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) January 29, 1999
Forest City Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Ohio 1-4372 34-0863886
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 Terminal Tower, 50 Public Square Cleveland, Ohio 44113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-621-6060
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
This Form 8-K is being filed to submit the following:
Exhibit 20.1 -
Third Amendment to Credit Agreement, dated as of January 29,
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 -
Third Amendment to Guaranty of Payment of Debt, dated as of
January 29, 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.
Exhibit 20.3 - Subordination Agreement, dated as of January 29, 1999, by and
among Forest City Enterprises, Inc., St. Paul Fire and Marine Insurance Company,
St. Paul Mercury Insurance Company, St. Paul Guardian Insurance Company,
Seaboard Surety Company, Economy Fire & Casualty Company, Asset Guaranty
Insurance Company, 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.
(Registrant)
Date February 11, 1999 By /S/ Thomas G. Smith
Thomas G. Smith, Senior Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 20.1
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT is made and entered into as of
this 29th day of January, 1999 by and among FOREST CITY RENTAL PROPERTIES
CORPORATION, an Ohio corporation (the "Borrower"), KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent (the "Agent"), NATIONAL CITY BANK, as Syndication Agent
(the "Syndication Agent" and, together with the Agent, the "Agents") and the
banks from time to time party hereto (collectively, the "Banks" and individually
a "Bank"). Capitalized terms not otherwise defined herein shall have the meaning
attributed to them in the Credit Agreement, as hereinafter defined.
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") and a Second Amendment to Credit Agreement dated as of
March 6, 1998 (the "Second Amendment"; the Original Credit Agreement as amended
by the First Amendment and the Second 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"; the Original Guaranty as
amended by the First Amendment to Guaranty and the Second Amendment to Guaranty
being referred to herein as the "Guaranty"); and
WHEREAS, the Borrower and the Parent have requested that the Banks and the
Agents agree to certain amendments to the Credit Agreement and to the Guaranty,
relating to certain surety bonds proposed to be obtained by the Parent, which
indebtedness is not permitted by the terms of the Guaranty; and
WHEREAS, the Banks and the Agents are willing to amend the Credit Agreement
and the Guaranty, on the respective terms and conditions set forth herein and in
the Third Amendment to Guaranty of Payment of Debt (the "Third Amendment to
Guaranty") of even date herewith, respectively, and such terms and conditions
are agreeable to the Borrower and to the Parent; and
WHEREAS, the Borrower, the Banks, and the Agent desire to make certain
further amendments to the Credit Agreement, all on the terms and conditions
herein set forth, which further amendments are acceptable to the Parent.
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NOW, THEREFORE, it is mutually agreed as follows:
1. AMENDMENT TO ARTICLE I OF THE CREDIT AGREEMENT.
(a) Amendment of Definition of "Funded Indebtedness". Article I of the
Credit Agreement is hereby amended by deleting the definition of "Funded
Indebtedness" contained therein and replacing it with the following definition
of "Funded Indebtedness":
"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.
(b) Addition of Definition of "Indemnity Agreement". Article I of the
Credit Agreement hereby amended by adding thereto the following definition of
"Indemnity Agreement":
"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.
(c) Addition of Definition of "Surety". Article I of the Credit Agreement
is hereby amended by adding thereto the following definition of "Surety":
"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.
(d) Addition of Definition of "Surety Bonds". Article I of the Credit
Agreement is hereby amended by adding thereto the following definition of
"Surety Bonds":
"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.
(e) Addition of Definition of "Subordination Agreement". Article I of the
Credit Agreement is hereby amended by adding thereto the following definition of
"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.
<PAGE>
2. AMENDMENT TO SECTION 3.06 OF THE CREDIT AGREEMENT.
(a) Amendment to Section 3.06(a). Section 3.06(a) of the Credit Agreement
shall be amended by deleting the first sentence contained therein and
substituting therefor the following sentence:
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.
(b) Amendment to Section 3.06(f). Section 3.06(f) of the Credit Agreement
shall be amended by deleting the first sentence contained therein and
substituting therefor the following sentence:
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.
3. AMENDMENT TO SECTION 7.05 OF THE CREDIT AGREEMENT.
(a) Amendment to Section 7.05(a). Section 7.05(a) of the Credit Agreement
shall be amended by adding after the phrase "forty-five (45) days," the
following parenthetical :
(or fifty (50) days so long as the Parent shall not have reported an Event
of Default under the Guaranty to the Securities and Exchange Commission during
such fiscal period nor on its most recent filing with the Securities and
Exchange Commission).
(b) Amendment to Section 7.05(b). Section 7.05(b) of the Credit Agreement
shall be amended by adding after the phrase "ninety (90) days," the following
parenthetical :
(or ninety-five (95) days so long as the Parent shall not have reported an
Event of Default under the Guaranty to the Securities and Exchange Commission
during such fiscal period nor on its most recent filing with the Securities and
Exchange Commission).
4. ADDITION OF SECTION 7.19 TO THE CREDIT AGREEMENT. Article VII of the
Credit Agreement shall be amended by adding a new Section 7.19 as follows:
SECTION 7.19. YEAR 2000 COMPLIANCE EFFORTS. The Borrower will, and
will cause each Subsidiary to, take all reasonable actions to ensure that
its computerbased systems are able to effectively process data, including dates
on and afterJanuary 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.
<PAGE>
5. AMENDMENT TO SECTION 8.04 OF THE CREDIT AGREEMENT.
Section 8.04 of the Credit Agreement shall be amended by deleting the word "or"
immediately before subsection (c), adding the word "or" at the end of
subsection (c) and adding a new subsection (d) as follows:
(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.
6. ADDITION OF SECTION 8.15 TO THE CREDIT AGREEMENT. Article VIII of the Credit
Agreement shall be amended by adding a new Section 8.15 as follows:
SECTION 8.15. CROSS COLLATERALIZATION AND CROSS DEFAULTS. The Borrower
shall not and shall not permit any Subsidiary to (a) cross-default or agree to
cross-default any indebtedness permitted under this Agreement to this 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
Agreement which would effectuate a cross-default with this 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.
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
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
Agreement with this 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 Agreement which effectuates a cross-default
with this 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 Agreement shall not permit the construction lender
to terminate funding and 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 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.
7. ADDITION OF SECTION 9.24 TO THE CREDIT AGREEMENT. Article IX of the
Credit Agreement shall be amended by adding a new Section 9.24 as follows:
<PAGE>
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.
8. ADDITION OF SECTION 10.11 TO THE CREDIT AGREEMENT. Article X of the
Credit Agreement shall be amended by adding a new Section 10.11 as follows:
SECTION 10.11. DEFAULT UNDER SUBORDINATION AGREEMENT. (a) 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).
8. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to
the Agents and the Banks as follows:
(a) INCORPORATION OF REPRESENTATIONS AND WARRANTIES. Each and every
representation and warranty made by the Borrower in Article IX of the Credit
Agreement is incorporated herein as if fully rewritten herein at length and is
true, correct and complete as of the date hereof;
(b) REQUISITE AUTHORITY. The Borrower has all requisite power and authority
to execute and deliver and to perform its obligations in respect of this Third
Amendment to Credit Agreement and each and every other agreement, certificate,
or document required by this Third Amendment to Credit Agreement;
(c) DUE AUTHORIZATION; VALIDITY. The Borrower has taken all necessary
action to authorize the execution, delivery, and performance by it of this Third
Amendment to Credit Agreement and every other instrument, document, and
certificate relating thereto. This Third Amendment to Credit Agreement has been
duly executed and delivered by the Borrower and when executed and delivered by
the Borrower will be a legal, valid, and binding obligation of the Borrower
enforceable against it in accordance with its terms; and
(d) NO CONSENT. No consent, approval, or authorization of, or registration
with, any governmental authority or other Person is required in connection with
the execution, delivery, and performance of this Third Amendment to Credit
Agreement and the transactions contemplated hereby.
9. CONDITIONS TO CLOSING OF THIRD AMENDMENT.
(a) CLOSING CONDITIONS. Except as otherwise expressly provided in this
Third Amendment to Credit Agreement, prior to or concurrently with the Third
Amendment Closing Date (as hereinafter defined), and as conditions precedent to
the effectiveness of the amendments to the Credit Agreement provided for herein,
the following actions shall be taken, all in form and substance satisfactory to
the Agents and the Banks and their respective counsel:
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(i) CORPORATE AND LOAN DOCUMENTS. The Borrower shall deliver
or cause to be delivered to the Agent and the Banks the following
documents, in all cases duly executed, and delivered by the
Borrower and/or the Parent, and/or certified, as the case may be:
(1) Certified copies of the resolutions of the board of
directors of the Borrower evidencing approval of the execution, delivery, and
performance of this Third Amendment to Credit Agreement;
(2) Certified copies of resolutions of the Board of Directors of
the Parent evidencing approval of the execution, delivery, and performance of
the Third Amendment to Guaranty;
(3) Copies of the Articles of Incorporation of the Borrower,
certified by the Ohio Secretary of State as of a recent date;
(4) Copies of the Articles of Incorporation of the Parent,
certified by the Ohio Secretary of State as of a recent date;
(5) Code of Regulations of the Borrower, certified as true and
complete as of the Third Amendment Closing Date by the secretary of Borrower;
(6) Code of Regulations of the Parent, certified as true and
complete as of the Third Amendment Closing Date by the secretary of the Parent;
(7) A good standing certificate from the State of Ohio for the
Borrower;
(8) A good standing certificate from the State of Ohio for the
Parent;
(9) A certificate of the secretary or assistant secretary of the
Borrower certifying the names of the officers of Borrower authorized to sign
this Third Amendment to Credit Agreement, together with the true signatures of
such officers;
` (10) Acertificate of the secretary or assistant secretary of the
Parent certifying the names of the officers of the Parent authorized to sign the
Third Amendment to Guaranty, together with the true signatures of such officers;
(11) Counterparts of the Third Amendment to Credit Agreement
executed and delivered by the Borrower, the Agents, and the Banks, and
the Parent's Acknowledgement of the Third Amendment to Credit Agreement;
<PAGE>
(12) Counterparts of the Third Amendment to Guaranty,
executed and delivered by the Parent, the Agents, and the Banks;
(13) A certificate of the secretary or assistant secretary of
the Borrower certifying that as of the date of this Third Amendment to Credit
Agreement no Event of Default or Possible Default exists under the Credit
Agreement; and
(14) A Subordination Agreement duly executed and delivered by
the Surety; and
(15) opinions of counsel for the Surety as to the due
authorization, execution, delivery, legality, validity and enforceability of the
Subordination Agreement and such other matters as the Agent or the Banks may
request.
(ii) OPINION OF COUNSEL FOR PARENT. The 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 Third Amendment to Guaranty and such other
matters as the Agent or the Banks may request.
(iii) OPINION OF COUNSEL FOR BORROWER. The Borrower shall deliver or caused
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 Third Amendment to Credit Agreement and such
other matters as the Agent or the Banks may request.
(iv) PAYMENT OF FEES TO BANKS. On or before the Third Amendment Closing
Date, the Borrower shall have paid to the Agents and the Banks all costs, fees,
and expenses incurred by them through the Third Amendment Closing Date in the
preparation, negotiation, and execution of this Third Amendment to Credit
Agreement and the Third Amendment to Guaranty (including, without limitation,
legal fees and expenses of Thompson Hine & Flory LLP), together with a fee in an
amount equal to $107,500. The Borrower shall pay such fee to the Agent for
distribution to the Banks Pro rata, based upon the Maximum Amount of the
Revolving Loan Commitment of each Bank.
(b) DEFINITION. The "Third Amendment Closing Date" shall mean the date this
Third Amendment to Credit Agreement is executed and delivered by the Borrower,
the Banks and the Agents and all the conditions set forth in subsection (a)
above have been satisfied or waived in writing by the Agent.
10. NO WAIVER. Except as otherwise expressly provided herein, the execution
and delivery of this Third Amendment to Credit Agreement by the Agents and the
Banks shall not constitute a waiver or release of any obligation or liability of
the Borrower under the Credit Agreement as in effect prior to the effectiveness
of this Third Amendment to Credit Agreement or as amended hereby or waive or
release any Event of Default or Possible Default existing at any time.
<PAGE>
11. EFFECT ON OTHER PROVISIONS. Except as expressly amended by this Third
Amendment to Credit Agreement, all provisions of the Credit Agreement continue
unchanged and in full force and effect and are hereby confirmed and ratified.
All provisions of the Credit Agreement shall be applicable to this Third
Amendment to Credit Agreement.
IN WITNESS WHEREOF, the parties hereto, each by an officer thereunto duly
authorized, have caused this Third Amendment to Credit Agreement to be executed
and delivered as of the date first above written.
