EXHIBIT 10.2
GUARANTY OF PAYMENT OF DEBT
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THIS GUARANTY OF PAYMENT OF DEBT (this "Guaranty") is made and
issued by FOREST CITY ENTERPRISES, INC., an Ohio corporation (the "Guarantor"),
as of this 5th day of March, 2002, 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 Credit Agreement of even date herewith (said Credit
Agreement as it may be from time to time amended, restated, or modified being
herein called the "Agreement"), by and among the Banks, the 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 each of the financing institutions that are
party to the Agreement as of the date of this Guaranty, 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.
"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 (excluding balloon payments) and interest on any
Indebtedness owing by the Borrower (excluding any non-recourse mortgage
Indebtedness owing by the Borrower or any Subsidiary of the Borrower), (Y) all
scheduled payments of principal of (excluding balloon payments) 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.
"Completion Guaranty" shall mean any performance guarantee by
the Guarantor that construction of a real estate project will be completed in
accordance with applicable plans and specifications and that all costs
associated with such completion will be paid, provided, that such costs may
include an interest reserve only through completion of the project and not
through stabilization of such project.
"Consolidated GAAP Shareholders' Equity" shall mean the
consolidated shareholders equity of the Borrower and the Parent, as calculated
in accordance with GAAP.
"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, (v) non-cash interest expense accrued but not currently payable
up to a maximum of Five Million Dollars ($5,000,000) with respect to
Indebtedness other than Indebtedness owing to the government of the United
States or any state or municipality thereof or any agencies of any of the
foregoing and (vi) non-cash interest expense accrued but not currently payable
with respect to Indebtedness owing to the government of the United States or any
state or municipality thereof or any agencies of any of the foregoing.
"Contingent Obligation" shall mean, with respect to any Person
at the time of any determination, without duplication, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person in any manner,
whether directly or otherwise; provided, that the term "Contingent Obligation"
shall not include endorsements for collection or deposit, in each case in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
Indebtedness in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonable anticipated liability in respect
thereof (assuming such Person is required to perform thereunder).
"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 the 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.
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"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.
"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.
"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 the
Guarantor's present accounting procedures, and (b) as to the 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 the 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 GAAP not inconsistent with the
Borrower's present accounting principles consistently applied.
"Event of Default" shall have the meaning set forth in Section
10 hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Hedge Agreement" shall mean any interest rate swap, cap or
collar agreements or other similar agreements or arrangements designed to hedge
the position of a Person with respect to interest rates, excluding any such
agreements as to which all obligations of such Person are paid or payable within
twelve (12) months of the date such agreement is entered into by such Person.
"Indebtedness" shall mean, with respect to any Person at the
time of any determination, without duplication, all obligations of such Person
which in accordance with GAAP should be classified upon the balance sheet of
such Person as liabilities, but in any event including: (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid or accrued, (d) all
written obligations of such Person to maintain working capital, equity capital
or other financial statement condition of another Person so as to enable such
other Person to pay its Indebtedness or
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otherwise to protect the holder of such Indebtedness against loss in respect
thereof, (e) all obligations of such Person issued or assumed as the deferred
purchase price of property or services, (f) all obligations of others secured by
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all capitalized lease
obligations of such Person, (h) all obligations of such Person in respect of
Hedge Agreements, (i) all obligations of such Person, actual or contingent, as
an account party in respect of letters of credit or bankers' acceptances, and,
without duplication, all drafts drawn thereunder, and (j) all obligations of any
partnership or joint venture as to which such Person is or may become personally
liable, PROVIDED, that, Indebtedness shall not include (i) any obligations
incurred as a result of fraud, misappropriation, misapplication and
environmental indemnities, as are usual and customary in commercial loan
transactions, or (ii) trade payables, deferred revenue, taxes and accrued
expenses, in each case arising in the ordinary course of business and that is
due and payable less than twelve (12) months after the date such debt was
incurred.
