EXHIBIT 2.2
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INDENTURE
dated as of [ ], 1999
between
BRADLEES STORES, INC.,
as Issuer,
BRADLEES, INC.,
and
[ ],
as Trustee
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DB DRAFT 12/18/98
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.............................................................. 8
SECTION 1.3 Form of Documents Delivered to Trustee............................................................ 9
SECTION 1.4 When Securities Disregarded....................................................................... 9
SECTION 1.5 Conflict with Trust Indenture Act................................................................. 10
SECTION 1.6 Execution in Counterparts......................................................................... 10
SECTION 1.7 Effect of Headings and Table of Contents.......................................................... 10
SECTION 1.8 Successors and Assigns............................................................................ 10
SECTION 1.9 Severability Clause............................................................................... 10
SECTION 1.10 Benefits of Indenture............................................................................. 10
SECTION 1.11 GOVERNING LAW..................................................................................... 10
SECTION 1.12 Legal Holidays.................................................................................... 10
SECTION 1.13 No Recourse Against Others........................................................................ 11
SECTION 1.14 Notices........................................................................................... 11
ARTICLE 2.................. THE NOTES......................................................................................... 12
SECTION 2.1 Title and Terms................................................................................... 12
SECTION 2.2 Execution, Authentication, Delivery and Dating.................................................... 13
SECTION 2.3 Temporary Notes................................................................................... 13
SECTION 2.4 Registration; Registration of Transfer and Exchange............................................... 14
SECTION 2.5 Mutilated, Destroyed, Lost and Stolen Notes....................................................... 15
SECTION 2.6 Payments; Interest and Principal Rights Preserved................................................. 16
SECTION 2.7 Persons Deemed Owners............................................................................. 17
SECTION 2.8 Cancellation; Purchase by the Issuer.............................................................. 17
SECTION 2.9 Dating of Notes................................................................................... 17
SECTION 2.10 CUSIP Numbers..................................................................................... 17
SECTION 2.11 Parity and Ranking of Notes....................................................................... 17
SECTION 2.12 Book Entry........................................................................................ 17
ARTICLE 3.................. REDEMPTION OF NOTES............................................................................... 18
SECTION 3.1 Mandatory Redemption of Notes..................................................................... 18
SECTION 3.2 Optional Redemption of Notes...................................................................... 18
SECTION 3.3 Delivery of Notices, Certificates and Opinions.................................................... 18
SECTION 3.4 Redemption of and Payment on Notes................................................................ 19
SECTION 3.5 Notes Redeemed in Part............................................................................ 20
SECTION 3.6 Cancellation of Notes............................................................................. 20
ARTICLE 4.................. CONCERNING THE TRUSTEE............................................................................ 20
SECTION 4.1 Duties and Responsibilities of Trustee; During Default; Prior to Default.......................... 20
SECTION 4.2 Certain Rights and Duties of Trustee.............................................................. 21
SECTION 4.3 Trustee Not Responsible for Recitals, Etc......................................................... 23
SECTION 4.4 Trustee and Others May Hold Notes................................................................. 23
SECTION 4.5 Monies Held by Trustee or Paying Agent............................................................ 23
SECTION 4.6 Compensation of Trustee and Its Lien.............................................................. 23
SECTION 4.7 Right of Trustee to Rely on Officer's Certificates and Opinions of Counsel........................ 24
SECTION 4.8 Persons Eligible for Appointment as Trustee....................................................... 24
SECTION 4.9 Conflicting Interests; Resignation and Removal of Trustee; Appointment of Successor............... 24
SECTION 4.10 Acceptance of Appointment by Successor Trustee.................................................... 26
SECTION 4.11 Merger, Conversion or Consolidation of Trustee.................................................... 26
SECTION 4.12 Preferential Collection of Claims Against Issuer.................................................. 26
SECTION 4.13 Maintenance of Offices and Agencies............................................................... 27
SECTION 4.14 Trustee Risk...................................................................................... 29
