<PAGE> 1
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JANUARY 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER: 1-4372
FOREST CITY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-0863886
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
10800 BROOKPARK ROAD
CLEVELAND, OHIO 44130
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Registrant's telephone number, including area code: 216-267-1200
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- --------------------------------------------- ---------------------------------------------
<S> <C>
Class A Common Stock ($.33 1/3 par value) American Stock Exchange
Class B Common Stock ($.33 1/3 par value) American Stock Exchange
</TABLE>
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
On March 4, 1997 the aggregate market value of the voting stock held by
non-affiliates of the registrant amounted to $210,541,403 and $67,584,666 for
Class A and Class B common stock, respectively.
The number of shares of registrant's common stock outstanding on March 4, 1997
was 7,702,308 and 5,409,668 for Class A and Class B common stock, respectively.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held June 10, 1997 are incorporated by reference into Part III of this Form
10-K.
================================================================================
<PAGE> 2
FOREST CITY ENTERPRISES, INC.
ANNUAL REPORT ON FORM 10-K
JANUARY 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
PART I
Item 1. Business................................................................... 1
Item 2. Properties................................................................. 4
Item 3. Legal Proceedings.......................................................... 8
Item 4. Submission of Matters to a Vote of Security Holders........................ 8
Item 4A. Executive Officers of the Registrant....................................... 8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters...... 9
Item 6. Selected Financial Data.................................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................. 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk................. 21
Item 8. Financial Statements and Supplementary Data................................ 22
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure................................................................. 46
PART III
Item 10. Directors and Executive Officers of the Registrant......................... 46
Item 11. Executive Compensation..................................................... 46
Item 12. Security Ownership of Certain Beneficial Owners and Management............. 46
Item 13. Certain Relationships and Related Transactions............................. 46
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........... 46
Signatures................................................................. 51
</TABLE>
i
<PAGE> 3
PART I
ITEM 1. BUSINESS
Founded 77 years ago and publicly traded since 1960, Forest City
Enterprises, Inc. (with its Subsidiaries, the "Company" or "Forest City") is one
of the leading real estate development companies in the United States. It
develops, acquires, owns and manages commercial and residential real estate
projects in 20 states and the District of Columbia. At January 31, 1997, the
Company had $2.7 billion in consolidated assets, of which approximately $2.5
billion was invested in commercial and residential real estate.
The Company operates through its four principal business groups:
- The Commercial Group, which develops, acquires, owns and operates
shopping centers, office buildings and mixed-use projects including
hotels.
- The Residential Group, which develops, acquires, owns and operates the
Company's multi-family properties.
- The Land Group, which owns and develops raw land into master planned
communities and other residential developments for resale.
- The Lumber Trading Group, which operates the Company's lumber wholesaling
business.
Each group operates autonomously and each of the Commercial Group and the
Residential Group has its own development, acquisition, leasing, property and
financial management functions. As a result, each of these groups is able to
perform all of the tasks necessary to develop and maintain a property from
selecting a project site to financing the project to managing the completed
project. The Company's "corporate" activities relate to its investments in, and
advances to, affiliates, and general corporate items.
The following table sets forth, by type of property, a summary of the
Company's operating portfolio of commercial, residential and land projects as of
January 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF REPRESENTATIVE PRINCIPAL
TYPE OF PROPERTY PROPERTIES TOTAL SIZE METROPOLITAN REGIONS
- ---------------------------------- ----------- ----------------- ----------------------------------
<S> <C> <C> <C>
COMMERCIAL GROUP
Shopping Centers................ 30 14.3 million New York City (4); California (4);
square feet Cleveland (3); Akron, OH (3); Las
Vegas (2); Tucson (2)
Office Buildings................ 20 6.4 million Cleveland (9); New York City (5);
leasable square Cambridge, MA (3); Pittsburgh (2)
feet
Hotels.......................... 5 1,530 rooms Cleveland (2); Pittsburgh (1);
Charleston, WV (1); Detroit (1)
RESIDENTIAL GROUP
Apartment Communities (1)....... 114 31,441 units Cleveland (20); California (7);
Washington, D.C. (5); Detroit (4);
Cambridge, MA (1); Las Vegas (1)
LAND GROUP
Land held for improvement and
sale.......................... -- 5,920 acres Ft. Lauderdale; Las Vegas;
Cleveland; Tucson
</TABLE>
- ---------------
(1) Includes 9,402 syndicated senior citizen units in 57 apartment communities
developed under Federal subsidy programs in which the Company holds a
residual interest, none of which are reflected under the caption
"Representative Principal Metropolitan Regions."
During 1996, the Company opened six new shopping centers with an aggregate
of 1.4 million square feet of gross leaseable area ("GLA"), acquired a new
apartment complex with 419 apartment units, and opened 336 additional apartment
units at four existing projects.
1
<PAGE> 4
The following table sets forth certain information regarding these
properties.
<TABLE>
<CAPTION>
COMPANY'S
DEVELOPED (D) DATE TOTAL COST SHARE OF TOTAL
OR OPENED/ COMPANY AT 100% COST SQUARE GLA(1)/
PROPERTY LOCATION ACQUIRED (A) ACQUIRED OWNERSHIP (%) (IN MIL.) (IN MIL.) FEET NO. OF UNITS
- ----------------- ----------------- ------------- -------- ------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL GROUP
Shopping Centers
Galleria at
Sunset.......... Henderson, NV D Feb-96 60% $ 82.0 $ 49.2 892,000 294,000
Hunting Park..... Philadelphia, PA D Apr-96 70 14.9 10.4 144,000 144,000
Bruckner
Boulevard....... Bronx, NY D Sep-96 70 15.1 10.6 114,000 114,000
Marketplace at
Riverpark....... Fresno, CA D Sep-96 50 26.5 13.3 453,000 284,000
Atlantic
Center.......... Brooklyn, NY D Nov-96 75 75.2 56.4 391,000 391,000
Showcase......... Las Vegas, NV D Dec-96 20 76.9 15.4 189,000 189,000
------ ------ --------- ---------
Subtotal...... $290.6 $ 155.3 2,183,000 1,416,000
========= =========
------ ------
RESIDENTIAL GROUP
Tam-A-Rac(2)..... Willoughby, OH D Feb-96 50% 3.3 1.7 64
Cherry Tree(2)... Strongsville, OH D Apr-96 50 6.9 3.5 132
Big Creek(2)..... Parma Hts., OH D May-96 50 4.3 2.2 72
Emerald Palms.... Miami, FL A May-96 100 21.8 21.8 419
Pebble
Creek(2)........ Twinsburg, OH D Sep-96 50 3.4 1.7 68
------ ------ ---------
Subtotal...... $ 39.7 $ 30.9 755
=========
------ ------
Total...... $330.3 $ 186.2
====== ======
</TABLE>
- ---------------
(1) Represents the total square feet available for lease by the Company.
Remaining square footage is owned by anchors.
(2) Part of a phased construction process.
COMMERCIAL GROUP
The Company has developed retail projects for more than 50 years and
office, mixed-use and hotel projects for more than 30 years, and today the
Commercial Group owns a diverse portfolio in both urban and suburban locations
in 12 states. The Commercial Group targets densely populated locations where it
uses its expertise to develop complex projects, often employing public/private
partnerships. As of January 31, 1997, the Commercial Group owned interests in 55
completed projects, including 30 retail properties, 20 office properties and
five hotels.
The Company opened its first strip shopping center in 1948, and its first
enclosed regional mall in 1962. Since then, it has developed urban retail
centers, entertainment based centers, community centers and power centers
focused on "big box" retailing (collectively, "Specialty Retail Centers"), as
well as regional malls. As of January 31, 1997, the Commercial Group's shopping
center portfolio consisted of 14 regional malls with a total GLA of 4.3 million
square feet and 16 Specialty Retail Centers with a total GLA of 3.4 million
square feet.
Malls are generally developed in collaboration with anchor stores that
usually own their own facilities as integral parts of the mall structure and
environment and which do not generate significant direct payments to the
Company. In contrast, anchor stores at specialty retail and power centers
generally are tenants under long-term leases which contribute significant rental
payments to the Company.
While the Company continues to develop regional malls in strong markets,
the Company recently has pioneered the concept of bringing "big box" retailing
to urban locations previously ignored by major retailers. With high population
densities and disposable income levels at or near those of the suburbs, urban
development is proving to be economically advantageous for the Company, for the
tenants who realize high sales per square foot and for the cities, which benefit
from the new jobs created in the urban locations.
The Company's existing portfolio of office/mixed-use and hotel projects
consists of 20 office buildings containing 6.4 million square feet, including
mixed-use projects with an aggregate of 164,000 gross leasable square feet of
retail space and five hotels with 1,530 rooms.
2
<PAGE> 5
In its office development activities, Forest City is primarily a
build-to-suit developer which works with tenants to meet their highly
specialized requirements. The Company's office development has focused primarily
on mixed-use projects in urban developments, often built in conjunction with
hotels and shopping centers or as part of a major office campus. As a result of
this focus on new urban developments, 50% of the Company's office buildings were
built within the last seven years and are concentrated in four new urban
developments located in Brooklyn, Cleveland, Cambridge and Pittsburgh.
RESIDENTIAL GROUP
The Company's Residential Group develops, acquires, owns, leases and
manages residential rental property in 16 states and the District of Columbia.
The Company has been engaged in apartment community development for over 50
years, beginning in northeast Ohio, and gradually expanding nationally. Its
portfolio includes mature middle-market apartments in geographically attractive
suburbs, newer and higher end apartments in unique urban locations and newer
apartments in the suburbs. The Residential Group, which focuses on large
apartment complexes, does not develop or operate single-family housing or
condominium projects.
The Residential Group's portfolio consists of 31,441 units in which Forest
City has an ownership interest, including 9,402 units of syndicated senior
citizen subsidized housing that the Company manages and in which it owns a
residual interest.
LAND GROUP
The Company has been in the land business since the 1930's. The Land Group
acquires and sells both raw land and developed lots to residential, commercial
and industrial customers. The Land Group projects attract national, regional and
local builders. The Land Group develops raw land into master planned
communities, mixed-use and other residential developments and currently owns
more than 5,920 acres of undeveloped land for this purpose. The Company
currently has major land development projects in five states.
Historically, the Land Group's activities focused on land development
projects in northeast Ohio. Over time, the Group's activities expanded to
larger, more complex projects, and regional expansion into western New York
State. In the last ten years, the Group has extended its activities on a
national basis, first in Arizona, and more recently in Florida and Nevada.
In addition to the sales activities of the Land Group, the Company also
sells land acquired by its Commercial Group and Residential Group adjacent to
their respective projects. Proceeds from such land sales are included in the
revenues and assets of such Groups.
LUMBER TRADING GROUP
The Company's original business was selling lumber to homebuilders. The
Company expanded this business in 1969 through its acquisition of Forest City
Trading Group, Inc., which is a lumber wholesaler to customers in all 50 states
and in all Canadian provinces. Through ten strategically located independent
trading companies in the United States and Canada, employing 343 traders, Forest
City sold the equivalent of seven billion board feet of lumber in 1996, with a
gross sales volume of nearly $3 billion, making the Company one of the largest
lumber wholesalers in North America.
The Lumber Trading Group currently has offices in 11 states, the District
of Columbia, Vancouver, British Columbia and Toronto, Ontario. The Company opens
offices in response to the changing demands of the lumber industry. In 1996, the
Lumber Trading Group opened offices in Utah and Texas. The new Houston, Texas
office is part of the Lumber Trading Group's strategic initiative to increase
its participation in the southern pine market, which is growing in popularity as
logging restrictions limit production in the Pacific Northwest.
The Lumber Trading Group's core business is supplying lumber for new home
construction and to the repair and remodeling markets. Approximately 60% of the
Lumber Trading Group's sales involve back-to-back trades in which the Company
brings together a buyer and seller for an immediate purchase and sale. The
3
<PAGE> 6
balance of transactions are trades in which the Company takes a short-term
ownership position and is at risk for lumber market fluctuations.
COMPETITION
The real estate industry is highly competitive in all major markets. With
regard to the Commercial and Residential Groups, there are numerous other
developers, managers and owners of commercial and residential real estate that
compete with the Company nationally, regionally and/or locally in seeking
management and leasing revenues, land for development, properties for
acquisition and disposition and tenants for properties, some of whom may have
greater financial resources than the Company. There can be no assurance that the
Company will successfully compete for new projects or have the ability to react
to competitive pressures on existing projects caused by factors such as
declining occupancy rates or rental rates. In addition, tenants at the Company's
retail properties face continued competition in attracting customers from
retailers at other shopping centers, catalogue companies, warehouse stores,
large discounters, outlet malls, wholesale clubs and direct mail and
telemarketers. The existence of competing developers, managers and owners and
competition to the Company's tenants could have a material adverse effect on the
Company's ability to lease space in its properties and on the rents charged or
concessions granted, could materially and adversely affect the Company's results
of operations and cash flows, and could affect the realizable value of assets
upon sale.
With regard to the Lumber Trading Group, the lumber wholesaling business is
highly competitive. Competitors in the lumber brokerage business include
numerous brokers and in-house sales departments of lumber manufacturers, many of
which are larger and have greater resources than the Company.
Forest City was incorporated in Ohio in 1960 as a successor to a business
started in 1921.
NUMBER OF EMPLOYEES
The Company had 3,384 employees as of January 31, 1997, of which 2,525 were
full-time and 859 were part-time.
SEGMENTS OF BUSINESS
Financial information about industry segments required by this item is
included in Item 8. Financial Statements and Supplementary Data, page 37, Note I
"Segment Information."
ITEM 2. PROPERTIES
The Corporate headquarters of Forest City Enterprises is located in
Cleveland, Ohio and is owned by the Company. Forest City Trading Group maintains
its headquarters in Portland, Oregon with twenty-three administrative and sales
offices and one processing plant located in eleven states and the District of
Columbia and two sales offices in Canada. The following table lists the shopping
centers, office buildings, hotels, and apartments in which Forest City Rental
Properties Corporation has an interest:
4
<PAGE> 7
PROPERTIES
The following tables provide summary information concerning the Company's
real estate portfolio as of January 31, 1997.
SHOPPING CENTERS -- EXISTING PORTFOLIO
<TABLE>
<CAPTION>
YEAR
COMPLETED/ RETAIL SQ. FT.
DATE OF LAST COMPANY INCLUDING
NAME RENOVATION OWNERSHIP(%) LOCATION MAJOR ANCHORS DEPT. STORES GLA
- ----------------- ------------ ---------- ----------------- -------------------------------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
REGIONAL MALLS
Antelope Valley
Mall............ 1990 40.0% Palmdale, CA Sears Roebuck and Co.; JC Penney's; 839,000 287,000
Gottshalk's; Harris; Mervyn's
The Avenue at
Tower City...... 1990/1996 100.0 Cleveland, OH Dillard's 368,000 368,000
Ballston
Common.......... 1986/1995 100.0 Arlington, VA Hecht's; JC Penney's 490,000 221,000
Boulevard Mall... 1962/1996 50.0 Amherst, NY Jenss; JC Penney's; Kaufmann's 772,000 261,000
Canton Centre.... 1981/1988 100.0 Canton, OH Kaufmann's; JC Penney's; Montgomery 680,000 254,000
Ward
Chapel Hill
Mall............ 1966/1995 50.0 Akron, OH Kaufmann's; JC Penney's; Sears Roebuck 882,000 321,000
and Co.
Charleston Town
Center.......... 1983/1994 50.0 Charleston, WV Kaufmann's; JC Penney's; Sears Roebuck 897,000 360,000
and Co.; Montgomery Ward
Courtland
Center.......... 1968 100.0 Flint, MI Crowley's; JC Penney's; Mervyn's 460,000 239,000
Galleria at
Sunset.......... 1996 60.0 Henderson, NV Dillard's; Robinson-May; Mervyn's; JC 892,000 294,000
Penney's
Manhattan Town
Center.......... 1987 37.5 Manhattan, KS Dillard's; JC Penney's; Sears Roebuck 380,000 185,000
and Co.
Rolling Acres
Mall............ 1975 80.0 Akron, OH Kaufmann's; JC Penney's; Sears Roebuck 1,014,000 365,000
and Co.; Dillard's; Target
South Bay
Galleria........ 1985 50.0 Redondo Beach, CA May Co.; Mervyn's; Nordstrom's 953,000 385,000
Summit Park
Mall............ 1972 100.0 Wheatfield, NY Bon-Ton; Jenss; Sears Roebuck and Co. 695,000 309,000
Tucson Mall...... 1982/1992 67.5 Tucson, AZ Broadway's; Foley's; Dillard's; 1,293,000 408,000
Mervyn's; JC Penney's; Sears Roebuck
and Co.
---------- ---------
Subtotal...... 10,615,000 4,257,000
---------- ---------
SPECIALTY RETAIL CENTERS
Atlantic
Center.......... 1996 75.0% Brooklyn, NY Caldor; The Sports Authority; 391,000 391,000
Pathmark; OfficeMax
Bowling Green
Mall............ 1966 50.0 Bowling Green, KY Kroger; Quality Big Lots 242,000 242,000
Bruckner
Boulevard....... 1996 70.0 Bronx, NY Pergament; Seaman's; Young World; Old 114,000 114,000
Navy
Chapel Hill
Suburban........ 1969 50.0 Akron, OH Value City; Petzazz 112,000 112,000
Courtyard........ 1990 50.0 Flint, MI V.G.'s Market; Home Depot; OfficeMax 233,000 124,000
Flatbush
Avenue.......... 1995 80.0 Brooklyn, NY Caldor 90,000 90,000
Gallery at
MetroTech....... 1990 80.0 Brooklyn, NY Toys "R" Us 163,000 163,000
Golden Gate...... 1958/1996 50.0 Mayfield Hts., OH OfficeMax; Old Navy; Koenig; 260,000 260,000
Michael's; Home Place
Hunting Park..... 1996 70.0 Philadelphia, PA Caldor; US Kidz; Payless Shoes 144,000 144,000
Marketplace at
Riverpark....... 1996 50.0 Fresno, CA Best Buy; Target; Marshall's; JC 453,000 284,000
Penney's
Midtown Plaza.... 1961 50.0 Parma, OH Hills 256,000 256,000
Newport Plaza.... 1977 50.0 Newport, KY IGA 157,000 157,000
The Plaza at
Robinson Town
Center.......... 1989 50.0 Pittsburgh, PA T.J. Maxx; IKEA; Hills; Marshall's; 455,000 455,000
Sears Roebuck and Co.
Showcase......... 1996 20.0 Las Vegas, NV Coca-Cola(R); All Star Cafe 189,000 189,000
South Bay
Southern........ 1978 100.0 Redondo Beach, CA CompUSA; General Cinema 160,000 160,000
Tucson Place..... 1989 100.0 Tucson, AZ Wal-Mart; Homelife; OfficeMax; 276,000 276,000
Smitty's
---------- ---------
Subtotal...... 3,695,000 3,417,000
---------- ---------
Shopping Centers at January 31, 1997 14,310,000 7,674,000
========== =========
Shopping Centers at January 31, 1996 13,422,000 6,938,000
========== =========
</TABLE>
5
<PAGE> 8
OFFICE BUILDINGS -- EXISTING PORTFOLIO
<TABLE>
<CAPTION>
LEASABLE
YEAR COMPLETED COMPANY SQUARE
NAME OR ACQUIRED OWNERSHIP (%) LOCATION MAJOR TENANTS FEET
- -------------------------- --------------- -------------- ---------------------- ---------------------------- -----------
<S> <C> <C> <C> <C> <C>
METROTECH CENTER
Eleven MetroTech
Center................ 1995 65.0% Brooklyn, NY E-911 -- City of New York 216,000
One MetroTech........... 1991 65.0 Brooklyn, NY Brooklyn Union Gas; Bear 932,000
Stearns & Co., Inc.
One Pierrepont Plaza.... 1988 85.0 Brooklyn, NY Morgan Stanley & Co. 672,000
Incorporated; Goldman,
Sachs & Co.; U.S. Attorney
Ten MetroTech Center.... 1991 80.0 Brooklyn, NY Internal Revenue Service 409,000
Two MetroTech........... 1990 65.0 Brooklyn, NY Securities Industry 521,000
Automation Corp.
-----------
Subtotal..............
2,750,000
-----------
TOWER CITY CENTER
Chase Financial Tower... 1991 95.0% Cleveland, OH Chase Financial 119,000
M.K. Ferguson 1990
Plaza(1).............. 1.0 Cleveland, OH M.K. Ferguson; Chase 482,000
Financial
Skylight Office Tower... 1991 85.0 Cleveland, OH Ernst & Young, L.L.P 321,000
Terminal Tower.......... 1983 100.0 Cleveland, OH Forest City Enterprises, 583,000
Inc.
-----------
Subtotal..............
1,505,000
-----------
MIT
Clark Building.......... 1989 50.0% Cambridge, MA Oravax 122,000
Jackson Building........ 1987 100.0 Cambridge, MA Ariad Pharmaceuticals 99,000
Richards Building....... 1990 100.0 Cambridge, MA Genzyme Tissue Repair; 126,000
Alkermes
-----------
Subtotal..............
347,000
-----------
OTHER
Chagrin Plaza I & II.... 1969 66.7% Beachwood, OH National City Bank 116,000
Emery-Richmond.......... 1991 50.0 Warrensville Hts., OH All State Insurance 5,000
Halle Building.......... 1986 75.0 Cleveland, OH Sealy, Inc.; North American 379,000
Refractories Co.
Liberty Center.......... 1986 50.0 Pittsburgh, PA Federated Investors 526,000
San Vicente............. 1983 25.0 Brentwood, CA Foote, Cone; Needham, Harper 469,000
Signature Square I...... 1986 50.0 Beachwood, OH Ciuni & Panichi 79,000
Signature Square II..... 1989 50.0 Beachwood, OH Sterling Software 81,000
Station Square.......... 1994 25.0 Pittsburgh, PA Woodsons; Grand Concourse 144,000
-----------
Subtotal..............
1,799,000
-----------
Office Buildings at January 31, 1997 and 1996 6,401,000
=========
</TABLE>
HOTELS -- EXISTING PORTFOLIO
<TABLE>
<CAPTION>
DATE OF
OPENING/ COMPANY
NAME ACQUISITION OWNERSHIP (%) LOCATION ROOMS
- ----------------------------------------- ----------- ------------- ------------------ -----
<S> <C> <C> <C> <C> <C>
Budgetel................................. 1982 28.4% Mayfield Hts., OH 102
Charleston Marriott...................... 1983 95.0 Charleston, WV 354
DoubleTree at Liberty Center............. 1986 50.0 Pittsburgh, PA 616
DoubleTree at Millender Center(1)........ 1985 4.0 Detroit, MI 250
Ritz-Carlton............................. 1990 95.0 Cleveland, OH 208
-----
Hotel Rooms at January 31, 1997 and 1996 1,530
=====
</TABLE>
- ---------------
(1) Syndicated.
6
<PAGE> 9
APARTMENTS -- EXISTING PORTFOLIO
<TABLE>
<CAPTION>
DATE OF
OPENING/ COMPANY
NAME ACQUISITION OWNERSHIP (%) LOCATION UNITS
- ---------------------------------------------------- ---------- --------------- ---------------------- ------
<S> <C> <C> <C> <C>
Bayside Village I, II & III......................... 1988-1989 50.0% San Francisco, CA 862
Big Creek........................................... 1996 50.0 Parma Hts., OH 72
Boot Ranch.......................................... 1991 50.0 Tampa, FL 236
Boulevard Towers.................................... 1969 50.0 Amherst, NY 402
Camelot............................................. 1967 50.0 Parma, OH 150
Chapel Hill Towers.................................. 1969 50.0 Akron, OH 402
Cherry Tree......................................... 1996 50.0 Strongsville, OH 132
Chestnut Lake....................................... 1969 50.0 Strongsville, OH 789
Clarkwood........................................... 1963 50.0 Warrensville Hts., OH 568
Classic Residence by Hyatt.......................... 1990 50.0 Chevy Chase, MD 339
Classic Residence by Hyatt.......................... 1989 50.0 Teaneck, NJ 221
Copper Creek........................................ 1992 20.0 Houston, TX 300
Deer Run I & II..................................... 1987-1989 43.0 Twinsburg, OH 562
Emerald Palms....................................... 1996 100.0 Miami, FL 419
Fenimore Court(1)................................... 1982 0.5 Detroit, MI 144
Fort Lincoln II..................................... 1979 45.0 Washington, D.C. 176
Fort Lincoln III & IV............................... 1981 24.9 Washington, D.C. 306
Granada Gardens..................................... 1966 50.0 Warrensville Hts., OH 940
Greenbriar.......................................... 1992 20.0 Houston, TX 400
Hamptons............................................ 1969 50.0 Beachwood, OH 649
Highlands I & II.................................... 1988-1990 100.0 Grand Terrace, CA 556
Hunter's Hollow..................................... 1990 50.0 Strongsville, OH 208
Independence Place I................................ 1976 50.0 Parma Hts., OH 202
Kennedy Lofts(1).................................... 1990 0.5 Cambridge, MA 142
Knolls(1)........................................... 1995 1.0 Orange, CA 260
Laurels............................................. 1995 100.0 Justice, IL 520
Lenox Club(1)....................................... 1991 0.5 Arlington, VA 385
Lenox Park(1)....................................... 1992 0.5 Silver Spring, MD 406
Liberty Hills....................................... 1979-1986 50.0 Solon, OH 396
Metropolitan........................................ 1989 100.0 Los Angeles, CA 270
Midtown Towers...................................... 1969 50.0 Parma, OH 635
Millender Center(1)................................. 1985 4.0 Detroit, MI 339
Noble Towers........................................ 1979 50.0 Pittsburgh, PA 133
Oaks................................................ 1994 100.0 Bryan, TX 248
One Franklintown.................................... 1988 100.0 Philadelphia, PA 335
Palm Villas......................................... 1991 100.0 Henderson, NV 350
Panorama Towers..................................... 1978 99.0 Los Angeles, CA 154
Parmatown........................................... 1972-1973 100.0 Parma, OH 412
Pavilion(1)......................................... 1992 0.5 Chicago, IL 1,115
Pebble Creek........................................ 1995-1996 50.0 Twinsburg, OH 148
Peppertree.......................................... 1993 100.0 College Station, TX 208
Pine Ridge Valley................................... 1967-1974 50.0 Willoughby, OH 1,147
Queenswood(1)....................................... 1990 0.7 Corona, NY 296
Regency Towers...................................... 1994 100.0 Jackson, NJ 372
Shippan Avenue...................................... 1980 100.0 Stamford, CT 148
Studio Colony....................................... 1986 80.0 Los Angeles, CA 450
Surfside Towers..................................... 1970 50.0 Eastlake, OH 246
Tam-A-Rac I, II & III............................... 1990-1996 50.0 Willoughby, OH 392
Toscana............................................. 1991-1992 100.0 Irvine, CA 563
Trolley Plaza....................................... 1981 100.0 Detroit, MI 351
Trowbridge.......................................... 1988 53.3 Southfield, MI 304
Twin Lakes Towers................................... 1966 50.0 Denver, CO 254
Village Green....................................... 1994-1995 25.0 Beachwood, OH 360
Vineyards........................................... 1995 100.0 Broadview Hts., OH 336
Waterford Village(1)................................ 1994 1.0 Indianapolis, IN 520
White Acres......................................... 1966 50.0 Richmond Hts., OH 473
Woodforest Glen..................................... 1992 20.0 Houston, TX 336
------
Subtotal........................................ 22,039
Senior Citizens Apartments(2)....................... 9,402
------
Apartments at January 31, 1997 31,441
======
Apartments at January 31, 1996 30,686
======
</TABLE>
- ---------------
(1) Syndicated.
(2) Syndicated, subsidized units in 57 communities in which the Company holds a
residual interest only.
7
<PAGE> 10
ITEM 3. 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 none of these
claims and lawsuits will have a material adverse effect on the financial
condition, results of operations or cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter.
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
The following list is included as an unnumbered Item in Part I of this
Report in lieu of being included in the Proxy Statement for the Annual Meeting
of Shareholders to be held on June 10, 1997.
The names, ages and positions held by the executive officers of the Company
are presented in the following list. Each individual has been appointed to serve
for the period which ends with the Annual Meeting of Shareholders scheduled for
June 10, 1997.
<TABLE>
<CAPTION>
NAME AND POSITION(S) HELD DATE APPOINTED AGE
- --------------------------------------------------------------------- -------------- ---
<S> <C> <C>
ALBERT B. RATNER
Co-Chairman of the Board of Directors of the Company since June 1995,
Vice Chairman of the Board of the Company from June 1993 to June
1995, Chief Executive Officer prior to July 1995 and President prior
to July 1993......................................................... 6-13-95 69
SAMUEL H. MILLER
Co-Chairman of the Board of Directors of the Company since June 1995,
Chairman of the Board of the Company from June 1993 to June 1995 and
Vice Chairman of the Board, Chief Operating Officer of the Company
prior to June 1993, Treasurer of the Company since December 1992..... 6-13-95 75
NATHAN SHAFRAN
Vice Chairman of the Board of Directors, Officer of various
subsidiary corporations.............................................. 3-11-87 83
CHARLES A. RATNER
President of the Company since June 1993, Chief Executive Officer of
the Company since June 1995, Chief Operating Officer from June 1993
to June 1995 and Executive Vice President prior to June 1993,
Director............................................................. 6-13-95 55
JAMES A. RATNER
Executive Vice President, Director, Officer of various subsidiary
corporations......................................................... 3-09-88 52
RONALD A. RATNER
Executive Vice President, Director, Officer of various subsidiary
corporations......................................................... 3-09-88 50
THOMAS G. SMITH
Senior Vice President, Chief Financial Officer, Secretary, Officer of
various subsidiary corporations...................................... 9-03-85 56
WILLIAM M. WARREN
Senior Vice President, General Counsel and Assistant Secretary....... 5-16-72 68
BRIAN J. RATNER
Senior Vice President -- Development since January 1997, Vice
President -- Urban Entertainment from June 1995 to December 1996,
Vice President from May 1994 to June 1995 and an officer of various
subsidiaries......................................................... 1-01-97 39
LINDA M. KANE
Vice President and Corporate Controller since April 1995, Asset
Manager -- Commercial Group from July 1992 to April 1995 and
Financial Analyst -- Residential Group from October 1990 to July
1992................................................................. 4-01-95 39
</TABLE>
- ---------------
Note: Nathan Shafran is the uncle of Charles A. Ratner, James A. Ratner and
Ronald A. Ratner, who are brothers, and is the uncle of Albert B. Ratner.
Albert B. Ratner is the father of Brian J. Ratner and Deborah Ratner
Salzberg and is first cousin to Charles A. Ratner, James A. Ratner and
Ronald A. Ratner.
8
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this item is included in Item 8. Financial
Statements and Supplementary Data, page 43, "Quarterly Consolidated Financial
Data (Unaudited)."
There were no sales by the Company of its equity securities during the
fiscal year ended January 31, 1997 that were not registered under the Securities
Act of 1933.
ITEM 6. SELECTED FINANCIAL DATA
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended January 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Revenues.................................. $610,449 $529,433 $522,608 $519,379 $474,469
======== ======== ======== ======== ========
Net earnings (loss) before extraordinary
gain(1)
Operating earnings (loss), net of
tax(2)............................... $ 6,986 $ 13,490 $ 6,774 $ 718 $ (4,712)
Provision for decline in real estate,
net of tax........................... (7,413) (6,073) (4,986) -- (5,705)
Gain (loss) on disposition of
properties, net of tax............... 9,598 (478) (20,321) 1,494 23,104
-------- -------- -------- -------- --------
$ 9,171 $ 6,939 $(18,533) $ 2,212 $ 12,687
======== ======== ======== ======== ========
Earnings before depreciation, amortization
and deferred taxes(1)
Operating earnings (loss), net of
tax(2)............................... $ 6,986 $ 13,490 $ 6,774 $ 718 $ (4,712)
Adjustments related to real estate
operations(3)
Depreciation and amortization........ 70,221 63,557 63,956 63,901 57,896
Deferred income taxes................ 13,197 4,974 10,532 10,865 19,021
Accrued interest of a rental property
not paid........................... -- -- -- 5,495 4,870
-------- -------- -------- -------- --------
Real estate adjustments............ 83,418 68,531 74,488 80,261 81,787
-------- -------- -------- -------- --------
$ 90,404 $ 82,021 $ 81,262 $ 80,979 $ 77,075
======== ======== ======== ======== ========
Per common share
Net earnings (loss) before extraordinary
gain(1)(4)........................... $ .70 $ .51 $ (1.37) $ .16 $ .94
======== ======== ======== ======== ========
Cash dividends declared(4)
Class A................................. $ .27 $ .17 $ .13 $ -- $ --
Class B................................. $ .27 $ .17 $ .13 $ -- $ --
</TABLE>
9
<PAGE> 12
SELECTED FINANCIAL DATA (CONT'D)
<TABLE>
<CAPTION>
January 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Consolidated assets................ $2,741,405 $2,631,046 $2,584,734 $2,668,057 $2,625,404
Real estate portfolio, at cost..... $2,520,179 $2,425,083 $2,322,136 $2,405,066 $2,310,970
Long-term debt, including mortgage
debt............................. $1,993,351 $1,945,120 $1,881,917 $2,026,451 $1,972,160
FOREST CITY RENTAL PROPERTIES CORPORATION -- REAL ESTATE ACTIVITY
Total real estate -- end of year
Completed rental properties,
before depreciation........... $2,227,859 $2,085,284 $1,995,629 $2,101,528 $2,045,946
Projects under development....... 215,960 246,240 230,802 214,111 188,187
---------- ---------- ---------- ---------- ----------
2,443,819 2,331,524 2,226,431 2,315,639 2,234,133
Accumulated depreciation......... (387,733) (338,216) (293,465) (272,518) (232,905)
---------- ---------- ---------- ---------- ----------
Rental properties, net of
depreciation................ $2,056,086 $1,993,308 $1,932,966 $2,043,121 $2,001,228
========== ========== ========== ========== ==========
Activity during the year
Completed rental properties
Additions..................... $ 160,690 $ 89,028 $ 77,265 $ 50,384 $ 200,440
Acquisitions.................. 22,264 28,587 32,811 5,198 --
Dispositions.................. (40,379) (27,960) (215,975) -- (32,888)
---------- ---------- ---------- ---------- ----------
142,575 89,655 (105,899) 55,582 167,552
---------- ---------- ---------- ---------- ----------
Projects under development
New development............... 98,403 58,798 49,585 54,317 39,045
Transferred to completed
rental properties........... (128,683) (43,360) (32,894) (28,393) (167,629)
---------- ---------- ---------- ---------- ----------
(30,280) 15,438 16,691 25,924 (128,584)
---------- ---------- ---------- ---------- ----------
Increase (decrease) in rental
properties, at cost.............. $ 112,295 $ 105,093 $ (89,208) $ 81,506 $ 38,968
========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Excludes the extraordinary gain, net of tax, of $2,900,000, $1,847,000 and
$60,449,000 for the years ended January 31, 1997, 1996 and 1995,
respectively.
(2) Excludes the provision for decline in real estate and gain (loss) on
disposition of properties, net of tax.
(3) These adjustments represent amounts related to the Company's real estate
operations in Rental Properties only.
(4) Adjusted for three-for-two stock split effective February 17, 1997.
10
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company develops, acquires, owns and manages commercial and residential
real estate properties in 20 states and the District of Columbia. The Company
owns a portfolio that is diversified both geographically and by property types
and operates through four principal business groups: Commercial Group,
Residential Group, Land Group and the Lumber Trading Group.
The Company uses an additional measure, along with net earnings (loss), to
report its operating results. This measure, referred to as Earnings Before
Depreciation, Amortization and Deferred Taxes ("EBDT"), is not a measure of
operating results or cash flows from operations as defined by generally accepted
accounting principles. However, the Company believes that EBDT provides
additional information about its operations and, along with net earnings (loss),
is necessary to understand its operating results. The Company believes that EBDT
is also an indicator of the Company's ability to generate cash to meet its
funding requirements. EBDT is defined and discussed in detail under "Results of
Operations-- EBDT."