"Indemnity Agreement" shall mean, collectively, (i) that
certain General Indemnity Agreement dated as of November 6, 1998 by and between
the Guarantor and the Original Surety, as amended by the St. ▇▇▇▇ Surety
Amendment to General Indemnity Agreement dated as of November 6, 1998 and the
St. ▇▇▇▇ Surety Amendment to General Indemnity Agreement dated as of March __,
2002,, and (ii) any additional indemnity agreement in form and substance
satisfactory to the Agents and the Banks, by and between the Guarantor and a
Surety, and as each such Indemnity Agreement may be amended, restated or
otherwise modified.
"Indenture" shall mean the indenture relating to the Senior
Notes dated as of March 16, 1998.
"Net Earnings" shall mean the 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 GAAP
consistently applied.
"Net Losses" shall mean the Guarantor's net losses, as
determined separately for each fiscal year, after taxes, upon a consolidated
basis (after deducting minority interests) in accordance with GAAP consistently
applied.
"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, the Borrower,
the Guarantor and any co-maker,
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endorser, other guarantor of payment, subordinating creditor, assignor, grantor
of a security interest, pledgor, mortgagor or hypothecator of property, if any.
"Original Surety" means, collectively, St. ▇▇▇▇ Fire and
Marine Insurance Company, St. ▇▇▇▇ Mercury Insurance Company, St. ▇▇▇▇ Guardian
Insurance Company and Seaboard Surety Company.
"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 Debt" shall have the meaning set forth in Section
9.10 hereof.
"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 the Guarantor, any Subsidiary, any member of the
Controlled Group, or any such Plan to which the 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.
"Restricted Company" shall mean the Guarantor or a Restricted
Subsidiary.
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"Restricted Subsidiary" shall mean any Subsidiary of the
Guarantor other than (a) the Borrower, and (b) any Subsidiary of the 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" shall mean, collectively, (i) that
certain Amended and Restated Subordination Agreement dated as of March 5, 2002,
executed and delivered by the Original Surety in favor of the Agents and the
Banks, and (ii) any other subordination agreement in form and substance
satisfactory to the Agents and the Banks entered into by a Surety in favor of
the Agents and the Banks, and as each 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 the Original Surety and/or any other surety or
insurance company reasonably acceptable to the Agents.
"Surety Bonds" means the bonds, undertakings and other like
obligations executed by a Surety for the Guarantor subject to the Indemnity
Agreement and the Subordination Agreement in a maximum aggregate principal
amount of $30,000,000 for all Sureties.
"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.
The financial statements furnished to the Banks pursuant
hereto shall be made and prepared in accordance with GAAP consistently applied
throughout the periods involved (except as set forth in the notes thereto or as
otherwise disclosed in writing by the Guarantor to the Banks), PROVIDED, that
(a) all computations determining compliance with Sections 9.8, 9.14 and 9.15,
including definitions used therein, shall utilize accounting principles based on
the prorata method of accounting as opposed to the equity method or
consolidation method of accounting and (b) such financial statements must also
include a report (in the footnotes thereto or otherwise) of the financial
results of the Guarantor and its Subsidiaries using accounting principles based
on the prorata method of accounting.
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2. ACKNOWLEDGMENTS, CONSIDERATION. The Guarantor desires that
the Agent and the ▇▇▇▇▇ ▇▇▇▇▇ the 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 One Hundred Million Dollars ($100,000,000) for Term Loans and Two Hundred
Fifty Million Dollars ($250,000,000) for Revolving Loans. There exists and will
hereafter exist economic and business relationships between the Guarantor and
the Borrower which will be of benefit to the Guarantor. The Guarantor finds it
to be in the direct business and economic interest of the Guarantor that the
Borrower obtain the loans, credit and financial accommodations from the Agents
and the Banks provided for in the Agreement. The Guarantor understands that the
Agents and the Banks are willing to grant the loans, credit and financial
accommodations to the 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 the Guarantor to satisfy that condition and in consideration of the
Agents and the Banks entering into the Agreement.