ARTICLE 5.................. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER.................................................. 29
SECTION 5.1 Issuer to Furnish Trustee Names and Addresses of Holders.......................................... 29
SECTION 5.2 Preservation of Information; Communications to Holders............................................ 29
SECTION 5.3 Reports by Trustee................................................................................ 30
SECTION 5.4 Reports by Issuer and BI.......................................................................... 30
ARTICLE 6.................. COVENANTS......................................................................................... 30
SECTION 6.1 Payment of Notes.................................................................................. 30
SECTION 6.2 Corporate Existence............................................................................... 30
SECTION 6.3 Compliance Certificate; Notice of Default......................................................... 31
SECTION 6.4 Impairment of Security Interest................................................................... 31
SECTION 6.5 Amendments to Security Documents.................................................................. 31
SECTION 6.6 Reports of Holders................................................................................ 31
ARTICLE 7.................. SUCCESSOR CORPORATION; MERGER, CONSOLIDATION AND SALE OF ASSETS 32
SECTION 7.1 Merger, Consolidation and Sale of Assets.......................................................... 32
SECTION 7.2 Successor Corporation Substituted................................................................. 32
ARTICLE 8.................. DEFAULT........................................................................................... 32
SECTION 8.1 Events of Default................................................................................. 32
SECTION 8.2 Acceleration...................................................................................... 33
SECTION 8.3 Collection of Indebtedness by Trustee; Trustee May Prove Debt..................................... 34
SECTION 8.4 Application of Proceeds........................................................................... 34
SECTION 8.5 Other Remedies.................................................................................... 35
SECTION 8.6 Restoration of Rights on Abandonment of Proceedings............................................... 35
SECTION 8.7 Limitations on Suits by Noteholders............................................................... 35
SECTION 8.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default........................... 36
SECTION 8.9 Control by Noteholders............................................................................ 36
SECTION 8.10 Waiver of Defaults................................................................................ 37
SECTION 8.11 Unconditional Right of Holders to Receive Principal and Interest.................................. 37
SECTION 8.12 Undertaking for Costs............................................................................. 37
SECTION 8.13 Trustee May File Proofs of Claim.................................................................. 37
ARTICLE 9.................. CONVERSION OF NOTES............................................................................... 38
SECTION 9.1 Conversion Privilege.............................................................................. 38
SECTION 9.2 Exercise of Conversion Privilege.................................................................. 38
SECTION 9.3 Fractional Interests.............................................................................. 39
SECTION 9.4 Conversion Price.................................................................................. 40
SECTION 9.5 Adjustment of Conversion Price; Notice of Adjustments............................................. 40
SECTION 9.6 Continuation of Conversion Privilege in Case of Reclassification, Change, Merger, Consolidation or
Sale of Assets................................................................................... 44
SECTION 9.7 Notice of Certain Events.......................................................................... 45
SECTION 9.8 Taxes on Conversion............................................................................... 46
SECTION 9.9 BI to Provide Stock............................................................................... 46
SECTION 9.10 Disclaimer of Responsibility for Certain Matters.................................................. 47
SECTION 9.11 Return of Funds Deposited for Redemption of Converted Notes....................................... 47
SECTION 9.12 Registrar and Paying Agent........................................................................ 47
ARTICLE 10................. SATISFACTION AND DISCHARGE........................................................................ 48
SECTION 10.1 Defeasance of Notes............................................................................... 48
SECTION 10.2 Satisfaction and Discharge of the Indenture....................................................... 49
SECTION 10.3 Application of Trust Money........................................................................ 50
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for One Year.......................... 50
ARTICLE 11................. AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................................... 50
SECTION 11.1 Without Consent of Holders........................................................................ 50
