EXCHANGE AGREEMENT (Unrestricted Convertible Preferred)
Exhibit
10.1
EXCHANGE AGREEMENT
(Unrestricted Convertible Preferred)
(Unrestricted Convertible Preferred)
(including any other persons or entities exchanging Notes hereunder for
whom the undersigned Holder holds contractual and investment authority, the “Holder”) enters into
this Exchange Agreement (the “Agreement”) with Forest City Enterprises, Inc., an Ohio corporation
(the “Company”) on ___, 2010 whereby the Holder will exchange (the “Exchange”) the
Company’s ___Senior Notes due ___(the “Notes”) for the Company’s ___% Series A Cumulative
Perpetual Convertible Preferred Stock (the “Preferred Stock”) governed by a Preferred Stock
Designation of the ___% Series A Cumulative Perpetual Convertible Preferred Stock (the “Preferred
Stock Designation”) that will constitute a part of the Company’s Amended Articles of Incorporation
at Closing (as defined below).
On and subject to the terms hereof, the parties hereto agree as follows:
Article I: Exchange of the Notes for Preferred Stock
At the Closing (as defined herein), the Holder hereby agrees to exchange and deliver to the
Company the following Notes, and in exchange therefor the Company hereby agrees to issue to the
Holder the number of shares of Preferred Stock described below and to pay in cash the following
accrued but unpaid interest on such Notes:
Principal Amount of Notes to be Exchanged:
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$
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Number of Shares of Preferred Stock to be issued in Exchange: |
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Cash Payment of Accrued but Unpaid Interest on Exchanged Notes:
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$
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The closing of the Exchange (the “Closing”) shall occur on a date (the “Closing Date”) no
later than three business days after the date of this Agreement. At the Closing, (a) the Holder
shall deliver or cause to be delivered to the Company all right, title and interest in and to the
Exchanged Notes free and clear of any mortgage, lien, pledge, charge, security interest,
encumbrance, title retention agreement, option, equity or other adverse claim thereto
(collectively, “Liens”), together with any documents of conveyance or transfer that the Company may
deem necessary or desirable to transfer to and confirm in the Company all right, title and interest
in and to the Exchanged Notes free and clear of any Liens, and (b) the Company shall issue to the
Holder the Holder’s Preferred Stock and shall deliver to the Holder the Cash Payment; provided,
however, that the parties acknowledge that the issuance of the Holder’s Preferred Stock to the
Holder may be delayed due to procedures and mechanics within the system of the Depository Trust
Company and that such delay will not be a default under this Agreement so long as (i) the Company
is using its best efforts to effect the issuance of the Preferred Stock, (ii) such delay is no
longer than three business days, and (iii) dividends shall accrue on such Preferred Stock from the
Closing Date. Simultaneously with or after the Closing, the Company may issue Preferred Stock to
one or more other holders of outstanding Notes or to other investors.
Article II: Covenants, Representations and Warranties of the Holder
The Holder hereby covenants as follows, and makes the following representations and
warranties, each of which is and shall be true and correct on the date hereof and on the Closing
Date, to the Company, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such
covenants, representations and warranties shall survive the Exchange.
Section 2.1 Power and Authorization. The Holder is duly organized, validly existing
and in good standing, and has the power, authority and capacity to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the Exchange contemplated
hereby. If the Holder that is signatory
hereto is executing this Agreement to effect the exchange of Exchanged Notes beneficially
owned by one or more other persons or entities (who are thus included in the definition of “Holder”
hereunder), (a) such signatory Holder has all requisite discretionary authority to enter into this
Agreement on behalf of, and bind, each such other person or entity that is a beneficial owner of
Exchanged Notes, and (b) Exhibit A hereto is a true, correct and complete list of (i) the
name of each party delivering (as beneficial owner) Exchanged Notes hereunder, (ii) the principal
amount of such Holder’s Exchanged Notes, (iii) the number of shares of Holder’s Preferred Stock to
be issued to such Holder in respect of its Exchanged Notes, and (iv) the amount of the cash payment
to be made to such Holder in respect of the accrued interest on its Exchanged Notes.
Section 2.2 Valid and Enforceable Agreement; No Violations. This Agreement has been
duly executed and delivered by the Holder and constitutes a legal, valid and binding obligation of
the Holder, enforceable against the Holder in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general principles of equity, whether such enforceability is considered in a
proceeding at law or in equity (the “Enforceability Exceptions”). This Agreement and consummation
of the Exchange will not violate, conflict with or result in a breach of or default under (i) the
Holder’s organizational documents, (ii) any agreement or instrument to which the Holder is a party
or by which the Holder or any of its assets are bound, or (iii) any laws, regulations or
governmental or judicial decrees, injunctions or orders applicable to the Holder.