3. GUARANTY. The 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 the 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 the 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 the 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 the Guarantor of the
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.
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5. WAIVERS. The Guarantor waives any and all contractual,
legal and/or equitable rights of subrogation, contribution, exoneration,
indemnity and/or reimbursement from or against the Borrower or any Obligor with
respect to the Debt and/or any payments made by the Guarantor on account of this
Guaranty.
6. ADDITIONAL AGREEMENTS. Regardless of the duration of time,
regardless of whether the 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, the 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, or (c) any act or thing that might otherwise operate as
a legal or equitable discharge of a surety, as to which the Guarantor hereby
expressly waives any and all defenses available to a surety except irrevocable
payment in full of the Debt.
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 the 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 the Guarantor might, but for the within
waiver, be entitled.
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
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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. The Guarantor's liabilities and other obligations under
this Guaranty shall survive any merger, consolidation or dissolution of the
Guarantor.
6.7. The 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 the 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, (d) this Guaranty has been duly
executed and delivered by the Guarantor and is a valid and binding obligation of
the Guarantor enforceable against the Guarantor in accordance with its terms,
and (e) as of the date of this Guaranty, there [ARE _____ SHARES AUTHORIZED OF
CLASS B COMMON STOCK] of the Guarantor of which 10,243,920 shares are issued and
outstanding.
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
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Guarantor believe, that the Guarantor will incur debts beyond the Guarantor's
ability to pay as they become due.
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 outstanding from any Subsidiary to
the Guarantor.
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.
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
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(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, except in each case where
the Subsidiary is the Borrower.
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 Borrower 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.
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
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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
percent (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,
(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
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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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ 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,
(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.
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9.8. EBDT. The Guarantor will not suffer or permit its EBDT at
any time to be less than the amount set forth below for the respective
periods set forth below:
Period EBDT
------ ----
Fiscal year ending
January 31, 2002 $140,000,000
Fiscal year ending
January 31, 2003 thereafter $145,000,000
Fiscal year ending
January 31, 2004 $155,000,000
Fiscal year ending
January 31, 2005 $160,000,000
Fiscal year ending
January 31, 2006 $165,000,000
9.9. COMBINATIONS, BULK TRANSFERS. (a) 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 ownership interests in any Subsidiary; PROVIDED,
that this Section 9.9 shall not apply to any transfer (as opposed to a pledge)
effected in the normal course of business on commercially reasonable terms and
PROVIDED, FURTHER, that a Restricted Company shall only be permitted to pledge
its stock or other ownership interests in any of its Subsidiaries to secure the
following:
(i) additional or mezzanine Indebtedness incurred
with respect to a project encumbered by a first mortgage at
the time such additional or mezzanine Indebtedness is
incurred, so long as such additional or mezzanine Indebtedness
is permitted under Section 9.10 of this Guaranty PROVIDED,
that the sum of the then existing Indebtedness with respect to
such project PLUS such additional or mezzanine Indebtedness
does not exceed eighty percent (80%) of the appraised value of
the project at the time such additional or mezzanine
Indebtedness is incurred; or
(ii) primary Indebtedness (or the re-financing
thereof) incurred solely for the purpose of acquiring real
property or for construction or redevelopment purposes;
PROVIDED, that such primary Indebtedness (or the re-financing
thereof) does not exceed one hundred percent (100%) of the
appraised value of the acquired property at the time of such
financing or re-financing, as applicable.
(b) In addition to the foregoing, (i) such pledges of stock or
other ownership interests may be made with respect to no more than
fifteen (15) individual properties, collectively with the Borrower, all
its Subsidiaries and all Restricted Companies at any one time,
exclusive of the properties set forth on Schedule 9.9A of this
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Guaranty, and (ii) the aggregate of all such additional or mezzanine
Indebtedness described in Section 9.9(a)(i) above or primary
Indebtedness described in Section 9.9(a)(ii) above, for which such a
pledge may be provided by a Restricted Company shall not exceed Two
Hundred Million Dollars ($200,000,000) in the aggregate for all pledges
provided by the Restricted Companies, the Borrower and its
Subsidiaries, taken together.
