FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1994
Commission file number 1-4372
FOREST CITY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-0863886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10800 Brookpark Road Cleveland, Ohio 44130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-267-1200
None
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 22, 1994
Class A Common Stock, $.33 1/3 par value 5,146,226 shares
Class B Common Stock, $.33 1/3 par value 3,845,388 shares
FOREST CITY ENTERPRISES, INC.
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Forest City Enterprises, Inc. and Subsidiaries:
Consolidated Balance Sheets - July 31, 1994
(Unaudited) and January 31, 1994 3-4
Consolidated Statements of Earnings and Retained
Earnings (Unaudited) - Three and Six Months Ended
July 31, 1994 and 1993 5
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended July 31, 1994 and 1993 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Part II. Other Information:
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
PART I - FINANCIAL INFORMATION
<TABLE>
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
July 31, 1994 January 31, 1994
------------- ----------------
(Unaudited)
(in thousands)
<S> <C> <C>
Assets
Real Estate
Completed rental properties $2,149,472 $2,116,557
Projects under development 235,768 214,111
Land held for development or sale 68,057 74,398
---------- ----------
2,453,297 2,405,066
Less accumulated depreciation (307,514) (282,313)
---------- ----------
Total Real Estate 2,145,783 2,122,753
Cash 11,879 21,798
Notes and accounts receivable, net of allowance
for doubtful accounts of $5,174 and $5,322,
respectively 240,726 252,009
Inventories and construction contracts
in progress 36,346 63,220
Investments in and advances to affiliates 63,808 59,891
Other assets 147,156 148,386
---------- ----------
$2,645,698 $2,668,057
========== ==========
Liabilities and Shareholders' Equity
Liabilities
Mortgage debt, nonrecourse $1,947,347 $1,930,999
Accounts payable and accrued expenses 342,982 361,023
Notes payable 13,324 39,183
Long-term debt 99,571 95,452
Deferred income taxes 69,471 69,449
Deferred profit 26,883 26,509
---------- ----------
Total Liabilities 2,499,578 2,522,615
---------- ----------
Shareholders' Equity
Preferred stock - convertible, without par
value; 1,000,000 shares authorized;
no shares issued - -
Common stock - $.33 1/3 par value
Class A, 16,000,000 shares authorized;
5,146,226 shares outstanding 1,715 1,715
Class B, convertible, 6,000,000 shares
authorized; 3,845,388 shares
outstanding 1,282 1,282
---------- ----------
2,997 2,997
Additional paid-in capital 45,511 45,511
Retained earnings 97,612 96,934
---------- ----------
Total Shareholders' Equity 146,120 145,442
---------- ----------
$2,645,698 $2,668,057
========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
(dollars in thousands, except
per share data)
<S> <C> <C> <C> <C>
Sales and operating revenues $130,533 $114,905 $242,429 $242,810
Interest and other income 2,934 3,774 7,550 5,757
-------- -------- -------- --------
Total revenues 133,467 118,679 249,979 248,567
Operating expenses 86,768 73,526 160,038 157,877
Interest expense 30,795 27,716 60,697 55,382
Depreciation and amortization 16,785 16,068 32,435 31,457
Gain (loss) on disposition of properties - (9) - 375
-------- -------- -------- --------
Earnings (loss) before income taxes
and extraordinary gain (881) 1,360 (3,191) 4,226
-------- -------- -------- --------
Income taxes
Current 834 149 (538) 300
Deferred (922) 1,032 22 2,424
-------- -------- -------- --------
(88) 1,181 (516) 2,724
-------- -------- -------- --------
Net earnings (loss) before
extraordinary gain (793) 179 (2,675) 1,502
Extraordinary gain, net of tax - - 3,353 -
-------- -------- -------- --------
Net earnings (loss) (793) 179 678 1,502
Retained earnings at beginning of period 98,405 96,045 96,934 94,722
-------- -------- -------- --------
Retained earnings at end of period $ 97,612 $ 96,224 $ 97,612 $ 96,224
======== ======== ======== ========
Per common share
Net earnings (loss) before
extraordinary gain $ (.09) $ .02 $ (.30) $ .17
Extraordinary gain, net of tax - - .37 -
-------- -------- -------- --------
Net earnings (loss) $ (.09) $ .02 $ .07 $ .17
======== ======== ======== ========
Weighted average common shares outstanding 8,991,614 8,991,614 8,991,614 8,991,614
========= ========= ========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended July 31,
-------------------------
1994 1993
---- ----
(in thousands)
<S> <C> <C>
Operating Activities
Net earnings $ 678 $ 1,502
Depreciation and amortization 32,435 31,457
Deferred income taxes 22 2,424
Accrued interest of a rental property
not payable until future years 6,825 2,760
Extraordinary gain (5,656) -
Gain on disposition of properties - (375)
Decrease in land held for development or sale 6,341 2,009
Decrease in notes and
accounts receivable, net 11,283 73,467
(Increase) decrease in inventories and
construction contracts in progress 26,874 (192)
(Increase) in other assets (5,961) (14,949)
(Decrease) in accounts payable and
accrued expenses (24,866) (47,159)
Increase in deferred profit 374 1,405
-------- --------
Net cash provided by operating activities 48,349 52,349
-------- --------
Investing Activities
Capital expenditures (54,615) (28,354)
(Increase) decrease in investments
in and advances to affiliates (3,917) 1,894
-------- --------
Net cash used in investing activities (58,532) (26,460)
-------- --------
Financing Activities
Increase in mortgage and long-term debt 55,985 16,032
Payments on long-term debt (11,590) (13,651)
Principal payments on mortgage debt
on real estate (18,272) (15,324)
Increase in notes payable 434 2,465
Payments on notes payable (26,293) (35,882)
Net cash provided by (used in) -------- --------
financing activities 264 (46,360)
-------- --------
Net (decrease) in cash (9,919) (20,471)
Cash at beginning of period 21,798 41,483
-------- --------
Cash at end of period $ 11,879 $ 21,012
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. During the first quarter of 1994, the Company and its partners
restructured the nonrecourse debt on Robinson Town Center Plaza, a
community strip shopping center located in Robinson Township near the
Greater Pittsburgh International Airport. As part of this transaction,
approximately $5,700,000 in debt was forgiven by the lender. As a
result of this transaction, the Company recorded an extraordinary gain,
net of tax, of $3,353,000 during the quarter ended April 30, 1994.
B. Effective July 25, 1994, the Company replaced its six-year term loan,
its $15,000,000 short-term line of credit and its seven-year term loan
with a seven-year, $70,000,000 term loan and a three-year, $70,000,000
revolving credit agreement. Quarterly principal payments of $2,500,000
on the seven-year term loan will commence October 1, 1994. The
revolving credit agreement allows for up to $20,000,000 in outstanding
letters of credit, which shall reduce the revolving credit portion
available to the Company. At its maturity, the revolving credit
agreement may be renewed annually or converted to a seven-year term loan
by the Company. The seven-year term loan and revolving credit agreement
provides, among other things, for 1) interest rates ranging from 1/4% to
3/4% over the prime rate or 2% to 2-1/2% over the London Interbank
Offered Rate ("LIBOR"); 2) the maintenance of a specified level of net
worth and cash flow (as defined); and 3) a restriction on dividend
payments.
PART I - FINANCIAL INFORMATION (CONTINUED)
The enclosed financial statements have been prepared on a basis
consistent with accounting principles applied in the prior periods and reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results of operations for the periods presented. All such
adjustments were of a normal recurring nature. Results of operations for the
three and six months ended July 31, 1994 and 1993 are not necessarily
indicative of results of operations which may be expected for the full year.
The following discussion and analysis of business segments of Forest
City Enterprises, Inc. and all majority-owned subsidiaries ("Company") should
be read in conjunction with the financial statements and the footnotes thereto
contained in the January 31, 1994 annual report ("Form 10-K").
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Earnings Before Depreciation and Deferred Taxes from Operations ("EBDT")
increased 12% for the quarter ended July 31, 1994 to $20,421,000 from
$18,205,000 for the second quarter of fiscal 1993. EBDT consists of net
earnings before gain on disposition of properties and the provision for
decline in real estate plus noncash charges from real estate operations of
depreciation and amortization, deferred income taxes and accrued interest on
mortgage notes of a rental property that is not payable until future years.
EBDT for the six months ended July 31, 1994 rose by 8% to $39,457,000 versus
$36,568,000 for the first six months of 1993.
Consolidated sales and operating revenues were $130,533,000 for the
three months ended July 31, 1994 versus $114,905,000 for the quarter ended
July 31, 1993. Consolidated sales and operating revenues were $242,429,000
for the six months ended July 31, 1994 versus $242,810,000 for the comparable
period in 1993.
The net loss from operations, including gain on disposition of
properties, was $793,000 for the quarter ended July 31, 1994 as compared to
net earnings from operations for the quarter ended July 31, 1993 of $179,000.
The net loss from operations for the six months ended July 31, 1994 was
$2,675,000 versus net earnings of $1,502,000 for the comparable period in
1993. The gain on disposition of properties, net of tax, which varies from
year to year and is not considered by management to be a part of the on-going
results of operations, was a loss of $6,000 for the quarter ended July 31,
1993 and net earnings of $230,000 for the six months ended July 31, 1993.
There was no gain on disposition of properties for the first six months of
1994.
The Company also recorded an extraordinary gain, net of tax, of
$3,353,000 during the quarter ended April 30, 1994. This resulted from the
restructuring of the nonrecourse debt on Robinson Town Center Plaza, a
community strip shopping center located in Robinson Township near the Greater
Pittsburgh International Airport. As a part of the transaction, approximately
$5,700,000 in debt was forgiven by the lender.
INVESTMENT REAL ESTATE - FOREST CITY RENTAL PROPERTIES CORPORATION
The Company conducts the development and management of its real estate
portfolio through Forest City Rental Properties Corporation. Sales and
operating revenues increased to $94,615,000 for the quarter ended July 31,
1994 from $91,339,000 for the second quarter of 1993. Sales for the six
months ended July 31, 1994 were $188,875,000 versus $180,714,000 for the first
six months of 1993. Although the Company has not opened any new properties as
a result of its development program during 1994, the acquisition of two multi-
family projects and an improvement in occupancy during the first six months of
1994 account for much of the increase in revenues. The net loss before gain
on disposition of properties for the quarter ended July 31, 1994 was
$1,464,000 versus a net loss of $67,000 for the second fiscal quarter of 1993.
For the six months ended July 31, 1994, net earnings were $580,000 versus a
net loss of $1,140,000 for the comparable period in 1993.
LAND DIVISION
The sales of residential, commercial and industrial land were $14,069,000 for
the second quarter of 1994 versus $6,972,000 for the comparable period in
1993. Revenues for the six months ended July 31, 1994 were $18,355,000 versus
$19,879,000 for the first six months of 1993. Pretax earnings were virtually
break-even at $2,000 for the quarter ended July 31, 1994 versus pretax
earnings of $919,000 for the three months ended July 31, 1993. The pretax
loss for the six months ended July 31, 1994 was $1,121,000 versus pretax
earnings of $3,559,000 for the first half of 1993. During the first six
months of 1993, the Company completed the sale of a multi-family parcel in
Northeast Ohio as well as the sale of a commercial parcel at one of our
shopping centers. There were no such significant individual sales during the
first six months of 1994. In addition, in 1994 the Company is incurring
interest expense on the debt of a joint venture which is in its initial stages
of development. The Company anticipates that sales from the joint venture
will occur during the second half of 1994. Sales of land and related earnings
vary from period to period, depending upon management's decisions regarding
the disposition of significant land holdings.
RESIDENTIAL DEVELOPMENT DIVISION
Revenues for the three months ended July 31, 1994 were $554,000 versus
revenues of $764,000 for the quarter ended July 31, 1993. The pretax loss was
$315,000 for the second quarter of 1994 as compared to pretax income of
$433,000 for the quarter ended July 31, 1993. Revenues for the six months
ended July 31, 1994 were $1,095,000 versus revenues of $1,360,000 for the six
months ended July 31, 1993. Earnings before income taxes were $121,000 for
the first six months of 1994 versus pretax earnings of $756,000 for the six
months ended July 31, 1993. This division's efforts are directed toward
acquiring completed real estate at favorable prices for the Company's
portfolio and continuing to oversee the operations of properties syndicated in
prior years. In addition to earning acquisition fees, the Company also earns
certain management incentive fees from syndicated properties.
WHOLESALE LUMBER DIVISION
Forest City Trading Group's revenues were $21,295,000 for the quarter ended
July 31, 1994 versus revenues of $15,830,000 for the second quarter of 1993.
Revenues for the six months ended July 31, 1994 were $34,104,000 versus
revenues of $40,857,000 for the six months ended July 31, 1993. Pretax
earnings from this division, including earnings from the Company's building
materials business which are accounted for on the equity method, were
$3,273,000 for the quarter ended July 31, 1994 versus $770,000 for the second
quarter of 1993. The pretax loss for the six months ended July 31, 1994 was
$259,000 versus pretax earnings of $3,185,000 for the six months ended July
31, 1993. The decrease in revenues and profitability for the six months ended
July 31, 1994 is due to the steep decline in the market price of lumber that
occurred during the first quarter of 1994 and the associated negative impact
upon the division's physical inventory. Physical inventory levels had grown
during 1993 due to market price increases and the volume of trading. When the
market price of lumber fell during the first quarter of 1994, the division
sold its physical inventory at a loss. All of the loss related to the
physical inventory has been accrued. Market conditions and the Company's
resulting profitability improved significantly during the second quarter of
1994 as reflected by both an increase in revenues and profitability.
FINANCIAL CONDITION AND LIQUIDITY
The net cash provided by operating activities was $48,349,000 and $52,349,000
during the six months ended July 31, 1994 and 1993, respectively. The
reduction in cash provided by operating activities in the first half of fiscal
1994 as compared to the first six months of fiscal 1993 is primarily the
result of two events: 1) the Company's lumber brokerage subsidiary revised
its debt agreement in fiscal 1993, resulting in a decrease in accounts
receivable that was only partially offset by a decrease in accounts payable;
there was no similar fluctuation in 1994; and 2) the market price of lumber
declined in 1994, leading to a reduction in both volume and price of the
Company's lumber brokerage subsidiary's physical inventory during 1994.
Net cash used in investing activities was $58,532,000 for the first six
months of fiscal 1994, an increase of $32,072,000 over cash used in the
comparable period in 1993. Net cash provided by financing activities for the
six months ended July 31, 1994 provided cash of $264,000 versus cash used of
$46,360,000 for the same period in 1993. The Company acquired two apartment
buildings in 1994 which resulted in an increase in capital expenditures and
mortgage debt in 1994 as compared to 1993. On-going development activity also
is reflected in the increase in capital expenditures. Mortgage debt increased
in 1994 over 1993 due to debt issued by Granite Development Partners, L.P.
Payments on notes payable during the first half of fiscal 1994 was less than
the same period in 1993 due to the change in debt agreements at the Company's
lumber brokerage subsidiary that occurred in the first half of 1993.
The Company's wholly-owned real estate subsidiary, Forest City Rental
Properties Corporation, renegotiated the unsecured corporate banking line of
credit during the quarter ended July 31, 1994. The Company's two term loans
that totaled $91,250,000 at January 31, 1994 and its $15,000,000 short-term
line of credit were replaced by a $70,000,000 term loan and a $70,000,000
revolving credit agreement. The $70,000,000 term loan is a seven-year
agreement providing for interest to be payable monthly at rates based on LIBOR
plus an increment ranging from 2% in years one through three to 2-1/4% in
years four and five and 2-1/2% in years six and seven. Principal payments of
$2,500,000 will be made quarterly, beginning October 1, 1994. The $70,000,000
revolving credit agreement is for a three-year period with interest payable
monthly based on LIBOR plus 2%. At termination, the Company and the banks may
agree to renew the revolver or the Company may convert it to a seven-year term
loan with the same principal repayment and interest rate terms as the
$70,000,000 term loan.
During 1991, the Company borrowed $10,000,000 from a related party who
was also a shareholder. The balance outstanding on this loan at July 31, 1994
was $8,826,000. This loan is secured by selected real estate assets of the
Company and collections on a note receivable.
The Company's mortgage debt, all of which is nonrecourse, totaled
$1,947,347,000 at July 31, 1994. The Company has followed a policy of
obtaining debt which is nonrecourse to the Company. However, the Company does
guarantee the completion of the initial construction of certain projects.
During 1993 and 1994, certain loans matured which were either extended or
refinanced. Just as we have been able to refinance our debt that has matured
in the past, we expect to either extend the maturity date on our loans as they
come due in 1994 or refinance the projects.
The Company's lumber brokerage subsidiary has a three-year agreement
maturing July 31, 1996 under which it is selling an undivided ownership
interest in a pool of accounts receivable up to a maximum of $80,000,000. The
Company also has a bank line of credit of $40,000,000 with the right to borrow
an additional $10,000,000 for up to ninety days through May 31, 1995. At July
31, 1994, $1,076,000 was outstanding under this line of credit.
The sources of liquidity of the Company and its subsidiaries are unused
bank lines, cash flow from operations, refinancings of rental properties with
larger mortgages and sales of real estate. The sources of funds have been
and, to a lesser extent, will continue to be used principally for the
development of additional real estate projects, the acquisition of existing
real estate and the repayment of recourse debt. Now that the Company's
development program has diminished and the properties are completing their
lease up, we are experiencing an increase in cash flow from operations. This
has had a positive impact upon the Company's liquidity.
The Company has historically invested a significant amount of equity in
its projects during their development and construction phases. Forest City
generally mortgages the properties owned by Forest City Rental Properties on
an intermediate- to long-term nonrecourse basis with maturities ranging from 5
years and higher to the extent that funds are available on acceptable terms.
Rental Properties has financed most of its development and construction
projects with shorter- to intermediate-term bank loans bearing floating rates
of interest. We now have begun a program of securitizing our nonrecourse debt
on a longer-term basis.
The Company has a substantial amount of variable-rate debt which enables
it to benefit from historically low interest rates. In past years, the
Company has purchased interest rate protection on a portion of its debt to
provide protection against significant increases in interest rates. The
Company has elected to purchase interest rate protection on a substantial
portion of its debt through July 31, 1995. Increases in interest rates still
could have a negative impact upon the Company to the extent that it has
variable-rate debt that is not covered by interest rate protection. The
Company will continue to review the various components of its variable-rate
debt structure and purchase interest rate protection as it deems appropriate.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various claims and lawsuits incidental to its
business. The Company's General Counsel is of the opinion that, except for
the claims discussed below which may or may not have a material effect, none
of the other claims and lawsuits will have a material adverse effect on the
Company.
The Company holds a partnership interest in Grant Liberty Development
Group Associates ("GLDGA"). GLDGA and Metropolitan Life Insurance Company
("Metropolitan") hold ownership interests of 40% and 60%, respectively, in
Liberty Center Venture ("Partnership"). Metropolitan is also the holder of
the nonrecourse mortgage which encumbers the property held by the Partnership.
In July 1990, GLDGA initiated an action against Metropolitan alleging
Metropolitan violated its fiduciary duty to the Partnership by refusing to
refinance or reduce the interest rate on the mortgage and by making decisions
detrimental to the Partnership. Subsequently, in March 1991, Metropolitan
filed an action against the Partnership to foreclose on the mortgage and
obtain title to the property. Subsequent thereto, a receiver had been
appointed to manage the property.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
No. 10.1 - Credit Agreement, dated as of July 25, 1994, among Forest
City Rental Properties Corporation, the banks named therein and
Society National Bank, as Agent.
No. 10.2 - Guaranty of Payment of Debt, dated as of July 25, 1994,
between Forest City Enterprises, Inc. and the banks named therein.
(b) Reports on Form 8-K filed for the three months ended July 31, 1994:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOREST CITY ENTERPRISES, INC.
(Registrant)
Date September 13, 1994 /s/ Thomas G. Smith
Thomas G. Smith, Senior Vice President,
Chief Financial Officer and Secretary
Date September 13, 1994 /s/ D. Layton McCown
D. Layton McCown, Vice President,
Corporate Controller and Chief
Accounting Officer
Exhibits Filed Electronically
The following exhibits are included in this electronic filing and are located
after this index.
Exhibit No. 10.1 - Credit Agreement, dated as of July 25, 1994,
among Forest City Rental Properties Corporation, the banks named
therein and Society National Bank, as Agent.
Exhibit No. 10.2 - Guaranty of Payment of Debt, dated as of July
25, 1994, between Forest City Enterprises, Inc. and the banks
named therein.