The Company's EBDT grew by 10.2% (or 13.0% per share) in 1996 to
$90,404,000, or $6.87 per share of common stock, from $82,021,000, or $6.08 per
share of common stock in 1995. This increase in EBDT was primarily the result of
the addition of new retail properties, improved operating results from the
Company's existing portfolio, acquisition of apartment projects, sales of land
by the Commercial and Land Groups, strong lumber trading activity and favorable
interest rates. EBDT grew by 0.9% (or 1.0% per share) in 1995 from $81,262,000,
or $6.03 per share of common stock in 1994, with the positive impact of new
project openings offset by the effect of the disposition of Park LaBrea Towers,
a 2,825-unit apartment community in Los Angeles, California.
RESULTS OF OPERATIONS
The Company reports its results of operations by each of its four principal
business groups as it believes such reporting provides the most meaningful
understanding of the Company's financial performance.
The major components of EBDT are Revenues, Operating Expenses and Interest
Expense, each of which is discussed below. Net Operating Income ("NOI") is
defined as Revenues less Operating Expenses. See Note I to the Consolidated
Financial Statements and information in the table "Three Year Summary of
Earnings Before Depreciation, Amortization and Deferred Taxes" at the end of
this section.
NET OPERATING INCOME FROM REAL ESTATE OPERATIONS
NOI from the combined Commercial Group and Residential Group for 1996 was
$196,456,000 compared to $199,651,000 in 1995, a 1.6% decrease. NOI in 1996 and
1995 was affected by the following items, which the Company believes are
non-recurring: (1) an increase of $5,863,000 in development expenses in 1996
over 1995, which includes write-offs of abandoned projects in excess of normal
levels, and (2) a decrease of $6,565,000 in the EBDT, resulting from an
unusually low cost basis in the land sold in 1995 (on comparable sales revenues)
compared to 1996. See "-- Commercial Group -- Operating and Interest Expenses."
Adjusting for these items, NOI would have been $202,319,000 and $193,086,000 for
1996 and 1995, respectively, a 4.8% increase. Comparable NOI (for properties in
operation throughout both periods) increased 2.5% from 1995 to 1996 and 6.1%
from 1994 to 1995. Eliminating asset dispositions and the non-recurring
development expenses discussed above, and including the expected NOI during the
initial twelve months after stabilization for the 11 properties that were opened
or acquired in 1996 and annualizing the ground rent received in 1996 from a
project under construction, would result in total NOI of approximately
$209,964,000.
COMMERCIAL GROUP
REVENUES. Revenues of the Commercial Group increased by $15,593,000 (or
5.3%) to $309,834,000 in 1996 from $294,241,000 in 1995. This increase was
primarily the result of the opening of the Galleria at
11
<PAGE> 14
Sunset in Henderson, Nevada ($5,578,000), improved performance from existing
properties ($6,412,000) and the benefit of a full year of operating results from
properties that opened in 1995 ($5,403,000). These increases were offset by a
reduction in revenues due to the dispositions of Beachwood Place ($786,000) and
Victor Village ($438,000) (see "-- Other Transactions -- Gain (Loss) on
Disposition of Properties") and the loss of revenue from ten leases rejected by
Handy Andy which went bankrupt in 1996 ($1,109,000).
Revenues of the Commercial Group in 1995 increased by $35,275,000 (or
13.6%) from $258,966,000 in 1994. This increase was primarily attributable to
the sale of a five acre parcel of land at Tower City Center in Cleveland, Ohio
to the Federal government ($18,300,000) and outlot sales in Henderson, Nevada
($1,708,000). In addition, 1995 revenues increased from the openings in 1995 of
Eleven MetroTech ($3,200,000) and Flatbush Avenue ($1,200,000), and from a full
year of operations at Station Square in Pittsburgh, Pennsylvania ($1,268,000).
Lastly, the Company acquired an additional 31% interest in Liberty Center, a
mixed-use property in Pittsburgh ($8,800,000). In 1994, commercial outlot sales
of $7,176,000 were recorded in the Land Group. Commercial outlot sales have been
recorded in the Commercial Group since 1995.
OPERATING AND INTEREST EXPENSES. In 1996, operating and interest expenses
for the Commercial Group increased $22,126,000 and $2,103,000 (or 15.1% and
2.4%), respectively, over 1995 to $168,466,000 and $88,149,000, respectively.
The increase in operating expenses was primarily attributable to the decrease in
the EBDT ($6,565,000) resulting from an unusually low cost basis in the land
sold in 1995 (on comparable sales revenues), increased development expenses
($5,726,000) and the opening of new properties ($5,089,000). At January 31,
1997, the Company's property level expenses for properties open since 1994 had
increased at a compounded annual rate of only 0.1%, reflecting the Company's
emphasis on controlling costs. The increase in interest expense was attributable
to the financing of new properties.
Operating and interest expenses increased $8,757,000 and $19,015,000 in
1995 (or 6.4% and 28.4%), respectively, from $137,583,000 and $67,031,000,
respectively, in 1994. The increase in operating expense was primarily the
result of the acquisition of Station Square and an additional 31% interest in
Liberty Center ($6,475,000) and the opening of new properties in New York
($1,491,000). The increase in interest expense was due to the financing of new
properties ($1,804,000), the acquisition of Station Square, the additional 31%
interest in Liberty Center and the additional 50% interest in Ballston Common
($6,733,000), higher outstanding principal balances on nonrecourse mortgages
resulting from refinancings to fund development projects ($4,420,000) and an
increase in interest rates ($6,094,000).
NET OPERATING INCOME. Commercial Group NOI for 1996 was $141,368,000,
compared to $147,901,000 in 1995, a 4.4% decrease. NOI increased 0.9% from 1995
to 1996 for Commercial Group properties in operation throughout both years and
6.2% from 1994 to 1995 for Commercial Group properties in operation throughout
both years. Adjusting for the items discussed above under "-- Net Operating
Income from Real Estate Operations," Commercial Group NOI would be $147,094,000
and $141,336,000 for 1996 and 1995 respectively, a 4.1% increase. Eliminating
asset dispositions and the items discussed above under "-- Net Operating Income
from Real Estate Operations," and including the expected NOI during the initial
twelve months after stabilization for the six Commercial Group properties that
were opened or acquired in 1996 and annualizing the ground rent received in 1996
from a Commercial Group project under construction would result in total NOI of
approximately $157,861,000.
RESIDENTIAL GROUP
REVENUES. Revenues for the Residential Group increased by $10,776,000 (or
10.2%) to $116,525,000 in 1996, from $105,749,000 in 1995. This increase
reflected a full year of performance from the 1995 acquisitions of Laurels, a
520-unit apartment complex in Justice, Illinois ($2,701,000), and the Vineyards,
a 336-unit apartment community in Cleveland, Ohio ($1,887,000). Revenues in 1996
were also favorably impacted by the addition of 336 units added to four
developments in Cleveland ($874,000) and the acquisition of Emerald Palms, a
419-unit apartment community in Miami, Florida ($2,563,000). Average monthly
rental rates increased in 1996, generating an additional $3,240,000 in annual
revenues over 1995. Average occupancy in
12
<PAGE> 15
1996 remained at 96%, consistent with the 1995 level. These revenue increases
were offset, in part, by the disposition of Vineyard Village, a 152-unit
apartment building in Ontario, California ($1,079,000).
Revenues for the Residential Group in 1995 decreased by $22,375,000 (or
17.5%) from $128,124,000 in 1994. Excluding the revenues of Park LaBrea Towers,
which was sold in 1994 (see "-- Other Transactions -- Gain (Loss) on Disposition
of Properties"), revenues increased by $5,796,000 (or 5.8%). This increase
reflected a full year of operations at Regency Towers, a 372-unit apartment
community in Jackson, New Jersey, and Oaks, a 248-unit apartment complex in
Bryan, Texas ($3,200,000). Average monthly rental rates increased in 1995,
generating an additional $2,868,000 in annual revenues over 1994. Average
occupancy in 1995 remained at 96%, the same level as in 1994.
OPERATING AND INTEREST EXPENSES. Operating and interest expenses for the
Residential Group increased by $7,438,000 and $2,420,000 (or 13.8% and 7.9%),
respectively, to $61,437,000 and $32,947,000, respectively, in 1996 from
$53,999,000 and $30,527,000, respectively, in 1995. The majority of the increase
in operating and interest expense reflected the expenses and debt service
associated with the addition of Laurels, the Vineyards and 336 new units at
existing properties in Cleveland, Ohio discussed above. During the fiscal years
ended January 31, 1995, 1996 and 1997, average comparable operating expenses
increased at a compounded annual rate of 2.2%.
Operating and interest expenses in 1995 decreased by $15,466,000 and
$6,166,000 (or 22.3% and 16.8%), respectively, from $69,465,000 and $36,693,000,
respectively, in 1994. Excluding Park LaBrea Towers, which was sold in 1994,
operating and interest expenses increased by $1,449,000 and $6,386,000 (or 2.8%
and 26.5%), respectively, from $52,550,000 and $24,141,000, respectively, in
1994. The increase in operating and interest expenses was primarily due to the
full year of operations for Regency Towers and Oaks, which were acquired in 1994
and the 1995 acquisition of Laurels. In addition, interest expense in 1995 was
also affected by increased interest rates.
NET OPERATING INCOME. Residential Group NOI for 1996 was $55,088,000,
compared to $51,750,000 in 1995, a 6.5% increase. NOI increased 6.7% from 1995
to 1996 for Residential Group properties in operation throughout both years and
6.0% from 1994 to 1995 for Residential Group properties in operation throughout
both years. Eliminating asset dispositions and including the expected NOI during
the initial twelve months after stabilization for the five Residential Group
properties that were opened or acquired in 1996 would result in total NOI of
approximately $52,103,000.
LAND GROUP
REVENUES. Revenues for the Land Group increased by $10,999,000 (or 25.6%)
in 1996, from $42,889,000 in 1995 to $53,888,000 in 1996. This increase
reflected income from the sale of a parcel of land in Miami, Florida
($9,029,000) and increased sales at the Company's Silver Lakes development in
Fort Lauderdale, Florida ($2,343,000). Revenues decreased by $6,005,000 (or
12.3%) in 1995 from $48,894,000 in 1994. The decrease was primarily the result
of two large commercial outlot sales in 1994 totaling $7,176,000. Commercial
outlot sales have been recorded in the Commercial Group since 1995.
OPERATING AND INTEREST EXPENSES. Operating expenses increased by
$9,966,000 and interest expense decreased by $1,151,000 (or 32.0% and 14.5%),
respectively, to $41,068,000 and $6,813,000, respectively, in 1996 from
$31,102,000 and $7,964,000, respectively, in 1995. Operating expenses decreased
by $7,262,000 and interest expense increased $724,000 (or 18.9% and 10.0%),
respectively, in 1995 from $38,364,000 and $7,240,000, respectively, in 1994.
The fluctuation in operating expenses primarily reflected the sales volume in
each year. The decrease in interest expense in 1996 compared to 1995 resulted
from a reduction in interest-bearing debt. The increase in interest expense in
1995 compared to 1994 was primarily due to the financing of new land
acquisitions.
LUMBER TRADING GROUP
REVENUES. Revenues of the Lumber Trading Group increased by $43,398,000
(or 53.5%) from $81,093,000 in 1995 to $124,491,000 in 1996. Of this increase,
$26,708,000 reflected the consolidation of the revenues of Forest City/Babin, a
wholesaler of major appliances, cabinets and hardware to housing
13
<PAGE> 16
contractors, for the first time. At the end of 1995, the Company acquired the
remaining 50% interest in Forest City/Babin and now consolidates this wholly
owned subsidiary. The Company previously accounted for its 50% interest in
Forest City/Babin using the equity method. The remaining increase was primarily
due to an increase in the Lumber Trading Group's margins as a result of
increased housing starts. Revenues of the Lumber Trading Group in 1995 were
relatively flat compared to 1994.
OPERATING AND INTEREST EXPENSES. Operating and interest expenses in the
Lumber Trading Group increased in 1996 by $40,170,000 and $88,000 (or 57.2% and
1.7%), respectively, from $70,189,000 and $5,078,000, respectively, in 1995. A
significant portion of this increase ($25,844,000 and $572,000 in operating and
interest expenses, respectively), was the result of the Forest City/Babin
acquisition described above. The remaining $14,326,000 increase in operating
expenses reflected the increase in variable expenses due to increased sales
volume. The remaining $484,000 decrease in interest expense was the result of
reduced inventory and a reduced rate of interest on the Lumber Trading Group's
lines of credit. Operating and interest expenses were flat in 1995 compared to
1994.
CORPORATE ACTIVITIES
REVENUES. Revenues of the Corporate Activities increased $250,000 (or
4.6%) in 1996 to $5,711,000 from $5,461,000 in 1995. Corporate Activities
revenues decreased $573,000 (or 9.5%) in 1995 from $6,034,000 in 1994. Corporate
Activities revenues consist primarily of interest income on advances made by the
Company on behalf of its partners, and vary from year to year depending on
interest rates and the amount of advances outstanding.
OPERATING AND INTEREST EXPENSES. Operating expenses increased $2,375,000
(or 37.4%) in 1996 to $8,723,000 from $6,348,000 in 1995, primarily due to a
favorable adjustment of $1,247,000 for a self-insurance accrual in 1995 that did
not recur in 1996 and increased general corporate expenses in 1996. Operating
expenses decreased $3,288,000 (or 34.1%) in 1995 from $9,636,000 in 1994. This
decrease was primarily the result of the favorable insurance adjustment noted
above and certain asset management costs that were charged to Corporate
Activities in 1994 and prior years. Beginning in 1995, these asset management
costs were being reported by each principal business group as part of its
operating expenses. Interest expense, which consists primarily of interest
expense on the Term Loan and Revolving Credit Facility that had not been
allocated to a principal business group, remained essentially flat for 1996,
1995, and 1994.
OTHER TRANSACTIONS
PROVISION FOR DECLINE IN REAL ESTATE. The Company's provision for decline
in real estate totaled $12,263,000, $9,581,000 and $10,133,000, in 1996, 1995
and 1994, respectively. In 1996, the Company entered into a joint venture
agreement with MGM to develop a casino/retail project which substantially
changed the scope of the Company's original development of the project. The 1996
provision for decline in real estate includes $5,104,000 of development costs
incurred by the Company which management determined to write-off as a result of
the change in scope of the project. In addition, the Company recorded a
provision for decline in real estate relating to the land acquired for Enclave,
a 633-unit apartment complex in San Jose, California. This provision for decline
in real estate resulted from an adjustment of $5,583,000 to write down the land
to its fair market value. The 1995 provision primarily reflected the write-off
of development costs of $7,242,000 associated with future phases of Toscana, a
563-unit apartment complex in Irvine, California discussed below under
"-- Recent Developments," based on management's determination that the Company
would not pursue future development. Also in 1995, the provision for decline in
real estate included an adjustment of $1,404,000 relating to the write down of
parcels of land to fair market value which were originally acquired for the
Enclave project and deeded back to the original land owner. The 1994 provision
reflected an adjustment to fair market value of Laurel Plaza, a Los Angeles,
California shopping center which was sold in 1995.
GAIN (LOSS) ON DISPOSITION OF PROPERTIES. The gain (loss) on disposition
of properties totaled a gain of $17,574,000, a loss of $754,000 and a loss of
$30,835,000, respectively, in 1996, 1995 and 1994. The 1996 gain primarily
reflects the disposition of the Company's 18.63% interest in Beachwood Place, a
regional shopping center in Cleveland, Ohio ($17,788,000) and the disposition of
Victor Village, a California strip shopping
14
<PAGE> 17
center ($499,000). The 1995 loss was primarily the result of the disposition of
Vineyard Village, as described above, ($650,000). The 1994 loss is primarily the
result of the disposition of Park LaBrea Towers, as described above.
EXTRAORDINARY GAIN. Extraordinary gain, net of tax, totaled $2,900,000,
$1,847,000 and $60,449,000, respectively, in 1996, 1995 and 1994 representing
extinguishment of nonrecourse debt and related accrued interest relating to
Enclave and Clark Building in Cambridge, Massachusetts in 1996, to Liberty
Center in 1995, and to Park LaBrea Towers in 1994. See Note N to the Company's
Consolidated Financial Statements.
INCOME TAXES. Income tax expense (benefit) totaled $12,951,000,
$10,623,000 and ($5,964,000), respectively in 1996, 1995 and 1994. At January
31, 1997, the Company had a tax net operating loss carryforward ("NOL") of
$88,868,000 (generated primarily over time in the ordinary course of business
from the significant impact of depreciation expense from real estate properties
on the Company's net earnings) which will expire in the years ending January 31,
2005 through January 31, 2011 and general business credit carryovers of
$3,601,000 which will expire in the years ending January 31, 2003 through
January 31, 2011. The Company's policy is to utilize its NOL before it expires
and will consider a variety of strategies to implement that policy. Federal,
state and local income taxes paid (refunded) totaled $830,000, ($888,000) and
$3,244,000 in 1996, 1995 and 1994, respectively. In 1996, the Company paid no
regular Federal corporate income tax and paid $570,000 in Federal alternative
minimum tax.
NET EARNINGS. In 1996, the Company's net earnings grew to $12,071,000, or
$.92 per share of common stock, from $8,786,000, or $.65 per share of common
stock in 1995. Excluding the 1994 Park LaBrea Towers transaction discussed under
"-- Other Transactions -- Gain (Loss) on Disposition of Properties," net
earnings in 1995 increased from 1994 net earnings of $4,635,000, or $0.34 per
share of common stock.
EBDT. The Company defines Earnings Before Depreciation, Amortization and
Deferred Taxes ("EBDT") as net earnings from operations before depreciation,
amortization and deferred taxes on income, and excludes provision for decline in
real estate, gain (loss) on disposition of properties and extraordinary gains.
The Company excludes depreciation and amortization expense from EBDT because
they are non-cash items and the Company believes the values of its properties
have appreciated over time in excess of their original cost. Deferred income
taxes are excluded because they are a non-cash item. Payment of current income
taxes has not been historically significant and is not expected to be
significant in the foreseeable future. The provision for the decline in real
estate is excluded from EBDT because it is typically a non-cash item that varies
from year to year based on factors unrelated to the Company's overall financial
performance. The Company excludes gain (loss) on the disposition of properties
from EBDT because it develops and acquires properties for long-term investment,
as opposed to short-term trading gains. As a result, the Company views
dispositions of properties other than commercial outlots or land held by the
Land Group as nonrecurring items. Extraordinary gains are generally the result
of the restructuring of nonrecourse debt obligations and are not considered to
be a component of the Company's operating results.
RECENT DEVELOPMENTS
During February 1997, the Company settled litigation with the original land
owner of Toscana, a 563-unit apartment complex in Irvine, California, and sold
the project back to the original land owner. As a result, the Company had
litigation settlement proceeds of $15,000,000 (the after-tax amount of which
will be included in EBDT for the first quarter of fiscal 1997); a pre-tax loss
on disposition of the property of $35,505,000; and a pre-tax extraordinary gain
of $18,272,000 related to the extinguishment of a portion of the nonrecourse
mortgage debt. The net result of these transactions to the Company was a pre-tax
loss of $2,233,000. Revenues, operating expenses, interest expense and asset
cost for 1996 related to Toscana were $7,218,000, $2,791,000, $4,097,000 and
$78,271,000, respectively.
FINANCIAL CONDITION AND LIQUIDITY
The Company believes that its sources of liquidity and capital are adequate
to meet its needs in the foreseeable future. The Company's principal sources of
funds are cash provided by operations, the Revolving
15
<PAGE> 18
Credit Facility and refinancings of existing properties. The Company's principal
use of funds are the financing of new developments, capital expenditures and
payments on nonrecourse mortgage debt on real estate.
The Lumber Trading Group is financed separately from the rest of the
Company's principal business groups, and the financing obligations of the Lumber
Trading Group are nonrecourse to the Company. Accordingly, the liquidity of the
Lumber Trading Group is discussed separately below under "-- Lumber Trading
Group Liquidity."
1996 AND 1995 MORTGAGE REFINANCINGS
In 1996, the Company refinanced $482,428,000 of mortgage indebtedness with
$525,370,000 of new nonrecourse mortgage indebtedness. In 1995, the Company
refinanced $361,421,000 of mortgage indebtedness with $366,842,000 of new
nonrecourse mortgage indebtedness.
OUTLOOK FOR 1997. As of January 31, 1997, the Company had $288,915,000
million of nonrecourse mortgage indebtedness due and payable in 1997. Of this
amount, as of March 31, 1997, the Company had already refinanced $40,000,000 and
discharged $67,800,000 with proceeds from the sale of Toscana (see "-- Recent
Developments"). The Company anticipates that the remaining $181,115,000 of
mortgage indebtedness will either be refinanced with new nonrecourse mortgage
indebtedness or extended.
LONG-TERM DEBT
At January 31, 1997, the Company had recourse debt of $93,000,000
outstanding, comprised of $45,000,000 under a $70,000,000 Term Loan maturing
July 1, 2001 and $48,000,000 under an $80,000,000 Revolving Credit Facility
maturing July 25, 1998. The Company is required to make quarterly principal
payments of $2,500,000 under the Term Loan. The Company has entered into an
interest rate swap agreement to fix $87,000,000 of the Term Loan and Revolving
Credit Facility for the period February 1, 1997 through February 1, 1998. The
Term Loan and Revolving Credit Facility and the Company's Guaranty require
Forest City Rental Properties Corporation (a wholly owned subsidiary of the
Company -- see Note M to the Consolidated Financial Statements) and the Company
to maintain certain levels of cash flow and require the Company to maintain a
specified level of net worth and restrict the payment of dividends by the
Company to $10,000,000 per year. At March 31, 1997, the Company had $15,000,000
of borrowings available under the Revolving Credit Facility, which is the
Company's principal source of temporary borrowings.
INTEREST RATE EXPOSURE
At January 31, 1997, the Company had $994,957,000 in fixed-rate and
$903,471,000 in variable-rate nonrecourse mortgages outstanding, with a weighted
average interest rate of 7.25%. At January 31, 1997, the Company's fixed-rate
debt carried a weighted average interest rate of 7.96%. Its weighted average
variable-rate taxable interest rate was 7.38%. Of the variable-rate debt,
$134,302,000 are tax-exempt financings which carried a weighted average interest
rate of 4.38% at January 31, 1997. Its weighted average interest rate on UDAG
loans and other government subsidized financing was 2.60%. The Company generally
does not hedge tax-exempt debt because of the low base rate on this type of
financing. With respect to taxable variable-rate debt, the Company generally
attempts to obtain interest rate protection for such debt with a maturity in
excess of one year. Of the $769,169,000 in taxable variable-rate debt
outstanding at February 1, 1997, $330,385,000 was protected by interest rate
swaps with a weighted average rate of 7.79% and an average remaining term of 2.3
years, effectively reducing the Company's interest rate exposure from the
taxable variable-rate debt to $438,784,000. In addition, $40,969,000 of
variable-rate debt was protected by interest rate caps, of which $19,139,000
extends for more than one year.
At January 31, 1997, a 100 basis point increase in taxable interest rates
would have increased the pre-tax interest cost of the Company's taxable
variable-rate debt by approximately $4.4 million. Although tax-exempt interest
rates generally increase in an amount that is smaller than corresponding changes
in taxable interest rates, a 100 basis point increase in tax-exempt interest
rates would have increased the pre-tax interest cost of the Company's tax-exempt
variable-rate debt by approximately $1.3 million.
16
<PAGE> 19
LUMBER TRADING GROUP LIQUIDITY
The Lumber Trading Group is separately financed with two lines of credit
and an accounts receivable sale program, which are not recourse to the Company.
The Lumber Trading Group has in place two lines of credit totaling
$46,000,000. These credit lines are secured by the assets of the Lumber Trading
Group, and are used by the Lumber Trading Group to finance its working capital
needs. At January 31, 1997, the Lumber Trading Group had $26,554,000 of
available credit under these facilities.
The Lumber Trading Group also has sold an undivided ownership interest in a
pool of accounts receivable of up to a maximum of $90,000,000. The Lumber
Trading Group uses this program to finance its working capital needs. At January
31, 1997, $34,000,000 had been sold under this accounts receivable program.
The Company believes that the amounts available under these credit
facilities, together with the accounts receivable sale program, will be
sufficient to meet the Lumber Trading Group's liquidity needs in 1997.
CASH FLOWS
Net cash provided by operating activities was $62,227,000, $72,509,000 and
$132,305,000 in 1996, 1995 and 1994, respectively. The decrease in cash provided
by operating activities in 1996 from 1995 is primarily the result of an increase
in inventories for the Lumber Trading Group ($5,346,000), a decrease in deferred
profit on contract sales ($6,484,000) and an increase in interest paid
($2,545,000), offset in part by an increase in rents and other revenues
received. The decrease in cash provided by operating activities in 1995 from
1994 was primarily due to an increase in interest paid ($13,436,000), the
increase in other assets for lease procurement costs and restricted cash
($18,721,000) and 1994 activity which did not recur in 1995: (1) the decrease in
inventories for the Lumber Trading Group ($26,456,000), and (2) the increase in
accounts payable and accrued expenses for the Land Group ($6,703,000). The
additional increases in operating expenses in 1996 and 1995 were offset by rents
and other revenues received during those years.
Net cash used in investing activities totaled $134,903,000, $112,848,000
and $132,305,000 in 1996, 1995 and 1994, respectively. Capital expenditures,
other than development and acquisition activities, totaled $32,007,000
(including both recurring and investment capital expenditures) in 1996 and were
financed primarily with cash provided by operating activities. In 1996, net cash
used in investing activities reflected the Company's use of $120,667,000 of
funds for acquisition and development activities, which were financed with
$117,202,000 in new mortgage indebtedness (see below for discussion of Cash
Flows from Financing Activities) and the remainder from cash provided by
operating activities. Net cash used in investing activities in 1996 also
includes the gross proceeds from the dispositions of Beachwood Place
($15,427,000) and Victor Village ($10,613,000).
Capital expenditures, other than development and acquisition activities,
totaled $29,954,000 (including both recurring and investment capital
expenditures) in 1995 and were financed primarily with cash provided by
operating activities. In 1995, the Company used $87,385,000 of funds for
acquisition and development activities, which were financed with $68,146,000 in
new mortgage indebtedness (see below for discussion of Cash Flows from Financing
Activities), and the remainder from cash provided by operating activities. Net
cash used in investing activities in 1995 also includes proceeds from the
dispositions of Vineyard Village($7,450,000) and Laurel Plaza ($8,500,000) for
$15,950,000.
In 1994, capital expenditures, other than development and acquisition
activities, totaled $39,206,000 (including both recurring and investment capital
expenditures) and were financed primarily with cash provided by operating
activities. The Company used $82,396,000 of funds in 1994 for acquisition and
development activities, which were financed with $66,205,000 in new mortgage
indebtedness and the remainder from cash provided by operating activities. Net
cash used in investing activities in 1994 also includes proceeds from the sale
of Park LaBrea Towers ($15,264,000).
Capital expenditures for 1997, other than development and acquisition
activities, are estimated to total $34,816,000. In 1997, the Company anticipates
expending $91,839,000 in acquisition and development
17
<PAGE> 20
activities. The Company anticipates that approximately one-half of these capital
expenditures will be financed with nonrecourse mortgage indebtedness, and that
the remaining portion with cash from operations and borrowings under the
Revolving Credit Facility.
Net cash provided by financing activities totaled $74,833,000, $33,006,000
and $24,680,000 in 1996, 1995 and 1994, respectively. The Company's refinancing
of mortgage indebtedness is discussed above in "-- 1996 and 1995 Mortgage
Refinancings" and borrowings under new mortgage indebtedness for acquisition and
development activities is included in the preceding paragraphs discussing net
cash used in investing activities. In addition, net cash provided by financing
activities in 1996 reflected $15,200,000 of restricted cash pledged for the
financing of Enclave, a 633 unit apartment community in San Jose, California
currently under construction, $6,080,000 of common stock repurchases and the
payment of $2,797,000 of dividends. Net cash provided by financing activities in
1995 reflected, in addition to the refinancing of mortgage indebtedness and
borrowing under new mortgage indebtedness, $2,509,000 in common stock
repurchases and the payment of $2,248,000 of dividends. Net cash provided by
financing activities in 1994 reflected, in addition to new indebtedness for
acquisition and development activities, refinancing of existing mortgages
indebtedness and the payment of $1,798,000 of dividends.
SHELF REGISTRATION
On March 4, 1997, the Company filed a shelf registration statement with the
Securities and Exchange Commission for the potential offering on a delayed basis
of up to $250 million in debt or equity securities.
STOCK SPLIT, DIVIDENDS AND AUTHORIZED SHARES
The Board of Directors approved a three-for-two stock split of both the
Company's Class A and Class B Common Stock, which became effective February 17,
1997 to shareholders of record at the close of business on February 3, 1997. The
stock split was effected as a stock dividend.
The Board of Directors of the Company recently announced that they intend
to pay cash dividends on a quarterly basis in the future, whereas cash dividends
in 1995 and 1996 were paid on an annual basis. A quarterly cash dividend of $.06
per share (post-split) on shares of both Class A and Class B Common Stock was
paid on March 17, 1997. The $.06 quarterly dividend per share equates to an
annual pre-split dividend of $.36 per share and represents a 12.5% increase over
the annual dividend declared in 1996. The second 1997 quarterly dividend of $.06
per share on shares of both Class A and Class B Common Stock will be paid on
June 16, 1997 to shareholders of record at the close of business on June 2,
1997. Purchasers of Class A Common Stock in this Offering who hold shares of
Class A Common Stock on the record date will be entitled to this dividend.
The Company's current authorized shares are comprised of 16,000,000 shares
of Class A Common Stock, 6,000,000 shares of Class B Common Stock and 1,000,000
shares of Preferred Stock. The Board of Directors has approved for submission to
shareholders at the Company's 1997 Annual Meeting amendments to the Company's
Articles of Incorporation to increase the Company's authorized shares to
48,000,000 shares of Class A Common Stock, 18,000,000 shares of Class B Common
Stock and 5,000,000 shares of Preferred Stock.
INFLATION
The Commercial Group's exposure to increases in costs and operating
expenses resulting from inflation is minimized due to the provisions of its
leases with its tenants that require tenants to reimburse the Company for the
majority of its operating expenses. Also, many of the Company's leases provide
for payments based on a percentage of the rental income of the tenants, which
generally increases in periods of inflation. The Residential Group's risk in a
period of inflation is minimized by the annual turnover of tenant leases, which
allow for immediate market rate increases. The Land and the Lumber Trading
Groups may be affected by inflation by the availability of buyers of new housing
to obtain mortgage financing when interest rates are high.
18
<PAGE> 21
NEW ACCOUNTING STANDARDS
In March, 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 121 " Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
SFAS 121 establishes accounting standards for the review of impairment of a
long-lived asset whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. The Company has adopted the
provisions of SFAS 121, which has no material effect on the financial position
or results of operations of the Company.
During 1996, the Company granted options under its Stock Option Plan. The
Company recognizes compensation cost in accordance with the provisions of
Accounting Principles Board Opinion No. 25 and related Interpretations. The
Company has not adopted the recognition provisions of SFAS 123 "Accounting for
Stock-Based Compensation," but the disclosures required by SFAS 123 have been
included in the Notes to the Consolidated Financial Statements.
In February 1997, FASB issued SFAS 128 "Earnings per Share," which is
effective for fiscal years ending after December 15, 1997. This Statement
simplifies the standards for computing earnings per share ("EPS") and makes them
comparable to international EPS standards. The Company will adopt the provisions
of SFAS 128 for its fiscal year ending January 31, 1998, but does not expect
such adoption to have a material impact on EPS.
19
<PAGE> 22
FOREST CITY ENTERPRISES, INC.
THREE YEAR SUMMARY OF EARNINGS BEFORE DEPRECIATION, AMORTIZATION AND DEFERRED
TAXES
<TABLE>
<CAPTION>
LUMBER
TRADING
COMMERCIAL GROUP RESIDENTIAL GROUP LAND GROUP GROUP
---------------------------- ---------------------------- ------------------------- --------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996
-------- -------- -------- -------- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $309,834 $294,241 $258,966 $116,525 $105,749 $128,124 $53,888 $42,889 $48,894 $124,491
Operating expenses,
including depreciation and
amortization for non-real
estate Groups............. 168,466 146,340 137,583 61,437 53,999 69,465 41,068 31,102 38,364 110,359
Interest expense........... 88,149 86,046 67,031 32,947 30,527 36,693 6,813 7,964 7,240 5,166
Income tax provision....... (2,970) 7,026 (1,980) (2,464) 581 (5,120) 2,078 (358) 368 3,913
-------- -------- -------- -------- -------- -------- ------- ------- ------- --------
253,645 239,412 202,634 91,920 85,107 101,038 49,959 38,708 45,972 119,438
-------- -------- -------- -------- -------- -------- ------- ------- ------- --------
Earnings before
depreciation, amortization
and deferred taxes
(EBDT).................... $ 56,189 $ 54,829 $ 56,332 $ 24,605 $ 20,642 $ 27,086 $ 3,929 $ 4,181 $ 2,922 $ 5,053
======== ======== ======== ======== ======== ======== ======= ======= ======= ========
Reconciliation to net
earnings:
Earnings before
depreciation, amortization
and deferred taxes
(EBDT)....................
Depreciation and
amortization -- real
estate Groups.............
Deferred taxes -- real
estate Groups.............
Provision for decline in
real estate, net of tax...
Gain (loss) on disposition
of properties, net of
tax.......................
Extraordinary gain, net of
tax.......................
Net earnings...............
<CAPTION>
CORPORATE ACTIVITIES TOTAL
------------------------ ----------------------------
1995 1994 1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------- -------- -------- --------
<S> <C><C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $81,093 $80,590 $ 5,711 $5,461 $ 6,034 $610,449 $529,433 $522,608
Operating expenses,
including depreciation and
amortization for non-real
estate Groups............. 70,189 70,312 8,723 6,348 9,636 390,053 307,978 325,360
Interest expense........... 5,078 5,372 289 386 485 133,364 130,001 116,821
Income tax provision....... 2,823 2,268 (3,929) (639) 3,629 (3,372) 9,433 (835)
------- ------- ------ ------ ------ -------- -------- --------
78,090 77,952 5,083 6,095 13,750 520,045 447,412 441,346
------- ------- ------ ------ ------ -------- -------- --------
Earnings before
depreciation, amortization
and deferred taxes
(EBDT).................... $ 3,003 $ 2,638 $ 628 $ (634) $(7,716) $ 90,404 $ 82,021 $ 81,262
======= ======= ====== ====== ====== ======== ======== ========
Reconciliation to net
earnings:
Earnings before
depreciation, amortization
and deferred taxes
(EBDT).................... $ 90,404 $ 82,021 $ 81,262
Depreciation and
amortization -- real
estate Groups............. (70,221) (63,557) (63,956)
Deferred taxes -- real
estate Groups............. (13,197) (4,974) (10,532)
Provision for decline in
real estate, net of tax... (7,413) (6,073) (4,986)
Gain (loss) on disposition
of properties, net of
tax....................... 9,598 (478) (20,321)
Extraordinary gain, net of
tax....................... 2,900 1,847 60,449
-------- -------- --------
Net earnings............... $ 12,071 $ 8,786 $ 41,916
======== ======== ========
</TABLE>
20
<PAGE> 23
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This Annual Report, together with other statements and information publicly
disseminated by the Company, contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements reflect
management's current views with respect to financial results related to future
events and are based on assumptions and expectations which may not be realized
and are inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy and some of which might not even be anticipated. Future
events and actual results, financial or otherwise, may differ from the results
discussed in the forward-looking statements. Risks and other factors that might
cause differences, some of which could be material, include, but are not limited
to, the effect of economic and market conditions on a nation-wide basis as well
as regionally in areas where the Company has a geographic concentration of
properties; failure to consummate financing arrangements; development risks,
including lack of satisfactory financing, construction and lease-up delays and
cost overruns; the level and volatility of interest rates; financial stability
of tenants within the retail industry, which may be impacted by competition and
consumer spending; the rate of revenue increases versus expenses increases; the
cyclical nature of the lumber wholesaling business; as well as other risks
listed from time to time in the Company's reports filed with the Securities and
Exchange Commission. The Company has no obligation to revise or update any
forward-looking statements as a result of future events or new information.
Readers are cautioned not to place undue reliance on such forward-looking
statements.
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Not applicable until fiscal year ending January 31, 1999.
21
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Financial Reports:
Report of Independent Accountants......................................... 23
Consolidated Financial Statements:
Consolidated Balance Sheets............................................... 24
Consolidated Statements of Earnings....................................... 25
Consolidated Statements of Shareholders' Equity........................... 26
Consolidated Statements of Cash Flows..................................... 27
Notes to Consolidated Financial Statements................................ 29
Supplementary Data:
Quarterly Consolidated Financial Data (Unaudited)......................... 43
Financial Statement Schedules:
II. Valuation and Qualifying Accounts.................................... 44
III. Real Estate and Accumulated Depreciation............................. 45
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is presented in the consolidated financial statements
or the notes thereto.
22
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Forest City Enterprises, Inc.
We have audited the accompanying consolidated balance sheets of Forest City
Enterprises, Inc. and its subsidiaries as of January 31, 1997 and 1996, and the
related consolidated statements of earnings, shareholders' equity and cash flows
for each of the three years in the period ended January 31, 1997 and financial
statement schedules listed in the Index of Item 8 of this Form 10-K. These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Forest City
Enterprises, Inc. and its subsidiaries as of January 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
Cleveland, Ohio
March 13, 1997
23
<PAGE> 26
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31,
-----------------------
1997 1996
---------- ----------
(dollars in thousands)
<S> <C> <C>
ASSETS
Real Estate
Completed rental properties.......................................... $2,247,393 $2,101,564
Projects under development........................................... 220,137 246,240
Land held for development or sale.................................... 52,649 77,279
---------- ----------
2,520,179 2,425,083
Less accumulated depreciation........................................ (399,830) (347,912)
---------- ----------
Total Real Estate................................................. 2,120,349 2,077,171
Cash................................................................... 41,302 39,145
Notes and accounts receivable, net..................................... 204,959 168,177
Inventories............................................................ 48,769 41,186
Investments in and advances to affiliates.............................. 145,242 145,238
Other assets........................................................... 180,784 160,129
---------- ----------
$2,741,405 $2,631,046
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage debt, nonrecourse............................................. $1,898,428 $1,832,059
Accounts payable and accrued expenses.................................. 378,230 342,511
Notes payable.......................................................... 37,041 19,856
Long-term debt......................................................... 94,923 113,061
Deferred income taxes.................................................. 115,488 105,111
Deferred profit........................................................ 25,317 28,859
---------- ----------
Total Liabilities................................................. 2,549,427 2,441,457
---------- ----------
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; 7,932,358 and 7,906,990 shares
issued, 7,696,408 and 7,903,990 outstanding, respectively......... 2,643 2,635
Class B, convertible, 6,000,000 shares authorized; 5,554,618 and
5,580,431 shares issued, 5,415,568 and 5,467,931 outstanding,
respectively...................................................... 1,851 1,859
---------- ----------
4,494 4,494
Additional paid-in capital............................................. 43,996 44,014
Retained earnings...................................................... 152,077 143,590
---------- ----------
200,567 192,098
Less treasury stock, at cost; 1997: 235,950 Class A and 139,050 Class B
shares, 1996: 3,000 Class A and 112,500 Class B shares............... (8,589) (2,509)
---------- ----------
Total Shareholders' Equity........................................ 191,978 189,589
---------- ----------
$2,741,405 $2,631,046
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE> 27
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
For the Years Ended January 31,
----------------------------------
1997 1996 1995
-------- -------- --------
(in thousands, except per share
data)
<S> <C> <C> <C>
Revenues.................................................. $610,449 $529,433 $522,608
-------- -------- --------
Operating expenses........................................ 386,970 305,819 323,736
Interest expense.......................................... 133,364 130,001 116,821
Provision for decline in real estate...................... 12,263 9,581 10,133
Depreciation and amortization............................. 73,304 65,716 65,580
-------- -------- --------
605,901 511,117 516,270
-------- -------- --------
Gain (loss) on disposition of properties.................. 17,574 (754) (30,835)
-------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES....................... 22,122 17,562 (24,497)
-------- -------- --------
INCOME TAX EXPENSE (BENEFIT)
Current................................................. 1,935 370 6,057
Deferred................................................ 11,016 10,253 (12,021)
-------- -------- --------
12,951 10,623 (5,964)
-------- -------- --------
NET EARNINGS (LOSS) BEFORE EXTRAORDINARY GAIN............. 9,171 6,939 (18,533)
Extraordinary gain, net of tax............................ 2,900 1,847 60,449
-------- -------- --------
NET EARNINGS.............................................. $ 12,071 $ 8,786 $ 41,916
======== ======== ========
NET EARNINGS PER COMMON SHARE
Net earnings (loss) before extraordinary gain, net of
tax.................................................. $ .70 $ .51 $ (1.37)
Extraordinary gain, net of tax.......................... .22 .14 4.48
-------- -------- --------
NET EARNINGS PER COMMON SHARE............................. $ .92 $ .65 $ 3.11
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE> 28
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------
CLASS A CLASS B ADDITIONAL TREASURY STOCK
-------------- -------------- PAID-IN RETAINED ---------------
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL
------ ------ ------ ------ ---------- -------- ------ ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 31, 1994, AS PREVIOUSLY
REPORTED.................................. 5,146 $1,715 3,846 $1,282 $ 45,511 $96,934 -- $ -- $145,442
Three-for-two stock split effective
February 17, 1997 applied
retroactively........................... 2,573 857 1,922 640 (1,497) -- -- -- --
----- ------ ----- ------ ------- -------- --- ------- ---------
BALANCES AT JANUARY 31, 1994, AS RESTATED... 7,719 2,572 5,768 1,922 44,014 96,934 -- -- 145,442
Net earnings.............................. 41,916 41,916
Dividends -- $.13 per share............... (1,798) (1,798)
----- ------ ----- ------ ------- -------- --- ------- ---------
BALANCES AT JANUARY 31, 1995, AS RESTATED... 7,719 2,572 5,768 1,922 44,014 137,052 -- -- 185,560
Net earnings.............................. 8,786 8,786
Dividends -- $.17 per share............... (2,248) (2,248)
Conversion of Class B shares to Class A
shares.................................. 188 63 (188) (63) --
Purchase of treasury stock................ 116 (2,509) (2,509)
----- ------ ----- ------ ------- -------- --- ------- ---------
BALANCES AT JANUARY 31, 1996, AS RESTATED... 7,907 2,635 5,580 1,859 44,014 143,590 116 (2,509) 189,589
Net earnings.............................. 12,071 12,071
Dividends:
Annual 1996 -- $.21 per share........... (2,797) (2,797)
Quarterly 1997 -- $.06 per share........ (787) (787)
Conversion of Class B shares to Class A
shares.................................. 25 8 (25) (8) --
Purchase of treasury stock................ 259 (6,080) (6,080)
Cash in lieu of fractional shares from
three-for-two stock split............... (18) (18)
----- ------ ----- ------ ------- -------- --- ------- ---------
BALANCES AT JANUARY 31, 1997................ 7,932 $2,643 5,555 $1,851 $ 43,996 $152,077 375 $(8,589) $191,978
===== ====== ===== ====== ======= ======== === ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE> 29
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended January 31,
----------------------------------
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Rents and other revenues received.............. $530,597 $508,494 $480,470
Proceeds from land sales....................... 44,297 44,740 42,493
Land development expenditures.................. (25,741) (24,163) (33,430)
Operating expenditures......................... (352,372) (324,553) (238,655)
Interest paid.................................. (134,554) (132,009) (118,573)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES... 62,227 72,509 132,305
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................... (157,601) (122,878) (121,602)
Proceeds from disposition of properties........ 26,040 15,950 15,264
Investments in and advances to affiliates...... (3,342) (5,920) (25,967)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES....... (134,903) (112,848) (132,305)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgage and long-term debt........ 175,202 103,993 99,894
Payments on long-term debt..................... (26,932) (12,873) (17,555)
Principal payments on mortgage debt on real
estate...................................... (55,880) (43,631) (34,228)
Increase in notes payable...................... 22,820 6,140 434
Payments on notes payable...................... (6,263) (8,624) (17,277)
Increase in cash restricted for letter of
credit...................................... (15,200) -- --
Payment of deferred financing costs............ (10,037) (7,242) (4,790)
Purchase of treasury stock..................... (6,080) (2,509) --
Dividends paid to shareholders................. (2,797) (2,248) (1,798)
-------- -------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES............................. 74,833 33,006 24,680
-------- -------- --------
NET INCREASE (DECREASE) IN CASH.................. 2,157 (7,333) 24,680
CASH AT BEGINNING OF YEAR........................ 39,145 46,478 21,798
-------- -------- --------
CASH AT END OF YEAR.............................. $ 41,302 $ 39,145 $ 46,478
======== ======== ========
</TABLE>
27
<PAGE> 30
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
For the Years Ended January 31,
----------------------------------
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
RECONCILIATION OF NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
NET EARNINGS..................................... $ 12,071 $ 8,786 $ 41,916
Depreciation................................... 52,979 50,821 49,869
Amortization................................... 20,325 14,895 15,711
Deferred income taxes.......................... 10,377 11,461 24,201
Provision for decline in real estate........... 12,263 9,581 10,133
(Gain) loss on disposition of properties....... (17,574) 754 30,835
Extraordinary gain............................. (4,797) (3,055) (90,823)
Decrease (increase) in land held for
development or sale......................... 8,980 2,887 (5,768)
(Increase) decrease in notes and accounts
receivable.................................. (40,579) 29,425 947
(Increase) decrease in inventories............. (7,583) (2,237) 24,271
Increase (decrease) in accounts payable and
accrued expenses............................ 40,225 (29,232) 37,403
(Decrease) increase in deferred profit......... (3,542) 2,942 (592)
(Increase) in other assets..................... (20,918) (24,519) (5,798)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES... $ 62,227 $ 72,509 $132,305
======== ======== ========
</TABLE>
Supplemental Non-Cash Disclosure:
The following items represent the non-cash effect of reductions in the
Company's interest in Granite Development Partners, L.P. and the Clark Building,
and the disposition of the Company's interest in Beachwood Place, during the
fiscal year ended January 31, 1997 and an increase in the Company's interest in
Liberty Center during the fiscal year ended January 31, 1996.
<TABLE>
<S> <C> <C> <C>
Operating Activities
Land held for development or sale.............. $ 15,650 $ -- $ --
Notes and accounts receivable.................. 3,797 -- --
Other assets................................... 5,175 -- --
Accounts payable and accrued expenses.......... (5,311) -- --
-------- -------- --------
Total effect on operating activities...... $ 19,311 $ -- $ --
======== ======== ========
Investing Activities
Capital expenditures........................... $ 16,085 $(15,714) $ --
Investments in and advances to affiliates...... 3,338 -- --
-------- -------- --------
Total effect on investing activities...... $ 19,423 $(15,714) $ --
======== ======== ========
Financing Activities
Mortgage and long-term debt.................... $(39,362) $ 15,714 $ --
Notes payable.................................. 628 -- --
-------- -------- --------
Total effect on financing activities...... $(38,734) $ 15,714 $ --
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE> 31
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Forest City Enterprises, Inc. is a major, vertically integrated national
real estate company with four principal business groups. The COMMERCIAL GROUP
develops, acquires, owns and operates shopping centers, office buildings and
mixed-use projects including hotels. The RESIDENTIAL GROUP develops or acquires,
and owns and operates the Company's multi-family properties. The LAND GROUP owns
and develops raw land into master planned communities and other residential
developments for resale. The LUMBER TRADING GROUP operates the Company's lumber
wholesaling business.
Forest City Enterprises, Inc. owns approximately $2.5 billion of properties
at cost in 20 states and Washington, D.C. The Company's executive offices are in
Cleveland, Ohio. Regional offices are located in New York, Los Angeles, Boston,
Chicago, Portland, Tucson, Detroit and Washington, D.C.
FISCAL YEAR
The years 1996, 1995 and 1994 refer to the fiscal years ended January 31,
1997, 1996 and 1995, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Forest City
Enterprises, Inc. and all wholly-owned subsidiaries ("Enterprises" and the
"Company"). The Company also includes its proportionate share of the assets,
liabilities and results of operations of its real estate partnerships, joint
ventures and majority-owned corporations. These entities are included as of
their respective fiscal year-ends (generally December 31).
All significant intercompany accounts and transactions between consolidated
entities have been eliminated. Entities which the Company does not control are
accounted for on the equity method. Undistributed earnings of such entities
included in retained earnings are $418,000 at January 31, 1997.
The Company is required to make estimates and assumptions when preparing
its financial statements and accompanying notes in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Certain prior years' amounts in the accompanying financial statements have
been reclassified to conform to the current year's presentation. The
Consolidated Statements of Cash Flows have been presented using the direct
method, whereas the indirect method was used in prior years.
RECOGNITION OF REVENUE AND PROFIT
REAL ESTATE SALES -- The Company follows the provisions of Statement of
Financial Accounting Standards (SFAS) No. 66, "Accounting for Sales of Real
Estate" for reporting the disposition of properties.
LEASING OPERATIONS -- The Company enters into leases with tenants in its
rental properties. The lease terms of tenants occupying space in the shopping
centers and office buildings range from 1 to 25 years, excluding leases with
anchor tenants. Minimum rent revenues are recognized when due from tenants.
Leases with most shopping center tenants provide for percentage rents when the
tenants' sales volumes exceed stated amounts. The Company is also reimbursed for
certain expenses related to operating its commercial properties.
LUMBER BROKERAGE -- The Company recognizes the gross margin on these sales
as revenue. Sales invoiced for the years 1996 through 1994 were approximately
$2,884,000,000, $2,337,500,000 and $2,697,500,000, respectively.
CONSTRUCTION -- Revenue and profit on long-term fixed-price contracts are
reflected under the percentage-of-completion method. On reimbursable cost-plus
fee contracts, revenues are recorded in the amount of the accrued reimbursable
costs plus proportionate fees at the time the costs are incurred.
RECOGNITION OF COSTS AND EXPENSES
Operating expenses primarily represent the recognition of operating costs,
administrative expenses and taxes other than income taxes.
29
<PAGE> 32
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
For financial reporting purposes, interest and real estate taxes during
development and construction are capitalized as a part of the project cost.
Depreciation is generally computed on a straight-line method over the
estimated useful asset lives. The estimated useful lives of buildings range from
20 to 50 years.
Major improvements are capitalized and expensed through depreciation
charges. Repairs, maintenance and minor improvements are expensed as incurred.
Costs and accumulated depreciation applicable to assets retired or sold are
eliminated from the respective accounts and any resulting gains or losses are
reported in the Consolidated Statements of Earnings.
The Company periodically reviews its properties to determine if its
carrying costs will be recovered from future operating cash flows. In cases
where the Company does not expect to recover its carrying costs, an impairment
loss is recorded as a provision for decline in real estate.
LAND OPERATIONS
Land held for development or sale is stated at the lower of carrying amount
or fair value less cost to sell.
INVENTORIES
The lumber brokerage inventories are stated at the lower of cost or market.
Inventory cost is determined by specific identification and average cost
methods.
OTHER ASSETS
Included in other assets are costs incurred in connection with obtaining
financing, which are deferred and amortized over the life of the related debt.
Costs incurred in connection with leasing space to tenants are also included in
other assets and are deferred and amortized on the straight-line method over the
lives of the related leases.
INCOME TAXES
Deferred tax assets and liabilities reflect the tax consequences on future
years of differences between the tax and financial statement basis of assets and
liabilities at year-end. The Company has recognized the benefits of its tax loss
carryforward and general business tax credits which it expects to use as a
reduction of the deferred tax expense.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company determined the estimated fair value of its debt and hedging
instruments by aggregating the various types (i.e. fixed-rate versus
variable-rate debt) and discounting future cash payments at interest rates that
the Company believes approximates the current market. There was no material
difference in the carrying amount and the estimated fair value of the Company's
total mortgage debt and hedging instruments.
INTEREST RATE PROTECTION AGREEMENTS
The Company maintains a practice of hedging its variable interest rate risk
by purchasing interest rate caps or entering into interest rate swap agreements
for periods of one to five years. The principal risk to the Company through its
interest rate hedging strategy is the potential inability of the financial
institution from which the interest rate protection was purchased to cover all
of its obligations. To mitigate this exposure, the Company purchases its
interest rate protection from either the institution that holds the debt or from
institutions with a minimum A credit rating.
The cost of interest rate protection is capitalized in other assets in the
Consolidated Balance Sheets and amortized over the benefit period as interest
expense in the Consolidated Statements of Earnings.
STOCK-BASED COMPENSATION
The Company follows Accounting Principles Board Opinion (APBO) No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations to
account for stock-based compensation. As such,
30
<PAGE> 33
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of grant over the amount
the employee is required to pay for the stock.
STOCK SPLIT
On December 11, 1996, the Board of Directors declared a three-for-two stock
split of the Company's common stock payable February 17, 1997 to shareholders of
record on February 3, 1997. The stock split was effected as a stock dividend.
The stock split is given retroactive effect to the beginning of the earliest
period presented in the accompanying Consolidated Balance Sheets and
Consolidated Statements of Shareholders' Equity by transferring the par value of
the additional shares issued from the additional paid-in capital account to the
common stock accounts. All share and per share data included in this annual
report, including stock option plan information, have been restated to reflect
the stock split.
EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during the year of 13,155,236 in
1996, 13,480,164 in 1995 and 13,487,421 in 1994. Stock options outstanding
during 1996 did not have a material dilutive effect on earnings per share.
CAPITAL STOCK
Class B common stock is convertible into Class A common stock on a
share-for-share basis. The 1,000,000 authorized shares of preferred stock
without par value, none of which have been issued, may be convertible into Class
A common stock.
Class A common shareholders elect 25% of the members of the Board of
Directors and Class B common shareholders elect the remaining directors
annually. The Company currently has 12 directors.
During 1996, the Company repurchased 232,950 shares of Class A and 26,550
shares of Class B common stock, and during 1995, the Company repurchased 3,000
shares of Class A and 112,500 shares of Class B common stock. All these shares
were held in treasury at January 31, 1997.
NEW ACCOUNTING STANDARD
Effective February 1, 1996, the Company adopted the provisions of SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". SFAS No. 121 requires that long-lived assets to be
held and used or disposed of should be reviewed for impairment whenever events
or changes in circumstances indicate the carrying amount of an asset may not be
recoverable. The Company adopted SFAS No. 121 and determined that no impairment
loss is required to be recognized for real estate held and used or to be
disposed of in the current year.
31
<PAGE> 34
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
B. REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION AND NONRECOURSE MORTGAGE
DEBT
The components of real estate cost and related nonrecourse mortgage debt
are presented below.
<TABLE>
<CAPTION>
January 31, 1997
----------------------------------------------------
Less Nonrecourse
Total Accumulated Net Mortgage
Cost Depreciation Cost Debt
---------- ----------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Completed rental properties
Residential......................... $ 605,201 $ 110,467 $ 494,734 $ 496,545
Commercial
Shopping centers................. 787,468 125,721 661,747 682,596
Office and other buildings....... 835,190 151,545 683,645 657,189
Corporate and other equipment....... 19,534 12,097 7,437 --
---------- -------- ---------- ----------
2,247,393 399,830 1,847,563 1,836,330
---------- -------- ---------- ----------
Projects under development
Residential......................... 46,564 -- 46,564 9,601
Commercial
Shopping centers................. 91,223 -- 91,223 8,729
Office and other buildings....... 82,350 -- 82,350 12,070
---------- -------- ---------- ----------
220,137 -- 220,137 30,400
---------- -------- ---------- ----------
Land held for development or sale..... 52,649 -- 52,649..... 31,698
---------- -------- ---------- ----------
$2,520,179 $ 399,830 $ 2,120,349 $ 1,898,428
========== ======== ========== ==========
</TABLE>
C. NOTES AND ACCOUNTS RECEIVABLE, NET
Notes and accounts receivable are summarized below.
<TABLE>
<CAPTION>
January 31,
---------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Lumber brokerage................................................ $ 153,944 $ 116,295
Real estate sales............................................... 14,509 13,862
Syndication activities.......................................... 12,865 15,072
Receivable from tenants......................................... 12,795 12,527
Other receivables............................................... 15,840 14,108
-------- --------
209,953 171,864
Allowance for doubtful accounts................................. (4,994) (3,687)
-------- --------
$ 204,959 $ 168,177
======== ========
</TABLE>
Notes receivable at January 31, 1997 of $24,536,000, reflected in real
estate sales and syndication activities in the table above, are collectible
primarily over five years, with $15,488,000 being due within one year. The
weighted average interest rate at January 31, 1997 and 1996 was 9.2% and 11.8%,
respectively.
In July 1996, the Lumber Trading Group entered into a three-year agreement
under which it is selling an undivided interest in a pool of accounts receivable
up to a maximum of $90,000,000. At January 31, 1997 and 1996, the Company had
received $34,000,000 and $27,000,000, respectively, as net proceeds from this
transaction. The program is non-recourse to the Company and the Company bears no
risk as to the collectability of the accounts receivable. An interest in
additional accounts receivable may be sold as collections reduce previously sold
interests.
32
<PAGE> 35
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
D. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Included in accounts payable and accrued expenses at January 31, 1997 and
1996 are book overdrafts of approximately $66,971,000 and $48,316,000,
respectively. The overdrafts are a result of the Company's cash management
program and represent checks issued but not yet presented to a Company bank for
collection.
E. NOTES PAYABLE
The components of notes payable, which represent indebtedness whose
original maturity dates are within one year of issuance, are as follows.
<TABLE>
<CAPTION>
January 31,
------------------
1997 1996
------- -------
(in thousands)
<S> <C> <C>
Payable To
Banks.......................................................... $15,191 $12,743
Other.......................................................... 21,850 7,113
------- -------
$37,041 $19,856
======= =======
</TABLE>
Notes payable to banks reflect borrowings on the Lumber Trading Group's
$46,000,000 bank lines of credit. The Company has the right to borrow an
additional $10,000,000 for up to 90 days through May 31, 1997 under these bank
lines of credit. Borrowings under these bank lines of credit, which are
non-recourse to the Company, are collateralized by all the assets of the Lumber
Trading Group and bear interest at prime and has a fee of 1/5% per annum on the
unused portion of the available commitment. These bank lines of credit are
subject to review and extension annually. The weighted average interest rate was
8.3% and 8.9% at January 31, 1997 and 1996, respectively.
Interest expense on notes payable was $5,166,000 in 1996, $5,078,000 in
1995 and $5,321,000 in 1994. Interest actually paid on notes payable was
$5,097,000 in 1996, $5,129,000 in 1995 and $5,527,000 in 1994.
F. MORTGAGE DEBT, NONRECOURSE
Mortgage debt, which is collateralized by completed rental properties,
projects under development and certain undeveloped land, is as follows.
<TABLE>
<CAPTION>
January 31,
-----------------------------------------------
<S> <C> <C> <C> <C>
1997 1996
-------------------- --------------------
<CAPTION>
(dollars in thousands)
RATE(1) Rate(1)
------- -------
<S> <C> <C> <C> <C>
Fixed.................................... $917,547... 7.96% $ 738,217 8.09%
Variable --
Taxable(2)............................. 769,169 7.38 910,767 7.16
Tax-Exempt............................. 134,302 4.38 128,199 4.13
UDAG and other subsidized loans.......... 77,410 2.60 54,876 2.56
---------- ----------
$1,898,428 7.25 $1,832,059 7.19
========== ==========
</TABLE>
- ---------------
(1) The weighted average interest rates shown above include both the base index
and the lender margin.
(2) At February 1, 1997, $330,385,000 of this debt is subject to interest rate
swaps as described below.
Debt related to projects under development at January 31, 1997 totals
$30,400,000, out of a total commitment from lenders of $93,461,000. Of this
outstanding debt, $25,288,000 is variable-rate debt and $5,112,000 is fixed-rate
debt. The Company generally borrows funds for development and construction
projects with maturities of three to seven years utilizing variable-rate
financing. Upon opening and achieving stabilized operations, the Company
generally obtains long-term fixed-rate financing.
33
<PAGE> 36
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
F. MORTGAGE DEBT, NONRECOURSE -- CONTINUED
As of January 31, 1997, the Company had entered into $378,385,000 of London
Interbank Offered Rate ("LIBOR") interest rate swap agreements for durations
ranging from one to five years, as follows.
<TABLE>
<CAPTION>
SWAP BASE PRINCIPAL
LIBOR RATE PERIOD OUTSTANDING
- ----------- -------------------- --------------
(in thousands)
<S> <C> <C>
6.25% 03/15/96 - 12/29/00 $ 21,624
6.28% 04/15/96 - 04/15/99 99,095
6.54% 06/03/96 - 10/31/00 58,052
6.64% 01/02/97 - 01/04/99 39,750
6.21% 02/01/97 - 02/01/98 80,000
6.28% 05/01/96 - 11/12/01 31,864
6.25% 05/01/97 - 02/01/98 48,000
-------
$378,385
=======
</TABLE>
The effect of these interest rate swap agreements reduces the Company's
outstanding taxable variable-rate debt at February 1, 1997, to $438,784,000,
which is 23.1% of the total mortgage debt.
In addition, the Company has purchased LIBOR interest rate caps ranging
from 6.50% to 9.85% on $40,969,000 of its variable-rate debt with varying
expiration dates through February 1, 2001.
The Urban Development Action Grants and other subsidized loans bear
interest at rates which are below prevailing commercial lending rates and are
granted to the Company as an inducement to develop real estate in economically
underdeveloped areas. A right to participate by the local government in the
future cash flows of the project is generally a condition of these loans.
Participation in annual cash flows generated from operations is recognized as an
expense in the period earned. Participation in appreciation and cash flows
resulting from a sale or refinancing is recorded as an expense at the time of
sale or is capitalized as additional basis and amortized if amounts are paid
prior to the disposition of the property.
Mortgage debt maturities for the next five years ending January 31 are as
follows: 1998, $288,915,000; 1999, $167,563,000; 2000, $416,612,000; 2001,
$318,753,000 and 2002, $98,186,000.
The Company is engaged in discussions with its current lenders and is
actively pursuing new lenders to extend and refinance the mortgage debt that
matures. The Company intends to convert a significant portion of its existing
variable-rate debt to fixed-rate mortgages in order to reduce the volatility in
the Company's project mortgage interest expense.
Interest incurred on mortgage debt was $129,241,000 in 1996, $126,520,000
in 1995 and $110,899,000 in 1994, of which $1,383,000, $2,861,000 and $2,156,000
was capitalized, respectively. Interest actually paid on mortgage debt, net of
capitalized interest, was $122,341,000 in 1996, $118,889,000 in 1995 and
$105,256,000 in 1994.
G. LONG-TERM DEBT
Long-term debt is as follows.
<TABLE>
<CAPTION>
January 31,
--------------------
1997 1996
------- --------
(in thousands)
<S> <C> <C>
Term loan..................................................... $45,000 $ 55,000
Revolving credit agreement.................................... 48,000 53,000
Other debt.................................................... 1,923 5,061
------- --------
$94,923 $113,061
======= ========
</TABLE>
34
<PAGE> 37
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
G. LONG-TERM DEBT -- CONTINUED
At January 31, 1997, the Company had a term loan maturing July 1, 2001 and
an $80,000,000 revolving credit agreement maturing July 25, 1998. The term loan
requires quarterly principal payments of $2,500,000. The revolving credit
agreement allows for up to $20,000,000 in outstanding letters of credit (none of
which were outstanding at January 31, 1997), 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 term loan and revolving credit agreement provide, among other
things, for 1) interest rates which range from 1/4% to 3/4% over the prime
rate or 2% to 2 1/2% over LIBOR; 2) the maintenance of a specified level of net
worth and cash flows (as defined); and 3) a restriction on dividend payments. At
January 31, 1997, approximately $7,203,000 of retained earnings were available
for payment of dividends.
The Company has entered into an interest rate swap agreement to fix
$87,000,000 of the term loan and revolving credit agreement at the base LIBOR
rate of 6.21% plus lender margin for the period February 1, 1997 to February 1,
1998.
Interest rates on the other debt ranged primarily from 6.1% to 12.3% at
January 31, 1997.
Maturities of other debt for the next five years ending January 31 are as
follows: 1998, $850,000; 1999, $794,000; 2000, $151,000; 2001, $80,000; and
2002, $22,000.
Interest incurred on long-term debt was $6,982,000 in 1996, $7,764,000 in
1995 and $7,650,000 in 1994 of which $6,642,000, $6,500,000 and $4,893,000 was
capitalized, respectively. Interest actually paid on long-term debt was
$7,116,000 in 1996, $7,991,000 in 1995 and $7,790,000 in 1994.
CONSOLIDATED INTEREST
Total interest incurred on all forms of indebtedness (included in Notes E,
F and G) was $141,389,000 in 1996, $139,362,000 in 1995 and $123,870,000 in 1994
of which $8,025,000, $9,361,000 and $7,049,000 was capitalized, respectively.
Interest paid on all forms of indebtedness was $134,554,000 in 1996,
$132,009,000 in 1995 and $118,573,000 in 1994.
H. INCOME TAXES
The provision (benefit) for income taxes consists of the following
components.
<TABLE>
<CAPTION>
For the Years Ended January 31,
--------------------------------
1997 1996 1995
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Current
Federal........................................... $ 896 $ 159 $ 4,764
Foreign........................................... 580 143 63
State............................................. 459 68 1,230
------- ------- --------
1,935 370 6,057
------- ------- --------
Deferred
Federal........................................... 6,985 6,083 (9,945)
Foreign........................................... (126) -- --
State............................................. 4,157 4,170 (2,076)
------- ------- --------
11,016 10,253 (12,021)
------- ------- --------
Total provision (benefit)........................... $12,951 $10,623 $ (5,964)
======= ======= ========
</TABLE>
35
<PAGE> 38
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
H. INCOME TAXES -- CONTINUED
The effective tax rate for income taxes varies from the federal statutory
rate of 35% for 1996, 1995 and 1994 due to the following items.
<TABLE>
<CAPTION>
For the Years Ended January 31,
--------------------------------
1997 1996 1995
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Statement earnings (loss) before income taxes....... $22,122 $17,562 $(24,497)
======= ======= ========
Income taxes computed at the statutory rate......... $ 7,742 $ 6,146 $ (8,574)
Increase (decrease) in tax resulting from:
State taxes, net of federal benefit............... 3,000 2,220 (839)
Contribution carryover............................ 811 520 494
Nondeductible lobbying costs...................... 811 -- --
Adjustment of prior estimated taxes............... (111) 566 589
Valuation allowance............................... 351 897 102
Losses without tax benefits....................... -- -- 2,067
Other items....................................... 347 274 197
------- ------- --------
Total provision (benefit)........................... $12,951 $10,623 $ (5,964)
======= ======= ========
</TABLE>
An analysis of the deferred tax provision (benefit) is as follows.
<TABLE>
<CAPTION>
For the Years Ended January 31,
--------------------------------
1997 1996 1995
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Excess of tax over statement depreciation and
amortization...................................... $ 4,730 $ 5,743 $ 8,046
Allowance for doubtful accounts deducted for
statement purposes................................ (349) 461 (464)
Costs on land and rental properties under
development expensed for tax purposes............. 3,244 (515) 366
Revenues and expenses recognized in different
periods for tax and statement purposes............ (2,652) 6,224 (14,893)
Development fees deferred for statement purposes.... (109) (1,326) (400)
Provision for decline in real estate................ (1,650) 3,547 (3,547)
Deferred state taxes, net of federal benefit........ 2,392 2,565 757
Interest on construction advances deferred for
statement purposes................................ (189) (953) 1,609
Benefits of tax loss carryforward recognized against
deferred taxes.................................... 3,187 (5,656) (1,869)
Deferred compensation............................... 2,061 (734) (1,728)
Valuation allowance................................. 351 897 102
------- ------- --------
Deferred provision (benefit)........................ $11,016 $10,253 $(12,021)
======= ======= ========
</TABLE>
36
<PAGE> 39
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
H. INCOME TAXES -- CONTINUED
The types of differences that give rise to significant portions of the
deferred income tax liability are as follows.
<TABLE>
<CAPTION>
TEMPORARY DEFERRED TAX
DIFFERENCES (ASSET)LIABILITY
----------- ----------------
(in thousands)
<S> <C> <C>
Depreciation............................................. $ 237,653 $ 93,992
Capitalized costs........................................ 142,517 56,365
Net operating losses..................................... (88,868) (35,147)
General business credits................................. -- (3,601)
Other.................................................... 2,996 3,879
-------- --------
$ 294,298 $115,488
======== ========
</TABLE>
Income taxes paid (refunded) totaled $830,000, $(888,000) and $3,244,000 in
1996, 1995 and 1994, respectively. At January 31, 1997, the Company had a net
operating loss carryforward for tax purposes of $88,868,000 which will expire in
the years ending January 31, 2005 through January 31, 2011 and general business
credits carryovers of $3,601,000 which will expire in the years ending January
31, 2003 through January 31, 2011. The Company's deferred tax liability at
January 31, 1997 is comprised of deferred liabilities of $194,574,000, deferred
assets of $83,832,000 and a valuation allowance related to state taxes and
general business credits of $4,746,000.
I. SEGMENT INFORMATION
Principal business groups are determined by the type of customer served or
the product sold. The COMMERCIAL GROUP develops, acquires, owns and operates
shopping centers, office buildings and mixed-use projects including hotels. The
RESIDENTIAL GROUP develops or acquires, and owns and operates the Company's
multi-family properties. The LAND GROUP owns and develops raw land into master
planned communities and other residential developments for resale to users
principally in Arizona, Florida, Nevada, New York and Ohio. The LUMBER TRADING
GROUP operates the Company's lumber wholesaling business. CORPORATE includes
interest on corporate borrowings and general administrative expenses. The
following tables summarize selected financial data by business segment for the
fiscal years ended January 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
For the Years Ended January 31,
-------------------------------------------------------------
Earnings (Loss) Before
Revenues Income Taxes
------------------------------ ----------------------------
1997 1996 1995 1997 1996 1995
-------- -------- -------- ------- ------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial Group........................................... $309,834 $294,241 $258,966 $(1,656) $12,283 $ 7,482
Residential Group(1)....................................... 116,525 105,749 128,124 6,795 7,238 4,880
Land Group................................................. 53,888 42,889 48,894 6,007 3,823 3,290
Lumber Trading Group(2).................................... 124,491 81,093 80,590 8,966 5,826 4,906
Provision for decline in real estate....................... -- -- -- (12,263) (9,581) (10,133)
Gain (loss) on disposition of properties................... -- -- -- 17,574 (754) (30,835)
Corporate.................................................. 5,711 5,461 6,034 (3,301) (1,273) (4,087)
-------- -------- -------- -------- ------- --------
Consolidated........................................... $610,449 $529,433 $522,608 $22,122 $17,562 $(24,497)
======== ======== ======== ======== ======= ========
</TABLE>
37
<PAGE> 40
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
I. SEGMENT INFORMATION -- CONTINUED
<TABLE>
<CAPTION>
For the Years Ended January 31,
-------------------------------------------------------------
Real Estate
-------------------------------------------------------------
Identifiable Assets at Depreciation and
January 31, Additions, net Amortization
------------------------------------ ------------------------------- ---------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
---------- ---------- ---------- -------- -------- --------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial Group........... $1,699,056 $1,640,810 $1,566,320 $ 84,972 $ 83,623 $ 95,264 $54,875 $49,572 $46,870
Residential Group(1)....... 642,873 613,480 614,609 26,120 27,612 (184,465) 15,419 14,001 17,108
Land Group................. 88,953 121,031 126,680 (25,658) (8,887) 5,791 748 59 90
Lumber Trading Group....... 209,901 172,305 175,107 2,285 (504) 542 2,140 1,962 1,377
Corporate.................. 100,622 83,420 102,018 7,377 1,103 (62) 122 122 135
---------- ---------- ---------- -------- -------- --------- ------- ------- -------
Consolidated........... $2,741,405 $2,631,046 $2,584,734 $ 95,096 $102,947 $ (82,930) $73,304 $65,716 $65,580
========== ========== ========== ======== ======== ========= ======= ======= =======
</TABLE>
- ---------------
(1) The Residential Group includes the Company's apartment and residential
development divisions. In prior years, these divisions were reported
separately. Segment information for the years ended January 31, 1996 and
1995 in this Note I combines these divisions to conform to the current year
presentation.
(2) The Company recognizes the gross margin on lumber brokerage sales as
revenue. Sales invoiced for the years ended January 31,1997, 1996 and 1995
were approximately $2,884,000,000, $2,337,500,000 and $2,697,500,000,
respectively.
J. LEASES
THE COMPANY AS LESSOR
The following summarizes the minimum future rental income to be received on
noncancelable operating leases of commercial properties that generally extend
for periods of more than one year.
<TABLE>
<CAPTION>
FOR THE YEARS
ENDING JANUARY 31,
------------------
(in thousands)
<S> <C>
1998............................................................... $ 152,852
1999............................................................... 149,394
2000............................................................... 142,181
2001............................................................... 134,404
2002............................................................... 116,515
Later years........................................................ 823,259
----------
Total minimum future rentals.................................. $1,518,605
==========
</TABLE>
Most of the commercial leases include provisions for reimbursements of
other charges including real estate taxes and operating costs. Other charges
amounted to $94,033,000, $84,533,000 and $83,881,000 in 1996, 1995 and 1994,
respectively.
THE COMPANY AS LESSEE
The Company is a lessee under various operating leasing arrangements for
real property and equipment having terms expiring through 2076, excluding
optional renewal periods.
38
<PAGE> 41
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
J. LEASES -- CONTINUED
Minimum fixed rental payments under long-term leases (over one year) in
effect at January 31, 1997 are as follows.
<TABLE>
<CAPTION>
FOR THE YEARS
ENDING JANUARY 31,
------------------
(in thousands)
<S> <C>
1998.................................. $ 9,425
1999.................................. 8,711
2000.................................. 6,874
2001.................................. 6,373
2002.................................. 5,651
Later years........................... 140,915
--------
Total minimum lease payments........ $177,949
========
</TABLE>
Rent expense was $8,813,000, $6,986,000 and $6,468,000 for 1996, 1995 and
1994, respectively.
K. CONTINGENT LIABILITIES
As of January 31, 1997, the Company has guaranteed loans totaling
$1,661,000 and has $12,555,000 in outstanding letters of credit.
The Company customarily guarantees lien-free completion of its
construction. Upon completion the guarantees are released. The Company is also
involved in certain claims and litigation related to its operations. Based upon
the facts known at this time, management is of the opinion that the ultimate
outcome of all such claims and litigation will not have a material adverse
effect on the financial condition, results of operations or cash flows of the
Company.
L. STOCK OPTION PLAN
During 1994, the Board of Directors of the Company and the shareholders
approved the 1994 Stock Option Plan ("Plan"). Shares may be awarded under the
Plan to key employees in the form of either incentive stock options or
non-qualified stock options. The aggregate number of shares that may be awarded
during the term of the Plan is 375,000 shares, subject to adjustments under the
Plan. The maximum number of shares that may be awarded to any employee during
any calendar year is 37,500 shares. The exercise price of all non-qualified and
incentive stock options shall be at least equal to the fair market value of a
share on the date the option is granted unless the grantee of incentive stock
options constructively owns more than ten percent of the total combined voting
power of all classes of stock of the Company, in which case the exercise price
of each incentive stock option shall be not less than 110% of the fair market
value of a share on the date granted. The Plan is administered by the
Compensation Committee of the Board of Directors. During 1996, 180,900 Class A
fixed stock options were granted. The options have a term of 10 years and vest
over two to four years. No options were granted in 1994 and 1995.
The Company applies APBO No. 25 and related Interpretations in accounting
for its Plan. Accordingly, no compensation cost has been recognized for its
Plan. During 1996, the Company adopted the disclosure provisions of SFAS No. 123
"Accounting for Stock-Based Compensation." Had compensation cost been determined
in accordance with SFAS No. 123, net earnings and earnings per share for 1996
would have been reduced to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
NET EARNINGS
EARNINGS PER SHARE
-------------- ---------
(in thousands)
<S> <C> <C>
As reported................................................ $ 12,071 $ .92
Pro forma.................................................. $ 11,846 $ .90
</TABLE>
39
<PAGE> 42
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
L. STOCK OPTION PLAN -- CONTINUED
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions used for
the grant in 1996: dividend yield of .5%; expected volatility of 30.7%;
risk-free interest rate of 6.5%; and expected life of 8.7 years.
A summary of stock option activity during 1996 is presented below.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding at beginning of year........................... --
Granted.................................................... 180,900 $28.75
Exercised.................................................. --
Forfeited.................................................. --
---------
Outstanding at end of year................................. 180,900 $28.75
=========
Options exercisable at year end............................ --
=========
Weighted average fair value of options granted during the
year..................................................... $ 14.37
=========
Range of exercise prices................................... $ 28.75
=========
Weighted average remaining contractual life................ 9.6 years
=========
</TABLE>
M. SUMMARIZED FINANCIAL INFORMATION
Forest City Rental Properties Corporation ("Rental Properties") is a
wholly-owned subsidiary engaged in the development, acquisition and management
of real estate projects, including apartment complexes, regional malls and
shopping centers, hotels, office buildings and mixed-use facilities. Condensed
consolidated balance sheets and statements of earnings for Rental Properties and
its subsidiaries follows.
40
<PAGE> 43
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
M. SUMMARIZED FINANCIAL INFORMATION -- CONTINUED
FOREST CITY RENTAL PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31,
-------------------------
1997 1996
---------- ----------
(in thousands)
<S> <C> <C>
ASSETS
Real Estate
Completed rental properties....................................... $2,227,859 $2,085,284
Projects under development........................................ 215,960 246,240
---------- ----------
2,443,819 2,331,524
Less accumulated depreciation..................................... (387,733) (338,216)
---------- ----------
Total Real Estate......................................... 2,056,086 1,993,308
Cash................................................................ 14,194 24,430
Other Assets........................................................ 267,596 250,171
---------- ----------
$2,337,876 $2,267,909
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Mortgage debt, nonrecourse.......................................... $1,866,730 $1,767,910
Accounts payable and accrued expenses............................... 101,532 130,099
Long-term debt...................................................... 93,467 108,049
Other liabilities and deferred credits.............................. 157,466 150,143
---------- ----------
Total Liabilities......................................... 2,219,195 2,156,201
---------- ----------
SHAREHOLDER'S EQUITY
Common stock and additional paid-in capital......................... 5,378 5,378
Retained earnings................................................... 113,303 106,330
---------- ----------
Total Shareholder's Equity................................ 118,681 111,708
---------- ----------
$2,337,876 $2,267,909
========== ==========
</TABLE>
41
<PAGE> 44
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
M. SUMMARIZED FINANCIAL INFORMATION -- CONTINUED
FOREST CITY RENTAL PROPERTIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
For the Years Ended January 31,
----------------------------------
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Revenues................................................... $426,226 $398,576 $386,858
-------- -------- --------
Operating expenses......................................... 228,110 198,282 205,707
Interest expense........................................... 121,186 117,560 104,836
Provision for decline in real estate....................... 11,684 9,581 10,133
Depreciation and amortization.............................. 70,221 63,557 63,956
-------- -------- --------
431,201 388,980 384,632
-------- -------- --------
Gain (loss) on disposition of properties................... 17,574 (754) (30,835)
-------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES........................ 12,599 8,842 (28,609)
INCOME TAX EXPENSE (BENEFIT)
Current.................................................. (989) (1,213) (375)
Deferred................................................. 9,515 6,925 (7,573)
-------- -------- --------
8,526 5,712 (7,948)
-------- -------- --------
NET EARNINGS (LOSS) BEFORE EXTRAORDINARY GAIN.............. 4,073 3,130 (20,661)
Extraordinary gain, net of tax............................. 2,900 1,847 60,449
-------- -------- --------
NET EARNINGS............................................... $ 6,973 $ 4,977 $ 39,788
======== ======== ========
</TABLE>
N. GAIN (LOSS) ON DISPOSITION AND EXTRAORDINARY GAIN
During 1996, the Company recorded a gain on disposition of properties of
$17,574,000, before tax of $7,976,000, primarily resulting from the sale of its
18.63% interest in Beachwood Place, a regional shopping center in suburban
Cleveland, Ohio. In 1995, a loss on disposition of properties of $754,000,
before tax of $276,000, was recognized on the sale of a California apartment
complex.
Extraordinary gains, net of tax, of $2,900,000 and $1,847,000 were recorded
for 1996 and 1995, respectively. These gains were the result of the
extinguishment of nonrecourse mortgage debt and related accrued interest on
three rental properties. In 1994, loss on disposition of properties of
$19,181,000, net of tax of $11,654,000, was recognized on the sale of Park
LaBrea Towers, a 2,825-unit apartment complex located in Los
Angeles, California. Prior to the sale transaction, an extraordinary gain of
$56,462,000, net of tax of $27,715,000, was recorded as a result of
extinguishment of nonrecourse purchase money mortgage debt and related accrued
interest.
Also in 1994, two other rental properties recognized extraordinary gains on
nonrecourse debt extinguishment, amounting to $3,987,000, net of tax.
O. SUBSEQUENT EVENT
During February 1997, the Company settled litigation with the original land
owner of Toscana, a 563-unit apartment complex in Irvine, California, and in
connection therewith sold the property to the original land owner. As a result
of these transactions, the Company recorded litigation settlement proceeds of
$15,000,000, a pre-tax loss on disposition of the property of $35,505,000, and a
pre-tax extraordinary gain of $18,272,000 related to the extinguishment of a
portion of the nonrecourse mortgage debt. The net result of these transactions
to the Company was a pre-tax loss of $2,233,000.
42
<PAGE> 45
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------------------------------------
JAN. 31, OCT. 31, JULY 31, APR. 30, Jan. 31, Oct. 31, July 31, Apr. 30,
FISCAL YEAR 1997 1996 1996 1996 1996 1995 1995 1995
- -------------------------------------- -------- -------- --------- -------- -------- -------- --------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. $169,177 $163,809 $ 148,492 $128,971 $170,643 $126,399 $ 120,807 $111,584
Earnings (loss) before income
taxes(1)............................ $ 2,065 $ 15,527 $ 5,488 $ (958) $ 21,131 $ 1,706 $ (998) $ (4,277)
Net earnings (loss) before
extraordinary gain(1)(2)............ $ (759) $ 8,054 $ 2,822 $ (946) $ 10,450 $ 601 $ (903) $ (3,209)
Net earnings (loss)................... $ (759) $ 10,047 $ 3,729 $ (946) $ 10,450 $ 601 $ 944 $ (3,209)
Net earnings (loss) before
extraordinary gain per common
share(1)(2)(4)...................... $ (.05) $ .61 $ .21 $ (.07) $ .77 $ .04 $ (.06) $ (.24)
Net earnings (loss) per common
share(4)............................ $ (.05) $ .76 $ .28 $ (.07) $ .77 $ .04 $ .08 $ (.24)
Dividends declared per common
share(3)(4)
Annual dividend
Class A........................... $ -- $ .21 $ -- $ -- $ -- $ .17 $ -- $ --
Class B........................... $ -- $ .21 $ -- $ -- $ -- $ .17 $ -- $ --
Quarterly dividend
Class A........................... $ .06 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Class B........................... $ .06 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Market price range of common stock(4)
Class A
High.............................. $ 41.67 $ 33.08 $ 28.08 $ 25.50 $ 24.50 $ 26.33 $ 26.33 $ 23.50
Low............................... $ 32.67 $ 27.83 $ 24.50 $ 22.00 $ 21.33 $ 24.50 $ 22.00 $ 20.25
Class B
High.............................. $ 40.67 $ 32.67 $ 28.08 $ 25.42 $ 24.33 $ 26.00 $ 26.25 $ 23.58
Low............................... $ 32.75 $ 27.92 $ 24.92 $ 22.17 $ 21.33 $ 24.50 $ 22.33 $ 20.75
</TABLE>
- ---------------
Both classes of common stock are traded on the American Stock Exchange
("Exchange") under the symbols, FCEA and FCEB. High and low prices shown are
based upon data provided by the Exchange.
As of March 4, 1997, the number of registered holders of Class A and Class B
common stock were 883 and 687, respectively.
(1) Third quarter 1996 data has been restated to reflect the reclassification of
$3,297,000, before taxes, from provision for decline in real estate to
extraordinary gain. This reclassification represents a $.15 reduction in net
earnings (loss) before extraordinary gain per common share, but has no
effect on net earnings of the Company.
(2) Excludes the extraordinary gain, net of tax of $2,900,000 ($.22 per share)
and $1,847,000 ($.14 per share), in fiscal 1996 and 1995, respectively.
These items are explained in Note N in the Notes to Consolidated Financial
Statements.
(3) Future dividends will depend upon such factors as earnings, capital
requirements and financial condition of the Company. Approximately
$7,203,000 of retained earnings were available for payment of dividends as
of January 31, 1997, under the restrictions contained in the term loan and
revolving credit agreement with a group of banks.
(4) Adjusted for three-for-two split of Class A and Class B common stock
effective February 17, 1997.
43
<PAGE> 46
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------------------------------------------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
Year Ended January 31, 1997.................. $3,687 $2,714 $1,407(A) $4,994
------ ------ ------ ------
Year Ended January 31, 1996.................. $4,208 $ 714 $1,235(A) $3,687
------ ------ ------ ------
Year Ended January 31, 1995.................. $5,322 $1,320 $2,434(A) $4,208
------ ------ ------ ------
</TABLE>
- ---------------
(A) Uncollectible accounts written off.
44
<PAGE> 47
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
GROSS AMOUNT AT
WHICH CARRIED
INITIAL COST COST CAPITALIZED AT CLOSE OF
TO COMPANY SUBSEQUENT JANUARY 31, 1997
AMOUNT OF --------------------------- TO ACQUISITION ------------------------------------
ENCUMBRANCE BUILDINGS ----------------------- BUILDINGS
DESCRIPTION OF AT JANUARY 31, AND CARRYING AND TOTAL
PROPERTY 1997 LAND IMPROVEMENTS(A) IMPROVEMENTS COSTS LAND IMPROVEMENTS (B)(C)
- ------------------ -------------- --------- --------------- ------------ -------- -------- ------------ ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Apartments:
Miscellaneous
investments... $ 496,545 $ 50,070 $ 499,726 $ 27,484 $ 27,921 $ 72,508 $ 532,693 $ 605,201
Shopping Centers:
Cleveland,
Ohio.......... 62,304 -- 137,137 7,861 6,150 -- 151,148 151,148
Miscellaneous
investments... 620,292 53,299 438,542 112,171 32,308 64,117 572,203 636,320
Office Buildings:
New York,
New York...... 133,946 -- 127,659 1,218 3,235 -- 132,112 132,112
Miscellaneous
investments... 523,243 15,295 504,885 163,267 19,631 20,055 683,023 703,078
Leasehold
improvements and
other equipment:
Miscellaneous
investments -- -- 19,534 -- -- -- 19,534 19,534
Under
Construction:
Miscellaneous
investments 30,400 51,480 168,657 -- -- 51,480 168,657 220,137
Undeveloped Land:
Miscellaneous
investments.. 31,698 52,649 -- -- -- 52,649 -- 52,649
---------- --------- ---------- -------- -------- -------- ---------- ----------
Total......... $ 1,898,428 $ 222,793 $ 1,896,140 $312,001 $ 89,245 $260,809 $2,259,370 $2,520,179
========== ========= ========== ======== ======== ======== ========== ==========
<CAPTION>
RANGE OF LIVES
(IN YEARS) ON
WHICH DEPRECIATION
ACCUMULATED IN LATEST INCOME
DEPRECIATION STATEMENT IS COMPUTED
DESCRIPTION OF AT JANUARY 31, DATE OF DATE ----------------------
PROPERTY 1997(D) CONSTRUCTION ACQUIRED BLDG. IMPROVEMENTS
- ------------------ -------------- ------------ --------- ------- ------------
<S> <<C> <C> <C> <C> <C>
Apartments:
Miscellaneous
investments... $110,467 Various -- Various Various
Shopping Centers:
Cleveland,
Ohio.......... 21,451 1988-1990 -- 50 50
Miscellaneous
investments... 104,270 Various -- Various Various
Office Buildings:
New York,
New York...... 13,217 1989-1991 -- 50 --
Miscellaneous
investments... 138,328 Various -- Various Various
Leasehold
improvements and
other equipment:
Miscellaneous
investments 12,097 -- Various Various Various
Under
Construction:
Miscellaneous
investments --
Undeveloped Land:
Miscellaneous
investments.. --
--------
Total......... $399,830
========
</TABLE>
- ---------------
(A) Certain amounts were reclassified to conform to the current year's
classifications.
(B) The aggregate cost at January 31, 1996 for federal income tax purposes was
$2,387,391.
(Continued)
45
<PAGE> 48
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C>
(C) Reconciliations of total real estate carrying
value are as follows:
Balance at beginning of period.................... $2,425,083 $2,322,136 $2,405,066
Additions during period --
Improvements...................................... 148,025 130,296 134,557
Other acquisitions................................ 22,264 28,587 32,811
---------- ----------
170,289 158,883 167,368
---------- ----------
Deductions during period --
Cost of real estate sold.......................... (75,193) (55,936) (250,298)
---------- ----------
Balance at end of period.......................... $2,520,179 $2,425,083 $2,322,136
========== ==========
(D) Reconciliations of accumulated depreciation are as
follows:
Balance at beginning of period.................... $ 347,912 $ 303,012 $ 282,313
Additions during period --
Charged to profit or loss......................... 52,979 50,821 49,869
Deductions during period --
Retirement and sales.............................. (1,061) (5,921) (29,170)
---------- ----------
Balance at end of period.......................... $ 399,830 $ 347,912 $ 303,012
========== ==========
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors is contained in a definitive proxy
statement which the Registrant anticipates will be filed by May 5, 1997 and is
incorporated herein by reference.
(b) Pursuant to General Instruction G of Form 10-K and Item 401(b) of
Regulation S-K, Executive Officers of the Registrant are reported in Part I of
this Report.
(c) The disclosure of delinquent filers, if any, under Section 16(a) of the
Securities Exchange Act of 1934 is contained in a definitive proxy statement
which the Registrant anticipates will be filed by May 5, 1997 and is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION; ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT; AND ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under these sections is contained in a definitive
proxy statement which the Registrant anticipates will be filed by May 5, 1997
and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
46
<PAGE> 49
1. Financial Statements and Supplementary Data included in Part II, Item
8.
Report of Independent Accountants
Consolidated Balance Sheets as of January 31, 1997 and 1996
Consolidated Statements of Earnings for the years ended January 31,
1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the years ended
January 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended January 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
Quarterly Consolidated Financial Data (Unaudited)
Individual financial statements of 50% or less owned persons accounted
for by the equity method have been omitted because such 50% or less
owned persons considered in the aggregate as a single subsidiary would
not constitute a significant subsidiary.
2. Financial statement schedules required by Part IV, Item 14 are
included in Part II, Item 8.
Schedule II -- Valuation and Qualifying Accounts for the years ended
January 31, 1997, 1996 and 1995
Schedule III -- Real Estate and Accumulated Depreciation at January 31,
1997 with reconciliations for the years ended January 31, 1997, 1996 and
1995
Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or the required information
is shown in the consolidated financial statements or notes thereto.
Columns omitted from schedules filed have been omitted because the
information is not applicable.
(b) Reports on Form 8-K.
On December 11, 1996, the Company filed a Current Report on Form 8-K
pursuant to Item 5 thereof, reporting the announcement of a stock split,
cash dividend and new quarterly dividend policy.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------- ------------------------------------------------------------------------
<S> <C> <C> <C>
No. 3.1 -- Amended Articles of Incorporation adopted as of October 11, 1983,
incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q for
the quarter ended October 31, 1983.
(1) No. 3.2 -- Code of Regulations as amended June 14, 1994.
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, incorporated by reference to Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended July 31, 1994.
No. 10.2 -- Guaranty of Payment of Debt, dated as of July 25, 1994, between Forest
City Enterprises, Inc. and the banks named therein incorporated by
reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter
ended July 31, 1994.
No. 10.3 -- First Amendment to Credit Agreement, dated as of September 12, 1995,
among Forest City Rental Properties Corporation, the banks named therein
and Society National Bank, as agent, incorporated by reference to
Exhibit 10.3 to the Company's Form 10-Q for the quarter ended October
31, 1995.
No. 10.4 -- First Amendment to Guaranty of Payment of Debt, dated as of September
12, 1995, among Forest City Enterprises, Inc., the banks named therein
and Society National Bank, as agent, incorporated by reference to
Exhibit 10.4 to the Company's Form 10-Q for the quarter ended October
31, 1995.
</TABLE>
47
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------- ------------------------------------------------------------------------
<S> <C> <C> <C>
No. 10.5 -- Second Amendment to Credit Agreement, dated as of April 4, 1996, among
Forest City Rental Properties Corporation, the banks named therein and
Society National Bank, as agent, incorporated by reference to Exhibit
4.8 to the Company's Registration Statement on Form S-3 (Registration
No. 333-22695).
(1) No. 10.6 -- Second Amendment to Guaranty of Payment of Debt, dated as of April 4,
1996, among Forest City Enterprises, Inc., the banks named therein and
Society National Bank, as agent, replacing Exhibit 4.9 to the Company's
Registration Statement on Form S-3 (Registration No. 333-22695).
No. 10.7 -- Third Amendment to Credit Agreement, dated as of December 18, 1996,
among Forest City Rental Properties Corporation, the banks named therein
and KeyBank National Association, f/k/a Society National Bank, as agent,
incorporated by reference to Exhibit 4.10 to the Company's Registration
Statement on Form S-3 (Registration No. 333-22695).
No. 10.8 -- Third Amendment to Guaranty of Payment of Debt, dated as of December 18,
1996, among Forest City Enterprises, Inc., the banks named therein and
KeyBank National Association, f/k/a Society National Bank, as agent,
incorporated by reference to Exhibit 4.11 to the Company's Registration
Statement on Form S-3 (Registration No. 333-22695).
(1)(2) No. 10.9 -- Supplemental Unfunded Deferred Compensation Plan for Executives.
(1)(2) No. 10.10 -- 1994 Stock Option Plan, including forms of Incentive Stock Option
Agreement and Nonqualified Stock Option Agreement.
(1)(2) No. 10.11 -- Employment Agreement entered into as of September 25, 1989 by the
Company and Albert B. Ratner.
(1)(2) No. 10.12 -- First Amendment to Employment Agreement entered into as of December 6,
1996 by the Company and Albert B. Ratner.
(1)(2) No. 10.13 -- Employment Agreement entered into as of September 25, 1989 by the
Company and Samuel H. Miller.
(1)(2) No. 10.14 -- Employment Agreement entered into as of September 25, 1989 by the
Company and Nathan P. Shafran.
(1)(2) No. 10.15 -- Employment Agreement entered into as of March 30, 1993 by the Company
and James A. Ratner.
(1)(2) No. 10.16 -- Employment Agreement entered into as of March 30, 1993 by the Company
and Ronald A. Ratner.
(1)(2) No. 10.17 -- Employment Agreement entered into as of February 1, 1994 by the Company
and Charles A. Ratner.
(1)(2) No. 10.18 -- First Amendment to Employment Agreement entered into as of December 6,
1996 by the Company and Charles A. Ratner.
(1)(2) No. 10.19 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Deborah Ratner Salzberg and Forest City
Enterprises, Inc., insuring the lives of Albert Ratner and Audrey
Ratner, dated June 26, 1996.
(1)(2) No. 10.20 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Brian J. Ratner and Forest City Enterprises, Inc.,
insuring the lives of Albert Ratner and Audrey Ratner, dated June 26,
1996.
(1)(2) No. 10.21 -- Letter Supplement to Split Dollar Insurance Agreement and Assignment of
Life Insurance Policy as Collateral between Brian J. Ratner and Forest
City Enterprises, Inc., insuring the lives of Albert Ratner and Audrey
Ratner, effective June 26, 1996.
</TABLE>
48
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------- ------------------------------------------------------------------------
<S> <C> <C> <C>
(1)(2) No. 10.22 -- Letter Supplement to Split Dollar Insurance Agreement and Assignment of
Life Insurance Policy as Collateral between Deborah Ratner Salzberg and
Forest City Enterprises, Inc., insuring the lives of Albert Ratner and
Audrey Ratner, effective June 26, 1996.
(1)(2) No. 10.23 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Charles Ratner 1992 Irrevocable Trust Agreement and Forest City
Enterprises, Inc., insuring the lives of Charles Ratner and Ilana
Horowitz (Ratner), dated November 2, 1996.
(1)(2) No. 10.24 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.25 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.26 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.27 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.28 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.29 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.30 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.31 -- Split Dollar Insurance Agreement and Assignment of Life Insurance Policy
as Collateral between Albert B. Ratner and James Ratner, Trustees under
the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City
Enterprises, Inc., insuring the life of Charles Ratner, dated October
24, 1996.
(1)(2) No. 10.32 -- Letter Supplement to Split Dollar Insurance Agreement and Assignment of
Life Insurance Policy as Collateral between James Ratner and Albert
Ratner, Trustees under the Charles Ratner 1992 Irrevocable Trust
Agreement and Forest City Enterprises, Inc., insuring the lives of
Charles Ratner and Ilana Ratner, effective November 2, 1996.
(1)(2) No. 10.33 -- Deferred Compensation Agreement between Forest City Enterprises, Inc.
and Thomas G. Smith, dated December 27, 1995.
(1) No. 21 -- Subsidiaries of the Registrant.
(1) No. 23(A) -- Consent of Coopers & Lybrand L.L.P. regarding Form S-3 (Registration No.
333-22695).
</TABLE>
49
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
--------- ------------------------------------------------------------------------
<S> <C> <C> <C>
(1) No. 23(B) -- Consent of Coopers & Lybrand L.L.P. regarding Form S-8 (Registration No.
33-65054).
(1) No. 23(C) -- Consent of Coopers & Lybrand L.L.P. regarding Form S-8 (Registration No.
33-65058).
(1) No. 24 -- Powers of Attorney.
(1) No. 27 -- Financial Data Schedules.
</TABLE>
- ---------------
Note (1) Filed herewith.
Note (2) Reflects management contracts or other compensatory arrangements
required to be filed as an exhibit pursuant to Item 14(c) of this Form
10-K.
50
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
<TABLE>
<S> <C>
DATE: April 29, 1997 BY: /s/ CHARLES A. RATNER
--------------------- -------------------------------------------------------
(Charles A. Ratner, President and Chief Executive
Officer)
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- --------------------------------------------------- --------
<S> <C> <C>
/s/ ALBERT B. RATNER Co-Chairman of the Board of Directors 4/29/97
- -----------------------------------------
(Albert B. Ratner)
/s/ SAMUEL H. MILLER Co-Chairman of the Board of Directors and Treasurer 4/29/97
- -----------------------------------------
(Samuel H. Miller)
* President, Chief Executive Officer and Director 4/29/97
- ----------------------------------------- (Principal Executive Officer)
(Charles A. Ratner)
/s/ THOMAS G. SMITH Senior Vice President, Chief Financial Officer and 4/29/97
- ----------------------------------------- Secretary (Principal Financial Officer)
(Thomas G. Smith)
/s/ LINDA M. KANE Vice President and Corporate Controller 4/29/97
- ----------------------------------------- (Principal Accounting Officer)
(Linda M. Kane)
/s/ NATHAN SHAFRAN Vice Chairman of the Board of Directors 4/29/97
- -----------------------------------------
(Nathan Shafran)
/s/ JAMES A. RATNER Executive Vice President and Director 4/29/97
- -----------------------------------------
(James A. Ratner)
/s/ RONALD A. RATNER Executive Vice President and Director 4/29/97
- -----------------------------------------
(Ronald A. Ratner)
/s/ BRIAN J. RATNER Senior Vice President and Director 4/29/97
- -----------------------------------------
(Brian J . Ratner)
/s/ DEBORAH RATNER SALZBERG Director 4/29/97
- -----------------------------------------
(Deborah Ratner Salzberg)
/s/ J MAURICE STRUCHEN Director 4/29/97
- -----------------------------------------
(J Maurice Struchen)
/s/ MICHAEL P. ESPOSITO, JR. Director 4/29/97
- -----------------------------------------
(Michael P. Esposito, Jr.)
/s/ SCOTT S. COWEN Director 4/29/97
- -----------------------------------------
(Scott S. Cowen)
/s/ JERRY V. JARRETT Director 4/29/97
- -----------------------------------------
(Jerry V. Jarrett)
</TABLE>
The Registrant plans to furnish security holders a copy of the Annual
Report and Proxy material by May 9, 1997.
* The undersigned, pursuant to a Power of Attorney executed by each of the
Directors and Officers identified above and filed with the Securities and
Exchange Commission, by signing his name hereto, does hereby sign and execute
this Form 10-K on behalf of each of the persons noted above, in the capacities
indicated.
<TABLE>
<S> <C>
By: /s/ CHARLES A. RATNER 4/29/97
- -------------------------------------------
(Charles A. Ratner, Attorney-in-Fact)
</TABLE>
51
<PAGE> 1
Exhibit 3.2
CODE OF REGULATIONS
-------------------
OF
--
FOREST CITY ENTERPRISES, INC.
-----------------------------
AS AMENDED JUNE 14, 1994
------------------------
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
Section 1. ANNUAL MEETING. The annual meeting of the shareholders of
the Company for the election of directors, the consideration of reports to be
laid before the meeting, and the transaction of such other business as may
properly be brought before the meeting shall be held in the place described in
the Articles of Incorporation as the place where the principal office of the
Company is or is to be located, or at such other place either within or without
the State of Ohio as may be designated by the Board of Directors, the Chairman
of the Board, or the President and specified in the notice of the meeting at ten
o'clock a.m., on the second Tuesday of June in each year, (or, if that be a
legal holiday, on the next succeeding business day) or at such other time and on
such other date (not, however, earlier than June 1 or later than June 30 in any
year) as the Board of Directors may determine. (Amended June 14, 1994)
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose or purposes may be called by the Premises or by order of the Board
of Directors and it shall be the duty of the Secretary to call such a meeting
upon a request in writing therefor stating the purpose or purposes thereof
delivered to the Secretary signed by the holders of record of not less than
twenty-five percent (25%) of the shares outstanding and entitled to vote.
Section 3. PLACE OF MEETINGS. Meetings of the shareholders may be held
at the Corporation's principal office in Cleveland, Ohio, or at such other place
within or without the State of Ohio, as the Board of Directors may from time to
time determine.
Section 4. NOTICE OF MEETINGS. Notice of the annual or of any special
meeting of shareholders, stating the time, place and purposes thereof, shall be
given to each shareholder of record entitled to vote at such meeting, by mailing
the same to his address as the same appears on the records of the Corporation or
of its Transfer Agent, or Agents, at least ten (10) and not more than sixty (60)
days before any such meeting; provided, however, that no failure or irregularity
of notice of any annual meeting shall invalidate the same or any proceeding
thereat. All notices with respect to any shares to which persons are jointly
entitled may be given to that one of such persons who is named first upon the
books of the Corporation and notice so given shall be sufficient notice to all
the holders of such shares. Any shareholder, or his attorney thereunto
authorized, may waive notice of any meeting either before or after the meeting
(Amended June 14, 1977)
<PAGE> 2
Section 5. QUORUM. At all meetings of shareholders the holders of
record of a majority of the issued and outstanding voting shares of the
Corporation, present in person or by proxy, shall constitute a quorum for the
transaction of business. In the absence of a quorum, the holders of a majority
of the voting shares present or represented may adjourn the meeting by
resolution to a date fixed therein, and no further notice thereof shall be
required. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 6. PROXIES. Any shareholder entitled to vote at a meeting of
shareholders may be represented and vote thereat by proxy appointed by an
instruments, in writing, subscribed by such shareholder, or by his duly
authorized attorney, and submitted to the Secretary at or before such meeting.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
Section 1. NUMBER. The number of directors shall be thirteen (13)
provided, however, that the directors are authorized to change the number of
directors to a number not to be less than three (3) or more than fifteen (15) by
resolution adopted by the directors at a meeting at which a quorum is present,
and the directors are authorized to fill any director vacancy that is created by
an increase in the number of directors or in the case of any directors being
unable to serve by reason of incapacity, death or resignation; provided,
however, that no reduction in the number of directors shall have the effect of
removing any director prior to the expiration of his term of office. (Amended
March 16, 1995)
Section 2. ELECTION AND TERM OF OFFICE. The election of directors shall
be held at the annual meeting of the shareholders or at a special meeting called
for that purpose. Directors shall be elected to serve until the next annual
election of directors and until their respective successors shall have been duly
elected and qualified.
Section 3. PLACE OF MEETINGS. The Board of Directors shall hold
its meeting at such places within or without the State of Ohio as it may decide.
Section 4. REGULAR MEETINGS. The Board of Directors by resolution
may establish regular periodic meetings and notice of such meetings need not be
given.
Section 5. SPECIAL MEETINGS. Special Meetings of the Board of Directors
shall be called by the Secretary or an Assistant Secretary whenever ordered by
the Board of Directors or requested in writing by the President or any two other
directors. Such meetings shall be held at the principal office of the
Corporation except as otherwise specified in the notice. Notice of each Special
Meeting shall be mailed to each director, addressed to his residence or usual
place of business, at least four days before the day on which the meeting
2
<PAGE> 3
is to be held, or shall be sent to such address by telegraph, or be given
personally or by telephone, not later than two days before the day of which
the meeting is to be held. Notice of any meeting may be waived in writing by
any director before or after the meeting.
Section 6. QUORUM. A majority of the members of the Board of Directors
then in office shall constitute a quorum at all meetings thereof. In the absence
of a quorum of the Board of Directors, a majority of the members present may
adjourn the meeting from time to time until a quorum be had, and no notice of
any such adjournment need be given.
Section 7. FEES. The Board of Directors may from time to time,
irrespective of any personal interest of any of them, establish reasonable
compensation for services to the Corporation by directors and officers. The
Board of Directors may reimburse directors for travel and other expense
incidental to their attendance at meetings of the Board, and, from time to time,
may prescribe reasonable annual directors' fees or reasonable fees for their
attendance at meetings of the Board. Members of either executive or special
committees may be reimbursed, by resolution of the Board, for travel and other
expense incidental to their attendance at meetings of such committees, and may
be allowed such compensation as the Board of Directors may determine for
attending such meetings.
ARTICLE III
-----------
EXECUTIVE AND OTHER COMMITTEES
------------------------------
Section 1. HOW CONSTITUTED AND THE POWERS THEREOF. The Board of
Directors by the vote of a majority of the entire Board, may designate three or
more directors to constitute an Executive Committee, who shall serve during the
pleasure of the Board of Directors. Except as otherwise provided by law, by
these regulations or by resolution adopted by a majority of the entire Board of
Directors, the Executive Committee shall possess and may exercise during the
intervals between the meetings of the Board, all of the powers of the Board of
Directors in the management of the business, affairs and property of the
Corporation, including the power to cause the seal of the Corporation to be
affixed to all papers that may require it.
Section 2. ORGANIZATION, ETC. The Executive Committee shall choose its
own Chairman and its Secretary and may adopt rules for its procedure. The
Committee shall keep a record of its act and proceedings and report the same
from time to time to the Board of Directors.
Section 3. MEETINGS. Meetings of the Executive Committee may be called
by the Chairman of the Committee and shall be called by him at the request of
any member of the Committee, or such meetings may be called by any member if
there shall be no Chairman. Notice of each meeting of the Committee shall be
sent to each member of the Committee by mail at least two days before the
3
<PAGE> 4
meeting is to be held, or given personally or by telegraph or telephone at least
one day before the day on which the meeting is to be held. Notice of any meeting
may be waived before or after the meeting.
Section 4. QUORUM AND MANNER OF ACTING. A majority of the Executive
Committee shall constitute a quorum for the transaction of business, and the act
of a majority of those present at the meeting at which a quorum is present shall
be the act of the Executive Committee.
Section 5. REMOVAL. Any member of the Executive Committee may be
removed, with or without cause, at any time, by the Board of Directors.
Section 6. VACANCIES. Any vacancy in the Executive Committee shall be
filled by the Board of Directors.
Section 7. OTHER COMMITTEES. The Board of Directors may by resolution
provide for such other standing or special committees to consist of not less
than three directors as it deems desirable, and discontinue the same at is
pleasure. Each Committee shall have such powers and perform such duties, not
inconsistent with law, as may be assigned to it by the Board of Directors.
ARTICLE IV
----------
OFFICES AND OFFICERS
--------------------
Section 1. OFFICERS - NUMBER. The Officers of the Corporation shall be
a President, who shall be a Director, and also a Vice President, a Secretary and
a Treasurer, who may or may not be Directors. In addition, the Board of
Directors may from time to time, in its discretion, appoint any or all of the
following: a Chairman of the Board, one or more Vice Chairmen of the Board, one
or more Executive Vice Presidents, one or more additional Vice Presidents, one
or more Assistant Secretaries and one or more Assistant Treasurers. Any two or
more offices may be held by the same person. (Amended June 9, 1987)
Section 2. ELECTION AND TERM OF OFFICE. All officers of the Corporation
shall be appointed annually by the Board of Directors at the first meeting of
the Board of Directors in each year held next after the annual meeting of
shareholders and each officer shall hold office until his successor shall have
been duly chosen and shall have qualified, or until he shall resign or shall
have been removed. At said first meeting, the Board of Directors shall also
designate and appoint such subordinate officers and employees as it shall
determine.
Section 3. VACANCIES. If any vacancy shall occur in any office of
the Corporation, such vacancy shall be filled by the Board of Directors.
4
<PAGE> 5
ARTICLE V
---------
DUTIES OF OFFICERS
------------------
Section 1. CHAIRMAN OF THE BOARD AND VICE CHAIRMAN OF THE BOARD. The
Chairman of the Board, if one appointed, shall preside at all meetings of the
Board of Directors and shall have such other powers and duties as may be
prescribed by the Board of Directors. In case of the absence or inability of the
Chairman of the Board, the Vice Chairman, in order designated therefor by the
Board of Directors, shall have the powers and discharge the duties of the
Chairman of the Board (Amended June 9, 1987)
Section 2. PRESIDENT. The President shall be chief executive officer of
the Corporation and shall have general direction of its business, affairs and
property and over its several officers. He shall preside at all meetings of the
shareholders and, in the absence of the Chairman of the Board, or if the same
shall not have been appointed, shall also preside at the meetings of the Board
of Directors. He shall see that all orders and resolutions of the Board of
Directors are carried into effect, and he shall have the power to execute in the
name of the Corporation all authorized deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall have been expressly delegated to some other officer or agent of the
Corporation; and in general, he shall perform all duties incident to the office
of a president of a corporation, and such other duties as from time to time may
be assigned to him by the Board of Directors. He shall be ex officio a member of
all committees. He shall from time to time report to the Board of Directors all
matters within his knowledge which the interest of the Corporation may require
to be brought to their notice.
Section 3. EXECUTIVE VICE PRESIDENTS AND VICE PRESIDENTS. The Executive
Vice President or Executive Vice Presidents, the Vice President or Vice
Presidents, under the direction of the President, shall have such powers and
perform such duties as the Board of Directors or President may from time to time
prescribe, and shall perform such other duties as may be prescribed in these
regulations. In case of the absence or inability of the President to act, then
the Executive Vice President, in the order designated therefor by the Board of
Directors shall have the powers and discharge the duties of the President.
(Amended June 9, 1987)
Section 4. SECRETARY. The Secretary shall attend all meetings of the
shareholders of the Corporation and of its Board of Directors and shall keep the
minutes of all such meetings in a book or books kept by him for that purpose. He
shall keep in safe custody the seal of the Corporation, and, when authorized by
the Board of Directors, he shall affix such seal to any instrument requiring it.
In the absence of a Transfer Agent or a Registrar, the Secretary shall have
charge of the stock certificate books and the Secretary shall have charge of
such other books and papers as the Board of Directors may direct. He shall also
have such other powers and perform such other duties as pertain to his office,
or as the Board of Directors or the President may from time to time prescribe.
5
<PAGE> 6
Section 5. ASSISTANT SECRETARIES. In the absence or disability of the
Secretary, the Assistant Secretaries, in the order designated by the Board of
Directors, shall perform the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary. They shall also perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
Section 6. TREASURER. The Treasurer, under the direction of the
President, shall have charge of the funds, securities, receipts and
disbursements of the Corporation. He shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such banks or trust
companies or with such other depositories as the Board of Directors may from
time to time designate. He shall supervise and have charge of keeping correct
books of account of all of the Corporation's business and transactions. If
required by the Board of Directors, he shall give a bond in such sum as the
Board of Directors may designate, conditioned upon the faithful performance of
the duties of his office and the restoration to the Corporation, at the
expiration of his term of office, or in case of his death, resignation or
removal from office, of all books, papers, vouchers, money or other property of
whatever kind in his possession belonging to the Corporation. He shall also have
such other powers and perform such other duties as pertain to his office, or as
the Board of Directors or the President may from time to time prescribe.
Section 7. ASSISTANT TREASURERS. In the absence of or disability of the
Treasurer, the Assistant Treasurers, in the order designated by the Board of
Directors, shall perform the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Treasurer.
They shall also perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
ARTICLE VI
----------
INDEMNIFICATION
---------------
(1) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the Corporation, by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, non-profit or for profit, partnership, joint venture, trust, or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interest
of the Corporation, and with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of
6
<PAGE> 7
any action, suit, or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact the he is or was a director, officer, employee,
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, non-profit or for profit, partnership, joint
venture, trust or other enterprise against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that the court of common pleas, or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or such other court
shall deem proper.
(3) To the extent that a director, trustee, officer, employee or agent
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to in Paragraphs (1) and (2) of this Article VI, or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under Paragraphs (1) and (2) of this Article
VI, unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, trustee, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in Paragraphs
(1) and (2) of this Article VI. Such determination shall be made (a) by a
majority vote of a quorum consisting of directors of the Corporation who were
not and are not parties to or threatened with any such action, suit, or
proceedings, or (b) if such a quorum is not obtainable or if a majority vote of
a quorum of disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the Corporation, or any person to be indemnified within the past five years, or
(c) by the shareholders, or (d) by the court of common pleas of the court in
which such action, suit, or proceeding was brought. Any determination made by
the
7
<PAGE> 8
disinterested directors under Paragraph (4) (a) of this Article VI shall be
promptly communicated to the person who threatened or brought the action or
suit, by or in the right of the Corporation under Paragraph (2) of this Article
VI, and within ten days after receipt of such notification, such person shall
have the right to petition the court of common pleas or the court in which such
action or suit was brought to review the reasonableness of such determination.
(5) Expenses, including attorneys' fees, incurred in defending any
action, suit, or proceeding referred to in Paragraphs (1) and (2) of this
Article VI, may be paid by the Corporation in advance of the final disposition
of such action, suit, or proceeding as authorized by the directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
trustee, officer, employee, or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article VI.
(6) The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under the Articles of Incorporation or the Code of Regulations, or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, trustee, officer, employee, or agent and shall inure to the benefit of
their heirs, executors, and administrators of such a person. (Amended June 8,
1976)
ARTICLE VII
-----------
CHECKS, DRAFTS, ETC.
--------------------
All checks, drafts or orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents, person or persons, to whom the
Board of Directors by resolution shall have delegated the power, but under such
conditions and restrictions as in said resolution may be imposed. The signature
of any officer upon any of the foregoing instruments may be a facsimile whenever
authorized by the Board of Directors.
ARTICLE VIII
------------
CERTIFICATES FOR SHARES
-----------------------
Section 1. ISSUE OF CERTIFICATES. The Board of Directors shall provide
for the issue and transfer of the certificates of capital stock of the
Corporation, and prescribe the form of such certificates. Every owner of stock
of the Corporation shall be entitled to a certificate of stock which shall be
under the seal of the Corporation (which seal may be a facsimile, engraved or
printed), specifying the number of shares owned by him, and which certificate
8
<PAGE> 9
shall be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation. Said signatures may, wherever permitted by law, be facsimile,
engraved or printed. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on any such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures shall have been used thereon had not ceased to
be such officer or officers of the Corporation.
Section 2. TRANSFER AGENTS AND REGISTRARS. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, prescribe. If
the Corporation shall have a Transfer Agent, no certificate of stock shall be
valid until countersigned by such Transfer Agent, and if the Corporation shall
have a Registrar, until registered by the Registrar. The duties of the Transfer
Agent and Registrar may be combined.
Section 3. TRANSFER OF SHARES. The shares of the Corporation shall be
transferable only upon its books and by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers or
to such other person as the Board of Directors may designate for such purpose,
and new certificates shall thereupon be issued.
Section 4. ADDRESSES OF SHAREHOLDERS. Every shareholder shall furnish
the Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in
the absence of a Transfer Agent and a Registrar, the Secretary, with an address
at or to which notices of meetings and all other notices may be served upon or
mailed to him, and in default thereof, notices may be addressed to him at the
office of the Corporation.
Section 5. CLOSING OF TRANSFER BOOKS; RECORD DATE. The Board of
Directors shall have power to close the stock transfer books of the Corporation
for a period not exceeding sixty (60) days and not less than then (10) days
prior to the date of any meeting of shareholders; provided, however, that in
lieu of closing the stock transfer books as aforesaid the Board of Directors may
fix a date not exceeding sixty (60) days and not less than ten (10) days prior
to the date of any such meeting as the time as of which shareholders entitled to
notice of and to vote at such meeting shall be determined, and all persons who
were holders of record of voting stock at such time and no others shall be
entitled to notice of and to vote at such meeting.
The Board of Directors shall also have the power to close the stock
transfer books of the Corporation for a period not exceeding sixty (60) days
preceding the date fixed for the payment of any dividend or the making of any
distribution or for the delivery of any evidence of right or evidence of
interest; provided, however, that in lieu of closing the stock transfer books
9
<PAGE> 10
as aforesaid the Board of Directors may fix a date not exceeding sixty (60) days
preceding the date fixed for the payment of any such dividend or the making of
any such distribution or for the delivery of any such evidence of right or
interest as a record time for the determination of the shareholders entitled to
receive any such dividend, distribution or evidence of right or interest, and in
such case only shareholders of record at the time so fixed shall be entitled to
receive such dividend, distribution or evidence of right or interest.
In no event shall the Board of Directors fix a record date for any
purpose, which shall be a date earlier than the date on which the record date is
fixed.
Section 6. LOST, STOLEN AND DESTROYED CERTIFICATES. The Board of
Directors may direct a new certificate or certificates of stock to be issued in
the place of any certificate or certificates theretofore issued and alleged to
have been lost, stolen or destroyed; but the Board of Directors when authorizing
such issue of a new certificate or certificates, may in its discretion require
the owner of the stock represented by the certificate so lost, stolen or
destroyed or his legal representative to furnish proof by affidavit or otherwise
to the satisfaction of the Board of Directors of the ownership of the stock
represented by such certificate alleged to have been lost, stolen or destroyed
and the facts which tend to prove its loss, theft or destruction. The Board of
Directors may also require such person to execute and deliver to the Corporation
a bond, with or without sureties, in such sum as the Board of Directors may
direct, indemnifying the Corporation against any claim that may be made against
it by reason of the issue of such new certificate. The Board of Directors,
however, may in its discretion, refuse to issue any such new certificate, except
pursuant to court order.
ARTICLE IX
----------
SEAL
----
The corporate seal of the Corporation shall be circular in form and
shall contain the name of the Corporation, and the words "SEAL OHIO", or words
of similar import. Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any manner reproduced.
ARTICLE X
---------
CONTROL SHARE ACQUISITIONS
--------------------------
Ohio Revised Code Section 1701.831 does not apply to "control share
acquisitions" of shares of capital stock of the Corporation.
10
<PAGE> 11
ARTICLE XI
----------
AMENDMENTS
----------
This Code of Regulations may be amended or a new Code of Regulations
may be adopted, at any meeting of shareholders called for that purpose, by the
affirmative votes of the holders of record of shares entitling them to exercise
a majority of the voting power on such proposal, or, without a meeting, by the
written consent of the holders of record of shares entitling them to exercise a
majority of the voting power on such proposal.
11
<PAGE> 1
Exhibit 10.6
SECOND AMENDMENT TO GUARANTY OF PAYMENT OF DEBT
-----------------------------------------------
This SECOND AMENDMENT TO GUARANTY OF PAYMENT OF DEBT
is made and entered into as of this 4th day of April, 1996 by and among FOREST
CITY ENTERPRISES, INC., an Ohio corporation ("Parent"), NATIONAL CITY BANR, THE
HUNTINGTON NATIONAL BANK, COMERICA BANK, FIRST NATIONAL BANK OF OHIO, and
SOCIETY NATIONAL BANK (collectively the "Banks" and individually a "Bank"), and
SOCIETY NATIONAL BANK, as Agent for the Banks (the "Agent").
W I T N E S S E T H:
WHEREAS, Forest City Rental Properties Corporation
("Borrower"), the Banks, and the Agent entered into a certain Credit Agreement
dated as of July 25, 1994 (the "Credit Agreement");
WHEREAS, the Banks required, as a condition to
entering into the Credit Agreement, that Parent execute and deliver to the Agent
and the Banks a certain Guaranty of Payment of Debt dated July 25, 1994 (the
"Guaranty") and Parent agreed to and did execute and deliver the Guaranty to the
Agent and the Banks;
WHEREAS, Borrower, the Banks and the Agent enterent
into a certain First Amendment to Credit Agreement dated as of September 12,
1995 amending the Credit Agreement as therein provided and Borrower, Parent, the
Banks and the Agent entered into a certain First Amendment to Guaranty of
Payment of Debt dated as of September 12, 1995 amending the Guaranty as therein
provided; and
WHEREAS, Borrower, Parent, the Banks, and the Agent
desire to make certain additional amendments to the Credit Agreement and,
concurrently therewith, to amend the Guaranty;
NOW, THEREFORE, it is mutually agreed as
follows:
1. AMENDMENT.
----------
Section 9.11 is amended by adding the following additional
subsection (ix) thereto:
(ix) a collateral assignment of the rights of Borrower to
receive payments in respect of certain indebtedness of Ranch
Center Associates Limited Partnership to Borrower made by
Borrower made by Borrower to Bank to secure payment and
performance of the Debt.
<PAGE> 2
The period ending subsection (viii) is hereby replaced by ";
or" and the "or" appearing at the end of subsection (vii) is
hereby deleted.
2. DEFINITION. Terms used in this Second Amendment
to Guaranty of Payment of Debt that are defined in the Guaranty or the Credit
Agreement shall have the respective meanings ascribed to them in the Guaranty or
the Credit Agreement, as the case may be.
3. REPRESENTATIONS AND WARRANTIES. Parent represents
and warrants to the Agent and each of the Banks that all of the representations
and warranties of the Parent set forth in Section 7 of the Guaranty are true and
correct on and as of the date hereof and that no Event of Default or Possible
Default exists on such date.
4. NO WAIVER. The acceptance, execution and/or
delivery of this Second Amendment to Guaranty of Payment of Debt by the Agent
and the Banks shall not constitute a waiver or release of any obligation or
liability of the Parent under the Guaranty as in effect prior to the
effectiveness of this Second Amendment to Guaranty of Payment of Debt or as
amended hereby or waive or release any Event of Default or Possible Default
existing at any time.
5. CONDITIONS TO EFFECTIVENESS. The amendments to the
Guaranty herein provided for shall become effective upon receipt by the Agent
and the Banks of such opinions of counsel to the Borrower and the Parent,
certified copies of resolutions of the boards of directors of the Borrower and
the Parent, and such other documents as shall be required by the Agent, the
Banks, or their respective counsel to evidence and confirm the due
authorization, execution, and delivery of this Second Amendment to Guaranty of
Payment of Debt.
6. CONFIRMATION OF GUARANTY. The Parent hereby
confirms that the Guaranty is in full force and effect on the date hereof, and
that, upon the amendment herein provided becoming effective, the Guaranty will
continue in full force and effect in accordance with its terms, as hereby
amended
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto, each by an officer
thereunto duly authorized, have causer this Second Amendment to Guaranty of
Payment of Debt to be executed and delivered as of the date first above written.
FOREST CITY ENTERPRISES, INC.
BY: Thomas G. Smith
TITLE: Secretary
NATIONAL CITY BANK
BY: Anthony J. DiMare
TITLE: Vice President
THE HUNTINGTON NATIONAL
BY: James R. Logan
TITLE: Senior Vice President
COMERICA BANK
BY: John D. Price III
TITLE: Assistant Vice President
FIRST NATIONAL BANK OF OHIO
BY: John F. Neumann
TITLE: Vice President
SOCIETY NATIONAL BANK
INDIVIDUALLY AND AS AQENT
BY: David F. Cerny
TITLE: Vice President
<PAGE> 1
Exhibit 10.9
FOREST CITY ENTERPRISES, INC.
SUPPLEMENTAL UNFUNDED
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
PLAN STATEMENT
------------------------------
PREAMBLE
This Plan is an unfunded deferred compensation arrangement for a select group
of management or highly compensated personnel of Forest City Enterprises,
Inc. and all rights hereunder shall be governed by and construed in accordance
with the laws of the State of Ohio.
The Plan consists of this Plan Statement, which incorporate the general
provisions and guidelines of the plan which shall apply equally to all Plan
participants, and separate individual deferred compensation Agreements, the
provisions of each of which will apply solely to the Plan Participant with
respect to whom the Agreement has been entered into.
ARTICLE I
Definitions
-----------
The following words and phrases as used herein shall have the following
meanings unless a different meaning is plainly required by the context:
1. 1 "ACTUARIAL EQUIVALENT" shall mean an amount of equal value when
computed on the basis of interest, mortality and other tables as
shall be adopted from time to time by the Committee for purposes of
the Plan.
1. 2 "AGREEMENT" shall mean a written agreement between a Participant and
the Corporation, specifying the benefits to which such Participant
shall be entitled under the Plan, and such other special provisions as
are applicable to such Participant. In the event of any conflict or
inconsistency between his Plan Statement and an Agreement, the terms
of the Agreement shall control.
1. 3 "BENEFICIARY" shall mean such person or person's as a Participant
may from time to time, by notice to the Corporation on a form made
available by the Committee for such purpose, designate to receive any
benefit payable in the event of his death, and means the estate of the
Participant if no valid beneficiary designation is in effect at the
time of a Participant's death.
1. 4 "BOARD" shall mean the Board of Directors of the Corporation.
1. 5 "COMMITTEE" shall mean the Committee appointed by the Board to
administer the plan.
1. 6 "COMPENSATION" shall mean the basic cash remuneration payable to a
Participant which was attributable to his employment with the Corporation
during the 1996 calendar year, excluding bonuses, overtime, and incentive
pay and annual Corporation contributions not in excess of 6% of the first
$25,000 of compensation which are made to the Corporation's bonus plan.
<PAGE> 2
1. 7 "CORPORATION" shall mean Forest City Enterprises, Inc.
1. 8 "DISABILITY" shall mean a mental or physical disability of at least
six months duration which the Committee expects will render the
Participant unable to engage in any occupation or employment for
remuneration or profit for the duration of such person's life.
Any Participant who is so disabled may be required to submit to
medical examination at any time prior to his Normal Retirement Date,
but not more often than semi-annually, to determine whether he is still
entitled to benefits under the Plan by reason of such Disability.
Should such a disabled Participant refuse to submit to medical
examination, any Plan benefits shall be discontinued until the
withdrawal of such refusal.
If prior to his Normal Retirement Date, a Participant is no longer
disabled, any benefits under the Plan payable by reason of such
Disability shall cease. Unless he is then reemployed by the
Corporation, he shall be deemed to have terminated his employment for
purposes of the Plan as of the date he became disabled.
1. 9 "NORMAL RETIREMENT BENEFIT" shall mean a benefit payable in cash in
equal installments on a monthly basis, for 120 or 180 months certain
as provided in the Agreement.
1.10 "NORMAL RETIREMENT DATE" shall mean the first day of the month next
following a Participant's attainment of age 65.
1.11 "PARTICIPANT" shall mean an employee of the Corporation serving in an
executive or other managerial capacity who is selected by the
Committee to participate in the Plan, and with whom the Corporation
has entered into an Agreement.
1.12 "PLAN" shall mean the Forest City Enterprises Supplemental Unfunded
Deferred Compensation Plan for Executives, consisting of this Plan
Statement and separate, individual Agreements with Plan Participants.
1.13 "SERVICE" shall mean the aggregate period of a Participant's employment
with the Corporation since his original date of hire, as determined
by the Committee in accordance with uniform rules, treating persons
similarly situated in a similar manner.
1.14 The masculine pronoun wherever used shall include the feminine pronoun,
and the singular shall include the plural.
ARTICLE II
----------
Eligibility for Benefits
------------------------
2.1 NORMAL RETIREMENT
A Participant who terminates employment on his Normal Retirement Date
shall be entitled to his Normal Retirement Benefit commencing on the
first day of the month after such termination of employment. In the
event of the death of such a Participant prior to having received
benefits for the 120 or 180 months, benefits shall be paid to his
Beneficiary until a total of 120 or 180 payments have been paid to the
Participant and his Beneficiary.
2.2 OTHER AGE RETIREMENT
With the consent of the Committee, actuarially adjusted benefits may
be payable at an earlier or later age.
2.3 DISABILITY
A Participant who terminates employment by reason of Disability shall
be entitled to a benefit commencing immediately which is the Actuarial
<PAGE> 3
Equivalent of his Normal Retirement Benefit. The Disability
retirement benefit shall be payable for 120 or 180 months certain.
2.4 DEATH
Upon a Participant's death prior to termination of employment, his
Beneficiary shall be paid a lump sum death benefit which is the
Actuarial Equivalent of his Normal Retirement Benefit.
2.5 VESTING
If a Participant's employment with the Corporation terminates other
than in accordance with Sections 2.1, 2.2, 2.3, or 2.4 prior to
completing 10 years of Service, no retirement benefit shall be payable
from this Plan.
If a Participant's employment with the Corporation terminates other
than in accordance with Sections 2.1, 2.2, 2.3 or 2.4 on or after
completing 10 years of Service, he shall be entitled to a percentage
of his Normal Retirement Benefit, commencing on his Normal Retirement
Date, determined in accordance with the following schedule:
Years of Service Percentage
---------------- ----------
10 years but less than 11 years 50%
11 years but less than 12 years 60%
12 years but less than 13 years 70%
13 years but less than 14 years 80%
14 years but less than 15 years 90%
15 or more years 100%
ARTICLE III
Administration
--------------
3.1 Subject to the provisions of the Plan, full power and authority to
construe, interpret and administer the Plan shall be vested in the
Committee as from time to time constituted by the Board.
3.2 Decisions and determinations by the Committee shall be final and
binding upon all parties, including the Corporation, shareholders,
employees and Participants and their Beneficiaries and personal
representatives. The Committee shall have the authority to interpret
the Plan, to establish and revise rules and regulations relating to
the Plan, and to make any other determinations that it believes
necessary or advisable for the administration of the Plan.
3.3 No member of the Committee shall be liable for any act done or
determination made in good faith.
ARTICLE IV
Funding
-------
4.1 Nothing in this Plan shall be interpreted or construed to require the
Corporation in any manner to fund its obligations to Participants
hereunder.
4.2 In the event that the Corporation shall decide to establish an
advance accrual reserve on its books against the future expense of
this Plan, such reserve shall not under any circumstances be deemed
to be an asset of this Plan nor a source of payment of any claims
under this Plan but, at all times, shall remain a part of the general
assets of the Corporation, subject to the claims of the Corporation's
creditors.
4.3 A person entitled to a benefit in accordance to the provisions of this
<PAGE> 4
Plan shall have a claim upon the Corporation only to the extent of the
monthly payments thereof, if any, due up to and including the then
current months and shall not have a claim upon the Corporation for
any subsequent monthly payment unless and until such payment shall
become due and payable.
<PAGE> 1
Exhibit 10.10
FOREST CITY ENTERPRISES, INC.
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of the 1994 Stock Option Plan (the "Plan") shall be to
enhance the retention and motivation of key employees including officers,
executives and other employees who are members of the Company's
management team and who, in the judgement of the Committee, can
contribute materially to the Company's success by awarding these key
employees the opportunity to receive stock options to purchase shares of
the Company's Class A common stock. The Plan is also intended to
foster within these key employees an identification with ownership and
shareholder interest.
2. DEFINITIONS
Unless the context of the applicable section clearly indicates otherwise,
the terms below, when used within the Plan, shall have the meaning set
forth in this Section 2.
A. BENEFICIARY means the person or persons designated in writing by the
Grantee or, in the absence of such a designation or if the
designated person or persons predecease the Grantee, the Grantee's
beneficiary shall be the person or persons who acquire the right
to exercise an option by bequest or inheritance.
B. BOARD OF DIRECTORS or BOARD means the Board of Directors of the
Company.
C. CODE means the Internal Revenue Code of 1986, as amended from time
to time.
D. COMPANY means Forest City Enterprises, Inc.
E. COMPENSATION COMMITTEE or COMMITTEE means the Compensation
Committee of the Board of Directors.
F. DISABILITY means a disability as defined in the Company's Long
Term Disability Plan, as amended from time to time.
G. GRANTEE means an executive or management team member to whom an
Option has been granted under the Plan.
H. INCENTIVE STOCK OPTIONS means options to purchase shares of stock
within the meaning of Section 422(b) of the Code.
I. NONQUALIFIED STOCK OPTIONS means options which do not qualify as
Incentive Stock Options within the meaning of Section 422(b) of the
Code.
J. OPTION means an option to purchase a share or shares of the
Company's par value common stock.
K. PLAN means the 1994 Stock Option Plan.
L. RETIREMENT means retirement pursuant to the Company's retirement
policies.
M. SHARES means shares of the Company's par Class A common stock.
N. TERM OF EXERCISE means the time period during which a particular
Option may be exercised in accordance with Section 6(G) of this Plan.
O. Wherever used herein, unless indicated otherwise, words in the
masculine form shall be deemed to refer to females as well as to males.
3. ADMINISTRATION
A. COMPENSATION COMMITTEE
The Plan shall be administered by the Compensation Committee of the
Board of Directors. No member of the Compensation Committee may
exercise discretion with respect to, or participate in, the
administration of the Plan if, at any time during the twelve month
period prior to such exercise or participation, he or she has been
granted or awarded stock, restricted stock, stock options, stock
appreciation rights, or any other derivative security of the
Company, except as permitted in Rule 16b-3 of the Securities and
Exchange Act of 1934, or any successor rule or regulation.
B. DETERMINATIONS
Within the limits of the provisions of the Plan, the Committee shall
have the plenary authority to determine (i) the key employees to whom
awards hereunder shall be granted, (ii) the number of shares subject
to each option; provided that, if the award is an incentive stock
option, the aggregate fair market value of the shares (as
determined at the time the option is granted) which become exercisable
in any calendar year for any employee shall not exceed $100,000,
(iii) the form (incentive stock options or nonqualified stock options)
and amount of each award granted, (iv) the provisions of each Option
Agreement, and (v) the limitations, restrictions and conditions
applicable to any such award. In making such awards the Committee
shall take into consideration the performance of each eligible
employee. The determinations of the Committee on all
<PAGE> 2
matters regarding the Plan shall be final and conclusive unless
otherwise determined by the Board of Directors.
C. INTERPRETATION
Subject to the provisions of the Plan, the Committee may interpret
the Plan, and prescribe, amend and rescind rules and regulations
relating to it. The interpretation of any provision of the Plan by
the Committee shall be final and conclusive unless otherwise
determined by the Board of Directors.
4. ELIGIBILITY
Stock options may be granted under the Plan to key employees of the
Company, as determined by the Committee, based upon the Committee's
evaluation of employees' duties and their overall performance
including current and potential contributions to the Company's
success. Generally, this group of eligible key employees includes
officers, senior executives, directors who are also employees, and any
other members of the Company's management team deemed appropriate by the
Committee. All determinations by the Committee as to the identity of
persons eligible to be granted awards hereunder shall be conclusive.
5. SHARE AWARDS UNDER THE PLAN
A. FORM
Awards under the Plan shall be granted in the form of incentive
stock options or nonqualified stock options as herein defined in
Section 2.
B. SHARES SUBJECT TO THE PLAN
The aggregate number of shares that may be awarded as stock options
during the term of the plan may not exceed 250,000 authorized but
unissued shares or shares held by the Company in its Treasury, subject
to adjustments described in section 9-A. The aggregate number of
shares which may be awarded to an individual participant during the
term of the plan is 25,000 shares, subject to adjustments described
in section 9-A. If any stock option granted under the Plan shall
terminate, expire or, with the consent of the grantee, be canceled
as to any shares, such shares shall again be available for grant
under the Plan.
6. TERMS AND CONDITIONS OF AWARDS
Stock options granted under the Plan shall be in such form and
upon such terms and conditions as the Committee shall determine
from time to time, subject to the following:
A. STOCK OPTION AGREEMENT
Each stock option granted under the Plan shall be evidenced by an
agreement between the Company and the Grantee, in a form approved by
the Committee, which has been executed and delivered. Appropriate
officers of the Company are hereby authorized to execute and
deliver these agreements in the name of the Company as directed
from time to time by the Committee.
B. EXERCISE PRICE FOR STOCK OPTIONS
(1)With respect to any non-qualified stock options the exercise
price to be paid by the Grantee to the Company for each share
shall be at least equal to the fair market value of a share on
the date the option is granted.
(2)With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns ten percent or less of the total
combined voting power of all classes of stock of the Company, the
exercise price to be paid by the Grantee to the Company for each
share shall be at least equal to the fair market value of a share
on the date the option is granted.
(3)With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns more than ten percent of the total
combined voting power of all classes of stock of the Company, the
exercise price to be paid by the Grantee to the Company for each share
shall be not be less than 110% of the fair market value of a share on
the date the incentive stock option award is granted. At no time may
an option be granted under the plan if the option price per share is
less than the par value of the stock.
C. EXERCISE
Stock options shall be exercisable subject to provisions of this
Plan and any other conditions as determined by the Committee, and
shall be evidenced by a written Option Agreement between the key
employee and the Company as provided in Section 6(A) of this Plan.
D. PAYMENT
At the time that a stock option granted under the Plan, or any part
thereof, is exercised, payment for the stock issuable thereupon shall
be made in full in cash, money order, certified check, cashier's
check, or in shares of stock currently owned by the key employee
which have satisfied any required holding period and are valued at
the fair market value of the shares on the date of exercise. As
<PAGE> 3
soon as reasonably possible following such exercise of a stock
option, a certificate representing the shares of stock purchased,
registered in the name of the key employee (Grantee), shall be
delivered to same.
E. CASHLESS EXERCISE
Options may be exercised in whole or in part upon delivery to the
Secretary of the Company of an irrevocable written notice of exercise.
The date on which such notice is received by the Secretary shall be
the date of exercise of the option, provided that within five business
days of the delivery of such notice the funds to pay for exercise
of the option are delivered to the Company by a broker acting on
behalf of the optionee either in connection with the sale of the
shares underlying the option or in connection with the making of a
margin loan to the optionee to enable payment of the exercise
price of the option. In connection with the foregoing, the Company
will provide a copy of the notice of exercise of the option to the
aforesaid broker upon receipt by the Secretary of such notice and
will deliver to such broker, within five business days of the
delivery of such notice to the company, a certificate or certificates
(as requested by the broker) representing the number of shares
underlying the option that have been sold by such broker for
the optionee.
F. TERM OF EXERCISE
The term during which each stock option granted under the Plan may
be exercised shall be as provided within the fully executed and
delivered Option Agreement. In no event shall the term during which
an option may be exercised exceed ten years from the date upon which
such option was granted.
G. STOCK OPTION VESTING
No stock options awarded under the Plan may be exercised during
the first year following its grant.
H. FAIR MARKET VALUE
Fair Market Value shall be determined by the price per share at
the close of business on the date on which the stock option grant is
awarded or, if the grant date is not a regular business day, by the
price per share on the next regular business day following the date of
the grant.
7. DURATION
With respect to any stock option awarded to a Grantee, such award shall
be granted within a period of 10 years from the date on which the Plan
is adopted or the date on which the Plan is approved by shareholders,
whichever is earlier. The Plan shall remain in effect thereafter until
all stock options awarded under the Plan have been exercised, surrendered
or expired.
8. EXERCISE IN THE EVENT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
A. DEATH
If a Grantee shall die while an employee of the Company or during
a period of disability, the option can be exercised by his estate,
heir or legatee at any time during its original term.
B. DISABILITY
If a Grantee's employment by the Company shall terminate because
of disability, and Grantee has not died within the following twelve
months, he may exercise his options to the extent that he was entitled
to do so on the date of his termination of employment, at any time,
but not later than the expiration date specified in the Option
Agreement by which such award was granted.
C. RETIREMENT
If a Grantee's employment shall terminate (i) by reason of his
retirement in accordance with the Company's retirement plan or (ii)
with the consent of the Committee, his right to exercise shall
terminate and be forfeited on the expiration data specified in the
Option Agreement by which such award was granted, or three months
after termination of employment, whichever date is earlier.
D. OTHER
If a Grantee's employment shall terminate for any reason other than
death, disability or retirement as provided in Sections 8(A) through
8(C) of the Plan herein, all rights to exercise his option shall
terminate and be forfeited on the date of such termination of
employment.
9. MISCELLANEOUS
A. ADJUSTMENTS IN THE EVENT OF CHANGE IN COMMON STOCK
In the event of any change in the common stock of the Company by
reason of a stock dividend, recapitalization, reorganization,
merger, consolidation, combination, split-up, or exchange of shares,
or of any similar change affecting the common stock, the number and
kind of shares which thereafter may be awarded under the Plan and
the number and kind of shares subject to option in outstanding
<PAGE> 4
agreements, and the option purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner
as the Committee may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for,
eligible key employees.
B. NON-TRANSFERABILITY AND NON-ASSIGNABILITY
No stock options granted hereunder may be transferred, assigned,
pledged or hypothecated, except as provided by will or the applicable
laws of descent or distribution, and no awards granted hereunder
shall be subject to execution, attachment, or similar process. Each
option granted hereunder may be exercised only by the individual to
whom it is issued or the executor of the estate and is subject to
the terms, conditions and provisions herein.
C. INVESTMENT REPRESENTATION
Each stock option agreement may provide that, upon demand by the
Committee, the Grantee shall deliver to the Committee at the time of
exercise of an option or portion thereof, a written representation
that the shares to be acquired upon such exercise are to be acquired
for investment and not for resale or with a view to the distribution
thereof.
D. RIGHTS AS A SHAREHOLDER
Any eligible key employee who receives a stock option under the
Plan shall have no rights to the underlying shares until the date of
the issuance of a stock certificate to him, and only after such shares
are fully paid. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock
certificate is issued.
E. NO OBLIGATION TO EXERCISE
The granting of a stock option under the Plan shall impose no
obligation upon an eligible key employee to exercise such option.
F. INCENTIVE STOCK OPTIONS
Each option agreement which provides for the grant of an incentive
stock option to an eligible key employee shall contain such terms and
provisions as the Committee may determine to be necessary or desirable
in order to qualify such option as an incentive stock option within
the meaning of Section 422(b) of the Internal Revenue Code of 1986,
as amended from time to time.
G. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of common stock
under the Plan shall be used for general corporate purposes.
H. WITHHOLDING TAXES
Upon the issuance of any stock pursuant to the exercise of a stock
option, the Company shall have the right to require the Grantee to
remit to the Company an amount payable in cash, money order, certified
check or cashier's check that is sufficient to satisfy all federal,
state and local withholding tax requirements prior to the delivery of
any certificate(s) for shares of common stock. The Committee, in its
sole descretion, may permit the Grantee to pay such taxes through the
withholding of shares otherwise deliverable to such Grantee in
connection with such exercise or the delivery to the Company of shares
otherwise acquired by the Grantee.
I. RIGHT TO TERMINATE EMPLOYMENT
Nothing in the Plan or any agreement entered into pursuant to the
Plan shall confer upon any key employee the right to continue in
the employment of the Company or affect any right which the
Company has to terminate any key employee.
J. GOVERNING LAW
The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of Ohio, except to the
extent that such laws may be superseded by any federal laws.
K. AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS
No awards under the Plan shall be considered as compensation under
any employee benefit plan of the Company, except as specifically
provided in any such plan or as otherwise determined by the Board
of Directors.
L. EFFECT OF MERGER OR OTHER REORGANIZATION
In the event any merger, consolidation or other reorganization in
which the Corporation is not the surviving or continuing
corporation, all options that were granted hereunder and that are
outstanding on the date of such event shall be assumed by the
surviving or continuing corporation.
M. ELIMINATION OF FRACTIONAL SHARES
If, under any provision of the Plan or formula used to calculate
award levels of stock options, the number so computed is not a
whole number, such number of shares shall be rounded down to the
next whole number.
10. EFFECTIVE DATE/APPROVAL BY SHAREHOLDERS
The effective date of the Plan shall be the date on which it is adopted
<PAGE> 5
by the Board, subject to approval of the Plan by the holders of a
majority of the shares of common stock of the Company within a period
beginning 12 months prior to and ending 12 months following approval of
the Plan by the Board. The Plan and any grants made as a part of the
Plan shall be null and void and of no effect if such condition is not
fulfilled.
11. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, without further action by the shareholders, from time
to time, amend, alter, suspend or terminate the Plan, except as
otherwise required by applicable federal securities laws.
<PAGE> 6
A G R E E M E N T
-----------------
THIS AGREEMENT, made this day of , 1996, by and between
FOREST CITY ENTERPRISES, INC., an Ohio corporation of Cleveland, Ohio,
hereinafter referred to as "Company," and , hereinafter referred to
as "Employee."
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company is of the opinion that
the interests of the Company and its shareholders will be advanced by affording
present and future executives and key employees an opportunity to secure stock
ownership in the Company,
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements and promises set forth herein, the parties hereto agree as
follows:
1. GRANT OF OPTION. The Company granted to the Employee as of September
9, 1996 (the "Option Date") an option to purchase under the 1994 Stock Option
Plan (the "Plan"), an aggregate of ______ shares of the presently authorized
$0.33 1/3 par value Class A Common Stock of the Company (the "Option"), which
Option, subject to all the terms and conditions hereinafter set forth, shall be
exercisable by the Employee over the option period as hereinafter described.
2. OPTION PRICE. The option price with respect to the shares of stock
covered by this Agreement (the "Option Shares") shall be $43.125 per share, the
price as of the close of business on September 9, 1996.
3. VESTING AND TIME OF EXERCISE OF OPTION. The Option granted
hereunder shall continue in effect for a period of ten (10) years from the date
of the granting of the same, except as
<PAGE> 7
such period may be reduced as hereinafter provided with respect to termination
of employment, retirement or death of the Employee.
The Option shall be exercisable cumulatively over the option period
only in accordance with the following terms, conditions and provisions:
(a) Except as otherwise provided in the Plan or this
Agreement, this Option shall not be exercisable prior
to the first business day after the second
anniversary of the Option Date, and upon such day the
Option shall automatically become vested and
exercisable with respect to 25 percent (25%) of the
total Option Shares. Thereafter, upon the third
anniversary of the Option Date, Employee may exercise
up to 50 percent (50%) of the total Option Shares.
Upon the fourth anniversary and thereafter until the
tenth anniversary of the Option Date, the Employee
may exercise up to 100 percent (100%) of the total
Option Shares.
(b) Except as hereinafter provided, no Option may be
exercised unless the Employee is, at the date of such
exercise, in the employ of the Company or a
subsidiary of the Company, and shall have been
continuously so employed since the date his Option
was granted. Absence or leave from the Company, or a
subsidiary of the Company, shall not be considered an
interruption of employment for the purposes of this
Agreement.
4. METHOD OF EXERCISE. Option Shares may be purchased pursuant to this
Agreement only upon receipt by the Secretary of the Company of notice in writing
from Employee of his intention to purchase, specifying the number of shares as
to which he desires to exercise his Option, and said notice shall be accompanied
by the full amount of the purchase price in the form of: full cash, a certified
or official bank check, a money order, a cashier's check, or in shares of stock
currently owned by the Employee and valued at the fair market value of the
shares on the date of exercise. In no event shall an Option be exercisable as to
less than twenty-five (25) shares at any one time (or all of the
2
<PAGE> 8
remaining shares then subject to the Option, if less than twenty-five (25)).
5. OPTION CONFERS NO RIGHTS AS COMMON STOCK HOLDER. The Employee shall
not be entitled to any privileges of ownership with respect to shares of Class A
Common Stock subject to this Option, unless and until purchased and delivered
upon the exercise of this Option, in whole or in part, and the Employee becomes
a stockholder of record with respect to such delivered shares. The Employee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
6. TERMINATION OF OPTION. In the event the employment of the Employee
with the Company, or its subsidiary, shall terminate and prevent him from
performing his regular duties for any reason other than disability, death, or
retirement with the consent of the Company, all rights to purchase shares
pursuant to his Option (including rights to purchase shares thereunder which
have accrued but which then remain unexercised) shall forthwith cease and
terminate.
In the event of the termination of his employment because of
disability, with the consent of the Company, the Option may be exercised by him
at any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of such termination, whichever is the
shorter period, but only if, and to the extent, that he was entitled to exercise
the Option at the date of such termination.
In the event of the termination of his employment because of
retirement, in accordance with the Company's retirement plan or with the consent
of the Compensation Committee, the Option may be exercised by him at any time
prior to the expiration date of the Option, or prior to the expiration of three
(3) months after the date of such termination, whichever is the shorter period,
but only if, and to the extent that he was entitled to exercise the Option at
the date of such termination.
In the event of the death of the Employee, his Option shall be
exercisable any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of death, whichever is the shorter
period, but only by the person
3
<PAGE> 9
or persons to whom such Employee's Will or by the laws of descent and
distribution of the State of his domicile at the time of his death, and then
only if, and to the extent that such Employee was entitled to exercise the
Option at the date of his death.
To the extent that the Option of the Employee shall not have been
exercised within the limited period above provided due to his death, retirement
or termination because of disability, all further rights to purchase shares
pursuant to such Option shall cease and terminate at the expiration of such
period.
7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred by
the Employee other than by Will or the laws of descent and distribution. During
the Employee's lifetime, this Option is exercisable only by the Employee or his
guardian or legal representative, PROVIDED that if so determined by the Board of
Directors, the Employee may, in a manner designated by the Board of Directors,
designate a beneficiary to exercise the rights of the Employee under this Option
upon the death of the Employee. Absent such a designation, in a case of death,
such Option shall be exercisable by the executor, administrator or legal
representative of the deceased Employee.
Except as permitted by the above, this Option may not be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of (whether
by operation of law or otherwise) or by subject to execution, attachment or
similar process. Any attempted sale, transfer, assignment, pledge, hypothecation
or encumbrance, or other disposition of this Option shall be null and void.
8. CHANGE IN STOCK CAPITALIZATION. If after the effective date of the
Stock Option there is any change in the Common Stock of the Company through the
declaration of stock dividends or reclassification, reorganization,
redesignation or recapitalization resulting in stock split-ups or combinations
or exchanges of shares, or through merger, consolidation, liquidation, or other
similar event, the number of shares available for option and the shares subject
to any option, and the price per share, shall be appropriately adjusted as
determined by the Compensation Committee of the Board of Directors to prevent
dilution or enlargement of option rights.
4
<PAGE> 10
9. EMPLOYMENT RIGHTS. Nothing contained in the Plan, however, or in any
Option granted pursuant to the Plan, shall confer upon any Employee any right to
be continued in the employment of the Company or any subsidiary of the Company,
or interfere in any way with the right of the Company, or such subsidiary, to
terminate his employment at any time.
10. RIGHTS OF AMENDMENTS TO OPTION PLAN. The Board of Directors shall
have the right to amend, suspend or terminate the Plan at any time, provided,
however, that no such action shall affect or in any way impair the rights of
Employee under the Option heretofore granted under the Plan, and provided
further that unless first duly approved by the shareholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) no
amendment or change shall be made in the Plan (a) increasing the total number of
shares which may be purchased under the Plan; (b) changing the minimum purchase
price hereinbefore specified for the optioned shares; (c) changing the option
period, the time limitation on the exercise of options under the Plan
hereinbefore specified or the rate at which shares may be purchased pursuant to
options; or (d) changing the designation of the persons eligible or ineligible
for the granting of options under the Plan.
The Plan shall be administered by the Board of Directors of the Company
whose interpretation of the terms and provisions thereof shall be final and
conclusive.
11. DELIVERING OF SHARES. The Employee shall give notice of his intent
to exercise an Option, and shares shall be delivered by the Company against full
payment of the Option Price in respect of the shares delivered, subject to the
conditions of Item 4 hereof.
12. CANCELLATION OF OPTION RIGHTS. The Board of Directors may cancel
all unexercised options hereunder if the Employee, after retirement and while
having rights to purchase hereunder, engages in employment or activities which
in any way directly or indirectly, divert or attempt to divert from the Company
any business whatsoever, and which in the opinion of the Board of Directors are
contrary to the best interests of the Company.
5
<PAGE> 11
13. NOTICES. Any notice to be given hereunder by the Employee shall be
sent by certified or registered mail addressed to the Company for the attention
of the Chairman of the Board, or the President, at its principle office, 10800
Brookpark Road, Cleveland, Ohio 44130, and any notice by the Company to the
Employee shall be sent by certified or registered mail addressed to the Employee
at______________________________________________ . Either party may, by notice
given to the other in accordance with the provisions of this Section, change the
address to which subsequent notices shall be sent.
14. EXERCISE OF EARLIER OPTIONS. It is understood that this Option by
its terms may not be exercisable if the Employee has an earlier qualified Option
granted to him at a higher price which is still outstanding and has not been
fully exercised.
15. AGREEMENT SUBJECT TO THE PLAN. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Employee hereby acknowledges receipt of a copy of the Plan.
16. GOVERNING LAWS. It is intended that (a) this Agreement shall come
within the provisions of the Plan and shall qualify as an Incentive Stock Option
within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly, and (b) the Company will treat any
deduction under the Internal Revenue Code of 1986, as amended, in respect of
shares acquired by the Employee pursuant hereto in such manner as to accord to
the Employee the full benefit of Section 422(b) of the 1986 Internal Revenue
Code, as amended. This Agreement shall be governed by the laws of the State of
Ohio.
Further, this Agreement may not be modified orally. It is understood
that wherever the masculine pronouns are used in this Agreement, it is intended
to include the feminine pronouns as well as the masculine.
IN WITNESS WHEREOF, we have hereunto set out hands this__________
day of___________________ , 1996.
6
<PAGE> 12
FOREST CITY ENTERPRISES, INC.
-------------------------------
-------------------------------
, Employee
<PAGE> 13
A G R E E M E N T
-----------------
THIS AGREEMENT, made this day of , 1996, by and between
FOREST CITY ENTERPRISES, INC., an Ohio corporation of Cleveland, Ohio,
hereinafter referred to as "Company," and , hereinafter referred to
as "Employee."
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company is of the opinion that
the interests of the Company and its shareholders will be advanced by affording
present and future executives and key employees an opportunity to secure stock
ownership in the Company,
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements and promises set forth herein, the parties hereto agree as
follows:
1. GRANT OF OPTION. The Company granted to the Employee as of September
9, 1996 (the "Option Date") a nonqualified stock option to purchase under the
1994 Stock Option Plan (the "Plan"), an aggregate of ______ shares of the
presently authorized $0.33 1/3 par value Class A Common Stock of the Company
(the "Option"), which Option, subject to all the terms and conditions
hereinafter set forth, shall be exercisable by the Employee over the option
period as hereinafter described.
2. OPTION PRICE. The option price with respect to the shares of stock
covered by this Agreement (the "Option Shares") shall be $43.125 per share, the
price as of the close of business on September 9, 1996.
3. VESTING AND TIME OF EXERCISE OF OPTION. The Option granted
hereunder shall continue in effect for a period of ten (10) years from the date
of the granting of the same, except as
<PAGE> 14
such period may be reduced as hereinafter provided with respect to termination
of employment, retirement or death of the Employee.
The Option shall be exercisable cumulatively over the option period
only in accordance with the following terms, conditions and provisions:
(a) Except as otherwise provided in the Plan or this
Agreement, this Option shall not be exercisable prior
to the first business day after the second
anniversary of the Option Date, and upon such day the
Option shall automatically become vested and
exercisable with respect to 25 percent (25%) of the
total Option Shares. Thereafter, upon the third
anniversary of the Option Date, Employee may exercise
up to 50 percent (50%) of the total Option Shares.
Upon the fourth anniversary and thereafter until the
tenth anniversary of the Option Date, the Employee
may exercise up to 100 percent (100%) of the total
Option Shares.
(b) Except as hereinafter provided, no Option may be
exercised unless the Employee is, at the date of such
exercise, in the employ of the Company or a
subsidiary of the Company, and shall have been
continuously so employed since the date his Option
was granted. Absence or leave from the Company, or a
subsidiary of the Company, shall not be considered an
interruption of employment for the purposes of this
Agreement.
4. METHOD OF EXERCISE. Option Shares may be purchased pursuant to this
Agreement only upon receipt by the Secretary of the Company of notice in writing
from Employee of his intention to purchase, specifying the number of shares as
to which he desires to exercise his Option, and said notice shall be accompanied
by the full amount of the purchase price in the form of: full cash, a certified
or official bank check, a money order, a cashier's check, or in shares of stock
currently owned by the Employee and valued at the fair market value of the
shares on the date of exercise. In no event shall an Option be exercisable as to
less than twenty-five (25) shares at any one time (or all of the
2
<PAGE> 15
remaining shares then subject to the Option, if less than twenty-five (25)).
5. OPTION CONFERS NO RIGHTS AS COMMON STOCK HOLDER. The Employee shall
not be entitled to any privileges of ownership with respect to shares of Class A
Common Stock subject to this Option, unless and until purchased and delivered
upon the exercise of this Option, in whole or in part, and the Employee becomes
a stockholder of record with respect to such delivered shares. The Employee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
6. TERMINATION OF OPTION. In the event the employment of the Employee
with the Company, or its subsidiary, shall terminate and prevent him from
performing his regular duties for any reason other than disability, death, or
retirement with the consent of the Company, all rights to purchase shares
pursuant to his Option (including rights to purchase shares thereunder which
have accrued but which then remain unexercised) shall forthwith cease and
terminate.
In the event of the termination of his employment because of
disability, with the consent of the Company, the Option may be exercised by him
at any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of such termination, whichever is the
shorter period, but only if, and to the extent, that he was entitled to exercise
the Option at the date of such termination.
In the event of the termination of his employment because of
retirement, in accordance with the Company's retirement plan or with the consent
of the Compensation Committee, the Option may be exercised by him at any time
prior to the expiration date of the Option, or prior to the expiration of three
(3) months after the date of such termination, whichever is the shorter period,
but only if, and to the extent that he was entitled to exercise the Option at
the date of such termination.
In the event of the death of the Employee, his Option shall be
exercisable any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of death, whichever is the shorter
period, but only by the person
3
<PAGE> 16
or persons to whom such Employee's Will or by the laws of descent and
distribution of the State of his domicile at the time of his death, and then
only if, and to the extent that such Employee was entitled to exercise the
Option at the date of his death.
To the extent that the Option of the Employee shall not have been
exercised within the limited period above provided due to his death, retirement
or termination because of disability, all further rights to purchase shares
pursuant to such Option shall cease and terminate at the expiration of such
period.
7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred by
the Employee other than by Will or the laws of descent and distribution. During
the Employee's lifetime, this Option is exercisable only by the Employee or his
guardian or legal representative, PROVIDED that if so determined by the Board of
Directors, the Employee may, in a manner designated by the Board of Directors,
designate a beneficiary to exercise the rights of the Employee under this Option
upon the death of the Employee. Absent such a designation, in a case of death,
such Option shall be exercisable by the executor, administrator or legal
representative of the deceased Employee.
Except as permitted by the above, this Option may not be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of (whether
by operation of law or otherwise) or by subject to execution, attachment or
similar process. Any attempted sale, transfer, assignment, pledge, hypothecation
or encumbrance, or other disposition of this Option shall be null and void.
8. CHANGE IN STOCK CAPITALIZATION. If after the effective date of the
Stock Option there is any change in the Common Stock of the Company through the
declaration of stock dividends or reclassification, reorganization,
redesignation or recapitalization resulting in stock split-ups or combinations
or exchanges of shares, or through merger, consolidation, liquidation, or other
similar event, the number of shares available for option and the shares subject
to any option, and the price per share, shall be appropriately adjusted as
determined by the Compensation Committee of the Board of Directors to prevent
dilution or enlargement of option rights.
4
<PAGE> 17
9. EMPLOYMENT RIGHTS. Nothing contained in the Plan, however, or in any
Option granted pursuant to the Plan, shall confer upon any Employee any right to
be continued in the employment of the Company or any subsidiary of the Company,
or interfere in any way with the right of the Company, or such subsidiary, to
terminate his employment at any time.
10. RIGHTS OF AMENDMENTS TO OPTION PLAN. The Board of Directors shall
have the right to amend, suspend or terminate the Plan at any time, provided,
however, that no such action shall affect or in any way impair the rights of
Employee under the Option heretofore granted under the Plan, and provided
further that unless first duly approved by the shareholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) no
amendment or change shall be made in the Plan (a) increasing the total number of
shares which may be purchased under the Plan; (b) changing the minimum purchase
price hereinbefore specified for the optioned shares; (c) changing the option
period, the time limitation on the exercise of options under the Plan
hereinbefore specified or the rate at which shares may be purchased pursuant to
options; or (d) changing the designation of the persons eligible or ineligible
for the granting of options under the Plan.
The Plan shall be administered by the Board of Directors of the Company
whose interpretation of the terms and provisions thereof shall be final and
conclusive.
11. DELIVERING OF SHARES. The Employee shall give notice of his intent
to exercise an Option, and shares shall be delivered by the Company against full
payment of the Option Price in respect of the shares delivered, subject to the
conditions of Item 4 hereof.
12. CANCELLATION OF OPTION RIGHTS. The Board of Directors may cancel
all unexercised options hereunder if the Employee, after retirement and while
having rights to purchase hereunder, engages in employment or activities which
in any way directly or indirectly, divert or attempt to divert from the Company
any business whatsoever, and which in the opinion of the Board of Directors are
contrary to the best interests of the Company.
5
<PAGE> 18
13. NOTICES. Any notice to be given hereunder by the Employee shall be
sent by certified or registered mail addressed to the Company for the attention
of the Chairman of the Board, or the President, at its principle office, 10800
Brookpark Road, Cleveland, Ohio 44130, and any notice by the Company to the
Employee shall be sent by certified or registered mail addressed to the Employee
at______________________________________________ . Either party may, by notice
given to the other in accordance with the provisions of this Section, change the
address to which subsequent notices shall be sent.
14. EXERCISE OF EARLIER OPTIONS. It is understood that this Option by
its terms may not be exercisable if the Employee has an earlier qualified Option
granted to him at a higher price which is still outstanding and has not been
fully exercised.
15. AGREEMENT SUBJECT TO THE PLAN. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Employee hereby acknowledges receipt of a copy of the Plan.
16. GOVERNING LAWS. This Option is hereby designated as not
constituting an "incentive stock option" within the meaning of section 422 of
the Internal Revenue Code of 1986, as amended; this Agreement shall be
interpreted and treated consistently with such designation. This Agreement
shall be governed by the laws of the State of Ohio.
Further, this Agreement may not be modified orally. It is understood
that wherever the masculine pronouns are used in this Agreement, it is intended
to include the feminine pronouns as well as the masculine.
IN WITNESS WHEREOF, we have hereunto set out hands this__________
day of___________________ , 1996.
6
<PAGE> 19
FOREST CITY ENTERPRISES, INC.
-------------------------------
-------------------------------
, Employee
<PAGE> 1
Exhibit 10.11
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as of
the 25th day of September, 1989, by and between FOREST CITY ENTERPRISES, INC.,
an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and ALBERT B. RATNER of 5150 Three
Village Drive, Lyndhurst, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the Employment
Agreement effective as of July 29, 1988 and enter into a new Employment
Agreement to be effective as of July 1, 1989, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of July 1, 1989.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated July 29, 1988 is hereby
terminated as of July 1, 1989, and that the effective date of this
Employment Agreement is July 1, 1989.
2. The Employee, in consideration of the promises and agreements of
the Company herein contained, hereby promises to continue in the employ of
the Company for a period of one (1) year from the date of July 1, 1989, as
an Executive and Officer of the Company and to perform such duties as may be
required of him in such capacities by the Company, faithfully, honestly,
diligently and to the satisfaction of the Company. Said employment shall
continue for additional periods of one (1) year each until termination by
mutual consent, death, or by either party giving ninety (90) days written
notice to either amend or terminate this Employment Agreement to the other
party prior to the termination of any such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay the
Employee a base salary of FOUR HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($450,000.00) per year, payable from time to time during each employment year.
4. In consideration of this Employment Agreement, if the Employee dies
while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty
percent (50%) of the base salary stated above of said Employee plus fifty
percent (50%) of the average bonuses granted to the Employee during the
five (5) calendar years preceding his death. Such payment to be of five
(5) years following the decease of said Employee; said sum to be payable
in quarterly installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands the day
and year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Sam H. Miller
----------------------------
SAM H. MILLER, Vice Chairman
of the Board
By: /s/ Helen Morgan
-----------------------------
HELEN MORGAN, Secretary
/s/ Albert B. Ratner
------------------------------
ALBERT B. RATNER, Employee
<PAGE> 1
Exhibit 10.12
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as
of this 6th day of December, 1996, by and between FOREST CITY ENTERPRISES,
INC. the "Company" and ALBERT B. RATNER the "Employee" to an Agreement
between said parties dated September 25, 1989.
WHEREAS, the Board of Directors of the Company have authorized the
Company to purchase a "Split Dollar" Insurance Policy on the life of the
Employee.
NOW, THEREFORE, it is agreed that:
1. The Employment Agreement dated September 25, 1989 is amended to
provide that the Company purchase a FIVE MILLION AND 00/100 DOLLAR
($5,000,000.00) "Split Dollar" Insurance Policy on the life of the Employee in
accordance with the terms of a Split Dollar Insurance Agreement And Assignment
Of Life Insurance Policy As Collateral dated 26th day of June, 1996 between the
Company and the Employee.
2. In all other respects the Employment Agreement dated September 25, 1989
is in full force and in effect except as amended hereby.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
----------------------------------
Thomas G. Smith, Secretary
/s/ Albert B. Ratner
----------------------------------
ALBERT B. RATNER, Employee
<PAGE> 1
Exhibit 10.13
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as of
the 25th day of September, 1989, by and between FOREST CITY ENTERPRISES,
INC., an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and SAM H. MILLER of 18605 Parkland
Drive, Shaker Heights, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the Employment
Agreement effective as of July 29, 1988 and enter into a new Employment
Agreement to be effective as of July 1, 1989, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of July 1, 1989.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated July 29, 1988 is hereby
terminated as of July 1, 1989, and that the effective date of this
Employment Agreement is July 1, 1989.
2. The Employee, in consideration of the promises and agreements of the
Company herein contained, hereby promises to continue in the employ of the
Company for a period of one (1) year from the date of July 1, 1989, as an
Executive and Officer of the Company and to perform such duties as may be
required of him in such capacities by the Company, faithfully, honestly,
diligently and to the satisfaction of the Company. Said employment shall
continue for additional periods of one (1) year each until termination by
mutual consent, death, or by either party giving ninety (90) days written
notice to either amend or terminate this Employment Agreement to the other
party prior to the termination of any such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay
the Employee a base salary of THREE HUNDRED EIGHTY-FIVE THOUSAND AND 00/100
DOLLARS ($385,000.00) per year, payable from time to time during each
employment year.
4. In consideration of this Employment Agreement, if the Employee dies
while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty
percent (50%) of the base salary stated above of said Employee plus fifty
percent (50%) of the average bonuses granted to the Employee during the
five (5) calendar years preceding his death. Such payment to be of five
(5) years following the decease of said Employee; said sum to be payable in
quarterly installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Albert B. Ratner
--------------------------------
ALBERT B. RATNER, President
By: /s/ Helen Morgan
--------------------------------
HELEN MORGAN, Secretary
/s/ Sam H. Miller
--------------------------------
SAM H. MILLER, Employee
<PAGE> 1
Exhibit 10.14
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as
of the 25th day of September, 1989, by and between FOREST CITY ENTERPRISES,
INC., an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and NATHAN P. SHAFRAN of 5150 Three
Village Drive, Lyndhurst, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the Employment
Agreement effective as of July 29, 1988 and enter into a new Employment
Agreement to be effective as of July 1, 1989, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of July 1, 1989.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated July 29, 1988 is hereby
terminated as of July 1, 1989, and that the effective date of this
Employment Agreement is July 1, 1989.
2. The Employee, in consideration of the promises and agreements of
the Company herein contained, hereby promises to continue in the employ of
the Company for a period of one (1) year from the date of July 1, 1989, as
an Executive and Officer of the Company and to perform such duties as may be
required of him in such capacities by the Company, faithfully, honestly,
diligently and to the satisfaction of the Company. Said employment shall
continue for additional periods of one (1) year each until termination by
mutual consent, death, or by either party giving ninety (90) days written
notice to either amend or terminate this Employment Agreement to the other
party prior to the termination of any such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay
the Employee a base salary of ONE HUNDRED NINETY THOUSAND AND 00/100
DOLLARS ($190,000.00) per year, payable from time to time during each
employment year.
4. In consideration of this Employment Agreement, if the Employee
dies while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty
percent (50%) of the base salary stated above of said Employee plus fifty
percent (50%) of the average bonuses granted to the Employee during the
five (5) calendar years preceding his death. Such payment to be of five
(5) years following the decease of said Employee; said sum to be payable
in quarterly installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands the day
and year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Albert B. Ratner
-----------------------------
ALBERT B. RATNER, President
By: /s/ Helen Morgan
----------------------------
HELEN MORGAN, Secretary
/s/ Nathan P. Shafran
----------------------------
NATHAN P. SHAFRAN, Employee
<PAGE> 1
Exhibit 10.15
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as of
the 30th day of March, 1993, by and between FOREST CITY ENTERPRISES, INC.,
an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and JAMES A. RATNER of 19750 Shaker
Boulevard, Shaker Heights, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the Employment
Agreement effective as of April 29, 1987 and enter into a new Employment
Agreement to be effective as of February 1, 1993, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of February 1, 1993.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated April 29, 1987 is hereby
terminated as of February 1, 1993, and that the effective date of this
Employment Agreement is February 1, 1993.
2. The Employee, in consideration of the promises and agreements of
the Company herein contained, hereby promises to continue in the employ of
the Company for a period of one (1) year from the date of February 1, 1993,
as an Executive and Officer of the Company and to perform such duties as
may be required of him in such capacities by the Company, faithfully,
honestly, diligently and to the satisfaction of the Company. Said
employment shall continue for additional periods of one (1) year each
until termination by mutual consent, death, or by either party giving
ninety (90) days written notice to either amend or terminate this
Employment Agreement to the other party prior to the termination of any
such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay
the Employee a base salary of TWO HUNDRED FIFTY THOUSAND AND 00/100
DOLLARS ($250,000.00) per year, payable from time to time during each
employment year.
4. In consideration of this Employment Agreement, if the Employee
dies while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty
percent (50%) of the base salary stated above of said Employee plus fifty
percent (50%) of the average bonuses granted to the Employee during the
five (5) calendar years preceding his death. Such payment to be of five
(5) years following the decease of said Employee; said sum to be payable
in quarterly installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands the day
and year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Albert B. Ratner
-------------------------------------
ALBERT B. RATNER, President
By: /s/ Thomas G. Smith
-------------------------------------
THOMAS G. SMITH, Secretary
/s/ James A. Ratner
------------------------------------
JAMES A. RATNER, Employee
<PAGE> 1
Exhibit 10.16
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as
of the 30th day of March, 1993, by and between FOREST CITY ENTERPRISES, INC.,
an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and RONALD A. RATNER of 17300 Parkland
Drive, Shaker Heights, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the
Employment Agreement effective as of April 29, 1987 and enter into a new
Employment Agreement to be effective as of February 1, 1993, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of February 1, 1993.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated April 29, 1987 is hereby
terminated as of February 1, 1993, and that the effective date of this
Employment Agreement is February 1, 1993.
2. The Employee, in consideration of the promises and agreements of the
Company herein contained, hereby promises to continue in the employ of the
Company for a period of one (1) year from the date of February 1, 1993, as
an Executive and Officer of the Company and to perform such duties as may
be required of him in such capacities by the Company, faithfully, honestly,
diligently and to the satisfaction of the Company. Said employment shall
continue for additional periods of one (1) year each until termination by
mutual consent, death, or by either party giving nintey (90) days written
notice to either amend or terminate this Employment Agreement to the other
party prior to the termination of any such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay
the Employee a base salary of TWO HUNDRED FIFTY THOUSAND AND 00/100
DOLLARS ($250,000.00) per year, payable from time to time during each
employment year.
4. In consideration of this Employment Agreement, if the Employee dies
while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty
percent (50%) of the base salary stated above of said Employee plus fifty
percent (50%) of the average bonuses granted to the Employee during the
five (5) calendar years preceding his death. Such payment to be of five (5)
years following the decease of said Employee; said sum to be payable in
quarterly installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Albert B. Ratner
------------------------------------
ALBERT B. RATNER, President
By: /s/ Thomas G. Smith
-------------------------------------
THOMAS G. SMITH, Secretary
/s/ Ronald A. Ratner
------------------------------------
RONALD A. RATNER, Employee
<PAGE> 1
Exhibit 10.17
AGREEMENT
---------
THIS AGREEMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as
of the 1st day of February, 1994, by and between FOREST CITY ENTERPRISES,
INC., an Ohio corporation, of 10800 Brookpark Road, Cleveland, Ohio 44130,
hereinafter referred to as "Company", and CHARLES A. RATNER of 16980 South
Park Boulevard, Shaker Heights, Ohio, hereinafter referred to as "Employee".
WHEREAS, the Company and the Employee desire to terminate the Employment
Agreement effective as of February 1, 1991 and enter into a new Employment
Agreement to be effective as of February 1, 1994, and
WHEREAS, the Compensation Committee of this Company has recommended a
change in salary for the Employee to be effective as of February 1, 1994.
NOW, THEREFORE, it is agreed that:
1. That the Employment Agreement dated February 1, 1991 is hereby
terminated as of February 1, 1994, and that the effective date of this
Employment Agreement is February 1, 1994.
2. The Employee, in consideration of the promises and agreements of the
Company herein contained, hereby promises to continue in the employ of the
Company for a period of one (1) year from the date of February 1, 1994, as
an Executive and Officer of the Company and to perform such duties as may
be required of him in such capacities by the Company, faithfully, honestly,
diligently and to the satisfaction of the Company. Said employment shall
continue for additional periods of one (1) year each until termination by
mutual consent, death, or by either party giving ninety (90) days written
notice to either amend or terminate this Employment Agreement to the other
party prior to the termination of any such one (1) year period.
3. In consideration whereof, the company promises and agrees to pay the
Employee a base salary of THREE HUNDRED TWENTY-FIVE THOUSAND AND 00/100
DOLLARS ($325,000.00) per year, payable from time to time during each
employment year.
4. In consideration of this Employment Agreement, if the Employee dies
while in the employ of the Company, the Company agrees to pay to the
beneficiaries of the Employee as stipulated in his Will, or designated by
written notice to the Company from the Employee during his lifetime, or
designated by operation of law if the Employee dies intestate, fifty percent
(50%) of the base salary stated above of said Employee plus fifty percent
(50%) of the average bonuses granted to the Employee during the five (5)
calendar years preceding his death. Such payment to be of five (5) years
following the decease of said Employee; said sum to be payable in quarterly
installments to said beneficiaries of said deceased Employee.
5. It is mutually agreed by and between the parties hereto that the
Company may cancel or terminate this Employment Agreement at any time prior
to the expiration of said one (1) year period, or any renewal thereof,
without notice, for any conduct on the part of the Employee which injures
the Company's business, such as, but not limited to, intemperance,
negligence, failure to follow instructions or perform and fulfill the
obligations on the Employee's part to be performed hereunder to the
satisfaction of the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands this 10th
day of May, 1994.
FOREST CITY ENTERPRISES, INC.
By: /s/ Albert B. Ratner
-------------------------------
ALBERT B. RATNER, Vice Chairman
of the Board
By: /s/ Thomas G. Smith
-------------------------------
THOMAS G. SMITH, Secretary
/s/ Charles A. Ratner
-------------------------------
CHARLES A. RATNER, Employee
<PAGE> 1
Exhibit 10.18
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT MADE AND ENTERED INTO at Cleveland, Ohio effective as
of this 6th day of December, 1996, by and between FOREST CITY ENTERPRISES, INC.
the "Company" and CHARLES A. RATNER the "Employee" to an Agreement between said
parties dated February 1, 1994.
WHEREAS, the Board of Directors of the Company have authorized the Company
to purchase a "Split Dollar" Insurance Policy on the life of the Employee.
NOW, THEREFORE, it is agreed that:
1. The Employment Agreement dated February 1, 1994 is amended to provide
that the Company purchase a TEN MILLION AND 00/100 DOLLAR ($10,000,000.00)
"Split Dollar" Insurance Policy on the life of the Employee in accordance with
the terms of a Split Dollar Insurance Agreement And Assignment Of Life Insurance
Policy As Collateral dated 24th day of October, 1996 between the Company and the
Employee.
2. In all other respects the Employment Agreement dated February 1, 1994 is
in full force and in effect except as amended hereby.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and year
first above written.
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
------------------------------------
Thomas G. Smith, Secretary
/s/ Charles A. Ratner
------------------------------------
CHARLES A. RATNER, Employee
<PAGE> 1
Exhibit 10.19
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 26th day of June, 1996
at Cleveland, Ohio, by and between DEBORAH RATNER SALZBERG (hereinafter referred
to as the "Owner"), and FOREST CITY ENTERPRISES, INC., an Ohio corporation
(hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the lives of
Albert Ratner and Audrey Ratner (hereinafter individually referred to as an
"Insured" and collectively referred to as the "Insureds") in the principal
amount of $2,500,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments othe Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. DEFINITIONS. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of second-to-die insurance on the
lives of the Insured issued by the Insurer, together
with any supplementary contracts issued by the Insurer
in conjunction therewith: Policy No. 13887204; Face
Amount: $2.5 million.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an amount
equal to the LESSER of the "Cash Surrender Value" of the
Policy or the Assignee's "Premium Interest"; provided,
if the survivor of the Insureds dies while this
Agreement is in effect, the Assignee's Policy Interest
shall be an amount equal to 1.10 times the Assignee's
Premium Interest in the Policy; provided further, if the
survivor of the Insureds dies within two years after the
Owner terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy or the
Premium Interest of the Assignee), then the Owner also
shall pay to the Assignee the amount (if any) by which
(i) 1.10 times the Assignee's Premium Interest, exceeds
(ii) the amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by filing
with the Insurer a copy of this Agreement, along with a
collateral assignment in the form prescribed by the
Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value of the
Policy; plus the cash value of any paid up additions;
plus any dividend accumulations and unpaid dividends;
and less any Policy loans outstanding to Assignee
(including any accrued interest on such loans). The
"Premium Interest" shall be equal to the cumulative
amount of unreimbursed premiums paid on the Policy by
the Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as
follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the then-living Insureds ages (on a
last-to-die
-2-
<PAGE> 3
basis, while both are alive) multiplied by the excess of the current
death benefit over the Assignee's current Premium Interest. The
Insurer's "current term rate" shall mean the lesser of (a) the Insurer's
current published premium rates charged by the Insurer for individual
one-year last-to-die (or single-life, as applicable) term life insurance
(available generally to all comparable policyholders of the Insurer), or
(b) the cost of comparable one-year term insurance as published or
approved from time to time by the Internal Revenue Service or (if no
such IRS-approved tables are in effect) as generally used in the
insurance industry (e.g., for last-to-die policies, with both Insureds
living, the so-called "US 38 rates"). The Owner's premium contribution
check (or checks) shall be delivered to the Insurer on or before each
premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the survivor of the Insureds or, if
earlier, until the termination of this Agreement. The Assignee's premium
contribution check shall be delivered to the Insurer on or before each
premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
-3-
<PAGE> 4
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and
subparagraph b of this Section, the Owner shall have all the rights of
the "Owner" under the terms of the Policy, including but not limited to
the right to designate beneficiaries, select settlement options and to
surrender the Policy; provided, the Owner may surrender paid up
additions, borrow against the Policy or change dividend options on the
Policy only if and to the extent that, immediately after the Owner takes
such actions, the Cash Surrender Value of the Policy exceeds 110% of the
Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the
Assignee the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, at the death
of the survivor of the Insureds.
c. It is agreed that benefits may be paid under the
Policy by the Insurer either by separate checks to the parties
entitled thereto, or by a joint check. In the latter instance,
the Owner and the Assignee agree that the benefits shall be
divided as provided herein.
-4-
<PAGE> 5
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides written notice to the Assignee
of such assignment (identifying the name, address and telephone number of such
new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATHS OF THE INSUREDS. In the event of the death of the survivor of
the Insureds while this Agreement is in effect, a portion of the proceeds of the
Policy equal to the Policy Interest shall be paid to the Assignee and the
balance of the proceeds of the Policy
-5-
<PAGE> 6
shall be paid to the beneficiary or beneficiaries under the Policy (as their
interests may appear); provided, in computing the value of Assignee's Policy
Interest upon termination, Assignee shall be deemed to have repaid to Insurer
the amount of any outstanding Policy loans or advances to Assignee (including
accrued interest) immediately prior to such termination, and such deemed repaid
amount in turn shall be deemed to have been distributed to Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Deborah Ratner Salzberg
---------------------------
Deborah Ratner Salzberg
-6-
<PAGE> 1
Exhibit 10.20
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 26th day of June, 1996
at Cleveland, Ohio, by and between BRIAN J. RATNER (hereinafter referred to as
the "Owner"), and FOREST CITY ENTERPRISES, INC., an Ohio corporation
(hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the lives of
Albert Ratner and Audrey Ratner (hereinafter individually referred to as an
"Insured" and collectively referred to as the "Insureds") in the principal
amount of $2,500,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on
the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. DEFINITIONS. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of second-to-die insurance on the
lives of the Insured issued by the Insurer, together
with any supplementary contracts issued by the Insurer
in conjunction therewith: Policy No. 13886121; Face
Amount: $2.5 million.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an amount
equal to the LESSER of the "Cash Surrender Value" of the
Policy OR the Assignee's "Premium Interest"; provided,
if the survivor of the Insureds dies while this
Agreement is in effect, the Assignee's Policy Interest
shall be an amount equal to 1.10 times the Assignee's
Premium Interest in the Policy; provided further, if the
survivor of the Insureds dies within two years after the
Owner terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy or the
Premium Interest of the Assignee), then the Owner also
shall pay to the Assignee the amount (if any) by which
(i) 1.10 times the Assignee's Premium Interest, exceeds
(ii) the amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by filing
with the Insurer a copy of this Agreement, along with a
collateral assignment in the form prescribed by the
Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value of the
Policy; plus the cash value of any paid up additions;
plus any dividend accumulations and unpaid dividends;
and less any Policy loans outstanding to Assignee
(including any accrued interest on such loans). The
"Premium Interest" shall be equal to the cumulative
amount of unreimbursed premiums paid on the Policy by
the Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the then-living Insureds ages (on a
last-to-die
-2-
<PAGE> 3
basis, while both are alive) multiplied by the excess of the current
death benefit over the Assignee's current Premium Interest. The
Insurer's "current term rate" shall mean the lesser of (a) the Insurer's
current published premium rates charged by the Insurer for individual
one-year last-to-die (or single-life, as applicable) term life insurance
(available generally to all comparable policyholders of the Insurer), or
(b) the cost of comparable one-year term insurance as published or
approved from time to time by the Internal Revenue Service or (if no
such IRS-approved tables are in effect) as generally used in the
insurance industry (e.g., for last-to-die policies, with both Insureds
living, the so-called "US 38 rates"). The Owner's premium contribution
check (or checks) shall be delivered to the Insurer on or before each
premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the survivor of the Insureds or, if
earlier, until the termination of this Agreement. The Assignee's premium
contribution check shall be delivered to the Insurer on or before each
premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
-3-
<PAGE> 4
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and
subparagraph b of this Section, the Owner shall have all the rights of
the "Owner" under the terms of the Policy, including but not limited to
the right to designate beneficiaries, select settlement options and to
surrender the Policy; provided, the Owner may surrender paid up
additions, borrow against the Policy or change dividend options on the
Policy only if and to the extent that, immediately after the Owner takes
such actions, the Cash Surrender Value of the Policy exceeds 110% of the
Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the
Assignee the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or
advances on the Policy to the extent of the Assignee's
Policy Interest and to pledge or assign the Policy for
such loans or advances.
(ii) The right to realize against the Cash
Surrender Value of the Policy to the extent of the
Assignee's Policy Interest, in the event of termination
of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds
of the Policy to the extent of Assignee's Policy
Interest, at the death of the survivor of the Insureds.
c. It is agreed that benefits may be paid under the
Policy by the Insurer either by separate checks to the parties
entitled thereto, or by a joint check. In the latter instance,
the Owner and the Assignee agree that the benefits shall be
divided as provided herein.
-4-
<PAGE> 5
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides written notice to the Assignee
of such assignment (identifying the name, address and telephone number of such
new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATHS OF THE INSUREDS. In the event of the death of the survivor of
the Insureds while this Agreement is in effect, a portion of the proceeds of the
Policy equal to the Policy Interest shall be paid to the Assignee and the
balance of the proceeds of the Policy
-5-
<PAGE> 6
shall be paid to the beneficiary or beneficiaries under the Policy (as their
interests may appear); provided, in computing the value of Assignee's Policy
Interest upon termination, Assignee shall be deemed to have repaid to Insurer
the amount of any outstanding Policy loans or advances to Assignee (including
accrued interest) immediately prior to such termination, and such deemed repaid
amount in turn shall be deemed to have been distributed to Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Brian J. Ratner
------------------------------
Brian J. Ratner
-6-
<PAGE> 1
Exhibit 10.21
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, OH 44130
Attention: Thomas G. Smith
Re: Split-Dollar Insurance Agreement
--------------------------------
Dear Tom:
This letter supplements the Split-Dollar Insurance Agreement and
Assignment of Life Insurance as Collateral (the "Agreement") dated June 26, 1996
between Forest City Enterprises, Inc. ("FCE") and the undersigned, with respect
to a certain second-to-die Northwestern Mutual Life Insurance Policy (the
"Policy") identified in such Agreement, insuring the lives of Albert Ratner and
Audrey Ratner.
Pursuant to Section 2 of the Agreement, FCE is obligated to pay
a portion of the annual premiums on the Policy each year the Agreement is in
effect, and Policy dividends are to be applied to purchase paid-up additions
(unless otherwise applied at the direction of the undersigned pursuant to
Section 3 of the Agreement).
If the financial performance of the Policy meets or exceeds the
projections attached hereto as Exhibit 1 (the "Projections") during any period
on or after the date when 15 annual premium payments have been made on the
Policy under the Agreement, then it has been (and is hereby) agreed between FCE
and the undersigned that, only during such period on or after such date that the
Policy meets or exceeds the Projections, (i) the undersigned shall waive premium
payments by FCE under the Agreement, and (ii) the undersigned shall elect to
apply Policy dividends when and as necessary to reduce premiums to keep the
Policy in force without premium payments by FCE during such period.
The terms of this letter are effective, along with the
Agreement, as of June 26, 1996.
Sincerely yours,
/s/ Brian J. Ratner December 6, 1996
---------------------------------------
Brian J. Ratner Date
Acknowledged and Agreed:
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
-------------------------
Title
Senior Vice President,
Chief Financial Officer,
and Secretary
<PAGE> 2
<TABLE>
<CAPTION>
EXHIBIT 1
Page 1 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 116984 3915 119333 116984 66619 2526086 3915 1566 3915 1566 0
2 116211 4688 119024 233195 178195 2547985 4688 1675 4688 1875 0
3 115305 5594 118662 348501 300293 2566079 5594 2238 5594 2238 0
4 114241 6658 118236 462742 431368 2580785 6658 2663 6658 2663 0
5 112992 7907 117737 575734 571927 2392540 7907 3163 7907 3163 0
6 111507 9393 117142 697241 687241 2601832 9393 3757 9393 3757 35327
7 109735 11141 116443 796999 796999 2609167 11141 4436 11141 4456 86979
8 107693 13206 115617 904693 904693 2615087 13206 5282 13206 5282 152119
9 105231 15669 114632 1009923 1009923 2620196 15669 6268 15669 6268 231982
10 102340 18560 113476 1112263 1112263 2625109 18560 7424 18560 7424 327738
------- ------- ------- ------- ------- ------- -------
1112263 96732 1170302 95,732 38693 96732 38693
11 98935 21965 112114 1211198 1211198 2630507 21965 8786 21965 8786 440405
12 94897 26003 110498 1306095 1306095 2637184 26003 1040* 26003 10401 573841
13 90099 30800 108379 1396195 1396195 2646055 30800 12320 30800 12320 725597
14 84430 36470 106312 1480624 1480624 2658148 36470 14388 36470 14588 896855
15 77248 43651 103439 1557873 1557873 2699320 43651 17460 43651 17460 1089485
16 0 0 0 1557873 1557873 2818042 53684 21473 0 21473 1256118
17 0 0 0 1557873 1557873 2945718 65984 26984 0 26394 1430906
18 0 0 -1557873 0 0 2500126 0 0 0 0 1581539
19 0 0 0 0 0 2542364 0 0 0 0 1665282
20 0 0 0 0 0 2586660 0 0 0 0 1731607
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 130115
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT 1
Page 2 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 0 0 0 0 0 2632383 0 0 0 0 1840781
22 0 0 0 0 0 2678991 0 0 0 0 1933313
23 0 0 0 0 0 2729179 0 0 0 0 2032594
24 0 0 0 0 0 2783047 0 0 0 0 2140166
25 0 0 0 0 0 2841125 0 0 0 0 2258127
26 0 0 0 0 0 2904463 0 0 0 0 2388752
27 0 0 0 0 0 2973292 0 0 0 0 2334709
28 0 0 0 0 0 3057641 0 0 0 0 2699738
29 0 0 0 0 0 3157620 0 0 0 0 2889937
30 0 0 0 0 0 3283612 0 0 0 0 3075922
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 150115
31 0 0 0 0 0 3495454 0 0 0 0 3495454
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 150115
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT 1
Page 3 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5 6 7 8 9
END ANNUAL ------- CASH VALUES -------
OF TOTAL CASH TOTAL ANNUAL PAID-UP
YEAR INSURANCE* OUTLAY* PAYMENTS* PREMIUM* DIVIDENDS* TOTAL* AP/LS* GUAR. INSURANCE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2643070 120900 120900 120900 4449 71068 66619 0 152625
2 2781180 120900 241799 120900 11763 189958 133351 38037 394039
3 2914580 120900 362699 120900 17609 317903 206763 76595 637425
4 3043527 120900 483598 120900 24033 455402 280199 113461 883384
5 3168274 120900 604498 120900 31095 603022 353769 154468 1132713
6 3289073 120900 725397 120900 38786 761354 453374 193464 1386246
7 3406166 120900 846297 120900 47028 931006 512926 232419 1644771
8 3519779 120900 967196 120900 55866 1112678 594357 271286 1909096
9 3630119 120900 1088096 120900 65255 1307160 677630 310128 2180017
10 3737372 120900 1208995 120900 75107 1515108 762703 348957 2458035
11 3841705 120900 1329895 120900 88183 1739786 849473 387725 2747913
12 3943279 120900 1450794 120900 98451 1978386 937828 426294 3044655
13 4042249 120900 1571694 120900 109453 2231244 1027538 464419 3348909
14 4163158 120900 1692593 120900 121324 2498802 1118363 501875 3661571
15 4375915 120900 1813493 120900 134130 2730113 1210037 538429 3910049
16 4503591 0 1813493 51376 142486 2905101 1236691 574029 4070993
17 4638299 0 1813493 51376 149523 3086926 1262669 608740 4236791
18 2542364 -1557873 255620 51376 82769 1612933 0 642695 2170050
19 2586660 0 255620 51376 84940 1698846 0 676168 2242021
20 2632383 0 255620 51376 86679 1786910 0 709693 2314261
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT 1
Page 4 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC ACCOUNT............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5 6 7 8 9
END ANNUAL ------- CASH VALUES -------
OF TOTAL CASH TOTAL ANNUAL PAID-UP
YEAR INSURANCE* OUTLAY* PAYMENTS* PREMIUMS DIVIDENDS* TOTAL* AP/LS* GUAR. INSURANCE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 2678991 0 255,620 51376 88039 1877445 0 743103 2386633
22 2729179 0 255,620 51376 91601 1973539 0 777528 2462246
23 2783047 0 255,620 51376 95387 2076605 0 813438 2541651
24 2841125 0 255,620 51376 99783 2188373 0 851550 2625793
25 2904463 0 255,620 51376 105290 2312042 0 892631 2716088
26 2975292 0 255,620 51376 113031 2450408 0 937225 2814943
27 3057641 0 255,620 51376 124773 2608107 0 985369 2926182
28 3157620 0 255,620 51376 142702 2791065 0 1036655 3055486
29 3283610 0 255,620 51376 169403 3007964 0 1090700 3210892
30 3495454 0 255,620 51376 253131 3277677 0 1126771 3441564
31 3608157 0 255,620 51376 112703 3608157 0 1237000 3608157
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT 1
Page 5 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
10 11 12 13 14 15 16 17 18
END -------------------TOTAL INSURANCE------------------- --------------ANNUAL PREMIUM----------------
OF BASIC ----ADDITIONAL PROTECTION----- OUTSIDE BASIC --ADD. PROTECTION-- ADD. PREV.
YEAR AMOUNT TOTAL* TERMS* ADDITIONS* ADDITIONS* AMOUNT TERM* AP INSIDE* OUTSIDE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1237000 1263000 1253445 9535 143070 51376 0 0 69524
2 1237000 1263000 1229044 33956 281180 51376 0 0 69524
3 1237000 1263000 1193735 69265 414580 51376 0 0 69524
4 1237000 1263000 1147114 115886 543527 51376 0 0 69524
5 1237000 1263000 1088705 174295 668274 51376 0 0 69524
6 1237000 1263000 1018084 244916 789073 51376 0 0 69524
7 1237000 1263000 935001 327999 906166 51376 0 0 69524
8 1237000 1263000 839147 423853 1019779 51376 0 0 69524
9 1237000 1263000 730318 532682 1130119 51376 0 0 69524
10 1237000 1263000 608468 634532 1237372 51376 0 0 69524
11 1237000 1263000 469186 793814 1341705 51376 0 0 69524
12 1237000 1263000 317674 945326 1443279 51376 0 0 69524
13 1237000 1263000 153394 1109606 1542249 51376 0 0 69524
14 1237000 1263000 0 1263000 1663158 51376 0 0 69524
15 1237000 1263000 0 1263000 1875915 51376 0 0 69524
16 1237000 1263000 0 1263000 2003591 51376 0 0 0
17 1237000 1263000 0 1263000 2138299 51376 0 0 0
18 1237000 1263000 0 1263000 42364 51376 0 0 0
19 1237000 1263000 0 1263000 86660 51376 0 0 0
20 1237000 1263000 0 1263000 132383 51376 0 0 0
- --------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT 1
Page 6 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
10 11 12 13 14 15 16 17 18
END -------------------TOTAL INSURANCE------------------- ---------------BASIC PREMIUM----------------
OF BASIC ----ADDITIONAL PROTECTION----- OUTSIDE BASIC --ADD. PROTECTION-- ADD. PREV.
YEAR AMOUNT TOTAL* TERM* ADDITIONS* ADDITIONS* AMOUNT TERM* AP INSIDE* OUTSIDE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 1237000 1263000 0 1263000 178991 51376 0 0 0
22 1237000 1263000 0 1263000 229179 51376 0 0 0
23 1237000 1263000 0 1263000 283047 51376 0 0 0
24 1237000 1263000 0 1263000 341123 51376 0 0 0
25 1237000 1263000 0 1263000 404463 51376 0 0 0
26 1237000 1263000 0 1263000 475292 51376 0 0 0
27 1237000 1263000 0 1263000 557643 51376 0 0 0
28 1237000 1263000 0 1263000 657620 51376 0 0 0
29 1237000 1263000 0 1263000 783610 51376 0 0 0
30 1237000 1263000 0 1263000 995454 51376 0 0 0
31 1237000 1263000 0 1263000 1108157 51376 0 0 0
- --------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 1
Exhibit 10.22
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, OH 44130
Attention: Thomas G. Smith
Re: Split-Dollar Insurance Agreement
--------------------------------
Dear Tom:
This letter supplements the Split-Dollar Insurance Agreement and
Assignment of Life Insurance as Collateral (the "Agreement") dated June 26, 1996
between Forest City Enterprises, Inc. ("FCE") and the undersigned, with respect
to a certain second-to-die Northwestern Mutual Life Insurance Policy (the
"Policy") identified in such Agreement, insuring the lives of Albert Ratner and
Audrey Ratner.
Pursuant to Section 2 of the Agreement, FCE is obligated to pay
a portion of the annual premiums on the Policy each year the Agreement is in
effect, and Policy dividends are to be applied to purchase paid-up additions
(unless otherwise applied at the direction of the undersigned pursuant to
Section 3 of the Agreement).
If the financial performance of the Policy meets or exceeds the
projections attached hereto as Exhibit 1 (the "Projections") during any period
on or after the date when 15 annual premium payments have been made on the
Policy under the Agreement, then it has been (and is hereby) agreed between FCE
and the undersigned that, only during such period on or after such date that the
Policy meets or exceeds the Projections, (i) the undersigned shall waive premium
payments by FCE under the Agreement, and (ii) the undersigned shall elect to
apply Policy dividends when and as necessary to reduce premiums to keep the
Policy in force without premium payments by FCE during such period.
The terms of this letter are effective, along with the
Agreement, as of June 26, 1996.
Sincerely yours,
/s/ Deborah Ratner Salzberg 12/11/96
------------------------------------
Deborah Ratner Salzberg Date
Acknowledged and Agreed:
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
----------------------------------
Title Senior Vice President, Chief Financial
Officer, and Secretary
<PAGE> 2
<TABLE>
<CAPTION>
EXHIBIT 1
Page 1 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 116984 3915 119333 116984 66619 2526086 3915 1566 3915 1566 0
2 116211 4688 119024 233195 178195 2547985 4688 1875 4688 1875 0
3 115305 5594 118662 348501 300293 2566079 5594 2238 5594 2238 0
4 114241 6658 118236 462742 431368 2580785 6658 2663 6658 2663 0
5 112992 7907 117737 575734 571927 2592560 7907 3163 7907 3163 0
6 111507 9393 117142 687241 687241 2601832 9393 3757 9393 3757 35327
7 109735 11141 116443 796999 796999 2609167 11141 4456 11141 4456 86979
8 107693 13206 115617 904693 904693 2615087 13206 5282 13206 5282 152119
9 105231 15669 114632 1009923 1009923 2620196 15669 6268 15669 6268 231982
10 102340 18560 113476 1112263 1112263 2625109 18560 7424 18560 7424 327738
------- ------- ------- ------- ------- ------- -------
1112263 96732 1170302 95,732 38693 96732 38693
11 98935 21965 112114 1211198 1211198 2630507 21965 8786 21965 8786 440405
12 94897 26003 110498 1306095 1306095 2637184 26003 10401 26003 10401 573841
13 90099 30800 108579 1396195 1396195 2646055 30800 12320 30800 12320 725597
14 84430 36470 106312 1480624 1480624 2658148 36470 14588 36470 14588 896855
15 77248 43651 103439 1557873 1557873 2699520 43651 17460 43651 17460 1089485
16 0 0 0 1557873 1557873 2818042 53684 21473 0 21473 1256118
17 0 0 0 1557873 1557873 2945718 65984 26394 0 26394 1430906
18 0 0 -1557873 0 0 2500126 0 0 0 0 1581539
19 0 0 0 0 0 2542364 0 0 0 0 1665282
20 0 0 0 0 0 2586660 0 0 0 0 1731607
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 150115
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT 1
Page 2 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 0 0 0 0 0 2632383 0 0 0 0 1840781
22 0 0 0 0 0 2678991 0 0 0 0 1933313
23 0 0 0 0 0 2729179 0 0 0 0 2032594
24 0 0 0 0 0 2783047 0 0 0 0 2140166
25 0 0 0 0 0 2841125 0 0 0 0 2258127
26 0 0 0 0 0 2904463 0 0 0 0 2388752
27 0 0 0 0 0 2973292 0 0 0 0 2334709
28 0 0 0 0 0 3057641 0 0 0 0 2699738
29 0 0 0 0 0 3157620 0 0 0 0 2889937
30 0 0 0 0 0 3283612 0 0 0 0 3075922
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 150115
31 0 0 0 0 0 3495454 0 0 0 0 3495454
------- ------- ------- ------- ------- ------- -------
1557873 255620 153372 375288 150115 255620 150115
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT 1
Page 3 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5 6 7 8 9
END ANNUAL ------- CASH VALUES -------
OF TOTAL CASH TOTAL ANNUAL PAID-UP
YEAR INSURANCE* OUTLAY* PAYMENTS* PREMIUM* DIVIDEND* TOTAL* AP/LS* GUAR. INSURANCE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2643070 120900 120900 120900 4449 71068 66619 0 152625
2 2781180 120900 241799 120900 11763 189958 133351 38037 394039
3 2914580 120900 362699 120900 17609 317903 206763 76595 637425
4 3043527 120900 483598 120900 24033 455402 280199 113461 883384
5 3168274 120900 604498 120900 31095 603022 353769 154468 1132713
6 3289073 120900 725397 120900 38786 761354 453374 193466 1386246
7 3406166 120900 846297 120900 47028 931006 512926 232419 1644771
8 3519779 120900 967196 120900 55866 1112678 594357 271286 1909096
9 3630119 120900 1088096 120900 65255 1307160 677630 310128 2180017
10 3737372 120900 1208995 120900 75107 1515108 762703 348957 2458035
11 3841705 120900 1329895 120900 88183 1739786 849473 387725 2747913
12 3943279 120900 1450794 120900 98451 1978386 937828 426294 3044655
13 4042249 120900 1571694 120900 109453 2231244 1027538 464419 3348909
14 4163158 120900 1692593 120900 121324 2498802 1118363 501875 3661571
15 4375915 120900 1813493 120900 134130 2730113 1210037 538429 3910049
16 4503591 0 1813493 51376 142486 2905101 1236691 574029 4070993
17 4638299 0 1813493 51376 149523 3086926 1262669 608740 4236791
18 2542364 -1557873 255620 51376 82769 1612933 0 642695 2170050
19 2586660 0 255620 51376 84940 1698846 0 676168 2242021
20 2632383 0 255620 51376 86679 1786910 0 709693 2314261
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT 1
Page 4 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5 6 7 8 9
END ANNUAL ------- CASH VALUES -------
OF TOTAL CASH TOTAL ANNUAL PAID-UP
YEAR INSURANCE* OUTLAY* PAYMENTS* PREMIUM* DIVIDEND* TOTAL* AP/LS* GUAR. INSURANCE*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 2678991 0 255,620 51376 88039 1877445 0 743103 2386633
22 2729179 0 255,620 51376 91601 1973539 0 777528 2462246
23 2783047 0 255,620 51376 95387 2076605 0 813438 2541651
24 2841125 0 255,620 51376 99783 2188373 0 851550 2625793
25 2904463 0 255,620 51376 105290 2312042 0 892631 2716088
26 2975292 0 255,620 51376 113031 2450408 0 937225 2814943
27 3057641 0 255,620 51376 124773 2608107 0 985369 2926182
28 3157620 0 255,620 51376 142702 2791065 0 1036655 3055486
29 3283610 0 255,620 51376 169403 3007964 0 1090700 3210892
30 3495454 0 255,620 51376 253131 3277677 0 1126771 3441564
31 3608157 0 255,620 51376 112703 3608157 0 1237000 3608157
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT 1
Page 5 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
10 11 12 13 14 15 16 17 18
END -------------------TOTAL INSURANCE------------------- --------------ANNUAL PREMIUM----------------
OF BASIC ----ADDITIONAL PROTECTION----- OUTSIDE BASIC --ADD. PROTECTION-- ADD. PREV.
YEAR AMOUNT TOTAL* TERM* ADDITIONS* ADDITIONS* AMOUNT TERM* AP INSIDE* OUTSIDE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1237000 1263000 1253445 9535 143070 51376 0 0 69524
2 1237000 1263000 1229044 33956 281180 51376 0 0 69524
3 1237000 1263000 1193735 69265 414580 51376 0 0 69524
4 1237000 1263000 1147114 115886 543527 51376 0 0 69524
5 1237000 1263000 1088705 174295 668274 51376 0 0 69524
6 1237000 1263000 1018084 244916 789073 51376 0 0 69524
7 1237000 1263000 935001 327999 906166 51376 0 0 69524
8 1237000 1263000 839147 423853 1019779 51376 0 0 69524
9 1237000 1263000 730318 532682 1130119 51376 0 0 69524
10 1237000 1263000 608468 634532 1237372 51376 0 0 69524
11 1237000 1263000 469186 793814 1341705 51376 0 0 69524
12 1237000 1263000 317674 945326 1443279 51376 0 0 69524
13 1237000 1263000 153394 1109606 1542249 51376 0 0 69524
14 1237000 1263000 0 1263000 1663158 51376 0 0 69524
15 1237000 1263000 0 1263000 1875915 51376 0 0 69524
16 1237000 1263000 0 1263000 2003591 51376 0 0 0
17 1237000 1263000 0 1263000 2138299 51376 0 0 0
18 1237000 1263000 0 1263000 42364 51376 0 0 0
19 1237000 1263000 0 1263000 86660 51376 0 0 0
20 1237000 1263000 0 1263000 132383 51376 0 0 0
- --------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT 1
Page 6 of 6
$2,500,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR AUDREY RATNER AGE 67 FEMALE. BASIC AMOUNT.............. $1,237,000
ALBERT RATNER AGE 68 MALE. ADDITIONAL PROTECTION..... $1,263,000**
INITIAL ANNUAL PREMIUM $120,899.50 (INCLUDES $69,524.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 14 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
10 11 12 13 14 15 16 17 18
END -------------------TOTAL INSURANCE------------------- --------------ANNUAL PREMIUM----------------
OF BASIC ----ADDITIONAL PROTECTION----- OUTSIDE BASIC --ADD. PROTECTION-- ADD. PREV.
YEAR AMOUNT TOTAL* TERM* ADDITIONS* ADDITIONS* AMOUNT TERM* AP INSIDE* OUTSIDE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 1237000 1263000 0 1263000 178991 51376 0 0 0
22 1237000 1263000 0 1263000 229179 51376 0 0 0
23 1237000 1263000 0 1263000 283047 51376 0 0 0
24 1237000 1263000 0 1263000 341123 51376 0 0 0
25 1237000 1263000 0 1263000 404463 51376 0 0 0
26 1237000 1263000 0 1263000 475292 51376 0 0 0
27 1237000 1263000 0 1263000 557643 51376 0 0 0
28 1237000 1263000 0 1263000 657620 51376 0 0 0
29 1237000 1263000 0 1263000 783610 51376 0 0 0
30 1237000 1263000 0 1263000 995454 51376 0 0 0
31 1237000 1263000 0 1263000 1108157 51376 0 0 0
- --------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM STANDARD PLUS/STANDARD PLUS 1 MN 09/10/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 091096-143152 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 1
Exhibit 10.23
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 2nd day of Nov., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Charles Ratner 1992 Irrevocable Trust Agreement dated March 12, 1992
(hereinafter referred to as the "Owner"), and FOREST CITY ENTERPRISES, INC., an
Ohio corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner now owns a life insurance policy (hereinafter
referred to and defined as "the Policy") on the lives of Charles Ratner and
Ilana Horowitz Ratner (hereinafter individually referred to as an "Insured" and
collectively referred to as the "Insureds") in the principal amount of
$5,000,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
<PAGE> 2
1. DEFINITIONS. In this Agreement:
a. INSURER.The "Insurer" is Northwestern Mutual Life
Insurance Company.
b. THE POLICY.
The following policy of second-to-die insurance
on the lives of the Insured issued by the
Insurer, together with any supplementary
contracts issued by the Insurer in conjunction
therewith: Policy No. 12110582; Face Amount:
$5.0 million.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the survivor of
the Insureds dies while this Agreement is in
effect, the Assignee's Policy Interest shall be
an amount equal to 1.10 times the Assignee's
Premium Interest in the Policy; provided
further, if the survivor of the Insureds dies
within two years after the Owner terminates this
Agreement (by paying to Assignee the LESSER of
Cash Surrender Value of the Policy or the
Premium Interest of the Assignee), then the
Owner also shall pay to the Assignee the amount
(if any) by which (i) 1.10 times the Assignee's
Premium Interest, exceeds (ii) the amount paid
by the Owner to the Assignee to terminate this
Agreement. The existence of the Assignee's
Policy Interest shall be evidenced by filing
with the Insurer a copy of this Agreement, along
with a collateral assignment in the form
prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due
as follows:
-2-
<PAGE> 3
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the then-living Insureds ages (on a
last-to-die basis, while both are alive) multiplied by the excess of the
current death benefit over the Assignee's current Premium Interest. The
Insurer's "current term rate" shall mean the lesser of (a) the Insurer's
current published premium rates charged by the Insurer for individual
one-year last-to-die (or single-life, as applicable) term life insurance
(available generally to all comparable policyholders of the Insurer), or
(b) the cost of comparable one-year term insurance as published or
approved from time to time by the Internal Revenue Service or (if no
such IRS-approved tables are in effect) as generally used in the
insurance industry (e.g., for last-to-die policies, with both Insureds
living, the so-called "US 38 rates"). The Owner's premium contribution
check (or checks) shall be delivered to the Insurer on or before each
premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the survivor of the Insureds or, if
earlier, until the termination of this Agreement. The Assignee's premium
contribution check shall be delivered to the Insurer on or before each
premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
-3-
<PAGE> 4
3. Policy Ownership.
a. Except as provided in, or limited by, Section 4 and
subparagraph b of this Section, the Owner shall have all the rights of
the "Owner" under the terms of the Policy, including but not limited to
the right to designate beneficiaries, select settlement options and to
surrender the Policy; provided, the Owner may surrender paid up
additions, borrow against the Policy or change dividend options on the
Policy only if and to the extent that, immediately after the Owner takes
such actions, the Cash Surrender Value of the Policy exceeds 110% of the
Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the
Assignee the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, at the death
of the survivor of the Insureds.
c. It is agreed that benefits may be paid under the
Policy by the Insurer either by separate checks to the parties
entitled thereto, or by a joint check. In the latter instance,
the Owner and the Assignee agree that the benefits shall be
divided as provided herein.
-4-
<PAGE> 5
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides written notice to the Assignee
of such assignment (identifying the name, address and telephone number of such
new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATHS OF THE INSUREDS. In the event of the death of the survivor of
the Insureds while this Agreement is in effect, a portion of the proceeds of the
Policy equal to the Policy Interest shall be paid to the Assignee and the
balance of the proceeds of the Policy
-5-
<PAGE> 6
shall be paid to the beneficiary or beneficiaries under the Policy (as their
interests may appear); provided, in computing the value of Assignee's Policy
Interest upon termination, Assignee shall be deemed to have repaid to Insurer
the amount of any outstanding Policy loans or advances to Assignee (including
accrued interest) immediately prior to such termination, and such deemed repaid
amount in turn shall be deemed to have been distributed to Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
--------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
------------------------------
Albert B. Ratner, Trustee u/a dtd 3/12/92
/s/ James Ratner
------------------------------
James Ratner, Trustee u/a dtd 3/12/92
-6-
<PAGE> 1
Exhibit 10.24
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996 at
Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Charles Ratner 1989 Irrevocable Trust Agreement dated May 9, 1989
f/b/o Rachel Ratner (hereinafter referred to as the "Owner"), and FOREST CITY
ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance policy
(hereinafter referred to and defined as "the Policy") on the life of Charles
Ratner (hereinafter referred to as the "Insured") in the principal amount of
$625,000;
WHEREAS, the Owner is willing to pay a portion of the premium payments
on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the remaining
premium payments, is willing to assign certain rights in the Policy to Assignee
and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that portion
of the premium payments which are not paid by the Owner if certain rights in the
Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement in order
to secure Assignee's repayment, out of the proceeds of the Policy, of the
portion of the premium payments paid by the Assignee and to grant certain other
rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency of which
are hereby acknowledged, the Owner and the Assignee mutually agree as follows:
1. DEFINITIONS. In this Agreement:
<PAGE> 2
a. Insurer.The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13908095; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the lesser of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the
Assignee the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, in the event
of the Insured's death.
c. It is agreed that benefits may be paid under the
Policy by the Insurer either by separate checks to the parties
entitled thereto, or by a joint check. In the latter instance,
the Owner and the Assignee agree that the benefits shall be
divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. Death of the Insured. In the event of the death of the Insured
while this Agreement is in effect, a portion of the proceeds of the Policy equal
to the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and
such deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. The Insurer. The Insurer shall be bound only by the provisions
of and endorsements on the Policy. The copy of this Agreement filed with the
Insurer shall constitute directives of the Owner to the Insurer and any payments
made or actions taken by it in accordance therewith shall fully discharge
Insurer from all claims, suits and demands of all persons whatsoever. Insurer
shall in no way be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
----------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
-----------------------------
Albert B. Ratner, Trustee u/a dtd 05/09/89
f/b/o Rachel Ratner
/s/ James Ratner
-----------------------------
James Ratner, Trustee u/a dtd 05/09/89
f/b/o Rachel Ratner
-6-
<PAGE> 1
Exhibit 10.25
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Max Ratner 1988 Grandchildren's Trust Agreement dated December 21,
1988 f/b/o Rachel Ratner (hereinafter referred to as the "Owner"), and FOREST
CITY ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as
"Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. DEFINITIONS. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life
Insurance Company.
b. THE POLICY.
The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13906896; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as
follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. Policy Ownership.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on the
Policy to the extent of the Assignee's Policy Interest and to pledge or
assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender Value of
the Policy to the extent of the Assignee's Policy Interest, in the event
of termination of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds of the Policy to
the extent of Assignee's Policy Interest, in the event of the Insured's
death.
c. It is agreed that benefits may be paid under the Policy by
the Insurer either by separate checks to the parties entitled thereto,
or by a joint check. In the latter instance, the Owner and the
Assignee agree that the benefits shall be divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and
such deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
-------------------------------
Albert B. Ratner, Trustee u/a dtd 12/21/88
f/b/o Rachel Ratner
/s/ James Ratner
-------------------------------
James Ratner, Trustee u/a dtd 12/21/88
f/b/o Rachel Ratner
-6-
<PAGE> 1
Exhibit 10.26
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Max Ratner 1988 Grandchildren's Trust Agreement dated December 21,
1988 f/b/o Kevin Ratner (hereinafter referred to as the "Owner"), and FOREST
CITY ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as
"Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. Definitions. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life
Insurance Company.
b. THE POLICY.
The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13907981; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate
beneficiaries, select settlement options and to surrender the Policy; provided,
the Owner may surrender paid up additions, borrow against the Policy or change
dividend options on the Policy only if and to the extent that, immediately after
the Owner takes such actions, the Cash Surrender Value of the Policy exceeds
110% of the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on the
Policy to the extent of the Assignee's Policy Interest and to pledge or
assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender Value of
the Policy to the extent of the Assignee's Policy Interest, in the event
of termination of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds of the Policy to
the extent of Assignee's Policy Interest, in the event of the Insured's
death.
c. It is agreed that benefits may be paid under the Policy by the
Insurer either by separate checks to the parties entitled thereto, or
by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and such
deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
----------------------------
Albert B. Ratner, Trustee u/a dtd 12/21/88
f/b/o Kevin Ratner
/s/ James Ratner
----------------------------
James Ratner, Trustee u/a dtd 12/21/88
f/b/o Kevin Ratner
-6-
<PAGE> 1
Exhibit 10.27
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Max Ratner 1988 Grandchildren's Trust Agreement dated December 21,
1988 f/b/o Jonathan Ratner (hereinafter referred to as the "Owner"), and FOREST
CITY ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as
"Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. Definitions. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life
Insurance Company.
b. THE POLICY. The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13908027; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on the
Policy to the extent of the Assignee's Policy Interest and to pledge or
assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender Value of
the Policy to the extent of the Assignee's Policy Interest, in the event
of termination of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds of the Policy to
the extent of Assignee's Policy Interest, in the event of the Insured's
death.
c. It is agreed that benefits may be paid under the Policy by the
Insurer either by separate checks to the parties entitled thereto, or
by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and such
deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
-----------------------------
Albert B. Ratner, Trustee u/a dtd 12/21/88
f/b/o Jonathan Ratner
/s/ James Ratner
-----------------------------
James Ratner, Trustee u/a dtd 12/21/88
f/b/o Jonathan Ratner
-6-
<PAGE> 1
Exhibit 10.28
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Trust dated December 17, 1990, f/b/o Adam Ratner held under Max Ratner
1988 Grandchildren's Trust Agreement dated December 21, 1988 (hereinafter
referred to as the "Owner"), and FOREST CITY ENTERPRISES, INC., an Ohio
corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
<PAGE> 2
1. DEFINITIONS. In this Agreement:
a. INSURER. The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of life insurance on the life of
the Insured issued by the Insurer, together with any
supplementary contracts issued by the Insurer in
conjunction therewith: Policy No. 13908061; Face Amount:
$625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an amount
equal to the LESSER of the "Cash Surrender Value" of the
Policy OR the Assignee's "Premium Interest"; provided,
if the Insured dies while this Agreement is in effect,
the Assignee's Policy Interest shall be an amount equal
to 1.10 times the Assignee's Premium Interest in the
Policy; provided further, if the Insured dies within two
years after the Owner terminates this Agreement (by
paying to Assignee the LESSER of Cash Surrender Value of
the Policy or the Premium Interest of the Assignee),
then the Owner also shall pay to the Assignee the amount
(if any) by which (i) 1.10 times the Assignee's Premium
Interest, exceeds (ii) the amount paid by the Owner to
the Assignee to terminate this Agreement. The existence
of the Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this Agreement, along
with a collateral assignment in the form prescribed by
the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value of the
Policy; plus the cash value of any paid up additions;
plus any dividend accumulations and unpaid dividends;
and less any Policy loans outstanding to Assignee
(including any accrued interest on such loans). The
"Premium Interest" shall be equal to the cumulative
amount of unreimbursed premiums paid on the Policy by
the Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as
follows:
-2-
<PAGE> 3
(i) The Owner shall pay a portion of each premium equal
to the Insurer's current term rate for the Insured's age,
multiplied by the excess of the current death benefit over the
Assignee's current Premium Interest. The Insurer's "current term
rate" shall mean the lesser of (a) the Insurer's current
published premium rates charged by the Insurer for individual
one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of
comparable one-year term insurance as published or approved from
time to time by the Internal Revenue Service or (if no such
IRS-approved tables are in effect) as generally used in the
insurance industry (e.g., for single-life policies, the
so-called "PS 58 rates"). The Owner's premium contribution check
(or checks) shall be delivered to the Insurer on or before each
premium due date.
(ii) The Assignee shall pay the remaining balance of
each premium due until the death of the Insured or, if earlier,
until the termination of this Agreement. The Assignee's premium
contribution check shall be delivered to the Insurer on or
before each premium due date.
(iii) For convenience, either the Assignee or the Owner
may pay the entire premium to the Insurer (by agreement between
the Owner and the Assignee), with reimbursement to be made
promptly by the nonpaying party to the other party, in the
amount of the premium contribution due from the nonpaying party
(as determined under clauses (i) and (ii) above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3
below.
-3-
<PAGE> 4
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the Policy, including but not limited to the right to designate
beneficiaries, select settlement options and to surrender the Policy; provided,
the Owner may surrender paid up additions, borrow against the Policy or change
dividend options on the Policy only if and to the extent that, immediately after
the Owner takes such actions, the Cash Surrender Value of the Policy exceeds
110% of the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on the
Policy to the extent of the Assignee's Policy Interest and to pledge or
assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender Value of
the Policy to the extent of the Assignee's Policy Interest, in the event
of termination of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds of the Policy to
the extent of Assignee's Policy Interest, in the event of the Insured's
death.
c. It is agreed that benefits may be paid under the Policy by
the Insurer either by separate checks to the parties entitled thereto,
or by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
-4-
<PAGE> 5
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides written notice to the Assignee
of such assignment (identifying the name, address and telephone number of such
new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to
-5-
<PAGE> 6
the beneficiary or beneficiaries under the Policy (as their interests may
appear); provided, in computing the value of Assignee's Policy Interest upon
termination, Assignee shall be deemed to have repaid to Insurer the amount of
any outstanding Policy loans or advances to Assignee (including accrued
interest) immediately prior to such termination, and such deemed repaid amount
in turn shall be deemed to have been distributed to Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
-----------------------------
Albert B. Ratner, Trustee u/t dtd 12/17/90
f/b/o Adam Ratner
/s/ James Ratner
-----------------------------
James Ratner, Trustee u/t dtd 12/17/90
f/b/o Adam Ratner
-6-
<PAGE> 1
Exhibit 10.29
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Charles Ratner 1989 Irrevocable Trust Agreement dated May 9, 1989
f/b/o Kevin Ratner (hereinafter referred to as the "Owner"), and FOREST CITY
ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. Definitions. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life
Insurance Company.
b. THE POLICY.
The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13908137; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the LESSER of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on the
Policy to the extent of the Assignee's Policy Interest and to pledge or
assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender Value of
the Policy to the extent of the Assignee's Policy Interest, in the event
of termination of this Agreement as provided in Section 5.
(iii) The right to realize against the proceeds of the Policy to
the extent of Assignee's Policy Interest, in the event of the Insured's
death.
c. It is agreed that benefits may be paid under the Policy by
the Insurer either by separate checks to the parties entitled thereto,
or by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
4. Assignment by the Owner. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and such
deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
-----------------------------------
Albert B. Ratner, Trustee u/a dtd 05/09/89
f/b/o Kevin Ratner
/s/ James Ratner
-----------------------------------
James Ratner, Trustee u/a dtd 05/09/89
f/b/o Kevin Ratner
-6-
<PAGE> 1
Exhibit 10.30
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Charles Ratner 1989 Irrevocable Trust Agreement dated May 9, 1989
f/b/o Jonathan Ratner (hereinafter referred to as the "Owner"), and FOREST CITY
ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. DEFINITIONS. In this Agreement:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of life insurance on the life of
the Insured issued by the Insurer, together with any
supplementary contracts issued by the Insurer in
conjunction therewith: Policy No. 13908384; Face
Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an amount
equal to the LESSER of the "Cash Surrender Value" of the
Policy OR the Assignee's "Premium Interest"; provided,
if the Insured dies while this Agreement is in effect,
the Assignee's Policy Interest shall be an amount equal
to 1.10 times the Assignee's Premium Interest in the
Policy; provided further, if the Insured dies within two
years after the Owner terminates this Agreement (by
paying to Assignee the LESSER of Cash Surrender Value of
the Policy or the Premium Interest of the Assignee),
then the Owner also shall pay to the Assignee the amount
(if any) by which (i) 1.10 times the Assignee's Premium
Interest, exceeds (ii) the amount paid by the Owner to
the Assignee to terminate this Agreement. The existence
of the Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this Agreement, along
with a collateral assignment in the form prescribed by
the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value of the
Policy; plus the cash value of any paid up additions;
plus any dividend accumulations and unpaid dividends;
and less any Policy loans outstanding to Assignee
(including any accrued interest on such loans). The
"Premium Interest" shall be equal to the cumulative
amount of unreimbursed premiums paid on the Policy by
the Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, in the event
of the Insured's death.
c. It is agreed that benefits may be paid under the Policy by
the Insurer either by separate checks to the parties entitled thereto,
or by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and such
deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. THE INSURER. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
----------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
------------------------------
Albert B. Ratner, Trustee u/a dtd 05/09/89
f/b/o Jonathan Ratner
/s/ James Ratner
------------------------------
James Ratner, Trustee u/a dtd 05/09/89
f/b/o Jonathan Ratner
-6-
<PAGE> 1
Exhibit 10.31
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996
at Cleveland, Ohio, by and between ALBERT B. RATNER and JAMES RATNER, Trustees
under the Trust dated October 3, 1991 f/b/o Adam Ratner held under Charles
Ratner 1989 Irrevocable Trust Agreement dated May 9, 1989 (hereinafter referred
to as the "Owner"), and FOREST CITY ENTERPRISES, INC., an Ohio corporation
(hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance
policy (hereinafter referred to and defined as "the Policy") on the life of
Charles Ratner (hereinafter referred to as the "Insured") in the principal
amount of $625,000;
WHEREAS, the Owner is willing to pay a portion of the premium
payments on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the
remaining premium payments, is willing to assign certain rights in the Policy to
Assignee and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that
portion of the premium payments which are not paid by the Owner if certain
rights in the Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement
in order to secure Assignee's repayment, out of the proceeds of the Policy, of
the portion of the premium payments paid by the Assignee and to grant certain
other rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency
of which are hereby acknowledged, the Owner and the Assignee mutually agree as
follows:
1. DEFINITIONS. IN THIS AGREEMENT:
<PAGE> 2
a. INSURER. The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of life insurance on the life of
the Insured issued by the Insurer, together with any
supplementary contracts issued by the Insurer in
conjunction therewith: Policy No. 13908424; Face
Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an amount
equal to the LESSER of the "Cash Surrender Value" of the
Policy OR the Assignee's "Premium Interest"; provided,
if the Insured dies while this Agreement is in effect,
the Assignee's Policy Interest shall be an amount equal
to 1.10 times the Assignee's Premium Interest in the
Policy; provided further, if the Insured dies within two
years after the Owner terminates this Agreement (by
paying to Assignee the LESSER of Cash Surrender Value of
the Policy or the Premium Interest of the Assignee),
then the Owner also shall pay to the Assignee the amount
(if any) by which (i) 1.10 times the Assignee's Premium
Interest, exceeds (ii) the amount paid by the Owner to
the Assignee to terminate this Agreement. The existence
of the Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this Agreement, along
with a collateral assignment in the form prescribed by
the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value of the
Policy; plus the cash value of any paid up additions;
plus any dividend accumulations and unpaid dividends;
and less any Policy loans outstanding to Assignee
(including any accrued interest on such loans). The
"Premium Interest" shall be equal to the cumulative
amount of unreimbursed premiums paid on the Policy by
the Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
-2-
<PAGE> 3
the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
-3-
<PAGE> 4
Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the Assignee
the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, in the event
of the Insured's death.
c. It is agreed that benefits may be paid under the Policy by
the Insurer either by separate checks to the parties entitled thereto,
or by a joint check. In the latter instance, the Owner and the Assignee
agree that the benefits shall be divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
-4-
<PAGE> 5
written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. DEATH OF THE INSURED. In the event of the death of the Insured while
this Agreement is in effect, a portion of the proceeds of the Policy equal to
the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
-5-
<PAGE> 6
(including accrued interest) immediately prior to such termination, and such
deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. The Insurer. The Insurer shall be bound only by the provisions of and
endorsements on the Policy. The copy of this Agreement filed with the Insurer
shall constitute directives of the Owner to the Insurer and any payments made or
actions taken by it in accordance therewith shall fully discharge Insurer from
all claims, suits and demands of all persons whatsoever. Insurer shall in no way
be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Thomas G. Smith
---------------------------
Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Albert B. Ratner
------------------------------
Albert B. Ratner, Trustee u/t dtd 10/3/91
f/b/o Adam Ratner
/s/ James Ratner
------------------------------
James Ratner, Trustee u/t dtd 10/3/91
f/b/o Adam Ratner
-6-
<PAGE> 1
Exhibit 10.32
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, OH 44130
Attention: Thomas G. Smith
Re: Split-Dollar Insurance Agreement
--------------------------------
Dear Tom:
This letter supplements the Split-Dollar Insurance Agreement and
Assignment of Life Insurance as Collateral (the "Agreement") dated November 2,
1996, between Forest City Enterprises, Inc. ("FCE") and the undersigned as
Trustees under the Charles Ratner 1992 Irrevocable Trust Agreement dated March
12, 1992, with respect to a certain second-to-die Northwestern Mutual Life
Insurance Policy (the "Policy") identified in such Agreement, insuring the lives
of Charles Ratner and Ilana Ratner.
Pursuant to Section 2 of the Agreement, FCE is obligated to pay
a portion of the annual premiums on the Policy each year the Agreement is in
effect, and Policy dividends are to be applied to purchase paid-up additions
(unless otherwise applied at the direction of the undersigned pursuant to
Section 3 of the Agreement).
If the financial performance of the Policy meets or exceeds the
projections attached hereto as Exhibit 1 (the "Projections") during any period
on or after the date when 8 annual premium payments have been made under the
Agreement on the Policy, then it has been (and is hereby) agreed between FCE and
the undersigned that, only during such period on or after such date that the
Policy meets or exceeds the Projections, (i) the undersigned shall waive premium
payments by FCE under the Agreement, and (ii) the undersigned shall elect to
apply Policy dividends when and as necessary to reduce premiums to keep the
Policy in force without premium payments by FCE during such period.
The terms of this letter are effective, along with the
Agreement, as of November 2, 1996.
Sincerely yours,
/s/ James Ratner 12/6/96
-----------------------------
James Ratner, Trustee Date
/s/ Albert Ratner 12/6/96
-----------------------------
Albert Ratner, Trustee Date
Acknowledged and Agreed:
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
----------------------------
Title: Senior Vice President,
Chief Financial Officer,
and Secretary
<PAGE> 2
<TABLE>
<CAPTION>
Page 1 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 N/A 750 33271 0 0 5000000 N/A N/A N/A N/A 148674
6 32774 828 33271 32774 32774 4967226 828 331 497 0 156880
7 32679 937 33271 65453 65453 4934547 987 395 592 0 167818
8 32555 1144 33271 98038 98038 4901962 1144 458 686 0 182615
9 32443 1380 33271 130481 130148 4869319 1380 552 828 0 201250
10 32382 1532 33271 162833 162833 4837167 1532 613 919 0 223926
11 32166 1842 33271 194999 194999 4805002 1842 737 1105 0 250994
12 31982 2148 33271 226981 224981 4773019 2148 859 1280 0 284851
13 31754 2529 33271 258735 258735 4741265 2529 1011 1517 0 323862
14 0 1201 721 258735 258735 4741265 3030 1201 0 0 344395
------- ----- ------- ----- ----- ----- -----
259735 14340 300160 16391 7137 8433 N/A
15 0 1391 834 258735 258735 4741265 3477 1391 0 0 411364
16 0 1644 986 258735 258735 4741265 4109 1644 0 0 459540
17 0 1960 1176 258735 258735 4741265 4899 1960 0 0 510356
18 0 2307 1384 258735 258735 4741265 5769 2307 0 0 564084
19 0 2718 1631 258735 258735 4741265 6796 2718 0 0 620757
20 0 3224 1934 258735 258735 4741265 8060 3224 0 0 680360
21 0 3825 2295 258735 258735 4741265 9562 3825 0 0 742949
22 0 4520 2712 258735 258735 4741265 11300 4520 0 0 801474
23 0 5342 3205 258735 258735 4741265 13355 5342 0 0 877378
24 0 6322 3779 258735 258735 4741265 13804 6322 0 0 930565
------- ------- ------- ------- ------- ------- -------
259735 47592 320111 99521 40409 8433 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-135105 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page 2 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5
TOTAL
END ANNUAL PAYMENTS* ----- CASH VALUES -----
OF TOTAL CASH FROM
YEAR INSURANCE* OUTLAY* 02/02/97* TOTAL* GUAR.
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5000000 N/A N/A 154416 65662
6 5000000 33271 33271 196738 83539
7 5000000 33271 66542 242414 102016
8 5000000 33271 99813 291684 121107
9 5000000 33271 133084 344785 140813
10 5000000 33271 166333 402009 161148
11 5000000 33271 199686 445640 182083
12 5000000 33271 232897 534104 203632
13 5000000 33271 265168 588246 225767
14 5000000 0 266168 632235 248460
15 5000000 0 266168 678947 271710
16 5000000 0 266168 762433 299531
17 5000000 0 266168 780760 319924
18 5000000 0 266168 835983 344903
19 5000000 0 266168 896139 370453
20 5000000 0 266168 953292 396547
21 5000000 0 266168 1019691 432141
22 5000000 0 266168 1087317 450135
23 5000000 0 266168 1139031 477471
24 5000000 0 266168 1234765 505094
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-161559 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page 3 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5
TOTAL
END ANNUAL PAYMENTS ----- CASH VALUES -----
OF TOTAL CASH FROM
YEAR INSURANCE* OUTLAY* 02/02/97* TOTAL* GUAR.
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25 5000000 0 266168 1314624 532988
26 5000000 0 266168 1398758 561154
27 5000000 0 266168 1487292 589648
28 5000000 0 266168 1580352 618456
29 5000000 0 266168 1678044 647931
35 5000000 0 266168 2372738 823418
45 5140804 0 266168 4050984 1073375
55 8389936 0 266168 7698136 1287943
- -------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-161559 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
</TABLE>
<PAGE> 1
Exhibit 10.33
DEFERRED COMPENSATION AGREEMENT
AGREEMENT entered into this 27th day of December, 1995 by and between FOREST
CITY ENTERPRISES, INC. (hereinafter called the "Corporation") and Thomas G.
Smith, (hereinafter called the "Employee").
WITNESSETH:
WHEREAS, the Employee is and will be rendering valuable services to the
Corporation, and the Corporation desires to have the benefit of his continued
loyalty, service, and counsel, and also to assist the Employee in providing for
the contingencies of death and retirement; and
WHEREAS, the Corporation has adopted a deferred compensation plan known as the
Forest City Enterprises Supplemental Unfunded Deferred Compensation Plan for
Executives (the "Plan") for certain key employees; and
WHEREAS, the Employee is eligible for participation in the Plan, a statement of
which is attached hereto and thereby made a part of this Agreement, and the
committee administering the Plan has recommended that the Employee be selected
as a Participant, effective as of February 1, 1995; and
NOW THEREFORE, the parties hereto hereby agree as follows:
For purposes hereunder the term "Agreement" shall mean this written Agreement
between the Employee and the Corporation; and
"Normal Retirement Benefit" shall be a 120 monthly payment annuity actuarially
equivalent to the sum of the total reserve value of $503,032 and 25% of base
salary for 1995 and each year's base salary thereafter not to exceed $50,000
annually before interest until the Employee reaches normal retirement date.
The Corporation agrees to pay to the Employee the Normal Retirement Benefit in
accordance with the provisions for Eligibility for Benefits as set forth in the
Plan, except that the provisions of Section 2.5 of the Plan shall be waived and
Employee shall at all times be 100% vested.
Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and the Employee,
his/her designated beneficiary or any other person or shall be construed to
create an interest in any funds of the Corporation. To the extent that any
Employee acquires a right to receive payments from the Corporation under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.
<PAGE> 2
The right of the Employee or any other person to the payment of deferred
compensation or other benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent and
distribution.
Nothing contained in this Agreement shall be construed as conferring upon the
Employee the right to continue in the employ of the Corporation.
Any deferred compensation payable under this Agreement shall not be deemed
salary or other compensation to the Employee for the purpose of computing
benefits to which he/she may be entitled under any pension plan or other
arrangement of the Corporation for the benefit of its employees.
This Agreement shall be binding upon and inure to the benefit of the
Corporation, its successors and assigns and the Employee and his/her heirs,
executors, administrators and legal representatives.
This Agreement shall be construed in accordance with and governed by the law of
the State of Ohio.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by
its duly authorized officers and the Employee has hereunto set his/her hand and
seal of the date first above written.
BY: /s/ Charles A. Ratner, President
---------------------------------
Attest:
/s/ Thomas G. Smith, Secretary
- ------------------------------
/s/ Thomas G. Smith
-----------------------------
<PAGE> 1
Exhibit 21
PARENTS AND SUBSIDIARIES
The voting securities of the subsidiaries below are in each case owned by
Forest City Enterprises, Inc. except where a subsidiary's name is indented, in
which case that subsidiary's voting securities are owned by the next preceding
subsidiary whose name is not so indented. All subsidiaries of the parent,
except those which are 50%-owned, are included in the consolidated financial
statements of the Registrant.
<TABLE>
<CAPTION>
PERCENTAGE
OF
VOTING
SECURITIES
OWNED BY
IMMEDIATE STATE OF
NAME OF SUBSIDIARY PARENT INCORPORATION
- --------------------------------------------------------- ------------ -------------
<S> <C> <C>
Forest City Rental Properties Corporation 100 Ohio
Bear Valley II, Inc. 100 Ohio
Center Courtland, Inc. 100 Ohio
F.C. Canton Centre, Inc. 100 Ohio
F.C. Irvine, Inc. 100 California
F.C. Park Labrea Towers, Inc. 100 Ohio
Tower City Retail, Inc. 100 Ohio
FL -- Pembroke, Inc. 100 Florida
Forest City 64 Sidney Street, Inc. 100 Ohio
Forest City B.U.G. Building, Inc. 100 New York
Forest City Central Station, Inc. 100 Ohio
Forest City Commercial Construction, Inc. 100 Ohio
Forest City East Coast, Inc. 100 New York
Forest City Finance Corporation 100 Ohio
Forest City Galaxy, Inc. 100 Nevada
Forest City Commercial Management, Inc. 100 Ohio
Forest City Peripheral Land, Inc. 100 Delaware
Forest City Rental Properties Corporation of Nevada,
Inc. 100 Nevada
Forest City Robinson Mall, Inc. 100 Delaware
Robinson Mall, Inc. 100 Pennsylvania
Forest City San Jose, Inc. 100 California
Forest City S.I.A.C. Building, Inc. 100 New York
Forest City Southpark Two, Inc. 100 California
Terminal Investments, Inc. 100 Ohio
Tower City Land Corporation 100 Ohio
Forest City Residential Group, Inc. 100 Ohio
Forest City Residential, Inc. 100 Ohio
Forest City Residential Management Inc. 100 Ohio
Forest City Equity Services Inc. 100 Ohio
Forest City Capital Corporation 100 Ohio
Forest City Franklin Town Corp. 100 Ohio
Forest City Residential West, Inc. 100 California
Forest City Trading Group, Inc. 100 Oregon
Sunrise Development Company 100 Ohio
Sunrise Land Company 100 Ohio
FC -- Granite, Inc. 100 Ohio
</TABLE>
- ---------------
Omitted are certain subsidiaries that, considered in the aggregate as a
single subsidiary, would not constitute a "significant subsidiary" as of January
31, 1997.
2
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Forest City Enterprises, Inc. and subsidiaries on Form S-3 (File
No.333-22695) of our report dated March 13, 1997, on our audits of the
consolidated financial statements and financial statement schedules of Forest
City Enterprises, Inc. and subsidiaries as of January 31, 1997 and 1996, and for
the years ended January 31, 1997, 1996 and 1995, which report is included in
this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Cleveland, Ohio
April 24, 1997
<PAGE> 1
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Forest City Enterprises, Inc. and subsidiaries on Form S-8 (File No.33-65054)
of our report dated March 13, 1997, on our audits of the
consolidated financial statements and financial statement schedules of Forest
City Enterprises, Inc. and subsidiaries as of January 31, 1997 and 1996, and for
the years ended January 31, 1997, 1996 and 1995, which report is included in
this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Cleveland, Ohio
April 24, 1997
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Forest City Enterprises, Inc. and subsidiaries on Form S-8 (File No.33-65058)
of our report dated March 13, 1997, on our audits of the consolidated financial
statements and financial statement schedules of Forest City Enterprises, Inc.
and subsidiaries as of January 31, 1997 and 1996, and for the years ended
January 31, 1997, 1996 and 1995, which report is included in this Annual Report
on Form 10-K.
Coopers & Lybrand L.L.P.
Cleveland, Ohio
April 24, 1997
<PAGE> 1
Exhibit 24
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 2, 1997.
<TABLE>
<S> <C>
/s/ Thomas G. Smith Senior Vice President and Chief Financial Officer
- --------------------- -------------------------------------------------
Signature Title
</TABLE>
Name: Thomas G. Smith
---------------
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 2, 1997.
<TABLE>
<S> <C>
/s/ William M. Warren Senior Vice President and General Counsel
- ----------------------- -----------------------------------------
Signature Title
</TABLE>
Name: William M. Warren
-----------------
<PAGE> 2
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 2, 1997.
<TABLE>
<S> <C>
/s/ Linda M. Kane Vice President - Corporate Controller
- -------------------- -------------------------------------
Signature Title
Name: Linda M. Kane
-------------
</TABLE>
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 7, 1997.
/s/ Robert G. O'Brien Vice President - Finance
- ------------------------------ -------------------------
Signature Title
Name: Robert G. O'Brien
-----------------
<PAGE> 3
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 2, 1997.
<TABLE>
<S> <C>
/s/ Minta Monchein Vice President - Human Resources
- ------------------------------ --------------------------------
Signature Title
</TABLE>
Name: Minta Monchein
--------------
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 7, 1997.
/s/ David J. LaRue Vice President
- ------------------------------ -------------------------
Signature Title
Name: David J. LaRue
--------------
<PAGE> 4
OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Officer of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 2, 1997.
<TABLE>
<S> <C>
/s/ Allan C. Krulak Vice President - Director of Community Affairs
- ---------------------- ----------------------------------------------
Signature Title
</TABLE>
Name: Allan C. Krulak
----------------
DIRECTOR OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 2, 1997.
/s/ Scott S. Cowen Director
- ---------------------- -------------------------
Signature Title
Name: Scott S. Cowen
--------------
<PAGE> 5
DIRECTOR OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 3, 1997.
/s/ Michael P. Esposito, Jr. Director
- ------------------------------ -------------------------
Signature Title
Name: Michael P. Esposito, Jr.
------------------------
DIRECTOR OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 2, 1997.
/s/ Jerry V. Jarrett Director
- ------------------------------ -------------------------
Signature Title
Name: Jerry V. Jarrett
------------------
<PAGE> 6
DIRECTOR OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Exchange Act of 1934 an Annual Report on Form 10-K for the fiscal
year ended January 31, 1997, and any and all amendments thereto to be filed with
the Securities and Exchange Commission pertaining to such filing, with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, hereby ratifying and
approving the act of said attorneys and any of them and any such substitute.
EXECUTED as of April 14, 1997.
<TABLE>
<S> <C>
/s/ Deborah Ratner Salzberg Vice President and Assistant Manager
- ------------------------------ ------------------------------------
Signature Title
</TABLE>
Name: Deborah Ratner Salzberg
-----------------------
DIRECTOR OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director of Forest City Enterprises, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Charles A.
Ratner, Thomas G. Smith and William M. Warren, or any of them, with full power
of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 2, 1997.
/s/ J Maurice Struchen Director
- ------------------------------ -------------------------
Signature Title
Name: J Maurice Struchen
------------------
<PAGE> 7
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 3, 1997.
/s/ Samuel H. Miller Co-Chairman of the Board
- ------------------------------ -------------------------
Signature Title
Name: Samuel H. Miller
----------------
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 17, 1997.
/s/ Albert B. Ratner Co-Chairman
- ------------------------------ -------------------------
Signature Title
Name: Albert B. Ratner
----------------
<PAGE> 8
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 2, 1997.
/s/ Brian J. Ratner Senior Vice President
- ------------------------------ -------------------------
Signature Title
Name: Brian J. Ratner
---------------
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 4, 1997.
<TABLE>
<S> <C>
/s/ Charles A. Ratner Director, Chief Executive Officer and President
- ----------------------- -----------------------------------------------
Signature Title
</TABLE>
Name: Charles A. Ratner
-----------------
<PAGE> 9
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 4, 1997.
<TABLE>
<S> <C>
/s/ James A. Ratner Director and Executive Vice President
- --------------------- -------------------------------------
Signature Title
</TABLE>
Name: James A. Ratner
---------------
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 9, 1997.
/s/ Ronald A. Ratner Executive Vice President
- ------------------------------ ------------------------
Signature Title
Name: Ronald A. Ratner
----------------
<PAGE> 10
DIRECTOR AND OFFICER OF
FOREST CITY ENTERPRISES, INC.
FORM 10-K
POWER OF ATTORNEY
The undersigned Director and Officer of Forest City Enterprises, Inc.,
an Ohio corporation (the "Corporation"), hereby constitutes and appoints
Charles A. Ratner, Thomas G. Smith and William M. Warren, or any of them, with
full power of substitution and resubstitution, as attorneys or attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Exchange Act of 1934 an Annual Report on Form
10-K for the fiscal year ended January 31, 1997, and any and all amendments
thereto to be filed with the Securities and Exchange Commission pertaining to
such filing, with full power and authority to do and perform any and all acts
and things whatsoever required and necessary to be done in the premises, hereby
ratifying and approving the act of said attorneys and any of them and any such
substitute.
EXECUTED as of April 3, 1997.
<TABLE>
<S> <C>
/s/ Nathan Shafran Director and Vice Chairman of the Board
- ------------------------------ ---------------------------------------
Signature Title
</TABLE>
Name: Nathan Shafran
--------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 41302
<SECURITIES> 0
<RECEIVABLES> 209953
<ALLOWANCES> 4994
<INVENTORY> 48769
<CURRENT-ASSETS> 0
<PP&E> 2520179
<DEPRECIATION> 399830
<TOTAL-ASSETS> 2741405
<CURRENT-LIABILITIES> 0
<BONDS> 1993351
<COMMON> 4494<F1>
0
0
<OTHER-SE> 196073<F1>
<TOTAL-LIABILITY-AND-EQUITY> 2741405
<SALES> 0
<TOTAL-REVENUES> 610449<F2>
<CGS> 0
<TOTAL-COSTS> 460274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133364
<INCOME-PRETAX> 22122
<INCOME-TAX> 12951
<INCOME-CONTINUING> 9171
<DISCONTINUED> 0
<EXTRAORDINARY> 2900
<CHANGES> 0
<NET-INCOME> 12071
<EPS-PRIMARY> .92<F1>
<EPS-DILUTED> 0
<FN>
<F1> The Company declared a three-for-two stock split of its Class A and
Class B common stock payable February 17, 1997. The stock split was given
retroactive effect to the January 31, 1997 consolidated balance sheet.
Prior financial data schedules were not restated for the stock split.
<F2> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 27494
<SECURITIES> 0
<RECEIVABLES> 197831
<ALLOWANCES> 5257
<INVENTORY> 42329
<CURRENT-ASSETS> 0
<PP&E> 2528538
<DEPRECIATION> 385668
<TOTAL-ASSETS> 2174952
<CURRENT-LIABILITIES> 0
<BONDS> 1990211
<COMMON> 2997
0
0
<OTHER-SE> 199133
<TOTAL-LIABILITY-AND-EQUITY> 2714952
<SALES> 0
<TOTAL-REVENUES> 441272<F1>
<CGS> 0
<TOTAL-COSTS> 328764
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99401
<INCOME-PRETAX> 23354
<INCOME-TAX> 11431
<INCOME-CONTINUING> 11923
<DISCONTINUED> 0
<EXTRAORDINARY> 907
<CHANGES> 0
<NET-INCOME> 12830
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 27879
<SECURITIES> 0
<RECEIVABLES> 175676
<ALLOWANCES> 4994
<INVENTORY> 41472
<CURRENT-ASSETS> 0
<PP&E> 2485103
<DEPRECIATION> 372630
<TOTAL-ASSETS> 2651312
<CURRENT-LIABILITIES> 0
<BONDS> 1977485
<COMMON> 2997
0
0
<OTHER-SE> 191884
<TOTAL-LIABILITY-AND-EQUITY> 2651312
<SALES> 0
<TOTAL-REVENUES> 277463<F1>
<CGS> 0
<TOTAL-COSTS> 207317
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66550
<INCOME-PRETAX> 4530
<INCOME-TAX> 2654
<INCOME-CONTINUING> 1876
<DISCONTINUED> 0
<EXTRAORDINARY> 907
<CHANGES> 0
<NET-INCOME> 2783
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 29065
<SECURITIES> 0
<RECEIVABLES> 166106
<ALLOWANCES> 4495
<INVENTORY> 59192
<CURRENT-ASSETS> 0
<PP&E> 2446129
<DEPRECIATION> 359552
<TOTAL-ASSETS> 2642059
<CURRENT-LIABILITIES> 0
<BONDS> 1945972
<COMMON> 2997
0
0
<OTHER-SE> 188155
<TOTAL-LIABILITY-AND-EQUITY> 2642059
<SALES> 0
<TOTAL-REVENUES> 128971<F1>
<CGS> 0
<TOTAL-COSTS> 96915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33013
<INCOME-PRETAX> (957)
<INCOME-TAX> (11)
<INCOME-CONTINUING> (946)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (946)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 39145
<SECURITIES> 0
<RECEIVABLES> 171864
<ALLOWANCES> 3687
<INVENTORY> 41186
<CURRENT-ASSETS> 0
<PP&E> 2425083
<DEPRECIATION> 347912
<TOTAL-ASSETS> 2631046
<CURRENT-LIABILITIES> 0
<BONDS> 1945120
<COMMON> 2997
0
0
<OTHER-SE> 189101
<TOTAL-LIABILITY-AND-EQUITY> 2631046
<SALES> 0
<TOTAL-REVENUES> 529433<F1>
<CGS> 0
<TOTAL-COSTS> 371535
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130001
<INCOME-PRETAX> 17562
<INCOME-TAX> 10623
<INCOME-CONTINUING> 6939
<DISCONTINUED> 0
<EXTRAORDINARY> 1847
<CHANGES> 0
<NET-INCOME> 8786
<EPS-PRIMARY> .98
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 22350
<SECURITIES> 0
<RECEIVABLES> 189101
<ALLOWANCES> 6168
<INVENTORY> 32904
<CURRENT-ASSETS> 0
<PP&E> 2431795
<DEPRECIATION> 337612
<TOTAL-ASSETS> 2623233
<CURRENT-LIABILITIES> 0
<BONDS> 1937403
<COMMON> 2997
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 178651
<SALES> 0
<TOTAL-REVENUES> 358790(1)<F1>
<CGS> 0
<TOTAL-COSTS> 266191
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96168
<INCOME-PRETAX> (3569)
<INCOME-TAX> (58)
<INCOME-CONTINUING> (3511)
<DISCONTINUED> 0
<EXTRAORDINARY> 1847
<CHANGES> 0
<NET-INCOME> (1664)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
<FN>
<F1> (1) In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 24242
<SECURITIES> 0
<RECEIVABLES> 167277
<ALLOWANCES> 5999
<INVENTORY> 24013
<CURRENT-ASSETS> 0
<PP&E> 2384831
<DEPRECIATION> 325193
<TOTAL-ASSETS> 2574637
<CURRENT-LIABILITIES> 0
<BONDS> 1913545
<COMMON> 2997
0
0
<OTHER-SE> 180298
<TOTAL-LIABILITY-AND-EQUITY> 2574637
<SALES> 0
<TOTAL-REVENUES> 232391<F1>
<CGS> 0
<TOTAL-COSTS> 174986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62680
<INCOME-PRETAX> (5275)
<INCOME-TAX> (1163)
<INCOME-CONTINUING> (4112)
<DISCONTINUED> 0
<EXTRAORDINARY> 1847
<CHANGES> 0
<NET-INCOME> (2265)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> APR-30-1995
<CASH> 21012
<SECURITIES> 0
<RECEIVABLES> 186128
<ALLOWANCES> 5574
<INVENTORY> 38160
<CURRENT-ASSETS> 0
<PP&E> 2345504
<DEPRECIATION> 313283
<TOTAL-ASSETS> 2554563
<CURRENT-LIABILITIES> 0
<BONDS> 1883939
<COMMON> 2997
0
0
<OTHER-SE> 179354
<TOTAL-LIABILITY-AND-EQUITY> 2554563
<SALES> 0
<TOTAL-REVENUES> 111584<F1>
<CGS> 0
<TOTAL-COSTS> 84116
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31745
<INCOME-PRETAX> (4277)
<INCOME-TAX> (1068)
<INCOME-CONTINUING> (3209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3209)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 46478
<SECURITIES> 0
<RECEIVABLES> 201810
<ALLOWANCES> 4208
<INVENTORY> 38949
<CURRENT-ASSETS> 0
<PP&E> 2322136
<DEPRECIATION> 303012
<TOTAL-ASSETS> 2584734
<CURRENT-LIABILITIES> 0
<BONDS> 1881917
<COMMON> 2997
0
0
<OTHER-SE> 182563
<TOTAL-LIABILITY-AND-EQUITY> 2584734
<SALES> 0
<TOTAL-REVENUES> 522608(F1>
<CGS> 0
<TOTAL-COSTS> 389316
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116821
<INCOME-PRETAX> (24497)
<INCOME-TAX> (5964)
<INCOME-CONTINUING> (18533)
<DISCONTINUED> 0
<EXTRAORDINARY> 60449
<CHANGES> 0
<NET-INCOME> 41916
<EPS-PRIMARY> 4.66
<EPS-DILUTED> 0
<FN>
<F1> In the consolidated financial statements for the year ended
January 31, 1997, INTEREST AND OTHER INCOME was combined with SALES AND
OPERATING REVENUES and reported on a single line captioned REVENUES. This
tag is restated to report REVENUES, previously it reported SALES AND
OPERATING REVENUES.
</FN>
</TABLE>
