Credit Facility Guarantees and pay it over to them or their
representative as their interests may appear.
SECTION 13.7 Relative Rights. This Article 13 defines the relative
---------------
rights of holders of Notes and holders of the Credit Facility Guarantees.
Nothing in this Indenture shall:
(1) impair, as between each Guarantor and the holders of Notes, the
obligation of such Guarantor, which is absolute and unconditional, to pay
its Guarantee Obligations to the extent set forth in this Article 13; or
(2) prevent the Trustee or any holder of Notes from exercising its
available remedies upon a default by a Guarantor under its Guarantee
Obligations, subject to the rights of holders of the corresponding Credit
Facility Guarantee to receive certain distributions otherwise payable to
holders of Notes.
SECTION 13.8 Rights of Trustee and Paying Agent. The Trustee or
----------------------------------
Paying Agent may continue to make distributions pursuant to a Guarantee and
shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless the corresponding Guarantor and
a trust officer of the Trustee receives written notice from the representative
of the corresponding Credit Facility Guarantee that payments may not be made
under this Article 13. The Trustee or Paying Agent shall make inquiry with the
representative of the corresponding Credit Facility Guarantee prior to making
any distributions pursuant to the corresponding Guarantee as to whether such
payment may be made under this Article 13, but if no written response thereon is
received by the Trustee or Paying Agent within 24 hours after making such
70
inquiry, the Trustee and Paying Agent shall continue to make payment pursuant to
such Guarantee in accordance with the first sentence of this Section 13.11. The
representative of the corresponding Credit Facility Guarantee shall keep on file
with the Trustee and any Paying Agent its address, telephone and facsimile
information.
SECTION 13.9 Trustee Entitled to Rely. Upon any payment or
------------------------
distribution pursuant to this Article 13, the Trustee and the holders of Notes
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 13.3
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
holders of Notes or (iii) upon the representative for the holders of the Credit
Facility Guarantees for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Credit Facility
Guarantees, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 13.
In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of a Credit
Facility Guarantee to participate in any payment or distribution pursuant to
this Article 13, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of the Credit Facility
Guarantee held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 13, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such person to receive such payment.
SECTION 13.10 Trustee to Effectuate Subordination. Each holder of
-----------------------------------
Notes by accepting a Note authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the holders of Notes and the holders of the Credit
Facility Guarantees as provided in this Article 13 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 13.11 Trustee not Fiduciary for Holders of the Credit
-----------------------------------------------
Facility Guarantees. The Trustee shall not be deemed to owe any fiduciary duty
-------------------
to the holders of the Credit Facility Guarantees and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to holders of Notes
or the Issuer or any other Person money or assets to which any holders of a
Credit Facility Guarantee shall be entitled by virtue of this Article 13 or
otherwise, except if such payment is made as a result of the willful misconduct
of the Trustee.
SECTION 13.12 Notice by Issuer. The Issuer shall promptly notify the
----------------
Trustee of any facts known to the Issuer that would cause a payment of the
Guarantee Obligations to violate this Article 13, but failure to give such
notice shall not affect the subordination of the Guarantees to the Credit
Facility Guarantees as provided in this Article 13.
71
SECTION 13.13 Acceleration of Notes. For so long as Indebtedness is
---------------------
outstanding under the New Credit Facility, if payment of the Notes is
accelerated because of a Default or Event of Default, the Issuer shall promptly
notify the Administrative Agent (as defined in the New Credit Facility) of such
acceleration.
SECTION 13.14 Default on Credit Facility Guarantee. Other than as
------------------------------------
provided in Section 13.2(ii) hereof, a Guarantor may not make any payment
pursuant to its Guarantee Obligations ("pay its Guarantee") and may not acquire
from the Trustee or any holder of Notes any Notes or any Guarantee for cash or
property if the corresponding Credit Facility Guarantee is not paid when due
unless the corresponding Credit Facility Guarantee has been paid or discharged
in full; provided, however, that such Guarantor may pay its Guarantee without
regard to the foregoing if such Guarantor and the Trustee receive written notice
approving such payment from the representative of the holders of the
corresponding Credit Facility Guarantee.