CREDIT AGREEMENT
by and among
FOREST CITY RENTAL PROPERTIES CORPORATION
as Borrower
and
SOCIETY NATIONAL BANK
NATIONAL CITY BANK
THE HUNTINGTON NATIONAL BANK
COMERICA BANK
AND
FIRST NATIONAL BANK OF OHIO
as Banks
and
SOCIETY NATIONAL BANK
as Agent for the Banks
Dated as of July 25, 1994
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TERM LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.01(a) INITIAL TERM LOANS. . . . . . . . . . . . . . . . . 8
SECTION 2.01(b) REPAYMENT OF INITIAL TERM LOANS . . . . . . . . . . 8
SECTION 2.02(a) ADDITIONAL TERM LOANS ON CONVERSION
OF REVOLVING LOANS. . . . . . . . . . . . . . . . . 8
SECTION 2.02(b) REPAYMENT OF ADDITIONAL TERM LOANS. . . . . . . . . 9
SECTION 2.03 TERM NOTES. . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04 INTEREST ON TERM LOANS. . . . . . . . . . . . . . . 9
ARTICLE III
REVOLVING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.01 AMOUNT OF THE REVOLVING LOAN FACILITY . . . . . . . 10
SECTION 3.02 REVOLVING LOAN COMMITMENTS. . . . . . . . . . . . . 10
SECTION 3.03 REVOLVING LOANS . . . . . . . . . . . . . . . . . . 10
SECTION 3.04 PURPOSE OF THE REVOLVING LOANS. . . . . . . . . . . 11
SECTION 3.05 REVOLVING LOAN NOTES. . . . . . . . . . . . . . . . 11
SECTION 3.06 LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 12
SECTION 3.07 REPAYMENT OF THE REVOLVING LOAN NOTES . . . . . . . 13
SECTION 3.08 INTEREST ON THE REVOLVING LOAN NOTES. . . . . . . . 13
ARTICLE IV
INTEREST ON THE TERM LOANS AND THE REVOLVING LOANS. . . . . . . . . 13
SECTION 4.01(a) INTEREST OPTIONS. . . . . . . . . . . . . . . . . . 13
SECTION 4.01(b) LIBOR RATE OPTION . . . . . . . . . . . . . . . . . 14
SECTION 4.01(c) PRIME RATE OPTION . . . . . . . . . . . . . . . . . 14
SECTION 4.01(d) INDICATED SPREAD. . . . . . . . . . . . . . . . . . 14
SECTION 4.02 INTEREST PERIODS. . . . . . . . . . . . . . . . . . 15
SECTION 4.03 INTEREST PAYMENT DATES. . . . . . . . . . . . . . . 16
SECTION 4.04 INTEREST CALCULATIONS . . . . . . . . . . . . . . . 16
SECTION 4.05 POST-DEFAULT RATE . . . . . . . . . . . . . . . . . 16
SECTION 4.06 RESERVES OR DEPOSIT REQUIREMENTS, ETC . . . . . . . 16
SECTION 4.07 TAX LAW, ETC. . . . . . . . . . . . . . . . . . . . 17
SECTION 4.08 INDEMNITY . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.09 EURODOLLAR DEPOSITS UNAVAILABLE OR
INTEREST RATE UNASCERTAINABLE . . . . . . . . . . . 18
SECTION 4.10 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL . . . 19
SECTION 4.11 FUNDING . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
AGREEMENTS AND CONDITIONS APPLICABLE TO ALL LOANS . . . . . . . . . 20
SECTION 5.01 CONDITIONS TO LOANS . . . . . . . . . . . . . . . . 20
SECTION 5.02 PAYMENT ON NOTES, ETC . . . . . . . . . . . . . . . 20
SECTION 5.03 PREPAYMENT. . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.04 COMMITMENT FEES . . . . . . . . . . . . . . . . . . 22
SECTION 5.05 CLOSING FEE . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.06 AGENT FEE. . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.07 COMPENSATION FOR ADDITIONAL COSTS; CAPITAL ADEQUACY 22
ARTICLE VI
OPENING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.01 CORPORATE AND LOAN DOCUMENTS. . . . . . . . . . . . 24
SECTION 6.02 OPINION OF COUNSEL FOR PARENT . . . . . . . . . . . 25
SECTION 6.03 OPINION OF COUNSEL FOR BORROWER . . . . . . . . . . 25
SECTION 6.04 TERMINATION OF OLD CREDIT AGREEMENT . . . . . . . . 26
SECTION 6.05 TERMINATION OF SNB CREDIT AGREEMENT . . . . . . . . 26
SECTION 6.06 MODIFICATION OF RITZ CARLTON DOCUMENTS. . . . . . . 26
ARTICLE VII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.01 PAYMENT OF AMOUNTS DUE. . . . . . . . . . . . . . . 26
SECTION 7.02 EXISTENCE, BUSINESS, ETC. . . . . . . . . . . . . . 26
SECTION 7.03 MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . 26
SECTION 7.04 PAYMENT OF TAXES, ETC . . . . . . . . . . . . . . . 27
SECTION 7.05 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 27
SECTION 7.06 INSPECTION. . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.07 ENVIRONMENTAL COMPLIANCE. . . . . . . . . . . . . . 28
SECTION 7.08 PLAN. . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.09 INSURANCE . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.10 MONEY OBLIGATIONS . . . . . . . . . . . . . . . . . 30
SECTION 7.11 RECORDS . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.12 FRANCHISES. . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.13 NOTICE. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.14 COMBINATIONS. . . . . . . . . . . . . . . . . . . . 31
SECTION 7.15 BULK TRANSFERS. . . . . . . . . . . . . . . . . . . 31
SECTION 7.16 BORROWINGS. . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.17 LIENS . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.18 LOANS . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.19 GUARANTEES. . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.20 GROSS CASH FLOW . . . . . . . . . . . . . . . . . . 35
SECTION 7.21 POST-CLOSING ITEMS. . . . . . . . . . . . . . . . . 35
SECTION 7.22 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . 36
SECTION 7.23 AMENDMENT OF ARTICLES OF INCORPORATION
AND/OR REGULATIONS. . . . . . . . . . . . . . . . . 36
SECTION 7.24 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.25 REGULATION U. . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 36
SECTION 8.01 EXISTENCE . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.02 RIGHT TO ACT. . . . . . . . . . . . . . . . . . . . 37
SECTION 8.03 BINDING EFFECT. . . . . . . . . . . . . . . . . . . 37
SECTION 8.04 LITIGATION. . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.05 EMPLOYEE RETIREMENT INCOME SECURITY ACT . . . . . . 38
SECTION 8.06 ENVIRONMENTAL COMPLIANCE. . . . . . . . . . . . . . 38
SECTION 8.07 SOLVENCY. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.08 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 39
SECTION 8.09 DEFAULTS. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.10 OPERATIONS. . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.11 TITLE TO PROPERTIES; PATENTS, TRADE MARKS, ETC. . . 39
SECTION 8.12 COMPLIANCE WITH OTHER INSTRUMENTS . . . . . . . . . 40
SECTION 8.13 MATERIAL RESTRICTIONS . . . . . . . . . . . . . . . 40
SECTION 8.14 CORRECTNESS OF DATA FURNISHED . . . . . . . . . . . 40
SECTION 8.15 TAXES . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.16 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . 41
SECTION 8.17 REGULATION U, ETC . . . . . . . . . . . . . . . . . 41
SECTION 8.18 HOLDING COMPANY ACT . . . . . . . . . . . . . . . . 42
SECTION 8.19 SECURITIES ACT, ETC . . . . . . . . . . . . . . . . 42
SECTION 8.20 INVESTMENT COMPANY ACT. . . . . . . . . . . . . . . 42
SECTION 8.21 INDEBTEDNESS OF SUBSIDIARIES. . . . . . . . . . . . 42
SECTION 8.22 GUARANTEES. . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.01 PAYMENTS. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.02 COVENANTS . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.03 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 43
SECTION 9.04 CROSS DEFAULT . . . . . . . . . . . . . . . . . . . 43
SECTION 9.05 TERMINATION OF PLAN . . . . . . . . . . . . . . . . 44
SECTION 9.06 DOMESTIC SUBSIDIARY'S SOLVENCY. . . . . . . . . . . 44
SECTION 9.07 BORROWER'S SOLVENCY . . . . . . . . . . . . . . . . 45
SECTION 9.08 PARENT DEFAULT. . . . . . . . . . . . . . . . . . . 46
ARTICLE X
REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.01 OPTIONAL DEFAULTS . . . . . . . . . . . . . . . . . 46
SECTION 10.02 AUTOMATIC DEFAULTS. . . . . . . . . . . . . . . . . 46
SECTION 10.04 OFFSETS . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.05 EQUALIZATION PROVISION. . . . . . . . . . . . . . . 47
ARTICLE XI
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.01 APPOINTMENT AND AUTHORIZATION . . . . . . . . . . . 48
SECTION 11.02 NOTE HOLDERS. . . . . . . . . . . . . . . . . . . . 49
SECTION 11.03 CONSULTATION WITH COUNSEL . . . . . . . . . . . . . 49
SECTION 11.04 DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.05 AGENT AND AFFILIATES. . . . . . . . . . . . . . . . 49
SECTION 11.06 KNOWLEDGE OF DEFAULT. . . . . . . . . . . . . . . . 49
SECTION 11.07 ACTION BY AGENT . . . . . . . . . . . . . . . . . . 49
SECTION 11.08 NOTICES, DEFAULT, ETC . . . . . . . . . . . . . . . 50
SECTION 11.09 INDEMNIFICATION . . . . . . . . . . . . . . . . . . 50
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.01 BANKS' INDEPENDENT INVESTIGATION. . . . . . . . . . 50
SECTION 12.02 NO WAIVER; CUMULATIVE REMEDIES. . . . . . . . . . . 51
SECTION 12.03 AMENDMENTS, CONSENTS. . . . . . . . . . . . . . . . 51
SECTION 12.04 NOTICES . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.05 COSTS, EXPENSES AND TAXES . . . . . . . . . . . . . 52
SECTION 12.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . 53
SECTION 12.07 OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS . . . 53
SECTION 12.08 EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . 53
SECTION 12.09 BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . 53
SECTION 12.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . 54
SECTION 12.11 SEVERABILITY OF PROVISIONS; CAPTIONS. . . . . . . . 54
SECTION 12.12 PURPOSE . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.13 ADDITIONAL BANKS. . . . . . . . . . . . . . . . . . 54
SECTION 12.14 CONSENT TO JURISDICTION . . . . . . . . . . . . . . 54
SECTION 12.15 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . 54
SECTION 12.16 JURY TRIAL WAIVER . . . . . . . . . . . . . . . . . 55
EXHIBITS and SCHEDULES
C R E D I T A G R E E M E N T
Credit Agreement, effective as of July 25,
1994, between FOREST CITY RENTAL PROPERTIES CORPORATION, an
Ohio corporation (hereinafter sometimes called the
"Borrower"), the banking institutions named in Exhibit A
attached hereto and made a part hereof (hereinafter
sometimes collectively called the "Banks" and individually
"Bank") and SOCIETY NATIONAL BANK, Cleveland, Ohio, as
Agent for the Banks under this Credit Agreement
(hereinafter sometimes called the "Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower and the Banks desire
to contract for the establishment of credits in the
aggregate principal amounts hereinafter set forth, to be
made available to the Borrower upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as
follows:
ARTICLE I
DEFINITIONS
As used in this Credit Agreement, the
following terms shall have the following meanings:
"Additional Term Loan" shall have the
meaning set forth in Section 2.02(a) hereof.
"Advantage" shall mean any payment (whether
made voluntarily or involuntarily, by offset of any deposit
or other indebtedness or otherwise) received by any Bank in
respect of Borrower's Debt to the Banks if such payment
results in that Bank having a lesser share of Borrower's
Debt to the Banks, than was the case immediately before
such payment.
"Agent" means Society National Bank, in its
capacity as agent for the Banks hereunder, and its
successors in such capacity.
"Authorized Fiscal Officer" shall have the
meaning set forth in Section 3.03 hereof.
"Bank" means each bank listed on the
signature pages hereof and its successors and assigns.
"Borrower" means Forest City Rental
Properties Corporation, an Ohio corporation.
"Cleveland Banking Day" shall mean a day on
which the main office of the Agent is open for the
transaction of business and on which banks are open in
Michigan.
"Closing Date" means July 25, 1994.
"Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Commitment" shall mean the obligation
hereunder of each Bank to make Term Loans and, until the
Termination Date, Revolving Loans up to the amount set
opposite such Bank's name under the column headed "Maximum
Amount" as set forth on Exhibit A hereof (or such lesser
amount as shall be determined pursuant to Section 3.02(b)
hereof).
"Company" means Borrower or a Subsidiary.
"Controlled Group" shall mean a controlled
group of corporations as defined in Section 1563 of the
Code, of which Borrower or any Subsidiary is a part.
"Credit Agreement" means this Credit
Agreement as the same may be from time to time amended,
supplemented, modified, extended and/or restated.
"Debt" shall mean, collectively, all
indebtedness incurred by Borrower to the Banks pursuant to
this Credit Agreement and includes the principal of and
interest on all Notes and each extension, renewal or
refinancing thereof in whole or in part, the stated amounts
of all letters of credit issued by the Agent or the Banks
hereunder, and the fees and any prepayment premium payable
hereunder (but not including indebtedness held by any Bank
arising and outstanding under any transaction or document
referred to in Sections 6.06, 7.16 (other than referred to
in subclause (i) thereof), and/or 7.19 of this Credit
Agreement).
"Domestic Subsidiary" shall mean any
Subsidiary organized under the laws of any state of the
United States of America which conducts the major portion
of its business within the United States.
"Draw" shall have the meaning set forth in
Section 3.06 hereof.
"Environmental Laws" shall mean all
provisions of law, statutes, ordinances, rules,
regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards
promulgated by the government of the United States of
America or by any state or municipality thereof or by any
court, agency, instrumentality, regulatory authority or
commission of any of the foregoing concerning health,
safety and protection of, or regulation of the discharge of
substances into, the environment.
"Event of Default" means any condition or
event which constitutes an Event of Default or which with
the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default as such term is
defined in Article IX hereof.
"Funded Indebtedness" means indebtedness
which (including any renewal or extension in whole or in
part) matures or remains unpaid more than twelve months
after the date on which originally incurred.
"Gross Cash Flow" shall have the meaning set
forth in Section 7.20 hereof.
"Guaranty" means the Guaranty of Payment of
Debt issued by the Parent to the Agent and the Banks in the
form and substance of Exhibit B hereto.
"Guaranty Default" shall mean any one or
more of the events constituting defaults under Section 10
of the Guaranty.
"Indicated Spread" shall have the meaning
set forth in Section 4.01(d) hereof.
"Initial Term Loan" shall have the meaning
set forth in Section 2.01(a) hereof.
"Interest Adjustment Date" shall mean the
last day of each Interest Period.
"Interest Options" means the LIBOR Option
and the Prime Rate Option.
"Interest Period" shall mean a period of
one, two, three or six months, or one year (as selected by
the Borrower) commencing on the applicable borrowing or
conversion date of each Loan subject to the LIBOR Rate
Option and on each Interest Adjustment Date with respect
thereto; provided, however, that if any such period would
be affected by a reduction in the Revolving Loan Commitment
as provided in Section 3.02(b) hereof, prepayment rights as
provided in Section 5.03 hereof or maturity of Loans as
provided in Sections 2.01(b), 2.02(b), and/or 3.07 hereof,
such period shall be shortened to end on such date. If the
Borrower fails to select a new Interest Period with respect
to an outstanding Loan subject to the LIBOR Rate Option at
least two (2) London Banking Days prior to any Interest
Adjustment Date, the Borrower shall be deemed to have
selected an Interest Period of the same duration as the
immediately preceding Interest Period (subject to the
proviso of the preceding sentence). With respect only to
that portion of the Term Loans (as described in
Sections 2.01(b) and 2.02(b) hereof) which represents a
mandatory quarter-annual installment of principal, the
Borrower may not select an Interest Period the maturity of
which would extend beyond the due date of such installment
payment without becoming subject to the provisions of
Section 5.03 hereof.
"LIBOR" shall mean the average (rounded
upward to the nearest 1/16th of 1%) of the per annum rates
at which deposits in immediately available funds in United
States dollars for the relevant Interest Period and in the
amount of the principal of the Loans to be disbursed or to
remain outstanding during such Interest Period, as the case
may be, are offered to the Reference Banks by prime banks
in any Eurodollar market reasonably selected by the
Reference Banks, determined as of 11:00 a.m. London time
(or as soon thereafter as practicable), two (2) London
Banking Days prior to the beginning of the relevant
Interest Period. In the event one or more of the Reference
Banks fail to furnish its quote of any rate required
herein, such rate shall be determined on the basis of the
quote or quotes of the remaining Reference Bank or Banks.
"LIBOR Rate Option" means interest
determined pursuant to Section 4.01(b) and related
provisions hereof.
"Loan" means an Initial Term Loan, an
Additional Term Loan, or a Revolving Loan, and "Loans"
means Initial Term Loans, Additional Term Loans, Revolving
Loans or any combination of the foregoing.
"London Banking Day" shall mean a day on
which banks are open for business in London, England, and
quoting deposit rates for dollar deposits.
"Note" or "Notes" shall mean a note or notes
executed and delivered pursuant to Sections 2.03 and 3.05
hereof.
"Old Credit Agreement" means the Credit
Agreement dated as of July 1, 1989 among Borrower, The
Huntington National Bank, Society National Bank, National
City Bank, Bank One, Dayton, N.A., Manufacturers National
Bank of Detroit, and Ameritrust Company National
Association, n/k/a Society National Bank, for itself and as
agent, as amended.
"Parent" means Forest City Enterprises,
Inc., an Ohio corporation.
"Person" means an individual, a corporation,
a partnership, an association, a trust or any other entity
or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" shall mean any employee pension
benefit plan subject to Title IV of the Employee Retirement
Income Security Act of 1974, as amended, established or
maintained by Borrower, any Subsidiary, or any member of
the Controlled Group, or any such Plan to which Borrower,
any Subsidiary, or any member of the Controlled Group is
required to contribute on behalf of any of its employees.
"Possible Default" shall mean an event or
condition which constitutes, or which, with the lapse of
any applicable grace period or the giving of notice or both
would constitute, any event of default referred to in
Article IX hereof and/or a Guaranty Default and which has
not been appropriately waived by the Banks in writing or
fully corrected prior to becoming an actual event of
default.
"Prime Rate" shall mean that interest rate
established from time to time by Agent as Agent's Prime
Rate, whether or not such rate is publicly announced; the
Prime Rate may not be the lowest interest rate charged by
Agent for commercial or other extensions of credit.
"Prime Rate Option" means interest
determined pursuant to Section 4.01(c) and related
provisions hereof.
"Pro rata" when used with reference to the
Banks means (unless the context otherwise clearly
indicates) pro rata according to the unpaid principal
amounts owing to the respective Banks under the Notes, or,
if no principal is then owing to any Bank, according to the
Commitment, as the case may be, of the respective Bank.
"Quarterly Date" shall mean each of
January 1, April 1, July 1, and October 1.
"Reference Banks" shall mean Society
National Bank and National City Bank.
"Regulatory Change" shall mean, as to any
Bank, any change in United States federal, state or foreign
laws or regulations or the adoption or making of any
interpretations, directives or requests of or under any
United States federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or
governmental authority charged with the interpretation or
administration thereof.
"Related Writing" shall mean any Note,
assignment, mortgage, security agreement, guaranty
agreement, subordination agreement, financial statement,
audit report or other writing furnished by Borrower, the
Parent, or any of their respective officers to the Banks
pursuant to or otherwise in connection with this Credit
Agreement.
"Reportable Event" shall mean a reportable
event as that term is defined in Title IV of the Employee
Retirement Income Security Act of 1974, as amended, except
actions of general applicability by the Secretary of Labor
under Section 110 of such Act.
"Required Banks" means at any time Banks
having at least 66 2/3% of the aggregate amount of the
Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66 2/3% of
the aggregate unpaid principal amount of the Loans.
"Revolving Loans" shall have the meaning set
forth in Section 3.03 hereof.
"Revolving Loan Commitment" shall have the
meaning set forth in Section 3.02 hereof.
"Revolving Loan Note" shall mean a note
executed and delivered pursuant to Section 3.05 hereof.
"SNB Credit Agreement" means that certain
agreement between Borrower and Society National Bank
amended in June, 1994 providing for a line of credit to the
Borrower of up to $15,000,000, as amended.
"Subsidiary" shall mean an existing or
future corporation, general partnership, limited
partnership, or other entity (a) the majority of the
outstanding capital stock or partnership interests, as the
case may be, or voting power, or both, of which is (or upon
the exercise of all outstanding warrants, options and other
rights would be) owned at the time in question by Borrower
or by another such corporation, general partnership,
limited partnership or other entity or by any combination
of Borrower and any one or more such corporations, general
partnerships, limited partnerships, or other entities
and/or (b) managed by Borrower or any corporation, general
partnership, limited partnership or other entity within the
terms of subclause (a).
"Term Loans" means the Initial Term Loans
and the Additional Term Loans.
"Term Note" shall mean a note executed and
delivered pursuant to Section 2.03 hereof.
"Termination Date" means the latest of the
following dates: (a) the third anniversary of the Closing
Date, or (b) any anniversary of the Closing Date specified
as the Termination Date in any notice given by all of the
Banks, through the Agent to the Borrower one year or more
before the date that would have been the Termination Date
had such notice not been given, and that is accepted in
writing by the Borrower within fifteen (15) days of
issuance, it being understood that the Agent and the Banks
shall not be obligated to extend the Termination Date
beyond the date specified in subclause (a) above and that
the Borrower shall not be obligated to accept any such
extension.
Any accounting term not specifically defined
in this Article I shall have the meaning ascribed thereto
by generally accepted accounting principles not
inconsistent with Borrower's present accounting procedures.
The foregoing definitions shall be
applicable to the singular and plurals of the foregoing
defined terms.
ARTICLE II
TERM LOANS
SECTION 2.01(a). INITIAL TERM LOANS.
Subject to the terms and conditions of this Credit
Agreement, each Bank severally agrees that it will, on the
Closing Date, make a term loan (an "Initial Term Loan") to
the Borrower in the amount set forth opposite the name of
the Bank:
Amount of
Name of Bank Initial Term Loan
Society National Bank $26,250,000
National City Bank 13,750,000
Huntington National Bank 10,000,000
Comerica Bank 10,000,000
First National Bank of Ohio 10,000,000
-----------
TOTAL $70,000,000
The proceeds of the Initial Term Loans shall be used
exclusively to pay the indebtedness incurred by Borrower
under the Old Credit Agreement and the SNB Credit
Agreement.
SECTION 2.01(b). REPAYMENT OF INITIAL TERM
LOANS. The principal of each Initial Term Loan shall be
payable in twenty-eight consecutive quarterly installments,
each in an amount equal to the original principal amount of
the Initial Term Loan divided by twenty-eight, commencing
October 1, 1994 and continuing on each Quarterly Date
thereafter until July 1, 2001, when all remaining principal
of the Initial Term Loans shall be due and payable in full,
unless such principal becomes due and payable earlier
pursuant to the provisions of Article X hereof.
SECTION 2.02(a). ADDITIONAL TERM LOANS ON
CONVERSION OF REVOLVING LOANS. Subject to the terms and
conditions of this Credit Agreement, each Bank severally
agrees that it will, upon not less than two (2) London
Banking Days' prior written request of the Borrower to the
Agent, make a term loan (an "Additional Term Loan") to the
Borrower on the Termination Date in an amount not exceeding
the lesser of (a) the then aggregate principal amount of
Revolving Loans made by such Bank, or (b) the then amount
of the Commitment of such Bank minus the amount of the
Initial Term Loan made by such Bank to the Borrower
pursuant to Section 2.01(a) above. The proceeds of the
Additional Term Loans shall be used exclusively to pay the
Revolving Loans made by such Bank hereunder and, upon the
making of an Additional Term Loan, no additional Revolving
Loans shall be made.
SECTION 2.02(b). REPAYMENT OF ADDITIONAL
TERM LOANS. The principal of the Additional Term Loans
shall be payable in twenty-eight consecutive quarterly
installments, each in an amount equal to the original
principal amount of the Additional Term Loan divided by
twenty-eight, such payments to commence on the first
Quarterly Date next following the date on which the
Additional Term Loan is made and continuing on each
Quarterly Date thereafter until the Quarterly Date that is
the twenty-seventh Quarterly Date after but not including
the Quarterly Date on which the first such installment was
due, at which time all remaining principal of the
Additional Term Loans shall be due and payable in full,
unless such principal becomes due and payable earlier
pursuant to the provisions of Article X hereof.