SECTION 11.2 With Consent of Holders........................................................................... 51
SECTION 11.3 Compliance with Trust Indenture Act............................................................... 52
SECTION 11.4 Revocation and Effect of Consents................................................................. 52
SECTION 11.5 Notation on or Exchange of Notes.................................................................. 53
SECTION 11.6 Trustee To Sign Amendments, Etc................................................................... 53
ARTICLE 12................. COLLATERAL AND SECURITY DOCUMENTS................................................................. 53
SECTION 12.1 Collateral and Security Documents................................................................. 53
SECTION 12.2 Release of Lien................................................................................... 53
SECTION 12.3 Recording, Certificates and Opinions.............................................................. 54
SECTION 12.4 Authorization of Actions to Be Taken by the Trustee Under the Security Documents.................. 54
SECTION 12.5 Authorization of Receipt of Funds by the Trustee Under the Security Documents..................... 55
SECTION 12.6 Trustee's Disclaimer.............................................................................. 55
SECTION 12.7 Release upon Termination of the Issuer's Obligations.............................................. 55
ARTICLE 13................. GUARANTEE......................................................................................... 55
SECTION 13.1 Guarantee......................................................................................... 55
SECTION 13.2 Guarantee Subordinated to Credit Facility Guarantee............................................... 56
SECTION 13.3 Liquidation, Dissolution, Bankruptcy.............................................................. 56
SECTION 13.4 Default on Credit Facility Guarantee.............................................................. 57
SECTION 13.5 When Distribution Must Be Paid Over............................................................... 57
SECTION 13.6 Relative Rights................................................................................... 57
SECTION 13.7 Rights of Trustee and Paying Agent................................................................ 57
SECTION 13.8 Trustee Entitled to Rely.......................................................................... 57
SECTION 13.9 Trustee to Effectuate Subordination............................................................... 58
SECTION 13.10 Trustee not Fiduciary for Holders of the Credit Facility Guarantee................................ 58
SECTION 13.11 Execution and Delivery of Guarantee............................................................... 58
SECTION 13.12 Limitation of BI's Liability...................................................................... 58
EXHIBIT A FORM OF NOTE
INDENTURE, dated as of [ ], 1999, among Bradlees Stores,
Inc., a Massachusetts corporation, as reorganized pursuant to the Plan described
below (together with its successors and assigns, the "Issuer"), [
], a New York banking corporation (the "Trustee") and Bradlees, Inc., a
Massachusetts corporation, as reorganized pursuant to the Plan (together with
its successors and assigns, "BI").
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)) (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 First Amended Joint Plan
of Reorganization of Bradlees Stores, Inc. and Certain Affiliates Under Chapter
11 of the Bankruptcy Code on November 17, 1998 (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 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 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:
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.
"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
officer or officers 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)(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.
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"BI" has the meaning specified in the introductory paragraph hereof.
"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 to have been adopted by the
Board of Directors of the Issuer 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.
"Conversion Price" has the meaning specified in Section 9.4.
"Conversion Shares" has the meaning specified in Section 9.5(k).
"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 [ ], or such other office
as may be designated by the Trustee to the Issuer and each Noteholder.
"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.
"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.
"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.
"Distribution Date" has the meaning specified in Section 9.5(k).
"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.
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"Equity Offering" shall mean an offering 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.
"Guarantee" means the guarantee by BI of the Guarantee Obligations, as
provided in Article 13.
"Guarantee Obligations" has the meaning specified in Section 13.1.
"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 Mortgage" means the Leasehold Mortgage and Security
4
Agreement from New Horizons and Bradlees to the Trustee, on behalf of the
Holders, dated as of ________, 1998, as the same may be amended from time to
time in accordance with its terms.
"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).
"Maturity Date" means the date, as set forth on the face of the Notes,
on which the Notes will mature.
"Mortgagee" and "Mortgagor" have the meanings specified in the
Leasehold Mortgage.