(c) The Guarantor will deliver to the Agents an updated
schedule, in the form of Schedule 9.9 attached hereto, listing all of
the properties as to which a pledge of stock or other ownership
interests has been provided to a lender in accordance with this Section
9.9 within forty-five (45) days after the end of each of the Parent's
fiscal quarters.
9.10. BORROWINGS. No Restricted Company will create, assume or
suffer to exist any Indebtedness of any kind including, but not limited to,
leases required to be capitalized under Financial Accounting Standards Board
Standard No. 13 or any reimbursement obligations or other liabilities with
respect to letters of credit issued for any Restricted Company's account;
PROVIDED, that this Section 9.10 shall not apply to any of the following
(collectively, "Permitted Debt"):
(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 percent (80%) of the
lender's appraisal of the real estate being financed,
(d) any loan or letter of credit 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 letters of credit and in respect of all guaranteed
loans referred to in clause (f) of Section 9.12 hereof, does not then
exceed and after incurring such loan or letter of credit or the
guarantee thereof in question would not exceed, Six Million Dollars
($6,000,000),
(e) leases required to be capitalized under Financial
Accounting Standards Board Standard No. 13 in the aggregate amount for
all Restricted Subsidiaries of Three Million Dollars ($3,000,000),
(f) any secured Indebtedness of a Restricted Company created
in the course of purchasing or developing real estate or financing
construction (or any refinancings thereof) or other improvements
thereon or purchasing furniture, fixtures or other equipment therefor
or any other Indebtedness of any Restricted Company or any refinancings
thereof; PROVIDED, that no Restricted Company (other than a Restricted
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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 arising from 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;
(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 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,
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(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,
(i) 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 in excess of $10,000,000; PROVIDED, such
Indebtedness is fully subordinated to the obligations of the Guarantor
under this Guaranty as set forth in the Subordination Agreement,
(j) any Indebtedness of the Guarantor under any Hedge
Agreement relating to Indebtedness otherwise permitted under this
Guaranty, PROVIDED, that, any Hedge Agreement proposed to be entered
into by the Guarantor that will not be provided by one or more of the
Agents or the Banks shall require the prior written consent of the
Required Banks (such written consent to be delivered by each consenting
Bank to the Agent not more than three (3) Business Days after the
request for such consent has been delivered by the Guarantor to the
Agent, PROVIDED, that, each Bank that does not deliver such written
consent within such three (3) Business Day period shall be deemed to
have denied the request for such Hedge Agreement).
(k) any Indebtedness of the Guarantor with respect to deferred
taxes that are due and payable in excess of twelve (12) months from the
date of the incurrence of such tax liability, or
(l) Any Indebtedness permitted by Section 9.12(g) hereof.