Section 2.3 Title to the Exchanged Notes. The Holder is the sole legal and beneficial
owner of the Exchanged Notes, and the Holder has good, valid and marketable title to the Exchanged
Notes, free and clear of any Liens (other than pledges or security interests that the Holder may
have created in favor of a prime broker under and in accordance with its prime brokerage agreement
with such broker). The Holder has not, in whole or in part, except as described in the preceding
sentence, (a) assigned, transferred, hypothecated, pledged, exchanged or otherwise disposed of any
of the Exchanged Notes or its rights in the Exchanged Notes, or (b) given any person or entity any
transfer order, power of attorney or other authority of any nature whatsoever with respect to the
Exchanged Notes. Upon the Holder’s delivery of the Exchanged Notes to the Company pursuant to the
Exchange, the Exchanged Notes shall be free and clear of all Liens created by the Holder.
Section 2.4 Accredited Investor. The Holder is an “accredited investor” within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”).
Section 2.5 No Affiliate, Related Party or 5% Shareholder Status. The Holder is not,
and has not been during the consecutive three month period preceding the date hereof, a director,
officer or “affiliate” within the meaning of Rule 144 promulgated under the Securities Act (an
“Affiliate”) of the Company. To its knowledge, the Holder did not acquire any of the Exchanged
Notes, directly or indirectly, from an Affiliate of the Company. The Holder and its Affiliates
collectively beneficially own and will beneficially own as of the Closing Date (but without giving
effect to the Exchange) (i) less than 5% of the aggregate outstanding shares of the Company’s Class
A common stock, par value $0.33 1/3 per share (the “Class A Common Stock”), and Class B common
stock, par value $0.33 1/3 per share (the “Class B Common Stock;” together with the Class A Common
Stock, the “Common Stock”), and (ii) less than 5% of the aggregate number of votes that may be cast
by holders of those outstanding securities of the Company that entitle the holders thereof to vote
generally on all matters submitted to the Company’s shareholders for a vote (the “Voting Power”).
The Holder is not a subsidiary, affiliate or, to its knowledge, otherwise closely-related to any
director or officer of the Company or beneficial owner of 5% or more of the outstanding Common
Stock or Voting Power (each such director, officer or beneficial owner, a “Related Party”). To its
knowledge, no Related Party beneficially owns 5% or more of the outstanding voting equity, or votes
entitled to be cast by the outstanding voting equity, of the Holder.
Section 2.6 No Illegal Transactions. The Holder has not, directly or indirectly, and
no person acting on behalf of or pursuant to any understanding with the Holder has, engaged in any
transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving any of the Company’s securities) since the time that such Holder was first
contacted by either the Company, Lazard Frères & Co. LLC or
Lazard Capital Markets LLC or any other person regarding an investment in the Preferred Stock
or the Company. Such Holder covenants that neither it nor any person acting on its behalf or
pursuant to any understanding with such Holder will engage, directly or indirectly, in any
transactions in the securities of the Company (including Short Sales) prior to the time the
transactions contemplated by this Agreement are publicly disclosed. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps,
derivatives and similar arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker-dealers or foreign regulated brokers. Solely for purposes of
this Section 2.6, subject to the Holder’s compliance with its obligations under the U.S. federal
securities laws and the Holder’s internal policies, “Holder” shall not be deemed to include any
subsidiaries or affiliates of the Holder that are effectively walled off by appropriate “Chinese
Wall” information barriers approved by the Holder’s legal or compliance department (and thus have
not been privy to any information concerning the Exchange).
Section 2.7 Adequate Information; No Reliance. The Holder acknowledges and agrees
that (a) the Holder has been furnished with all materials it considers relevant to making an
investment decision to enter into the Exchange and has had the opportunity to review the Company’s
filings with the Securities and Exchange Commission (the “SEC”), including, without limitation, all
filings made pursuant to the Exchange Act, (b) the Holder has had a full opportunity to ask
questions of the Company concerning the Company, its business, operations, financial performance,
financial condition and prospects, and the terms and conditions of the Exchange, (c) the Holder has
had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to
evaluate the risks involved in the exchange of the Notes pursuant hereto and to make an informed
investment decision with respect to such Exchange and (d) the Holder is not relying, and has not
relied, upon any statement, advice (whether legal, tax, financial, accounting or other),
representation or warranty made by the Company or any of its affiliates or representatives
including, without limitation, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, except for
(i) a Term Sheet, together with a Summary Description of Series A Cumulative Perpetual Convertible
Preferred Stock from the Company, dated ___, 2010 describing the terms of the Preferred
Stock, (ii) the publicly available filings made by the Company with the SEC under the Exchange Act
and (iii) the representations and warranties made by the Company in this Agreement.
Section 2.8 No Public Market. The Holder understands that no public market exists for
the Preferred Stock, and that there is no assurance that a public market will ever develop for the
Preferred Stock.