"Net Proceeds" means, as appropriate, (i) the proceeds of an Equity
Offering minus all costs of such Equity Offering or (ii) the proceeds of the
sale of the Yonkers Property or the Union Square Property minus all costs of
such sale. For purposes of clause (ii) hereof, "Net Proceeds" shall be deemed
to be all proceeds required to be paid to the Mortgagee upon a sale of the
Yonkers Property or the Union Square Property, as the case may be, in order to
release such property from the Lien of the Leasehold Mortgage.
"New Common Stock" means the common stock, par value $____, 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.
"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" or "Holders" means the registered owners of the Notes as
shown on the Security Register maintained for that purpose.
"Offer" has the meaning specified in Section 9.5(e).
"Officer's Certificate" of any Person means a certificate signed by an
Authorized Representative 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:
5
(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 or any Affiliate
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 2.4 hereof.
"Plan" shall have the meaning specified in the recitals hereto.
"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 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.
"Proceeds" has the meaning specified in the Leasehold Mortgage.
"Purchased Shares" has the meaning specified in 9.5(e).
"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.
6
"Registered Depositary" shall mean 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.
"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.
"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 Documents" means the Leasehold Mortgage and any other
instruments or documents entered into in connection therewith, 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 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.
"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
7
Friday, other than any day on which securities are not traded on the NASDAQ.
"Trustee" means [ ], 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.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations promulgated thereunder.
"Union Square Property" means that certain leasehold interest owned by
the Issuer, located at 00xx Xxxxxx and Broadway in New York, New York, as
further described in the Leasehold Mortgage.
"Yonkers Property" means that certain leasehold interest owned by New
Horizons located in Yonkers, New York, as further described in the Leasehold
Mortgage.
(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;
(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.
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Except as otherwise 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
Officer's 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
8
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 Officer's Certificate, a statement that no Event of
Default has occurred and is continuing.
SECTION 1.3 Form of Documents Delivered to Trustee.
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In any case 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.
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.
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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.
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In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned by the Issuer or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer 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 which the Trustee knows 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 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.
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This instrument may be 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 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 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.
SECTION 1.9 Severability Clause.
-------------------
In case any provision in this 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.
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. Nothing in this Indenture or in 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.
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THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
SECTION 1.12 Legal Holidays.
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In any case where the Redemption Date 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.
SECTION 1.14 Notices.
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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:
(a) if to the Issuer, to:
Bradlees Stores, Inc.
____________________________________________
____________________________________________
____________________________________________
Attention: ________________________
Telephone: _______________________
Telecopy: ________________________
(b) if to BI, to:
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Bradlees, Inc.
____________________________________________
____________________________________________
____________________________________________
Attention: ________________________
Telephone: _______________________
Telecopy: ________________________
and
(c) if to the Trustee, to:
____________________________________________
____________________________________________
____________________________________________
Attention: ________________________
Telephone: _______________________
Telecopy: ________________________
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.
ARTICLE 2
THE NOTES
SECTION 2.1 Title and Terms.
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The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $[40,000,000], except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes
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pursuant to Sections 2.3, 2.4, 2.5 or 3.5.
The Maturity Date of the Notes shall be [January 31, 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 on
January 1 and July 1, commencing July 1, 1999, until the principal thereof is
paid or made available for payment. 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.
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 Lien on (i) the leasehold interest of
New Horizons in the Yonkers Property, (ii) the leasehold interest of the Issuer
in the Union Square Property and (iii) the Proceeds of the conversion of the
Yonkers Property and the Union Square Property, as provided in Article 12.
The Guarantee Obligations under the Notes shall be fully and
unconditionally guaranteed on an unsecured basis by BI, as provided in Article
13.
SECTION 2.2 Execution, Authentication, Delivery and Dating.
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The Notes shall be executed on behalf of the Issuer by two Authorized
Representatives of the 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.
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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.
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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.
SECTION 2.4 Registration; Registration of Transfer and Exchange.
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(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
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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 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 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 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 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 Depositary designated for such Global Note or a nominee thereof
and delivered to such Depositary 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.