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
-17-
(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,
(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 guarantee by the Guarantor of a real estate loan
permitted by clause (c) of Section 9.10,
(d) any Completion Guaranty with respect to a real estate
building project, if the Guarantor or any Company is the developer of
the project or has a property interest in the project,
-18-
(e) the guarantee by the Guarantor set forth in Section 3
hereof,
(f) any other guarantee by the Guarantor, PROVIDED, that the
Guarantor's aggregate personal liability in respect of all of such
other guarantees and all Indebtedness described in subsection (a) of
the definition of Indebtedness (other than any loan permitted by
clauses (a) through (c), inclusive, of Section 9.10 hereof) does not
exceed, and after making the guarantee in question would not exceed,
Six Million Dollars ($6,000,000),
(g) any guarantee by the Guarantor of the equity investment or
performance of a Subsidiary (other than any Indebtedness 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 the Guarantor deems it to be in
its best interest not to be a partner or have a direct interest in the
partnership,
(h) the guarantee by the Guarantor of the obligations of
Franklin Town Towers Associates located in Philadelphia, Pennsylvania,
with respect to Museum Towers, in the original principal amount of
Twenty Million Four Hundred Thousand Dollars ($20,400,000), PROVIDED,
that such obligations shall not be amended, restated or otherwise
modified without the prior written consent of the Banks,
(i) any guarantee or indemnity by the Guarantor for fraud,
misappropriation, misapplication or environmental problems, as are
usual and customary in commercial mortgage loan transactions entered
into by the Guarantor,
(j) any guarantee by the Guarantor of an unsecured Hedge
Agreement permitted by Section 8.04 of the Agreement entered into by a
Subsidiary (other than the Borrower) and with a maturity date of not
more than twelve (12) months following the date of such Hedge
Agreement,
(k) subject to the limitations set forth in Section 9.19 of
this Guaranty, any Completion Guaranty, or
(l) the guarantee by the Guarantor of the obligations of
Forest City Southpark Two, with respect to Metropolitan Apartments
(Skyline), in the original principal amount of Twenty Eight Million
Four Hundred Thousand Dollars ($28,400,000), PROVIDED, that such
guaranty obligations shall be fully subordinated by written agreement,
in form and substance satisfactory to the Banks, to the obligations of
the Guarantor under this Guaranty, which written agreement shall
include, among other things, terms providing that such subordinated
guaranty obligations (A) shall be unsecured, (B) shall have a maturity
date of at least four (4) years beyond the maturity date of the
Revolving Loans, including all extensions thereof, (C) shall be subject
to a payment blockage for so long as an Event of Default caused by a
violation of Section 3 of this Guaranty has occurred and is continuing
and a payment blockage period of at least one hundred seventy nine
(179) days if any other Event of Default has occurred and is continuing
under this Guaranty, and(D) shall consist solely of a covenant to pay
such
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subordinated guaranty obligations and no other material covenants,
financial or otherwise.
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, except that, from
and after the Closing Date, so long as no Event of Default or violation
of Section 9.14 of this Guaranty shall have occurred or will result
after giving effect to such purchase acquisition, redemption or
retirement, the Guarantor may purchase, acquire, redeem or retire
shares of its outstanding capital stock in an aggregate amount not to
exceed Twenty Million Dollars ($20,000,000) MINUS any amounts paid as
permitted by Section 9.13(c) hereof, in any yearly period measured by
the anniversary dates of the 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
Indebtedness now or hereafter owing by the 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 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, from and after the Closing Date, 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, the Guarantor may pay Dividends in any aggregate
amount not to exceed Twenty Million Dollars ($20,000,000) minus any
amounts paid as permitted by Section 9.13(a) hereof, in any yearly
period measured by the anniversary dates of the Closing Date of the
Agreement thereafter,
(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
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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. The Guarantor will not permit
the Cash Flow Coverage Ratio, at any time, to be less than 1.75:1.00.
9.15. CONSOLIDATED GAAP SHAREHOLDERS' EQUITY. The Guarantor
will not permit the Consolidated GAAP Shareholders' Equity to be less than (a)
on the Closing Date, Five Hundred Sixty Million Dollars ($560,000,000), (b) on
January 31, 2003, the sum of (i) Five Hundred Sixty Million Dollars
($560,000,000), 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 year-to-date period ended on
January 31, 2003, and (c) at any date of determination thereafter, the sum of
(i) 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 year-to-date period ended on such Fiscal Quarterly Date.
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
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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.