Address: FOREST CITY RENTAL PROPERTIES
1100 Terminal Tower CORPORATION
Cleveland, Ohio 44113
By: /S/ Thomas G. Smith
Title: Vice President and Assistant Secretary
Address: KEYBANK NATIONAL ASSOCIATION,
127 Public Square Individually and as Administrative Agent
Cleveland, Ohio 44114
By: /S/ Scott A. Childs
Title: Assistant Vice President
Address: NATIONAL CITY BANK, Individually and
1900 East Ninth Street as Syndication Agent
Cleveland, Ohio 44114
By: /S/ Anthony DiMare
Title: Senior Vice President
Address: THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, Ohio 44114 By: /S/ M.W. Stachur
Title: Vice President
Address: COMERICA BANK
Overnight Mail:
500 Woodward Avenue By: /S/ David J. Campbell
Detroit, Michigan 48226 Title: Vice President
7th Floor
U.S. Mail:
PO Box 75000
Detroit, Michigan 48275-3256
(Signatures continued on next page.)
<PAGE>
(Signatures continued from previous page.)
Address: FIRST MERIT BANK
123 West Prospect Avenue
Cleveland, Ohio 44115 By: John Neumann
Title: Vice President
Address: CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of the Americas
New York, New York 10019 By:
Title:
Address: STAR BANK
1350 Euclid Avenue
Suite 211 By: /S/ Perry Quick
Cleveland, Ohio 44115 Title: Vice President
Address: MANUFACTURERS AND TRADERS
One Fountain Plaza TRUST COMPANY
Buffalo, New York 14203-1495
By: /S/ Kevin Quinn
Title: Assistant Vice President
Address: U.S. BANK NATIONAL ASSOCIATION
U.S. Bank Place (M.S. MPFP-0802)
601 Second Avenue South By: /S/ Elliott L. Quigley
Minneapolis, Minnesota 55402 Title: Vice President
<PAGE>
CONSENT OF GUARANTOR
FOREST CITY ENTERPRISES, INC., an Ohio corporation, Guarantor under that
certain Guaranty of Payment of Debt issued on or about December 10, 1997, as
amended (the "Guaranty of Payment of Debt") to and in favor of the Agents and
the Banks in respect of, inter alia., the indebtedness of FOREST CITY RENTAL
PROPERTIES CORPORATION under the Credit Agreement referenced in the foregoing
Third Amendment to Credit Agreement, hereby acknowledges that it consents to the
foregoing Third Amendment to Credit Agreement and confirms and agrees that its
Guaranty of Payment of Debt, as amended to the date hereof, is and shall remain
in full force and effect with respect to the Credit Agreement as in effect prior
to, and from and after, the amendment thereof pursuant to the foregoing Third
Amendment to Credit Agreement.
Dated: 1/29/99 FOREST CITY ENTERPRISES, INC.
By: /S/ Charles A. Ratner
Title: Chief Executive Officer and President
<PAGE>
EXHIBIT 20.2
THIRD AMENDMENT TO GUARANTY OF PAYMENT OF DEBT
This THIRD AMENDMENT TO GUARANTY OF PAYMENT OF DEBT (this "Third Amendment
to Guaranty") is made and entered into as of this 29th day of January, 1999 by
and among FOREST CITY ENTERPRISES, INC., an Ohio corporation (the "Guarantor"),
KEYBANK NATIONAL ASSOCIATION, as Administrative Agent (the "Agent"), NATIONAL
CITY BANK, as Syndication Agent (the "Syndication Agent" and, together with the
Agent, the "Agents") and the banks from time to time party hereto (the "Banks"),
W I T N E S S E T H;
WHEREAS, Forest City Rental Properties Corporation (the "Borrower"), the
Banks, other than U.S. Bank National Association (the "Original Banks"), and the
Agents previously entered into a certain Credit Agreement dated as of December
10, 1997 (the "Original Credit Agreement"); and
WHEREAS, the Banks required, as a condition to entering into the Original
Credit Agreement, that the Guarantor execute and deliver to the Agents and the
Original Banks a certain Guaranty of Payment of Debt, dated December 10, 1997
(the "Original Guaranty") and the Guarantor agreed to and did execute and
deliver the Original Guaranty to the Agents and the Original Banks; and
WHEREAS, 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 to Credit Agreement") and a Second Amendment to Credit
Agreement, dated as of March 6, 1998 (the "Second Amendment to Credit
Agreement"); and
WHEREAS, the Banks required, as a condition to entering into the First
Amendment to Credit Agreement, that the Guarantor execute and deliver to the
Agents and the Banks a certain First Amendment to Guaranty of Payment of Debt,
dated January 20, 1998 and the Guarantor agreed to and did execute and deliver
the First Amendment to Guaranty of Payment of Debt (the "First Amendment") to
the Agents and the Banks; and
WHEREAS, the Banks required as a condition to entering into the Second
Amendment to Credit Agreement, that the Guarantor execute and deliver to the
Agents and the Banks a certain Second Amendment to Guaranty of Payment of Debt,
dated March 6, 1998 (together with the First Amendment and the Original
Guaranty, the "Guaranty") and the Guarantor agreed to and did execute and
deliver the Second Amendment to Guaranty of Payment of Debt to the Agents and
the Banks; and
WHEREAS, the Borrower and the Guarantor have requested that the Banks and
the Agents agree to certain amendments to the Credit Agreement and to the
Guaranty; and
WHEREAS, the Borrower, the Banks and the Agents have entered into a Third
Amendment to Credit Agreement dated as of the date hereof (together with the
First Amendment to Credit Agreement, the Second Amendment to Credit Agreement
and the Original Credit Agreement, the "Credit Agreement"), that requires as one
its conditions that Guarantor enter into this Third Amendment to Guaranty of
Payment of Debt.
<PAGE>
NOW, THEREFORE, it is mutually agreed as follows:
1. AMENDMENTS TO SECTION 1 OF THE GUARANTY.
(a) ADDITION OF DEFINITION OF "INDEMNITY AGREEMENT". Section 1 of the
Guaranty is hereby amended by adding thereto the following definition of
"Indemnity Agreement":
"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.
(b) ADDITION OF DEFINITION OF "SURETY". Section 1 of the Guaranty is hereby
amended by adding thereto the following definition of "Surety":
"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.
(c) ADDITION OF DEFINITION OF "SURETY BONDS". Section 1 of the Guaranty is
hereby amended by adding thereto the following definition of "Surety Bonds":
"Surety Bonds" means the bonds, undertakings and other like
obligations executed by Surety for Guarantor subject to the Indemnity
Agreement and the Subordination Agreement.
(d) ADDITION OF DEFINITION OF "SUBORDINATION AGREEMENT". Section 1 of the
Guaranty is hereby amended by adding thereto the following definition of
"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.
2. AMENDMENT TO SECTION 7 OF THE GUARANTY. Section 7 of the Guaranty shall
be amended by adding a new paragraph at the end of such Section as follows:
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 data, including dates on or
after January 1, 2000 and to avoid serious disruption to its business or
operations.