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(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 Depositary for such Global Note or a nominee thereof unless (A)
such Depositary (1) has notified the Issuer that it is unwilling or unable to
continue as Depositary for such Global Note or (2) has ceased to be a clearing
agency registered under the Exchange Act, and, in either case, a successor
Depositary 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 Depositary 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
Depositary 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 Depositary for such Global Note shall direct.
(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 Depositary 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 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 satisfaction of
the ownership and authenticity thereof, and such security or indemnity as may be
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
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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 destruction, loss or
theft, evidence to the 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 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.
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
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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 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. 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 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 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.
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Each Note shall be dated the date of its authentication.
SECTION 2.10 CUSIP Numbers.
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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.
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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; (ii) the rights of the Holders shall be exercised only through the
Depository and shall be limited to those established by law and agreement
between the Holders and the Depository and/or direct participants of the
Depository; (iii) 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 (iv) the
direct
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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, and
the Depository may be treated by the Trustee and its agents, employees, officers
and directors as the absolute owner of the Notes for all purposes whatsoever.
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 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. 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 60 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 10 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 by a
written calculation by the Issuer of the amount of the Net Proceeds, which
amount shall be used for the redemption.
(b) Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 5 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
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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 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.
Notice of redemption of Notes to be redeemed at the election of the
Issuer 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.
(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 sale of each of the Yonkers Property and the Union
Square Property, the Trustee, prior to the Redemption Date, shall, in accordance
with the terms of the Security Documents, transfer the full Redemption Price in
Dollars to the Redemption Account which 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, prior to the Redemption Date, 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. Upon 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
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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.
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 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. In case an
Event of Default with respect to the Notes has occurred (which has not been
cured or waived), 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.
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:
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(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 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 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 there shall be reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such liability is not reasonably 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 accordance
with a direction
22
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 been offered
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 or 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 reasonable indemnity 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.
(h) If an Event of Default known to the Trustee has occurred and is continuing,
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.
23
(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.
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 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
24
and of all persons not regularly employed by it) except any such expense or
disbursement as may arise from its negligence or bad faith. 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 Officer's 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 Officer's 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 at all times be a corporation which complies with the
requirements of the Trust Indenture Act, having a combined capital and surplus
of at least US$100,000,000. If such corporation publishes reports of condition
at least annually, then, for the purposes of this 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.
------------------------
25
(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 for at least six months may, on behalf of
himself 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.
26
(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 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.
------------------------------------------------
If and when the Trustee shall be or become a creditor of the Issuer (or any
other obligor upon the Notes), the Trustee shall be subject to the provisions of
the Trust Indenture Act
27
regarding the collection of claims against the Issuer (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 five 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.
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
28
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.
[ ], 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.
(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
29
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 it shall have reasonable ground for believing that the repayment
of such funds or liability is not reasonably 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.
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.
------------------------------------------------------
30
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 June 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 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
31
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, the Issuer 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 Officer's Certificate stating that a review of
its activities and the activities of its subsidiaries during the preceding
fiscal year, has been made under the supervision of the signing officer
with a view to determining whether the Issuer has complied with its
obligations under this Indenture and further stating that to the best of
such officer's knowledge the Issuer during such preceding fiscal year has
complied with each and every such covenant and no Event of Default occurred
during such year and at the date of such certificate there is no Event of
Default that has occurred and is continuing or, if such officer does know
of such Event of Default, the certificate shall describe the Event of
Default and its status with particularity.
(b) Upon becoming aware of any 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
Officer's Certificate specifying such event, notice or other action.
SECTION 6.4 Impairment of Security Interest.
-------------------------------
The Issuer shall not, and the Issuer shall not permit any of its subsidiaries
to, take or knowingly or negligently 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 sale, 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.
SECTION 6.5 Amendments to Security Documents.
--------------------------------
The Issuer shall not, and the Issuer 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 in any way that
would be adverse
32
to the Holders of the Notes, 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 it files them with the SEC, copies of the
quarterly and annual reports and of the 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 files with the SEC pursuant to the
Section 13 or 15(d) of the Exchange Act.