SECTION 2.03. TERM NOTES. Each of the
Initial Term Loans and the Additional Term Loans made
pursuant to this Article II shall be evidenced by a term
note ("Term Note"), dated as of the date such loan is made,
payable to the order of the Bank making such Term Loan in
the aggregate principal amount of the Initial Term Loan or
Additional Term Loan, as the case may be, made by such
Bank, in the form and substance of Exhibit C hereto, and
executed and delivered by the Borrower. Notwithstanding
that more than one Term Note may be issued to each Bank,
the term "Term Note" when used in reference to any Bank
includes all the Term Notes issued to that Bank. In the
event more than one Term Note is issued to each Bank,
payments to be applied to the Term Notes shall be applied
against the various Term Notes of each Bank in such order
and amount as the Agent determines.
SECTION 2.04. INTEREST ON TERM LOANS. All
principal from time to time outstanding on the Initial Term
Loans and the Additional Term Loans shall bear interest at
the rates, and payable at the times, provided for in
Article IV hereof.
ARTICLE III
REVOLVING LOANS
The Banks hereby establish a revolving loan
facility pursuant to which Revolving Loans will be made to
the Borrower, on and subject to the terms and conditions
set forth in this Credit Agreement.
SECTION 3.01. AMOUNT OF THE REVOLVING LOAN
FACILITY. The aggregate principal amount of the Revolving
Loans outstanding from time to time shall not exceed the
sum of the amounts of the Revolving Loan Commitments in
effect at the time.
SECTION 3.02. REVOLVING LOAN COMMITMENTS.
(a) As used in this Agreement, the "Revolving Loan
Commitment" of each Bank at any time means the several
obligations of each Bank to advance, subject to the terms
and conditions set forth herein, up to one-half of the
Maximum Amount set forth for such Bank on Exhibit A hereto
on a Pro rata basis.
(b) The Borrower shall have the right at
all times to permanently reduce the Revolving Loan
Commitments in whole or in part by giving written notice of
the reduction to the Agent at least one Cleveland Banking
Day prior to the reduction, each such reduction to be equal
to at least $500,000, or the then Revolving Loan
Commitments if the then Revolving Loan Commitments are less
than $500,000. Each such reduction shall reduce each
Bank's Revolving Loan Commitment Pro rata. Concurrently
with each reduction, the Borrower shall prepay the amount,
if any, together with interest thereon by which the
aggregate unpaid principal amount of the Revolving Loans
(including the stated amounts of all letters of credit then
outstanding issued pursuant to Section 3.06 hereof) exceeds
the sum of the Revolving Loan Commitments as so reduced.
SECTION 3.03. REVOLVING LOANS. Each Bank
severally agrees, subject to the fulfillment of the terms
and conditions of this Credit Agreement, to make revolving
loans (the "Revolving Loans") to the Borrower from time to
time from and including the Closing Date until the
Termination Date. Subject to the provisions of this Credit
Agreement, Revolving Loans may be repaid in whole or in
part, and amounts so repaid may be reborrowed, but in no
event shall the aggregate principal amount of each Bank's
Revolving Loans to the Borrower exceed at any time the then
Revolving Loan Commitment of such Bank. The obligation of
the Banks to make any Revolving Loan shall, in addition to
the other conditions herein provided, be subject to:
(a) the Borrower making a request for such
Revolving Loan specifying the date the Revolving Loan
is to be made, which shall be a Cleveland Banking Day,
the amount thereof, which shall be an amount equal to
an integral multiple of $500,000, and, if any part of
the principal of the Revolving Loan is to be initially
subject to the LIBOR Rate Option, the Interest Period
selected by the Borrower therefor; and
(b) receipt of the notice specified in
subparagraph (a) above prior to 12:00 noon on a day
that is at least one (1) Cleveland Banking Day prior
to the day the proceeds of such Revolving Loan are to
be disbursed in the case of any Revolving Loan that
will be initially subject entirely to the Prime Rate
Option or at least two (2) London Banking Days prior
to the day the proceeds of such Revolving Loan are to
be disbursed in the case of any Revolving Loan that
will be initially subject in whole or in part to the
LIBOR Rate Option.
The requesting of a Revolving Loan in and of itself
constitutes a representation and warranty by the Borrower
to the Banks and the Agent that the conditions specified in
Section 5.01 hereof have been satisfied. Each oral request
for a Revolving Loan shall be made by a person designated
on Schedule 3.03 or as that Schedule may be amended from
time to time in writing by the Borrower (an "Authorized
Fiscal Officer") authorized by the Borrower to do so; and
the making of a Revolving Loan as provided herein shall
conclusively establish Borrower's obligation to repay such
Loan.
SECTION 3.04. PURPOSE OF THE REVOLVING
LOANS. The proceeds of Revolving Loans shall be used by
the Borrower to pay all indebtedness incurred under the Old
Credit Agreement and the SNB Credit Agreement not paid with
the proceeds of the Initial Term Loans and for working
capital purposes of the Borrower.
SECTION 3.05. REVOLVING LOAN NOTES. On the
Closing Date, the Borrower shall execute and deliver to the
respective Banks Revolving Loan Notes, each in the amount
of the Revolving Loan Commitment of the Bank to which
issued, in the form and substance of Exhibit D hereto. The
Revolving Loan Notes shall be subject to the terms of this
Credit Agreement.
SECTION 3.06. LETTERS OF CREDIT. The Banks
agree to make available to the Borrower letters of credit,
issued by the Agent, pursuant to their respective Revolving
Loan Commitments up to an aggregate amount at any one time
outstanding of $20,000,000. The availability of letters of
credit will be subject to (a) the Agent and the Banks being
satisfied with the terms of the letter of credit, (b) the
Borrower's executing and delivering such letter of credit
and reimbursement agreements and related documents as
required by the Agent, and (c) satisfaction of all
conditions to the Borrower obtaining a Revolving Loan in
the amount of the requested letter of credit. The Borrower
shall pay a fee for each letter of credit to the Agent for
the Pro rata benefit of the Banks in the amount of one and
five eighths percent (1-5/8%) of the stated amount of the
letter of credit during the first three years after the
Closing Date and one and three quarters percent (1-3/4%) of
the stated amount of the letter of credit after three years
from the Closing Date until the Termination Date. In
addition, the Borrower shall pay to the Agent upon issuance
of each letter of credit provided for under this Section
3.06 an issuance fee of $500 for the Agent's services in
issuing the letter of credit. No letter of credit shall be
issued having an expiration date after the Termination
Date. The amounts of all letter(s) of credit issued at any
time for the account of the Borrower by any of the Banks,
by the Agent for the Banks, or by any other issuer not a
party hereto shall reduce the amount of Revolving Loans
available for borrowing hereunder in the amount of the
letter(s) of credit outstanding until such time as the
letter of credit has expired without any Draws having been
made and until all Draws paid have been reimbursed in full.
All letters of credit shall be in such form and substance
as the Bank and the Borrower agree. The Borrower shall not
be entitled to obtain letters of credit from the Bank
unless (i) the Borrower is then entitled to obtain
Revolving Loans from the Bank in an amount not less than
the stated amount of the letter of credit requested and
(ii) the other conditions of Section 5.01 of this Credit
Agreement have been satisfied as if the Borrower was
obtaining a Revolving Loan. On the Closing Date, certain
letters of credit identified on Schedule 3.06 that were
issued for the account of the Borrower by some of the Banks
remain outstanding. Such letters of credit shall be deemed
to be letters of credit issued pursuant to this Section
3.06 for all purposes and shall, so long as outstanding,
reduce availability under the Revolving Loan Commitments by
the stated amounts thereof. The fees paid by the Borrower
for the issuance thereof prior to the Closing Date shall be
retained by the Banks that received them, but all fees
payable in respect of such letter of credit and/or any
renewals or extensions thereof from and after the Closing
Date shall be as provided in this Section 3.06 and shall be
for the Pro rata benefit of the Banks.
In the event the Bank pays any amount under
or on account of a letter of credit (the payment by the
Bank under or on account of a letter of credit being herein
called a "Draw"), a Revolving Loan shall be deemed to be
made to the Borrower to reimburse immediately the Bank for
the amount of the Draw. In the event no Revolving Loan or
only a partial Revolving Loan is deemed to be made, the
Bank is hereby authorized to charge (without prior notice
to the Borrower) the amount of each Draw, together with
interest thereon, against any account of the Borrower
maintained with the Bank.
So long as letters of credit are
outstanding, the amount of Revolving Loans that the
Borrower is entitled to obtain under this Article III shall
be reduced by the stated amount of the letters of credit
issued for the account of the Borrower and, in addition to
otherwise constituting part of the Loan, except as
otherwise expressly stated herein, the stated amount of the
letters of credit shall be treated as principal of the
Revolving Loan.
SECTION 3.07. REPAYMENT OF THE REVOLVING
LOAN NOTES. The principal of the Revolving Loan Notes
shall be due and payable in full on the Termination Date,
unless such principal sums shall become due earlier in
whole or in part by reason of the principal amount
exceeding the aggregate amount of the Revolving Loan
Commitments at any time in effect or pursuant to the
provisions of Article X hereof.
SECTION 3.08. INTEREST ON THE REVOLVING
LOAN NOTES. The Revolving Loan Notes shall bear interest
on the principal amounts outstanding thereunder from time
to time until paid as provided in Article IV hereof.
ARTICLE IV
INTEREST ON THE TERM LOANS AND THE REVOLVING LOANS
SECTION 4.01(a). INTEREST OPTIONS. The
Borrower shall pay interest on the Term Loans and the
Revolving Loans at the rates in effect from time to time
pursuant to the Interest Options provided for in
subsections (b) and (c) of this section as selected by the
Borrower or otherwise in effect in accordance with the
terms and conditions of this Credit Agreement from time to
time.
SECTION 4.01(b). LIBOR RATE OPTION.
Interest on the principal amount of all Loans at any time
subject to the interest rate option provided for pursuant
to this subsection (b) (the "LIBOR Rate Option") shall be
at rates determined by adding the applicable LIBOR rate at
the time in effect for each Term Loan and Revolving Loan
and the applicable Indicated Spread for the LIBOR Rate
Option set forth in subsection (d) below. The LIBOR Rate
Option shall be in effect for all portions of the principal
of the Loans for which the Borrower has selected an
Interest Period in accordance with Section 4.02 hereof,
unless and until any event or circumstance provided for in
Sections 4.09 or 4.10 hereof shall have occurred and
continue to be in effect.
SECTION 4.01(c). PRIME RATE OPTION.
Interest on the principal amount of all Loans at any time
subject to the interest rate option provided for pursuant
to this subsection (c) (the "Prime Rate Option") shall be
at rates determined by adding the Prime Rate in effect from
time to time and the applicable Indicated Spread for the
Prime Rate Option set forth in subsection (d) below. The
interest rate in effect under the Prime Rate Option shall
change automatically and immediately with each change in
the Prime Rate. The Prime Rate Option shall be in effect
for all portions of the principal of the Loans for which
the LIBOR Rate Option is not in effect at any time.
SECTION 4.01(d). INDICATED SPREAD. The
Indicated Spread is measured in basis points and shall be
determined as follows:
Revolving Loans
Period Indicated Spread
(Basis Points)
Prime Rate Option Libor Rate Option
From and including the 25 200
Closing Date to the
Termination Date
Term Loans
Period Indicated Spread
(Basis Points)
Prime Rate Option Libor Rate Option
From and including 25 200
the Closing Date to
but not including
the third anniversary
of the Closing Date
From and including 50 225
the third anniversary
of the Closing Date
to but not including
the sixth anniversary
of the Closing Date
From and including the 75 250
sixth anniversary of
the Closing Date and
thereafter
SECTION 4.02. INTEREST PERIODS. The
Borrower shall have the option to select and advise the
Agent of the Interest Periods the Borrower has selected for
Term Loans and Revolving Loans not less than two (2) London
Banking Days prior to (a) the Closing Date, for the Term
Loans and the Revolving Loans to be made on the Closing
Date, (b) each Interest Adjustment Date, (c) the date any
Term Loans or Revolving Loans are to be made subsequent to
the Closing Date, and (d) any date on which Borrower
desires to have any portion of the principal of the Loans
not subject to the LIBOR Rate Option to become subject to
the LIBOR Rate Option. Each Interest Period selected shall
apply to not less than $5,000,000 in principal amount of
the Loans. The principal amount subject to each Interest
Period shall be deemed distributed Pro rata among the Banks
with respect to the respective Loans to which the Interest
Period applies. If the Borrower fails to timely select any
Interest Period, the Agent may select an Interest Period in
the sole discretion of the Agent and such selection shall
be binding on the Borrower. No Interest Period may be
selected that would extend beyond the scheduled maturity
date or principal repayment date(s) of the Loans to which
it would apply.
SECTION 4.03. INTEREST PAYMENT DATES.
Interest on all Loans shall be payable in arrears (a) on
the first Cleveland Banking Day of each month, beginning
August 1, 1994, and (b) on the date all remaining principal
and/or interest on any Loan is payable, whether by reason
of scheduled maturity or acceleration of maturity of the
Loan.
SECTION 4.04. INTEREST CALCULATIONS. All
interest shall be computed on the basis of a 360 day year
for the actual number of days elapsed. Interest shall in
all events continue to accrue in accordance with the
provisions of this Credit Agreement until the time payment
is received.
SECTION 4.05. POST-DEFAULT RATE. After the
occurrence and during the continuation of any Event of
Default, the Loans and any interest on the Loans not paid
when due shall bear interest at a rate equal to the rate(s)
otherwise in effect pursuant to this Credit Agreement plus
two percent (2%) per annum, and all such interest shall be
due on demand. No interest shall accrue on any interest
that is being charged with respect to any interest not paid
when due.
SECTION 4.06. RESERVES OR DEPOSIT
REQUIREMENTS, ETC. If at any time any law, treaty or
regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or
the interpretation thereof by any governmental authority
charged with the administration thereof or any central bank
or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem
applicable any reserve and/or special deposit requirement
against assets held by, or deposits in or for the amount of
any loans by, any Bank, and the result of the foregoing is
to increase the cost (whether by incurring a cost or adding
to a cost) to such Bank of making or maintaining Loans
hereunder or to reduce the amount of principal or interest
received by such Bank with respect to such Loans, then upon
demand by such Bank the Borrower shall pay to such Bank
from time to time on each interest payment date with
respect to such Loans, as additional consideration
hereunder, additional amounts sufficient to fully
compensate and indemnify such Bank for such increased cost
or reduced amount, assuming (which assumption such Bank
need not corroborate) such additional cost or reduced
amount were allocable to such Loans. A statement as to the
increased cost or reduced amount as a result of any event
mentioned in this Section 4.06, setting forth the
calculations therefor, shall be submitted by such Bank to
the Borrower not later than 150 days after the events
giving rise to the same occurred and shall, in the absence
of manifest error, be conclusive and binding as to the
amount thereof. Notwithstanding any other provision of
this Credit Agreement, after any such demand for
compensation by any Bank, Borrower, upon at least one (1)
Cleveland Banking Day's prior written notice to such Bank
through the Agent, may prepay all Loans in full regardless
of the Interest Period of any thereof. Any such prepayment
shall be subject to the prepayment premium set forth in
Section 5.03 hereof.
SECTION 4.07. TAX LAW, ETC. In the event
that by reason of any law, regulation or requirement or in
the interpretation thereof by an official authority, or the
imposition of any requirement of any central bank whether
or not having the force of law, any Bank shall, with
respect to this Credit Agreement or any transaction under
this Credit Agreement, be subjected to any tax, levy,
impost, charge, fee, duty, deduction or withholding of any
kind whatsoever (other than any tax imposed upon the total
net income of such Bank) and if any such measures or any
other similar measure shall result in an increase in the
cost to such Bank of making or maintaining any Loan or in a
reduction in the amount of principal, interest or
commitment fee receivable by such Bank in respect thereof,
then such Bank shall promptly notify the Borrower stating
the reasons therefor. The Borrower shall thereafter pay to
such Bank upon demand from time to time on each interest
payment date with respect to such Loans, as additional
consideration hereunder, such additional amounts as will
fully compensate such Bank for such increased cost or
reduced amount. A statement as to any such increased cost
or reduced amount, setting forth the calculations therefor,
shall be submitted by such Bank to the Borrower not later
than 150 days after the events giving rise to the same
occurred and shall, in the absence of manifest error, be
conclusive and binding as to the amount thereof.
If any Bank receives such additional
consideration from the Borrower pursuant to this
Section 4.07, such Bank shall use its best efforts to
obtain the benefits of any refund, deduction or credit for
any taxes or other amounts on account of which such
additional consideration has been paid and shall reimburse
the Borrower to the extent, but only to the extent, that
such Bank shall receive a refund of such taxes or other
amounts together with any interest thereon or an effective
net reduction in taxes or other governmental charges
(including any taxes imposed on or measured by the total
net income of such Bank) of the United States or any state
or subdivision thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions
and credits otherwise available to such Bank. If, at the
time any audit of such Bank's income tax return is
completed, such Bank determines, based on such audit, that
it was not entitled to the full amount of any refund
reimbursed to the Borrower as aforesaid or that its net
income taxes are not reduced by a credit or deduction for
the full amount of taxes reimbursed to the Borrower as
aforesaid, the Borrower, upon demand of such Bank, will
promptly pay to such Bank the amount so refunded to which
such Bank was not so entitled, or the amount by which the
net income taxes of such Bank were not so reduced, as the
case may be.
Notwithstanding any other provision of this
Credit Agreement, after any such demand for compensation by
any Bank, Borrower, upon at least one (1) Cleveland Banking
Day's prior written notice to such Bank through the Agent,
may prepay all Loans in full regardless of the Interest
Period of any thereof. Any such prepayment shall be
subject to the prepayment premium set forth in Section 5.03
hereof.
SECTION 4.08. INDEMNITY. Without prejudice
to any other provisions of this Article IV, the Borrower
hereby agrees to indemnify each Bank against any loss or
expense which such Bank may sustain or incur as a
consequence of any Event of Default hereunder, including,
but not limited to, any loss of profit, premium or penalty
incurred by such Bank in respect of funds borrowed by it
for the purpose of making or maintaining such Loan, as
determined by such Bank in the exercise of its sole but
reasonable discretion. A statement as to any such loss or
expense shall be promptly submitted by such Bank to the
Borrower not later than 150 days after the events giving
rise to the same occurred and shall, in the absence of
manifest error, be conclusive and binding as to the amount
thereof.
SECTION 4.09. EURODOLLAR DEPOSITS
UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE. In the event
that the Agent shall have determined that dollar deposits
of the relevant amount for the relevant Interest Period are
not available to the Reference Banks in the applicable
Eurodollar market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not
exist for ascertaining the LIBOR rate applicable to such
Interest Period, as the case may be, the Agent shall
promptly give notice of such determination to the Borrower.
In any such event, all principal of the Loans then subject
to the LIBOR Rate Option shall become subject to the Prime
Rate Option on expiration of any Interest Periods then in
effect. In the event that the circumstances causing any
such unavailability of deposits or inability to determine
the LIBOR rate shall change or terminate so that the LIBOR
rate may again be determined, the Agent shall promptly so
notify the Borrower.
SECTION 4.10. CHANGES IN LAW RENDERING
LIBOR LOANS UNLAWFUL. If at any time any new law, treaty
or regulation, or any change in any existing law, treaty or
regulation, or any interpretation thereof by any
governmental or other regulatory authority charged with the
administration thereof, shall make it unlawful for any Bank
to fund any Loans which it is committed to make hereunder
subject to the LIBOR Rate Option with moneys obtained in
the Eurodollar market, the Commitment of such Bank to fund
such Loans shall, upon the happening of such event
forthwith be suspended for the duration of such illegality,
and such Bank shall by written notice to the Borrower and
the Agent declare that its Commitment with respect to such
Loans has been so suspended and, if and when such
illegality ceases to exist, such suspension shall cease and
such Bank shall similarly notify the Borrower and the
Agent. If any such change shall make it unlawful for any
Bank to continue in effect the funding in the applicable
Eurodollar market of any Loan previously made by it
hereunder subject to the LIBOR Rate Option, such Bank
shall, upon the happening of such event, notify the
Borrower, the Agent and the other Banks thereof in writing
stating the reasons therefor, and the Borrower shall, on
the earlier of (i) the last day of the then current
Interest Period or (ii) if required by such law, regulation
or interpretation, on such date as shall be specified in
such notice, prepay all such Loans to the Banks in full.
Any such prepayment or conversion may be made without
payment of the prepayment premium provided from Section
5.03 hereof, but Borrower shall compensate such Banks(s)
for any costs or expenses relating to such Loan incurred in
connection with the events provided for in this Section on
written request to the Borrower describing such costs or
expenses.
SECTION 4.11. FUNDING. Each Bank may, but
shall not be required to, make Loans hereunder with funds
obtained outside the United States.
ARTICLE V
AGREEMENTS AND CONDITIONS APPLICABLE TO ALL LOANS
SECTION 5.01. CONDITIONS TO LOANS. The
obligation of each Bank to make Loans hereunder is
conditioned, in the case of each Loan hereunder, upon
(i) receipt by the Agent of a request of the Borrower for
the making of the Loan in accordance with Sections 2.01(a),
2.02(a) and/or 3.03 hereof, as the case may be, of which
date, amount and initial Interest Period the Agent shall
notify each Bank promptly upon the receipt of such notice;
and on which date each Bank shall provide the Agent not
later than 12:00 Noon Cleveland time, with the amount in
federal or other immediately available funds required of
it; (ii) no Event of Default or Possible Default existing
then or immediately after the Loan; and (iii) the
conditions set forth in Article VI hereof having been
satisfied and the representations and warranties contained
in Article VIII hereof being true and correct in all
material respects with the same force and effect as if made
on and as of the date of such Loan except to the extent
that any thereof expressly relate to an earlier date. Each
request for a Loan by the Borrower hereunder shall be
deemed to be a representation and warranty by the Borrower
as of the date of such borrowing as to the truth of the
matters specified in (ii) and (iii) above. The Agent shall
promptly notify the Borrower in writing (with a copy to
each of the Banks) of the applicable Interest Option(s)
pertaining to each Loan obtained hereunder.