<PAGE>
3. AMENDMENT TO SECTION 9.7 OF THE GUARANTY.
(a) AMENDMENT TO SECTION 9.7(a). Section 9.7(a) of the Guaranty shall be
amended by adding after the phrase "forty-five (45) days," the following
parenthetical :
(or fifty (50) days so long as the Guarantor will not be reporting an Event
of Default on such Form 10-Q report).
(b) AMENDMENT TO SECTION 9.7 (b). Section 9.7(b) of the Guaranty shall be
amended by adding after the phrase "forty-five (45) days," the following
parenthetical :
(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).
(c) AMENDMENT TO SECTION 9.7(c). Section 9.7(c) of the Guaranty shall be
amended by adding after the phrase "ninety (90) days," the following
parenthetical :
(or ninety-five (95) days so long as the Parent 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).
4. AMENDMENT TO SECTION 9.10 OF THE GUARANTY. Section 9.10 of the Guaranty
shall be amended by adding new subsections (j) and (k) as follows:
(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.
(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.
5. AMENDMENT TO SECTION 9.15 OF THE GUARANTY. Section 9.15 of the Guaranty
shall be amended by deleting it in its entirety and substituting therefor the
following Section 9.15:
<PAGE>
9.15 CONSOLIDATED SHAREHOLDER'S GAAP EQUITY. The Guarantor will not
permit at any time, the Consolidated Shareholder's GAAP 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 Quarterly 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 Shareholder's GAAP 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 Shareholder's GAAP 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 just ended. In addition to the foregoing, on
January 31, 1999 and at all times thereafter, the base Consolidated
Shareholder's GAAP Equity shall increase from Two Hundred Fifty Million
Dollars ($250,000,000) to Two Hundred Sixty Five Million Dollars
($265,000,000).
6. AMENDMENT TO SECTION 9 OF THE GUARANTY. Section 9 of the Guaranty shall
be amended by adding a new Section 9.18 and a new Section 9.19 as follows:
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. 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.
(I) Notwithstanding the foregoing clauses of this Section 9.19, 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. (II) Notwithstanding the foregoing clauses of this
Section 9.19, 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,
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 terminate
funding and 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.
7. ADDITION OF SECTION 10(i) OF THE GUARANTY. Article X of the Guaranty
shall be amended by adding a new section 10(i) as follows:
(i) 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.
7. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants to
the Agents and each of the Banks as follows:
(a) INCORPORATION OF REPRESENTATIONS AND WARRANTIES. Each and every
representation and warranty made by the Guarantor in Section 7 of the
Guaranty is incorporated herein as if fully rewritten herein at length and
is true, correct and complete as of the date hereof and no Event of Default
or Possible Default exists on such date;
(b) REQUISITE AUTHORITY. The Guarantor has all requisite power and
authority to execute and deliver and to perform its obligations in respect
of this Third Amendment to Guaranty and each and every other agreement,
certificate, or document required to be delivered as a condition precedent
to this Third Amendment to Guaranty or to the Third Amendment to Credit
Agreement;
(c) DUE AUTHORIZATION; VALIDITY. The Guarantor has taken all necessary
action to authorize the execution, delivery, and performance by it of this
Third Amendment to Guaranty and every other instrument, document, and
certificate relating thereto. This Third Amendment to Guaranty has been
duly executed and delivered and when executed and delivered will be a
legal, valid, and binding obligation of the Guarantor enforceable against
it in accordance with its terms; and
(d) NO CONSENT. No consent, approval, or authorization of, or
registration with, any governmental authority or other Person is required
in connection with the execution, delivery, and performance of this Third
Amendment to Guaranty and the transactions contemplated hereby.
<PAGE>
8. NO WAIVER. Except as otherwise expressly provided herein, the
acceptance, execution, and/or delivery of this Third Amendment to Guaranty by
the Agents and the Banks shall not constitute a waiver or release of any
obligation or liability of the Guarantor under the Guaranty as in effect prior
to the effectiveness of this Third Amendment to Guaranty or as amended hereby or
waive or release any Event of Default or Possible Default existing at any time.
9. CONDITIONS TO CLOSING. Except as otherwise expressly provided in this
Third Amendment to Guaranty, prior to or concurrently with the execution and
delivery of this Third Amendment to Guaranty, and as conditions precedent to the
effectiveness of the amendments to the Guaranty provided for herein, the Agents
and the Banks and their respective counsel shall have received such opinions of
counsel to the Guarantor, certified copies of resolutions of the Board of
Directors of the Guarantor, and such other documents as shall be required by the
Agents, the Banks, or their respective counsel to evidence and confirm the due
authorization, execution, and delivery of this Third Amendment to Guaranty, all
in form and substance satisfactory to the Agents and the Banks and their
respective counsel; all conditions to the Third Amendment to Credit Agreement
shall have been satisfied; and all costs, fees, and expenses required by the
Third Amendment to Credit Agreement to have been paid by the Borrower in
connection with the Third Amendment to Credit Agreement and/or this Third
Amendment to Guaranty shall have been paid.
10. CONFIRMATION OF GUARANTY. The Guarantor hereby confirms that the
Guaranty is in full force and effect on the date hereof and that, upon the
amendment herein provided becoming effective, the Guaranty will continue in full
force and effect in accordance with its terms, as hereby amended.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, each by an officer thereunto duly
authorized, have caused this Third Amendment to Guaranty of Payment of Debt to
be executed and delivered as of the date first above written.
FOREST CITY ENTERPRISES, INC.
By: /S/ Thomas G. Smith
Title: Chief Financial Officer, Senior Vice
President and Secretary
KEYBANK NATIONAL ASSOCIATION,
Individually and as Administrative Agent
By: /S/ Scott A. Childs
Title: Assistant Vice President
NATIONAL CITY BANK, Individually and as
Syndication Agent
By: /S/ Anthony DiMare
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By: /S/ M.W. Stachur
Title: Vice President
FIRST MERIT BANK
By: /S/ John Neumann
Title: Vice President
(Signatures continued on next page.)
<PAGE>
(Signatures continued from previous page.)