ARTICLE 7
SUCCESSOR CORPORATION;
MERGER, CONSOLIDATION AND SALE OF ASSETS
SECTION 7.1 Merger, Consolidation and Sale of Assets.
----------------------------------------
The Issuer 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
Issuer's assets whether as an entirety or substantially as an entirety to any
Person unless: (i) either (1) the Issuer shall be the surviving or continuing
entity or (2) the Person (if other than the Issuer) formed by such consolidation
or into which the Issuer is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the properties and
assets of the Issuer substantially as an entirety (the "Surviving Entity") shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal and interest on all of the Notes and the performance of
every covenant of the Notes and the Indenture on the part of the Issuer to be
performed or observed; (ii) immediately before and immediately after giving
effect to such transaction and the assumption contemplated above, no Event of
Default shall have occurred or be continuing; and (iii) the Issuer or the
Surviving Entity shall have delivered to the Trustee an Officer's 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 clause (ii) of the preceding sentence, (a)
any subsidiary of the Issuer may consolidate with, merge into or transfer all or
part of its properties and assets to the Issuer; (b) the Issuer may merge with
an Affiliate incorporated solely for the purpose of reincorporating the Issuer
in another jurisdiction; and (c) the Issuer may merge with or into BI.
SECTION 7.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all or
substantially all
33
of the assets of the Issuer in accordance with the foregoing, in which the
Issuer is not the continuing corporation, the successor Person formed by such
consolidation or into which the Issuer 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, the Issuer under this Indenture and the Notes
with the same effect as if such surviving entity had been named as such.
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 30 days; or
(b) failure to pay the principal on any Notes when such principal becomes
due and payable, at maturity, upon redemption or otherwise; or
(c) the Issuer or BI defaults in the observance or performance of any
other covenant or agreement on its part contained in this Indenture, which
default continues for a period of 60 days after the Issuer and BI receive
written notice specifying the default (and demanding that such default be
remedied) from the Holders of at least a majority of the outstanding principal
amount of the Notes; or
(d) the Issuer or BI (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) a court of competent jurisdiction enters a judgment, decree or order
for relief in respect of the Issuer or BI 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 or BI, (B) appoint a Custodian of the Issuer or BI or for substantially
all of its property or (C) order the winding-up or liquidation of the affairs of
the Issuer or BI; and such judgment, decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or
(f) the Lien created by the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created thereby,
which cessation has a material adverse effect on the Holders; provided that the
Issuer shall have 30 days to cure any such cessation (or, to the extent such
default is curable but cannot be cured
34
within such 30 day period, so long as the Issuer is diligently pursuing a cure,
such longer period of time which may be necessary in good faith to cure the
same, but in no event to exceed 120 days).
SECTION 8.2 Acceleration.
------------
If an Event of Default (other than an Event of Default specified in Section
8.1(d) or (e) with respect to the Issuer or BI) occurs and is continuing and has
not been waived pursuant to Section 8.10, then the Holders of at least a
majority 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) or (e) occurs and
is continuing with respect to the Issuer 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 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.
-------------------------------------------------------------
In case the Issuer shall default in its obligations to pay the
principal of or interest on, each of the Notes, 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 upon such Notes and collect in the manner provided by law out of the
property of the Issuer upon such Notes, wherever situated, the moneys adjudged
or decreed to be payable.
35
All rights of action and of asserting claims under this Indenture 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 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
------
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Third: 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.
---------------------------------------------------
36
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 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
a majority 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 offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby and the Trustee for 60 days
after its receipt of such notice, request and offer of 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 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.
-------
Except as provided in Section 8.5 and 8.6 hereof, 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.
37
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, subject to
Section 8.5 hereof and Section 8.6 hereof, 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.
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. 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
38
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
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 directly 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
39
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.