Article III: Covenants, Representations and Warranties of the Company
The Company hereby covenants as follows, and makes the following representations and
warranties, each of which is and shall be true and correct on the date hereof and on the Closing
Date, to the Holder, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such
covenants, representations and warranties shall survive the Exchange.
Section 3.1 Power and Authorization. The Company is duly incorporated, validly
existing and in good standing under the laws of its state of incorporation, and has the power,
authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder,
and to consummate the Exchange contemplated hereby.
Section 3.2 Valid and Enforceable Agreements; No Violations. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to the Enforceability Exceptions. At the Closing, the Preferred Stock
Designation, substantially in the form of Exhibit B hereto, will constitute a part of the
Company’s Amended Articles of Incorporation and will govern the terms of the Preferred Stock. This
Agreement and consummation of the Exchange will not violate, conflict with or result in a breach of
or default under (i) the charter, bylaws or other organizational documents of the Company, (ii) any
agreement or instrument to which the Company is a party or by which the Company or any of its
assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions
or orders applicable to the Company.
Section 3.3 Validity of the Holder’s Preferred Stock. The Holder’s Preferred
Stock has been duly authorized by the Company and, when issued and delivered to the
Holder pursuant to the Exchange against delivery of the Exchanged Notes in accordance with the
terms of this Agreement, the Holder’s Preferred Stock will be validly issued, fully paid and
non-assessable, and the Holder’s Preferred Stock will not be subject to any preemptive,
participation, rights of first refusal and other similar rights. Assuming the accuracy of the
Holder’s representations and warranties hereunder, the Holder’s Preferred Stock (a) will be issued
in the Exchange exempt from the registration requirements of the Securities Act pursuant to Section
4(2) of the Securities Act, (b) will be free of any restrictions on resale by the Holder pursuant
to Rule 144 promulgated under the Securities Act, and (c) will be issued in compliance with all
applicable state and federal laws concerning the issuance of the Holder’s Preferred Stock.
Section 3.4 Validity of Underlying Class A Common Stock . The Holder’s Preferred
Stock is convertible into shares of Class A Common Stock (the “Conversion Shares”) in accordance
with the terms of the Preferred Stock Designation. The Conversion Shares have been duly authorized
and reserved by the Company for issuance upon conversion of the Holder’s Preferred Stock and, when
issued upon conversion of the Holder’s Preferred Stock in accordance with the terms of the
Preferred Stock Designation, will be validly issued, fully paid and non-assessable, and the
issuance of the Conversion Shares will not be subject to any preemptive, participation, rights of
first refusal and other similar rights.
Section 3.5 Listing Approval. The Conversion Shares have been listed on the New York
Stock Exchange.
Section 3.6 Disclosure. On or before the first business day following the date of
this Agreement, the Company shall issue a publicly available press release or file with the SEC a
Current Report on Form 8-K disclosing all material terms of the Exchange (to the extent not
previously publicly disclosed).
Article IV: Miscellaneous
Section 4.1 Entire Agreement. This Agreement and any documents and agreements
executed in connection with the Exchange embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous oral or written agreements, representations, warranties, contracts, correspondence,
conversations, memoranda and understandings between or among the parties or any of their agents,
representatives or affiliates relative to such subject matter, including, without limitation, any
term sheets, emails or draft documents.
Section 4.2 Construction. References in the singular shall include the plural, and
vice versa, unless the context otherwise requires. References in the masculine shall include the
feminine and neuter, and vice versa, unless the context otherwise requires. Headings in this
Agreement are for convenience of reference only and shall not limit or otherwise affect the
meanings of the provisions hereof. Neither party, nor its respective counsel, shall be deemed the
drafter of this Agreement for purposes of construing the provisions of this Agreement, and all
language in all parts of this Agreement shall be construed in accordance with its fair meaning, and
not strictly for or against either party.
Section 4.3 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the substantive laws of the State of New York, without reference to
its choice of law rules.
Section 4.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall constitute one and the
same instrument. Any counterpart or other signature hereon delivered by facsimile shall be deemed
for all purposes as constituting good and valid execution and delivery of this Agreement by such
party.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of
the date first above written.
| “HOLDER”: | “COMPANY”: | |||||||||
| FOREST CITY ENTERPRISES, INC. | ||||||||||
By:
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By: | |||||||||
Name:
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Name: | |||||||||
Title:
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Title: | |||||||||
EXHIBIT A
Exchanging Beneficial Owners
Exchanging Beneficial Owners
| Number of Shares of | ||||||
| Name of | Principal Amount of | Holder’s Preferred | ||||
| Beneficial Owner | Exchanged Notes | Stock | Cash Interest Payment | |||
EXHIBIT B
Preferred Stock Designation
Preferred Stock Designation