COMERICA BANK
By: /S/ David J. Campbell
Title: Vice President
CREDIT LYONNAIS
By:
Title:
STAR BANK
By: /S/ Perry Quick
Title: Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /S/ Kevin Quinn
Title: Assistant Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /S/ Elliott L. Quigley
Title: Vice President
<PAGE>
EXHIBIT 20.3
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of this 29th day
of January, 1999, by and among FOREST CITY ENTERPRISES, INC., an Ohio
corporation (the "Guarantor"), ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a
Minnesota capital stock company, ST. PAUL MERCURY INSURANCE COMPANY, a Minnesota
capital stock company, ST. PAUL GUARDIAN INSURANCE COMPANY, a Minnesota capital
stock company, SEABOARD SURETY COMPANY, a New York company, ECONOMY FIRE &
CASUALTY COMPANY, a Minnesota capital stock company and ASSET GUARANTY INSURANCE
COMPANY, a New York company (each a "Subordinating Creditor" and collectively,
the "Subordinating Creditors"), KEYBANK NATIONAL ASSOCIATION, as Administrative
Agent (the "Agent"), NATIONAL CITY BANK, as Syndication Agent (the "Syndication
Agent" and, together with the Agents, the "Agents") and the banks from time to
time party hereto (collectively, the "Banks" and individually a "Bank").
W I T N E S S E T H:
WHEREAS, Forest City Rental Properties Corporation, an Ohio corporation
(the "Borrower") has previously entered into a Credit Agreement dated as of
December 10, 1997 with the Banks, other than U.S. Bank National Association, and
the Agents (the "Original Credit Agreement"), as amended by the First Amendment
to Credit Agreement dated as of January 20, 1998, among the Borrower, the Banks
and the Agents (the "First Amendment"), as further amended by the Second
Amendment to Credit Agreement dated as of March 6, 1998, among the Borrower, the
Banks and the Agents (the "Second Amendment") and as further amended by the
Third Amendment to Credit Agreement dated as of January 29, 1999 (the "Third
Amendment;" the Original Credit Agreement, together with the First Amendment,
Second Amendment, Third Amendment and any and all further amendments,
restatements, or other modifications are collectively referred to herein as the
"Credit Agreement"); and
WHEREAS, in connection with the Original Credit Agreement the Guarantor
executed and delivered a Guaranty of Payment of Debt dated as of December 10,
1997 (the "Original Guaranty") pursuant to which the Guarantor agreed to
guarantee the payment of all obligations owing by the Borrower to the Banks and
the Agents under the Credit Agreement; and
WHEREAS, in connection with the First Amendment, the Guarantor executed and
delivered a First Amendment to Guaranty of Payment of Debt dated as of January
20, 1998 (the "First Amendment to Guaranty"), and in connection with the Second
Amendment, the Guarantor executed and delivered a Second Amendment to Guaranty
of Payment of Debt dated as of March 6, 1998 (the "Second Amendment to
Guaranty") and in connection with the Third Amendment, the Guarantor executed
and delivered a Third Amendment to Guaranty of Payment of Debt dated as of
January 29, 1999 (the "Third Amendment to Guaranty"; the Original Guaranty,
together with the First Amendment to Guaranty, Second Amendment to Guaranty,
Third Amendment to Guaranty and any and all further amendments, restatements or
other modifications are collectively referred to as the "Guaranty"); and
<PAGE>
WHEREAS, the Guarantor has previously entered into a General Indemnity
Agreement dated as of November 6, 1998 with the Subordinating Creditors, other
than Asset Guaranty Insurance Company, as amended by The St. Paul Surety
Amendment to General Indemnity Agreement dated as of November 6, 1998 (said
General Indemnity Agreement as amended, and as it may be from time to time
further amended, restated or otherwise modified, the "St. Paul Indemnity
Agreement"); and
WHEREAS, the Guarantor has previously entered into a General Indemnity
Agreement dated as of December 3, 1998 with Asset Guaranty Insurance Company, as
amended by the Asset Guaranty Insurance Company Amendment to General Indemnity
Agreement dated as of December 3, 1998 (said General Indemnity Agreement as
amended and as it may be from time to time further amended, restated or
otherwise modified, the "Asset Guaranty Indemnity Agreement"; the St. Paul
Indemnity Agreement and the Asset Guaranty Indemnity Agreement are collectively
referred to herein as the "Indemnity Agreement"); and
WHEREAS, the execution delivery of this Agreement is required in order to
induce the Banks and the Agents to enter into the Third Amendment and the Third
Amendment to Guaranty.
NOW, THEREFORE, for valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the Guarantor, the Subordinating Creditors, the
Banks and the Agents agree as follows:
1. Definitions. In addition to capitalized terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Bank Liabilities" means all Liabilities of the Guarantor owed, due or
payable to the Banks and the Agents under or in respect of the Guaranty.
"Business Day" means a day on which Cleveland, Ohio banks are open for the
transaction
of business of a nature required for the purposes of this Agreement.
"Cash Payment" means an absolute and final Payment of cash or the absolute
and final transfer of all rights of ownership of property in satisfaction of
Bank Liabilities.
"Event of Default" shall have the meaning given to such term in the
Guaranty.
"Junior Liabilities" means all Liabilities, claims and rights due, owed or
payable to the Subordinating Creditors under or in respect of the Indemnity
Agreement. The maximum aggregate principal amount of such Liabilities shall not
exceed Thirty Million Dollars ($30,000,000).
"Liabilities" means all obligations and liabilities of the Guarantor of
every kind and description, whether indebtedness, principal of indebtedness,
interest on indebtedness, fees, expense reimbursements, premiums, on account,
contract or other claim, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, joint and/or several, now or hereafter
existing, or due or to become due (including, without limitation, any costs and
expenses of collection and enforcement thereof).
<PAGE>
"Payment" means any transfer, delivery, distribution, assignment, pledge,
grant, conveyance or other action whereby cash or other property (or any
interest therein) is given or received.
"Scheduled Payment" means the regularly scheduled [monthly, quarterly,
annual] cash payments to Subordinated Creditors of premiums owed under the
Indemnity Agreement (but not any Payments arising out of any losses, claims or
obligations incurred by the Subordinating Creditors by reason of having executed
any bonds for the Guarantor).
2. Representations of the Subordinating Creditors. Each Subordinating
Creditor represents and warrants that this Agreement is a legal, valid and
binding obligation enforceable against it in accordance with its terms. Each
Subordinating Creditor further represents and warrants that, as of the date
hereof, all Junior Liabilities are evidenced by the Indemnity Agreement and that
a true, correct and complete copy of the Indemnity Agreement as issued and
delivered by the Guarantor has been delivered to the Banks. In the event
additional Junior Liabilities are hereafter created, each Subordinating Creditor
will from time to time, (a) promptly notify the Agent of the creation of any
Junior Liabilities and of the issuance of any instrument to evidence the
issuance of any Junior Liabilities, and (b) promptly cause any Liabilities to
the Subordinating Creditors, except for those Liabilities which are permitted
pursuant to Section 9.12 of the Guaranty, which are not evidenced by the
Indemnity Agreement or other instrument of the Guarantor to be so evidenced with
language reasonably satisfactory to the Agent.