SECTION 13.15 Waiver. Without in any way limiting the provisions of
------
Section 13.1 hereof, each Guarantor hereby waives notice of acceptance hereof,
notice of any liability of such Guarantor under its Guarantee, notice or proof
of reliance by the Holders upon the obligations of such Guarantor under its
Guarantee, and diligence, presentment demand for payment on the Issuer, protest,
notice of dishonor or nonpayment of any of the Issuer's or any other Person's
obligations under this Indenture, the Notes or the Security Documents, or other
notice or formalities to the Issuer or such Guarantor of any kind whatsoever.
SECTION 13.16 Survival of Obligations. To the extent the Trustee
-----------------------
receives any payment by or on behalf of the Issuer, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to the Issuer, its estate, trustee, receiver,
custodian or any other party under any Bankruptcy Law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of the Issuer to the Trustee as of the date such
initial payment, reduction or satisfaction occurred.
SECTION 13.17 Subordination may not be impaired by the Issuer or a
----------------------------------------------------
Guarantor. No right of any holder of a Credit Facility Guarantee to enforce the
---------
subordination of the Indebtedness evidenced by the corresponding Guarantee shall
be impaired by any act or failure to act by the applicable Guarantor or any
holder of such Guarantee or by the failure of such Guarantor or any holder of
such Guarantee to comply with this Indenture.
SECTION 13.18 Guarantees in Addition to Other Obligations. The
-------------------------------------------
obligations of each Guarantor under its Guarantee and this Indenture are in
addition to and not in substitution for any other obligations to the Trustee or
to any of the Holders in relation to this Indenture, the Notes or the Security
Documents and any guarantees or security at any time held by or for the benefit
of any of them.
72
SECTION 13.19 Limitation of Guarantor's Liability. Each Guarantor,
-----------------------------------
and by its acceptance of a Note each Holder, hereby confirms that it is the
intention of all such parties that in no event shall any Guarantee Obligations
under such Guarantor's Guarantee constitute or result in a fraudulent transfer
or conveyance for purposes of, or result in a violation of, any United States
federal, or applicable United States state, fraudulent transfer or conveyance or
similar law. To effectuate the foregoing intention, in the event that any
Guarantee Obligations in respect of the Notes would, but for this sentence,
constitute or result in such a fraudulent transfer or conveyance or violation,
then the liability of the Guarantor under the corresponding Guarantee in respect
of the Notes shall be reduced to the extent necessary to eliminate such
fraudulent transfer or conveyance or violation under the applicable fraudulent
transfer or conveyance or similar law.
SECTION 13.20 Amendments. If any Indebtedness is outstanding under
----------
the New Credit Facility, the provisions of this Article 13 relating to the
Credit Facility Guarantees or the subordination of the Guarantees (including,
without limitation, Sections 13.2, 13.3, 13.5, 13.6, 13.7, 13.8, 13.9, 13.10,
13.11, 13.12, 13.13, 13.14, 13.16, 13.17 and 13.20) shall not be amended or
modified without the prior written consent of the Administrative Agent (as
defined in the New Credit Facility).
SECTION 13.21 Acknowledgement. The Issuer, the Guarantors, the
---------------
Trustee and, by its acceptance of a Note, each Holder hereby acknowledge that
the Issuer and the Guarantors have made no representation or warranty regarding
whether approval of or authorization by the United States Bankruptcy Court with
jurisdiction over the Chapter 11 case of New Horizons is necessary with respect
to the effectiveness of the New Horizons Guarantee and the other obligations of
New Horizons under this Indenture or the effect of receiving or not receiving
any such approvals or authorizations, and the Trustee is not and, by its
acceptance of a Note, each Holder is deemed not to be, relying on the Issuer or
the Guarantors with respect to the same. The Issuer and the Guarantors shall
take such actions as they deem necessary or advisable to seek to obtain such
court order, and the Issuer shall use reasonable efforts to provide advance
written notice to the Trustee at the commencement of any such action.
73
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed by their respective officers duly authorized as of the day and year
first above written.
BRADLEES STORES, INC., as the Issuer
By:_________________________________
Name:____________________________
Title:___________________________
BRADLEES, INC.
By:_________________________________
Name:____________________________
Title:___________________________
NEW HORIZONS OF YONKERS, INC.
By:_________________________________
Name:____________________________
Title:___________________________
IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee
By:_________________________________
Name:____________________________
Title:___________________________
74
EXHIBIT A
---------
FORM OF NOTE
EXHIBIT B
---------
FORM OF NOTATION RELATING TO GUARANTEES
________________________________________________________
INDENTURE
dated as of February 2, 1999
between
BRADLEES STORES, INC.,
as Issuer,
BRADLEES, INC.,
as Guarantor,
NEW HORIZONS OF YONKERS, INC.,
as Guarantor,
and
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
$28,995,000
________________________________________________________
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 2
SECTION 1.1 Definitions; Construction............................... 2
SECTION 1.2 Compliance Certificates and Opinions.................... 11
SECTION 1.3 Form of Documents Delivered to Trustee.................. 11
SECTION 1.4 When Securities Disregarded............................. 12
SECTION 1.5 Conflict with Trust Indenture Act....................... 12
SECTION 1.6 Execution in Counterparts............................... 12
SECTION 1.7 Effect of Headings and Table of Contents................ 12
SECTION 1.8 Successors and Assigns.................................. 12
SECTION 1.9 Severability Clause..................................... 13
SECTION 1.10 Benefits of Indenture................................... 13
SECTION 1.11 GOVERNING LAW........................................... 13
SECTION 1.12 Legal Holidays.......................................... 13
SECTION 1.13 No Recourse Against Others.............................. 13
SECTION 1.14 Notices................................................. 13
ARTICLE 2 THE NOTES 15
SECTION 2.1 Title and Terms......................................... 15
SECTION 2.2 Execution, Authentication, Delivery and Dating.......... 15
SECTION 2.3 Temporary Notes......................................... 16
SECTION 2.4 Registration; Registration of Transfer and
Exchange.............................................. 17
SECTION 2.5 Mutilated, Destroyed, Lost and Stolen Notes............. 19
SECTION 2.6 Payments; Interest and Principal Rights
Preserved............................................. 20
SECTION 2.7 Persons Deemed Owners................................... 20
SECTION 2.8 Cancellation; Purchase by the Issuer.................... 20
SECTION 2.9 Dating of Notes......................................... 21
SECTION 2.10 CUSIP Numbers........................................... 21
SECTION 2.11 Parity and Ranking of Notes............................. 21
SECTION 2.12 Book Entry.............................................. 21
ARTICLE 3 REDEMPTION OF NOTES 21
SECTION 3.1 Mandatory Redemption of Notes........................... 21
SECTION 3.2 Optional Redemption of Notes............................ 22
SECTION 3.3 Delivery of Notices, Certificates and Opinions.......... 22
SECTION 3.4 Redemption of and Payment on Notes...................... 23
SECTION 3.5 Notes Redeemed in Part.................................. 24
SECTION 3.6 Cancellation of Notes................................... 24
ARTICLE 4 CONCERNING THE TRUSTEE 24
SECTION 4.1 Duties and Responsibilities of Trustee; During
Default; Prior to Default............................. 24
SECTION 4.2 Certain Rights and Duties of Trustee.................... 25
SECTION 4.3 Trustee Not Responsible for Recitals, Etc............... 27
SECTION 4.4 Trustee and Others May Hold Notes....................... 27
SECTION 4.5 Monies Held by Trustee or Paying Agent.................. 27
SECTION 4.6 Compensation of Trustee and Its Lien.................... 27
SECTION 4.7 Right of Trustee to Rely on Officers'
Certificates and Opinions of Counsel.................. 28
SECTION 4.8 Persons Eligible for Appointment as Trustee............. 28
SECTION 4.9 Conflicting Interests; Resignation and Removal
of Trustee; Appointment of Successor.................. 29
SECTION 4.10 Acceptance of Appointment by Successor Trustee.......... 30
SECTION 4.11 Merger, Conversion or Consolidation of Trustee.......... 30
SECTION 4.12 Preferential Collection of Claims Against
Issuer and BI......................................... 31
SECTION 4.13 Maintenance of Offices and Agencies..................... 31
SECTION 4.14 Trustee Risk............................................ 33
SECTION 4.15 Appointment of a Co-Trustee............................. 33
ARTICLE 5 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER 34
SECTION 5.1 Issuer to Furnish Trustee Names and Addresses
of Holders............................................ 34
SECTION 5.2 Preservation of Information; Communications
to Holders............................................ 34
SECTION 5.3 Reports by Trustee...................................... 34