SECTION 5.02. PAYMENT ON NOTES, ETC. All
payments of principal, interest and commitment fees shall
be made to the Agent in immediately available funds for the
account of the Banks. Any such payment received by the
Agent after 12:00 noon on a Cleveland Banking Day shall be
deemed received on the next Cleveland Banking Day and
interest shall accrue to such next Cleveland Banking Day in
respect of any principal of the Loans to be paid by such
payment. The Agent shall distribute to each Bank its Pro
rata share of the amount of principal, interest and
commitment fees received by it for the account of such Bank
on the same day the Agent receives payment thereof from the
Borrower in immediately available funds, unless the Agent
does not receive such payment from the Borrower until after
12:00 noon, in which case the Agent shall make payment
thereof to the Banks on the next Cleveland Banking Day.
Each Bank shall endorse each Note held by it with
appropriate notations evidencing each payment of principal
made thereon or shall record such principal payment by such
other method as such Bank may generally employ; provided,
however, that failure to make any such entry shall in no
way detract from Borrower's obligations under each such
Note. Whenever any payment to be made hereunder, including
without limitation any payment to be made on any Note,
shall be stated to be due on a day which is not a Cleveland
Banking Day, such payment shall be made on the next
succeeding Cleveland Banking Day and such extension of time
shall in each case be included in the computation of the
interest payable on such Note; provided, however, that if
the next succeeding Cleveland Banking Day falls in the
succeeding calendar month, such payment shall be made on
the preceding Cleveland Banking Day and the relevant
Interest Period shall be adjusted accordingly.
SECTION 5.03. PREPAYMENT. The Borrower
shall have the right at any time or from time to time, upon
two (2) London Banking Days' prior written notice (subject
to the payment of a prepayment premium as hereinafter
described in this Section 5.03), to prepay on a Pro rata
basis, all or any part of the principal amount of the Notes
then outstanding as designated by the Borrower, plus
interest accrued on the amount so prepaid to the date of
such prepayment. The Borrower agrees that if LIBOR as
determined as of 11:00 a.m. London time, two (2) London
Banking Days' prior to the date of prepayment or
acceleration of any Loans (hereinafter, "Prepayment LIBOR")
shall be lower than the last LIBOR previously determined
for those Loans with respect to which prepayment is
intended to be made or that are accelerated (hereinafter,
"Last LIBOR"), then the Borrower shall, upon written notice
by the Agent, promptly pay to the Agent, for the account of
each of the Banks, in immediately available funds, a
prepayment premium measured by a rate (the "Prepayment
Premium Rate") which shall be equal to the difference
between the Last LIBOR and the Prepayment LIBOR. In
determining the Prepayment LIBOR payable to each Bank,
Agent shall apply a rate for each Bank equal to LIBOR for a
deposit approximately equal to each Bank's portion of such
prepayment or accelerated balance which would be applicable
to an Interest Period commencing on the date of such
prepayment or acceleration and having a duration as nearly
equal as practicable to the remaining duration of the
actual Interest Period during which such acceleration
occurs or prepayment is to be made. In addition, Borrower
shall immediately pay directly to each Bank the amount
claimed as additional costs or expenses (including, without
limitation, cost of telex, wires, or cables) incurred by
such Bank in connection with the prepayment or acceleration
upon Borrower's receipt of a written statement from such
Bank. The Prepayment Premium Rate shall be applied to all
or such part of the principal amounts of the Notes as
related to the Loans to be prepaid, or that are accelerated
and the prepayment premium shall be computed for the period
commencing with the date on which such prepayment is to be
made or acceleration occurs to that date which coincides
with the last day of the Interest Period previously
established when the Loans, which are to be prepaid or are
accelerated, were made. Each prepayment of a Loan shall be
in the aggregate principal sum of not less than One Million
Dollars ($1,000,000) (except in the case of a Loan
initially made in an aggregate amount less than One Million
Dollars ($1,000,000)). In the event the Borrower cancels a
proposed Loan subsequent to the delivery to the Agent of
the notice of the proposed date, aggregate amount and
initial Interest Period of such Loan, but prior to the draw
down of funds thereunder, such cancellation shall be
treated as a prepayment subject to the aforementioned
prepayment premium. Each prepayment of the Notes
evidencing Term Loans shall be applied to the principal
installments thereof in the inverse order of their
respective maturities.
SECTION 5.04. COMMITMENT FEES. Borrower
agrees to pay to Agent, for the Pro rata benefit of each
Bank, as consideration for its Commitment hereunder, a
commitment fee calculated at the rate of three eighths of
one percent per annum (3/8%) (based on a year having 360
days and calculated for the actual number of days elapsed)
from the date hereof to and including the Termination Date,
on the average daily unborrowed amount of such Bank's
Revolving Loan Commitment hereunder, payable on October 1,
1994 and on each Quarterly Date thereafter. After any
reduction of the Revolving Loan Commitments pursuant to
Section 3.02(b), the commitment fees payable hereunder
shall be calculated upon the Revolving Loan Commitments of
the Banks as so reduced.
SECTION 5.05. CLOSING FEE. On the Closing
Date, the Borrower shall pay to the Agent for the Pro rata
benefit of the Banks a Closing Fee of $550,000.
SECTION 5.06. AGENT FEE. On each Quarterly
Date after the Closing Date so long as any of the Loans
remain unpaid, the Borrower shall pay to the Agent an Agent
Fee of $31,250.
SECTION 5.07. COMPENSATION FOR ADDITIONAL
COSTS; CAPITAL ADEQUACY. (i) In the event that any law or
regulation, or any industry-wide guideline or directive
(whether or not having the force of law) or the
interpretation or administration thereof by any court,
central bank or administrative or governmental authority
thereof shall:
(A) subject the Bank (and similarly
situated banks) to any tax or shall change the
basis of taxation of the Bank (other than a
change in the rate of tax based on the overall
net income of the Bank); or
(B) impose, modify or deem applicable
any reserve, special deposit, or similar
requirement against the Bank (and similarly
situated banks);
and as a result of any of the foregoing, in the reasonable
opinion of the Bank, (x) the cost to the Bank of issuing or
maintaining a Loan and/or letter of credit is increased or
(y) any amounts payable by the Borrower hereunder are
reduced because of such circumstances, then and in each
such case from time to time the Borrower shall pay to the
Bank any additional amount or amounts as shall compensate
the Bank for such increased cost or reduction in payment
within fifteen (15) days of Borrower's receipt of a
statement from the Bank setting forth such additional
amount as determined by the Bank which, in the absence of
manifest error, shall be final and conclusive. In
determining such amount, the Bank may use any reasonable
averaging and attribution methods.
(ii) If the Bank shall determine that the
adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the
Bank's capital (or on the capital of the Bank's holding
company) as a consequence of its obligations hereunder to a
level below that which the Bank (or its holding company)
could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies
or the policies of its holding company with respect to
capital adequacy), then from time to time, upon demand by
the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank
(or its holding company) for such reduction. Failure on
the part of the Bank to demand compensation for any
reduction in return on capital with respect to any period
shall not constitute a waiver of the Bank's rights to
demand compensation for any reduction in return on capital
in such period or in any other period. The protection of
this section shall be available to the Bank regardless of
any possible contention of the invalidity or
inapplicability of the law, regulation or other condition
which shall have been imposed.
ARTICLE VI
OPENING COVENANTS
Prior to or concurrently with the execution
and delivery of this Credit Agreement, and as conditions
precedent to the making of any Loans hereunder, the
following actions shall be taken, all in form and substance
satisfactory to the Agent and the Banks and their
respective counsel:
SECTION 6.01. CORPORATE AND LOAN DOCUMENTS.
Borrower shall deliver or cause to be delivered to the
Agent and the Banks the following documents, in all cases
duly executed, delivered and/or certified, as the case may
be:
(a) Certified copies of the resolutions of
the board of directors of Borrower evidencing approval of
the execution, delivery, and performance of this Credit
Agreement and the Notes provided for herein;
(b) Certified copies of resolutions of the
board of directors of the Parent evidencing approval of the
execution, delivery, and performance of the Guaranty;
(c) Copies of the Articles of Incorporation
of Borrower, certified by the Ohio Secretary of State as of
a recent date;
(d) Copies of the Articles of Incorporation
of the Parent, certified by the Ohio Secretary of State as
of a current date;
(e) Code of Regulations of Borrower,
certified as true and complete as of the Closing Date by
the Secretary of Borrower;
(f) Code of Regulations of Parent,
certified as true and complete as of the Closing Date by
the Secretary of Parent;
(g) Borrower good standing certificate;
(h) Parent good standing certificate.
(i) A certificate of the secretary or
assistant secretary of Borrower certifying the names of the
officers of Borrower authorized to sign this Credit
Agreement, and the Notes, together with the true signatures
of such officers.
(j) A certificate of the secretary or
assistant secretary of Parent certifying the names of the
officers of Parent authorized to sign the Guaranty,
together with the true signatures of such officers.
(k) The Borrower, the Agent, and the Banks
shall have executed and delivered counterparts of the
Credit Agreement.
(l) The Borrower shall have executed and
delivered the Revolving Loan Notes and the Term Notes
evidencing the Initial Term Loans to the Banks.
(m) The Parent shall have executed and
delivered the Guaranty to the Agent and the Banks.
(n) A certificate of the secretary or
assistant secretary of Borrower certifying that as of the
date of this Credit Agreement no Event of Default or
Possible Default exists hereunder.
SECTION 6.02. OPINION OF COUNSEL FOR
PARENT. A favorable opinion of counsel for the Parent as
to the due authorization, execution, and delivery, and
legality, validity, and enforceability of the Guaranty and
such other matters as the Agent and the Banks may request.
SECTION 6.03. OPINION OF COUNSEL FOR
BORROWER. A favorable opinion of counsel for the Borrower
as to the due authorization, execution, and delivery, and
legality, validity, and enforceability of the Credit
Agreement and the Notes and such other matters as the Agent
and the Banks may request.
SECTION 6.04. TERMINATION OF OLD CREDIT
AGREEMENT. The Old Credit Agreement shall have been
cancelled and terminated and all indebtedness and
obligations of Borrower thereunder satisfied and performed
in full.
SECTION 6.05. TERMINATION OF SNB CREDIT
AGREEMENT. The SNB Credit Agreement shall have been
cancelled and terminated and all indebtedness and
obligations of Borrower thereunder satisfied and performed
in full.
SECTION 6.06. MODIFICATION OF RITZ CARLTON
DOCUMENTS. Such transactions acceptable to the Agent and
the Banks shall have been consummated as shall be necessary
to make the obligations of the Parent under its Debt
Service Guaranty relating to the Ritz Carlton loan
acceptable to the Corporate Banking Group of Society
National Bank.
ARTICLE VII
COVENANTS
Borrower agrees that so long as the
Commitments remain in effect and thereafter until the
principal of and interest on all Notes and all other
payments due hereunder shall have been paid in full,
Borrower will perform and observe all of the following
provisions, namely:
SECTION 7.01. PAYMENT OF AMOUNTS DUE. The
Borrower will make all payments of the principal of and
interest on the Loans and the Notes promptly as the same
become due.
SECTION 7.02. EXISTENCE, BUSINESS, ETC.
The Borrower will cause to be done all things necessary to
preserve and to keep in full force and effect its existence
and rights and those of its Subsidiaries. The Borrower
will, and will cause its Subsidiaries to, comply in all
material respects with all federal, state, and local laws
and regulations now in effect or hereafter promulgated by
any governmental authority having jurisdiction over it.
SECTION 7.03. MAINTENANCE OF PROPERTIES.
The Borrower will, and will cause its Subsidiaries to, at
all times maintain, preserve, protect, and keep its
properties used in the conduct of its business in good
repair, working order, and condition, ordinary wear and
tear excepted, and, from time to time, make all needful and
proper repairs, renewals, replacements, betterments, and
improvements thereto, so that the business carried on in
connection therewith may be properly conducted at all
times.
SECTION 7.04. PAYMENT OF TAXES, ETC. The
Borrower will pay and discharge all lawful taxes,
assessments, and governmental charges or levies imposed
upon it, upon its income or profits, or upon its
properties, before the same shall become in default, as
well as all lawful claims for labor, materials, and
supplies which, if unpaid, might become a lien or charge
upon such properties or any part thereof; provided,
however, the Borrower shall not be required to pay and
discharge any such tax, assessment, charge, levy, or claim
so long as the validity thereof shall be contested in good
faith by appropriate proceedings and there shall be set
aside on its books such reserves with respect thereto as
are required by generally accepted accounting principles.
Except where the liability for the tax, assessment, charge,
levy, or claim is limited solely to the property on which
assessed and is not subject to enforcement against
Borrower, the Borrower will in all events pay such tax,
assessment, charge, levy or claim before the property
subject thereto shall be sold to satisfy any lien which has
attached as security therefor.
SECTION 7.05. FINANCIAL STATEMENTS.
Borrower will furnish to each Bank
(a) within sixty (60) days after the end of
each of the first three quarter-annual fiscal periods of
each of Borrower's fiscal years, an unaudited consolidated
balance sheet of Borrower and its Subsidiaries as at the
end of that period and an unaudited consolidated statement
of earnings of Borrower and its Subsidiaries for Borrower's
current fiscal year to the end of that period, all prepared
in form and detail in accordance with generally accepted
accounting principles, consistently applied, and certified
by a financial officer of Borrower, subject to changes
resulting from year-end adjustments, together with a
certificate of the Chief Financial Officer of Borrower (i)
specifying the nature and period of existence of each Event
of Default and/or Possible Default, if any, and the action
taken, being taken, or proposed to be taken by the Borrower
in respect thereof, or if none, so stating and (ii)
certifying that the representations and warranties of the
Borrower set forth in Article VIII hereof are true and
correct as of the date of such certificate, or, if not, all
respects in which they are not;
(b) within one hundred twenty (120) days
after the end of each of Borrower's fiscal years, a
complete unaudited annual report of Borrower and its
Subsidiaries for that year prepared on a consolidated basis
and in form and detail satisfactory to the Banks, together
with (i) a certificate of the Chief Financial Officer of
Borrower (x) specifying the nature and period of existence
of each Event of Default and/or Possible Default, if any,
and the action taken, being taken or proposed to be taken
by Borrower in respect thereof or, if none, so stating and
(y) certifying that the representations and warranties of
the Borrower set forth in Article VIII hereof are true and
correct as of the date of such certificate, or, if not, all
respects in which they are not, and (ii) a fully completed
covenant compliance worksheet in the form and substance of
Schedule 7.05 hereof relating to such fiscal year; and
(c) forthwith upon any Bank's written
request, such other information about the financial
condition, properties and operations of Borrower and its
Subsidiaries as that Bank may from time to time reasonably
request.
SECTION 7.06. INSPECTION. Borrower and
each Subsidiary will permit their properties and records to
be examined at all reasonable times by each of the Banks.
SECTION 7.07. ENVIRONMENTAL COMPLIANCE.
Borrower will comply in all material respects with any and
all Environmental Laws including, without limitation, all
Environmental Laws in jurisdictions in which Borrower or
any Subsidiary owns property, operates, arranges for
disposal or treatment of hazardous substances, solid waste
or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any
interest in real property or otherwise. Borrower will
furnish to the Banks promptly after receipt thereof a copy
of any notice Borrower or any Subsidiary may receive from
any governmental authority, private person or entity or
otherwise that any litigation or proceeding pertaining to
any environmental, health or safety matter has been filed
or is threatened against Borrower or such Subsidiary, any
real property in which Borrower or such Subsidiary holds
any interest or any past or present operation of Borrower
or such Subsidiary. Borrower will not allow the storage,
release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which
Borrower holds any interest or performs any of its
operations, in violation of any Environmental Law. As used
in this subsection "litigation or proceeding" means any
demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether
brought by any governmental authority, private person or
entity or otherwise. Borrower shall defend, indemnify and
hold the Banks harmless against all costs, expenses,
claims, damages, penalties and liabilities of every kind or
nature whatsoever (including attorneys fees) arising out of
or resulting from the noncompliance of Borrower or any
Subsidiary with any Environmental Law provided that, so
long as and to the extent that the Banks are not required
to make any payment or suffer to exist any unsatisfied
judgment, order, or assessment against them, the Borrower
may pursue rights of appeal to comply with such
Environmental Laws. In any case of noncompliance with any
Environmental Law by a Subsidiary, the Banks' recourse for
indemnity in respect of the matters provided for in this
Section shall be limited solely to the property of the
Subsidiary holding title to the property involved in such
noncompliance and such recovery shall not be a lien, or a
basis of a claim of lien or levy of execution, against
either Borrower's general assets or the general assets of
any of its other Subsidiaries.
SECTION 7.08. PLAN. Neither Borrower nor
any Subsidiary will suffer or permit any Plan to be amended
if, as a result of such amendment, the current liability
under the Plan is increased to such an extent that security
is required pursuant to section 307 of the Employee
Retirement Income Security Act of 1974, as amended from
time to time. As used herein, "current liability" means
current liability as defined in section 307 of such Act.
SECTION 7.09. INSURANCE. Each Company will
(a) keep itself and all of its insurable properties insured
at all times to such extent, by such insurers, and against
such hazards and liabilities as is generally and prudently
done by like businesses, it being understood that Borrower
has obtained a fidelity bond for each of its employees as
handle funds, (b) give each Bank prompt written notice of
each material change in that Company's insurance coverage
and the details of the change and (c) forthwith upon any
Bank's written request, furnish to each Bank such
information about that Company's insurance as any Bank may
from time to time reasonably request, which information
shall be prepared in form and detail satisfactory to each
Bank and certified by an officer of that Company.
SECTION 7.10. MONEY OBLIGATIONS. Each
Company will pay in full (a) prior in each case to the date
when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long
as and to the extent that the same shall be contested in
good faith by appropriate and timely proceedings diligently
pursued) for which it may be or become liable or to which
any or all of its properties may be or become subject, (b)
all of its wage obligations to its employees in compliance
with the Fair Labor Standards Act (29 U.S.C. sections 206-207) or
any comparable provisions, and (c) all of its other
obligations calling for the payment of money (except only
those so long as and to the extent that the same shall be
contested in good faith by appropriate and timely
proceedings diligently pursued) before such payment becomes
overdue.
SECTION 7.11. RECORDS. Each Company will
(a) at all times maintain true and complete records and
books of account, and without limiting the generality of
the foregoing, maintain appropriate reserves for possible
losses and liabilities, all in accordance with generally
accepted accounting principles applied on a basis not
inconsistent with its present accounting procedures and (b)
at all reasonable times permit any Bank to examine that
company's books and records and to make excerpts therefrom
and transcripts thereof.
SECTION 7.12. FRANCHISES. Each Company
will preserve and maintain at all times its corporate
existence, rights and franchises; provided that this
Section shall not prohibit any merger, consolidation or
transfer permitted by Section 7.14.
SECTION 7.13. NOTICE. Borrower will cause
its Chief Financial Officer, or in his or her absence
another officer designated by the Chief Financial Officer,
to promptly notify the Banks whenever (a) any Event of
Default or Possible Default may occur hereunder or any
representation or warranty made in Article VIII hereof or
elsewhere in this Credit Agreement or in any Related
Writing may for any reason cease in any material respect to
be true and complete and/or (b) any Subsidiary shall (i) be
in default of any material (either with respect to the
Subsidiary or the Borrower) obligation for payment of
borrowed money, or, to the knowledge of Borrower, any
material obligations in respect of guarantees, taxes,
and/or indebtedness for goods or services purchased by, or
other contractual obligations of, such Subsidiary and/or
(ii) not, to the knowledge of Borrower, be in compliance
with any law, order, rule, judgments, ordinance,
regulation, license, franchise, lease, or other agreement
that has or could reasonably be expected to have a material
adverse effect on the business, operations, property, or
financial condition of the Subsidiary, and/or (iii)
Borrower and/or the Subsidiary shall have received or have
knowledge of any actual, pending, or threatened claim,
notice, litigation, citation, proceeding, or demand
relating to any matter(s) described in subclauses (i) and
(ii).
SECTION 7.14. COMBINATIONS. The Borrower
will not dissolve or liquidate, and will not permit any
Subsidiary to dissolve or liquidate, except (a) in cases
within the terms of clause (I) of Section 9.06 hereof that
do not come within the terms of clause (II) of Section 9.06
hereof, or (b) in the ordinary course of business to the
extent that no material adverse effect is thereby suffered
by Borrower. No Company will be a party to any
consolidation or merger; provided, that this Section shall
not apply to (i) any merger of a Subsidiary into Borrower
(with Borrower being the surviving corporation) or into
another Subsidiary, (ii) any consolidation of a Subsidiary
with another Subsidiary, or (iii) a merger of Borrower into
Parent on such terms that the surviving corporation will be
liable for all obligations of Borrower arising under this
Credit Agreement.
SECTION 7.15. BULK TRANSFERS. No Company
will be a party to any lease, sale or other transfer
involving all or a substantial part of the assets of the
Companies as a whole; provided, that this Section shall not
apply to (i) any transfer of assets to Borrower or another
Subsidiary, (ii) the transfer of assets to a trustee (other
than a trustee for the benefit of creditors) in connection
with a building project involving such assets, or (iii) any
transfer effected in the normal course of business and on
commercially reasonable terms.
SECTION 7.16. BORROWINGS. No Company will
create, assume or suffer to exist any indebtedness for
borrowed money or any Funded Indebtedness of any kind;
provided, that this Section shall not apply to (i) any
Loans obtained hereunder, (ii) any indebtedness of any
Company created in the course of purchasing or developing
real estate or financing construction or other improvements
thereon or purchasing furniture, fixtures or other
equipment therefor or any other indebtedness of any Company
for borrowed money or any refinancings thereof, provided
that no Company (other than a Company whose sole assets
consist of contiguous parcels of land which are being
purchased or developed with such financing, the
improvements, if any, thereon, furniture, fixtures and
other equipment used in connection therewith, receivables
incurred by tenants in connection therewith and the
proceeds of such receivables and other property directly
obtained from the ownership of such assets) shall have any
personal liability for such indebtedness, the creditors'
recourse being solely to the property being pledged as
collateral for such indebtedness and the income therefrom,
(iii) any Funded Indebtedness hereafter incurred by any
Company and subordinated, by written agreement in form and
substance satisfactory to the Banks, in favor of the prior
payment in full of such Company's Debt to the Banks, (iv)
any other indebtedness heretofore guaranteed by Parent and
reflected in Borrower's January 31, 1994 audit report
heretofore delivered to the Banks, or any other
indebtedness of any Company for borrowed money or any
refinancings thereof; provided, that the aggregate personal
liability of all the Companies in respect for all
indebtedness for borrowed money and any refinancings
thereof (other than any loan permitted by any other clause
of this Section), does not then exceed, and after incurring
the indebtedness in question will not exceed, One Million
Five Hundred Thousand Dollars ($1,500,000), or (v)
unsecured short-term borrowings in the form of commercial
paper issued by Borrower not to exceed the aggregate amount
of the unused Revolving Loan Commitments at any time.