3. Subordination. The Payment, the demand for Payment, the right of
collection or enforcement, and the exercise of remedies of all Junior
Liabilities, whether for principal or interest, or premiums, penalties, fees,
charges, expenses in respect thereof, shall be postponed and subordinated in all
respects, to the Cash Payment in full of all Bank Liabilities and no Payments
whatsoever in respect of any Junior Liabilities shall be made, nor shall any
property or assets of, the Guarantor be applied to the purchase or other
acquisition or retirement of any Junior Liabilities until the Cash Payment in
full of all Bank Liabilities. Notwithstanding the foregoing, however, so long as
no Event of Default shall have occurred and be continuing, Scheduled Payments
may be made in the manner provided in the Indemnity Agreement.
4. Retention of Scheduled Payments. If any holder of the Junior Liabilities
receives a Scheduled Payment from the Guarantor, such Scheduled Payment shall be
deemed to constitute a representation of the Guarantor to the Banks, the Agents
and the Subordinating Creditors that no Event of Default shall have occurred and
be continuing and the Subordinating Creditors shall be entitled to keep and
retain such Scheduled Payment unless prior to the date on which such Scheduled
Payment is made or within thirty (30) days after such date, the Agents, any Bank
or any holder of the Bank Liabilities shall have notified the Subordinating
Creditors, by telephone, telex, telefax or otherwise by oral communication
(which means of notice shall be an exception to Paragraph 23 herein), promptly
confirmed in writing, that an Event of Default existed at the time of such
Scheduled Payment to the Subordinating Creditors, in which case the
Subordinating Creditors shall forthwith deliver such Scheduled Payment or an
amount in cash equal thereto to the Agent in accordance with the provisions of
Section 8 of this Agreement.
<PAGE>
5. Subrogation. To the extent that any holder of the Bank Liabilities
receives payments or other distributions pursuant to the provisions of this
Agreement which would otherwise be payable or distributed to the holder of the
Junior Liabilities, the holder of the Junior Liabilities shall be subrogated to
the rights of the holders of the Bank Liabilities; provided, that neither the
Agents nor the Banks make any representation or warranty as to the existence or
extent of any such subrogation rights. To the extent that the holder of the
Junior Liabilities is subrogated to the rights of any holder of the Bank
Liabilities, the holder of the Junior Liabilities shall not exercise any of the
rights of such holder of the Bank Liabilities without the prior written consent
of all holders of the Bank Liabilities except after the termination of this
Agreement pursuant to Section 20 hereof. For the purpose of such subrogation, no
payments or distribution to the holders of the Bank Liabilities of any cash,
property or securities to which the holder of the Junior Liabilities would be
entitled except for the provisions of this Agreement, and no payment, pursuant
to the provisions of this Agreement, to the holders of the Bank Liabilities by
the holder of the Junior Liabilities, shall, as between the Guarantors, its
creditors other than the holders of the Bank Liabilities, and the holder of the
Junior Liabilities, be deemed to be a payment by the Guarantor to or on account
of the Bank Liabilities.
6. Bankruptcy. In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar proceedings relating to the
Guarantor and its creditors, as such, or to its properties (whether voluntary or
involuntary, partial or complete, and whether in reorganization, bankruptcy,
insolvency or receivership, or upon an assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of the Guarantor, or any
sale of all or substantially all of the assets of the Guarantor, or either of
them, or otherwise), the Junior Liabilities are hereby subordinated as a claim
(to the extent the Junior Liabilities constitute a claim) against the Guarantor,
its estate and its property and assets with regard to the Bank Liabilities and
the Bank Liabilities shall first be paid by Cash Payment in full before the
Subordinating Creditors shall be entitled to receive and to retain any Payment
of any kind or character in respect of any of the Junior Liabilities, and, in
order to implement the foregoing, (a) all payments and distributions of any kind
or character in respect of the Junior Liabilities to which the Subordinating
Creditors would be entitled if the Junior Liabilities were not subordinated
pursuant to this Agreement shall be made directly to the Agent, (b) the Agent,
may, in its sole discretion and at its sole option, on behalf of the
Subordinating Creditors, file and prove a claim or claims for the full
outstanding amount of all of the Junior Liabilities (and promptly thereafter
shall provide the Subordinating Creditors with notice and copies thereof;
provided that the failure of the Agent to provide such notice and copies shall
not in any way prejudice any of the rights of the Agents or the Banks or the
obligations of the Subordinating Creditors under this Agreement), and the
Subordinating Creditors shall use their reasonable best efforts to cause said
claim or claims to be approved and all payments and other distributions in
respect thereof, to which it has been determined that the Subordinating
Creditors are entitled, to be made directly to the Agent, and (c) the
Subordinating Creditors hereby irrevocably agree that the Agent may, at its sole
discretion, in the names of the Subordinating Creditors or otherwise, demand,
sue for, collect, and receive any and all such payments or distributions, and
prove, in any such proceedings with respect to, any and all claims of the
Subordinating Creditors relating to the Junior Liabilities (and promptly
thereafter shall provide the Subordinating Creditors with notice and copies
thereof; provided that the failure of the Agent to provide such notice and
copies shall not in any way prejudice any of the rights of the Agents or the
Banks or the obligations of the Subordinating Creditors under this Agreement).
The Agent is hereby appointed attorney-in-fact for the Subordinating Creditors
with full power to act in their names and stead for any and all purposes
relating to any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceeding relating to the Guarantor. Neither
the Agent nor the Banks shall have any obligation to the Subordinating Creditors
to collect or attempt to collect any of the Junior Liabilities.
7. Relative Rights. The provisions of this Agreement are solely for the
purpose of defining the relative rights of the holders of Bank Liabilities on
the one hand, and the holders of the Junior Liabilities on the other hand, and
none of such provisions shall impair, as between the Guarantor and any holder of
the Junior Liabilities, the obligation of the Guarantor, which is unconditional
and absolute, to pay to such holder all of the Junior Liabilities in accordance
with the terms hereof, nor shall any such provisions prevent any holder of the
Junior Liabilities from exercising all remedies otherwise permitted by
applicable law or under the terms of such Junior Liabilities or under any
security agreement or other agreement or instrument executed in connection
therewith, upon a default thereunder, subject to the rights, if any, under the
provisions of this Agreement of a holder of Bank Liabilities except, that the
Subordinating Creditors (i) shall not have a lien upon any assets of or capital
stock issued by the Guarantor or any of its subsidiaries; and (ii) shall not
block any sale by the Agent as secured creditor of any assets of the Guarantor
or any of its subsidiaries.