SECTION 5.4 Reports by Issuer and BI................................ 35
ARTICLE 6 COVENANTS 35
SECTION 6.1 Payment of Notes........................................ 35
SECTION 6.2 Corporate Existence..................................... 35
SECTION 6.3 Compliance Certificate; Notice of Default............... 35
SECTION 6.4 Impairment of Security Interest......................... 36
SECTION 6.5 Amendments to Security Documents........................ 36
SECTION 6.6 Reports of Holders...................................... 36
SECTION 6.7 Limitation on Indebtedness.............................. 36
SECTION 6.8 Delivery of Title Policies.............................. 37
SECTION 6.9 Disposition of Yonkers Property......................... 38
ARTICLE 7 SUCCESSOR CORPORATION; MERGER, CONSOLIDATION AND SALE OF ASSETS 40
SECTION 7.1 Merger, Consolidation and Sale of Assets................ 40
SECTION 7.2 Successor Corporation Substituted....................... 41
ARTICLE 8 DEFAULT 41
SECTION 8.1 Events of Default....................................... 41
SECTION 8.2 Acceleration............................................ 43
SECTION 8.3 Collection of Indebtedness by Trustee; Trustee
May Prove Debt........................................ 44
SECTION 8.4 Application of Proceeds................................. 44
SECTION 8.5 Other Remedies.......................................... 45
SECTION 8.6 Restoration of Rights on Abandonment of
Proceedings........................................... 45
SECTION 8.7 Limitations on Suits by Noteholders..................... 45
SECTION 8.8 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default........................ 46
SECTION 8.9 Control by Noteholders.................................. 46
SECTION 8.10 Waiver of Defaults...................................... 47
SECTION 8.11 Unconditional Right of Holders to Receive
Principal and Interest................................ 47
SECTION 8.12 Undertaking for Costs................................... 47
SECTION 8.13 Trustee May File Proofs of Claim........................ 47
SECTION 8.14 New Credit Facility Waivers and Consents................ 48
ARTICLE 9 CONVERSION OF NOTES 48
SECTION 9.1 Conversion Privilege.................................... 48
SECTION 9.2 Exercise of Conversion Privilege........................ 48
SECTION 9.3 Fractional Interests.................................... 50
SECTION 9.4 Conversion Price........................................ 50
SECTION 9.5 Adjustment of Conversion Price; Notice of
Adjustments........................................... 50
SECTION 9.6 Continuation of Conversion Privilege in Case
of Reclassification, Change, Merger,
Consolidation or Sale of Assets....................... 55
SECTION 9.7 Notice of Certain Events................................ 56
SECTION 9.8 Taxes on Conversion..................................... 56
SECTION 9.9 BI to Provide Stock..................................... 57
SECTION 9.10 Disclaimer of Responsibility for Certain
Matters............................................... 57
SECTION 9.11 Return of Funds Deposited for Redemption
of Converted Notes.................................... 58
SECTION 9.12 Registrar and Paying Agent.............................. 58
ARTICLE 10 SATISFACTION AND DISCHARGE 58
SECTION 10.1 Defeasance of Notes..................................... 58
SECTION 10.2 Satisfaction and Discharge of the Indenture............. 59
SECTION 10.3 Application of Trust Money.............................. 60
SECTION 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for One Year.......................... 60
ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS 60
SECTION 11.1 Without Consent of Holders.............................. 60
SECTION 11.2 With Consent of Holders................................. 61
SECTION 11.3 Compliance with Trust Indenture Act..................... 63
SECTION 11.4 Revocation and Effect of Consents....................... 63
SECTION 11.5 Notation on or Exchange of Notes........................ 63
SECTION 11.6 Trustee to Sign Amendments, Etc......................... 63
SECTION 11.7 Payment for Consent..................................... 64
ARTICLE 12 COLLATERAL AND SECURITY DOCUMENTS 64
SECTION 12.1 Collateral and Security Documents....................... 64
SECTION 12.2 Release of Lien......................................... 65
SECTION 12.3 Recording, Certificates and Opinions.................... 66
SECTION 12.4 Authorization of Actions to Be Taken
by the Trustee Under the Security Documents........... 66
SECTION 12.5 Authorization of Receipt of Funds by the
Trustee Under the Security Documents.................. 67
SECTION 12.6 Trustee's Disclaimer.................................... 67
SECTION 12.7 Release upon Termination of the Issuer's
Obligations........................................... 67
ARTICLE 13 GUARANTEE 67