SECTION 7.17. LIENS. No Company will (a)
acquire any property subject to any inventory consignment,
land contract or other title retention contract, (b) sell
or otherwise transfer any receivables, or (c) suffer or
permit any property now owned or hereafter acquired by it
to be or become encumbered by any mortgage, security
interest, financing statement or lien of any kind or nature
other than:
(i) any lien for a tax, assessment or
governmental charge or levy so long as the payment thereof
is not at the time required by Section 7.10 hereof;
(ii) any lien securing only its workers'
compensation, unemployment insurance and similar
obligations;
(iii) any mechanic's, carrier's or similar
common law or statutory lien incurred in the normal course
of business;
(iv) any transfer of a check or other medium
of payment for deposit or collection through normal banking
channels or any similar transaction in the normal course of
business;
(v) any judgment lien against a Subsidiary
which shall never have had a net worth in excess of One
Hundred Fifty Thousand Dollars ($150,000);
(vi) any mortgage, security interest or
other lien securing only indebtedness permitted by clause
(iv) of Section 7.16;
(vii) any mortgage, security interest or
other lien securing only indebtedness permitted by clause
(ii) of Section 7.16;
(viii) any transfer of receivables without
recourse;
(ix) any assignment of rents, profits,
and/or cash flows derived from particular real estate given
as additional security to a mortgage or security interest
on such real estate permitted by this Section, provided,
that the mortgage or security interest encumbers only the
real property in question;
(x) any financing statement perfecting a
security interest permitted by this Section;
(xi) easements, restrictions, minor title
irregularities and similar matters having no adverse effect
as a practical matter on the ownership or use of any
Company's real property; or
(xii) any mortgage, security interest and
lien securing any indebtedness incurred to the Banks under
this Credit Agreement.
SECTION 7.18. LOANS. No Company will
knowingly make or have outstanding at any time any advance
or loan of any kind other than:
(i) any loan secured solely by mortgages on
real estate and not exceeding eighty per cent (80%) of the
value of the real estate as appraised by the lender
(provided, however, that in the case of any federally
insured loan, the amount of the loan may be up to one
hundred per cent (100%) of such appraised value), (ii) any
loan from Borrower to one of its Subsidiaries or from such
a Subsidiary to Borrower or (iii) any advance or loan made
in the normal course of business of acquiring properties
for, or developing properties of, the Companies.
SECTION 7.19. GUARANTEES. No Company will
pledge its credit or property in any manner for the payment
or other performance of the indebtedness, contract or other
obligation of another, whether as guarantor (whether of
payment or of collection), surety, co-maker, endorser or by
agreeing conditionally or otherwise to make any purchase,
loan or investment in order thereby to enable another to
prevent or correct a default of any kind, or otherwise,
except for:
(i) endorsements of negotiable instruments
for deposit or collection or similar transactions in the
normal course of business;
(ii) any guarantee of the completion of a
real estate building project if any Company is the
developer of the project or has a property interest in the
project;
(iii) the guarantee by Parent of all Loans
granted to Borrower hereunder;
(iv) Borrower's guarantee of up to Three
Million Dollars ($3,000,000) to cover the lease of certain
furniture and fixtures for Marriott Hotel in Charleston,
West Virginia;
(v) any indemnity or guarantee of a surety
bond for the performance by some customer of a Company of
the customer's obligations under a land development
contract;
(vi) any guarantee by Borrower of the equity
investment or performance of a Subsidiary (other than any
obligations of such Subsidiary incurred for borrowed money)
in connection with a real estate project in favor of a
partner or partnership in which such Subsidiary is a
general partner, when Borrower deems it to be in its best
interest not to be a partner or have a direct interest in
the partnership;
(vii) any guarantee by Borrower of letters
of credit (other than letters issued under Section 3.06 of
this Credit Agreement) issued on or after the first
anniversary of the Closing Date by any banking institution
on behalf of Forest City Residential Development, Inc. or
Parent, or any obligation of Borrower as an applicant under
standby letters of credit so long as (a) the aggregate
amount of all such outstanding guarantees, plus (b) the
aggregate face amount of all such outstanding letters of
credit issued on behalf of Borrower, plus (c) the aggregate
face amount of all such outstanding letters of credit
issued on behalf of or guaranteed by Parent, plus (d) the
aggregate face amount of all letters of credit permitted
under Section 9.12(g) of Parent's Guaranty of Payment of
Debt issued in connection with this Agreement do not exceed
Ten Million Dollars ($10,000,000);
(viii) obligations of Borrower as in effect
on the Closing Date after giving effect to the transactions
contemplated under Section 6.06 hereof in respect of
guarantees of debt service, payment of taxes, and/or
availability of Regional Transit Authority easements
relating to the Ritz Carlton Project and the Post Office
Building Plaza; and
(ix) Pledges and/or assignments permitted
under Section 7.17(ix) hereof.
SECTION 7.20. GROSS CASH FLOW. Borrower
will not suffer or permit (a) its net earnings (loss),
excluding the gain on disposition of properties and the
provision for decline in real estate, before deducting the
noncash charges from rental properties for depreciation and
amortization, deferred income taxes and accrued interest on
mortgage notes of a rental property which is not payable
until future years, plus (b) its corporate interest expense
and pass thru debt reimbursement of New York principal
payments (its "Gross Cash Flow") for any year to be less
than one hundred fifty percent (150%) until the Termination
Date and one hundred twenty-five per cent (125%) after the
Termination Date of the sum of (a) all payments of
principal and interest of the Notes due in such year, plus
(b) the principal payments made on all loans secured by
real estate mortgages (other than any final principal
payment on any loan secured by real estate and the RMS
loan).
SECTION 7.21. POST-CLOSING ITEMS. The
Borrower will promptly perform and complete to the
satisfaction of the Agent each of the matters, if any, set
forth on Schedule 7.21 attached hereto (the "Listed
Matters") on or before the date set forth on Schedule 7.21
for the performance and completion thereof (the
"Satisfaction Date").
SECTION 7.22. FURTHER ASSURANCES. The
Borrower agrees to execute and deliver to the Agent and/or
the Banks any agreements, documents and instruments,
including, without limitation, additional Notes as
replacements or substitutions as may be required by the
Agent and/or the Banks, and to take such other actions as
reasonably requested by the Agent to effect the
transactions contemplated hereby.
SECTION 7.23. AMENDMENT OF ARTICLES OF
INCORPORATION AND/OR REGULATIONS. The Borrower will not
amend, modify, or supplement its articles of incorporation
or its code of regulations in any material respect that
would be detrimental to the performance by the Borrower of
its obligations under the Loan Documents or rights of the
Agent or the Banks under this Agreement or the Notes.
SECTION 7.24. FISCAL YEAR. Except as
required by law, or required in connection with a
transaction permitted under Section 7.14 hereof, the
Borrower will not change its fiscal year without the
consent of the Banks, which shall not be unreasonably
withheld.
SECTION 7.25. REGULATION U. The Borrower
and its Subsidiaries will not, and will not permit its
Subsidiaries to, directly or indirectly, (a) apply any part
of the proceeds of any Loan to the purchasing or carrying
of any "margin stock" within the meaning of Regulations G,
T, U or X of the Federal Reserve Board, or any regulations,
interpretations or rulings thereunder, (b) extend credit to
others for the purpose of purchasing or carrying any such
margin stock, or (c) retire Indebtedness which was incurred
to purchase or carry any such margin stock.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Subject only to such exceptions, if any, as
may be fully disclosed in an officer's certificate in the
form of Schedule 8 hereto furnished by Borrower to each
Bank prior to the execution and delivery hereof, Borrower
represents and warrants as follows:
SECTION 8.01. EXISTENCE. Borrower is a
corporation duly organized and validly existing in good
standing under the laws of the State of Ohio and is duly
qualified to transact business and is in good standing as a
foreign corporation in all jurisdictions (other than
jurisdictions in which the nature of the property owned or
business conducted, when considered in relation to the
absence of serious penalties, renders qualification as a
foreign corporation unnecessary as a practical matter)
where the nature of the property owned and business
transacted by Borrower render such qualification necessary.
Each of the Borrower's Subsidiaries is duly organized and
existing in good standing in the jurisdiction of its
incorporation or formation. The Borrower and each of its
Subsidiaries has full power, authority, and legal right to
own and operate its respective properties and to carry on
the business in which it engages and intends to engage.
SECTION 8.02. RIGHT TO ACT. No
registration with or approval of any governmental agency of
any kind is required for the due execution and delivery or
for the enforceability of this Credit Agreement and any
Note issued pursuant to this Credit Agreement. Borrower
has legal power and right to execute and deliver this
Credit Agreement and any Note issued pursuant to this
Credit Agreement and to perform and observe the provisions
of this Credit Agreement and any Note issued pursuant
hereto and all such actions have been duly authorized by
all necessary corporate action of Borrower. By executing
and delivering this Credit Agreement and any Note issued
pursuant to this Credit Agreement and by performing and
observing the provisions of this Credit Agreement and any
Note issued pursuant hereto, Borrower will not violate any
existing provision of its articles of incorporation, code
of regulations or by-laws or any applicable law or violate
or otherwise become in default under any existing contract,
agreement, indenture or other obligation binding upon
Borrower. The officers executing and delivering this
Credit Agreement on behalf of Borrower have been duly
authorized to do so, and this Credit Agreement and any
Note, when executed, are legally valid, binding and
enforceable against Borrower in every respect.
SECTION 8.03. BINDING EFFECT. This Credit
Agreement constitutes a valid and binding agreement of the
Borrower, and the Guaranty constitutes a valid and binding
agreement of the Parent, in both cases enforceable in
accordance with their respective terms, and the Notes, when
executed and delivered in accordance with this Credit
Agreement, will constitute valid and binding obligations of
the Borrower, enforceable in accordance with their terms.
SECTION 8.04. LITIGATION. No litigation or
proceeding is pending or being threatened against Borrower
or any Subsidiary before any court or any administrative
agency which might, if successful, adversely affect
Borrower to a material extent. The Internal Revenue
Service has not alleged any default by Borrower in the
payment of any tax or threatened to make any assessment in
respect thereof.
SECTION 8.05. EMPLOYEE RETIREMENT INCOME
SECURITY ACT. No material employee benefit plan
established or maintained by Borrower or any Domestic
Subsidiary, which is subject to Part 3 of Subtitle B of
Title I of the Employee Retirement Income Security Act of
1974, as amended and in effect, had an accumulated funding
deficiency (as such term is defined in Section 302 of that
Act) as of the last day of the most recent fiscal year of
such plan ended prior to the date hereof, or would have had
an accumulated funding deficiency (as so defined) on such
day if such year were the first year of such plan to which
Part 3 of Subtitle B of Title I of that Act applied, and no
material liability to the Pension Benefit Guaranty
Corporation, has been, or is expected by Borrower or any
Domestic Subsidiary to be, incurred with respect to any
such plan by Borrower or any Domestic Subsidiary.
SECTION 8.06. ENVIRONMENTAL COMPLIANCE. To
the best of Borrower's knowledge, Borrower and each
Subsidiary are in compliance with any and all Environmental
Laws including, without limitation, all Environmental Laws
in all jurisdictions in which Borrower or any Subsidiary
owns or operates, or has owned or operated, a facility or
site, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts
or has accepted for transport any hazardous substances,
solid waste or other wastes or holds or has held any
interest in real property or otherwise. No litigation or
proceeding arising under, relating to or in connection with
any Environmental Law is pending or threatened against
Borrower or any Subsidiary, any real property in which
Borrower or any Subsidiary holds or has held an interest or
any past or present operation of Borrower or any
Subsidiary. To the best of Borrower's knowledge, no
release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring, or has occurred,
on, under, from, or to any real property in which Borrower
or any Subsidiary holds any interest or performs any of its
operations, in violation of any Environmental Law. As used
in this subsection, "litigation or proceeding" means any
demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether
brought by any governmental authority, private person or
entity or otherwise.
SECTION 8.07. SOLVENCY. Borrower has
received consideration which is the reasonable equivalent
value of the obligations and liabilities that Borrower has
incurred to the Banks. Borrower is not insolvent as defined
in any applicable state or federal statute, nor will
Borrower be rendered insolvent by the execution and
delivery of this Credit Agreement or any Note to the Banks.
Borrower is not engaged or about to engage in any business
or transaction for which the assets retained by it shall be
an unreasonably small capital, taking into consideration
the obligations to the Banks incurred hereunder. Borrower
does not intend to, nor does it believe that it will, incur
debts beyond its ability to pay them as they mature.
SECTION 8.08. FINANCIAL STATEMENTS. The
annual financial statements of Borrower prepared as of
January 31, 1994, certified by Borrower's Chief Financial
Officer and heretofore furnished to each Bank, are true and
complete, has been prepared in accordance with generally
accepted accounting principles applied on a basis
consistent with those used by Borrower during its
immediately preceding full fiscal year and fairly present
its financial condition as of that date and the results of
its operations for the fiscal year then ending. Since that
date there has been no material adverse change in
Borrower's financial condition, properties or business or
in the financial condition, properties or business of any
Subsidiary other than any change which has been previously
disclosed to the Banks.
SECTION 8.09. DEFAULTS. No Event of
Default or Possible Default exists hereunder, nor will any
begin to exist immediately after the execution and delivery
hereof.
SECTION 8.10. OPERATIONS. The Borrower and
its Subsidiaries have obtained and continue to possess all
permits, licenses and authorizations the absence of which
would materially and adversely affect the Borrower's or a
Subsidiary's ability to carry on its business in the
ordinary course.
SECTION 8.11. TITLE TO PROPERTIES; PATENTS,
TRADE MARKS, ETC. The Borrower and its Subsidiaries have
good and marketable title to all of their properties and
assets, including, without limitation, the properties and
assets reflected in the financial statements referred to in
Section 8.08 (excepting, however, inventory and other
immaterial assets, in each case sold or otherwise disposed
of in the ordinary course of business subsequent to the
date of the such financial statements). There are no Liens
of any nature whatsoever on any of the properties or assets
of the Borrower and its Subsidiaries other than such as are
permitted under Section 7.17. The Borrower and its
Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights, and licenses and
rights with respect to the foregoing necessary for the
conduct of their respective businesses as now conducted,
without any known conflict with the valid rights of others
which would be inconsistent with the conduct of its
business substantially as now conducted and as currently
proposed to be conducted.
SECTION 8.12. COMPLIANCE WITH OTHER
INSTRUMENTS. The Borrower and, to the best of the
Borrower's knowledge, each Subsidiary is not in default in
the performance, observance, or fulfillment of any of the
material obligations, covenants, or conditions contained in
any evidence of indebtedness. Neither the execution and
delivery of this Credit Agreement, nor the consummation of
the transactions contemplated thereby, nor compliance with
the terms and provisions thereof will violate the
provisions of any applicable law or of any applicable order
or regulations of any governmental authority having
jurisdiction over the parties thereto, or will conflict
with any material permit, license or authorization, or will
conflict with or result in a breach of any of the terms,
conditions or provisions of any restriction or of any
agreement or instrument to which the Borrower is now a
party, or will constitute a default thereunder, or will
result in the creation or imposition of any Lien upon any
of the properties or assets of the Borrower or any
Subsidiary except in favor of the Banks.
SECTION 8.13. MATERIAL RESTRICTIONS. The
Borrower and its Subsidiaries are not a party to any
agreement or other instrument or subject to any other
restriction which materially adversely affects their
business, properties, assets, operations, or conditions,
financial or otherwise, taken as a whole.
SECTION 8.14. CORRECTNESS OF DATA
FURNISHED. The Credit Agreement and all schedules and
exhibits thereto do not contain any untrue statement of a
material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading; and
there is no fact not otherwise disclosed in writing to the
Agent which, to the knowledge of the Borrower, materially
affects adversely the business, properties or condition
(financial or otherwise) of the Borrower and its
Subsidiaries.
SECTION 8.15. TAXES. The Borrower and its
Subsidiaries have (a) timely filed all returns required to
be filed by it with respect to all taxes, (b) paid all
taxes shown to have become due pursuant to such returns,
and (c) paid all other taxes for which a notice of
assessment or demand for payment has been received other
than taxes that the Borrower or its Subsidiary is
contesting in good faith with appropriate proceedings. All
tax returns have been prepared in accordance with all
applicable laws and requirements and accurately reflect in
all material respects the taxable income (or other measure
of tax) of the Borrower filing the same. The accruals for
taxes contained in the Balance Sheet are adequate under
GAAP to cover all liabilities for taxes for all periods
ending on or before the date of such balance sheet and
include adequate provision for all deferred taxes
(including deferred federal taxes), and nothing has
occurred subsequent to that date to make any of such
accruals inadequate. All taxes for periods beginning after
the date of this Credit Agreement through and including the
Closing Date have been paid or are adequately reserved
against on the books of the Borrower. The Borrower and its
Subsidiaries have timely filed all information returns or
reports which are required to be filed and has accurately
reported all information required to be included on such
returns or reports. There are no proposed assessments of
taxes against the Borrower or its Subsidiaries nor proposed
adjustments to any tax return filed that, individually or
in the aggregate, have a material adverse effect on the
business or financial condition of the Borrower.
SECTION 8.16. COMPLIANCE WITH LAWS. Except
as disclosed on Schedule 8.16, the Borrower and, to the
best of the Borrower's knowledge, its Subsidiaries are in
compliance in all material respects with all material laws,
rules, regulations, court orders and decrees, and orders of
any governmental agency which are applicable to the
Borrower and its Subsidiaries or to their properties.
SECTION 8.17. REGULATION U, ETC. The
Borrower does not own, nor does it have any present
intention of acquiring, any "margin stock" within the
meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System (herein called
"margin stock"). The proceeds of the Loans will not be
used, directly or indirectly, by the Borrower for the
purpose of purchasing or carrying, or for the purpose of
reducing or retiring any indebtedness or other liability
which was originally incurred to purchase or carry, any
margin stock or for any other purpose which might cause the
transactions contemplated hereby to be considered a
"purpose credit" within the meaning of said Regulation U,
or which might cause this Credit Agreement to violate
Regulation G, Regulation U, Regulation T, Regulation X, or
any other regulation of the Board of Governors of the
Federal Reserve System or the Securities Exchange Act of
1934. Upon request, the Borrower will promptly furnish the
Agent with a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in said
Regulation U.
SECTION 8.18. HOLDING COMPANY ACT. The
Borrower is not a "Holding Company" or a "Subsidiary
Company" of a "Holding Company", or an "Affiliate" of a
"Holding Company" or of a "Subsidiary Company" of a
"Holding Company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
SECTION 8.19. SECURITIES ACT, ETC. Neither
the registration of any security under the Securities Act
of 1933, as amended, or any other federal, state, or local
securities laws, nor the qualification of the Credit
Agreement, the Notes and/or the Guaranty under the Trust
Indenture Act of 1939, as amended, is required in
connection with the Loan or the issuance and delivery of
the Notes pursuant hereto.
SECTION 8.20. INVESTMENT COMPANY ACT. The
Borrower is not, nor immediately after the application by
the Borrower of the proceeds of each Loan will the Borrower
be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 8.21. INDEBTEDNESS OF SUBSIDIARIES.
No Subsidiary has any indebtedness for borrowed money other
than (a) on terms that limit recourse for the payment
thereof to the real property or other assets of the
Subsidiary securing such indebtedness or (b) such
indebtedness owed by a Subsidiary the sole assets of which
consist of contiguous parcels of land, the improvements, if
any, thereon, furniture, fixtures and other equipment
used in connection therewith, receivables incurred by
tenants in connection therewith and the proceeds of such
receivables and other property directly obtained from the
ownership of such assets.
SECTION 8.22. GUARANTEES. All outstanding
guarantees issued by Borrower are set forth on Schedule
8.22 hereto.
ARTICLE IX
EVENTS OF DEFAULT
Each of the following shall constitute an
event of default (an "Event of Default") hereunder:
SECTION 9.01. PAYMENTS. If all or any
installment of the principal of, or interest on, any Note,
or any fee provided hereunder shall not be paid in full
punctually when due and payable.
SECTION 9.02. COVENANTS.
(a) If Borrower shall fail or omit to perform or
observe any agreement or other provision contained or
referred to in Sections 7.13 and/or 7.20 of this
Credit Agreement; or
(b) If Borrower shall fail or omit to perform or
observe any agreement or other provision (other than
those referred to in Sections 9.01 and 9.02(a) hereof)
contained or referred to in this Credit Agreement or
any Related Writing that is on Borrower's part to be
complied with, and Borrower shall not have corrected
such failure or omission within thirty (30) days after
the giving of written notice thereof to Borrower by
Agent or any Bank that the specified default is to be
remedied.
SECTION 9.03. REPRESENTATIONS AND
WARRANTIES. If any representation, warranty, or statement
made in or pursuant to this Credit Agreement or any Related
Writing or any other material information furnished by
Borrower to the Banks or any thereof or any other holder of
any Note, shall be false or erroneous in any material
respect.
SECTION 9.04. CROSS DEFAULT. If Borrower
and/or any Subsidiary defaults in any payment of principal
or interest due and owing upon any obligation for borrowed
money or, in the case of the Borrower, in the payment or
performance of any obligation permitted to be outstanding
or incurred pursuant to Sections 7.16, 7.17, and/or 7.19
hereof, beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term
or condition contained in any agreement under which any
such obligation is created, if the effect of such default
is to accelerate the maturity of the related indebtedness
or to permit the holder thereof to cause such indebtedness
to become due prior to its stated maturity or foreclose on
any lien on property of Borrower securing the same, except
that defaults in payment or performance of non-recourse
obligations of Borrower or any Subsidiary shall not
constitute Events of Default under this Section 9.04 unless
such defaults have, individually or in the aggregate, a
material adverse effect on the business or financial
condition of Borrower.
SECTION 9.05. TERMINATION OF PLAN. If (a)
any Reportable Event occurs and the Banks, in their sole
determination, deem such Reportable Event to constitute
grounds (i) for the termination of any Plan by the Pension
Benefit Guaranty Corporation or (ii) for the appointment by
the appropriate United States district court of a trustee
to administer any Plan and such Reportable Event shall not
have been fully corrected or remedied to the full
satisfaction of the Banks within thirty (30) days after
giving of written notice of such determination to Borrower
by the Banks or (b) any Plan shall be terminated within the
meaning of Title IV of the Employee Retirement Income
Security Act of 1974, as amended, or (c) a trustee shall be
appointed by the appropriate United States district court
to administer any Plan, or (d) the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any
Plan or to appoint a trustee to administer any Plan.