8. Turnover of Impermissible Payments. In the event that any Subordinating
Creditor receives any Payment of any kind or character from the Guarantor or
from any other source whatsoever in respect of any of the Junior Liabilities,
including, without limitation, pursuant to a reorganization, liquidation,
dissolution or similar proceeding, other than as expressly permitted by the
terms of this Agreement, such Payment shall be received in trust for the Agents
and the Banks and promptly delivered by such Subordinating Creditor in the form
received (except for the endorsement of such Subordinating Creditor when
necessary) to the Agent for the benefit of the Banks. In the event of the
failure of any Subordinating Creditor to endorse any instrument for the payment
of money so received, the Agent is hereby appointed attorney-in-fact (coupled
with an interest) for such Subordinating Creditor with full power to make such
endorsement and with full power of substitution. Each Subordinating Creditor
will mark its books and records, so as to clearly indicate that all of the
Junior Liabilities are subordinated in accordance with the terms of this
Agreement. Each Subordinating Creditor will execute such further documents or
instruments and take such further action as the Agent may from time to time
reasonably request to carry out the intent of this Agreement.
9. Applications of Payments. All Payments received by the Agents or any
Bank in respect of the Junior Liabilities may be applied by the Agents or such
Bank first to the payment of any and all expenses (including reasonable
attorneys' fees and legal expenses) actually paid or incurred by the Agents or
such Bank in enforcing this Agreement or in endeavoring to collect or realize
upon any of the Junior Liabilities or any security therefor, and any balance
thereof shall, solely as between the Subordinating Creditors and the Banks, be
applied by the Agents and the Banks in such order of application as the Agents
or the Banks may from time to time select, toward the payment of the Bank
Liabilities; but, as between the Guarantor and its creditors, no such payments
or distributions of any kind or character shall be deemed to be payments or
distributions in respect of the Bank Liabilities.
10. Waiver of Notice, etc. Each Subordinating Creditor hereby
waives: (a) notice of acceptance by the Agents and the Banks of this Agreement;
(b) notice of the existence or creation of all or any of the Bank Liabilities;
and (c) all diligence in collection or protection of or realization upon the
Bank Liabilities or any proceeds thereof or any security therefor except in the
instance of willful misconduct or gross negligence on the part of the Agents or
the Banks.
11. Subordination of Security Interests. Each Subordinating Creditor agrees
that in the event that any mortgage, lien, pledge, encumbrance or security
interest is hereafter created and held by any Subordinating Creditor (the
"Junior Security Interests") in any property or assets of the Guarantor such
Junior Security Interests shall be fully subordinate in all respects, including,
without limitation, priority, rights of Payment, collection and enforcement,
participation in any reorganization or rehabilitation of the Guarantor or
assignment for the benefit of its creditors, to any mortgage, lien, pledge,
encumbrance or security interest, now existing or hereafter arising, securing
any of the Bank Liabilities, subject to Section 20 hereof (the "Bank Security
Interests"); notwithstanding that the creation, attachment, perfection, filing
or recording of the Junior Security Interests, or the time of any of the
foregoing, has occurred or is prior to the creation, attachment, perfection,
filing or recording of the Bank Security Interests. Each Subordinating Creditor
further agrees that in the event the Agents or the Banks release and/or
terminate any Bank Security Interests in any property in which any Subordinating
Creditor has a Junior Security Interest, such Subordinating Creditor will, not
later than simultaneously with the release and termination of the Bank Security
Interests, terminate and release the Junior Security Interests. Each
Subordinating Creditor agrees to take all actions and to execute such
agreements, documents and instruments as the Agent may reasonably request to
satisfy the purposes of the foregoing sentence. In the event of a failure of any
Subordinating Creditor to release and terminate the Junior Security Interests in
accordance with the provisions of this Section 11, the Agent is hereby appointed
attorney-in-fact (coupled with an interest) for such Subordinating Creditor with
full power to execute and deliver such releases and termination, and take such
actions as to effect the same.
12. Limit on Action. The Subordinating Creditors will not, without the
prior written consent of the Agent: (a) take any collateral security for any of
the Junior Liabilities; (b) demand Payment of, sue for, attempt to enforce or
collect, or commence any action or proceeding in respect of, any of the Junior
Liabilities, or attempt to enforce, foreclose or realize upon, take possession
of (actual or constructive) or commence any action or proceedings with regard
to, any collateral security, for any of the Junior Liabilities; or (c) commence,
or join with any other creditor in commencing, any bankruptcy, reorganization or
insolvency proceedings with respect to the Guarantor. Notwithstanding the
foregoing sentence, the Subordinated Creditors may, subject to the other
provisions of this Agreement, exercise the rights and remedies described in
subsections (b) and (c) in the foregoing sentence, but only if three hundred
sixty (360) calendar days have elapsed since demand has been made by the Agents
or the Banks for the payment of the Bank Liabilities and such demand has not
been rescinded by the Agents or the Banks.
13. Amendment to Guaranty. The Agents or the Banks may from time to time
and without notice to the Subordinating Creditors and without affecting the
validity or enforceability of this Agreement, take any or all of the following
actions: (a) amend, modify, supplement or restate the Guaranty (b) retain or
obtain a security interest in any property to secure any of the Bank
Liabilities; (c) retain or obtain the primary or secondary obligation of any
other obligor or obligors with respect to any of the Bank Liabilities; (d)
extend or renew for one or more periods, alter or exchange any of the Bank
Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Bank Liabilities; (e) release any security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Bank Liabilities, or extend
or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations or any nature
of any obligor with respect to any such property; and (f) create, or advance
additional funds, creating additional Bank Liabilities whether or not under the
Guaranty.
14. Transfer of Bank Liabilities. The Agents or the Banks may from time to
time without notice to the Subordinating Creditors and without affecting the
validity or enforceability of this Agreement, assign or transfer any or all of
the Bank Liabilities or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer thereof, such
Bank Liabilities shall be and remain Bank Liabilities for the purposes of this
Agreement; and every immediate and successive assignee or transferee of the Bank
Liabilities or of any interest therein shall, to the extent of the interest of
such assignee or transferee in the Bank Liabilities, be entitled to the benefits
of this Agreement to the same extent as if such assignee or transferee were such
Agent or such Bank; provided, that, unless such transferor Agent or Bank shall
otherwise consent in writing, such transferor Agent or Bank shall have an
unimpaired right, prior and superior to that of any such assignee or transferee,
to enforce this Agreement, for its benefit, as to those of the Bank Liabilities
which it has not assigned or transferred.