SECTION 13.1 Guarantee............................................... 67
SECTION 13.2 Guarantees Subordinated to Credit Facility
Guarantees............................................ 68
SECTION 13.3 Liquidation, Dissolution, Bankruptcy.................... 69
SECTION 13.4 Execution and Delivery of Guarantees.................... 69
SECTION 13.5 Obligations Reinstated.................................. 70
SECTION 13.6 When Distribution Must Be Paid Over..................... 70
SECTION 13.7 Relative Rights......................................... 70
SECTION 13.8 Rights of Trustee and Paying Agent...................... 70
SECTION 13.9 Trustee Entitled to Rely................................ 71
SECTION 13.10 Trustee to Effectuate Subordination..................... 71
SECTION 13.11 Trustee not Fiduciary for Holders of the
Credit Facility Guarantees............................ 71
SECTION 13.12 Notice by Issuer........................................ 71
SECTION 13.13 Acceleration of Notes................................... 72
SECTION 13.14 Default on Credit Facility Guarantee.................... 72
SECTION 13.15 Waiver.................................................. 72
SECTION 13.16 Survival of Obligations................................. 72
SECTION 13.17 Subordination may not be impaired by the
Issuer or a Guarantor................................. 72
SECTION 13.18 Guarantees in Addition to Other Obligations............. 72
SECTION 13.19 Limitation of Guarantor's Liability..................... 73
SECTION 13.20 Amendments.............................................. 73
SECTION 13.21 Acknowledgement......................................... 73
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF NOTATION RELATING TO GUARANTEES
FORM OF NOTE
BRADLEES STORES, INC.
9% SECURED CONVERTIBLE NOTE DUE 2004
Number: CUSIP Number: 000000XX0
Principal
Amount Maturity Date Issue Date
------ ------------- ----------
$ ________ February 3, 2004 February 2, 1999
INTEREST RATE: Nine percent (9%) per annum
BRADLEES STORES, INC., a corporation duly organized and existing under
the laws of the Commonwealth of Massachusetts (hereinafter called the "Issuer",
which term includes any successor or assign under the Indenture referred to
below), for value received hereby promises to pay to [_____________], or its
registered assigns, the outstanding Principal Amount hereof on the Maturity Date
set forth above, and to pay interest on the unpaid portion of the Principal
Amount semi-annually on each of January 1 and July 1 of each year (each of such
dates and the Maturity Date are hereinafter individually referred to as the
"Stated Maturity") at the Interest Rate set forth above from the most recent
Stated Maturity for which interest has been paid or duly provided for or, if no
interest has been paid, from the Issue Date set forth above, until the Principal
Amount is paid in full. The Issuer shall pay interest on overdue principal from
time to time on demand at the rate of interest borne by the Notes and it shall
pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the rate of interest borne by the Notes to the
extent lawful. It is acknowledged and agreed that the principal of the Notes
may not be repaid prior to the Maturity Date except as specifically provided in
the Indenture (as hereinafter defined). The principal and interest so payable
on any Stated Maturity shall, as provided in the Indenture, be paid to the
person in whose name this Note is registered in the Security Register at the
close of business on the Regular Record Date for such payment of principal and
interest, which shall be the fifteenth day preceding each Stated Maturity,
respectively. Any such principal and interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the person in whose name
this Note was registered in the Security Register at the close of business on
such Regular Record Date, and may be paid to the person in whose name this Note
is registered at the close of business on a special record date for the payment
of such overdue interest and/or overdue principal, to be fixed by the Trustee,
notice of which shall be given to the Holder hereof at least 15 days prior to
such special
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record date, or may be paid at any time in any other lawful manner.
Notwithstanding the foregoing, payment of the principal amount of this Note (or
any outstanding installment thereof) upon final maturity (whether by redemption,
acceleration or otherwise) shall be made instead only upon presentation and
surrender of this Note. All payments in respect of this Note shall be made in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of debts.
Whenever any amount to be paid hereunder is stated to be due on a day
that is not a Business Day, such amount shall be payable on the next succeeding
Business Day.