SECTION 9.06. DOMESTIC SUBSIDIARY'S
SOLVENCY. If (I) any Domestic Subsidiary shall (a)
generally not pay its debts as such debts become due, or
(b) make a general assignment for the benefit of creditors,
or (c) apply for or consent to the appointment of a
receiver, a custodian, a trustee, an interim trustee or
liquidator of itself or all or a substantial part of its
assets, or (d) be adjudicated a debtor or have entered
against it an order for relief under Title 11 of the United
States Code, as the same may be amended from time to time,
or (e) file a voluntary petition in bankruptcy or file a
petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief
of debtors, or admit (by answer, by default or otherwise)
the material allegations of a petition filed against it in
any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of
debtors, or (f) suffer or permit to continue unstayed and
in effect for thirty (30) consecutive days any judgment,
decree or order, entered by a court of competent
jurisdiction, which approves a petition seeking its
reorganization or appoints a receiver, custodian, trustee,
interim trustee or liquidator of itself or of all or a
substantial part of its assets, or (g) take or omit to
take any other action in order thereby to effect any of the
foregoing or (h) fail to pay and discharge all lawful
taxes, assessments, and governmental charges or levies
imposed upon it or its income, profits, or properties,
and/or all lawful claims for labor, materials, and
supplies, which, if unpaid, might become a lien or charge
against such properties, in all cases before the same shall
become in default, or (i) fail to comply with any and all
Environmental Laws applicable to such Domestic Subsidiary,
its properties, or activities, or (j) fail to observe,
perform, or fulfill any of its obligations, covenants or
conditions contained in any evidence of indebtedness or
other contract, decree, order, judgment, or instrument to
which such Domestic Subsidiary is a party or by which it or
its assets are bound, and (II) any such event or events
described in (I) above shall in the reasonable judgment of
the Banks have a material adverse effect on the business or
financial condition of the Borrower.
SECTION 9.07. BORROWER'S SOLVENCY. If
Borrower shall (a) discontinue business, or (b) generally
not pay its debts as such debts become due, or (c) make a
general assignment for the benefit of creditors, or (d)
apply for or consent to the appointment of a receiver, a
custodian, a trustee, an interim trustee or liquidator of
all or a substantial part of its assets, or (e) be
adjudicated a debtor or have entered against it an order
for relief under Title 11 of the United States Code, as the
same may be amended from time to time (the "Bankruptcy
Code"), or (f) file a voluntary petition under any chapter
or provision of the Bankruptcy Code or file a petition or
an answer seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law
(whether federal or state) relating to relief of debtors,
or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any
bankruptcy, reorganization, insolvency or other proceeding
(whether federal or state) relating to relief of debtors,
or (g) suffer or permit to continue unstayed and in effect
for thirty (30) consecutive days any judgment, decree or
order entered by a court or governmental commission of
competent jurisdiction, which assumes custody or control of
Borrower, approves a petition seeking reorganization of
Borrower or any other judicial modification of the rights
of its creditors, or appoints a receiver, custodian,
trustee, interim trustee or liquidator for Borrower or of
all or a substantial part of its assets, or (h) take or
omit to take any action in order thereby to effect any of
the foregoing.
SECTION 9.08. PARENT DEFAULT. Parent or
any other entity shall repudiate or challenge the validity
of the Guaranty, or a Guaranty Default shall occur.
ARTICLE X
REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or
inference herein or elsewhere,
SECTION 10.01. OPTIONAL DEFAULTS. If any
event of default referred to in section 9.01, 9.02(a),
9.02(b), 9.03, 9.04, 9.05, 9.06, 9.07 (other than (e) or
(f) hereof and/or 9.08 shall occur, the Required Banks
shall have the right in their discretion, by directing the
Agent, on behalf of the Banks, to give written notice to
Borrower, to
(a) terminate the Commitments and the
credits hereby established, if not theretofore terminated,
and forthwith upon such election the obligations of Banks,
and each thereof, to make any further Loan or Loans and/or
issue further letters of credit hereunder immediately shall
be terminated, and/or
(b) accelerate the maturity of all of
Borrower's Debt to the Banks (if it be not already due and
payable), whereupon all of Borrower's Debt to the Banks
shall become and thereafter be immediately due and payable
in full without any presentment or demand and without any
further or other notice of any kind, all of which are
hereby waived by Borrower.
SECTION 10.02. AUTOMATIC DEFAULTS. If any
event of default referred to in Section 9.07(e) or 9.07(f)
hereof shall occur,
(a) all of the Commitments and the credits
hereby established shall automatically and forthwith
terminate, if not theretofore terminated, and no Bank
thereafter shall be under any obligation to grant any
further Loan or Loans and/or issue further letters of
credit hereunder, and
(b) the principal of and interest on all
Notes then outstanding, and all of Borrower's Debt to the
Banks shall thereupon become and thereafter be immediately
due and payable in full (if it be not already due and
payable), all without any presentment, demand or notice of
any kind, which are hereby waived by Borrower.
SECTION 10.03. REMEDIES RELATING TO LETTERS
OF CREDIT. In the event the Commitments are terminated
and/or the Debt is accelerated pursuant to Section 10.01 or
10.02 above, Borrower shall immediately deposit with the
Agent an amount of cash equal to the then aggregate amount
of the stated amounts of all letters of credit outstanding
hereunder as security for reimbursement of any drawings
made on any such letters of credit and as collateral for
repayment of the Debt or any part thereof. The amount of
cash required to be deposited pursuant to this Section
10.03 shall constitute part of the Debt and be included in
the indebtedness evidenced by the Notes.
SECTION 10.04. OFFSETS. If there shall
occur or exist any Possible Default under Section 9.07
hereof or if the maturity of the Notes is accelerated
pursuant to Section 10.01 or 10.02 hereof, each Bank shall
have the right at any time to set off against, and to
appropriate and apply toward the payment of, any and all
debt then owing by Borrower to that Bank (including,
without limitation, any participation purchased or to be
purchased pursuant to Section 10.05 hereof), whether or not
the same shall then have matured, any and all deposit
balances and all other indebtedness then held or owing by
that Bank to or for the credit or account of Borrower, all
without notice to or demand upon Borrower or any other
person, all such notices and demands being hereby expressly
waived by Borrower.
SECTION 10.05. EQUALIZATION PROVISION.
Each Bank agrees with the other Banks that if it at any
time shall obtain any Advantage over the other Banks or any
thereof in respect of Borrower's Debt to the Banks
including without limitation in respect of the letters of
credit described in Schedule 3.06 hereof (except under
Sections 4.06, 4.07, 4.08, 4.09, 4.10 and/or 4.11, hereof),
it will purchase from the other Banks, for cash and at par,
such additional participation in Borrower's Debt to the
Banks as shall be necessary to nullify the Advantage. If
any said Advantage resulting in the purchase of an
additional participation as aforesaid shall be recovered in
whole or in part from the Bank receiving the Advantage each
such purchase shall be rescinded, and the purchase price
restored (but without interest unless the Bank receiving
the Advantage is required to pay interest on the Advantage
to the person recovering the Advantage from such Bank)
ratably to the extent of the recovery. Each Bank further
agrees with the other Banks that if it at any time shall
receive any payment for or on behalf of Borrower on any
indebtedness owing by Borrower to that Bank by reason of
offset of any deposit or other indebtedness, it will apply
such payment first to any and all indebtedness owing by
Borrower to that Bank pursuant to this Credit Agreement
(including, without limitation, any participation purchased
or to be purchased pursuant to this Section 10.05) until
Borrower's Debt has been paid in full. Borrower agrees
that any Bank so purchasing a participation from the other
Banks or any thereof pursuant to this Section may exercise
all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Bank
were a direct creditor of Borrower in the amount of such
participation.
ARTICLE XI
THE AGENT
The Banks authorize Society National Bank
and Society National Bank hereby agrees to act as Agent for
the Banks in respect of this Credit Agreement upon the
terms and conditions set forth elsewhere in this Credit
Agreement, and upon the following terms and conditions:
SECTION 11.01. APPOINTMENT AND
AUTHORIZATION. Each Bank hereby irrevocably appoints and
authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers hereunder as are
delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. It is
expressly understood and agreed that the Agent shall not be
or be chargeable with the duties of a fiduciary on account
of its undertaking to act as agent hereunder. Neither the
Agent nor any of its directors, officers, attorneys or
employees shall be liable for any action taken or omitted
to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or
willful misconduct.
SECTION 11.02. NOTE HOLDERS. The Agent may
treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with it
signed by such payee and in form satisfactory to the Agent.
SECTION 11.03. CONSULTATION WITH COUNSEL.
The Agent may consult with legal counsel selected by it and
shall not be liable for any action taken or suffered in
good faith by it in accordance with the opinion of such
counsel.
SECTION 11.04. DOCUMENTS. The Agent shall
not be under a duty to examine into or pass upon the
validity, effectiveness, genuineness or value of this
Credit Agreement, the Notes, any other Related Writing
furnished pursuant hereto or in connection herewith or the
value of any collateral obtained hereunder, and the Agent
shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
SECTION 11.05. AGENT AND AFFILIATES. With
respect to the Loans made hereunder, the Agent shall have
the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not the Agent, and
the Agent and its affiliates may accept deposits from, lend
money to and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the
Borrower.
SECTION 11.06. KNOWLEDGE OF DEFAULT. It is
expressly understood and agreed that the Agent shall be
entitled to assume that no Possible Default or Event of
Default has occurred and is continuing, unless the Agent
has been notified by a Bank in writing that such Bank
considers that a Possible Default or Event of Default has
occurred and is continuing and specifying the nature
thereof.
SECTION 11.07. ACTION BY AGENT. So long as
the Agent shall be entitled, pursuant to Section 11.06
hereof, to assume that no Possible Default or Event of
Default shall have occurred and be continuing, the Agent
shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which
may be vested in it by, or with respect to taking or
refraining from taking any action or actions which it may
be able to take under or in respect of, this Credit
Agreement. The Agent shall incur no liability under or in
respect of this Credit Agreement by acting upon any notice,
certificate, warranty or other paper or instrument believed
by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything which
it may do or refrain from doing in the reasonable exercise
of its judgment, or which may seem to it to be necessary or
desirable in the premises.
SECTION 11.08. NOTICES, DEFAULT, ETC. In
the event that the Agent shall have acquired actual
knowledge of any Possible Default or Event of Default, the
Agent shall promptly notify the Banks and will take such
action and assert such rights under this Credit Agreement
the Required Banks shall direct and the Agent shall inform
the other Banks in writing of the action taken. The Agent
may take such action and assert such rights as it deems to
be advisable, in its discretion, for the protection of the
interests of the holders of the Notes.
SECTION 11.09. INDEMNIFICATION. The Banks
agree to indemnify the Agent (to the extent not reimbursed
by the Borrower), Pro rata according to the respective
principal amounts of their Commitments from and against any
and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in
its capacity as agent in any way relating to or arising out
of this Credit Agreement or any action taken or omitted by
the Agent with respect to this Credit Agreement, provided
that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence, willful
misconduct or from any action taken or omitted by the Agent
in any capacity other than as agent under this Credit
Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. BANKS' INDEPENDENT
INVESTIGATION. Each Bank by its signature to this Credit
Agreement acknowledges and agrees that the Agent has made
no representation or warranty, express or implied, with
respect to the creditworthiness, financial condition, or
any other condition of Borrower, the Parent, or any
Subsidiary, or with respect to the statements contained in
any information memorandum furnished in connection herewith
or in any other oral or written communication between the
Agent and such Bank. Each Bank represents that it has made
and shall continue to make its own independent
investigation of the creditworthiness, financial condition
and affairs of Borrower, the Parent, and any Subsidiary in
connection with the extension of credit hereunder, and
agrees that the Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto
(other than such notices as may be expressly required to be
given by Agent to the Banks hereunder), whether coming into
its possession before the granting of the first Loans or at
any time or times thereafter.
SECTION 12.02. NO WAIVER; CUMULATIVE
REMEDIES. No omission or course of dealing on the part of
Agent, any Bank or the holder of any Note in exercising any
right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are
cumulative and in addition to any other rights, powers or
privileges held by operation of law, by contract or
otherwise.
SECTION 12.03. AMENDMENTS, CONSENTS. No
amendment, modification, termination, or waiver of any
provision of this Credit Agreement or of the Notes nor
consent to any variance therefrom, shall be effective
unless the same shall be in writing and signed by the
Required Banks or all of the Banks in cases provided for in
the next sentence, and any such waiver or consent shall be
effective only in the specific instance and for the
specific purpose for which given. Unanimous consent of the
Banks, or, if there is any borrowing hereunder, the holders
of one hundred per cent (100%) (by amount) of the Notes
shall be required with respect to (i) any increase in any
Commitment, the extension of maturity of the Notes, or the
payment date of interest thereunder, (ii) any reduction in
the rate of interest on the Notes, or in any amount of
principal or interest due on any Note, or any change in the
manner of Pro rata application of any payments made by
Borrower to the Banks hereunder, or any change in
amortization schedules, or in the manner of calculating
fees or prepayment penalties, (iii) any change in any
percentage voting requirement in this Credit Agreement, or
(iv) the increase of more than $5,000,000 on a cumulative
basis of the amounts permitted to be guaranteed by the
Borrower, or (v) any amendment to the definitions of
Required Banks or Reference Banks set forth herein or to
this Section 12.03, or any material amendment to any
representation, warranty, covenant, event of default, or
remedy provided for hereunder. Notice of amendments or
consents ratified by the Banks hereunder shall immediately
be forwarded by Borrower to all Banks. Each Bank or other
holder of a Note shall be bound by any amendment, waiver or
consent obtained as authorized by this section, regardless
of its failure to agree thereto.
SECTION 12.04. NOTICES. All notices,
requests, demands and other communications provided for
hereunder shall be in writing and, if to Borrower, mailed
or delivered to it, addressed to it at the address
specified on the signature pages of this Credit Agreement,
if to a Bank, mailed or delivered to it, addressed to the
address of such Bank specified on the signature pages of
this Credit Agreement. All notices, statements, requests,
demands and other communications provided for hereunder
shall be deemed to be given or made when delivered or
forty-eight (48) hours after being deposited in the mails
with postage prepaid by registered or certified mail or
delivered to a telegraph company, addressed as aforesaid,
except that notices from Borrower to Agent or the Banks
pursuant to any of the provisions hereof shall not be
effective until received by Agent or the Banks.
SECTION 12.05. COSTS, EXPENSES AND TAXES.
Borrower agrees to pay on demand all costs and expenses of
the Banks and Agent, any expenses incurred in connection
with the preparation of this Credit Agreement and any
Related Writings, including (i) administration and out-of-
pocket expenses of Agent in connection with the
administration of this Credit Agreement, the Notes, the
collection and disbursement of all funds hereunder and the
other instruments and documents to be delivered hereunder,
(ii) extraordinary expenses of Agent or the Banks in
connection with the administration of this Credit
Agreement, the Notes and the other instruments and
documents to be delivered hereunder, (iii) the reasonable
fees and out-of-pocket expenses of Thompson, Hine and
Flory, counsel to the Agent, in connection with the
preparation and closing of this Credit Agreement and
related matters, and (iv) all costs and expenses, including
reasonable attorney's fees, in connection with the
restructuring or enforcement of this Credit Agreement or
any Related Writing. In addition, Borrower shall pay any
and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution
and delivery of this Credit Agreement or the Notes, and
the other instruments and documents to be delivered
hereunder, and agrees to save Agent and each Bank harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such
taxes or fees.
SECTION 12.06. SURVIVAL OF REPRESENTATIONS
AND WARRANTIES. All representations and warranties of the
Borrower made in or pursuant to this Credit Agreement or in
any certificate or other Related Writing in connection
herewith shall survive the closing hereof or the making of
the Loan or other transaction in connection with which
given.
SECTION 12.07. OBLIGATIONS SEVERAL; NO
FIDUCIARY OBLIGATIONS. The obligations of the Banks
hereunder are several and not joint. Nothing contained in
this Credit Agreement and no action taken by Agent or the
Banks pursuant hereto shall be deemed to constitute the
Banks a partnership, association, joint venture or other
entity. No default by any Bank hereunder shall excuse the
other Banks from any obligation under this Credit
Agreement; but no Bank shall have or acquire any additional
obligation of any kind by reason of such default. The
relationship among Borrower and the Banks with respect to
this Credit Agreement, any Note and any Related Writing is
and shall be solely that of debtor and creditor,
respectively, and no Bank has any fiduciary obligation
toward Borrower with respect to any such documents or the
transactions contemplated thereby.
SECTION 12.08. EXECUTION IN COUNTERPARTS.
This Credit Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
SECTION 12.09. BINDING EFFECT; ASSIGNMENT.
This Credit Agreement shall become effective when it shall
have been executed by Borrower, Agent and by each Bank and
thereafter shall be binding upon and inure to the benefit
of Borrower and each of the Banks and their respective
successors and assigns, except that Borrower shall not have
the right to assign its rights hereunder or any interest
herein without the prior written consent of all of the
Banks. No person, other than the Banks, shall have or
acquire any obligation to grant Borrower any loans
hereunder.
SECTION 12.10. GOVERNING LAW. This Credit
Agreement, each of the Notes and any Related Writing shall
be governed by and construed in accordance with the laws of
the State of Ohio, without regard to the principles of
conflict of laws and the respective rights and obligations
of Borrower and the Banks shall be governed by Ohio law.
SECTION 12.11. SEVERABILITY OF PROVISIONS;
CAPTIONS. Any provision of this Credit Agreement which is
prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in
interpreting the provisions of this Credit Agreement.
SECTION 12.12. PURPOSE. Each of the Banks
represents and warrants to Borrower that it is entering
into this Credit Agreement with the present intention of
acquiring any Note issued pursuant hereto solely in
connection with such Bank's commercial lending activities
and not for the purpose of distribution or resale, it being
understood, however, that each Bank shall at all times
retain full control over the disposition of its assets.
SECTION 12.13. ADDITIONAL BANKS.
Additional banks may be added to this Credit Agreement on
such terms and conditions as may be agreed among the Agent,
the Banks originally parties hereto, and the Borrower.
SECTION 12.14. CONSENT TO JURISDICTION.
The Borrower agrees that any action or proceeding to
enforce or arising out of this Credit Agreement may be
commenced in the Court of Common Pleas for Cuyahoga County,
Ohio or in the District Court of the United States for the
Northern District of Ohio, and the Borrower waives personal
service of process and agrees that a summons and complaint
commencing an action or proceeding in any such court shall
be properly served and shall confer personal jurisdiction
over the Borrower if served to the Borrower at the address
listed opposite the signature of the Borrower at the end of
this Credit Agreement or as otherwise provided by the laws
of the State of Ohio or the United States.
SECTION 12.15. ENTIRE AGREEMENT. This
Credit Agreement, any Note and any other agreement,
document or instrument attached hereto or referred to
herein or executed on or as of the date hereof integrate
all the terms and conditions mentioned herein or incidental
hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject
matter hereof.
SECTION 12.16. JURY TRIAL WAIVER. BORROWER
AND EACH OF THE BANKS WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER AND THE BANKS,
OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY NOTE
OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT,
WAIVE, LIMIT, AMEND OR MODIFY ANY BANK'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT
PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT AMONG BORROWER AND THE BANKS, OR ANY
THEREOF.
IN WITNESS WHEREOF, the parties hereto have
caused this Credit Agreement to be executed and delivered
as of the date set forth above, each by an officer
thereunto duly authorized.
Address: FOREST CITY RENTAL PROPERTIES
10800 Brookpark Road CORPORATION
Cleveland, Ohio 44130
By: /s/ Thomas G. Smith
Thomas G. Smith
Vice President
Address: SOCIETY NATIONAL BANK
127 Public Square
Cleveland, Ohio 44114
individually and as Agent
By: /s/ Paul E. Horning
Paul E. Horning
Vice President
Address: NATIONAL CITY BANK
1900 East Ninth Street
Cleveland, Ohio 44114 By: /s/ Anthony Dimare
Anthony Dimare
Vice President
Address: THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, Ohio 44114 By: /s/ James R. Logan
James R. Logan
Senior Vice President
Address: COMERICA BANK
One Detroit Center
500 Woodward Avenue, MC 3279
Detroit, MI 48226 By: /s/ Ian Hogan
Ian Hogan
Vice President
Address: FIRST NATIONAL BANK OF OHIO
123 West Prospect Avenue
Cleveland, Ohio 44115 By: /s/ John F. Neumann
John F. Neumann
Vice President
EXHIBIT A
Name Maximum Amount Percentage
Society National Bank $52,500,000 37.5
National City Bank 27,500,000 19.6
The Huntington National Bank 20,000,000 14.3
Comerica Bank 20,000,000 14.3
First National Bank of Ohio 20,000,000 14.3
GUARANTY OF PAYMENT OF DEBT
THIS GUARANTY OF PAYMENT OF DEBT (the "Guaranty")
is made and issued by FOREST CITY ENTERPRISES, INC., an Ohio
corporation (the "Guarantor"), this 25th day of July, 1994, in
order to induce the Banks (as hereinafter defined) and SOCIETY
NATIONAL BANK, as agent for the Banks (the "Agent"), to enter
into, and lend money pursuant to a certain Credit Agreement of
even date herewith (said Credit Agreement as it may be from time
to time amended, restated, or modified being herein called the
"Agreement"), by and among the Banks, the Agent, and FOREST CITY
RENTAL PROPERTIES CORPORATION, a subsidiary of the Guarantor (the
"Borrower").