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 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 Determination Date to the close of business on the Business Day
following
40
the corresponding Payment Date to the registered Holder at the close of business
on that Determination Date (notwithstanding the conversion of such Note after
the corresponding Payment Date) 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 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
41
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 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 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:
42
(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 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 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 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
43
(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 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
44
(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.
(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
45
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
Officer's 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 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
-----------------------------------------------
46
. 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.
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.
47
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 paid to BI the amount of any such tax or has established, to the
48
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 non-assessable 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 non-assessable 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 Officer's 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
49
covenants of BI contained in this Article 9.
SECTION 9.11 Return of Funds Deposited for Redemption of Converted Notes.
-----------------------------------------------------------
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.
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,
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 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
50
such opinion must refer to and be based upon a 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 Event of Default shall have occurred and be continuing on the date of
such deposit;
(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 Officer's 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.
Upon satisfaction of the aforesaid conditions with respect to the
Notes, the Trustee shall, upon receipt of an Issuer Request, acknowledge in
writing that the Notes are deemed to have been paid for all purposes of this
Indenture and that the entire indebtedness of the Issuer in respect thereof is
deemed to have been satisfied and discharged.
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.
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 as and when payable, (ii) depositing with the Trustee cash in a sufficient
amount to redeem all outstanding Notes in accordance with their terms together
with proof that notice of redemption has been given or waived or an irrevocable
order of the Issuer directing the Trustee to give such notice together with an
amount sufficient to pay any and all amounts
51
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 Officer's 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) 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 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 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
52
SECTION 11.1 Without Consent of Holders.
--------------------------
The Issuer, when authorized by a Board Resolution, BI and the 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 material 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 material 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;
(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 in any material respect the rights
of any Holder;
provided that the Issuer has delivered to the Trustee an Opinion of Counsel and
an Officer's 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, without notice to
any other Holders or other holders, 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 without notice to any
other Holder; 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
53
Indenture with respect to such Notes or to waive compliance with certain
provisions thereof or certain Events of Default and consequences
thereunder;
(b) reduce the rate of 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; or
(h) amend, modify, change or waive any provision of this Section 11.2 to
adversely affect the Holders of the Notes in any material respect.
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. Any failure of
the Issuer 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.
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
54
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 notice to the Trustee or the
Issuer received before the date on which the Trustee receives an Officer's
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 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 Officer's 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
55
this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
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
the Issuer and New Horizons have granted to the Trustee, for the benefit of
the Holders, a Lien on the Union Square Property and the Yonkers Property
and the Proceeds of the conversion of the Yonkers Property and the Union
Square Property, respectively, which Lien shall be a first priority Lien.
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.
(b) 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 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 has been properly recorded and
filed so as to perfect and make effective the security interest 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
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and make effective such security interest.
(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 as is necessary to maintain the
security interest 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 Lien of the
Security Documents and Officer's 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 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
57
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 Officer's 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, 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 a Lien in the Collateral for the benefit of the Holders.
ARTICLE 13
GUARANTEE
SECTION 13.1 Guarantee.
---------
BI hereby fully and unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee, 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 (the "Guarantee Obligations"). In
case of the failure of the Issuer punctually to pay any such principal, interest
or redemption payment, BI 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.
BI 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 validity, regularity or enforceability of any
such Note or this Indenture, the absence of any action to enforce the same, any
waiver or consent 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. BI 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.
BI agrees, to the fullest extent that it may lawfully do so, that, as
between
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BI, 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 this Guarantee, notwithstanding any stay,
injunction or other prohibition extant under any applicable bankruptcy law
preventing such acceleration in respect of the obligations guaranteed hereby.
BI shall be subrogated to all rights of the Holders of the Notes
against the Issuer in respect of any amounts paid by BI on account of such Notes
or this Indenture; provided, however, that BI 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 Guarantee Subordinated to Credit Facility Guarantee.