This Note is one of an authorized issue of Notes of the Issuer known
as its 9% Secured Convertible Notes Due 2004 (the "Notes") and ranks equally in
right of payment with other non-subordinated indebtedness of the Issuer. The
Notes are issued under the Indenture, dated as of February 2, 1999 (the
"Indenture"), among the Issuer, IBJ Whitehall Bank & Trust Company (the
"Trustee," which term includes any successor indenture trustee under the
Indenture), Bradlees, Inc. ("BI") and New Horizons of Yonkers, Inc. All
capitalized terms used herein, unless defined herein, shall have the meanings
ascribed to them in the Indenture. All rights, powers and remedies available to
any Holder of this Note shall be subject to the provisions of the Indenture.
Reference is hereby made to the Indenture for a description of the nature and
extent of the Notes and the respective rights of the Holders of the Notes, the
Indenture Trustee, the Issuer, BI and New Horizons in respect of the Notes and
the terms upon which the Notes are made and are to be authenticated and
delivered.
The principal of, and interest on, and all other amounts payable under
this Note are secured by (A) a first priority mortgage Lien on (i) the Yonkers
Property and the Net Proceeds of the Disposition of the Yonkers Property and
(ii) subject to Section 12.1(b) of the Indenture, the Additional Collateral and
the Net Proceeds of the Disposition of the Additional Collateral and (B) a first
priority Lien on the Pledged Stock, in each case as described in the Indenture
and the Security Documents. Such Liens shall be subject to modification, and
certain portions of the Collateral shall be subject to release, upon the terms
and provisions set forth in the Security Documents. Each Holder of a Note, by
accepting a Note, shall be deemed to have agreed to all of the terms and
provisions of the Security Documents, as the same may be amended from time to
time pursuant to the provisions thereof, the Notes and the Indenture.
Payment and performance of the BI Guarantee Obligations and the New
Horizons Guarantee Obligations in connection with the Notes are severally fully
and unconditionally guaranteed by BI and New Horizons, respectively, in
accordance with the terms of Article 13 of the Indenture.
The Indenture permits, with certain exceptions, as therein provided,
the amendment thereof and the Security Documents and the modification of the
rights and obligations of the Issuer and the rights of the Holders of the Notes
to be affected under the Indenture or the Security Documents at any time by the
Issuer with the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Notes. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Outstanding Notes, on behalf of the
83
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver or direction by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any security issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
The Notes shall be redeemed pro rata with (a) the Net Proceeds of the
Disposition of the Yonkers Property, (b) subject to Section 12.1(b) of the
Indenture, the Net Proceeds of the Disposition of the Additional Collateral and
(c) the Net Proceeds of any Equity Offering, in each case at a Redemption Price
equal to 100% of the unpaid principal amount of the Notes to be redeemed plus
accrued and unpaid interest thereon to the Redemption Date.
The Notes may be redeemed in whole or in part at any time at the
option of the Issuer at a Redemption Price equal to 100% of the unpaid principal
amount thereof plus accrued and unpaid interest thereon to the Redemption Date.
Notice of any redemption of Notes will be given at least 10 days
before the Redemption Date to each Holder at its registered address. Notes (or
portions thereof as aforesaid) redeemed in accordance with the Indenture shall
thereupon cease to be entitled to the Liens of the Security Documents and shall
cease to bear interest from and after the Redemption Date.
If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed pro rata or by lot or by a method that complies
with applicable requirements, and that the Trustee considers fair and
appropriate; provided that in the case of a mandatory redemption, selection of
the portion of Notes for redemption shall be made by the Trustee only on a pro
rata basis unless prohibited by law.
The Notes are, subject to the terms of the Indenture, convertible in
whole or in part at the option of the Holder thereof into shares of New Common
Stock of BI at any time after the first anniversary of the original issuance of
the Notes. The Conversion Price per share of New Common Stock shall initially
be equal to the arithmetic unweighted average closing price of such stock during
the 20 Business Days prior to the first anniversary of the original issuance of
the Notes. The Conversion Price shall be adjusted from time to time in the case
of certain dividends and distributions in respect of the New Common Stock, in
the event of certain tender or exchange offers for the New Common Stock and
under certain other circumstances, as further provided in the Indenture.
If an Event of Default occurs and is continuing, the Holders of at
least 25% in aggregate principal amount of the Notes Outstanding may declare the
principal amount of, and any accrued and unpaid interest on, all the Notes to be
due and payable immediately; provided, that in the case of an Event of Default
--------
arising from certain events of bankruptcy or insolvency with respect to the
Issuer, the principal amount of and any accrued and unpaid interest on all
outstanding Notes shall become due and payable immediately without further
action or notice.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged
84
as provided in the Indenture. The Registrar and the Trustee may require a
Noteholder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or the Indenture.