1. DEFINITIONS. As used in this Guaranty, the
following terms shall have the following meanings:
1.1. "Banks" shall mean COMERICA BANK, FIRST
NATIONAL BANK OF OHIO, THE HUNTINGTON NATIONAL BANK, SOCIETY
NATIONAL BANK, NATIONAL CITY BANK, any other bank(s) that may
become parties to the Agreement, and all successors and assigns
of any such bank; and "Bank" shall mean any one of the foregoing;
1.2. "Cash Flow" shall mean the consolidated net
earnings (loss) of Guarantor and Borrower excluding the gain on
disposition of properties and the provision for decline in real
estate, before deducting the noncash charges from rental
properties for depreciation and amortization, deferred income
taxes and accrued interest on mortgage notes of a rental property
which is not payable until future years;
1.3. "Collateral" shall mean, collectively, all
property, if any, securing the debt or any part thereof at the
time in question;
1.4. "Company" shall mean Guarantor and/or a
Subsidiary of Guarantor;
1.5. "Controlled Group" shall mean a controlled
group of corporations as defined in Section 1563 of the Internal
Revenue Code of 1986, as may be amended from time to time, of
which Guarantor or any Subsidiary is a part;
1.6. "Debt" shall mean, collectively, (a) all
indebtedness now owing or hereafter incurred by Borrower to the
Agent and/or the Banks arising under or in connection with the
Agreement, whether pursuant to commitment or otherwise, and
including, without limitation, the principal amount of all Loans
made pursuant to the Agreement, all interest thereon determined
as provided in the Agreement, all fees provided to be paid by the
Borrower to the Banks and/or the Agent pursuant to the Agreement,
and all liabilities in respect of letters of credit issued by the
Agent and/or any of the Banks for the account of the Borrower
(but not including indebtedness held by any Bank arising and
outstanding under any transaction or document referred to in
Sections 6.06, 7.16 (other than that referred to in subclause (i)
thereof), and/or 7.19 of the Agreement), (b) each renewal,
extension, consolidation, or refinancing of any such indebtedness
in whole or in part, and (c) all interest from time to time
accruing on any of the foregoing indebtedness;
1.7. "Dividends" shall include all dividends
(other than dividends payable only in capital stock of any
Company) declared and/or paid, capital return and other
distributions of any kind made on any share of capital stock
outstanding at the time;
1.8. "Environmental Laws" means all provisions of
law, statutes, ordinances, rules, regulations, permits, licenses,
judgments, writs, injunctions, decrees, orders, awards and
standards promulgated by the government of the United States of
America or by any state or municipality thereof or by any court,
agency, instrumentality, regulatory authority or commission of
any of the foregoing concerning health, safety and protection of,
or regulation of the discharge of substances into, the
environment;
1.9. "Event of Default" shall have the meaning
set forth in Section 10 hereof.
1.10. "Funded Indebtedness" shall mean
indebtedness (including any renewal or extension in whole or in
part) which by its terms matures or remains unpaid more than
twelve (12) months after the date on which originally incurred;
1.11. "Net Earnings" shall mean Guarantor's net
earnings, as determined separately for each fiscal year, after
taxes, upon a consolidated basis (after deducting minority
interests) and in accordance with generally accepted accounting
principles consistently applied;
1.12. "Net Losses" shall mean Guarantor's net
losses, as determined separately for each fiscal year, after
taxes, upon a consolidated basis (after deducting minority
interests) in accordance with generally accepted accounting
principles consistently applied;
1.13. "Net Worth" shall mean, (a) as to any
Subsidiary, the excess of the net book value of such Subsidiary's
assets (other than patents, treasury stock, goodwill and similar
intangibles but including unamortized mortgage and lease costs)
over all of its liabilities (other than liabilities to any other
Company), such excess being determined in accordance with
generally accepted accounting principles applied on a basis
consistent with Guarantor's present accounting procedures, and
(b) as to Guarantor the excess of the net book value (after
deducting all applicable reserves and deducting any value
attributable to the re-appraisal or write-up of any asset) of
Guarantor's assets (other than patents, good will, treasury stock
and similar intangibles but including unamortized mortgage and
lease costs) over all of its liabilities as determined on an
accrued and consolidated and consolidating basis and in
accordance with generally accepted accounting principles not
inconsistent with Borrower's present accounting principles
consistently applied;
1.14. "Obligor" shall mean any person or entity
who, or any of whose property, is or shall be obligated on the
Debt or any part thereof in any manner and includes, without
limiting the generality of the foregoing, Borrower, Guarantor,
and any co-maker, endorser, other guarantor of payment,
subordinating creditor, assignor, grantor of a security interest,
pledgor, mortgagor, or hypothecator of property, if any;
1.15. "Plan" shall mean any employee pension
benefit plan subject to Title IV of the Employee Retirement
Income Security Act of 1974, as amended, established or
maintained by Guarantor, any Subsidiary, or any member of the
Controlled Group, or any such Plan to which Guarantor, any
Subsidiary, or any member of the Controlled Group is required to
contribute on behalf of its employees;
1.16. "Possible Default" shall mean an event or
condition which constitutes, or which, with the lapse of any
applicable grace period or the giving of notice or both would
constitute, any Event of Default referred to in Section 10 hereof
and which has not been appropriately waived by the Banks in
writing or fully corrected prior to becoming an actual event of
default.
1.17. "Receivable" shall mean a claim for moneys
due or to become due, whether classified as a contract right,
account, chattel paper, instrument, general intangible or
otherwise;
1.18. "Reportable Event" shall mean a reportable
event as that term is defined in Title IV of the Employee
Retirement Income Security Act of 1974, as amended, except a
reportable event not subject to the provisions for thirty day
notice to the Pension Benefit Guaranty Corporation and actions of
general applicability by the Secretary of Labor under Section 110
of such Act;
1.19. "Restricted Company" shall mean Guarantor
or a Restricted Subsidiary;
1.20. "Restricted Subsidiary" shall mean any
Subsidiary of Guarantor other than (a) Borrower and (b) any
Subsidiary of Borrower;
1.21. "Subsidiary" shall mean an existing or
future corporation, general partnership, limited partnership, or
other entity (a) the majority of the outstanding capital stock or
partnership interests, as the case may be, or voting power, or
both, of which is (or upon the exercise of all outstanding
warrants, options and other rights would be) owned at the time in
question by Guarantor or by another such corporation, general
partnership, limited partnership or other entity or by any
combination of Borrower and any or one more such corporations,
general partnerships, limited partnerships, or other entities
and/or (b) managed by Guarantor or any corporation, general
partnership, limited partnership or other entity within the terms
of subclause (a).
1.22. All capitalized terms used herein not
herein defined that are defined in the Agreement shall have the
respective meanings ascribed to them in the Agreement.
2. ACKNOWLEDGEMENTS, CONSIDERATION. Guarantor
desires that the Agent and the Banks grant Borrower the loan(s),
credit, and financial accommodations provided for under the
Agreement.The Agreement provides, on and subject to certain
conditions therein set forth, for Term Loans and Revolving Loans
by the Banks to the Borrower up to an aggregate maximum principal
amount of $140,000,000. There exists and will hereafter exist
economic and business relationships between the Guarantor and the
Borrower which will be of benefit to the Guarantor. Guarantor
finds it to be in the direct business and economic interest of
Guarantor that Borrower obtain the loans, credit, and financial
accommodations from the Agent and the Banks provided for in the
Agreement. Guarantor understands that the Agent and the Banks
are willing to grant the loans, credit, and financial
accommodations to Borrower provided for in the Agreement only
upon certain terms and conditions, one of which is that the
Guarantor unconditionally guarantee the payment of the Debt, and
this instrument is being executed and delivered by Guarantor to
satisfy that condition and in consideration of the Agent and the
Banks entering into the Agreement.
3. GUARANTY. Guarantor hereby absolutely,
irrevocably, and unconditionally guarantees: (a) the punctual and
full payment of all and every portion of the Debt when due, by
acceleration or otherwise, whether now owing or hereafter
arising, (b) the prompt observance and performance by the
Borrower of each and all of Borrower's covenants, undertakings,
obligations, and agreements set forth in the Agreement, the
Notes, and/or any other instruments evidencing or pertaining
thereto, and (c) the prompt payment of all expenses and costs,
including reasonable attorneys' fees, incurred by or for the
account of the Agent and/or the Banks in connection with any
action to enforce payment or collection of the Debt from the
Borrower and/or the Guarantor, or to prepare any amendments,
restatements, or modifications of the Agreement, the Notes,
and/or this Guaranty. If the Debt or any part thereof shall not
be paid in full punctually when due and payable, Agent and/or the
Banks in each case shall have the right to proceed directly
against Guarantor under this Guaranty regardless of whether or
not Agent and/or the Banks shall have theretofore proceeded or
shall then be proceeding against Borrower or any other Obligor or
Collateral, if any, or any of the foregoing, it being understood
that Agent and/or the Banks in their sole discretion may proceed
or not proceed against the Borrower, the Obligors, and/or any
Collateral, and may exercise or not exercise each right, power,
or privilege that the Agent and/or the Banks may at any time
have, either simultaneously or separately and, in any event, at
such time or times and as often and in such order as the Agent
and/or the Banks in their sole discretion, may from time to time
deem expedient, all without affecting the obligations of the
Guarantor hereunder or the right of the Agent and/or the Banks to
demand and/or enforce performance by Guarantor of Guarantor's
obligations hereunder.
4. REINSTATEMENT. This Guaranty shall continue
to be effective, or be reinstated, as the case may be, if any
amount paid by or on behalf of the Borrower to the Agent or the
Banks on or in respect of the Debt is rescinded, restored, or
returned in connection with the insolvency, bankruptcy,
dissolution, liquidation, or reorganization of the Borrower or
any other Obligor, or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any other Obligor, or any part of
the property of the Borrower or any other Obligor, or otherwise,
all as though such payment has not been made.
5. WAIVERS. Guarantor waives any and all
contractual, legal, and/or equitable rights of subrogation,
contribution, exoneration, indemnity, and/or reimbursement from
or against Borrower or any Obligor with respect to the Debt
and/or any payments made by Guarantor on account of this
Guaranty.
6. ADDITIONAL AGREEMENTS. Regardless of the
duration of time, regardless of whether Borrower may from time to
time cease to be indebted to the Banks, and irrespective of any
act, omission, or course of dealing whatever on the part of the
Agent and/or the Banks, Guarantor's liabilities and other
obligations under this Guaranty shall remain in full force and
effect until the full and final payment of all of the Debt.
Without limiting the generality of the foregoing:
6.1. The obligations of the Guarantor hereunder
shall not be released, discharged, or in any way affected, nor
shall the Guarantor have any rights or recourse against the Agent
or the Banks by reason of: (a) any action the Agent or the Banks
may take or omit to take, or (b) any defense raised or asserted
by the Borrower against enforcement of the Agreement or the
Notes, or any challenge to the sufficiency or enforceability of
the Agreement, any of the Notes, or this Guaranty.
6.2. The obligations of the Guarantor under this
Guaranty shall be satisfied strictly in accordance with the terms
of this Guaranty, under all circumstances whatsoever, including,
without limitation, the existence of any claim, setoff, defense
or right which the Guarantor or the Borrower may have at any time
against the Agent or the Banks or any other person or entity,
whether in connection with this Guaranty, the Agreement, the
Notes, or the transactions contemplated hereby or any unrelated
transaction.
6.3. Banks shall at no time be under any duty to
Guarantor to grant any loans, credit, or financial accommodation
to Borrower, irrespective of any duty or commitment of Banks to
Borrower, or to follow or direct the application of the proceeds
of any such loans, credit, or financial accommodation;
6.4. Guarantor waives (a) notice of the granting
of any loan to Borrower or the incurring of any other
indebtedness, including. but not limited to the creation of the
Debt, by Borrower or the terms and conditions thereof,
(b) presentment, notice of nonpayment, demand for payment,
protest, notice of protest, and notice of dishonor of the Notes
or any other indebtedness incurred by Borrower to Banks,
(c) notice of any indulgence granted to any Obligor, (d) notice
of the Banks' acceptance of this Guaranty, and (d) any other
notice to which Guarantor might, but for the within waiver, be
entitled;
6.5. The Agent and/or the Banks in their sole
discretion may, without prejudice to their rights under this
Guaranty, at any time or times (a) grant Borrower whatever loans,
credit, or financial accommodations that Banks, or any thereof,
may from time to time deem advisable, even if Borrower might be
in default and even if those loans, credit or financial
accommodations might not constitute Debt the payment of which is
guaranteed hereunder, (b) assent to any renewal, extension,
consolidation, or refinancing of the Debt or any part thereof,
(c) forbear from demanding security, if the Agent and/or the
Banks shall have the right to do so, (d) release any Obligor or
Collateral or assent to any exchange of Collateral, if any,
irrespective of the consideration, if any, received therefor,
(e) grant any waiver or consent or forbear from exercising any
right, power or privilege that the Agent and/or the Banks may
have or acquire, (f) assent to any amendment, deletion, addition,
supplement, or other modification in, to, or of any writing
evidencing or securing any Debt or pursuant to which any Debt is
created, (g) grant any other indulgence to any Obligor,
(h) accept any Collateral for or other Obligors upon the Debt or
any part thereof, and (i) fail, neglect or omit in any way to
realize upon any Collateral or to protect the Debt or any part
thereof or any Collateral therefor;
6.6. Guarantor's liabilities and other
obligations under this Guaranty shall survive any merger,
consolidation, or dissolution of Guarantor;
6.7. Guarantor's liabilities and other
obligations under this Guaranty shall be absolute and
unconditional irrespective of any lack of validity or
enforceability of any agreement, instrument, or document
evidencing the Debt or related thereto, or any other defense
available to Guarantor in respect of this Guaranty.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor
represents and warrants that (a) it is a duly organized and
validly existing corporation under the laws of the State of Ohio,
(b) the execution, delivery, and performance of this Guaranty
been duly authorized by all necessary corporate action, (c) there
is no prohibition in either its Articles of Incorporation, Code
or Regulations, or in any agreement, instrument, judgment, decree
or order to which it is a party which in any way restricts or
prohibits the execution, delivery, and performance of this
Guaranty in any respect, and (d) this Guaranty has been duly
executed and delivered by the Guarantor and is a valid and
binding obligation of the Guarantor enforceable against Guarantor
in accordance with its terms.
The Guarantor further represents and warrants that
this Guaranty is made in furtherance of the purposes for which
the Guarantor was incorporated and is necessary to promote and
further the business of the Guarantor and that the assumption by
the Guarantor of its obligations hereunder will result in direct
financial benefits to the Guarantor.
This Guaranty is not made in connection with any
consumer loan or consumer transaction.
Guarantor represents and warrants that
(a) Guarantor has received consideration which is the reasonable
equivalent value of the obligations and liabilities that
Guarantor has incurred to the Agent and/or the Banks,
(b) Guarantor is not insolvent as defined in any applicable state
or federal statute, nor will Guarantor be rendered insolvent by
the execution and delivery of this Guaranty to the Agent and the
Banks, (c) Guarantor is not engaged or about to engage in any
business or transaction for which the assets retained by
Guarantor shall be an unreasonably small capital, taking into
consideration the obligations to the Agent and the Banks incurred
hereunder, and (d) Guarantor does not intend to, nor does
Guarantor believe, that Guarantor will incur debts beyond
Guarantor's ability to pay as they become due.
8. NOTICES. The Agent and/or the Banks shall be
deemed to have knowledge or to have received notice of any event,
condition or thing only if the Agent and/or the Banks shall have
received written notice thereof as provided in the Agreement. A
written notice shall be deemed to have been duly given to
Guarantor whenever a writing to that effect shall have been sent
by registered or certified mail to Guarantor at the address set
forth opposite Guarantor's signature below (or to such other
address of Guarantor as Guarantor may hereafter furnish to Banks
in writing for such purpose), but no other method of giving
notice to or making a request of Guarantor is hereby precluded.
9. COVENANTS. Guarantor hereby agrees to perform
and observe and to cause each Subsidiary to perform and observe,
all of the following covenants and agreements:
9.1. INSURANCE. Each Company will:
(a) insure itself and all of its insurable
properties to such extent, by such insurers, and against
such hazards and liabilities as is generally done by
businesses similarly situated, it being understood that
Guarantor has obtained a fidelity bond for such of its
employees as handle funds belonging to Borrower or
Guarantor,
(b) give the Agent prompt written notice of any
material reduction or adverse change in that Company's
insurance coverage, and
(c) forthwith upon any Bank's or the Agent's
written request, furnish to each Bank and the Agent such
information in writing about that Company's insurance as any
Bank may from time to time reasonably request.
9.2. MONEY OBLIGATIONS. Each Company will pay in
full:
(a) prior in each case to the date when penalties
would attach, all taxes, assessments and governmental
charges and levies (except only those so long as and to the
extent that the same shall be contested in good faith by
appropriate and timely proceedings diligently pursued and
taxes and assessments on inconsequential parcels of vacant
land, the nonpayment of which does not materially adversely
affect the financial condition of Guarantor) for which it
may be or become liable or to which any or all of its
properties may be or become subject,
(b) all of its wage obligations to its employees
in compliance with the Fair Labor Standards Act (29 U.S.C.
Section 206-207) or any comparable provisions, and
(c) all of its other obligations calling for the
payment of money (except only those so long as and to the
extent that the same shall be contested in good faith by
appropriate and timely proceedings diligently pursued)
before such payment becomes overdue.
9.3. RECORDS. Each Company will:
(a) at all times maintain true and complete
records and books of account and, without limiting the
generality of the foregoing, maintain appropriate reserves
for possible losses and liabilities, all in accordance with
generally accepted accounting principles applied on a basis
not inconsistent with its present accounting procedures, and
(b) at all reasonable times permit each Bank to
examine that Company's books and records and to make
excerpts therefrom and transcripts thereof.
9.4. FRANCHISES. Each Company will preserve and
maintain at all times its corporate existence, rights and
franchises; provided that this Section shall not apply to (a) any
merger of a Subsidiary into Guarantor or into another Subsidiary,
or (b) any consolidation of a Subsidiary with another Subsidiary.
9.5. NOTICE. Guarantor will cause its Chief
Financial Officer, or in his or her absence another officer
designated by the Chief Financial Officer, to promptly notify the
Banks whenever (a) any Event of Default or Possible Default may
occur hereunder or any representation or warranty made herein may
for any reason cease in any material respect to be true and
complete and/or (b) any Restricted Subsidiary shall (i) be in
default of any material (either with respect to the Subsidiary or
the Guarantor) obligation for payment of borrowed money, or, to
the knowledge of Guarantor, any material obligations in respect
of guarantees, taxes, and/or indebtedness for goods or services
purchased by, or other contractual obligations of, such
Subsidiary and/or (ii) not, to the knowledge of Guarantor, be in
compliance with any law, order, rule, judgments, ordinance,
regulation, license, franchise, lease, or other agreement that
has or could reasonably be expected to have a material adverse
effect on the business, operations, property, or financial
condition of the Subsidiary, and/or (iii) Guarantor and/or the
Subsidiary shall have received or have knowledge of any actual,
pending, or threatened claim, notice, litigation, citation,
proceeding, or demand relating to any matter(s) described in
subclauses (i) and (ii) of this Section.
9.6. ERISA COMPLIANCE. No Company will incur any
material accumulated funding deficiency within the meaning of the
Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations thereunder, or any material
liability to the Pension Benefit Guaranty Corporation,
established thereunder in connection with any Plan. Each Company
will furnish (i) as soon as possible and in any event within
thirty (30) days after such Company knows or has reason to know
that any Reportable Event with respect to any Plan has occurred,
a statement of the chief financial officer of such Company
setting forth details as to such Reportable Event and the action
which such Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given
to the Pension Benefit Guaranty Corporation if a copy of such
notice is available to such Company, (ii) promptly after the
filing thereof with the United States Secretary of Labor or the
Pension Benefit Guaranty Corporation, copies of each annual
report with respect to each Plan established or maintained by
such Company for each plan year, including (x) where required by
law, a statement of assets and liabilities of such Plan as of the
end of such plan year and statements of changes in fund balance
and in financial position, or a statement of changes in net
assets available for plan benefits, for such plan year, certified
by an independent public accountant satisfactory to the Banks and
(y) an actuarial statement of such Plan applicable to such plan
year, certified by an enrolled actuary of recognized standing
acceptable to the Banks, and (iii) promptly after receipt thereof
a copy of any notice such Company, any Subsidiary or and member
of the Controlled Group may receive from the Pension Benefit
Guaranty Corporation Group may receive from the Pension Benefit
Guaranty Corporation or the Internal Revenue Service with respect
to any Plan administered by such Company; provided, that this
latter clause shall not apply to notices of general application
promulgated by the Pension Benefit Guaranty Corporation or the
Internal Revenue Service. As used in this Section "material"
means the measure of a matter of significance which shall be
determined as being an amount equal to five per cent (5%) of each
Company's Net Worth.
9.7. FINANCIAL STATEMENTS. Guarantor will
furnish to each Bank:
(a) within sixty (60) days after the end of each
quarter-annual period of each fiscal year of Guarantor, a
copy of Guarantor's Form 10-Q quarterly report filed by
Guarantor with the Securities Exchange Commission,
(b) within sixty (60) days after the end of each
of the first three quarter-annual fiscal periods of each
fiscal year of Guarantor, balance sheets of the Companies as
at the end of that period and the profit and loss and
reconciliation of surplus statements for that period, all
prepared on a consolidating and consolidated basis and
otherwise in form and detail satisfactory to the Banks and
certified by an officer of Guarantor, together with (i) a
certificate of the Chief Financial Officer of Guarantor (x)
specifying the nature and period of existence of each Event
of Default and/or Possible Default, if any, and the action
taken, being taken, or proposed to be taken by the Guarantor
in respect thereof, or if none, so stating and (y)
certifying that the representations and warranties of the
Guarantor set forth herein are true and correct as of the
date of such certificate, or, if not, all respects in which
they are not, and (ii) a covenant compliance worksheet in
the form and substance of Schedule 9.70 hereof completed
with respect to the Net Worth of the Guarantor as of the end
of such fiscal quarterly period,
(c) within one hundred twenty (120) days after
the close of each fiscal year of Guarantor, (i) a complete
annual audit report of the Companies prepared on a
consolidated basis and certified by an independent public
accountant satisfactory to the Banks, and (ii) a complete
unaudited annual report of the Companies prepared on a
consolidating basis, both in form and detail consistent with
past practice satisfactory to the Banks, together with (x) a
certificate of the Chief Financial Officer of Guarantor (1)
specifying the nature and period of existence of each Event
of Default and/or Possible Default, if any, and the action
taken, being taken or proposed to be taken by Guarantor in
respect thereof or, if none, so stating and (2) certifying
that the representations and warranties of the Guarantor set
forth herein are true and correct as of the date of such
certificate, or, if not, all respects in which they are not,
and (iii) a fully completed covenant compliance worksheet in
the form and substance of Schedule 9.7 hereof relating to
such fiscal year,
(d) concurrently with furnishing any semi-annual
financial statement or audit report pursuant to this
Section, a certificate by Charles A. Ratner, Albert Ratner,
Samuel H. Miller, or Thomas G. Smith stating whether any
Company has made any guaranty or incurred any indebtedness
referred to in Section 9.10(d) or Section 9.12(g) hereof or
in Section 7.16(iv) or Section 7.19(vii) of the Agreement,
and, if so, the details thereof,
(e) as soon as available, copies of all notices,
reports, proxy statements and other similar documents sent
by Guarantor to its shareholders, to the holders of any of
its debentures or bonds or the trustee of any indenture
securing the same or pursuant to which they be issued, to
any securities exchange or to the Securities Exchange
Commission or any similar federal agency having regulatory
jurisdiction over the issuance of Guarantor's securities,
and
(f) forthwith upon any Bank's written request
such other information of any Company's financial condition
and business.