9.17. PLAN. Neither the 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. [Reserved.]
9.19. CROSS COLLATERALIZATION AND CROSS DEFAULTS. (a) Except
as expressly permitted by this Section 9.19, neither the Guarantor nor any
Restricted Company will (i) cross-default or agree to cross-default any
Permitted Debt to this Guaranty or the Debt; (ii) agree to any financial
covenants based on the performance of the Guarantor under any other Permitted
Debt (other than the Debt); or (iii) cross-collateralize, or agree to
cross-collateralize Permitted Debt (other than the Debt) 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.
(b) Notwithstanding Section 9.19(a) above:
(i) with respect to construction projects that are
constructed in multiple phases and/or stabilized properties,
any Restricted Company shall be permitted to cross-default
and/or cross-collateralize any Permitted Debt with other
Permitted Debt (other than, in each case, the Debt), but only
if the phases to be cross-collateralized in and/or
cross-defaulted consist of a single identifiable project;
(ii) under a Completion Guaranty granted by the
Guarantor to a construction lender, the Guarantor shall be
permitted to agree to a financial covenant solely with respect
to the Guarantor's net worth, but only if (A) the Indebtedness
related to such Completion Guaranty is in excess of Seventy
Five Million Dollars ($75,000,000), (B) the Indebtedness
related to such Completion Guaranty has a maturity of two (2)
years or greater, not including extensions, (C) any net worth
financial covenant is calculated in substantially the same
manner as the covenant set forth in Section 9.15 of this
Guaranty and requires a net worth for the Guarantor of not
more than One Hundred Million Dollars ($100,000,000) and (D)
the aggregate of all Indebtedness subject to such Completion
Guaranties shall not exceed Four Hundred Million Dollars
($400,000,000), exclusive of the Indebtedness incurred in
connection with the projects set forth on Schedule 9.19 to
this Guaranty; and
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(iii) under any Completion Guaranty granted by the
Guarantor that contains the net worth financial covenant
referred to in Section 9.19(b)(ii) above, (A) the construction
lender shall not be permitted to call upon such Completion
Guaranty due to a violation of such net worth financial
covenant and (B) the construction lender shall only be
permitted to call upon such Completion Guaranty if the project
is not performing (i.e. not on budget and/or schedule).
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:
(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 the
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 the
Guarantor set forth in any section or provision hereof other than those
identified specifically in subsection (b) above and the Guarantor shall
not have corrected such failure within thirty (30) days after the
giving of written notice thereof to the Guarantor by the Agent or any
Bank that the specified failure is to be corrected, or
(d) The Guarantor and/or any Restricted Subsidiary defaults in
any payment of principal or interest due and owing upon any
Indebtedness in excess of $1,000,000, 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 in
excess of $1,000,000, 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 the Guarantor securing the same, except that
defaults in payment or performance of non-recourse obligations of the
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 the 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
(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
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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 the 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
the Guarantor under the Bankruptcy Code or any other federal or state
law providing for relief of debtors, reorganization, liquidation, or
arrangements with creditors, and the 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
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(i) The Guarantor 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,
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 Debt 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. The
Guarantor acknowledges that it, either directly or indirectly through its
representatives, has participated in the drafting of this Guaranty, and any
applicable rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in connection with the construction or
interpretation of this Guaranty.
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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
the 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. 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 the Guarantor, addressed to it at the address
specified on the signature pages of this Guaranty, if to a Bank, addressed to
the address of such Bank specified on the signature pages of the 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 the
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 the Guarantor 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.
14. CONSENT TO JURISDICTION. The Guarantor agrees that any
action or proceeding to enforce or arising out of this Guaranty 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 Guarantor 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 Guarantor if served to the Guarantor at
the address listed opposite the signature of the Guarantor at the end of this
Guaranty or as otherwise provided by the laws of the State of Ohio or the United
States.
15. ENTIRE AGREEMENT. This Guaranty 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.
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 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 an Event of Default if such action is taken or condition exists.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed as of the date set forth above, by an officer thereunto duly
authorized.
Address: FOREST CITY ENTERPRISES, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President, Chief
Financial Officer and Secretary
[Signature page of Guaranty]