The person in whose name this Note is registered shall be deemed to be
the owner and holder hereof for the purpose of receiving payment as herein
provided and for all other purposes.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
A director, officer, employee, stockholder or incorporator, as such,
of the Issuer or BI shall not have any liability for any obligations of the
Issuer under the Notes or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of the Notes. Such waiver and release
shall not affect the Guarantee Obligations of BI or New Horizons pursuant to the
Indenture.
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Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual or facsimile signature, this Note shall not be
entitled to any benefit under such Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
BRADLEES STORES, INC.
By:
------------------------------------
Name: Xxxx X. XxXxxxxx
Title: Vice President & Treasurer
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
IBJ Whitehall Bank & Trust Company, as Trustee
By:
-------------------------------------
Authorized Signatory
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CONVERSION NOTICE
To BRADLEES STORES, INC. and BRADLEES, INC.
The undersigned registered holder of this Note hereby irrevocably exercises
the option to convert this Note, or portion hereof, which is $1,000 or a
multiple thereof below designated into shares of common stock of BRADLEES, INC.
in accordance with the terms of the Indenture referred to in this Note and
directs that the shares issuable and deliverable upon the conversion, together
with any check in payment for fractional shares be issued and delivered to the
registered holder hereof unless a different name has been indicated below.
Unless otherwise directed, a new Note representing any unconverted principal
amount hereof shall be delivered to the registered holder hereof. If shares are
to be issued in the name of a person other than the undersigned, this Note must
be duly endorsed by or accompanied by instruments of transfer in form reasonably
satisfactory to BRADLEES STORES, INC. and BRADLEES, INC. duly executed by the
undersigned and the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Note.
Dated:
If different from that of Noteholder,
print name, address (including ZIP ----------------------------
code) and Social Security or other Signature of Noteholder
taxpayer identification number of
person in whose name the New Common Signature Guaranteed
Stock will be issued.
Signature must be guaranteed by a participant
in a recognized signature guarantee
medallion program or other signature
guarantor acceptable to the Trustee.
SOCIAL SECURITY OR OTHER Principal amount to be
TAXPAYER IDENTIFYING NUMBER converted (if less than all)
Name ($1,000 or an integral
multiple thereof)
----------------------------------------
Address $
----------------------------------------
87
TRANSFER FORM
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
Please print or typewrite name and address including postal zip code of
assignee the within Note and all rights thereunder, hereby irrevocably
constituting and appointing attorney to transfer said Note on the books of the
Company, with full power of substitution in the premises.
Signature: Dated:
Signature Guaranteed:
Signature must be guaranteed by a participant in a recognized
signature guarantee medallion program or other signature
guarantor acceptable to the Trustee.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
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FORM OF NOTATION RELATING
TO GUARANTEES
Bradlees, Inc. ("BI") and New Horizons of Yonkers, Inc. ("New Horizons")
have severally fully and unconditionally guaranteed, to the extent set forth in
Article 13 of the Indenture and subject to the provisions of the Indenture, the
complete and punctual payment by the Issuer of the BI Guarantee Obligations and
the New Horizons Guarantee Obligations, respectively, in connection with the
Notes. The BI Guarantee Obligations shall rank equally in right of payment with
other non-subordinated indebtedness of BI, except that the BI Guarantee
Obligations shall be expressly subordinated in right of payment to the BI Credit
Facility Guarantee, as more particularly set forth in the Indenture. The New
Horizons Guarantee Obligations shall rank equally in right of payment with other
non-subordinated indebtedness of New Horizons, except that the New Horizons
Guarantee Obligations shall be expressly subordinated in right of payment to New
Horizons Credit Facility Guarantee, as more particularly set forth in the
Indenture.
The obligations of BI and New Horizons to the Holders of Notes and to the
Trustee pursuant to the Guarantees are expressly set forth in Article 13 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Guarantees. Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture.
BRADLEES, INC.
By:
------------------------------
Name: Xxxx X. XxXxxxxx
Title: Vice-President & Treasurer
Attest:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Clerk
NEW HORIZONS OF YONKERS, INC.
By:
------------------------------
Name: Xxxx X. XxXxxxxx
Title: Vice-President & Treasurer
Attest:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
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