---------------------------------------------------
BI and the Trustee each covenants and agrees, and each Holder, by
its acceptance of a Note and the corresponding Guarantee, likewise covenants and
agrees, that the Guarantee Obligations shall, to the extent and in the manner
set forth in this Article 13, be unsecured obligations of the Guarantor, ranking
equally in right of payment with other nonsubordinated indebtedness of BI,
except that the Guarantee Obligations shall be expressly subordinated in right
of payment to the Credit Facility Guarantee.
SECTION 13.3 Liquidation, Dissolution, Bankruptcy.
------------------------------------
Upon any payment or distribution of the assets of BI to creditors
upon a liquidation or dissolution of BI or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to BI or its property:
(1) holders of the Credit Facility Guarantee shall be entitled to
receive payment in full of such Credit Facility Guarantee in cash or cash
equivalents before Noteholders shall be entitled to receive any payment
pursuant to the Guarantee Obligations; and
(2) until the Credit Facility Guarantee 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 shares of
stock and any debt securities of BI that are subordinated to the Credit
Facility Guarantee, and to any debt securities received by holders of such
Credit Facility Guarantee, of BI to at least the same extent as the
Guarantee Obligations are subordinated to the Credit Facility Guarantee.
SECTION 13.4 Default on Credit Facility Guarantee.
------------------------------------
BI may not make any payment pursuant to the Guarantee Obligations
("pay its Guarantee") if the Credit Facility Guarantee is not paid when due
unless the Credit Facility Guarantee has been paid or discharged in full;
provided, however, that BI
59
may pay its Guarantee without regard to the foregoing if BI and the Trustee
receive written notice approving such payment from the representative of the
holders of the Credit Facility Guarantee.
SECTION 13.5 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 Guarantee
and pay it over to them or their representative as their interests may appear.
SECTION 13.6 Relative Rights.
---------------
This Article 13 defines the relative rights of holders of Notes and
holders of the Credit Facility Guarantee. Nothing in this Indenture shall:
(1) impair, as between BI and the holders of Notes, the obligation
of BI, 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 BI under its Guarantee Obligations,
subject to the rights of holders of the Credit Facility Guarantee to
receive distributions otherwise payable to holders of Notes.
SECTION 13.7 Rights of Trustee and Paying Agent.
----------------------------------
The Trustee or Paying Agent may continue to make payments pursuant
to the Guarantee and shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments unless BI and a trust
officer of the Trustee receives written notice from the representative of the
Credit Facility Guarantee that payments may not be made under this Article 13.
SECTION 13.8 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 Guarantee for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
such Credit Facility Guarantee, 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 the Credit Facility
60
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 13.9 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 Guarantee as provided in this Article 13 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 13.10 Trustee not Fiduciary for Holders of the Credit Facility
--------------------------------------------------------
Guarantee.
---------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Credit Facility Guarantee 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 such Credit
Facility Guarantee shall be entitled by virtue of this Article 13 or otherwise.
SECTION 13.11 Execution and Delivery of Guarantee.
-----------------------------------
To evidence its Guarantee with respect to the Notes, BI hereby agrees to
execute the 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 BI by an Authorized Representative and
attested by its Secretary or one of its Assistant Secretaries or an Authorized
Representative. The signature of any of these officers on the Guarantee may be
manual or facsimile.
A Guarantee bearing the manual or facsimile signatures of the
individuals who were the proper officers of BI shall bind BI, 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.
The delivery of any Notes by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed
thereon on behalf of BI. BI 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 13.12 Limitation of BI's Liability.
----------------------------
61
BI, 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 the Guarantee constitute or result in a fraudulent transfer or
conveyance for purposes of, or resulting 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 the
Guarantee Obligations, if any, 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 BI under its 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.
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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: _________________________
[ ], as Trustee
By:________________________________
Name: _________________________
Title: _________________________
63
EXHIBIT A
---------
FORM OF NOTE
EXHIBIT B
---------
FORM OF NOTATION RELATING TO GUARANTEED