9.8. CASH FLOW. Borrower and Guarantor will not
suffer or permit their Cash Flow at any time to fall below the
sum of (a) Sixty Million Dollars ($60,000,000), plus (b) the
cumulative sum of amounts equal to fifty percent (50%) of the
amount, if any, by which their Cash Flow in each fiscal year
(commencing with their 1994 fiscal year) exceeds their Cash Flow
in the immediately preceding fiscal year.
9.9. COMBINATIONS, BULK TRANSFERS. No Restricted
Company will be a party to any consolidation or merger or lease,
sell or otherwise transfer all or any substantial part of its
assets, or sell, pledge, hypothecate, or transfer its stock or
other interests in any Subsidiary; provided, that this Section
shall not apply to any transfer effected in the normal course of
business on commercially reasonable terms.
9.10. BORROWINGS. No Restricted Company will
create, assume or suffer to exist any indebtedness for borrowed
money or any Funded Indebtedness of any kind including, but not
limited to, leases required to be capitalized under Financial
Accounting Standards Board Standard No. 13; provided, that this
Section shall not apply to:
(a) any loan obtained by Forest City Trading
Group, Inc., formerly known as American International
Forest Products, Inc. (or any of its wholly-owned
subsidiaries) from any lender other than the Companies,
(b) any loan obtained from Guarantor by any
Restricted Subsidiary and, in the ordinary course of
business by Forest City Trading Group, Inc. (or any of
its wholly-owned subsidiaries),
(c) any real estate loan heretofore or
hereafter obtained or guaranteed by Guarantor for the
purpose of financing any building to be used only for
the business of Guarantor and its Subsidiaries,
provided that no such loan shall exceed eighty per cent
(80%) of the lender's appraisal of the real estate
being financed,
(d) any loan that is obtained or guaranteed
by Guarantor, provided that Guarantor's aggregate
personal liability in respect of all such loans (other
than any loan obtained by Guarantor and permitted by
any other clause of this Section) and in respect of all
guaranteed loans referred to in clause (f) of
Section 9.13 hereof, does not then exceed, and after
incurring the indebtedness in question would not
exceed, One Million Five Hundred Thousand Dollars
($1,500,000),
(e) leases required to be capitalized under
Financial Accounting Standards Board Standard No. 13 in
the aggregate amount for all Restricted Subsidiaries of
Three Million Dollars ($3,000,000), or
(f) any indebtedness created in the course
of purchasing or developing real estate or financing
construction or other improvements thereon or
purchasing furniture, fixtures or other equipment
therefor or any other indebtedness of any Restricted
Company for borrowed money or any refinancings thereof,
provided that no Restricted Company (other than a
Restricted Company whose sole assets consist of
contiguous parcels of land which are being purchased or
developed with such financing, the improvements, if
any, thereon, furniture, fixtures and other equipment
used in connection therewith, receivables incurred by
tenants in connection therewith and the proceeds of
such receivables and other property directly obtained
from the ownership of such assets) shall have any
personal liability for such indebtedness, the
creditors' recourse being solely to the property being
pledged as collateral for such indebtedness and the
income therefrom.
9.11. LIENS. No Restricted Company will:
(a) sell or otherwise transfer any Receivables
other than in the ordinary course of business,
(b) acquire any property subject to any land
contract, conditional sale contract, or other title
retention contract, or
(c) suffer or permit any property now owned or
hereafter acquired by it or to be or become encumbered by
any mortgage, security interest, financing statement,
encumbrance, or lien of any kind or nature;
provided, that this Section shall not apply to:
(i) any lien for a tax, assessment or other
governmental charge or levy so long as the payment
thereof is not required by Section 9.2(a) hereof,
(ii) any lien securing only workmen's
compensation, unemployment insurance or similar
obligations,
(iii) any mechanic's, warehousemen's,
carrier's or similar common law or statutory lien
incurred in the normal course of business,
(iv) any judgment lien against a Subsidiary
having a Net Worth of One Hundred Fifty Thousand
Dollars ($150,000) or less,
(v) any mortgage, security interest, or
other lien encumbering property of any Restricted
Subsidiary for the purpose of securing any indebtedness
owing by only that Subsidiary,
(vi) any mortgage, security interest, or
other lien encumbering property of Guarantor and
securing any indebtedness or liability of Guarantor
permitted by clause (c) of Section 9.10 or by
Section 9.12 hereof,
(vii) any transfer made in the normal course
of business by Forest City Trading Group, Inc. (or any
of its wholly-owned subsidiaries), or
(viii) any financing statement perfecting a
security interest permitted by this Section 9.11,
9.12. GUARANTEES. No Restricted Company will be
or become a guarantor of any kind; provided, that this Section
shall not apply to:
(a) any endorsement of a check or other
medium of payment for deposit or collection through
normal banking channels or any similar transaction in
the normal course of business,
(b) any indemnity or guaranty of a surety
bond for the performance by some customer of a
Restricted Company of the customer's obligations under
a land development contract,
(c) any guaranty by Guarantor of a real
estate loan permitted by clause (c) of Section 9.10,
(d) any guarantee of the completion of a
real estate building project, if Guarantor or any
Company is the developer of the project or has a
property interest in the project,
(e) the guaranty by Guarantor set forth in
Section 3 hereof,
(f) any other guaranty by Guarantor,
provided that Guarantor's aggregate personal liability
in respect of all those other guarantees and all
indebtedness for borrowed money (other than any loan
permitted by clauses (a) through (c), both inclusive,
of Section 9.10 hereof) does not exceed, and after
making the guaranty in question would not exceed, One
Million Five Hundred Thousand Dollars ($1,500,000),
(g) any guarantee by Guarantor of letters of
credit issued on or after the first anniversary of the
Closing Date by any banking institution on behalf of
Forest City Residential Development, Inc. or Borrower,
or any obligation of Guarantor as an applicant under
standby letters of credit so long as (i) the aggregate
amount of all such outstanding guarantees, plus
(ii) the aggregate face amount of all such outstanding
letters of credit issued on behalf of Guarantor, plus
(iii) the aggregate face amount of all such outstanding
letters of credit issued on behalf of or guaranteed by
Borrower, plus (iv) the aggregate face amount of all
letters of credit permitted under clause (i) of this
Section does not exceed Ten Million Dollars
($10,000,000),
(h) obligations of Guarantor as in effect on
the Closing Date after giving effect to the
transactions contemplated under Section 6.06 of the
Agreement in respect of guarantees of debt service,
payment of taxes, and/or availability of Regional
Transit Authority easements relating to the Ritz
Carlton Project and the Post Office Building Plaza, or
(i) any guarantee by Guarantor of the equity
investment of performance of a Subsidiary (other than
any obligations of such Subsidiary incurred for
borrowed money) in connection with a real estate
project in favor of a partner or partnership in which
such Subsidiary is a general partner, when Guarantor
deems it to be in its best interest not to be a partner
or have a direct interest in the partnership.
9.13. REDEMPTIONS, PREPAYMENTS, AND DIVIDENDS.
(a) No Company will directly or indirectly
purchase, acquire, redeem or retire any shares of its
capital stock at any time outstanding or set aside funds for
any such purpose;
(b) No Company will directly or indirectly pay
any principal of, make sinking fund payments in respect of
or purchase any Funded Indebtedness now or hereafter owing
by Guarantor other than any principal payment, sinking fund
payment or purchase the omission of which would (or with the
giving of notice or the lapse of any applicable grace period
or both) accelerate, or give any one the right to
accelerate, the maturity of such Funded Indebtedness in
accordance with the original terms thereof;
(c) Guarantor will not directly or indirectly
declare or pay any Dividends, except that, so long as no
Event of Default shall have occurred and be continuing
hereunder and no Event of Default shall have occurred and be
continuing under the Agreement, Guarantor may pay Dividends
in aggregate amounts not exceeding Five Million Dollars
($5,000,000) during the first year following the execution
of the Agreement, Seven Million Five Hundred Thousand
Dollars ($7,500,000) during the second year following the
execution of the Agreement, and Ten Million Dollars
($10,000,000) in any yearly period measured by anniversary
dates of the date of the Agreement thereafter. If the
aggregate amount of Dividends paid by the Guarantor in any
such year is less than the maximum amount permitted for that
year, the difference between the amount actually paid and
the maximum amount permitted for that year may be carried
over to the next year; provided, however, that in no event
shall payments of Dividends by the Guarantor exceed Ten
Million Dollars ($10,000,000) in any such year.
9.14. NET WORTH; ADJUSTED NET WORTH.
(a) Guarantor will not suffer or permit its Net
Worth (determined on a consolidated basis) at any time to
fall below One Hundred Twenty Million Dollars ($120,000,000)
increased on a cumulative basis by twenty-five per cent
(25%) of Borrower's Net Earnings (before Dividends) in each
fiscal year beginning after January 31, 1994.
(b) Guarantor will not suffer or permit its Net
Worth (determined on a consolidated basis) plus Guarantor's
accumulated depreciation, plus deferred taxes, at any time
to fall below Four Hundred Million Dollars ($400,000,000).
9.15. ENVIRONMENTAL COMPLIANCE. Guarantor will
comply with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which
Guarantor or any Restricted Subsidiary owns property, operates,
arranges for disposal or treatment of hazardous substances, solid
waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in
real property or otherwise. Guarantor will furnish to the Banks
promptly after receipt thereof a copy of any notice Guarantor or
any Restricted Subsidiary may receive from any governmental
authority, private person or entity or otherwise that any
litigation or proceeding pertaining to any environmental, health
or safety matter has been filed or is threatened against
Guarantor or such Restricted Subsidiary, any real property in
which Guarantor or such Restricted Subsidiary holds any interest
or any past or present operation of Guarantor or such Restricted
Subsidiary. Guarantor will not knowingly allow the storage,
release or disposal of hazardous waste, solid waste or other
wastes on, under or to any real property in which Guarantor holds
any interest or performs any of its operations, in violation of
any Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry
whether brought by any governmental authority, private person or
entity or otherwise. Guarantor shall defend, indemnify and hold
the Banks harmless against all costs, expenses, claims, damages,
penalties and liabilities of every kind or nature whatsoever
(including attorneys fees) arising out of or resulting from the
noncompliance of Guarantor or any Restricted Subsidiary with any
Environmental Law, provided that, so long as and to the extent
that the Banks are not required to make any payment or suffer to
exist any unsatisfied judgment, order, or assessment against
them, the Borrower may pursue rights of appeal to comply with
such Environmental Laws. In any case of noncompliance with any
Environmental Law by a Restricted Subsidiary, the Banks' recourse
for such indemnity herein shall be limited solely to the property
of the Restricted Subsidiary holding title to the property
involved in such noncompliance and such recovery shall not be a
lien, or a basis of a claim of lien or levy of execution, against
either Guarantor's general assets or the general assets of any of
its other Restricted Subsidiaries.
9.16. PLAN. Neither Guarantor nor any Restricted
Subsidiary will suffer or permit any Plan to be amended if, as a
result of such amendment, the current liability under the Plan is
increased to such an extent that security is required pursuant to
Section 307 of the Employee Retirement Income Security Act of
1974, as amended from time to time. As used herein, "current
liability" means current liability as defined in Section 307 of
such Act.
10. DEFAULT; REMEDIES. The Guarantor shall be in
default hereunder in the event that any of the following (an
"Event of Default") shall occur or exist:
(a) Any representation or warranty made by the
Guarantor, or any of its officers, herein, or in any written
statement or certificate furnished at any time in connection
herewith, shall prove untrue in any material respect as of
the date it was made, or
(b) The Guarantor shall fail to observe, perform,
or comply with any obligation, covenant, agreement, or
undertaking of Guarantor set forth in Sections 3, 9.5, 9.8,
9.13 and/or 9.14 hereof, or
(c) The Guarantor shall fail to observe, perform,
or comply with any obligation, covenant, agreement, or
undertaking of Guarantor set forth in any section or
provision hereof other than those identified specifically in
subsection (b) above and Guarantor shall not have corrected
such failure within thirty (30) days after the giving of
written notice thereof to Guarantor by Agent or any Bank
that the specified failure is to be corrected, or
(d) Guarantor and/or any Restricted Subsidiary
defaults in any payment of principal or interest due and
owing upon any obligation for borrowed money or, in the case
of the Guarantor, in the payment or performance of any
obligation permitted to be outstanding or incurred pursuant
to Sections 9.10 and/or 9.12 hereof, beyond any period of
grace provided with respect thereto or in the performance of
any other agreement, term or condition contained in any
agreement under which any such obligation is created, if the
effect of such default is to accelerate the maturity of the
related indebtedness or to permit the holder thereof to
cause such indebtedness to become due prior to its stated
maturity or foreclose on any lien on property of Guarantor
securing the same, except that defaults in payment or
performance of non-recourse obligations of Guarantor or any
Restricted Subsidiary shall not constitute Events of Default
under this Section 10(d) unless such defaults have, or
individually or in the aggregate, a material adverse effect
on the business or financial condition of Guarantor. or
(e) (I) any Restricted Subsidiary shall (a)
generally not pay its debts as such debts become due, or (b)
make a general assignment for the benefit of creditors, or
(c) apply for or consent to the appointment of a receiver, a
custodian, a trustee, an interim trustee or liquidator of
itself or all or a substantial part of its assets, or (d) be
adjudicated a debtor or have entered against it an order for
relief under Title 11 of the United States Code, as the same
may be amended from time to time, or (e) file a voluntary
petition in bankruptcy or file a petition or an answer
seeking reorganization or an arrangement with creditors or
seeking to take advantage of any other law (whether federal
or state) relating to relief of debtors, or admit (by
answer, by default or otherwise) the material allegations of
a petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether
federal or state) relating to relief of debtors, or
(f) suffer or permit to continue unstayed and in effect for
thirty (30) consecutive days any judgment, decree or order,
entered by a court of competent jurisdiction, which approves
a petition seeking its reorganization or appoints a
receiver, custodian, trustee, interim trustee or liquidator
of itself or of all or a substantial part of its assets, or
(g) take or omit to take any other action in order thereby
to effect any of the foregoing or (h) fail to pay and
discharge all lawful taxes, assessments, and governmental
charges or levies imposed upon it or its income, profits, or
properties, and/or all lawful claims for labor, materials,
and supplies, which, if unpaid, might become a lien or
charge against such properties, in all cases before the same
shall become in default, or (i) fail to comply with any and
all Environmental Laws applicable to such Domestic
Subsidiary, its properties, or activities, or (j) fail to
observe, perform, or fulfill any of its obligations,
covenants or conditions contained in any evidence of
indebtedness or other contract, decree, order, judgment, or
instrument to which such Domestic Subsidiary is a party or
by which it or its assets are bound, and (II) any such event
or events described in (I) above shall in the reasonable
judgment of the Banks have a material adverse effect on the
business or financial condition of the Guarantor, or
(f) An Event of Default specified in Article IX
of the Agreement shall have occurred and be continuing, or
(g) The Guarantor shall (i) make a general
assignment for the benefit of creditors, (ii) file a
voluntary petition under any chapter or provision of Title
11 United States Code (Bankruptcy), as from time to time in
effect (the "Bankruptcy Code") or a petition or answer
seeking reorganization of the Guarantor or a readjustment of
its indebtedness under the Bankruptcy Code or any other
federal or state law providing for relief of debtors,
reorganization, liquidation, or arrangements with creditors,
(iii) consent to the appointment of a receiver or trustee of
its properties, or (iv) cease to be or be unable to pay its
debts generally as they become due, or
(h) Relief shall be ordered against Guarantor as
debtor in any involuntary case under the Bankruptcy Code, or
a petition or proceedings for bankruptcy or for
reorganization shall be filed against Guarantor under the
Bankruptcy Code or any other federal or state law providing
for relief of debtors, reorganization, liquidation, or
arrangements with creditors, and Guarantor shall admit the
material allegations thereof, or an order, judgment or
decree entered therein shall not be vacated or stayed within
thirty (30) days of its entry, or a receiver or trustee
shall be appointed for the Guarantor or its properties or
any part thereof and remain in possession thereof for thirty
(30) days,
then, in any such event, and at any time thereafter, the Agent
and/or the Banks may at their option, by written notice delivered
or mailed to the Guarantor, do any one or more of the following:
(a) declare the Debt to be immediately due and payable, and upon
any such declaration such indebtedness shall become and be
forthwith due and payable by Guarantor without any further
notice, presentment, or demand of any kind, all of which are
expressly waived by the Guarantor, or (b) require the Guarantor
to purchase the Debt at par value, without recourse, within ten
(10) days after such notice, by paying to the Agent, in
immediately available U.S. funds, an amount equal to the unpaid
principal amount then outstanding on the Notes and any other
matured or unmatured Debt owing to the Banks, plus the unpaid
accrued interest on the Notes at the rate or rates determined in
accordance with the Agreement. The foregoing rights, powers, and
remedies of the Agent and the Banks are not exclusive and are in
addition to any and all other rights, powers, and remedies
provided for hereunder (including, without limitation, under
Section 13 hereof), at law, and/or in equity. The exercise by
the Agent and/or the Banks of any right, power, or remedy shall
not waive or preclude the exercise of any other rights, powers,
and/or remedies.
11. MISCELLANEOUS. The foregoing rights, powers,
and remedies of the Agent and the Banks are not exclusive and are
in addition to any and all other rights, powers, and remedies
provided for hereunder, at law, and/or in equity. The exercise
by the Agent and/or the Banks of any right, power, or remedy
shall not waive or preclude the exercise of any other rights,
powers, and/or remedies. This Guaranty shall bind Guarantor and
its successors and assigns and shall inure to the benefit of the
Agent and the Banks and their respective successors and assigns
including (without limitation) each holder of any Note. The
provisions of this Guaranty and the respective rights and duties
of Guarantor and the Agent and/or the Banks hereunder shall be
interpreted and determined in accordance with Ohio law, without
regard to principles of conflict of laws. If at any time one or
more provisions of this Guaranty is or becomes invalid, illegal
or unenforceable in whole or in part, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby. This Guaranty constitutes a
final written expression of all of the terms of this Guaranty, is
a complete and exclusive statement of those terms and supersedes
all oral representations, negotiations, and prior writings, if
any, with respect to the subject matter hereof. The relationship
between Guarantor and the Agent and/or the Banks with respect to
this Guaranty is and shall be solely that of debtor and creditor,
respectively, and the Agent and/or the Banks have no fiduciary
obligation to Guarantor with respect to this Guaranty or the
transactions contemplated thereby. All representations and
warranties of Guarantor shall survive the execution and delivery
of this Guaranty and be and remain true and correct until this
Guaranty is discharged. Captions herein are for convenient
reference only and shall have no effect on the interpretation of
any provision hereof.
12. JURY TRIAL WAIVER. Guarantor waives the
right to have a jury participate in resolving any dispute,
whether sounding in contract, tort, or otherwise, between or
among Guarantor and the Agent, the Banks, and/or Borrower arising
out of or in connection with the Agreement, this Guaranty, or any
other agreement, instrument or document executed or delivered in
connection therewith or the transactions related thereto. This
waiver shall not in any way affect, waive, limit, amend or modify
the rights or powers of the Agent and/or the Banks to pursue
remedies pursuant to any confession of judgment or cognovit
provision contained in this instrument, any note or any other
guaranty of payment, agreement, instrument or document related
thereto.
13. WARRANT OF ATTORNEY. Guarantor authorizes
any attorney at law at any time or times to appear in any state
or federal court of record in the United States of America after
the Debt or any part thereof shall have become due and payable
(whether the payment becomes due by lapse of time or by
acceleration of maturity or otherwise) and in each case to waive
the issuance and service of process, to admit the maturity of the
Debt and the nonpayment thereof when due, to present each
evidence of the Debt in question or any part thereof to the court
and to certify the amount of the Debt then owing thereon, to
confess judgment against Guarantor in favor of Banks for the
amount of the Debt then appearing due, together with interest and
costs of suit, and thereupon to release all errors and waive all
rights of appeal and stay of execution. The foregoing warrant of
attorney shall survive any judgment, and should any judgment be
vacated for any reason Banks may nevertheless utilize the
foregoing warrant of attorney in thereafter obtaining additional
judgment or judgments against Guarantor. The Guarantor expressly
authorizes any attorneys for the Agent and/or the Banks to
receive compensation from the Agent and/or the Banks for services
rendered in exercising the foregoing warrant of attorney and in
the enforcement of any judgment obtained against the Guarantor in
favor of the Agent and/or the Banks on this Guaranty, and the
Guarantor expressly waives any conflict of interest to which any
attorneys for the Agent and/or the Banks may be subject that may
arise in connection with such attorneys exercising any of the
rights and/or powers of the Agent and/or the Banks provided for
herein or the enforcement of any judgment hereon in favor of
Agent and/or the Banks.
"WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR
RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A
COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM
YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE."
Address: FOREST CITY ENTERPRISES,
INC.
10800 Brookpark Road
Brooklyn, Ohio 44130 By:/s/ Thomas G. Smith
Thomas G. Smith, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JUL-31-1994
<CASH> 11879
<SECURITIES> 0
<RECEIVABLES> 245900
<ALLOWANCES> 5174
<INVENTORY> 36346
<CURRENT-ASSETS> 0
<PP&E> 2453297
<DEPRECIATION> 307514
<TOTAL-ASSETS> 2645698
<CURRENT-LIABILITIES> 0
<BONDS> 2046918
<COMMON> 2997
0
0
<OTHER-SE> 143123
<TOTAL-LIABILITY-AND-EQUITY> 2645698
<SALES> 0
<TOTAL-REVENUES> 242429
<CGS> 0
<TOTAL-COSTS> 192473
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60697
<INCOME-PRETAX> (3191)
<INCOME-TAX> (516)
<INCOME-CONTINUING> (2675)
<DISCONTINUED> 0
<EXTRAORDINARY> 3353
<CHANGES> 0
<NET-INCOME> 678
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
