EXHIBIT 2.3
FORM OF NOTE
BRADLEES STORES, INC.
9% SECURED CONVERTIBLE NOTE DUE 2004
Number: CUSIP Number:
Principal
Amount Maturity Date Issue Date
------ ------------- ----------
$__________ $_________, 2004 __________, 1999
REGISTERED HOLDER: _______________________
PRINCIPAL AMOUNT: _______________________ Dollars
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 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 or duly provided for, from the Issue Date set forth
above, until the Principal Amount is paid in full or payment thereof is duly
provided for. 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
record date, or may be paid at
any time in any other lawful manner. 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 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 and shall continue to bear interest at the rate set forth herein
until paid.
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 January ___, 1999
(the "Indenture"), among the Issuer, [ ] (the "Trustee," which term includes
any successor indenture trustee under the Indenture) and, solely for the
purposes of the conversion provisions therein, Bradlees, Inc. ("BI"). 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 xxxxxx 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 and BI 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 first priority Lien on the Yonkers Property and the
Union Square Property and the Proceeds of the conversion of the Yonkers
Property and the Union Square Property as described in the Indenture and the
Security Documents. 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 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 Guarantee Obligations in connection
with the Notes are fully and unconditionally guaranteed on an unsecured basis by
BI 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 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
sale of the Yonkers Property, (b) the Net Proceeds of the sale of the Union
Square Property 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 5 days before
the Redemption Date to each Holder at its registered address. Notes (or
portions thereof as aforesaid) for the redemption of which provision is made in
accordance with the Indenture shall thereupon cease to be entitled to the Lien
of the Security Documents and shall cease to bear interest from and after the
Redemption Date.
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 a majority 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, 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 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 permitted by 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.
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:
Title:
By:
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
[ ], as Indenture Trustee
By:
Authorized Signatory
EXHIBIT A
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
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.
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
$
EXHIBIT A
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:
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.
EXHIBIT B
FORM OF NOTATION RELATING
TO GUARANTEE
Bradlees, Inc. ("BI") has 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 Guarantee
Obligations in connection with the Notes. The Guarantee Obligations shall rank
equally in right of payment with other non-subordinated indebtedness of BI,
except that the Guarantee Obligations shall be expressly subordinated in right
of payment to the Credit Facility Guarantee, as more particularly set forth in
the Indenture.
The obligations of BI to the Holders of Notes and to the Trustee pursuant
to the Guarantee are expressly set forth in Article 13 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee. Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture.
BRADLEES, INC.
By
Title:
Attest:
Title:
