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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 25, 1999
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Forest City Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 1-4372 34-0863886
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 Terminal Tower, 50 Public Square Cleveland, Ohio 44113
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-621-6060
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
The Credit Agreement termination date was extended by one year to December 10,
2001 on June 25, 1999. The following Amended and Restated Credit Agreement and
Guaranty of Payment consolidate the original agreements and all amendments to
date.
Exhibit 20.1 -
Amended and Restated Credit Agreement, dated as of June 25, 1999, by and among
Forest City Rental Properties Corporation, the banks named therein, KeyBank
National Association, as administrative agent, and National City Bank, as
syndication agent.
Exhibit 20.2 -
Amended and Restated Guaranty of Payment of Debt, dated as of June 25, 1999, by
and among Forest City Enterprises, Inc., the banks named therein, KeyBank
National Association, as administrative agent, and National City Bank, as
syndication agent.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Forest City Enterprises, Inc.
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(Registrant)
Date July 12, 1999 By /s/ THOMAS G. SMITH
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Thomas G. Smith, Senior Vice President
and Chief Financial Officer
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Exhibit 20.1
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AMENDED AND RESTATED
CREDIT AGREEMENT
by and among
FOREST CITY RENTAL PROPERTIES CORPORATION
as Borrower
and
VARIOUS LENDING INSTITUTIONS
as Banks
and
KEYBANK NATIONAL ASSOCIATION
as Administrative Agent for the Banks
and
NATIONAL CITY BANK
as Syndication Agent for the Banks
Dated as of June 25, 1999
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TABLE OF CONTENTS
Article Page
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I DEFINITIONS .......................................................2
II TERM LOANS .......................................................10
2.01(a). [Reserved] ..............................................10
2.01(b). [Reserved] ..............................................10
2.02(a). TERM LOANS ON CONVERSION OF REVOLVING LOANS .............10
2.02(b). REPAYMENT OF TERM LOANS .................................11
2.03. TERM NOTES ..............................................11
III REVOLVING LOANS ..................................................11
3.01. AMOUNT OF THE REVOLVING LOAN FACILITY ...................11
3.02. REVOLVING LOAN COMMITMENTS ..............................11
3.03. REVOLVING LOANS .........................................12
3.04. PURPOSE OF THE REVOLVING LOANS ..........................13
3.05. REVOLVING LOAN NOTES ....................................13
3.06. LETTERS OF CREDIT .......................................13
3.07. REPAYMENT OF THE REVOLVING LOAN NOTES ...................15
3.08. INTEREST ON THE REVOLVING LOANS .........................15
3.09. EXTENSIONS OF THE REVOLVING LOANS .......................15
IV INTEREST ON THE TERM LOANS AND THE REVOLVING LOANS ...............15
4.01(a). INTEREST OPTIONS .......................................15
4.01(b). LIBOR RATE OPTION .......................................15
4.01(c). PRIME RATE OPTION .......................................16
4.01(d). INDICATED SPREAD .......................................16
4.02. INTEREST PERIODS .......................................16
4.03. INTEREST PAYMENT DATES .................................17
4.04. INTEREST CALCULATIONS .................................17
4.05. POST-DEFAULT RATE .......................................17
4.06. RESERVES OR DEPOSIT REQUIREMENTS, ETC ...................17
4.07. TAX LAW, ETC ...........................................18
4.08. INDEMNITY ...............................................19
4.09. EURODOLLAR DEPOSITS UNAVAILABLE OR
INTEREST RATE UNASCERTAINABLE ...........................19
4.10. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL ...........19
4.11. FUNDING .................................................20
V AGREEMENTS AND CONDITIONS APPLICABLE TO ALL LOANS ................20
5.01 NOTICE OF BORROWING .....................................20
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Article Page
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5.02 DISBURSEMENT OF FUNDS ...................................20
5.03. CONDITIONS TO LOANS .....................................21
5.04. PAYMENT ON NOTES, ETC ...................................22
5.05. PREPAYMENT ..............................................22
5.06. UNUSED COMMITMENT FEES ..................................23
VI CONDITIONS PRECEDENT .............................................24
6.01. CORPORATE AND LOAN DOCUMENTS ............................24
6.02. OPINION OF COUNSEL FOR PARENT ...........................25
6.03. COMMITMENT FEE ..........................................25
6.04. JUDGMENT, ORDERS ........................................25
6.05. LITIGATION .............................................25
6.06. NOTICE OF BORROWING .....................................25
6.07. OPINION OF COUNSEL FOR BORROWER .........................26
6.08. PAYMENT OF FEES .........................................26
6.09 ADVERSE CHANGE, ETC .....................................26
VII AFFIRMATIVE COVENANTS ............................................26
7.01. PAYMENT OF AMOUNTS DUE ..................................26
7.02. EXISTENCE, BUSINESS, ETC ................................26
7.03. MAINTENANCE OF PROPERTIES ...............................26
7.04. PAYMENT OF TAXES, ETC ...................................27
7.05. FINANCIAL STATEMENTS ....................................27
7.06. INSPECTION ..............................................28
7.07. ENVIRONMENTAL COMPLIANCE ................................28
7.08. ERISA ...................................................29
7.09. INSURANCE ...............................................30
7.10. MONEY OBLIGATIONS .......................................30
7.11. RECORDS .................................................30
7.12. FRANCHISES ..............................................31
7.13. NOTICE ..................................................31
7.14. POST CLOSING ITEMS ......................................31
7.15. FURTHER ASSURANCES ......................................31
7.16. NOTICE OF DEFAULT OR LITIGATION. ........................32
7.17. USE OF PROCEEDS .........................................32
7.18. USE OF PROCEEDS OF THE SENIOR NOTES .....................32
7.19. YEAR 2000 COMPLIANCE EFFORTS ............................32
VIII NEGATIVE COVENANTS ...............................................32
8.01. PLAN ....................................................32
8.02. COMBINATIONS ............................................32
8.03. BULK TRANSFERS ..........................................33
8.04. BORROWINGS ..............................................33
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Article Page
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8.05. LIENS ...................................................34
8.06. LOANS ...................................................35
8.07. GUARANTEES ..............................................35
8.08. AMENDMENT OF ARTICLES OF INCORPORATION
AND/OR REGULATIONS ......................................36
8.09. FISCAL YEAR .............................................36
8.10. REGULATION U ............................................36
8.11. NO PLEDGE ...............................................36
8.12. TRANSACTIONS WITH AFFILIATES ............................36
8.13. DEBT SERVICE COVERAGE RATIO .............................37
8.14(a) RESTRICTIONS ON DISTRIBUTIONS DURINGAN
EVENT OF DEFAULT OTHER THAN A PAYMENT DEFAULT ...........37
8.14(b) RESTRICTIONS ON DISTRIBUTION DURING A PAYMENT DEFAULT ...37
8.15. CROSS COLLATERALIZATION AND CROSS DEFAULTS ..............37
8.16. SENIOR NOTES ............................................38
IX REPRESENTATIONS AND WARRANTIES ...................................38
9.01. EXISTENCE ...............................................38
9.02. RIGHT TO ACT ............................................39
9.03. BINDING EFFECT ..........................................39
9.04. LITIGATION ..............................................39
9.05. EMPLOYEE RETIREMENT INCOME SECURITY ACT .................39
9.06. ENVIRONMENTAL COMPLIANCE ................................40
9.07. SOLVENCY ................................................40
9.08. FINANCIAL STATEMENTS ....................................40
9.09. DEFAULTS ................................................41
9.10. OPERATIONS ..............................................41
9.11. TITLE TO PROPERTIES; PATENTS, TRADE MARKS, ETC ..........41
9.12. COMPLIANCE WITH OTHER INSTRUMENTS .......................41
9.13. MATERIAL RESTRICTIONS ...................................41
9.14. CORRECTNESS OF DATA FURNISHED ...........................41
9.15. TAXES ...................................................42
9.16. COMPLIANCE WITH LAWS ....................................42
9.17. REGULATION U, ETC .......................................42
9.18. HOLDING COMPANY ACT .....................................43
9.19. SECURITIES ACT, ETC .....................................43
9.20. INVESTMENT COMPANY ACT ..................................43
9.21. INDEBTEDNESS OF SUBSIDIARIES ............................43
9.22. GUARANTEES ..............................................43
9.23. FUNDED INDEBTEDNESS .....................................43
9.24. YEAR 2000 COMPLIANCE ....................................43
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Article Page
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X EVENTS OF DEFAULT ................................................43
10.01. PAYMENTS ................................................44
10.02. COVENANTS ...............................................44
10.03. REPRESENTATIONS AND WARRANTIES ..........................44
10.04. CROSS DEFAULT ...........................................44
10.05. TERMINATION OF PLAN .....................................45
10.06. DOMESTIC SUBSIDIARY SOLVENCY ............................45
10.07. BORROWER'S SOLVENCY .....................................45
10.08. CHANGE OF OWNERSHIP .....................................46
10.09. JUDGMENTS ...............................................46
10.10. DEFAULT UNDER GUARANTY OR SENIOR NOTES ..................46
10.11. DEFAULT UNDER SUBORDINATION AGREEMENT ...................46
XI REMEDIES UPON DEFAULT ............................................46
11.01. OPTIONAL DEFAULTS .......................................47
11.02. AUTOMATIC DEFAULTS ......................................47
11.03. REMEDIES RELATING TO LETTERS OF CREDIT ..................47
11.04. OFFSETS .................................................47
11.05. REMEDIES WITH RESPECT TO GUARANTY DEFAULT ...............48
11.06. APPLICATION OF PAYMENTS .................................48
XII THE AGENT ........................................................48
12.01. APPOINTMENT AND AUTHORIZATION ...........................48
12.02. DELEGATION OF DUTIES ....................................49
12.03. EXCULPATORY PROVISIONS ..................................49
12.04. RELIANCE BY AGENT .......................................49
12.05. RESIGNATION OR REMOVAL OF THE AGENT; SUCCESSOR AGENT ....50
12.06. NOTE HOLDERS ............................................50
12.07. CONSULTATION WITH COUNSEL ...............................50
12.08. DOCUMENTS ...............................................51
12.09. AGENT AND AFFILIATES ....................................51
12.10. KNOWLEDGE OF DEFAULT ....................................51
12.11. INDEMNIFICATION .........................................51
12.12. EQUALIZATION PROVISION ..................................52
XIII MISCELLANEOUS ....................................................52
13.01. NO WAIVER; CUMULATIVE REMEDIES ..........................52
13.02. AMENDMENTS, CONSENTS ....................................53
13.03. NOTICES .................................................53
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Article Page
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13.04. COSTS, EXPENSES AND TAXES ...............................54
13.05. SURVIVAL OF REPRESENTATIONS AND WARRANTIES ..............54
13.06. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS ...........54
13.07. EXECUTION IN COUNTERPARTS ...............................54
13.08. BINDING EFFECT; ASSIGNMENT ..............................55
13.09. GOVERNING LAW ..........................................56
13.10. SEVERABILITY OF PROVISIONS; CAPTIONS ....................56
13.11. PURPOSE .................................................56
13.12. CONSENT TO JURISDICTION .................................56
13.13. ENTIRE AGREEMENT ........................................56
13.14. JURY TRIAL WAIVER .......................................57
13.15. SURVIVAL ................................................57
13.16. INDEPENDENCE OF COVENANTS ...............................57
A BANKS AND COMMITMENT
B FORM OF GUARANTY
C FORM OF TERM NOTE
D FORM OF REVOLVING LOAN NOTE
E FORM OF LETTER OF CREDIT REQUEST
F FORM OF NOTICE OF BORROWING
G SENIOR NOTES
SCHEDULES
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3.03 AUTHORIZED FISCAL OFFICERS
3.06 OUTSTANDING LETTERS OF CREDIT
7.05 FORM COVENANT COMPLIANCE WORKSHEET
7.14 POST-CLOSING ITEMS
8.15 PERMITTED INDEBTEDNESS
9.00 EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
9.16 COMPLIANCE WITH LAWS
9.22 OUTSTANDING GUARANTEES
9.23 OUTSTANDING INDEBTEDNESS
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A M E N D E D A N D R E S T A T E D
C R E D I T A G R E E M E N T
Amended and Restated Credit Agreement, effective as of June 25, 1999,
between FOREST CITY RENTAL PROPERTIES CORPORATION, an Ohio corporation
(hereinafter sometimes called the "Borrower"), the banking institutions named in
Exhibit A attached hereto and made a part hereof (hereinafter sometimes
collectively called the "Banks" and individually "Bank"), KEYBANK NATIONAL
ASSOCIATION, Cleveland, Ohio, as Administrative Agent for the Banks under this
Amended Credit Agreement (the "Agent") and NATIONAL CITY BANK, Cleveland, Ohio
as Syndication Agent for the Banks under this Amended Credit Agreement (the
"Syndication Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks, other than U.S. Bank National Association
(the "Original Banks"), and the Agents have previously entered into a certain
Credit Agreement dated as of December 10, 1997, (the "Original Credit
Agreement") and the Borrower, the Banks and the Agents have also previously
entered into a First Amendment to Credit Agreement dated as of January 20, 1998
(the "First Amendment"), a Second Amendment to Credit Agreement dated as of
March 6, 1998 (the "Second Amendment") and a Third Amendment to Credit Agreement
dated as of January 29, 1999 (the "Third Amendment"; the Original Credit
Agreement as amended by the First Amendment, the Second Amendment and the Third
Amendment being referred to herein as the "Credit Agreement"); and
WHEREAS, in connection with the Original Credit Agreement, Forest City
Enterprises, Inc. (the "Parent") made and entered into a certain Guaranty of
Payment of Debt in favor of the Original Banks, dated as of December 10, 1997
(the "Original Guaranty") and in connection with the First Amendment, entered
into a First Amendment to Guaranty of Payment of Debt in favor of the Banks and
the Agents, dated as of January 20, 1998 (the "First Amendment to Guaranty") and
in connection with the Second Amendment, entered into a Second Amendment to
Guaranty of Payment of Debt in favor of the Banks and the Agents dated as of
March 6, 1998 (the "Second Amendment to Guaranty") and in connection with the
Third Amendment, entered into a Third Amendment to Guaranty of Payment of Debt
in favor of the Banks and the Agents dated as of January 29, 1999 (the "Third
Amendment to Guaranty"; the Original Guaranty as amended by the First Amendment
to Guaranty, the Second Amendment to Guaranty and the Third Amendment to
Guaranty being referred to herein as the "Guaranty"); and
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WHEREAS, the Borrower and the Parent have requested that the Banks and the
Agents amend the Credit Agreement and the Guaranty by entering into amended and
restated versions of the Credit Agreement and the Guaranty, in order to, among
other things, extend the Termination Date; and
WHEREAS, the Banks and the Agents are willing to enter into amended and
restated versions of the Credit Agreement and the Guaranty, on the respective
terms and conditions set forth herein and in the Amended and Restated Guaranty
of Payment of Debt (the "Amended Guaranty") of even date herewith, respectively,
and such terms and conditions are agreeable to the Borrower and to the Parent.
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS
As used in this Amended Credit Agreement, the following terms shall have
the following meanings:
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of Borrower's Debt to the Banks if such payment
results in that Bank having a lesser share of Borrower's Debt to the Banks, than
was the case immediately before such payment.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" means KeyBank National Association, in its capacity as
administrative agent for the Banks hereunder, and its successors in such
capacity.
"Agents" means collectively, the Agent and the Syndication Agent.
"Amended Credit Agreement" means this Amended and Restated Credit Agreement
as the same may be from time to time amended, supplemented, modified, extended
and/or restated.
"Amended Guaranty" means the Amended and Restated Guaranty of Payment of
Debt issued by the Parent to the Agent and the Banks, in substantially the form
and substance of Exhibit B attached hereto, as such Amended Guaranty may be from
time to time, amended, restated or otherwise modified.
"Authorized Fiscal Officer" shall have the meaning set forth in Section
3.03(b) hereof.
"Bank" means each bank listed on Exhibit A attached hereto and its
successors and assigns.
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"Board of Directors" shall mean either the board of directors of the Parent
or any duly constituted committee thereof.
"Borrower" means Forest City Rental Properties Corporation, an Ohio
corporation.
"Capital Stock" of any Person shall mean any and all shares, interests,
participations, or other equivalents (however designated) of corporate stock or
other equity participations or interests including, without limitation,
partnership interests, whether general or limited, and membership interests,
whether of managing or non-managing members, of such Person.
"Change of Ownership Event" shall be deemed to have occurred at such time
as either (a) any Person (other than a Permitted Holder) or any Persons acting
together that would constitute a "group" (a "Group") for purposes of Section
13(d) of the Exchange Act or any successor provision thereto (other than
Permitted Holders), together with any Affiliates or Related Persons thereof,
shall beneficially own (within the meaning of Rule 13d-3 under the Exchange Act,
or any successor provision thereto) at least 30% of the aggregate voting power
of all classes of Voting Stock of the Parent; or (b) any Person or Group (other
than Permitted Holders), together with any Affiliates or Related Persons
thereof, shall succeed in having a sufficient number of its nominees elected to
the Board of Directors of the Parent such that such nominees, when added to any
existing director remaining on the Board of Directors of the Parent after such
election who was a nominee of or is an Affiliate or Related Person of such
Person or Group, will constitute a majority of the Board of Directors of the
Parent; or (c) the Parent shall cease to own at least one hundred percent (100%)
on a fully diluted basis, of the economic and voting interests of the Borrower.
"Cleveland Banking Day" shall mean a day on which the main office of the
Agent is open for the transaction of business.
"Closing Date" shall mean the date of this Amended Credit Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commitment" shall mean, until the Termination Date, the obligation
hereunder of each Bank to make Revolving Loans up to the amount set forth
opposite such Bank's name under the column headed "Maximum Amount" on Exhibit A
hereof (or such lesser amount as shall be determined pursuant to Section 3.02(b)
hereof).
"Common Stock" of any Person shall mean Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to other amounts upon
any voluntary or involuntary liquidation, dissolution, or winding up of such
Person, to shares of Capital Stock or any other class of such Person.
"Controlled Group" shall mean a controlled group of corporations as defined
in Section 1563 of the Code, of which Borrower or any Subsidiary is a part.
"Debt" shall mean, collectively, all indebtedness incurred by Borrower to the
Banks pursuant to this Amended Credit Agreement and includes the principal of
and interest on all Notes and each extension, renewal or refinancing thereof in
whole or in part, the stated amounts of all letters of credit issued by the
Agent or the Banks hereunder, and the fees and any prepayment premium payable
hereunder.
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"Debt Service Coverage Ratio" shall mean the ratio of (i) Net Operating
Income to (ii) the sum of (X) all scheduled principal payments (excluding
balloon payments) on non-recourse mortgage indebtedness plus (Y) all interest
payments on such non-recourse mortgage indebtedness and less (Z) non-cash
interest expense accrued with respect to Terminal Investments, Inc. and Grant
Liberty Development Group Associates, but not currently payable.
"Distributions" shall have the meaning set forth in Section 8.14 hereof.
"Dividends" shall mean all dividends (in cash or otherwise) declared and/or
paid, capital returned, and other distributions of any kind made on any share of
Capital Stock outstanding at any time.
"Domestic Subsidiary" shall mean any Subsidiary organized under the laws of
any state of the United States of America which conducts the major portion of
its business within the United States.
"Draw" shall have the meaning set forth in Section 3.06(b) hereof.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or by any state or municipality thereof or by
any court, agency, instrumentality, regulatory authority or commission of any of
the foregoing, now or hereafter in effect, and in each case as amended,
concerning or relating to health, safety and protection of, or regulation of the
discharge of substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings issued thereunder.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower, the Parent or any Subsidiary of the
Borrower or any subsidiary of the Parent would be deemed a "single employer"
within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
"Event of Default" shall have the meaning set forth in Article X hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor provision thereto.
<PAGE>
"Funded Indebtedness" means indebtedness (including any renewal or
extension in whole or in part, but excluding indebtedness for borrowed money)
that matures or remains unpaid more than twelve (12) months after the date on
which such indebtedness was originally incurred.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Guaranty Default" shall mean any one or more of the events constituting
defaults under Section 10 of the Amended Guaranty.
"Indenture" shall mean the indenture relating to the Senior Notes dated as
of ________________________, in the form attached to this Amended Credit
Agreement as Exhibit G.
"Indemnity Agreement" shall mean collectively, (i) that certain General
Indemnity Agreement dated as of November 6, 1998 by and between the Parent and
the Surety (other than Asset Guaranty Insurance Company), as amended by the St.
Paul Surety Amendment to General Indemnity Agreement dated as of November 6,
1998 and (ii) that certain General Indemnity Agreement dated as of December 3,
1998 by and between the Parent and Asset Guaranty Insurance Company, as amended
by the Asset Guaranty Insurance Company Amendment to General Indemnity Agreement
dated as of December 3, 1998 and as each such Indemnity Agreement may be further
amended, restated or otherwise modified.
"Indicated Spread" shall have the meaning set forth in Section 4.01(d)
hereof.
"Interest Adjustment Date" shall mean the last day of each Interest Period.
"Interest Options" means the LIBOR Rate Option and the Prime Rate Option.
"Interest Period" shall mean a period of one, two, three or six months or
one year (as selected by the Borrower) commencing on the applicable borrowing or
conversion date of each Loan subject to the LIBOR Rate Option and on the date
that is one London Banking Day after each Interest Adjustment Date occurring
thereafter with respect thereto; provided, that if any such Interest Period
would be affected by a reduction in the Revolving Loan Commitment as provided in
Section 3.02(b) hereof, prepayment rights as provided in Section 5.05 hereof or
maturity of Loans as provided in Sections 2.02(b), and/or 3.07 hereof, such
Interest Period shall be shortened to end on such date. Notwithstanding anything
to the contrary contained above:
(i) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last London Banking
Day of such calendar month;
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(ii) if any Interest Period would otherwise expire on a day which is
not a London Banking Day, such Interest Period shall expire on the next
succeeding London Banking Day, provided, that if any Interest Period would
otherwise expire on a day which is not a London Banking Day but is a day of
the month after which no further London Banking Day occurs in such month,
such Interest Period shall expire on the next preceding London Banking Day;
(iii) no Interest Period may be selected if it would extend beyond the
scheduled maturity date or principal repayment date(s) of the Loans to
which it would apply; and
(iv) no Interest Period may be selected if it would extend beyond the
Termination Date.
"LC Obligations" shall mean the aggregate amount of all possible drawings
under all letters of credit issued pursuant to Section 3.06 hereof, plus all
amounts drawn under such letters of credit and not reimbursed.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16th of 1%)
of the per annum rates at which deposits in immediately available funds in
United States dollars for the relevant Interest Period and in the amount of the
principal of the Loans to be disbursed or to remain outstanding during such
Interest Period, as the case may be, are offered to the Reference Banks by prime
banks in any Eurodollar market reasonably selected by the Reference Banks,
determined as of 11:00 a.m. London time (or as soon thereafter as practicable),
two (2) London Banking Days prior to the beginning of the relevant Interest
Period. In the event one or more of the Reference Banks fail to furnish its
quote of any rate required herein, such rate shall be determined on the basis of
the quote or quotes of the remaining Reference Bank or Banks.
"LIBOR Rate Option" means interest determined pursuant to Section 4.01(b)
and related provisions hereof.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
or any similar notice or recording statute, and any lease having substantially
the same effect as any of the foregoing).
"Loan" means a Term Loan or a Revolving Loan, and "Loans" means Term Loans,
Revolving Loans or any combination of the foregoing.
"London Banking Day" shall mean a day on which banks are open for business
in London, England, and quoting deposit rates for dollar deposits.
"Material Adverse Effect" shall have the meaning set forth in Section 6.09
hereof.
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"Net Operating Income" shall mean for any relevant period, the excess of
the Borrower's revenues over the Borrower's operating expenses, in each case, as
determined in accordance with GAAP. For purposes of this definition, Net
Operating Income (i) shall not include any gains or losses from the sale of
income producing real property, other than gains or losses obtained from the
sale of net outlot parcels to a total maximum aggregate amount of $15,000,000
for the immediately preceding four consecutive quarters and (ii) shall include
adjustments for cash flow of properties pursuant to which the Borrower is
receiving a preferred return over and above its ownership percentage in such
properties.
"Note" or "Notes" shall mean a note or notes executed and delivered
pursuant to Sections 2.03 and 3.05 hereof.
"Notice of Borrowing" shall have the meaning set forth in Section 5.01
hereof.
"Original Closing Date" means December 10, 1997.
"Parent" means Forest City Enterprises, Inc., an Ohio corporation.
"Payment Default" shall mean any failure by the Borrower or the Parent to
make payment of principal, interest, or any other charge due, whether at
maturity or by acceleration, under the Amended Credit Agreement or the Amended
Guaranty.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
"Permitted Distributions" shall have the meaning set forth in Section 8.14
hereof.
"Permitted Holder" shall mean (i) any of Samuel H. Miller, Albert B.
Ratner, Charles A. Ratner, James A. Ratner, Ronald A. Ratner, Nathan Shafran or
any spouse of any of the foregoing, and any trusts for the benefit of any of the
foregoing, (ii) RMS, Limited Partnership and any general partner or limited
partner thereof and any Person (other than a creditor) that upon the dissolution
or winding up of RMS, Limited Partnership receives a distribution of Capital
Stock of the Parent, (iii) any group (as defined in Section 13(d) of the
Exchange Act) of two or more Persons or entities that are specified in the
immediately preceding clauses (i) and (ii), and (iv) any successive
recombination of the Persons or groups that are specified in the immediately
preceding clauses (i), (ii) and (iii).
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including, without limitation, governmental or political subdivision or an
agency or instrumentality thereof.
"Plan" shall mean any employee pension benefit plan subject to Title IV of
ERISA, established or maintained by Borrower, any Subsidiary, or any member of
the Controlled Group, or any such Plan to which Borrower, any Subsidiary, or any
member of the Controlled Group is required to contribute on behalf of any of its
employees.
<PAGE>
"Possible Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Post Closing Items" shall have the meaning set forth in Section 7.14
hereof.
"Prime Rate" shall mean that interest rate established from time to time by
Agent as Agent's prime rate, whether or not such rate is publicly announced; the
Prime Rate may be other than the lowest interest rate charged by Agent for
commercial or other extensions of credit.
"Prime Rate Option" means interest determined pursuant to Section 4.01(c)
and related provisions hereof.
"Pro rata" when used with reference to the Banks means (unless the context
otherwise clearly indicates) pro rata according to the unpaid principal amounts
owing to the respective Banks under the Notes, or, if no principal is then owing
to any Bank, according to the Commitment, as the case may be, of the respective
Bank.
"Quarterly Date" shall mean each of January 1, April 1, July 1 and October
1.
"Reference Banks" shall mean KeyBank National Association and National City
Bank.
"Regulatory Change" shall mean, as to any Bank, any change in federal,
state or foreign laws or regulations or the adoption or making of any
interpretations, directives or requests of or under any federal, state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental authority charged with the interpretation or
administration thereof.
"Related Person" of any Person shall mean any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person), or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Related Writing" shall mean any Note, assignment, mortgage, security
agreement, guaranty agreement, subordination agreement, financial statement,
audit report or other writing furnished by Borrower, the Parent or any of their
respective officers to the Agents or the Banks pursuant to or otherwise in
connection with this Amended Credit Agreement.
"Reportable Event" shall mean a reportable event as that term is defined in
Title IV of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
<PAGE>
"Required Banks" means at any time Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, Banks holding Notes evidencing at least 66 2/3% of the aggregate
unpaid principal amount of the Loans.
"Revolving Loans" shall have the meaning set forth in Section 3.03(a)
hereof.
"Revolving Loan Commitment" shall have the meaning set forth in Section
3.02(a) hereof.
"Revolving Loan Note" shall have the meaning set forth in Section 3.05(a)
hereof.
"Satisfaction Date" shall have the meaning set forth in Section 7.14
hereof.
"Senior Notes" shall mean the senior notes of the Parent, in the original
principal amount not to exceed $200,000,000 to be issued under the terms of the
Indenture.
"Subsidiary" of any Person shall mean and include (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation is at the time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, limited liability company, association
(including business trusts) or other entity in which such Person directly or
indirectly through Subsidiaries, has more than a fifty percent (50%) voting or
equity interest at the time.
"Surety" means, collectively, St. Paul Fire and Marine Insurance Company,
St. Paul Mercury Insurance Company, St. Paul Guardian Insurance Company, Seabord
Surety Company, Economy Fire & Casualty Company and Asset Guaranty Insurance
Company.
"Surety Bonds" means the bonds, undertakings and other like obligations
executed by Surety for the Parent subject to the Indemnity Agreement and the
Subordination Agreement.
"Subordination Agreement" means that certain Subordination Agreement dated
as of January 29, 1999 executed and delivered by the Surety in favor of the
Agents and the Banks, as such Subordination Agreement may, from time to time, be
amended, restated or otherwise modified.
"Syndication Agent" means National City Bank, in its capacity as
syndication agent for the Banks hereunder, and its successors in such capacity.
"Term Loan" shall have the meaning set forth in Section 2.02(a) hereof.
"Term Note" shall have the meaning set forth in Section 2.03(a) of this
Amended Credit Agreement.
<PAGE>
"Termination Date" means December 10, 2001, unless extended by the Banks
pursuant to Section 3.09 of this Amended Credit Agreement, in which case the
Termination Date shall be the date of the expiration of any such extension, or,
if terminated earlier pursuant to Article XI or Section 8.13(b) of this Amended
Credit Agreement, the Termination Date shall be the date of such earlier
termination.
"Unfunded Current Liabilities" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan, exceeds the fair market value of the assets allocable thereto,
determined in accordance with Section 412 of the Code.
"Voting Stock" of any Person shall mean Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
Any accounting term not specifically defined in this Article I or elsewhere
in the Amended Credit Agreement, shall have the meaning ascribed thereto by
generally accepted accounting principles not inconsistent with Borrower's
present accounting procedures.
The foregoing definitions shall be applicable to the singular and plurals
of the foregoing defined terms.
ARTICLE II
TERM LOANS
SECTION 2.01(a). [Reserved].
SECTION 2.01(b). [Reserved].
SECTION 2.02(a). TERM LOANS ON CONVERSION OF REVOLVING LOANS. Subject to
the terms and conditions of this Amended Credit Agreement, each Bank severally
agrees that it will, upon not less than two (2) London Banking Days' prior
written request of the Borrower to the Agent, make a term loan (each "Term Loan"
and collectively the "Term Loans") to the Borrower on the Termination Date in an
amount not exceeding the lesser of (x) the then outstanding aggregate principal
amount of Revolving Loans made by such Bank, or (y) the then amount of the
Commitment of such Bank. The proceeds of each Term Loan shall be used
exclusively to pay the Revolving Loans made by such Banks hereunder and, upon
the making of Term Loans, no additional Revolving Loans shall be made.
<PAGE>
SECTION 2.02(b). REPAYMENT OF TERM LOANS. The principal of the Term Loans
shall be payable in consecutive quarterly installments, each in an amount equal
to $5,625,000, such payments to commence on the first Quarterly Date next
following the date on which the Term Loans are made and continuing until the
earlier of the following (a) payment in full of the Term Loans and (b) the
sixteenth (16th) Quarterly Date following the date on which the Term Loans were
made, at which time all remaining principal of the Term Loans shall be due and
payable in full, unless such principal becomes due and payable earlier pursuant
to the provisions of Article XI. Notwithstanding any other provision of this
Amended Credit Agreement, any regularly scheduled installment of principal paid
by the Borrower on a Quarterly Date pursuant to this Section 2.02(b) that
results in a prepayment of the Term Loans shall not be subject to the payment of
the prepayment premium set forth in Section 5.05 of this Amended Credit
Agreement.
SECTION 2.03. TERM NOTES. (a) The Borrower's obligation to pay the
principal of, and interest on, the Term Loan made to it by each Bank shall be
evidenced by a promissory note substantially in the form of Exhibit C attached
hereto with blanks appropriately completed in conformity herewith (each a "Term
Note" and, collectively, the "Term Notes'').
(b) The Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and dated as of the
Termination Date, (iii) be in a stated principal amount equal to the amount
determined pursuant to Section 2.02 (a) for such Bank and be payable in the
principal amount of the Term Loan evidenced thereby, (iv) mature on the
sixteenth (16th) Quarterly Date following the date on which the Term Loan was
made, (v) bear interest as provided in Article IV in respect of the Term Loan
evidenced thereby and (vi) be entitled to the benefits of this Amended Credit
Agreement and the other Related Writings.
ARTICLE III
REVOLVING LOANS
The Banks hereby establish a revolving loan facility pursuant to which
Revolving Loans will be made to the Borrower, on and subject to the terms and
conditions set forth in this Amended Credit Agreement.
SECTION 3.01. AMOUNT OF THE REVOLVING LOAN FACILITY. The aggregate
principal amount of the Revolving Loans plus the LC Obligations outstanding from
time to time shall not exceed the sum of the Revolving Loan Commitments in
effect at the time.
<PAGE>
SECTION 3.02. REVOLVING LOAN COMMITMENTS. (a) As used in this Amended
Credit Agreement, the "Revolving Loan Commitment" of each Bank at any time means
the obligation of each Bank to advance, subject to the terms and conditions set
forth herein, up to the maximum amount set forth for such Bank on Exhibit A
hereto (the "Maximum Amount"); provided that, on each Quarterly Date, the
aggregate Revolving Loan Commitment shall be reduced by $2,500,000 and the
Maximum Amount of the Revolving Loan Commitment of each Bank shall be reduced by
such Bank's Pro rata share of the aggregate $2,500,000 reduction. If, and to the
extent that, upon giving effect to such reduction, the outstanding principal
balance of the Loans plus LC Obligations will exceed the aggregate Revolving
Loan Commitment, then, notwithstanding any other provision of the Amended Credit
Agreement to the contrary, the Borrower also shall, on such Quarterly Date, make
a prepayment of principal, in accordance with the requirements of Section 5.05
of this Amended Credit Agreement, sufficient to reduce the outstanding principal
balance of the Loans plus LC Obligations to an amount less than or equal to the
reduced aggregate Revolving Loan Commitment.
(b) The Borrower shall have the right at all times to permanently reduce
the Revolving Loan Commitments in whole or in part by giving written notice of
the reduction to the Agent at least one Cleveland Banking Day prior to the
reduction, each such reduction to be equal to at least $500,000, or the then
Revolving Loan Commitments if the then Revolving Loan Commitments are less than
$500,000. Each such reduction shall reduce each Bank's Revolving Loan Commitment
Pro rata. Concurrently with each reduction, the Borrower shall prepay the
amount, if any, together with interest thereon by which the aggregate unpaid
principal amount of the Revolving Loans plus LC Obligations exceeds the sum of
the Revolving Loan Commitments as so reduced.
(c) All Revolving Loans under this Amended Credit Agreement shall be made
by the Banks Pro rata on the basis of their Revolving Loan Commitments. It is
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that each Bank shall be obligated
to make the Loans to be made by it hereunder, regardless of the failure of any
other Bank to fulfill its commitments hereunder.
SECTION 3.03. REVOLVING LOANS. (a) Each Bank severally agrees, subject to
the fulfillment of the terms and conditions of this Amended Credit Agreement, to
make revolving loans (the "Revolving Loans") to the Borrower from time to time
from and including the Closing Date until the Termination Date. Subject to the
provisions of this Amended Credit Agreement, Revolving Loans may be repaid in
whole or in part, and amounts so repaid may be reborrowed, but in no event shall
the aggregate principal amount of each Bank's Revolving Loans plus such Bank's
Pro rata share of the LC Obligations exceed at any time the then Revolving Loan
Commitment of such Bank.
<PAGE>
(b) The requesting of a Revolving Loan in and of itself pursuant to a
Notice of Borrowing constitutes a representation and warranty by the Borrower to
the Banks and the Agents that the conditions specified in Section 5.01 hereof
have been satisfied. Each oral request for a Revolving Loan (which request shall
be promptly confirmed in writing as specified in Section 5.01 hereof) shall be
made by a person authorized by the Borrower to do so and designated on Schedule
3.03, or as that Schedule may be amended from time to time in writing by the
Borrower (an "Authorized Fiscal Officer"), and the making of a Revolving Loan as
provided herein shall conclusively establish Borrower's obligation to repay such
Loan.
SECTION 3.04. PURPOSE OF THE REVOLVING LOANS. The proceeds of Revolving
Loans shall be used by the Borrower for working capital purposes of the
Borrower.
SECTION 3.05. REVOLVING LOAN NOTES. (a) The Borrower has executed and
delivered to each of the Banks a promissory note substantially in the form and
substance of Exhibit D attached hereto with all blanks appropriately completed
in conformity herewith (each a "Revolving Loan Note" and, collectively
"Revolving Loan Notes").
(b) The Revolving Loan Note issued to each Bank (i) has been executed by
the Borrower, (ii) is payable to the order of such Bank and is dated as shown on
Exhibit D, (iii) is in a stated principal amount equal to the Revolving Loan
Commitments of such Bank and is payable in the principal amount of the Revolving
Loans evidenced thereby, (iv) shall mature on the Termination Date and (v) shall
be entitled to the benefits of this Amended Credit Agreement and other Related
Writings. The Revolving Loan Notes shall be subject to the terms of this Amended
Credit Agreement.
SECTION 3.06. LETTERS OF CREDIT. (a) The Banks agree to make available to
the Borrower letters of credit, issued by the Agent, pursuant to their
respective Revolving Loan Commitments up to an aggregate amount at any one time
outstanding of $30,000,000 minus the aggregate principal amount of all then
outstanding Surety Bonds issued by the Surety on behalf of the Parent pursuant
to the Indemnity Agreement. The availability of letters of credit will be
subject to (i) the Agent and the Banks being satisfied with the terms of the
letter of credit, (ii) the Borrower's executing and delivering such letter of
credit and reimbursement agreements and related documents as required by the
Agent, and (iii) satisfaction of all conditions to the Borrower obtaining a
Revolving Loan in the amount of the requested letter of credit. The Borrower
shall pay a fee for each letter of credit to the Agent for the Pro rata benefit
of the Banks in the amount of two percent (2%) of the stated amount of the
letter of credit; provided that, the Agent shall be entitled to .125% of such
fee prior to the distribution of the balance of such fee Pro rata to the Banks.
In addition, the Borrower shall pay to the Agent upon issuance of each letter of
credit provided for under this Section 3.06 an issuance fee of $500 for the
Agent's services in issuing the letter of credit. No letter of credit shall be
issued having an expiration date after the Termination Date. All letters of
credit shall be in such form and substance as the Agent, the Banks and the
Borrower agree. The Borrower shall not be entitled to obtain letters of credit
from the Agent unless the Borrower is then entitled to obtain Revolving Loans
from the Banks in an amount not less than the stated amount of the letter of
credit requested, the other conditions of Section 5.01 of this Amended Credit
Agreement have been satisfied as if the Borrower was obtaining a Revolving Loan
and the Borrower has executed and delivered such letter of credit, reimbursement
agreements and other related documents as may be required by the Agent. The
amount available for borrowing from time to time under the Loan shall be reduced
by the amount of the LC Obligations then outstanding.
<PAGE>
(b) In the event the Agent pays any amount under or on account of a letter
of credit (the payment by the Agent under or on account of a letter of credit
being herein called a "Draw"), a Revolving Loan shall be deemed to be made to
the Borrower by each Bank to the extent of its Pro rata share of the Revolving
Loan Commitments to reimburse immediately the Agent for the amount of the Draw.
The Agent shall notify each Bank of the occurrence and payment of a Draw and,
not later than 1:00 p.m. of the date of such notice, each Bank will make
available to the Agent its Pro rata portion of the Draw deemed to be a Revolving
Loan. All amounts shall be made available to the Agent in U.S. Dollars and
immediately available funds at its office listed on the signature pages hereto.
If such corresponding Pro rata amount is not in fact made available to the Agent
by such Bank the Agent shall be entitled to recover such corresponding amount
from such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from the Bank or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered by the Agent at a
rate per annum equal to (i) if paid by such Bank, the overnight federal funds
effective rate or (ii) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Article IV, for the Loans. In the event
no Revolving Loan or only a partial Revolving Loan is deemed to be made, the
Agent is hereby authorized to charge (without prior notice to the Borrower) the
amount of each Draw, together with interest thereon, against any account of the
Borrower maintained with the Agent.
(c) So long as letters of credit are outstanding, the amount of Revolving
Loans that the Borrower is entitled to obtain under this Article III shall be
reduced by the stated amount of the letters of credit issued for the accounts of
the Borrower and, in addition to otherwise constituting part of the Revolving
Loan, except as otherwise expressly stated herein, the stated amount of the
letters of credit shall be treated as principal of the Revolving Loans.
(d) Whenever the Borrower desires that a letter of credit be issued, the
Borrower shall give the Agent written notice (including by way of facsimile
transmission) thereof prior to 1:00 P.M. (Cleveland Time) at least five
Cleveland Banking Days (or such shorter period as may be acceptable to the
Agent) prior to the proposed date of issuance (which shall be a Cleveland
Business Day), which written notice shall be in the form of Exhibit E hereto
(each, a "Letter of Credit Request"). Each Letter of Credit Request shall
include an application for such letter of credit and any other documents that
the Agent customarily requires in connection therewith. The Agent shall promptly
notify each Bank of each Letter of Credit Request.
(e) The delivery of each Letter of Credit Request shall be deemed a
representation and warranty by the Borrower that such letter of credit as
requested in such Letter of Credit Request may be issued in accordance with and
will not violate the requirements of this Section 3.06 and shall include a
representation and warranty as to the aggregate principal amount of all then
outstanding Surety Bonds. The Agent shall, on the date of each issuance of or
amendment or modification to a letter of credit by it, give each Bank and the
Borrower written notice of the issuance of or amendment or modification to such
letter of credit.
<PAGE>
(f) In determining whether to pay under any letter of credit, the Agent
shall not have any obligation relative to the Banks other than to determine that
any documents required to be delivered under such letter of credit have been
delivered and that they appear to comply on their face with the requirements of
the letter of credit. Any action taken or omitted to be taken by the Agent with
respect to a letter of credit issued by it if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create any resulting liability
for the Agent.
SECTION 3.07. REPAYMENT OF THE REVOLVING LOAN NOTES. The principal of the
Revolving Loan Notes shall be due and payable in full on the Termination Date,
unless such principal sums shall become due earlier in whole or in part by
reason of the principal amount exceeding the aggregate amount of the Revolving
Loan Commitments at any time in effect or pursuant to the provisions of Article
XI hereof.
SECTION 3.08. INTEREST ON THE REVOLVING LOANS. [RESERVED.]
SECTION 3.09. EXTENSIONS OF THE REVOLVING LOANS. Within 60 days following
the 31st day of January of any calendar year in which there exist outstanding
Revolving Loans, the Borrower may request the Banks to extend the Termination
Date for one additional year in a writing delivered to the Agent in accordance
with the terms of this Amended Credit Agreement. The unanimous consent of the
Banks shall be required for any such extension and the Banks shall have the
right, but not the obligation, to approve such request for an extension. Any
approval of the Borrower's request shall be subject to such terms and conditions
as the Banks may deem appropriate.
ARTICLE IV
INTEREST ON THE TERM LOANS AND THE REVOLVING LOANS
SECTION 4.01(a). INTEREST OPTIONS. The Borrower shall pay interest on the
Term Loans and the Revolving Loans at the rates in effect from time to time
pursuant to the Interest Options provided for in Sections 4.01(b) and 4.01(c) as
selected by the Borrower or otherwise in effect in accordance with the terms and
conditions of this Amended Credit Agreement from time to time. Interest on the
Revolving Loans shall accrue from and including the Original Closing Date to but
excluding the date of repayment thereof. Interest on the Term Loans shall accrue
from and including the date such Loans are made to the Borrower to but excluding
the date of repayment thereof.
SECTION 4.01(b). LIBOR RATE OPTION. Interest on the principal amount of
each Loan at any time subject to the interest rate option provided for pursuant
to this Section 4.01(b) (the "LIBOR Rate Option") shall be at a rate determined
by adding the applicable LIBOR rate at the time in effect for each Interest
Period for such Loan and the applicable Indicated Spread for the LIBOR Rate
Option set forth in Section 4.01(d) below. The LIBOR Rate Option shall be in
effect for all portions of the principal of the Loans for which the Borrower has
selected an Interest Period in accordance with Section 4.02 hereof, unless and
until any event or circumstance provided for in Sections 4.09 or 4.10 hereof
shall have occurred and continue to be in effect.
SECTION 4.01(c). PRIME RATE OPTION. Interest on the principal amount of all
Loans at any time subject to the interest rate option provided for pursuant to
this Section 4.01(c) (the "Prime Rate Option") shall be at rates determined by
adding the Prime Rate in effect from time to time and the applicable Indicated
Spread for the Prime Rate Option set forth in Section 4.01(d) below. The
interest rate in effect under the Prime Rate Option shall change automatically
and immediately with each change in the Prime Rate. The Prime Rate Option shall
be in effect for all portions of the principal of the Loans for which the LIBOR
Rate Option is not in effect at any time.
<PAGE>
SECTION 4.01(d). INDICATED SPREAD. The Indicated Spread is measured in
basis points and shall be determined as follows:
Revolving Loans
---------------
Period Indicated Spread
------ ----------------
(Basis Points)
Prime Rate Option LIBOR Rate Option
From and including the Original Closing 25 200
Date to the Termination Date
Term Loans
----------
Period Indicated Spread
------ ----------------
(Basis Points)
Prime Rate Option LIBOR Rate Option
From and including the Termination Date 50 225
to but not including the second anniversary
of the Termination Date
From and including the second anniversary 75 250
of the Termination Date
<PAGE>
SECTION 4.02. INTEREST PERIODS. The Borrower shall have the option to
select and advise the Agent of the Interest Periods the Borrower has selected
for Term Loans and Revolving Loans not less than two (2) Cleveland Banking Days
prior to (a) the Closing Date, for the Term Loans and the Revolving Loans to be
made on the Closing Date, (b) each Interest Adjustment Date, (c) the date any
Term Loans or Revolving Loans are to be made subsequent to the Closing Date, and
(d) any date on which the Borrower desires to have any portion of the principal
of the Loans not subject to the LIBOR Rate Option to become subject to the LIBOR
Rate Option. Each Interest Period selected shall apply to not less than $500,000
in principal amount of the Loans; provided, that at no time shall there be more
than ten (10) Interest Periods in effect. The principal amount subject to each
Interest Period shall be deemed distributed Pro rata among the Banks with
respect to the respective Loans to which the Interest Period applies. If the
Borrower fails to timely select any Interest Period, the Borrower shall be
deemed to have elected to convert such Loan to a Loan subject to the Prime Rate
Option, effective as of the expiration date of such current Interest Period.
SECTION 4.03. INTEREST PAYMENT DATES. Interest on all Loans shall be
payable (a) in arrears on the first Cleveland Banking Day of each month, (b) on
any prepayment or conversion (on the amount prepaid or converted), (c) at
maturity (whether by acceleration or otherwise) and/or, (d) after such maturity,
on demand.
SECTION 4.04. INTEREST CALCULATIONS. All interest shall be computed on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed. Interest shall in all events continue to accrue in accordance with the
provisions of this Amended Credit Agreement until the time payment in full is
received.
SECTION 4.05. POST-DEFAULT RATE. After the occurrence and during the
continuation of any Event of Default, the Loans and any interest on the Loans
not paid when due shall bear interest at a rate equal to the rate(s) otherwise
in effect pursuant to this Amended Credit Agreement plus two percent (2%) per
annum, and all such interest shall be due on demand. No interest shall accrue on
any interest that is being charged with respect to any interest not paid when
due.
SECTION 4.06. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time any
law, treaty, regulation (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System), governmental rule, guideline,
order or request (whether or not having force of law) or the interpretation or
administration thereof by any governmental authority charged with the
administration thereof or any central bank or other fiscal, monetary or other
authority shall impose, modify or deem applicable any reserve and/or special
deposit requirement against assets held by, or deposits in or for the amount of
any Loans by, any Bank, and the result of the foregoing is to increase the cost
(whether by incurring a cost or adding to a cost) to such Bank of making or
maintaining Loans hereunder or to reduce the amount of principal or interest
received by such Bank with respect to such Loans, then upon demand by such Bank
the Borrower shall pay to such Bank from time to time on each interest payment
date with respect to such Loans, as additional consideration hereunder,
additional amounts sufficient to fully compensate and indemnify such Bank for
such increased cost or reduced amount, assuming (which assumption such Bank need
not corroborate) such additional cost or reduced amount were allocable to such
Loans. A statement as to the increased cost or reduced amount as a result of any
event mentioned in this Section 4.06, setting forth the calculations therefor,
shall be submitted by such Bank to the Borrower not later than one hundred fifty
(150) days after the events giving rise to the same occurred and shall, in the
absence of manifest error, be conclusive and binding as to the amount thereof.
Notwithstanding any other provision of this Amended Credit Agreement, after any
such demand for compensation by any Bank, Borrower, upon at least one (1)
Cleveland Banking Day's prior written notice to such Bank through the Agent, may
prepay all Loans in full regardless of the Interest Period of any thereof. Any
such prepayment shall be subject to the prepayment premium set forth in Section
5.05 hereof.
<PAGE>
SECTION 4.07. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Amended Credit
Agreement or any transaction under this Amended Credit Agreement, be subjected
to any tax, levy, impost, charge, fee, duty, deduction or withholding of any
kind whatsoever (other than any tax imposed upon the total net income of such
Bank) and if any such measures or any other similar measure shall result in an
increase in the cost to such Bank of making or maintaining any Loan or in a
reduction in the amount of principal, interest or commitment fee receivable by
such Bank in respect thereof, then such Bank shall promptly notify the Borrower
stating the reasons therefor. The Borrower shall thereafter pay to such Bank
upon demand from time to time on each interest payment date with respect to such
Loans, as additional consideration hereunder, such additional amounts as will
fully compensate such Bank for such increased cost or reduced amount. A
statement as to any such increased cost or reduced amount, setting forth the
calculations therefor, shall be submitted by such Bank to the Borrower not later
than one hundred fifty (150) days after the events giving rise to the same
occurred and shall, in the absence of manifest error, be conclusive and binding
as to the amount thereof.
If any Bank receives such additional consideration from the Borrower
pursuant to this Section 4.07, such Bank shall use its best efforts to obtain
the benefits of any refund, deduction or credit for any taxes or other amounts
on account of which such additional consideration has been paid and shall
reimburse the Borrower to the extent, but only to the extent, that such Bank
shall receive a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental charges
(including any taxes imposed on or measured by the total net income of such
Bank) of the United States or any state or subdivision thereof by virtue of any
such deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Bank. If, at the time any audit of such
Bank's income tax return is completed, such Bank determines, based on such
audit, that it was not entitled to the full amount of any refund reimbursed to
the Borrower as aforesaid or that its net income taxes are not reduced by a
credit or deduction for the full amount of taxes reimbursed to the Borrower as
aforesaid, the Borrower, upon demand of such Bank, will promptly pay to such
Bank the amount so refunded to which such Bank was not so entitled, or the
amount by which the net income taxes of such Bank were not so reduced, as the
case may be.
Notwithstanding any other provision of this Amended Credit Agreement, after
any such demand for compensation by any Bank, Borrower, upon at least one (1)
Cleveland Banking Day's prior written notice to such Bank through the Agent, may
prepay all Loans in full regardless of the Interest Period of any thereof. Any
such prepayment shall be subject to the prepayment premium set forth in Section
5.05 hereof.
<PAGE>
SECTION 4.08. INDEMNITY. Without prejudice to any other provisions of this
Article IV, the Borrower hereby agrees to indemnify each Bank against any loss
or expense which such Bank may sustain or incur as a consequence of any Event of
Default hereunder, including, but not limited to, any loss of profit, premium or
penalty incurred by such Bank in respect of funds borrowed by it for the purpose
of making or maintaining any Loan subject to the Libor Rate Option, as
determined by such Bank in the exercise of its sole but reasonable discretion. A
statement as to any such loss or expense shall be promptly submitted by such
Bank to the Borrower not later than one hundred fifty (150) days after the
events giving rise to the same occurred and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
SECTION 4.09. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In the event that the Agent shall have determined that dollar
deposits of the relevant amount for the relevant Interest Period are not
available to the Reference Banks in the applicable Eurodollar market or that, by
reason of circumstances affecting such market, adequate and reasonable means do
not exist for ascertaining the LIBOR rate applicable to such Interest Period, as
the case may be, the Agent shall promptly give notice of such determination to
the Borrower. In any such event, all principal of the Loans then subject to the
LIBOR Rate Option shall become subject to the Prime Rate Option on expiration of
any Interest Periods then in effect. In the event that the circumstances causing
any such unavailability of deposits or inability to determine the LIBOR rate
shall change or terminate so that the LIBOR rate may again be determined, the
Agent shall promptly so notify the Borrower.
SECTION 4.10. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time
any new law, treaty, regulation, governmental rule, guideline, order or request
or any change in any existing law, treaty, regulation, governmental rule,
guideline, order or request or any interpretation thereof by any governmental or
other regulatory authority charged with the administration thereof, shall make
it unlawful for any Bank to fund any Loans which it is committed to make
hereunder subject to the LIBOR Rate Option with moneys obtained in the
Eurodollar market, the Commitment of such Bank to fund such Loans shall, upon
the happening of such event forthwith be suspended for the duration of such
illegality, and such Bank shall by written notice to the Borrower and the Agent
declare that its Commitment with respect to such Loans has been so suspended
and, if and when such illegality ceases to exist, such suspension shall cease
and such Bank shall similarly notify the Borrower and the Agent. If any such
change shall make it unlawful for any Bank to continue in effect the funding in
the applicable Eurodollar market of any Loan previously made by it hereunder
subject to the LIBOR Rate Option, such Bank shall, upon the happening of such
event, notify the Borrower, the Agent and the other Banks thereof in writing
stating the reasons therefor, and the Borrower shall, on the earlier of (i) the
last day of the then current Interest Period or (ii) if required by such law,
regulation or interpretation, on such date as shall be specified in such notice,
prepay all such Loans to the Banks in full. Any such prepayment or conversion
may be made without payment of the prepayment premium provided from Section 5.05
hereof, but Borrower shall compensate such Bank(s) for any costs or expenses
relating to such Loan incurred in connection with the events provided for in
this Section on written request to the Borrower describing such costs or
expenses.
<PAGE>
SECTION 4.11. FUNDING. Each Bank may, but shall not be required to, make
Loans hereunder with funds obtained outside the United States.
ARTICLE V
AGREEMENTS AND CONDITIONS APPLICABLE TO ALL LOANS
SECTION 5.01 NOTICE OF BORROWING. (a) Whenever the Borrower desires to
incur a Loan, it shall give the Agent, prior to 12:00 noon (Cleveland time), at
least two Cleveland Banking Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Loan to be subject to the LIBOR Rate
Option and at least one Cleveland Banking Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Loan to be subject to
the Prime Rate Option. Each such notice (each, a "Notice of Borrowing" a form of
which is attached hereto as Exhibit F) shall be appropriately completed to
specify (i) the type of Loan(s) to be made, (ii) the aggregate principal amount
of each type of Loan to be made, which, in the case of Revolving Loans shall be
an amount equal to an integral multiple of $500,000, (iii) the date such Loan(s)
is to be made (which shall be a Cleveland Banking Day), and (iv) whether the
Loan(s) shall be subject to the Prime Rate Option or the Libor Rate Option and,
in the latter case, the Interest Period to be initially applicable thereto. The
Agent shall promptly give each Bank written notice (or telephonic notice
promptly confirmed in writing) of each proposed Loan, of such Bank's
proportionate share thereof and of the other matters covered by the Notice of
Borrowing.
<PAGE>
(b) Without in any way limiting the obligation of the Borrower to confirm
in writing any telephonic notice permitted to be given hereunder, the Agent may,
prior to receipt of written confirmation, act without liability upon the basis
of such telephonic notice, believed by the Agent in good faith to be from an
Authorized Fiscal Officer of the Borrower. In such case, the Borrower hereby
waives the right to dispute the Agent's record of the terms of such telephonic
notice.
SECTION 5.02 DISBURSEMENT OF FUNDS. (a) No later than 1:00 PM (Cleveland
time) on the date specified in each Notice of Borrowing, each Bank will make
available its Pro rata portion of each Loan requested to be made on such date in
the manner provided below in this Section 5.02(a). All amounts shall be made
available to the Agent in U.S. dollars and immediately available funds at its
office listed on the signature pages hereto and the Agent promptly will make
available to the Borrower by depositing to its account at the Agent's office the
aggregate of the amounts so made available in the type of funds received. Unless
the Agent shall have been notified by any Bank prior to the date specified in
the Notice of Borrowing that such Bank does not intend to make available to the
Agent its portion of the Loan or Loans to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of borrowing, and the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank and the Agent has made available same to the Borrower,
the Agent shall be entitled to recover such corresponding amount from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from the Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such corresponding amount is recovered by the Agent at a rate per annum equal to
(i) if paid by such Bank, the overnight federal funds effective rate or (ii) if
paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Article IV, for the Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its obligation
to fulfill its commitments hereunder or to prejudice any rights which the
Borrower may have against any Bank as a result of any default by such Bank
hereunder.
SECTION 5.03. CONDITIONS TO LOANS. The obligation of each Bank to make
Loans hereunder is conditioned, in the case of each Loan hereunder, upon the
following:
(a) receipt by the Agent of a Notice of Borrowing or Letter of Credit
Request, as applicable;
(b) no Event of Default or Possible Default existing then or immediately
after giving effect to the Loan; and
(c) the conditions set forth in Article VI hereof having been satisfied;
and
(d) the representations and warranties contained in Article IX hereof being
true and correct in all material respects with the same force and effect as if
made on and as of the date of such Loan except to the extent that any thereof
expressly relate to an earlier date.
Each request for a Loan by the Borrower hereunder shall be deemed to be a
representation and warranty by the Borrower as of the date of such borrowing as
to the truth of the matters specified in (b), (c) and (d) above.
<PAGE>
SECTION 5.04. PAYMENT ON NOTES, ETC. All payments of principal, interest,
and any other amounts under the Amended Credit Agreement shall be made to the
Agent in immediately available funds and in lawful money of the United States of
America for the account of the Banks, not later than 12:00 noon (Cleveland time)
on the date when due. Any such payment received by the Agent after 12:00 noon on
a Cleveland Banking Day shall be deemed received on the next succeeding
Cleveland Banking Day and interest shall accrue to such next Cleveland Banking
Day in respect of any principal of the Loans to be paid by such payment. All
payments made by the Borrower hereunder, under any Note or any other Related
Writing, will be made without setoff, counterclaim or defense. The Agent shall
distribute to each Bank its Pro rata share of the amount of principal, interest
and other amounts received by it for the account of such Bank on the same day
the Agent receives payment thereof from the Borrower in immediately available
funds, unless the Agent does not receive such payment from the Borrower until
after 12:00 noon, in which case the Agent shall make payment thereof to the
Banks on the next Cleveland Banking Day. Each Bank shall endorse each Note held
by it with appropriate notations evidencing each payment of principal made
thereon or shall record such principal payment by such other method as such Bank
may generally employ; provided, that failure to make any such entry shall in no
way detract from Borrower's obligations under each such Note. Whenever any
payment to be made hereunder, including without limitation any payment to be
made on any Note, shall be stated to be due on a day which is not a Cleveland
Banking Day, such payment shall be made on the next succeeding Cleveland Banking
Day and such extension of time shall in each case be included in the computation
of the interest payable on such Note; provided, that if the next succeeding
Cleveland Banking Day falls in the succeeding calendar month, such payment shall
be made on the preceding Cleveland Banking Day and the relevant Interest Period
shall be adjusted accordingly. To the extent a Bank does not receive its Pro
rata share of the amount of principal, interest and other amounts made available
by the Borrower to the Agent for the account of such Bank at the applicable time
set forth above in this Section 5.04, such Bank shall be entitled to recover
from the Agent, interest on all such amounts in respect of each day from the
date such amounts were made available to the Agent by the Borrower to the date
such amounts are distributed to such Bank at a rate per annum equal to the
overnight federal funds effective rate.
SECTION 5.05. PREPAYMENT. (a) The Borrower shall have the right (subject to
the payment of a prepayment premium as hereinafter described in this Section
5.05), at any time or from time to time, upon two (2) Cleveland Banking Days'
prior written notice (or telephonic notice promptly confirmed in writing) to
prepay all or any part of the principal amount of the Loans as designated by the
Borrower, subject to the provisions of Section 5.05(b) hereof, plus interest
accrued on the amount so prepaid to the date of such prepayment, which notice
shall promptly be transmitted by the Agent to each of the Banks.
<PAGE>
(b) The Borrower agrees that if LIBOR as determined as of 11:00 a.m. London
time, two (2) London Banking Days' prior to the date of prepayment or
acceleration of any Loans (hereinafter, "Prepayment LIBOR") shall be lower than
the last LIBOR previously determined for those Loans accruing interest at LIBOR
with respect to which prepayment is intended to be made or that are accelerated
(hereinafter, "Last LIBOR") prior to the end of the applicable Interest Period,
then the Borrower shall, upon written notice by the Agent, promptly pay to the
Agent, for the account of each of the Banks, in immediately available funds, a
prepayment premium measured by a rate (the "Prepayment Premium Rate") which
shall be equal to the difference between the Last LIBOR and the Prepayment
LIBOR. In determining the Prepayment LIBOR payable to each Bank, Agent shall
apply a rate for each Bank equal to LIBOR for a deposit approximately equal to
each Bank's portion of such prepayment or accelerated balance which would be
applicable to an Interest Period commencing on the date of such prepayment or
acceleration and having a duration as nearly equal as practicable to the
remaining duration of the actual Interest Period during which such acceleration
occurs or prepayment is to be made. In addition, Borrower shall immediately pay
directly to each Bank the amount claimed as additional costs or expenses
(including, without limitation, cost of telex, wires, or cables) incurred by
such Bank in connection with the prepayment or acceleration upon Borrower's
receipt of a written statement from such Bank. The Prepayment Premium Rate shall
be applied to all or such part of the principal amounts of the Notes as related
to the Loans to be prepaid, or that are accelerated and the prepayment premium
shall be computed for the period commencing with the date on which such
prepayment is to be made or acceleration occurs to that date which coincides
with the last day of the Interest Period previously established when the Loans,
which are to be prepaid or are accelerated, were made. Each voluntary prepayment
of a Loan shall be in the aggregate principal sum of not less than One Million
Dollars ($1,000,000) (except in the case of a Loan initially made in an
aggregate amount less than One Million Dollars ($1,000,000)) and, if greater, in
an integral multiple of Two Hundred Fifty Thousand Dollars ($250,000). In the
event the Borrower cancels a proposed Loan subsequent to the delivery to the
Agent of a Notice of Borrowing with respect to such Loan, but prior to the draw
down of funds thereunder, such cancellation shall be treated as a prepayment
subject to the aforementioned prepayment premium.
(c) Each prepayment of the Term Loans shall be applied to the principal
installments thereof in the inverse order of their respective maturities.
SECTION 5.06. UNUSED COMMITMENT FEES. Borrower agrees to pay to Agent, for
the Pro rata benefit of each Bank, as consideration for its Commitment
hereunder, an unused commitment fee calculated at the rate of three eighths of
one percent per annum (3/8%) (based on a year having 360 days and calculated for
the actual number of days elapsed) from the Original Closing Date to the
Termination Date, on the average daily unborrowed amount of such Bank's
Revolving Loan Commitment hereunder, payable on each Quarterly Date. After any
permanent reduction of the Revolving Loan Commitments pursuant to Section
3.02(b), the unused commitment fees payable hereunder shall be calculated upon
the Revolving Loan Commitments of the Banks as so reduced.
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
Prior to or concurrently with the execution and delivery of this Amended
Credit Agreement, and as conditions precedent to the making of any Loans
hereunder, the following actions shall be taken, all in form and substance
satisfactory to the Agents and the Banks and their respective counsel:
SECTION 6.01. CORPORATE AND LOAN DOCUMENTS. Borrower shall deliver or cause
to be delivered to the Agents and the Banks the following documents, in all
cases duly executed, delivered and/or certified, as the case may be:
(a) Certified copies of the resolutions of the board of directors of
Borrower evidencing approval of the execution, delivery and performance of this
Amended Credit Agreement and the Notes provided for herein;
(b) Certified copies of resolutions of the board of directors of the Parent
evidencing approval of the execution, delivery and performance of the Amended
Guaranty;
(c) Copies of the Articles of Incorporation of Borrower, certified by the
Ohio Secretary of State as of a recent date;
(d) Copies of the Articles of Incorporation of the Parent, certified by the
Ohio Secretary of State as of a recent date;
(e) Code of Regulations of Borrower, certified as true and complete as of
the Closing Date by the secretary of Borrower;
(f) Code of Regulations of Parent, certified as true and complete as of the
Closing Date by the secretary of Parent;
(g) Borrower good standing certificate from the State of Ohio as of a
recent date;
(h) Parent good standing certificate from the State of Ohio as of a recent
date.
(i) A certificate of the secretary or assistant secretary of Borrower
certifying the names of the officers of Borrower authorized to sign this Amended
Credit Agreement and the Notes, together with the true signatures of such
officers.
<PAGE>
(j) A certificate of the secretary or assistant secretary of Parent
certifying the names of the officers of Parent authorized to sign the Amended
Guaranty, together with the true signatures of such officers.
(k) The Borrower, the Agents, and the Banks shall have executed and
delivered counterparts of the Amended Credit Agreement.
(l) The Parent shall have executed and delivered the Amended Guaranty to
the Agent and the Banks.
(m) A certificate of the secretary or assistant secretary of Borrower
certifying that as of the date of this Amended Credit Agreement and after giving
effect thereto (i) there shall exist no Possible Default or Event of Default and
(ii) all representations and warranties contained herein shall be true and
correct in all material respects.
(n) A certificate of the secretary or assistant secretary of Parent
certifying that as of the date of this Amended Credit Agreement and after giving
effect thereto (i) there shall exist no Possible Default or Event of Default and
(ii) all representations and warranties contained herein shall be true and
correct in all material respects.
SECTION 6.02. OPINION OF COUNSEL FOR PARENT. Borrower shall deliver or
caused to be delivered to the Agents and the Banks a favorable opinion of
counsel for the Parent as to the due authorization, execution and delivery, and
legality, validity, and enforceability of the Amended Guaranty and such other
matters as the Agents and the Banks may request.
SECTION 6.03. COMMITMENT FEE. Borrower shall, on or before the Closing
Date, pay to Agent a commitment fee equal to 5 basis points of the total
Commitment of the Banks under this Amended Credit Agreement.
SECTION 6.04. JUDGMENT, ORDERS. On the Closing Date, there shall not exist
any judgment, order, injunction or other restraint issued or filed with respect
to the consummation of the transactions contemplated by this Amended Credit
Agreement.
SECTION 6.05. LITIGATION. On the Closing Date, there shall be no actions,
suits or proceedings pending or threatened (a) with respect to this Amended
Credit Agreement or the transactions contemplated hereby or (b) which the Agents
or the Banks shall determine could (i) have a Material Adverse Effect or (ii)
have a material adverse effect on the rights or remedies of the Banks hereunder
or under the Notes or Amended Guaranty or on the ability of either the Borrower
or the Parent to perform its respective obligations to the Banks hereunder or
under the Notes or the Amended Guaranty.
SECTION 6.06. NOTICE OF BORROWING. Prior to the making of each Loan, the
Agent shall have received a Notice of Borrowing satisfying the requirements of
Section 5.01.
<PAGE>
SECTION 6.07. OPINION OF COUNSEL FOR BORROWER. Borrower shall deliver or
cause to be delivered to the Agents and the Banks a favorable opinion of counsel
for the Borrower as to the due authorization, execution and delivery, and
legality, validity and enforceability of the Amended Credit Agreement and the
Notes and such other matters as the Agents and the Banks may request.
SECTION 6.08. PAYMENT OF FEES. On the Closing Date, the Borrower shall have
paid to the Agents and the Banks all costs, fees and expenses, and all other
compensation contemplated by this Amended Credit Agreement (including, without
limitation, legal fees and expenses) to the extent then due.
SECTION 6.09 ADVERSE CHANGE, ETC. From January 31, 1999 to the Closing
Date, nothing shall have occurred (and neither the Banks nor the Agents shall
have become aware of any facts or conditions not previously known) which the
Banks or the Agents shall determine (a) has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Banks or the
Agents, or on the ability of the Borrower or the Parent to perform its
obligations to them or (b) has, or could have, a material adverse effect on the
business, properties, assets, liabilities or condition (financial or otherwise)
(a "Material Adverse Effect") of the Borrower or the Parent.
ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that on the Closing Date and thereafter, for
so long as this Amended Credit Agreement remains in effect and until the
Commitments have terminated and the principal of and interest on all Notes and
all other payments due hereunder shall have been paid in full, Borrower will
perform and observe all of the following provisions, namely:
SECTION 7.01. PAYMENT OF AMOUNTS DUE. The Borrower will make all payments
of the principal of and interest on the Loans and the Notes promptly as the same
become due.
SECTION 7.02. EXISTENCE, BUSINESS, ETC. The Borrower will cause to be done
all things necessary to preserve and to keep in full force and effect its
existence and rights and those of its Subsidiaries. The Borrower will, and will
cause its Subsidiaries to, comply in all material respects with all federal,
state and local laws and regulations now in effect or hereafter promulgated by
any governmental authority having jurisdiction over it or them, as applicable.
SECTION 7.03. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause
its Subsidiaries to, at all times maintain, preserve, protect and keep its
properties used in the conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted, and, from time to time, make all
needful and proper repairs, renewals, replacements, betterments, and
improvements thereto, so that the business carried on in connection therewith
may be properly conducted at all times.
<PAGE>
SECTION 7.04. PAYMENT OF TAXES, ETC. The Borrower will pay and discharge
all lawful taxes, assessments and governmental charges or levies imposed upon
it, upon its income or profits or upon its properties, before the same shall
become in default or penalties attach thereto, as well as all lawful claims for
same which have become due and payable which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided, that the Borrower
shall not be required to pay and discharge any such tax, assessment, charge,
levy or claim so long as the validity thereof shall be contested in good faith
by appropriate proceedings and there shall be set aside on its books such
reserves with respect thereto as are required by generally accepted accounting
principles. Except where the liability for the tax, assessment, charge, levy or
claim is limited solely to the property on which assessed and is not subject to
enforcement against the Borrower, the Borrower will in all events pay such tax,
assessment, charge, levy or claim before the property subject thereto shall be
sold to satisfy any lien which has attached as security therefor.
SECTION 7.05. FINANCIAL STATEMENTS. The Borrower will furnish to each Bank:
(a) within forty-five (45) days (or fifty (50) days so long as the Parent
shall not have reported an Event of Default under the Amended Guaranty to the
Securities and Exchange Commission during such fiscal period nor on its most
recent filing with the Securities and Exchange Commission) after the end of each
of the first three (3) quarter-annual fiscal periods of each of the Borrower's
fiscal years, an unaudited consolidated and consolidating balance sheet of the
Parent, the Borrower and their respective Subsidiaries as at the end of that
period and an unaudited consolidated and consolidating statement of earnings of
the Parent, the Borrower and their respective Subsidiaries for the Borrower's
current fiscal year to the end of that period, all prepared in form and detail
in accordance with generally accepted accounting principles, consistently
applied, and certified by a Chief Financial Officer of the Parent, together with
a certificate of a senior officer of the Borrower (i) specifying the nature and
period of existence of each Event of Default and/or Possible Default, if any,
and the action taken, being taken or proposed to be taken by the Borrower in
respect thereof, or if none, so stating, (ii) certifying that the
representations and warranties of the Borrower set forth in Article IX hereof
are true and correct as of the date of such certificate, or, if not, all
respects in which they are not and (iii) certifying compliance by the Borrower
with the covenants contained in Section 8.13;
(b) within ninety (90) days (or ninety-five (95) days so long as the Parent
shall not have reported an Event of Default under the Amended Guaranty to the
Securities and Exchange Commission during such fiscal period nor on its most
recent filing with the Securities and Exchange Commission) after the end of each
of the Borrower's fiscal years, complete audited annual financial statements of
the Parent, the Borrower and their respective Subsidiaries for that year
prepared on a consolidated basis and unaudited on a consolidating basis and in
form and detail satisfactory to the Banks, together with (i) a certificate of a
senior officer of Borrower (x) specifying the nature and period of existence of
each Event of Default and/or Possible Default, if any, and the action taken,
being taken or proposed to be taken by Borrower in respect thereof or, if none,
so stating, and (y) certifying that the representations and warranties of the
Borrower set forth in Article IX hereof are true and correct as of the date of
such certificate, or, if not, all respects in which they are not, and (ii) a
fully completed covenant compliance worksheet in the form and substance of
Schedule 7.05 hereof relating to such fiscal year duly certified by the
Borrower's accountants; and
<PAGE>
(c) forthwith upon the Agent's or any Bank's written request, such other
information about the financial condition, properties and operations of Borrower
and its Subsidiaries, including, but not limited to, financial statements, rent
rolls and other similar information for each Subsidiary of the Borrower, in each
case as the Agent or that Bank may from time to time reasonably request.
SECTION 7.06. INSPECTION. The Borrower will and will cause each Subsidiary
to permit its properties and records to be examined at all reasonable times by
the Agent and each of the Banks.
SECTION 7.07. ENVIRONMENTAL COMPLIANCE. The Borrower will comply in all
material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which Borrower or any
Subsidiary owns property, operates, arranges for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts for transport any
hazardous substances, solid waste or other wastes or holds any interest in real
property or otherwise. The Borrower will furnish to the Banks promptly after
receipt thereof a copy of any notice the Borrower or any Subsidiary may receive
from any governmental authority, private person or entity or otherwise that any
litigation or proceeding pertaining to any environmental, health or safety
matter has been filed or is threatened against the Borrower or such Subsidiary,
any real property in which the Borrower or such Subsidiary holds any interest or
any past or present operation of the Borrower or such Subsidiary. The Borrower
will not allow the storage, release or disposal of hazardous waste, solid waste
or other wastes on, under or to any real property in which Borrower holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this subsection "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise. The Borrower shall defend, indemnify and hold the
Banks harmless against all costs, expenses, claims, damages, penalties and
liabilities of every kind or nature whatsoever (including attorneys' fees)
arising out of or resulting from the noncompliance of the Borrower or any
Subsidiary with any Environmental Law provided that, so long as and to the
extent that the Banks are not required to make any payment or suffer to exist
any unsatisfied judgment, order or assessment against them, the Borrower may
pursue rights of appeal to comply with such Environmental Laws. In any case of
noncompliance with any Environmental Law by a Subsidiary, the Banks' recourse
for indemnity in respect of the matters provided for in this Section shall be
limited solely to the property of the Subsidiary holding title to the property
involved in such noncompliance and such recovery shall not be a lien, or a basis
of a claim of lien or levy of execution, against either the Borrower's general
assets or the general assets of any of its Subsidiaries.
<PAGE>
SECTION 7.08. ERISA. (a) At the request of any Bank, the Borrower will
deliver to each Bank a complete copy of the annual report (Form 5500) of each
Plan required to be filed with the Internal Revenue Service. In addition to any
certificates or notes delivered to the Banks pursuant to this Section 7.08,
copies of any notices received by the Borrower or any Subsidiary of the Borrower
or any ERISA Affiliate with respect to any Plan shall be delivered to the Banks
no later than (10) days after the date such notice has been filed with the
Internal Revenue Service or the PBGC or such notice has been received by the
Borrower or such Subsidiary or such ERISA Affiliate, as applicable.
(b) As soon as possible and, in any event, within ten (10) days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know of the occurrence of any of the following, the Borrower will deliver to
each of the Banks a certificate of an authorized officer of the Borrower setting
forth details as to the occurrence and such action, if any, which the Borrower,
such Subsidiary or such ERISA Affiliate is required or proposed to take,
together with any notices required or proposed to be given to or filed with or
by the Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto:
(i) that a Reportable Event has occurred;
(ii) that an accumulated funding deficiency has been incurred or any
application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan;
(iii) that a contribution required to be made to a Plan has not been
timely made;
(iv) that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA;
(v) that a Plan has an Unfunded Current Liability giving rise to a
lien under ERISA or the Code;
(vi) that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan;
(vii) that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; (viii) that the
Borrower, any of its Subsidiaries or any ERISA Affiliate will or may incur
any liability (including any indirect, contingent or secondary liability)
to or on account of the termination of or withdrawal from a Plan under
Section 4062, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971, 4975, or 4980 of the Code or Sections 409
or 502(i) or 501(1) of ERISA; or
<PAGE>
(ix) that the Borrower or any of its Subsidiaries may incur any
material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by Section 601
of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA).
SECTION 7.09. INSURANCE. The Borrower will and will cause each of its
Subsidiaries to (a) keep itself and all of its insurable properties insured at
all times to such extent, by such insurers, and against such hazards and
liabilities as is generally and prudently done by like businesses, it being
understood that the Parent, the Borrower and each Subsidiary has obtained a
fidelity bond for each of its employees that handle funds, (b) give each Bank
prompt written notice of each material change in the Borrower's or any
Subsidiary's insurance coverage and the details of the change and (c) forthwith
upon any Bank's written request, furnish to each Bank such information about the
Borrower's or any Subsidiary's insurance as any Bank may from time to time
reasonably request, which information shall be prepared in form and detail
satisfactory to each Bank and certified by an officer of the Borrower or such
Subsidiary, as applicable.
SECTION 7.10. MONEY OBLIGATIONS. The Borrower will and will cause each
Subsidiary to pay in full (a) prior in each case to the date when penalties
would attach, all taxes, assessments and governmental charges and levies (except
only those so long as and to the extent that the same shall be contested in good
faith by appropriate and timely proceedings diligently pursued) for which it may
be or become liable or to which any or all of its properties may be or become
subject, (b) all of its wage obligations to its employees in compliance with the
Fair Labor Standards Act (29 U.S.C. ~~206-207) or any comparable provisions, and
(c) all of its other obligations calling for the payment of money (except only
those so long as and to the extent that the same shall be contested in good
faith by appropriate and timely proceedings diligently pursued) before such
payment becomes overdue except where the failure to make such payments, either
singly or in the aggregate, would not have a Material Adverse Effect on the
Borrower and provided that Borrower shall promptly give written notice to the
Administrative Agent of any such non-payments, which written notice the
Administrative Agent will promptly deliver to each Bank.
SECTION 7.11. RECORDS. The Borrower will and will cause each Subsidiary to
(a) at all times maintain true and complete records and books of account, and
without limiting the generality of the foregoing, maintain appropriate reserves
for possible losses and liabilities, all in accordance with generally accepted
accounting principles applied on a basis not inconsistent with its present
accounting procedures, and (b) at all reasonable times permit any Bank to
examine the Borrower's or any Subsidiary's books and records and to make
excerpts therefrom and transcripts thereof.
<PAGE>
SECTION 7.12. FRANCHISES. The Borrower will and will cause each Subsidiary
to preserve and maintain at all times its corporate existence, rights and
franchises; provided that this Section 7.12 shall not prohibit any merger,
consolidation, dissolution or transfer permitted by Section 8.02.
SECTION 7.13. NOTICE. The Borrower will cause its Chief Financial Officer,
or in his or her absence another officer designated by the Chief Financial
Officer, to promptly notify the Banks whenever:
(a) any Event of Default or Possible Default may occur hereunder or any
representation or warranty made in Article IX hereof or elsewhere in this
Amended Credit Agreement or in any Related Writing may for any reason cease in
any material respect to be true and complete; and/or
(b) any Subsidiary shall (i) be in default of any material (either with
respect to the Subsidiary or the Borrower) obligation for payment of borrowed
money or, to the knowledge of Borrower, any material obligations in respect of
guarantees, taxes and/or indebtedness for goods or services purchased by, or
other contractual obligations of, such Subsidiary and/or (ii) not, to the
knowledge of Borrower, be in compliance with any law, order, rule, judgments,
ordinance, regulation, license, franchise, lease or other agreement that has or
could reasonably be expected to have a material adverse effect on the business,
operations, property or financial condition of the Subsidiary, and/or (iii)
Borrower and/or the Subsidiary shall have received or have knowledge of any
actual, pending or threatened claim, notice, litigation, citation, proceeding,
or demand relating to any matter(s) described in subsections (i) and (ii) of
this Section 7.13; and/or
(c) the Borrower shall be in default of any guarantee permitted by Section
8.07(b).
SECTION 7.14. POST CLOSING ITEMS. The Borrower will promptly perform and
complete to the satisfaction of the Agent each of the matters, if any, set forth
on Schedule 7.14 attached hereto (the "Post Closing Items") on or before the
date set forth on Schedule 7.14 for the performance and completion thereof (the
"Satisfaction Date").
SECTION 7.15. FURTHER ASSURANCES. The Borrower agrees to execute and
deliver to the Agent and/or the Banks any agreements, documents and instruments,
including, without limitation, additional Notes as replacements or substitutions
as may be required by the Agent and/or the Banks, and to take such other actions
as reasonably requested by the Agent to effect the transactions contemplated
hereby.
<PAGE>
SECTION7.16. NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three (3) Cleveland Banking Days after any officer of the Borrower or any
of its Subsidiaries obtains knowledge thereof, notice to the Banks of (a) the
occurrence of any event which constitutes a Possible Default or Event of
Default, which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto, and
(b) the commencement of, or written threat of, or any significant development
in, any litigation or governmental proceeding pending against the Borrower or
any of its Subsidiaries which is likely to have a Material Adverse Effect or a
material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under the Notes.
SECTION 7.17. USE OF PROCEEDS. All proceeds of the Loans shall be used as
provided in Sections 2.02(a) or 3.04, as applicable.
SECTION 7.18. USE OF PROCEEDS OF THE SENIOR NOTES. The net proceeds of the
Senior Notes, as the same shall be contributed by the Parent to the Borrower as
capital, shall be used by the Borrower for general corporate purposes of the
Borrower, including projects under current development.
SECTION 7.19. YEAR 2000 COMPLIANCE EFFORTS. The Borrower will, and will
cause each Subsidiary to, take all reasonable actions to ensure that its
computer based systems are able to effectively process data, including dates on
and after January 1, 2000 and to avoid serious disruption to its business or
operations and will notify the Agent of any material risk of its inability to so
process data and avoid serious disruption which could have a Material Adverse
Effect on such Person.
ARTICLE VIII
NEGATIVE COVENANTS
Borrower covenants and agrees that as of the Closing Date, and thereafter for so
long as this Amended Credit Agreement is in effect and until the Commitments and
all letters of credit are terminated, no Notes are outstanding and the Loans,
together with interest, fees and all other obligations incurred hereunder, are
paid in full, the Borrower will observe all of the following provisions, namely:
SECTION 8.01. PLAN. Neither the Borrower nor any Subsidiary will suffer or
permit any Plan to be amended if, as a result of such amendment, the current
liability under the Plan is increased to such an extent that security is
required pursuant to Section 307 of the ERISA. As used herein, "current
liability" means current liability as defined in Section 307 of ERISA.
SECTION 8.02. COMBINATIONS. The Borrower will not dissolve or liquidate,
and will not permit any Subsidiary to dissolve or liquidate, except in the
ordinary course of business to the extent that no Material Adverse Effect is
thereby suffered by Borrower. The Borrower will not and will not permit any
Subsidiary to be a party to any consolidation or merger; provided, that this
Section shall not apply to (i) any merger of a Subsidiary into Borrower (with
Borrower being the surviving corporation) or into another Subsidiary, (ii) any
consolidation of a Subsidiary with another Subsidiary, or (iii) a merger of
Borrower into Parent on such terms that the surviving corporation will be liable
for all obligations of Borrower arising under this Amended Credit Agreement.
<PAGE>
SECTION 8.03. BULK TRANSFERS. The Borrower will not and will not permit a
Subsidiary to be a party to any lease, sale or other transfer involving all or a
substantial part of the assets of the Companies as a whole; provided, that this
Section shall not apply to (a) any transfer of assets by a Subsidiary to
Borrower or another Subsidiary, (b) the transfer of assets to a trustee (other
than a trustee for the benefit of creditors) in connection with a building
project involving such assets, or (c) any transfer effected in the normal course
of business and on commercially reasonable terms.
SECTION 8.04. BORROWINGS. The Borrower will not and will not permit any
Subsidiary to create, assume or suffer to exist any indebtedness for borrowed
money or any Funded Indebtedness of any kind; provided, that this Section shall
not apply to (a) any Loans obtained hereunder, (b) any indebtedness of Borrower
or of any Subsidiary created in the course of purchasing or developing real
estate or financing construction or other improvements thereon or purchasing
furniture, fixtures or other equipment therefor or any other related
indebtedness of Borrower or of any Subsidiary for borrowed money or any
refinancings thereof, provided that neither Borrower nor any Subsidiary (other
than a Subsidiary whose sole assets consist of contiguous parcels of land which
are being purchased or developed with such financing, the improvements, if any,
thereon, furniture, fixtures and other equipment used in connection therewith,
receivables incurred by tenants in connection therewith and the proceeds of such
receivables and other property directly obtained from the ownership of such
assets) shall have any personal liability for such indebtedness, the creditors'
recourse being solely to the property being pledged as collateral for such
indebtedness and the income therefrom, (c) any Funded Indebtedness hereafter
incurred by the Borrower or any Subsidiary that is fully subordinated, by
written agreement in form and substance satisfactory to the Banks, which
agreements shall include, among others, terms providing that such subordinated
indebtedness (i) shall be unsecured, (ii) shall have a maturity date of at least
four (4) years beyond the maturity date of the Revolving Loans, including all
extensions thereof and including the term of any Term Loans made upon the
Termination Date and (iii) shall be subject to a stand still period of at least
twelve (12) months, in favor of the prior payment in full of the Borrower's Debt
to the Banks, and provided further that all proceeds of such Funded Indebtedness
shall be used to repay the outstanding principal amounts of the Loans, or (d)
indebtedness under any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement or other similar agreement or
arrangement provided by one or both of the Agents and offered on a Pro rata
basis to the Banks and designed to hedge the position of the Borrower or any
Subsidiary with respect to interest rates, relating to indebtedness otherwise
permitted under this Section 8.04.
<PAGE>
SECTION 8.05. LIENS. The Borrower will not and will not permit any
Subsidiary to (a) acquire any property subject to any inventory consignment,
land contract or other title retention contract, (b) other than the periodic
sale by Borrower or any Subsidiary of any mortgages held by Borrower or such
Subsidiary, sell or otherwise transfer any receivables, or (c) suffer or permit
any property now owned or hereafter acquired by it to be or become encumbered by
any mortgage, security interest, financing statement or lien of any kind or
nature other than:
(i) any lien for a tax, assessment or governmental charge or levy so
long as the payment thereof is not at the time required by Section 7.10
hereof;
(ii) any lien securing only its workers' compensation, unemployment
insurance and similar obligations;
(iii) any mechanic's, carrier's or similar common law or statutory
lien incurred in the normal course of business;
(iv) any transfer of a check or other medium of payment for deposit or
collection through normal banking channels or any similar transaction in
the normal course of business;
(v) any mortgage, security interest or other lien securing only
indebtedness permitted by clause (b) of Section 8.04;
(vi) any lien permitted by Section 8.15 hereunder;
(vii) any transfer of receivables without recourse;
(viii) any assignment of rents, profits and/or cash flows derived from
particular real estate given as additional security to a mortgage or
security interest on such real estate permitted by this Section 8.05,
provided, that the mortgage or security interest encumbers only the real
property in question;
(ix) any financing statement perfecting a security interest permitted
by this Section;
(x) easements, restrictions, minor title irregularities and similar
matters having no adverse effect as a practical matter on the ownership or
use of the Borrower's or any Subsidiary's real property; or
(xi) any mortgage, security interest and lien securing any
indebtedness incurred to the Banks under this Amended Credit Agreement.
<PAGE>
SECTION 8.06. LOANS. The Borrower will not and will not permit any
Subsidiary to knowingly make or have outstanding at any time to any third party,
any advance or loan of any kind other than:
(a) any loan secured solely by mortgages on real estate and not exceeding
eighty per cent (80%) of the value of the real estate as appraised by the lender
(provided, however, that in the case of any federally insured loan, the amount
of the loan may be up to one hundred percent (100%) of such appraised value),
(b) any loan from Borrower to one of its Subsidiaries or from such a Subsidiary
to Borrower, provided, that any such loan from a Subsidiary to the Borrower
shall be subordinated in all respects to the Borrower's Debt to the Banks on the
terms set forth in Section 8.04(c) herein and shall be on such terms and
conditions as may be satisfactory to the Banks or (c) any advance or loan made
in the normal course of business of acquiring properties for, or developing
properties of, the Borrower or any Subsidiary.
SECTION 8.07. GUARANTEES. The Borrower will not and will not permit any
Subsidiary to pledge its credit or property in any manner for the payment or
other performance of the indebtedness, contract or other obligation of another
(including, without limitation, the indebtedness of the Parent under the Senior
Notes), whether as guarantor (whether of payment or of collection), surety,
co-maker, endorser or by agreeing conditionally or otherwise to make any
purchase, loan or investment in order thereby to enable another to prevent or
correct a default of any kind, or otherwise, except for:
(a) endorsements of negotiable instruments for deposit or collection or
similar transactions in the normal course of business;
(b) any guarantee of the completion of a real estate building project if
the Borrower or any Subsidiary is the developer of the project or has a property
interest in the project, provided, that such guarantee contains balancing
provisions satisfactory to the Banks and provided, further, that no debt service
guarantees or balancing guarantees through lease-up shall be permitted;
(c) [Reserved.];
(d) any indemnity or guarantee of a surety bond for the performance by some
customer of the Borrower or any Subsidiary of the customer's obligations under a
land development contract;
(e) any guarantee by Borrower of the equity investment or performance of a
Subsidiary (other than any obligations of such Subsidiary incurred for borrowed
money) in connection with a real estate project in favor of a partner or
partnership in which such Subsidiary is a general partner, when Borrower deems
it to be in its best interest not to be a partner or have a direct interest in
the partnership;
<PAGE>
(f) Borrower's guarantee of up to Six Million Eight Hundred Thousand
Dollars ($6,800,000) of the Wisconsin Park Associates' letter of credit; and
(g) guarantee(s) by Borrower not permitted under the provisions of
Subsections (a) through (f), inclusive, of this Section 8.07 of up to an
aggregate principal amount of indebtedness not at any time exceeding an amount
equal to (i) Four Million Five Hundred Thousand Dollars ($4,500,000) minus (ii)
all amounts subject to guarantee(s) permitted by Section 9.12(f) of the Amended
Guaranty. Borrower shall provide a written report to each of the Banks within
forty-five (45) days after the end of each quarter-annual fiscal period of
Borrower identifying each guarantee of Borrower then outstanding that is not
permitted by the provisions of subsections (a) through (f), inclusive, of this
Section 8.07.
For purposes of Section 8.07(b), the term "balancing provisions" means
provisions that (i) require additional funds to be contributed to a project by
an obligor, which will be disbursed to pay construction costs prior to any
further disbursements by a lender of loan proceeds and (ii) are generally in
effect when the cost to complete a project exceeds the amount of loan proceeds
remaining to be disbursed by the lender.
SECTION 8.08. AMENDMENT OF ARTICLES OF INCORPORATION AND/OR REGULATIONS.
The Borrower will not amend, modify or supplement its articles of incorporation
or its code of regulations in any material respect that would be detrimental to
the performance by the Borrower of its obligations under this Amended Credit
Agreement or the Notes or the rights of the Agent or the Banks under this
Amended Credit Agreement or the Notes.
SECTION 8.09. FISCAL YEAR. Except as required by law, or required in
connection with a transaction permitted under Section 8.02 hereof, the Borrower
will not change its fiscal year without the consent of the Banks, which consent
shall not be unreasonably withheld.
SECTION 8.10. REGULATION U. The Borrower will not, and will not permit its
Subsidiaries to, directly or indirectly, (a) apply any part of the proceeds of
any Loan to the purchasing or carrying of any "margin stock" within the meaning
of Regulations T, U or X of the Federal Reserve Board, or any regulations,
interpretations or rulings thereunder, (b) extend credit to others for the
purpose of purchasing or carrying any such margin stock, or (c) retire
Indebtedness which was incurred to purchase or carry any such margin stock.
SECTION 8.11. NO PLEDGE. The Borrower will not sell, assign, pledge or
otherwise dispose of or encumber any of its partnership interests or other
equity interests in any of its Subsidiaries, except as permitted under Section
8.02.
SECTION 8.12. TRANSACTIONS WITH AFFILIATES. Except for loans permitted by
Section 8.06 of this Amended Credit Agreement, the Borrower will not and will
not permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than in the ordinary course of business
and on terms and conditions substantially as favorable as would be obtainable by
the Borrower or such Subsidiary, at the time, in a comparable arm's-length
transaction with a Person other than an Affiliate.
<PAGE>
SECTION 8.13. DEBT SERVICE COVERAGE RATIO. (a) The Borrower will not permit
the Debt Service Coverage Ratio in each case for the four (4) consecutive
quarters ending on each January 31, April 30, July 31 and October 31 to be less
than 1:20:1.00.
(b) In the event of a violation of Section 8.13(a), the Borrower will have
thirty (30) days from the due date of the most recent financial statement and
covenant compliance certificate delivered in accordance with Section 7.05 to
correct such violation. If the Borrower is unwilling or unable to cure such
violation within such thirty (30) day period, the Revolving Loan Commitments
will be terminated and the then outstanding amount of the Revolving Loans will
be converted to Term Loans as provided in Section 2.02(a), subject to the
provisions contained in Sections 2.02(b), 2.03 and 2.05. Interest shall be paid
in accordance with Article IV, provided, that the Indicated Spread for such Term
Loans subject to the LIBOR Rate Option shall be two hundred fifty (250) basis
points and to the Prime Rate Option shall be seventy-five (75) basis points.
From and after the conversion of the Revolving Loans to the Term Loans pursuant
to this Section 8.13(b), the Borrower will not permit the Debt Service Coverage
Ratio in each case for the four (4) consecutive quarters ending on each January
31, April 30, July 31 and October 31 to be less than 1.00:1.00.
SECTION 8.14(a) RESTRICTIONS ON DISTRIBUTIONS DURING AN EVENT OF DEFAULT
OTHER THAN A PAYMENT DEFAULT. If any Event of Default has occurred and is
continuing, or if any Event of Default would occur as a result thereof, other
than a Payment Default, the Borrower shall not directly or indirectly declare,
make, or pay any Dividends in respect of its Capital Stock, or, notwithstanding
any other provision of the Amended Credit Agreement to the contrary, make any
loans or advances to the Parent (any such Dividends, loans, or advances are
referred to hereinafter as "Distributions") in excess of the sum of the amounts
sufficient to pay, when due, all interest payments in respect of the Senior
Notes and the amounts sufficient to pay, when due, all taxes of the Parent
(collectively, "Permitted Distributions"); provided that any Permitted
Distributions shall be applied by the Parent strictly to the permitted uses
specified above.
SECTION 8.14(b) RESTRICTIONS ON DISTRIBUTIONS DURING A PAYMENT DEFAULT. In
the event of and during the continuance of any Payment Default, the Borrower
shall not directly or indirectly declare or pay any Distributions to the Parent.
SECTION 8.15. CROSS COLLATERALIZATION AND CROSS DEFAULTS. Except as
permitted in this Section 8.15, the Borrower shall not and shall not permit any
Subsidiary to (a) cross-default or agree to cross-default any indebtedness
permitted under this Amended Credit Agreement to this Amended Credit Agreement
or the Debt incurred hereunder; (b) agree to any of the financial covenants of
Borrower contained herein under any other indebtedness permitted under this
Amended Credit Agreement which would effectuate a cross-default with this
Amended Credit Agreement or the Debt incurred hereunder; or (c)
cross-collateralize, or agree to cross-collateralize indebtedness owing to any
one lender under one or more different loan agreements or arrangements,
provided, that the cross-defaulted and/or cross-collateralized indebtedness set
forth on Schedule 8.15 attached hereto shall be permitted.
<PAGE>
Notwithstanding the foregoing clauses of this Section 8.15, (i) with
respect to construction projects which are constructed in multiple phases and/or
stabilized properties, Borrower and any Subsidiary shall be permitted to
cross-default and/or cross-collateralize any indebtedness permitted under this
Amended Credit Agreement, but only if the phases to be cross-collateralized
and/or cross-defaulted consist of a single identifiable project; and (ii) in the
event of a completion guaranty of a construction loan, the Borrower and any
Subsidiary shall be permitted to (a) cross-default any indebtedness permitted
under this Amended Credit Agreement with this Amended Credit Agreement or the
Debt created hereunder or (b) agree to any of the financial covenants of the
Borrower contained herein under any other indebtedness permitted under this
Amended Credit Agreement which effectuates a cross-default with this Amended
Credit Agreement or the Debt incurred hereunder; provided that the completion
guaranty and any other relevant documents relating to such construction loan
provide that if the construction project is performing (i.e. construction is on
schedule and on budget) and otherwise the construction loan is not in default
(after any required notice and the lapse of any applicable cure period), an
Event of Default under this Amended Credit Agreement shall not permit the
construction lender to call upon its completion guaranty to fund construction
costs. In order for a construction lender to call a default due to an Event of
Default under this Amended Credit Agreement, the Banks must have provided
written notice of the Event of Default to the Borrower and all applicable cure
periods shall have lapsed without remedy.
SECTION 8.16. SENIOR NOTES. Borrower shall not alter, amend, change or
modify the terms of the Senior Notes (a) to allow the maturity date of the
Senior Notes to be less than ten (10) years from the date of issue, (b) to
provide for payment of interest under the Senior Notes less frequently than
semi-annually, or (c) to modify the redemption provisions contained therein,
including adding additional redemption provisions.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Subject only to such exceptions, if any, as may be fully disclosed in an
officer's certificate in the form of Schedule 9.00 hereto furnished by Borrower
to each Bank prior to the execution and delivery hereof, Borrower represents and
warrants as follows:<PAGE>
SECTION 9.01. EXISTENCE. Borrower is a corporation duly organized and
validly existing in good standing under the laws of the State of Ohio and is
duly qualified to transact business and is in good standing as a foreign
corporation in all jurisdictions (other than jurisdictions in which the nature
of the property owned or business conducted, when considered in relation to the
absence of serious penalties, renders qualification as a foreign corporation
unnecessary as a practical matter) where the nature of the property owned and
business transacted by Borrower render such qualification necessary. Each of the
Borrower's Subsidiaries is duly organized and existing in good standing in the
jurisdiction of its incorporation or formation. The Borrower and each of its
Subsidiaries has full power, authority, and legal right to own and operate its
respective properties and to carry on the business in which it engages and
intends to engage.
SECTION 9.02. RIGHT TO ACT. No registration with or approval of any
governmental agency of any kind is required for the due execution and delivery
or for the enforceability of this Amended Credit Agreement and any Note issued
pursuant to this Amended Credit Agreement. Borrower has legal power and right to
execute and deliver this Amended Credit Agreement and any Note issued pursuant
to this Amended Credit Agreement and to perform and observe the provisions of
this Amended Credit Agreement and any Note issued pursuant hereto and all such
actions have been duly authorized by all necessary corporate action of Borrower.
By executing and delivering this Amended Credit Agreement and any Note issued
pursuant to this Amended Credit Agreement and by performing and observing the
provisions of this Amended Credit Agreement and any Note issued pursuant hereto,
Borrower will not violate any existing provision of its Articles of
incorporation, code of regulations or by-laws or any applicable law or violate
or otherwise become in default under any existing contract, agreement, indenture
or other obligation binding upon Borrower. The officers executing and delivering
this Amended Credit Agreement on behalf of Borrower have been duly authorized to
do so.
SECTION 9.03. BINDING EFFECT. This Amended Credit Agreement constitutes a
valid and binding agreement of the Borrower, and the Amended Guaranty
constitutes a valid and binding agreement of the Parent, in both cases
enforceable in accordance with their respective terms, and the Notes, when
executed and delivered in accordance with this Amended Credit Agreement, will
constitute valid and binding obligations of the Borrower, enforceable in
accordance with their terms.
SECTION 9.04. LITIGATION. No litigation or proceeding is pending or being
threatened against Borrower or any Subsidiary before any court or any
administrative agency which might, if successful, be expected to have a Material
Adverse Effect on Borrower, or to have a material adverse effect on the ability
of the Borrower to perform its obligations to the Banks hereunder or under the
Notes. The Internal Revenue Service has not alleged any default by Borrower or
any Subsidiary in the payment of any tax or threatened to make any assessment in
respect thereof.
<PAGE>
SECTION 9.05. EMPLOYEE RETIREMENT INCOME SECURITY ACT. No material Plan
established or maintained by Borrower or any Domestic Subsidiary, which is
subject to Part 3 of Subtitle B of Title I of ERISA, had an accumulated funding
deficiency (as such term is defined in Section 302 of ERISA) as of the last day
of the most recent fiscal year of such Plan ended prior to the date hereof, or
would have had an accumulated funding deficiency (as so defined) on such day if
such year were the first year of such Plan to which Part 3 of Subtitle B of
Title I of that Act applied, and no material liability to the PBGC, has been, or
is expected by Borrower or any Domestic Subsidiary to be, incurred with respect
to any such Plan by Borrower or any Domestic Subsidiary.
SECTION 9.06. ENVIRONMENTAL COMPLIANCE. To the best of Borrower's
knowledge, Borrower and each Subsidiary are in compliance with any and all
Environmental Laws including, without limitation, all Environmental Laws in all
jurisdictions in which Borrower or any Subsidiary owns or operates, or has owned
or operated, a facility or site, arranges or has arranged for disposal or
treatment of hazardous substances, solid waste or other wastes, accepts or has
accepted for transport any hazardous substances, solid waste or other wastes or
holds or has held any interest in real property or otherwise. No litigation or
proceeding arising under, relating to or in connection with any Environmental
Law is pending or threatened against Borrower or any Subsidiary, any real
property in which Borrower or any Subsidiary holds or has held an interest or
any past or present operation of Borrower or any Subsidiary. To the best of
Borrower's knowledge, no release, threatened release or disposal of hazardous
waste, solid waste or other wastes is occurring, or has occurred, on, under,
from, or to any real property in which Borrower or any Subsidiary holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this subsection, "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise.
SECTION 9.07. SOLVENCY. Borrower has received consideration which is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to the Banks. Borrower is not insolvent as defined in any applicable
state or federal statute, nor will Borrower be rendered insolvent by the
execution and delivery of this Amended Credit Agreement or any Note to the
Banks. Borrower is not engaged or about to engage in any business or transaction
for which the assets retained by it shall be an unreasonably small capital,
taking into consideration the obligations to the Banks incurred hereunder.
Borrower does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay them as they mature.
SECTION 9.08. FINANCIAL STATEMENTS. The annual financial statements of
Borrower prepared as of January 31, 1999, certified by Borrower's Chief
Financial Officer and heretofore furnished to each Bank, are true and complete,
have been prepared in accordance with GAAP applied on a basis consistent with
those used by Borrower during its immediately preceding full fiscal year and
fairly present its financial condition as of those dates and the results of its
operations for the periods set forth therein. Since January 31, 1999 there has
been no material adverse change in Borrower's financial condition, properties or
business or in the financial condition, properties or business of any Subsidiary
other than any change which has been previously disclosed to the Banks.
<PAGE>
SECTION 9.09. DEFAULTS. No Event of Default or Possible Default exists
hereunder, nor will any begin to exist immediately after the execution and
delivery hereof.
SECTION 9.10. OPERATIONS. The Borrower and its Subsidiaries have obtained
and continue to possess all permits, licenses and authorizations the absence of
which would materially and adversely affect the Borrower's or a Subsidiary's
ability to carry on its business in the ordinary course.
SECTION 9.11. TITLE TO PROPERTIES; PATENTS, TRADE MARKS, ETC. The Borrower
and its Subsidiaries have good and marketable title to all of their properties
and assets, including, without limitation, the properties and assets reflected
in the financial statements referred to in Section 9.08 (excepting, however,
inventory and other immaterial assets, in each case sold or otherwise disposed
of in the ordinary course of business subsequent to the date of such financial
statements). There are no Liens of any nature whatsoever on any of the
properties or assets of the Borrower and its Subsidiaries other than such as are
permitted under Section 8.05. The Borrower and its Subsidiaries owns or
possesses all the patents, trademarks, service marks, trade names, copyrights,
and licenses and rights with respect to the foregoing necessary for the conduct
of their respective businesses as now conducted, without any known conflict with
the valid rights of others which would be inconsistent with the conduct of its
business substantially as now conducted and as currently proposed to be
conducted.
SECTION 9.12. COMPLIANCE WITH OTHER INSTRUMENTS. The Borrower and, to the
best of the Borrower's knowledge, each Subsidiary is not in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any evidence of indebtedness. Neither the
execution and delivery of this Amended Credit Agreement, nor the consummation of
the transactions contemplated hereby, nor compliance with the terms and
provisions hereof will violate the provisions of any applicable law or of any
applicable order or regulations of any governmental authority having
jurisdiction over the Borrower or its Subsidiaries, or will conflict with any
material permit, license or authorization, or will conflict with or result in a
breach of any of the terms, conditions or provisions of any restriction or of
any agreement or instrument to which the Borrower is now a party, or will
constitute a default thereunder, or will result in the creation or imposition of
any Lien upon any of the properties or assets of the Borrower or any Subsidiary.
SECTION 9.13. MATERIAL RESTRICTIONS. Neither the Borrower nor any of its
Subsidiaries are a party to any agreement or other instrument or subject to any
other restriction which would have a Materially Adverse Effect on the Borrower
and its Subsidiaries taken as a whole.
SECTION 9.14. CORRECTNESS OF DATA FURNISHED. This Amended Credit Agreement
and all schedules and exhibits attached hereto do not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained herein or therein not misleading; and there is no fact not
otherwise disclosed in writing to the Agent which, to the knowledge of the
Borrower, would have a Material Adverse Effect on the Borrower and its
Subsidiaries.
<PAGE>
SECTION 9.15. TAXES. The Borrower and each of its Subsidiaries has (a)
timely filed all returns required to be filed by it with respect to all taxes,
(b) paid all taxes shown to have become due pursuant to such returns, and (c)
paid all other taxes for which a notice of assessment or demand for payment has
been received other than taxes that the Borrower or such Subsidiary is
contesting in good faith with appropriate proceedings. All tax returns have been
prepared in accordance with all applicable laws and requirements and accurately
reflect in all material respects the taxable income (or other measure of tax) of
the Borrower filing the same. The accruals for taxes contained in the financial
statements referred to in Section 9.08 are adequate under GAAP to cover all
liabilities for taxes for all periods ending on or before the date of such
financial statements and include adequate provision for all deferred taxes
(including deferred federal taxes), and nothing has occurred subsequent to that
date to make any of such accruals inadequate. All taxes for periods beginning
after the date of this Amended Credit Agreement through and including the
Closing Date have been paid or are adequately reserved against on the books of
the Borrower. The Borrower and each of its Subsidiaries has timely filed all
information returns or reports which are required to be filed and has accurately
reported all information required to be included on such returns or reports.
There are no proposed assessments of taxes against the Borrower or any of its
Subsidiaries nor proposed adjustments to any tax return filed that, individually
or in the aggregate, wold have a Material Adverse Effect on the Borrower.
SECTION 9.16. COMPLIANCE WITH LAWS. Except as disclosed on Schedule 9.16,
the Borrower and, to the best of the Borrower's knowledge, each of its
Subsidiaries is in compliance in all material respects with all material laws,
rules, regulations, court orders and decrees, and orders of any governmental
agency which are applicable to the Borrower or its Subsidiaries or to their
respective properties.
SECTION 9.17. REGULATION U, ETC. The Borrower does not own, nor does it
have any present intention of acquiring, any "margin stock" within the meaning
of Regulation U (12 CFR Part 221) of the Board of Governors of the Federal
Reserve System (herein called "margin stock"). The proceeds of the Loans will
not be used, directly or indirectly, by the Borrower for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness or other liability which was originally incurred to purchase or
carry, any margin stock or for any other purpose which might cause the
transactions contemplated hereby to be considered a "purpose credit" within the
meaning of said Regulation U, or which might cause this Amended Credit Agreement
to violate Regulation U, Regulation T, Regulation X or any other regulation of
the Board of Governors of the Federal Reserve System or the Securities Exchange
Act of 1934. Upon request, the Borrower will promptly furnish the Agent with a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation U.
<PAGE>
SECTION 9.18. HOLDING COMPANY ACT. The Borrower is not a "Holding Company"
or a "Subsidiary Company" of a "Holding Company", or an "Affiliate" of a
"Holding Company" or of a "Subsidiary Company" of a "Holding Company", as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
SECTION 9.19. SECURITIES ACT, ETC. Neither the registration of any security
under the Securities Act of 1933, as amended, or any other federal, state or
local securities laws, nor the qualification of the Amended Credit Agreement,
the Notes and/or the Amended Guaranty under the Trust Indenture Act of 1939, as
amended, is required in connection with the Loans or the issuance and delivery
of the Notes pursuant hereto.
SECTION 9.20. INVESTMENT COMPANY ACT. The Borrower is not, nor immediately
after the application by the Borrower of the proceeds of each Loan will the
Borrower be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 9.21. INDEBTEDNESS OF SUBSIDIARIES. No Subsidiary has any
indebtedness for borrowed money other than (a) on terms that limit recourse for
the payment thereof to the real property or other assets of the Subsidiary
securing such indebtedness, provided, that the assets securing such indebtedness
were acquired or developed with the proceeds of such indebtedness, or (b) such
indebtedness owed by a Subsidiary the sole assets of which consist of contiguous
parcels of land, the improvements, if any, thereon, furniture, fixtures and
other equipment used in connection therewith, receivables incurred by tenants in
connection therewith and the proceeds of such receivables and other property
directly obtained from the ownership of such assets.
SECTION 9.22. GUARANTEES. All outstanding guarantees, including, but not
limited to completion guarantees, issued by Borrower and the maximum amounts
guaranteed pursuant to each such guaranty are set forth on Schedule 9.22
attached hereto.
SECTION 9.23. FUNDED INDEBTEDNESS. Schedule 9.23 attached hereto sets forth
a complete and accurate list of all Funded Indebtedness, including, but not
limited to, intercompany Funded Indebtedness, of each of the Parent and the
Borrower (other than the Loans). All such intercompany Funded Indebtedness is
subordinated in all respects to Borrower's Debt to the Banks.
SECTION 9.24. YEAR 2000 COMPLIANCE. The Borrower and each Subsidiary has
taken and will continue to take, all reasonable actions to insure that its
computer based systems are able to effectively process data, including dates on
and after January 1, 2000 and to avoid serious disruption to its business or
operations.
<PAGE>
ARTICLE X
EVENTS OF DEFAULT
Each of the following shall constitute an event of default (each an "Event
of Default") hereunder:
SECTION 10.01. PAYMENTS. If all or any installment of the principal of, or
interest on, any Note, or any fee provided hereunder shall not be paid in full
punctually when due and payable.
SECTION 10.02. COVENANTS.
(a) If Borrower shall fail or omit to perform or observe any agreement or
other provision contained or referred to in Sections 7.13(a), 7.15, 7.16(a),
7.17 or Article 8 (other than Section 8.13(a)) of this Amended Credit Agreement;
or
(b) If Borrower shall fail or omit to perform or observe any agreement or
other provision (other than those referred to in Sections 10.01 or 10.02(a)
hereof) contained or referred to in this Amended Credit Agreement or any Related
Writing that is on Borrower's part to be complied with, and Borrower shall not
have corrected such failure or omission within thirty (30) days after the giving
of written notice thereof to Borrower by Agent or any Bank that the specified
default is to be remedied.
SECTION 10.03. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or statement made in or pursuant to this Amended Credit Agreement or
any Related Writing or any other material information furnished by Borrower to
the Agents, the Banks or any thereof or any other holder of any Note, shall be
false or erroneous in any material respect.
SECTION 10.04. CROSS DEFAULT. If Borrower and/or any Subsidiary defaults in
any payment of principal or interest due and owing upon any obligation for
borrowed money or, in the case of the Borrower, in the payment or performance of
any obligation permitted to be outstanding or incurred pursuant to Sections 8.04
or 8.05, 8.06, or 8.07 hereof, beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or condition
contained in any agreement under which any such obligation is created, if the
effect of such default is to accelerate the maturity of the related indebtedness
or to permit the holder thereof to cause such indebtedness to become due prior
to its stated maturity or foreclose on any lien on property of Borrower securing
the same, except that defaults in payment or performance of non-recourse
obligations of Borrower or any Subsidiary shall not constitute Events of Default
under this Section 10.04 unless such defaults have, individually or in the
aggregate, a Material Adverse Effect on the Borrower.
<PAGE>
SECTION 10.05. TERMINATION OF PLAN. If (a) any Reportable Event occurs and
the Banks, in their sole determination, deem such Reportable Event to constitute
grounds (i) for the termination of any Plan by the PBGC or (ii) for the
appointment by the appropriate United States district court of a trustee to
administer any Plan and such Reportable Event shall not have been fully
corrected or remedied to the full satisfaction of the Banks within thirty (30)
days after the giving of written notice of such determination to Borrower by the
Banks or (b) any Plan shall be terminated within the meaning of Title IV of
ERISA or (c) a trustee shall be appointed by the appropriate United States
district court to administer any Plan, or (d) the PBGC shall institute
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan.
SECTION 10.06. DOMESTIC SUBSIDIARY SOLVENCY. If (a) any Domestic Subsidiary
shall (i) generally not pay its debts as such debts become due, or (ii) make a
general assignment for the benefit of creditors, or (iii) apply for or consent
to the appointment of a receiver, a custodian, a trustee, an interim trustee or
liquidator of itself or all or a substantial part of its assets, or (iv) be
adjudicated a debtor or have entered against it an order for relief under Title
11 of the United States Code, as the same may be amended from time to time, or
(v) file a voluntary petition in bankruptcy or file a petition or an answer
seeking reorganization or an arrangement with creditors or seeking to take
advantage of any other law (whether federal or state) relating to relief of
debtors, or admit (by answer, by default or otherwise) the material allegations
of a petition filed against it in any bankruptcy, reorganization, insolvency or
other proceeding (whether federal or state) relating to relief of debtors, or
(vi) suffer or permit to continue unstayed and in effect for thirty (30)
consecutive days any judgment, decree or order, entered by a court of competent
jurisdiction, which approves a petition seeking its reorganization or appoints a
receiver, custodian, trustee, interim trustee or liquidator of itself or of all
or a substantial part of its assets, or (vii) take or omit to take any other
action in order thereby to effect any of the foregoing or (viii) fail to pay and
discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or its income, profits, or properties, and/or all lawful claims
for labor, materials and supplies, which, if unpaid, might become a lien or
charge against such properties, in all cases before the same shall become in
default, or (ix) fail to comply with any and all Environmental Laws applicable
to such Domestic Subsidiary, its properties or activities, or (x) fail to
observe, perform or fulfill any of its obligations, covenants or conditions
contained in any evidence of indebtedness or other contract, decree, order,
judgment, or instrument to which such Domestic Subsidiary is a party or by which
it or its assets are bound, and (b) any such event or events described in (a)
above shall in the reasonable judgment of the Banks have a Material Adverse
Effect on the Borrower.
<PAGE>
SECTION 10.07. BORROWER'S SOLVENCY. If Borrower shall (a) discontinue
business, or (b) generally not pay its debts as such debts become due, or (c)
make a general assignment for the benefit of creditors, or (d) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an interim
trustee or liquidator of all or a substantial part of its assets, or (e) be
adjudicated a debtor or have entered against it an order for relief under Title
11 of the United States Code, as the same may be amended from time to time (the
"Bankruptcy Code"), or (f) file a voluntary petition under any chapter or
provision of the Bankruptcy Code or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief of debtors, or admit
(by answer, by default or otherwise) the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of debtors, or (g)
suffer or permit to continue unstayed and in effect for thirty (30) consecutive
days any judgment, decree or order entered by a court or governmental commission
of competent jurisdiction, which assumes custody or control of Borrower,
approves a petition seeking reorganization of Borrower or any other judicial
modification of the rights of its creditors, or appoints a receiver, custodian,
trustee, interim trustee or liquidator for Borrower or of all or a substantial
part of its assets, or (h) take or omit to take any action in order thereby to
effect any of the foregoing.
SECTION 10.08. CHANGE OF OWNERSHIP. If a Change of Ownership Event shall
occur.
SECTION 10.09. JUDGMENTS. If one or more judgments or decrees shall be
entered against the Borrower involving a liability (not paid or fully covered by
a reputable and solvent insurance company) in excess of $5,000,000 for all such
judgments or decrees and any such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within sixty (60) days from
the entry thereof.
SECTION 10.10. DEFAULT UNDER GUARANTY OR SENIOR NOTES. If the Parent
defaults in the payment or performance of any obligation in the Amended Guaranty
or in the performance of any other agreement, covenant, term or condition in the
Amended Guaranty, other than a violation of Section 9.14(a) of the Amended
Guaranty, or in the payment or performance of any obligation under the Senior
Notes or the Indenture (after giving effect to any applicable grace periods), or
in the performance of any other agreement, covenant, term or condition in the
Senior Notes or the Indenture (after giving effect to any applicable grace
periods).
SECTION 10.11. DEFAULT UNDER SUBORDINATION AGREEMENT. If the Parent
defaults in the performance of any obligation in the Subordination Agreement or
in the performance of any other agreement, covenant, term or condition in the
Subordination Agreement (which default shall only be an Event of Default
hereunder when Agent provides written notice of such default to the Parent
and/or the Borrower).
<PAGE>
ARTICLE XI
REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or elsewhere,
the Banks may take any or all of the following actions if any Event of Default
occurs and is continuing:
SECTION 11.01. OPTIONAL DEFAULTS. If any Event of Default referred to in
Sections 10.01, 10.02(a), 10.02(b), 10.03, 10.04, 10.05, 10.06, 10.07 (other
than (e), (f) or (g) thereof) and/or 10.08. 10.09, 10.10 or 10.11 shall occur,
the Required Banks shall have the right in their discretion, by directing the
Agent, on behalf of the Banks, to give written notice to Borrower, and to
(a) terminate the Commitments and the credits hereby established and any
letter of credit which may be terminated in accordance with its terms, in each
case, if not theretofore terminated, and forthwith upon such election the
obligations of the Banks, and each thereof, to make any further Loan or Loans
and/or issue further letters of credit hereunder immediately shall be
terminated, and/or
(b) accelerate the maturity of all of Borrower's Debt to the Banks (if it
be not already due and payable), whereupon all of Borrower's Debt to the Banks
shall become and thereafter be immediately due and payable in full without any
presentment or demand and without any further or other notice of any kind, all
of which are hereby waived by Borrower.
SECTION 11.02. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 10.07(e), 10.07(f) or 10.07(g) hereof shall occur,
(a) all of the Commitments and the credits hereby established shall
automatically and forthwith terminate, if not theretofore terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan or Loans
and/or issue further letters of credit hereunder, and
(b) the principal of and interest on all Notes then outstanding, and all of
Borrower's Debt to the Banks shall thereupon become and thereafter be
immediately due and payable in full (if it be not already due and payable), all
without any presentment, demand or notice of any kind, all of which are hereby
waived by Borrower.
SECTION 11.03. REMEDIES RELATING TO LETTERS OF CREDIT. In the event the
Commitments are terminated and/or the Debt is accelerated pursuant to Sections
11.01 or 11.02 above, Borrower shall immediately deposit with the Agent an
amount of cash equal to the then aggregate amount of the stated amounts of all
letters of credit outstanding hereunder as security for reimbursement of any
drawings made on any such letters of credit and as collateral for repayment of
the Debt or any part thereof.
SECTION 11.04. OFFSETS. If there shall occur or exist any Possible Default
under Section 10.07 hereof or if the maturity of the Notes is accelerated
pursuant to Sections 11.01 or 11.02 hereof, each Bank shall have the right at
any time to set off against, and to appropriate and apply toward the payment of,
any and all Debt then owing by Borrower to that Bank (including, without
limitation, any participation purchased or to be purchased pursuant to Section
12.12 hereof), whether or not the same shall then have matured, any and all
deposit balances and all other indebtedness then held or owing by that Bank to
or for the credit or account of the Borrower, all without notice to or demand
upon the Borrower or any other Person, all such notices and demands being hereby
expressly waived by the Borrower.
<PAGE>
SECTION 11.05. REMEDIES WITH RESPECT TO GUARANTY DEFAULT. In the event of a
violation of Section 9.14(a) of the Amended Guaranty, the Borrower will have
thirty (30) days from the due date of the most recent financial statement and
covenant compliance certificate delivered in accordance with Section 7.05 to
correct such violation. If the Borrower is unwilling or unable to cure such
violation within such thirty (30) day period, the Revolving Loan Commitments
will be terminated and the then outstanding amount of the Revolving Loans will
be converted to Term Loans as provided in Section 2.02(a), subject to the
provisions contained in Sections 2.02(b), 2.03 and 2.05. Interest shall be paid
in accordance with Section 2.03, provided, that the Indicated Spread for such
Term Loans subject to the LIBOR Rate Option shall be two hundred fifty (250)
basis points and to the Prime Rate Option shall be seventy-five (75) basis
points.
SECTION 11.06. APPLICATION OF PAYMENTS. Notwithstanding any other provision
of this Amended Credit Agreement, upon the occurrence and during the continuance
of an Event of Default, the Borrower waives any right it may have to direct the
application of any and all payments received by the Agent or the Banks on
account of the Debt and the Borrower agrees that the Agent and each Bank shall
have the right, in its sole and absolute discretion, to apply and re-apply any
and all such payments in such manner as the Agent or such Bank may deem
advisable, subject to the Pro rata sharing of any such payments among the Banks.
ARTICLE XII
THE AGENT
SECTION 12.01. APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
designates and appoints KeyBank National Association as Agent of such Bank to
act as specified in this Amended Credit Agreement and each such Bank hereby
irrevocably authorizes KeyBank National Association to take such action as Agent
on its behalf and to exercise such powers and perform such duties hereunder as
are expressly delegated to the Agent by the terms hereof, together with such
other powers as are reasonably incidental thereto. The Agent agrees to act as
such upon the express conditions contained in this Article XII. Notwithstanding
any provision to the contrary elsewhere in this Amended Credit Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth in this Amended Credit Agreement, or any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be created by or arise under this Amended Credit Agreement
or otherwise exist against the Agent. Subject to the provisions of Sections
12.03 and 12.11, the Agent shall administer the Loans in the same manner as it
administers its own loans. The provisions of this Article XII are solely for the
benefit of the Agent and the Banks, and neither the Borrower, the Parent nor any
of their respective Subsidiaries shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Amended Credit Agreement, the Agent shall act solely as agent
of the Banks and the Agent does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for the
Borrower, the Parent or their respective Subsidiaries.
<PAGE>
SECTION 12.02. DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Amended Credit Agreement, the Notes or any Related Writing by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care except to the extent otherwise required by
Section 12.03.
SECTION 12.03. EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by such Person
under or in connection with this Amended Credit Agreement, the Notes or the
other Related Writings (except for its or such Person's own gross negligence or
willful misconduct) or (b) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Borrower, the
Parent, or any of their respective Subsidiaries or any of their responsible
officers contained in this Amended Credit Agreement or any Related Writing, or
for any failure of the Borrower, the Parent or any of their respective
Subsidiaries or any of their respective officers to perform its obligations
hereunder or thereunder. Each Bank by its signature to this Amended Credit
Agreement acknowledges and agrees that the Agent has made no representation or
warranty, express or implied, with respect to the creditworthiness, financial
condition or any other condition of Borrower, the Parent or any Subsidiary, or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between the
Agent and such Bank. Each Bank represents that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of Borrower, the Parent and any Subsidiary in connection
with the extension of credit hereunder, and agrees that the Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Banks
hereunder), whether coming into its possession before the granting of the first
Loans or at any time or times thereafter.
SECTION 12.04. RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, facsimile transmission,
telex or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Amended Credit Agreement or
the Notes unless it shall first receive such advice or concurrence of the
Required Banks or the Super Majority Banks, as it deems appropriate, or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Amended Credit
Agreement, the Notes or the other Related Writings in accordance with a request
of the Required Banks or the Super Majority Banks, as applicable, and such
request and any action or failure to act pursuant thereto shall be binding upon
all the Banks.
SECTION 12.05. RESIGNATION OR REMOVAL OF THE AGENT; SUCCESSOR AGENT. The
Agent may resign upon 20 days' notice to the Banks or the Agent may be removed
by a unanimous vote of the Required Banks (excluding the Agent). Upon the
resignation or removal of the Agent, the Required Banks shall appoint from among
the Banks a successor Agent for the Banks subject to prior approval of the
Borrower so long as no Possible Default or Event of Default then exists (such
approval not to be unreasonably withheld or delayed), whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall include such successor agent effective upon its appointment, and
the resigning or removed Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of the former
Agent or any of the parties to this Amended Credit Agreement. After the
resignation or removal of the Agent hereunder, the provisions of this Article
XII shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Amended Credit Agreement. In the event no
successor agent has been appointed by the end of such 20 day period in the case
of a resignation or upon the removal of the Agent by the Required Banks
(excluding the Agent), the resignation or removal of the Agent shall become
effective and the Required Banks shall perform the duties of the Agent until a
successor agent is appointed.
<PAGE>
SECTION 12.06. NOTE HOLDERS. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes unless and until written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
SECTION 12.07. CONSULTATION WITH COUNSEL. (a) The Agent may consult with
legal counsel selected by it and shall not be liable for any action taken or
suffered in good faith by it in accordance with the opinion of such counsel.
(b) Should the Agent (i) employ counsel for advice or other representation
(whether or not any suit has been or shall be filed) with respect to this
Amended Credit Agreement, the Notes or any of the Related Writings, or (ii)
commence any proceeding or in any way seek to enforce its rights or remedies
under this Amended Credit Agreement, the Notes or any Related Writing, each
Bank, upon demand therefor from time to time, shall contribute its share (based
on its Pro rata share) of the reasonable costs and/or expenses of any such
advice or other representation, enforcement or acquisition, including, but not
limited to, fees of receivers, court costs and fees and expenses of attorneys to
the extent not otherwise reimbursed by Borrower; provided that the Agent shall
not be entitled to reimbursement of its attorneys' fees and expenses incurred in
connection with the resolution of disputes between the Agent and the other Banks
unless the Agent shall be the prevailing party in any such dispute. Any loss of
principal and interest resulting from any Event of Default shall be shared by
the Banks in accordance with their respective Pro rata shares and, provided
further, that the Agent shall only be entitled to such reimbursement from those
Banks that were involved in the dispute with the Agent.
<PAGE>
SECTION 12.08. DOCUMENTS. The Agent shall not be under a duty to examine
into or pass upon the validity, effectiveness, genuineness or value of this
Amended Credit Agreement, the Notes or any other Related Writing furnished
pursuant hereto or in connection herewith or the value of any collateral
obtained hereunder, and the Agent shall be entitled to assume that the same are
valid, effective and genuine and what they purport to be.
SECTION 12.09. AGENT AND AFFILIATES. With respect to the Loans made
hereunder, the Agent shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or Affiliate
of the Borrower.
SECTION 12.10. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Agent shall not be deemed to have knowledge or notice of the occurrence
of any Possible Default or Event of Default hereunder (other than the failure to
make available to the Agent any principal of or interest on the Loans for the
account of the Banks as required under this Amended Credit Agreement and the
Notes), unless the Agent has actually received written notice from a Bank or the
Borrower describing such Possible Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Banks. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Banks; provided, that unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Possible Default or Event of Default as it shall deem advisable in the
best interests of the Banks.
SECTION 12.11. INDEMNIFICATION. The Banks agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower), Pro rata
according to the respective principal amounts of their Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in its capacity as agent in any way relating to or arising out of this
Amended Credit Agreement, the Notes or any Related Writing, or the transactions
contemplated hereby or thereby, or any action taken or omitted to be taken by
the Agent under or in connection with the foregoing, provided, that no Bank
shall be liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence, willful misconduct or
from any action taken or omitted by the Agent in any capacity other than as
agent under this Amended Credit Agreement. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 12.11 shall survive the termination of
this Amended Credit Agreement.
<PAGE>
SECTION 12.12. EQUALIZATION PROVISION. Each Bank agrees with the other
Banks that if it at any time shall obtain any Advantage over the other Banks or
any thereof in respect of Borrower's Debt to the Banks including without
limitation in respect of the letters of credit described in Schedule 3.06 hereof
(except under Sections 4.06, 4.07, 4.08, 4.09, 4.10 and/or 4.11, hereof), it
will purchase from the other Banks, for cash and at par, such additional
participation in Borrower's Debt to the Banks as shall be necessary to nullify
the Advantage. If any said Advantage resulting in the purchase of an additional
participation as aforesaid shall be recovered in whole or in part from the Bank
receiving the Advantage each such purchase shall be rescinded, and the purchase
price restored (but without interest unless the Bank receiving the Advantage is
required to pay interest on the Advantage to the Person recovering the Advantage
from such Bank) ratably to the extent of the recovery. Each Bank further agrees
with the other Banks that if it at any time shall receive any payment from or on
behalf of Borrower on any indebtedness owing by Borrower to that Bank by reason
of offset of any deposit or other indebtedness, it will apply such payment first
to any and all indebtedness owing by Borrower to that Bank pursuant to this
Amended Credit Agreement (including, without limitation, any participation
purchased or to be purchased pursuant to this Section 12.12) until Borrower's
Debt has been paid in full. Borrower agrees that any Bank so purchasing a
participation from the other Banks or any thereof pursuant to this Section may
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Bank were a direct creditor of
Borrower in the amount of such participation.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder and no omission or course of dealing on the part of Agent, any Bank or
the holder of any Note in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and in addition to any other rights, powers or
privileges that the Agent or any Bank would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Banks to any other or further action in
any circumstances without notice or demand.
<PAGE>
SECTION 13.02. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of this Amended Credit Agreement or of
the Notes, nor consent to any variance therefrom, shall be effective unless the
same shall be in writing and signed by the Required Banks, the Super Majority
Banks or all of the Banks as appropriate under this Section 13.02, and any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. Unanimous consent of the Banks, or, if there
is any borrowing hereunder, the holders of one hundred percent (100%) (by
amount) of the Notes, shall be required with respect to (i) any increase in any
Commitment, the extension of maturity of the Notes or the payment date of
interest thereunder, (ii) any reduction in the rate of interest on the Notes, or
in any amount of principal or interest due on any Note or any change in the
manner of Pro rata application of any payments made by Borrower to the Banks
hereunder, or any change in amortization schedules, or in the manner of
calculating fees or prepayment penalties, (iii) any change in any percentage
voting requirements in this Amended Credit Agreement, or (iv) the release of the
Amended Guaranty or any other guarantee in favor of the Banks, or (v) any
amendment to the definitions of Required Banks, Super Majority Banks or
Reference Banks set forth herein or to this Section 13.02, or (vi) any material
amendment to any representation, warranty, covenant, Possible Default, Event of
Default or remedy provided for hereunder. The consent of the holders of eighty
percent (80%)(by amount) of the Notes (the "Super Majority Banks") shall be
required for any amendments, modifications or other changes to Section 8.13.
Notice of amendments or consents ratified by the Banks hereunder shall
immediately be forwarded by Borrower to all Banks. Each Bank or other holder of
a Note shall be bound by any amendment, waiver or consent obtained as authorized
by this Section, regardless of its failure to agree thereto.
SECTION 13.03. NOTICES. Except as otherwise expressly provided herein, all
notices, requests, demands and other communications provided for hereunder shall
be in writing (including telegraphic, telex, facsimile, transmission or cable
communication) and mailed, telexed, telegraphed, facsimile transmitted, cabled
or delivered, if to Borrower, addressed to it at the address specified on the
signature pages of this Amended Credit Agreement, if to a Bank, addressed to the
address of such Bank specified on the signature pages of this Amended Credit
Agreement and if to the Agents, addressed to them at the address of the Agent or
the Syndication Agent, as applicable, specified on the signature pages of this
Amended Credit Agreement. All notices, statements, requests, demands and other
communications provided for hereunder shall be deemed to be given or made when
delivered or forty-eight (48) hours after being deposited in the mails with
postage prepaid by registered or certified mail or delivered to a telegraph
company, addressed as aforesaid, except that notices from Borrower to the Agent
or the Banks pursuant to any of the provisions hereof shall not be effective
until received by the Agent or the Banks.
<PAGE>
SECTION 13.04. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand
all costs and expenses of the Banks and the Agents, any expenses incurred in
connection with the preparation of this Amended Credit Agreement, the Notes and
any Related Writings, including, without limitation (i) administration and
out-of-pocket expenses of the Agent in connection with the administration of
this Amended Credit Agreement, the Notes, the collection and disbursement of all
funds hereunder and the other instruments and documents to be delivered
hereunder, (ii) extraordinary expenses of the Agents or the Banks in connection
with the administration of this Amended Credit Agreement, the Notes and the
other instruments and documents to be delivered hereunder, (iii) the reasonable
fees and out-of-pocket expenses of Thompson Hine & Flory LLP, counsel to the
Agent, in connection with the negotiation, preparation, execution and delivery
of this Amended Credit Agreement and related matters, and (iv) all costs and
expenses, including reasonable attorneys' fees and out-of-pocket expenses, in
connection with the restructuring or enforcement of this Amended Credit
Agreement, the Notes or any Related Writing. In addition, Borrower shall pay any
and all stamp and other taxes and fees payable or determined to be payable in
connection with the execution and delivery of this Amended Credit Agreement or
the Notes, and the other instruments and documents to be delivered hereunder,
and agrees to save the Agents and each Bank harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes or fees.
SECTION 13.05. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrower made in or pursuant to this
Amended Credit Agreement or in any certificate or other Related Writing in
connection herewith shall survive the closing hereof or the making of the Loans
or other transactions in connection with which given.
SECTION 13.06. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Amended Credit Agreement and no action taken by the Agents or the Banks
pursuant hereto shall be deemed to constitute the Banks a partnership,
association, joint venture or other entity. No default by any Bank hereunder
shall excuse the other Banks from any obligation under this Amended Credit
Agreement; but no Bank shall have or acquire any additional obligation of any
kind by reason of such default. The relationship among Borrower and the Banks
with respect to this Amended Credit Agreement, any Note and any Related Writing
is and shall be solely that of debtor and creditor, respectively, and no Bank
has any fiduciary obligation toward Borrower with respect to any such documents
or the transactions contemplated thereby.
SECTION 13.07. EXECUTION IN COUNTERPARTS. This Amended Credit Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
<PAGE>
SECTION 13.08. BINDING EFFECT; ASSIGNMENT. (a) This Amended Credit
Agreement shall become effective when it shall have been executed by Borrower,
Agent and by each Bank and thereafter shall be binding upon and inure to the
benefit of Borrower and each of the Banks and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of all of the
Banks, which consent may be withheld in their sole discretion. Each Bank may at
any time grant participations in any of its rights hereunder or under its Note
or Notes to another commercial bank, financial institution, mutual fund or any
institutional "accredited investor" (as defined in Regulation D of the
Securities Act of 1933, as amended), provided, that in the case of any such
participation, the participant shall not have any rights under this Amended
Credit Agreement, the Notes or any Related Writing (the participant's rights
against such Bank in respect of any such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by such Bank hereunder shall be determined as
if such Bank had not sold such participation; and provided further, that no Bank
shall transfer, assign or grant any participation under this Amended Credit
Agreement under which the participant shall have rights to approve any amendment
to or waiver of this Amended Credit Agreement or any Related Writing.
(b) Notwithstanding the foregoing, (i) any Bank may assign all or a portion
of its Loans and/or Commitments and its rights and obligations hereunder to an
affiliate of such Bank and (ii) with the consent of the Agent and the Borrower
so long as no Possible Default or Event of Default then exists (which consents
shall not be unreasonably withheld or delayed), any Bank may assign all or a
portion of its Loans and/or Commitments and its rights and obligations hereunder
to one or more commercial banks, financial institutions (including one or more
Banks), mutual funds or institutional "accredited investors" (as defined in
Regulation D of the Securities Act of 1933, as amended), provided, that (A) any
assignment of a Bank's Revolving Loans shall include a ratable part of such
Bank's Revolving Loan Commitment, and (B) the consent of the Agent (which
consent shall not be unreasonably withheld or delayed) shall be required for any
assignment of a Revolving Loan Commitment to the extent any letters of credit
are outstanding. No assignment pursuant to subsection (ii) of the immediately
preceding sentence shall be in an aggregate amount less than Ten Million Dollars
($10,000,000). If any Bank so sells all or a part of its rights hereunder or
under any Note, any reference in this Amended Credit Agreement or such Note to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would if it were such assigning
Bank. Each assignment pursuant to Section 13.08(b)(ii) shall be effected by the
assigning Bank and the assignee Bank executing a Bank Assignment and Assumption
Agreement substantially in the form of Exhibit E (appropriately completed). At
the time of any such assignment pursuant to Section 13.08(b)(ii), (X) Exhibit A
shall be deemed to be amended to reflect the Commitments of the respective
assignee (which shall result in a corresponding reduction of the Commitment of
the assigning Bank) and of the other Banks (Y) if any such assignment occurs
after the Closing Date, the Borrower will issue new Notes to the respective
assignee and to the assigning Bank (upon delivery of the existing Note or Notes
of such assigning Bank) in conformity with the requirements of this Amended
Credit Agreement and (Z) the Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a nonrefundable
assignment fee of $3,000.
<PAGE>
(c) Notwithstanding any other provisions of this Section 13.08, no transfer
or assignment of the interests or obligations of any Bank hereunder or any grant
of participations therein shall be permitted if such transfer, assignment or
grant would require the Borrower to file a registration Statement with the
Securities and Exchange Commission or to qualify the loans under the "Blue Sky"
laws of any State.
SECTION 13.09. GOVERNING LAW. This Amended Credit Agreement, each of the
Notes and any Related Writing shall be governed by and construed in accordance
with the laws of the State of Ohio, without regard to the principles of conflict
of laws and the respective rights and obligations of Borrower and the Banks
shall be governed by Ohio law.
SECTION 13.10. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this
Amended Credit Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several headings to Sections and subsections
herein are inserted for convenience only and shall be ignored in interpreting
the provisions of this Amended Credit Agreement.
SECTION 13.11. PURPOSE. Each of the Banks represents and warrants to
Borrower that it is entering into this Amended Credit Agreement with the present
intention of acquiring any Note issued pursuant hereto solely in connection with
such Bank's commercial lending activities and not for the purpose of
distribution or resale, it being understood, however, that each Bank shall at
all times retain full control over the disposition of its assets.
SECTION 13.12. CONSENT TO JURISDICTION. The Borrower agrees that any action
or proceeding to enforce or arising out of this Amended Credit Agreement may be
commenced in the Court of Common Pleas for Cuyahoga County, Ohio or in the
District Court of the United States for the Northern District of Ohio, and the
Borrower waives personal service of process and agrees that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and shall confer personal jurisdiction over the Borrower if served to the
Borrower at the address listed opposite the signature of the Borrower at the end
of this Amended Credit Agreement or as otherwise provided by the laws of the
State of Ohio or the United States.
SECTION 13.13. ENTIRE AGREEMENT. This Amended Credit Agreement, the Notes,
the Related Writings and any other agreement, document or instrument attached
hereto or referred to herein or executed on or as of the date hereof integrate
all the terms and conditions mentioned herein or incidental hereto and supersede
all oral representations and negotiations and prior writings with respect to the
subject matter hereof.
<PAGE>
SECTION 13.14. JURY TRIAL WAIVER. BORROWER AND EACH OF THE BANKS WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER AND THE BANKS, OR ANY THEREOF,
ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AMENDED CREDIT
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY ANY BANK'S
ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT
PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT AMONG
BORROWER AND THE BANKS, OR ANY THEREOF.
SECTION 13.15. SURVIVAL. All indemnities set forth herein shall survive the
execution and delivery of this Amended Credit Agreement and the making and
repayment of the Loans and the satisfaction of all other obligations under this
Amended Credit Agreement.
SECTION 13.16. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Possible Default or an Event of Default if such
action is taken or condition exists, and if a particular action or condition is
expressly permitted under any covenant, unless expressly limited to such
covenant, the fact that it would not be permitted under the general provisions
of another covenant shall not constitute a Possible Default or an Event of
Default if such action is taken or condition exists.
IN WITNESS WHEREOF, the parties hereto have caused this Amended Credit
Agreement to be executed and delivered as of the date set forth above, each by
an officer thereunto duly authorized.
Address: FOREST CITY RENTAL PROPERTIES
1100 Terminal Tower CORPORATION
Cleveland, Ohio 44113
By: /s/ THOMAS G. SMITH
Vice President and Assistant
Secretary
<PAGE>
Address: KEYBANK NATIONAL ASSOCIATION
127 Public Square individually and as Agent
Cleveland, Ohio 44114
By: /S/ Scott A. Childs
Title: Assistant Vice President
Address: NATIONAL CITY BANK
1900 East Ninth Street individually and as Syndication
Cleveland, Ohio 44114 Agent
By: /S/ Anthony J. Dimare
Title: Senior Vice President
Address: THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, Ohio 44114 By: /S/ M. W. Stachure
Title: Vice President
Address: COMERICA BANK
211 West Fort Street
Detroit, MI 4275-1195 By: /S/ David J. Campbell
Title: Vice President
Address: FIRST MERIT BANK
123 West Prospect Avenue
Cleveland, OH 44115 By: /S/ Robert W. Carpenter
Title: Executive Vice
President
Address: FIRSTAR BANK NATIONAL ASSOCIATION
1350 Euclid Avenue
Suite 211 By: /S/ Carlos Molina
Cleveland, OH 44115 Title: Senior Vice President
Address: CREDIT LYONNAIS
1301 Avenue of the Americas
New York, NY 10019 By: /S/ Gregory E. Allen
Title: Vice President
<PAGE>
Address: MANUFACTURERS AND TRADERS
One Fountain Plaza TRUST COMPANY
Buffalo, NY 14203-1495
By: /S/ C. Gregory Vogelsang
Title: Assistant Vice
President
Address: U.S. BANK NATIONAL ASSOCIATION
111 East Wacker Drive
Suite 3000 By: /S/ Thomas Schroeder
Chicago, Illinois 60601 Title: Vice President
<PAGE>
EXHIBIT A
---------
Bank Maximum Amount
---- --------------
KeyBank National Association $37,777,777.78
National City Bank $37,777,777.78
The Huntington National Bank $30,694,444.44
First Merit Bank $21,250,000.00
Comerica Bank $17,000,000.00
Credit Lyonnais $17,000,000.00
Firstar Bank National Association $17,000,000.00
Manufacturers and Traders Trust
Company $17,000,000.00
U.S. Bank National Association $17,000,000.00
TOTAL $212,500,000.00
<PAGE>
Exhibit 20.2
AMENDED AND RESTATED GUARANTY OF PAYMENT OF DEBT
THIS AMENDED AND RESTATED GUARANTY OF PAYMENT OF DEBT (this "Guaranty") is
made and issued by FOREST CITY ENTERPRISES,INC., an Ohio corporation (the
"Guarantor"), as of this 25th day of June, 1999, in order to induce the Banks
(as hereinafter defined), KEYBANK NATIONAL ASSOCIATION, as agent for the Banks
(the "Agent") and NATIONAL CITY BANK, as syndication agent for the Banks (the
"Syndication Agent" and together with the Agent, the "Agents"), to enter into,
and lend money pursuant to, a certain Amended and Restated Credit Agreement of
even date herewith (said Amended and Restated Credit Agreement as it may be from
time to time amended, restated, or modified being herein called the
"Agreement"), by and among the Banks, the Agents and FOREST CITY RENTAL
PROPERTIES CORPORATION, a subsidiary of the Guarantor (the "Borrower").
1. DEFINITIONS. As used in this Guaranty, the following terms shall have
the following meanings:
"Banks" shall mean COMERICA BANK, FIRST MERIT BANK, THE HUNTINGTON NATIONAL
BANK, KEYBANK NATIONAL ASSOCIATION, NATIONAL CITY BANK, FIRSTAR BANK NATIONAL
ASSOCIATION, CREDIT LYONNAIS, MANUFACTURERS AND TRADERS TRUST COMPANY AND U.S.
BANK NATIONAL ASSOCIATION, any other bank(s) that may become parties to the
Agreement, and all successors and assigns of any such bank; and "Bank" shall
mean any one of the foregoing.
The term "Capital Stock" of any Person as used herein shall mean any and
all shares, interests, participations, or other equivalents (however designated)
of corporate stock or other equity participations or interests including,
without limitation, partnership interests, whether general or limited, and
membership interests, whether of managing or non-managing members, of such
Person.
"Cash Flow Coverage Ratio" shall mean the ratio of (i) Consolidated Net
Operating Cash Flow to (ii) the sum of (X) all scheduled payments of principal
of and interest on any indebtedness owing by the Borrower (excluding any
non-recourse mortgage indebtedness owing by Borrower or any Subsidiary of
Borrower), (Y) all scheduled payments of principal of and interest on any
indebtedness owing by the Parent and (Z) Dividends.
"Collateral" shall mean, collectively, all property, if any, securing the
Debt or any part thereof at the time in question.
"Company" shall mean Guarantor and/or a Subsidiary of Guarantor.
"Consolidated GAAP Shareholders' Equity" shall mean the consolidated
shareholders equity of the Borrower and the Parent, as calculated in accordance
with GAAP.
<PAGE>
"Consolidated Net Operating Cash Flow" shall mean Net Operating Income
(a) less (i) all scheduled payments of principal of non-recourse mortgage
indebtedness (excluding any balloon payments), (ii) all interest payments on
such non-recourse indebtedness, (iii) Ten Million Dollars ($10,000,000) of
normal recurring capital expenditures and (b) plus (i) net income (loss) before
taxes and corporate interest expense of the Land Group, (ii) net income (loss)
before taxes of the Lumber Trading Group, (iii) net income (loss) before taxes
and corporate interest expense (including, but not limited to, interest incurred
on Debt, subordinated debt or any other third party debt) of the Corporate
Activity Group, (iv) actual cash taxes paid on the Net Operating Income and the
income set forth in subsections (b)(i), (b)(ii) and (b)(iii) above and
(v) non-cash interest expense accrued with respect to Terminal Investments, Inc.
and Grant Liberty Development Group Associates.
"Controlled Group" shall mean a controlled group of corporations as defined
in Section 1563 of the Internal Revenue Code of 1986, as may be amended from
time to time, of which Guarantor or any Subsidiary is a part.
"Debt" shall mean, collectively, (a) all indebtedness now owing or
hereafter incurred by Borrower to the Agents and/or the Banks arising under or
in connection with the Agreement, whether pursuant to commitment or otherwise,
and including, without limitation, the principal amount of all Loans made
pursuant to the Agreement, all interest thereon determined as provided in the
Agreement, all fees provided to be paid by the Borrower to the Banks and/or the
Agents pursuant to the Agreement and all liabilities in respect of letters of
credit issued by the Agent and/or any of the Banks for the account of the
Borrower (but not including indebtedness held by any Bank arising and
outstanding under any transaction or document referred to in Sections 8.04
(other than that referred to in subclause (a) thereof), and/or 8.07 of the
Agreement), (b) each renewal, extension, consolidation or refinancing of any
such indebtedness in whole or in part, and (c) all interest from time to time
accruing on any of the foregoing indebtedness.
"Distributions" shall have the meaning set forth in Section 9.13(e) hereof.
"Dividends" shall include all dividends (in cash or otherwise) declared
and/or paid, capital returned, and other distributions of any kind made on any
share of Capital Stock outstanding at the time.
"EBDT" shall mean 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.
<PAGE>
"ERISA Net Worth" shall mean (a) as to any Subsidiary, the excess of the
net book value of such Subsidiary's assets (other than patents, treasury stock,
goodwill and similar intangibles but including unamortized mortgage and lease
costs) over all of its liabilities (other than liabilities to any other
Company), such excess being determined in accordance with generally accepted
accounting principles applied on a basis consistent with Guarantor's present
accounting procedures, and (b) as to Guarantor, the excess of the net book value
(after deducting all applicable reserves and deducting any value attributable to
the re-appraisal or write-up of any asset) of Guarantor's assets (other than
patents, good will, treasury stock and similar intangibles but including
unamortized mortgage and lease costs) over all of its liabilities as determined
on an accrued and consolidated and consolidating basis and in accordance with
generally accepted accounting principles not inconsistent with Borrower's
present accounting principles consistently applied.
"Environmental Laws" means all provisions of law, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by the government of the United States
of America or by any state or municipality thereof or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing, now
or hereafter in effect, and in each case, as amended, concerning or relating to
health, safety and protection of, or regulation of the discharge of substances
into, the environment.
"Event of Default" shall have the meaning set forth in Section 10 hereof.
"Funded Indebtedness" shall mean indebtedness (including any renewal or
extension in whole or in part) that by its terms matures or remains unpaid more
than twelve (12) months after the date on which originally incurred.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Indemnity Agreement" shall mean collectively, (i) that certain General
Indemnity Agreement dated as of November 6, 1998 by and between the Guarantor
and the Surety (other than Asset Guaranty Insurance Company), as amended by the
St. Paul Surety Amendment to General Indemnity Agreement dated as of November 6,
1998 and (ii) that certain General Indemnity Agreement dated as of December 3,
1998 by and between the Guarantor and Asset Guaranty Insurance Company, as
amended by the Asset Guaranty Insurance Company Amendment to General Indemnity
Agreement dated as of December 3, 1998 and as each such Indemnity Agreement may
be further amended, restated or otherwise modified.
"Indenture" shall mean the indenture relating to the Senior Notes dated as
of March 16, 1998, in the form attached to the Agreement as Exhibit G.
"Net Earnings" shall mean Guarantor's net earnings, as determined
separately for each fiscal year, after taxes, upon a consolidated basis (after
deducting minority interests) and in accordance with generally accepted
accounting principles consistently applied.
"Net Losses" shall mean Guarantor's net losses, as determined separately
for each fiscal year, after taxes, upon a consolidated basis (after deducting
minority interests) in accordance with generally accepted accounting principles
consistently applied.
<PAGE>
"Net Operating Income" shall mean for any relevant period, the excess of
the Borrower's revenues over the Borrower's operating expenses, in each case as
determined in accordance with GAAP. For purposes of this definition, Net
Operating Income (i) shall not include any gains or losses from the sale of
income producing real properties, other than gains or losses obtained from the
sale of net outlot parcels to a maximum aggregate amount of Fifteen Million
Dollars ($15,000,000) for the immediately preceding four consecutive quarters
and (ii) shall include adjustments for cash flow of properties pursuant to which
the Borrower is receiving a preferred return over and above its ownership
percentage in such properties.
"Obligor" shall mean any Person or entity who, or any of whose property is
or shall be, obligated on the Debt or any part thereof in any manner and
includes, without limiting the generality of the foregoing, Borrower, Guarantor
and any co-maker, endorser, other guarantor of payment, subordinating creditor,
assignor, grantor of a security interest, pledgor, mortgagor or hypothecator of
property, if any.
"Payment Default" shall mean any failure by the Borrower or the Guarantor
to make payment of principal of, or interest on, any Note (as defined in the
Agreement), or any other charge provided hereunder or under the Agreement, when
due and payable, whether at maturity or by acceleration.
"Permitted Distributions" shall have the meaning set forth in Section
9.13(e) hereof.
"Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a governmental or political
subdivision or an agency or instrumentality thereof.
"Plan" shall mean any employee pension benefit plan subject to Title IV of
the Employee Retirement Income Security Act of 1974, as amended, established or
maintained by Guarantor, any Subsidiary, any member of the Controlled Group, or
any such Plan to which Guarantor, any Subsidiary or any member of the Controlled
Group is required to contribute on behalf of its employees.
"Possible Default" shall mean an event or condition which, with notice or
lapse of time or both, would constitute an Event of Default referred to in
Section 10 hereof.
"Quarterly Date" shall mean each of January 1, April 1, July 1 and October
1 and "Fiscal Quarterly Date" shall mean each of January 31, April 30, July 31
and October 31.
"Receivable" shall mean a claim for moneys due or to become due, whether
classified as a contract right, account, chattel paper, instrument, general
intangible or otherwise.
"Reportable Event" shall mean a reportable event as that term is defined in
Title IV of the Employee Retirement Income Security Act of 1974, as amended,
with respect to a Plan as to which the thirty (30) day notice requirement has
not been waived by the Pension Benefit Guaranty Corporation.
<PAGE>
"Restricted Company" shall mean Guarantor or a Restricted Subsidiary.
"Restricted Subsidiary" shall mean any Subsidiary of Guarantor other than
(a) Borrower, and (b) any Subsidiary of Borrower.
"Senior Notes" shall mean the senior notes of the Guarantor, in the
original principal amount not to exceed $200,000,000, issued under the terms of
the Indenture.
"Subordination Agreement" means that certain Subordination Agreement dated
as of January 29, 1999 executed and delivered by the Surety in favor of the
Agents and the Banks, as such Subordination Agreement may, from time to time, be
amended, restated or otherwise modified.
"Subsidiary" of any Person shall mean and include (a) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation is at the time owned by such Person directly or indirectly through
Subsidiaries and (b) any partnership, limited liability company, association
(including business trusts) or other entity in which such Person directly or
indirectly through Subsidiaries, has more than a fifty percent (50%) voting or
equity interest at the time.
"Surety" means, collectively, St. Paul Fire and Marine Insurance Company,
St. Paul Mercury Insurance Company, St. Paul Guardian Insurance Company,
Seaboard Surety Company, Economy Fire & Casualty Company and Asset Guaranty
Insurance Company.
"Surety Bonds" means the bonds, undertakings and other like obligations
executed by Surety for Guarantor subject to the Indemnity Agreement and the
Subordination Agreement.
"Trading Loans" shall mean any loans that are now or hereafter outstanding
from Forest City Trading Group, Inc. (but not from any other lender, whether or
not such lender is a Subsidiary of the Guarantor) to the Guarantor. All
capitalized terms used herein but not herein defined that are defined in the
Agreement shall have the respective meanings ascribed to them in the Agreement.
All financial covenants contained in this Guaranty shall be measured on
each Fiscal Quarterly Date.
<PAGE>
2. ACKNOWLEDGMENTS, CONSIDERATION. Guarantor desires that the Agent and the
Banks grant Borrower the loan(s), credit and financial accommodations provided
for under the Agreement. The Agreement provides, on and subject to certain
conditions therein set forth, for Term Loans and Revolving Loans by the Banks to
the Borrower up to an aggregate maximum principal amount of Two Hundred Twelve
Million Five Hundred Thousand Dollars ($212,500,000) (which amount is reduced
from the aggregate maximum principal amount of $225,000,000 as of January 20,
1998). There exists and will hereafter exist economic and business relationships
between the Guarantor and the Borrower which will be of benefit to the
Guarantor. Guarantor finds it to be in the direct business and economic interest
of Guarantor that Borrower obtain the loans, credit and financial accommodations
from the Agents and the Banks provided for in the Agreement. Guarantor
understands that the Agents and the Banks are willing to grant the loans, credit
and financial accommodations to Borrower provided for in the Agreement only upon
certain terms and conditions, one of which is that the Guarantor unconditionally
guarantee the payment of the Debt and this instrument is being executed and
delivered by Guarantor to satisfy that condition and in consideration of the
Agents and the Banks entering into the Agreement.
3. GUARANTY. Guarantor hereby absolutely, irrevocably and unconditionally
guarantees (a) the punctual and full payment of all and every portion of the
Debt when due, by acceleration or otherwise, whether now owing or hereafter
arising, (b) the prompt observance and performance by the Borrower of each and
all of Borrower's covenants, undertakings, obligations and agreements set forth
in the Agreement, the Notes and/or any other instruments evidencing or
pertaining thereto, and (c) the prompt payment of all expenses and costs,
including reasonable attorneys' fees, incurred by or for the account of the
Agents and/or the Banks in connection with any action to enforce payment or
collection of the Debt from the Borrower and/or the Guarantor or to prepare any
amendments, restatements or modifications of the Agreement, the Notes and/or
this Guaranty. If the Debt or any part thereof shall not be paid in full
punctually when due and payable, the Agents and/or the Banks in each case shall
have the right to proceed directly against Guarantor under this Guaranty
regardless of whether or not the Agents and/or the Banks shall have theretofore
proceeded or shall then be proceeding against Borrower or any other Obligor or
Collateral, if any, or any of the foregoing, it being understood that the Agents
and/or the Banks in their sole discretion may proceed or not proceed against the
Borrower, the Obligors and/or any Collateral and may exercise or not exercise
each right, power or privilege that the Agents and/or the Banks may at any time
have, either simultaneously or separately and, in any event, at such time or
times and as often and in such order as the Agents and/or the Banks in their
sole discretion, may from time to time deem expedient, all without affecting the
obligations of the Guarantor hereunder or the right of the Agents and/or the
Banks to demand and/or enforce performance by Guarantor of Guarantor's
obligations hereunder.
4. REINSTATEMENT. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if any amount paid by or on behalf of the
Borrower to the Agents or the Banks on or in respect of the Debt is rescinded,
restored or returned in connection with the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any other Obligor, or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any other Obligor or any part of
the property of the Borrower or any other Obligor, or otherwise, all as though
such payment had not been made.
<PAGE>
5. WAIVERS. Guarantor waives any and all contractual, legal and/or
equitable rights of subrogation, contribution, exoneration, indemnity and/or
reimbursement from or against Borrower or any Obligor with respect to the Debt
and/or any payments made by Guarantor on account of this Guaranty.
6. ADDITIONAL AGREEMENTS. Regardless of the duration of time, regardless of
whether Borrower may from time to time cease to be indebted to the Banks and
irrespective of any act, omission or course of dealing whatever on the part of
the Agents and/or the Banks, Guarantor's liabilities and other obligations under
this Guaranty shall remain in full force and effect until the full and final
payment of all of the Debt. Without limiting the generality of the foregoing:
6.1. The obligations of the Guarantor hereunder shall not be released,
discharged or in any way affected, nor shall the Guarantor have any rights or
recourse against the Agents or the Banks by reason of (a) any action the Agents
or the Banks may take or omit to take, or (b) any defense raised or asserted by
the Borrower against enforcement of the Agreement or the Notes or any challenge
to the sufficiency or enforceability of the Agreement, any of the Notes or this
Guaranty.
6.2. The obligations of the Guarantor under this Guaranty shall be
satisfied strictly in accordance with the terms of this Guaranty, under all
circumstances whatsoever, including, without limitation, the existence of any
claim, setoff, defense or right which the Guarantor or the Borrower may have at
any time against the Agents or the Banks or any other Person or entity, whether
in connection with this Guaranty, the Agreement, the Notes or the transactions
contemplated hereby or any unrelated transaction.
6.3. The Banks shall at no time be under any duty to the Guarantor to grant
any loans, credit or financial accommodation to the Borrower, irrespective of
any duty or commitment of the Banks to the Borrower, or to follow or direct the
application of the proceeds of any such loans, credit or financial
accommodation.
6.4. The Guarantor waives (a) notice of the granting of any loan to the
Borrower or the incurring of any other indebtedness, including, but not limited
to the creation of the Debt by Borrower or the terms and conditions thereof, (b)
presentment, notice of nonpayment, demand for payment, protest, notice of
protest and notice of dishonor of the Notes or any other indebtedness incurred
by the Borrower to the Banks, (c) notice of any indulgence granted to any
Obligor, (d) notice of the Banks' acceptance of this Guaranty, and (e) any other
notice to which Guarantor might, but for the within waiver, be entitled.
<PAGE>
6.5. The Agents and/or the Banks in their sole discretion may, without
prejudice to their rights under this Guaranty, at any time or times (a) grant
the Borrower whatever loans, credit or financial accommodations that the Banks,
or any thereof, may from time to time deem advisable, even if the Borrower might
be in default and even if those loans, credit or financial accommodations might
not constitute Debt the payment of which is guaranteed hereunder, (b) assent to
any renewal, extension, consolidation or refinancing of the Debt or any part
thereof, (c) forbear from demanding security, if the Agents and/or the Banks
shall have the right to do so, (d) release any Obligor or Collateral or assent
to any exchange of Collateral, if any, irrespective of the consideration, if
any, received therefor, (e) grant any waiver or consent or forbear from
exercising any right, power or privilege that the Agents and/or the Banks may
have or acquire, (f) assent to any amendment, deletion, addition, supplement or
other modification in, to or of any writing evidencing or securing any Debt or
pursuant to which any Debt is created, (g) grant any other indulgence to any
Obligor, (h) accept any Collateral for or other Obligors upon the Debt or any
part thereof, or (i) fail, neglect or omit in any way to realize upon any
Collateral or to protect the Debt or any part thereof or any Collateral
therefor.
6.6. Guarantor's liabilities and other obligations under this Guaranty
shall survive any merger, consolidation or dissolution of Guarantor.
6.7. Guarantor's liabilities and other obligations under this Guaranty
shall be absolute and unconditional irrespective of any lack of validity or
enforceability of any agreement, instrument or document evidencing the Debt or
related thereto, or any other defense available to Guarantor in respect of this
Guaranty.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
that (a) it is a duly organized and validly existing corporation under the laws
of the State of Ohio, (b) the execution, delivery and performance of this
Guaranty have been duly authorized by all necessary corporate action, (c) there
is no prohibition in either its Articles of Incorporation, Code of Regulations
or in any agreement, instrument, judgment, decree or order to which it is a
party that in any way restricts or prohibits the execution, delivery and
performance of this Guaranty in any respect, and (d) this Guaranty has been duly
executed and delivered by the Guarantor and is a valid and binding obligation of
the Guarantor enforceable against Guarantor in accordance with its terms.
The Guarantor further represents and warrants that this Guaranty is made in
furtherance of the purposes for which the Guarantor was incorporated and is
necessary to promote and further the business of the Guarantor and that the
assumption by the Guarantor of its obligations hereunder will result in direct
financial benefits to the Guarantor.
This Guaranty is not made in connection with any consumer loan or consumer
transaction.
The Guarantor further represents and warrants that (a) the Guarantor has
received consideration which is the reasonably equivalent value of the
obligations and liabilities that the Guarantor has incurred to the Agents and/or
the Banks, (b) the Guarantor is not insolvent as defined in any applicable state
or federal statute, nor will the Guarantor be rendered insolvent by the
execution and delivery of this Guaranty to the Agents and the Banks, (c) the
Guarantor is not engaged or about to engage in any business or transaction for
which the assets retained by the Guarantor shall be an unreasonably small
capital, taking into consideration the obligations to the Agents and the Banks
incurred hereunder, and (d) the Guarantor does not intend to, nor does the
Guarantor believe, that the Guarantor will incur debts beyond the Guarantor's
ability to pay as they become due.
<PAGE>
The Guarantor further represents and warrants that the Guarantor has
provided to the Agent three copies of all promissory notes or other writings
evidencing any Trading Loans outstanding on the date hereof and that the
Guarantor has no other indebtedness for borrowed money or Funded Indebtedness
outstanding from any Subsidiary to the Guarantor.
The Guarantor further represents and warrants that it has taken and will
continue to take all reasonable actions to insure that its computer based
systems are able to effectively process dates, including dates on or after
January 1, 2000 and to avoid serious disruption to its business or operations.
8. NOTICES. The Agents and/or the Banks shall be deemed to have knowledge
or to have received notice of any event, condition or thing only if the Agents
and/or the Banks shall have received written notice thereof as provided in the
Agreement. A written notice shall be deemed to have been duly given to the
Guarantor whenever a writing to that effect shall have been sent by registered
or certified mail to the Guarantor at the address set forth opposite the
Guarantor's signature below (or to such other address of the Guarantor as the
Guarantor may hereafter furnish to the Banks in writing for such purpose), but
no other method of giving notice to or making a request of the Guarantor is
hereby precluded.
9. COVENANTS. The Guarantor hereby agrees to perform and observe and to
cause each Subsidiary to perform and observe, all of the following covenants and
agreements:
9.1. INSURANCE. Each Company will:
(a) insure itself and all of its insurable properties to such extent,
by such insurers and against such hazards and liabilities as is generally
done by businesses similarly situated, it being understood that the
Guarantor has obtained a fidelity bond for such of its employees as handle
funds belonging to the Borrower or the Guarantor,
(b) give the Agent prompt written notice of any material reduction or
adverse change in that Company's insurance coverage, and
(c) forthwith upon any Bank's or the Agent's written request, furnish
to each Bank and the Agent such information in writing about that Company's
insurance as any Bank or the Agent, as applicable, may from time to time
reasonably request.
<PAGE>
9.2. MONEY OBLIGATIONS. Each Company will pay in full:
(a) prior in each case to the date when penalties would attach, all
taxes, assessments and governmental charges and levies (except only those
so long as and, to the extent that, the same shall be contested in good
faith by appropriate and timely proceedings diligently pursued and taxes
and assessments on inconsequential parcels of vacant land, the nonpayment
of which does not materially adversely affect the financial condition of
the Guarantor) for which it may be or become liable or to which any or all
of its properties may be or become subject,
(b) all of its wage obligations to its employees in compliance with
the Fair Labor Standards Act (29 U.S.C. Section 206-207) or any comparable
provisions, and
(c) all of its other obligations calling for the payment of money
(except only those so long as and to the extent that the same shall be
contested in good faith by appropriate and timely proceedings diligently
pursued) before such payment becomes overdue; provided that,
notwithstanding the foregoing, the Guarantor shall not make any payment on
account of the Senior Notes in the event of and during the continuance of
any Payment Default under the Agreement or this Guaranty.
9.3. RECORDS. Each Company will:
(a) at all times maintain true and complete records and books of
account and, without limiting the generality of the foregoing, maintain
appropriate reserves for possible losses and liabilities, all in accordance
with generally accepted accounting principles applied on a basis not
inconsistent with its present accounting procedures, and
(b) at all reasonable times permit each Bank to examine that Company's
books and records and to make excerpts therefrom and transcripts thereof.
9.4. FRANCHISES. Each Company will preserve and maintain at all times its
corporate existence, rights and franchises; provided that this Section shall not
apply to (a) any merger of a Subsidiary into the Guarantor or into another
Subsidiary, (b) any consolidation of a Subsidiary with another Subsidiary, or
(c) any dissolution of any Subsidiary.
9.5. NOTICE. The Guarantor will cause its Chief Financial Officer, or in
his or her absence another officer designated by the Chief Financial Officer, to
promptly notify the Banks whenever (a) any Event of Default or Possible Default
may occur hereunder (including, without limitation, any default under the Senior
Notes, the Indenture or any other document relating thereto (after giving effect
to any applicable grace period) or any representation or warranty made herein
may for any reason cease in any material respect to be true and complete, and/or
(b) any Restricted Subsidiary shall (i) be in default of any material (either
with respect to the Subsidiary or the Guarantor) obligation for payment of
borrowed money, or, to the knowledge of the Guarantor, any material obligations
in respect of guarantees, taxes and/or indebtedness for goods or services
purchased by, or other contractual obligations of, such Subsidiary, and/or (ii)
not, to the knowledge of the Guarantor, be in compliance with any law, order,
rule, judgment, ordinance, regulation, license, franchise, lease or other
agreement that has or could reasonably be expected to have a material adverse
effect on the business, operations, property or financial condition of the
Subsidiary, and/or (c) the Guarantor and/or the Subsidiary shall have received
notice, or have knowledge, of any actual, pending or threatened claim, notice,
litigation, citation, proceeding or demand relating to any matter(s) described
in subclauses (b)(i) and (b)(ii) of this Section 9.5. Further, the Guarantor
shall notify the Banks not less than thirty (30) days in advance of entering
into any proposed amendment or modification of the Senior Notes or the
Indenture, whether or not the Guarantor believes that the consent of the
Required Banks is needed therefor pursuant to Section 9.10(h)(ii) of the
Guaranty.
<PAGE>
9.6. ERISA COMPLIANCE. No Company will incur any material accumulated
funding deficiency within the meaning of the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations thereunder or any
material liability to the Pension Benefit Guaranty Corporation, established
thereunder in connection with any Plan. Each Company will furnish (i) as soon as
possible and in any event within thirty (30) days after such Company knows or
has reason to know that any Reportable Event with respect to any Plan has
occurred, a statement of the Chief Financial Officer of such Company setting
forth details as to such Reportable Event and the action which such Company
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to the Pension Benefit Guaranty Corporation if a
copy of such notice is available to such Company, (ii) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each Plan
established or maintained by such Company for each plan year, including (x)
where required by law, a statement of assets and liabilities of such Plan as of
the end of such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets available for plan
benefits, for such plan year, certified by an independent public accountant
satisfactory to the Banks, and (y) an actuarial statement of such Plan
applicable to such plan year, certified by an enrolled actuary of recognized
standing acceptable to the Banks, and (iii) promptly after receipt thereof a
copy of any notice such Company, any Subsidiary or any member of the Controlled
Group may receive from the Pension Benefit Guaranty Corporation or the Internal
Revenue Service with respect to any Plan administered by such Company; provided,
that this latter clause shall not apply to notices of general application
promulgated by the Pension Benefit Guaranty Corporation or the Internal Revenue
Service. As used in this Section 9.6, "material" means the measure of a matter
of significance which shall be determined as being an amount equal to five per
cent (5%) of each Company's ERISA Net Worth.
9.7. FINANCIAL STATEMENTS. The Guarantor will furnish to each Bank:
(a) within forty-five (45) days (or fifty (50) days so long as the
Guarantor will not be reporting an Event of Default on such Form 10-Q
report) after the end of each quarter-annual period of each fiscal year of
the Guarantor, a copy of the Guarantor's Form 10-Q quarterly report filed
by the Guarantor with the Securities Exchange Commission,
<PAGE>
(b) within forty-five (45) days (or fifty (50) days so long as the
Guarantor shall not have reported an Event of Default to the Securities and
Exchange Commission during such fiscal period nor on its most recent filing
with the Securities and Exchange Commission) after the end of each of the
first three (3) quarter-annual fiscal periods of each fiscal year of the
Guarantor, an unaudited consolidated and consolidating balance sheet of the
Guarantor and its Subsidiaries as at the end of that period and an
unaudited consolidated and consolidating statement of earnings for the
Guarantor and its Subsidiaries for the Guarantor's current fiscal year to
the end of that period, all prepared in form and detail in accordance with
GAAP, consistently applied, and certified by a financial officer of the
Guarantor, subject to changes resulting from year-end adjustments, together
with a certificate of the Chief Financial Officer of the Guarantor (i)
specifying the nature and period of existence of each Event of Default
and/or Possible Default, if any, and the action taken, being taken or
proposed to be taken by the Guarantor in respect thereof or if none, so
stating, and (ii) certifying that the representations and warranties of the
Guarantor set forth herein are true and correct as of the date of such
certificate, or, if not, all respects in which they are not, and (iii) a
covenant compliance worksheet in the form and substance of Schedule 9.70
hereof completed as of the end of such fiscal quarterly period,
(c) within ninety (90) days (or ninety-five (95) days so long as the
Guarantor shall not have reported an Event of Default to the Securities and
Exchange Commission during such fiscal period nor on its most recent filing
with the Securities and Exchange Commission) after the end of each fiscal
year of the Guarantor, complete audited annual financial statements of the
Guarantor and its Subsidiaries for that year prepared on a consolidated
basis certified by an independent public accountant satisfactory to the
Banks and on an unaudited consolidating basis and in each case, in form and
detail satisfactory to the Banks, together with (i) a certificate of the
Chief Financial Officer of the Guarantor (X) specifying the nature and
period of existence of each Event of Default and/or Possible Default, if
any, and the action taken, being taken or proposed to be taken by the
Guarantor in respect thereof or if none, so stating, and (Y) certifying
that the representations and warranties of the Guarantor set forth herein
are true and correct as of the date of such certificate, or, if not, all
respects in which they are not, and (ii) a fully completed covenant
compliance worksheet in the form and substance of Schedule 9.70 hereof
relating to such fiscal year duly certified by the Guarantor's accountants,
(d) concurrently with furnishing any quarterly financial statement or
audit report pursuant to this Section 9.7, a certificate by Charles A.
Ratner, Albert Ratner, Samuel H. Miller or Thomas G. Smith stating whether
any Company has made any guaranty or incurred any indebtedness referred to
in Section 9.10(d) or Section 9.12(g) hereof and, if so, the details
thereof,
<PAGE>
(e) as soon as available, copies of all notices, reports, proxy
statements and other similar documents sent by the Guarantor to its
shareholders, to the holders of any of its debentures or bonds or the
trustee of any indenture securing the same or pursuant to which they have
been issued, to any securities exchange or to the Securities Exchange
Commission or any similar federal agency having regulatory jurisdiction
over the issuance of the Guarantor's securities, and
(f) forthwith upon any Bank's written request such other information
of any Company's financial condition and business.
9.8. EBDT. The Guarantor will not suffer or permit its EBDT at any time to
fall below the amounts set forth below for the respective periods set forth belo
Period EBDT
------ ----
Fiscal year ending
January 31, 2000 $105,000,000
Fiscal year ending
January 31, 2001 and
for each fiscal year
ending on each January 31
thereafter
9.9. COMBINATIONS, BULK TRANSFERS. No Restricted Company will be a party to
any consolidation or merger or lease, sell or otherwise transfer all or any
substantial part of its assets or sell, pledge, hypothecate or transfer its
stock or other interests in any Subsidiary; provided, that this Section 9.9
shall not apply to any transfer effected in the normal course of business on
commercially reasonable terms.
9.10. BORROWINGS. No Restricted Company will create, assume or suffer to
exist any indebtedness for borrowed money or any Funded Indebtedness of any kind
including, but not limited to, leases required to be capitalized under Financial
Accounting Standards Board Standard No. 13; provided, that this Section 9.10
shall not apply to:
(a) any loan obtained by Forest City Trading Group, Inc., formerly
known as American International Forest Products, Inc. (or any of its
wholly-owned subsidiaries) from any lender other than the Companies,
(b) any loan obtained from the Guarantor by any Restricted Subsidiary
and, in the ordinary course of business by Forest City Trading Group, Inc.
(or any of its wholly-owned subsidiaries),
(c) any real estate loan heretofore or hereafter obtained or
guaranteed by the Guarantor for the purpose of financing any building to be
used only for the business of Guarantor and its Subsidiaries, provided that
no such loan shall exceed eighty per cent (80%) of the lender's appraisal
of the real estate being financed,
<PAGE>
(d) any loan that is obtained or guaranteed by the Guarantor;
provided, that the Guarantor's aggregate personal liability in respect of
all such loans (other than any loan obtained by the Guarantor and permitted
by any other clause of this Section 9.10) and in respect of all guaranteed
loans referred to in clause (f) of Section 9.12 hereof, does not then
exceed and after incurring the indebtedness in question would not exceed,
Four Million Five Hundred Thousand Dollars ($4,500,000) minus all amounts
subject to guarantees permitted by Section 8.07 of the Agreement,
(e) leases required to be capitalized under Financial Accounting
Standards Board Standard No. 13 in the aggregate amount for all Restricted
Subsidiaries of Three Million Dollars ($3,000,000),
(f) any indebtedness created in the course of purchasing or developing
real estate or financing construction or other improvements thereon or
purchasing furniture, fixtures or other equipment therefor or any other
indebtedness of any Restricted Company for borrowed money or any
refinancings thereof; provided, that no Restricted Company (other than a
Restricted Company whose sole assets consist of contiguous parcels of land
which are being purchased or developed with such financing, the
improvements, if any, thereon, furniture, fixtures and other equipment used
in connection therewith, receivables incurred by tenants in connection
therewith and the proceeds of such receivables and other property directly
obtained from the ownership of such assets) shall have any personal
liability for such indebtedness, the creditors' recourse being solely to
the property being pledged as collateral for such indebtedness and the
income therefrom,
(g) any Trading Loans, provided that, each of the following conditions
is satisfied as to each of such Trading Loans:
(i) the aggregate principal amount of all the Trading Loans may
not exceed Ten Million Dollars ($10,000,000);
(ii) no interest shall accrue or be payable with respect to any
Trading Loan;
(iii) there shall be no scheduled principal payments prior to the
maturity date of any Trading Loan, as any promissory notes evidencing
such Trading Loans may be extended from time to time; no principal
payments shall be made on any Trading Loan at any time that a Possible
Default or Event of Default exists under the Guaranty or the
Agreement, or at any time that the Agent has determined, in its sole
discretion, that there has been a material adverse change in the
financial condition of the Guarantor; and the Trading Loans, either
individually or in the aggregate, shall not be revolving loans and, if
any principal payments are made on any Trading Loan, the Ten Million
Dollars ($10,000,000) maximum amount of permissible Trading Loans set
forth above shall automatically and irrevocably decline by like amount
upon such payment;
<PAGE>
(iv) each Trading Loan shall be expressly subordinate in right of
payment to the prior payment in full of the indebtedness under the
Guaranty and the Agreement, whether such indebtedness arises due to a
Term Loan, a Revolving Loan or otherwise;
(v) an event of default as to any Trading Loan(s) will
automatically constitute an Event of Default under the Agreement, the
Term Notes, the Revolving Notes and the Guaranty; and
(vi) each Trading Loan shall be evidenced by a written promissory
note, including the terms set forth above in clauses (i) through (v)
and shall otherwise be in form and substance approved in advance by
the Agent, executed by the Guarantor and Forest City Trading Group,
Inc. and, in the case of any Trading Loan(s) on or after the date of
the date hereof, executed by such parties not later than the date of
the first disbursement of such Trading Loan, a copy of which note(s)
shall be provided within ten (10) days after execution,
(h) any indebtedness or obligations of the Guarantor under the Senior
Notes; provided that,
(i) neither the Senior Notes nor the Indenture may provide that
an Event of Default under the Agreement or this Guaranty constitutes a
default under the Senior Notes or the Indenture, except in the case of
an Event of Default that results in the acceleration of the payment of
the Debt or constitutes the failure to pay the Debt when due after
acceleration or maturity; and
(ii) neither the Senior Notes nor the Indenture shall be amended
or modified without the prior written consent of the Required Banks,
including, without limitation, the provisions referred to in Section
8.16 of the Agreement, other than amendments or modifications that do
not adversely affect the Agreement and the Guaranty or their
relationship to the Senior Notes or the Indenture,
<PAGE>
(i) any indebtedness or obligations of the Guarantor created by or
arising out of an interest rate lock agreement among Guarantor, as obligor,
and an affiliate of Daiwa Finance Corp. or another financial institution
approved in advance by the Administrative Agent, as the counterparty (the
"Interest Rate Lock Agreement"), which Interest Rate Lock Agreement is
related to the interest rate under the terms of the permanent loan
commitment from Daiwa Finance Corp. to Forest City Finance Corporation, an
affiliate of the Guarantor and the Borrower, dated August 14, 1997, which
commitment is with respect to a project in Cambridge, Massachusetts that
will include two office buildings with aggregate square footage of 225,000
square feet and a 532 - car parking garage (the "University Park Project"),
and provides for an initial loan amount not to exceed $55,000,000, with an
earn out based on a debt service coverage test that will be applied at the
time of the permanent loan closing, and will be assigned by Forest City
Finance Corporation to FC 45/75 Sidney, Inc., an affiliate of the Guarantor
and the Borrower (the "University Park Permanent Loan Commitment"),
(j) any indebtedness or obligations of the Guarantor under the Surety
Bonds or the Indemnity Agreement to a maximum aggregate principal amount of
$30,000,000.00 minus the aggregate stated amount of all letters of credit
then outstanding for the account of the Borrower under the Agreement;
provided such indebtedness is fully subordinated to the obligations of the
Guarantor under this Guaranty as set forth in the Subordination Agreement,
or
(k) any indebtedness of the Guarantor under any interest rate cap
agreement, interest rate collar agreement, interest rate swap agreement or
other similar agreement or arrangement provided by one or both of the
Agents and offered on a Pro rata basis to the Banks and designed to hedge
the position of the Guarantor or any Company with respect to interest
rates, relating to indebtedness otherwise permitted under this Guaranty.
9.11. LIENS. No Restricted Company will:
(a) sell or otherwise transfer any Receivables, including, but not
limited to, any mortgages held by the Guarantor or any of its Subsidiaries,
other than in the ordinary course of business,
(b) acquire any property subject to any land contract, conditional
sale contract or other title retention contract, or
(c) suffer or permit any property now owned or hereafter acquired by
it to be or become encumbered by any mortgage, security interest, financing
statement, encumbrance or lien of any kind or nature;
provided, that this Section 9.11 shall not apply to:
(i) any lien for a tax, assessment or other governmental charge or
levy so long as the payment thereof is not required by Section 9.2(a)
hereof,
<PAGE>
(ii) any lien securing only workmen's compensation, unemployment
insurance or similar obligations,
(iii) any mechanic's, warehousemen's, carrier's or similar common law
or statutory lien incurred in the normal course of business,
(iv) any mortgage, security interest or other lien encumbering
property of any Restricted Subsidiary for the purpose of securing any
indebtedness owing by only that Subsidiary,
(v) any mortgage, security interest or other lien encumbering property
of the Guarantor and securing any indebtedness or liability of the
Guarantor permitted by clause (c) of Section 9.10 or by Section 9.12
hereof,
(vi) any lien permitted by Section 8.15 of the Agreement,
(vii) any transfer made in the ordinary course of business by Forest
City Trading Group, Inc. (or any of its wholly-owned subsidiaries), or
(viii) any financing statement perfecting a security interest
permitted by this Section 9.11.
9.12. GUARANTEES. No Restricted Company will be or become a guarantor of
any kind; provided, that this Section 9.12 shall not apply to:
(a) any endorsement of a check or other medium of payment for deposit
or collection through normal banking channels or any similar transaction in
the normal course of business,
(b) any indemnity or guaranty of a surety bond for the performance by
a customer of a Restricted Company of the customer's obligations under a
land development contract,
(c) any guaranty by Guarantor of a real estate loan permitted by
clause (c) of Section 9.10,
(d) any guarantee of the completion of a real estate building project,
if Guarantor or any Company is the developer of the project or has a
property interest in the project,
(e) the guaranty by Guarantor set forth in Section 3 hereof,
<PAGE>
(f) any other guaranty by Guarantor, provided that Guarantor's
aggregate personal liability in respect of all those other guarantees and
all indebtedness for borrowed money (other than any loan permitted by
clauses (a) through (c), both inclusive, of Section 9.10 hereof) does not
exceed, and after making the guaranty in question would not exceed, Four
Million Five Hundred Thousand Dollars ($4,500,000) minus all amounts
subject to guarantees permitted by Section 8.07(g) of the Agreement,
(g) any guarantee by Guarantor of the equity investment of performance
of a Subsidiary (other than any obligations of such Subsidiary incurred for
borrowed money) in connection with a real estate project in favor of a
partner or partnership in which such Subsidiary is a general partner, when
Guarantor deems it to be in its best interest not to be a partner or have a
direct interest in the partnership,
(h) any indebtedness or obligations of the Guarant or created by or
arising out of the Interest Rate Lock Agreement, or
(i) the guaranty by Guarantor of the obligations of Wisconsin Park
Associates Limited Partnership to make a deposit of $6,800,000 into a cash
collateral account in connection with the high rise luxury apartment
facility to be known as Lenox at White Flint to be located in Rockville,
Maryland.
9.13. REDEMPTIONS, PREPAYMENTS, AND DIVIDENDS.
(a) The Guarantor will not directly or indirectly purchase, acquire,
redeem or retire any shares of its capital stock at any time outstanding or
set aside funds for any such purpose in an amount greater than Ten Million
Dollars ($10,000,000), including any amounts paid as permitted by Section
9.13(c), in any yearly period measured by anniversary dates of the Original
Closing Date of the Agreement thereafter,
(b) The Guarantor will not directly or indirectly pay any principal
of, make sinking fund payments in respect of or purchase any Funded
Indebtedness now or hereafter owing by Guarantor other than any principal
payment, sinking fund payment or purchase the omission of which would (or
with the giving of notice or the lapse of any applicable grace period or
both) accelerate, or give any one the right to accelerate, the maturity of
such Funded Indebtedness in accordance with the original terms thereof;
provided that, notwithstanding the foregoing, the Guarantor shall not make
any payment on account of the Senior Notes in the event of and during the
continuance of any Payment Default under the Agreement or this Guaranty,
(c) The Guarantor will not directly or indirectly declare or pay any
Dividends, except that, so long as no Event of Default shall have occurred
and be continuing hereunder and no Event of Default shall have occurred and
be continuing under the Agreement, Guarantor may pay Dividends in aggregate
amounts not exceeding Ten Million Dollars ($10,000,000), including any
amounts paid as permitted by Section 9.13(a), in any yearly period measured
by anniversary dates of the Original Closing Date of the Agreement
thereafter,
<PAGE>
(d) The Guarantor shall not directly or indirectly exercise its
optional redemption rights, under the terms of the Senior Notes or the
Indenture, to redeem the Senior Notes before the maturity date of the
Senior Notes, or to deposit monies or other assets with the trustee under
the Indenture for the Senior Notes for the payment of the Senior Notes or
the release of restrictive covenants thereunder, by defeasance, without in
each case the prior written consent of the Required Banks,
(e) In the event of and during the continuance of any Event of Default
under the Agreement or under this Guaranty other than a Payment Default,
the Guarantor shall not cause the Borrower to declare, pay, or make, and
shall not accept payment of, any Dividends in respect of Capital Stock of
the Borrower, or, notwithstanding any other provision of the Agreement or
this Guaranty to the contrary, any loans or advances to the Guarantor, (any
such Dividends or loans are referred to herein as "Distributions") in
excess of the sum of the amount sufficient to pay, when due, all interest
payments in respect of the Senior Notes and the amounts sufficient to pay,
when due, all taxes of the Guarantor (collectively, "Permitted
Distributions"); provided that any Permitted Distributions shall be applied
by the Guarantor strictly to the permitted uses specified above, and
(f) Notwithstanding the provisions of Section 9.13(e) of this
Guaranty, in the event and during the continuance of any Payment Default,
the Guarantor shall not cause the Borrower to pay or make, and shall not
accept payment of, any Distributions.
9.14. CASH FLOW COVERAGE RATIO.
(a) The Guarantor will not permit the Cash Flow Coverage Ratio (i) for
any fiscal year to be less than 1.75:1.00 and (ii) subject to subsection
(i) hereof, for any four (4) consecutive quarters to be less than
1.50:1.00.
(b) In the event of a violation of Section 9.14(a), the Guarantor will
have thirty (30) days from the due date of the most recent financial
statement and covenant compliance certificate delivered in accordance with
Section 9.7 to correct such violation. If the Guarantor is unwilling or
unable to cure such violation within such thirty (30) day period, the
Revolving Loan Commitments will be terminated and the then outstanding
amount of the Revolving Loans will be converted to Term Loans as provided
in Section 2.02(a) of the Agreement. From and after such conversion, the
Guarantor will not permit the Cash Flow Coverage Ratio to be less than
1.25:1.00 for any four (4) consecutive quarters.
<PAGE>
9.15. CONSOLIDATED GAAP SHAREHOLDERS' EQUITY. The Guarantor will not permit
at any time, the Consolidated GAAP Shareholders' Equity to be less than (a) on
the Original Closing Date, Two Hundred Fifty Million Dollars ($250,000,000), (b)
on each Fiscal Quarterly Date thereafter (other than a January 31 Fiscal
Quarterly Date), the sum of (i) (A) during the first year following the Original
Closing Date, Two Hundred Fifty Million Dollars ($250,000,000) and (B) at all
times thereafter, the computed minimum Consolidated GAAP Shareholders' Equity
for the immediately preceding January 31 Fiscal Quarterly Date as calculated
pursuant to subsection (c) below, plus (ii) one hundred percent (100%) of the
cash proceeds from any sale or issuance of equity plus (iii) twenty-five percent
(25%) of the Guarantor's consolidated GAAP net income for the year-to-date
period ended on such Fiscal Quarterly Date, plus (iv) Fifteen Million Dollars
($15,000,000) beginning January 31, 1999 and (c) on each January 31 Fiscal
Quarterly Date after the Original Closing Date, the sum of (i) (X) for the first
January 31 Fiscal Quarterly Date following the Original Closing Date, Two
Hundred Fifty Million Dollars ($250,000,000) and (Y) for each January 31 Fiscal
Quarterly Date thereafter, the computed minimum Consolidated GAAP Shareholders'
Equity for the immediately preceding January 31 Fiscal Quarterly Date, plus (ii)
one hundred percent (100%) of the cash proceeds from any sale or issuance of
equity, plus (iii) fifty percent (50%) of the Guarantor's consolidated GAAP net
income for the fiscal year then ended, plus (iv) Fifteen Million Dollars
($15,000,000) beginning January 31,1999. As a model of this calculation, and in
order to clarify this section 9.15, the minimum Consolidated GAAP Shareholders'
Equity calculation as of January 31, 1999, which totaled $302,645,000, is
attached hereto as Exhibit "A".
9.16. ENVIRONMENTAL COMPLIANCE. The Guarantor will comply with any and all
Environmental Laws including, without limitation, all Environmental Laws in
jurisdictions in which the Guarantor or any Restricted Subsidiary owns property,
operates, arranges for disposal or treatment of hazardous substances, solid
waste or other wastes, accepts for transport any hazardous substances, solid
waste or other wastes or holds any interest in real property or otherwise. The
Guarantor will furnish to the Banks promptly after receipt thereof a copy of any
notice the Guarantor or any Restricted Subsidiary may receive from any
governmental authority, private person or entity or otherwise that any
litigation or proceeding pertaining to any environmental, health or safety
matter has been filed or is threatened against the Guarantor or such Restricted
Subsidiary, any real property in which the Guarantor or such Restricted
Subsidiary holds any interest or any past or present operation of the Guarantor
or such Restricted Subsidiary. The Guarantor will not knowingly allow the
storage, release or disposal of hazardous waste, solid waste or other wastes on,
under or to any real property in which the Guarantor holds any interest or
performs any of its operations, in violation of any Environmental Law. As used
in this Section, "litigation or proceeding" means any demand, claim, notice,
suit, suit in equity, action, administrative action, investigation or inquiry
whether brought by any governmental authority, private person or entity or
otherwise. The Guarantor shall defend, indemnify and hold the Banks harmless
against all costs, expenses, claims, damages, penalties and liabilities of every
kind or nature whatsoever (including attorneys' fees) arising out of or
resulting from the noncompliance of the Guarantor or any Restricted Subsidiary
with any Environmental Law, provided that, so long as and to the extent that the
Banks are not required to make any payment or suffer to exist any unsatisfied
judgment, order, or assessment against them, the Guarantor may pursue rights of
appeal to comply with such Environmental Laws. In any case of noncompliance with
any Environmental Law by a Restricted Subsidiary, the Banks' recourse for such
indemnity herein shall be limited solely to the property of the Restricted
Subsidiary holding title to the property involved in such noncompliance and such
recovery shall not be a lien, or a basis of a claim of lien or levy of
execution, against either the Guarantor's general assets or the general assets
of any of its Restricted Subsidiaries.
<PAGE>
9.17. PLAN. Neither Guarantor nor any Restricted Subsidiary will suffer or
permit any Plan to be amended if, as a result of such amendment, the current
liability under the Plan is increased to such an extent that security is
required pursuant to Section 307 of the Employee Retirement Income Security Act
of 1974, as amended from time to time. As used herein, "current liability" means
current liability as defined in Section 307 of such Act.
9.18. YEAR 2000 COMPLIANCE EFFORTS. The Guarantor will and will cause each
Company to take all reasonable actions to assure its computer based systems are
able to effectively process data, including dates on and after January 1, 2000
and to avoid serious disruption to its business or operations and the Guarantor
will notify the Agent of any material risk of the Guarantor's or any Company's
inability to so process data and avoid serious disruption which could have a
Material Adverse Effect on such Person.
9.19. CROSS COLLATERALIZATION AND CROSS DEFAULTS. Except as expressly
permitted by Section 8.15 of the Agreement and this Section 9.19, the Guarantor
will not (a) cross-default or agree to cross-default any indebtedness permitted
under this Guaranty to this Guaranty or the Debt; (b) agree to any of the
financial covenants of the Guarantor contained herein under any other
indebtedness permitted under this Agreement which would effectuate a
cross-default with this Guaranty or the Debt incurred hereunder; or (c)
cross-collateralize, or agree to cross-collateralize indebtedness owing to any
one lender under one or more different loan agreements or arrangements,
provided, that the cross-defaulted and/or cross-collateralized indebtedness set
forth on Schedule 9.19 attached hereto shall be permitted.
Notwithstanding the foregoing clauses of this Section 9.19, (i) with
respect to construction projects which are constructed in multiple phases and/or
stabilized properties, Borrower and any Subsidiary of Borrower shall be
permitted to cross-default and/or cross-collateralize any indebtedness permitted
under this Guaranty, but only if the phases to be cross-collateralized and/or
cross-defaulted consist of a single identifiable project; and (ii) in the event
of a completion guaranty of a construction loan, the Borrower and any Subsidiary
of Borrower shall be permitted to (a) cross-default any indebtedness permitted
under this Guaranty with this Guaranty or the Debt or (b) agree to any of the
financial covenants of the Borrower contained herein under any other
indebtedness permitted under this Guaranty which effectuates a cross-default
with this Guaranty or the Debt incurred hereunder; provided that the completion
guaranty and any other relevant documents relating to such construction loan
provide that if the construction project is performing (i.e. construction is on
schedule and on budget) and otherwise the construction loan is not in default
(after any required notice and the lapse of any applicable cure period), an
Event of Default under this Guaranty shall not permit the construction lender to
call upon its completion guaranty to fund construction costs. In order for a
construction lender to call a default due to an Event of Default under this
Guaranty, the Banks must have provided written notice of the Event of Default to
the Borrower and all applicable cure periods shall have lapsed without remedy.
10. DEFAULT; REMEDIES. The Guarantor shall be in default hereunder in the
event that any of the following (each an "Event of Default") shall occur or
exist:
<PAGE>
(a) Any representation or warranty made by the Guarantor, or any of
its officers, herein, or in any written statement or certificate furnished
at any time in connection herewith, shall prove untrue in any material
respect as of the date it was made, or
(b) The Guarantor shall fail to observe, perform, or comply with any
obligation, covenant, agreement, or undertaking of Guarantor set forth in
Sections 3, 9.5, 9.8, 9.13, 9.14 and/or 9.15 hereof, or
(c) The Guarantor shall fail to observe, perform, or comply with any
obligation, covenant, agreement, or undertaking of Guarantor set forth in
any section or provision hereof other than those identified specifically in
subsection (b) above and Guarantor shall not have corrected such failure
within thirty (30) days after the giving of written notice thereof to
Guarantor by Agent or any Bank that the specified failure is to be
corrected, or
(d) Guarantor and/or any Restricted Subsidiary defaults in any payment
of principal or interest due and owing upon any obligation for borrowed
money or, in the case of the Guarantor, in the payment or performance of
any obligation permitted to be outstanding or incurred pursuant to Sections
9.10 and/or 9.12 hereof, beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or condition
contained in any agreement under which any such obligation is created, if
the effect of such default is to accelerate the maturity of the related
indebtedness or to permit the holder thereof to cause such indebtedness to
become due prior to its stated maturity or foreclose on any lien on
property of Guarantor securing the same, except that defaults in payment or
performance of non-recourse obligations of Guarantor or any Restricted
Subsidiary shall not constitute Events of Default under this Section 10(d)
unless such defaults have, individually or in the aggregate, a material
adverse effect on the business or financial condition of Guarantor;
provided that it shall be an Event of Default hereunder if any default
occurs (after giving effect to any applicable grace period) under the
Senior Notes permitted by Section 9.10(h) of this Guaranty or under the
Indenture, or
<PAGE>
(e) (i) any Restricted Subsidiary shall (A) generally not pay its
debts as such debts become due, or (B) make a general assignment for the
benefit of creditors, or (C) apply for or consent to the appointment of a
receiver, a custodian, a trustee, an interim trustee or liquidator of
itself or all or a substantial part of its assets, or (D) be adjudicated a
debtor or have entered against it an order for relief under Title 11 of the
United States Code, as the same may be amended from time to time, or (E)
file a voluntary petition in bankruptcy or file a petition or an answer
seeking reorganization or an arrangement with creditors or seeking to take
advantage of any other law (whether federal or state) relating to relief of
debtors, or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether federal or state)
relating to relief of debtors, or (F) suffer or permit to continue unstayed
and in effect for thirty (30) consecutive days any judgment, decree or
order, entered by a court of competent jurisdiction, which approves a
petition seeking its reorganization or appoints a receiver, custodian,
trustee, interim trustee or liquidator of itself or of all or a substantial
part of its assets, or (G) take or omit to take any other action in order
thereby to effect any of the foregoing or (H) fail to pay and discharge all
lawful taxes, assessments, and governmental charges or levies imposed upon
it or its income, profits, or properties, and/or all lawful claims for
labor, materials, and supplies, which, if unpaid, might become a lien or
charge against such properties, in all cases before the same shall become
in default, or (I) fail to comply with any and all Environmental Laws
applicable to such Subsidiary, its properties, or activities, or (J) fail
to observe, perform, or fulfill any of its obligations, covenants or
conditions contained in any evidence of indebtedness or other contract,
decree, order, judgment, or instrument to which such Subsidiary is a party
or by which it or its assets are bound, and (ii) any such event or events
described in (i) above shall in the reasonable judgment of the Banks have a
material adverse effect on the business or financial condition of the
Guarantor, or
(f) An Event of Default specified in Article X of the Agreement shall
have occurred and be continuing, or
(g) The Guarantor shall (i) make a general assignment for the benefit
of creditors, (ii) file a voluntary petition under any chapter or provision
of Title 11 United States Code (Bankruptcy), as from time to time in effect
(the "Bankruptcy Code") or a petition or answer seeking reorganization of
the Guarantor or a readjustment of its indebtedness under the Bankruptcy
Code or any other federal or state law providing for relief of debtors,
reorganization, liquidation, or arrangements with creditors, (iii) consent
to the appointment of a receiver or trustee of its properties, or (iv)
cease to be or be unable to pay its debts generally as they become due, or
(h) Relief shall be ordered against Guarantor as debtor in any
involuntary case under the Bankruptcy Code, or a petition or proceedings
for bankruptcy or for reorganization shall be filed against Guarantor under
the Bankruptcy Code or any other federal or state law providing for relief
of debtors, reorganization, liquidation, or arrangements with creditors,
and Guarantor shall admit the material allegations thereof, or an order,
judgment or decree entered therein shall not be vacated or stayed within
thirty (30) days of its entry, or a receiver or trustee shall be appointed
for the Guarantor or its properties or any part thereof and remain in
possession thereof for thirty (30) days, or
(i) The Parent defaults in the performance of any obligation in the
Subordination Agreement or in the performance of any other agreement,
covenant, term or condition in the Subordination Agreement,
<PAGE>
then, in any such event, and at any time thereafter, the Agent and/or the
Required Banks may at their option, by written notice delivered or mailed to the
Guarantor, do any one or more of the following: (a) declare the Debt to be
immediately due and payable, and upon any such declaration such indebtedness
shall become and be forthwith due and payable by Guarantor without any further
notice, presentment, or demand of any kind, all of which are expressly waived by
the Guarantor, or (b) require the Guarantor to purchase the Debt at par value,
without recourse, within ten (10) days after such notice, by paying to the
Agent, in immediately available U.S. funds, an amount equal to the unpaid
principal amount then outstanding on the Notes and any other matured or
unmatured Debt owing to the Banks, plus the unpaid accrued interest on the Notes
at the rate or rates determined in accordance with the Agreement. The foregoing
rights, powers, and remedies of the Agent and the Banks are not exclusive and
are in addition to any and all other rights, powers, and remedies provided for
hereunder (including, without limitation, under Section 13 hereof), at law,
and/or in equity. The exercise by the Agent and/or the Banks of any right,
power, or remedy shall not waive or preclude the exercise of any other rights,
powers, and/or remedies.
11. MISCELLANEOUS. The foregoing rights, powers, and remedies of the Agent
and the Banks are not exclusive and are in addition to any and all other rights,
powers, and remedies provided for hereunder, at law, and/or in equity. The
exercise by the Agent and/or the Banks of any right, power, or remedy shall not
waive or preclude the exercise of any other rights, powers, and/or remedies.
This Guaranty shall bind the Guarantor and its successors and assigns and shall
inure to the benefit of the Agent and the Banks and their respective successors
and assigns including (without limitation) each holder of any Note. The
provisions of this Guaranty and the respective rights and duties of the
Guarantor and the Agent and/or the Banks hereunder shall be interpreted and
determined in accordance with Ohio law, without regard to principles of conflict
of laws. If at any time one or more provisions of this Guaranty is or becomes
invalid, illegal or unenforceable in whole or in part, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby. This Guaranty constitutes a final written expression of all
of the terms of this Guaranty, is a complete and exclusive statement of those
terms and supersedes all oral representations, negotiations, and prior writings,
if any, with respect to the subject matter hereof. The relationship between the
Guarantor and the Agent and/or the Banks with respect to this Guaranty is and
shall be solely that of debtor and creditor, respectively, and the Agent and/or
the Banks have no fiduciary obligation to the Guarantor with respect to this
Guaranty or the transactions contemplated thereby. All representations and
warranties of the Guarantor shall survive the execution and delivery of this
Guaranty and be and remain true and correct until this Guaranty is discharged.
Captions herein are for convenient reference only and shall have no effect on
the interpretation of any provision hereof.
<PAGE>
12. JURY TRIAL WAIVER. The Guarantor waives the right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise, between or among the Guarantor and the Agent, the Banks, and/or
Borrower arising out of or in connection with the Agreement, this Guaranty, or
any other agreement, instrument or document executed or delivered in connection
therewith or the transactions related thereto. This waiver shall not in any way
affect, waive, limit, amend or modify the rights or powers of the Agent and/or
the Banks to pursue remedies pursuant to any confession of judgment or cognovit
provision contained in this instrument, any note or any other guaranty of
payment, agreement, instrument or document related thereto.
13. WARRANT OF ATTORNEY. The Guarantor authorizes any attorney at law at
any time or times to appear in any state or federal court of record in the
United States of America after the Debt or any part thereof shall have become
due and payable (whether the payment becomes due by lapse of time or by
acceleration of maturity or otherwise) and in each case to waive the issuance
and service of process, to admit the maturity of the Debt and the nonpayment
thereof when due, to present each evidence of the Debt in question or any part
thereof to the court and to certify the amount of the Debt then owing thereon,
to confess judgment against the Guarantor in favor of the Agents and/or the
Banks for the amount of the Debt then appearing due, together with interest and
costs of suit, and thereupon to release all errors and waive all rights of
appeal and stay of execution. The foregoing warrant of attorney shall survive
any judgment, and should any judgment be vacated for any reason the Agent and/or
the Banks may nevertheless utilize the foregoing warrant of attorney in
thereafter obtaining additional judgment or judgments against the Guarantor. The
Guarantor expressly authorizes any attorneys for the Agent and/or the Banks to
receive compensation from the Agent and/or the Banks for services rendered in
exercising the foregoing warrant of attorney and in the enforcement of any
judgment obtained against the Guarantor in favor of the Agent and/or the Banks
on this Guaranty, and the Guarantor expressly waives any conflict of interest to
which any attorneys for the Agent and/or the Banks may be subject that may arise
in connection with such attorneys exercising any of the rights and/or powers of
the Agent and/or the Banks provided for herein or the enforcement of any
judgment hereon in favor of the Agent and/or the Banks.
<PAGE>
"WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE."
Address: FOREST CITY ENTERPRISES, INC.
1100 Terminal Tower
Cleveland, Ohio 44113 By: /s/ THOMAS G. SMITH
Thomas G. Smith,
Senior Vice President, Chief
Financial Officer and Secretary
<PAGE>
EXHIBIT A
Forest City Enterprises, Inc.
Loan Covenants
at January 31, 1999
(in thousands)
The Third Amendment to the FCE Guaranty of Payment of Debt, Section 9.15 states
the Guarantor will not permit at any time, the Consolidated GAAP Shareholders'
Equity to be less than (a) on the Closing Date, Two Hundred Fifty Million
Dollars ($250,000,000), (b) on each Fiscal Quarterly Date thereafter (other than
the January 31 fiscal Quarter Date), the sum of (i)(A) during the first year
following the Closing Date, Two Hundred Fifty Million Dollars ($250,000,000),
and (B) at all times thereafter, the computed minimum Consolidated GAAP
Shareholders' Equity for the immediately preceding January 31 Fiscal Quarterly
Date as calculated pursuant to subsection (c) below, plus (ii) one hundred
percent (100%) of the cash proceeds from any sale or issuance of equity, plus
(iii) twenty-five percent (25%) of the Guarantor's Consolidated GAAP Net Income
for the year-to-date period ended on such Fiscal Quarterly Date and (c) on each
January 31 Fiscal quarterly Date after the Closing Date, the sum of (i)(X) for
the first January 31 Fiscal Quarterly Date following the Closing Date, Two
Hundred Fifty Million Dollars ($250,000,000), and (Y) for each January 31 Fiscal
Quarterly Date thereafter, the computed minimum Consolidated GAAP Shareholders'
Equity for the immediately preceding January 31 Fiscal quarterly Date, plus (ii)
on hundred percent (100%) of the cash proceeds from any sale or issuance of
equity, plus (iii) fifty percent (50%) of the Guarantor's Consolidated GAAP Net
Income for the fiscal year just ended. In addition to the foregoing, on January
31, 1999 and at all times thereafter, the base Consolidated GAAP Shareholders'
Equity shall increase from Two Hundred Fifty Million Dollars ($250,000,000) to
Two Hundred Sixty Five Million Dollars ($265,000,000).
(i) Base amount $265,000
(ii) 100% of cash proceeds from any sale or issuance
of equity (none)
(iii) Consolidated Net Earnings:
Actual: Year ended January 31, 1999 ($54,750 @ 50%) 27,375
------
Requirement $302,645
========
Consolidated GAAP Shareholders' Equity $332,108
========
Cushion $ 29,463
========