15. Notice; Transfer of Junior Liabilities; No Amendment. Each
Subordinating Creditor agrees to notify the Agent upon the happening of any of
the following: (i) any claim for payment of the Junior Liabilities; and
(ii) any transfer of Junior Liabilities, specifying the name and address of the
transferee upon any transfer of the Junior Liabilities, whereupon, the
transferor Subordinating Creditor will deliver to such transferee a copy of this
Agreement and will, as a condition to the effectiveness of such transfer, obtain
the complete agreement, in writing, of such transferee to the terms and
provisions of this Agreement. The Subordinating Creditors shall not transfer,
sell or otherwise dispose of any of the Junior Liabilities, except in compliance
with this Section 15. The Subordinating Creditors shall provide written notice
to the Agent prior to any such transfer, sale, disposition or amendment. No part
of the Junior Liabilities shall be forgiven or subject to any other
subordination arrangement without the prior written consent of the Agent. Each
Subordinating Creditor agrees not to make, and not to consent to, any amendment,
restatement, modification or alteration of the Indemnity Agreement or other
agreement, document or instrument executed in connection therewith to the extent
that such amendment, modification, restatement or alteration would adversely
affect (as reasonably determined by the Agent) the Agents or the Banks and their
respective rights under this Agreement and the respective obligations of the
Subordinating Creditors hereunder. Each Subordinating Creditor agrees to give
prior written notice to the Agent of any proposed amendment, modification,
restatement or alteration of the Indemnity Agreement.
16. No Prejudice. Each Subordinating Creditor and the Guarantor agree that
the Banks shall not be prejudiced in their rights under this Agreement by any
act or failure to act of the Guarantor or the Subordinating Creditors, or any
noncompliance of the Guarantor with any agreement or obligation, regardless of
any knowledge thereof which the Agents or the Banks may have or with which the
Agents or the Banks may be charged; and no action of the Agents or the Banks
permitted hereunder (other than termination of this Agreement as permitted by
Section 20 below, the effect of which is governed by such Section 20) shall in
any way affect or impair the rights of the Agents or the Banks and the
obligations of the Guarantor and the Subordinating Creditors under this
Agreement.
17. No Delay or Waiver Effective. No delay on the part of the Agents or the
Banks in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Agents or the Banks of any right or
remedy shall preclude other or further exercise thereof or the exercise of any
other right or remedy; nor shall any modification or waiver of any of the
provisions of this Agreement be binding upon the Agents or the Banks except as
expressly set forth in a writing duly signed and delivered by the Agents or the
Banks.
18. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Agents, the Banks, the Subordinating Creditors and the Guarantor
and their respective heirs, executors, representatives, successors and permitted
assigns.
19. Books of Records. The Guarantor will render to the Agent upon demand,
and from time to time, a statement of account of each of the Junior Liabilities.
20. Termination. This Agreement shall automatically terminate upon the
payment in full of all of the Bank Liabilities but shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any amount paid by or on behalf of the Guarantor or Borrower
with regard to the Bank Liabilities is rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Guarantor or Borrower or, upon or as a result of the
appointment of a receiver, intervener or conservator of, or trustee or similar
officer for the Guarantor or Borrower or any substantial part of its property,
or otherwise, all as though such payments had not been made. In the event of
such reinstatement, the respective rights and duties of each of the parties
hereto shall be reinstated as if no termination had occurred.
21. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio. Wherever possible each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. Each Subordinating
Creditor agrees to submit to the personal jurisdiction of any state or federal
court located in the State of Ohio and that venue for any action or legal
proceeding relating to this Agreement shall be proper in Cleveland, Cuyahoga
County, Ohio.
22. Counterparts. This 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.
23. Notice. All notices hereunder shall be deemed sufficiently given to a
party hereto when mailed, certified mail, return receipt requested, to such
party at the address shown beneath such party's name below or at such other
address as such party shall have designated for such purposes in writing.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
first written above.
Address: FOREST CITY ENTERPRISES, INC.
1100 Terminal Tower
Cleveland, Ohio 44113
By: /S/ Thomas G. Smith
Title: Chief Financial Officer,
Senior Vice President and Secretary
Address: ST. PAUL FIRE AND MARINE INSURANCE
COMPANY
By: /S/ Richard C. Lang
Title: Assistant Vice President
Address: ST.PAUL GUARDIAN INSURANCE COMPANY
By: /S/ Richard C. Lang
Title: Assistant Vice President
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<PAGE>
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Address: ST. PAUL MERCURY INSURANCE COMPANY
By: /S/ Richard C. Lang
Title: Assistant Vice President
Address: SEABOARD SURETY COMPANY
By: /S/ Richard C. Lang
Title: Assistant Vice President
Address: ECONOMY FIRE & CASUALTY COMPANY
By: /S/ Richard C. Lang
Title: Assistant Vice President
Address: ASSET GUARANTY INSURANCE COMPANY
335 Madison Avenue
35th Floor By: /S/ Joseph Snider
New York, NY 10017-4605 Title: Vice President
Address: KEYBANK NATIONAL ASSOCIATION,
127 Public Square Individually and as Administrative Agent
Cleveland, Ohio 44114
By: /S/ Scott A. Childs
Title: Assistant Vice President
Address: NATIONAL CITY BANK, Individually and
1900 East Ninth Street as Syndication Agent
Cleveland, Ohio 44114
By: /S/ Anthony DiMare
Title: Senior Vice President
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<PAGE>
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Address: THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, Ohio 44114 By: /S/ M.W. Stachur
Title: Vice President
Address: COMERICA BANK
Overnight Mail:
500 Woodward Avenue By: /S/ David J. Campbell
Detroit, Michigan 48226 Title: Vice President
7th Floor
U.S. Mail:
PO Box 75000
Detroit, Michigan 48275-3256
Address: FIRST MERIT BANK
123 West Prospect Avenue
Cleveland, Ohio 44115 By: /S/ John Neumann
Title: Vice President
Address: CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of the Americas
New York, New York 10019 By: _____________________________________
Title: ________________________________
Address: STAR BANK
1350 Euclid Avenue
Suite 211 By: /S/ Perry Quick
Cleveland, Ohio 44115 Title: Vice President
Address: MANUFACTURERS AND TRADERS
One Fountain Plaza TRUST COMPANY
Buffalo, New York 14203-1495
By: /S/ Kevin B. Quinn
Title: Assistant Vice President
(Signatures continued on next page)
<PAGE>
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Address: U.S. BANK NATIONAL ASSOCIATION
U.S. Bank Place (M.S. MPFP-0802)
601 Second Avenue South By: /S/ Elliott L. Quigley
Minneapolis, Minnesota 55402 Title: Vice President
