FIRST AMENDMENT
TO
AMENDED AND RESTATED GUARANTY
OF PAYMENT OF DEBT
This FIRST
AMENDMENT TO AMENDED AND RESTATED GUARANTY OF PAYMENT OF DEBT (this
“First Amendment to Guaranty”) is made and entered into
as of this 10th day of September, 2008, but shall be effective as
of July 31, 2008, by and among FOREST CITY ENTERPRISES,
INC. , an Ohio corporation (the “Guarantor”),
KEYBANK NATIONAL ASSOCIATION , as Administrative Agent (the
“Administrative Agent”), NATIONAL CITY BANK , as
Syndication Agent (the “Syndication Agent” and,
together with the Administrative Agent, the “Agents”),
BANK OF AMERICA, N. A. , as Documentation Agent, and the
banks party to the Credit Agreement (as hereinafter defined) as of
the date hereof (collectively, the “Banks” and
individually, a “Bank”). Capitalized terms not
otherwise defined herein shall have the respective meanings
attributed to them in the Guaranty, as hereinafter
defined.
WHEREAS, Forest
City Rental Properties Corporation (the “Borrower”),
the Banks, and the Agents previously entered into a certain Amended
and Restated Credit Agreement, dated as of June 6, 2007 (the
“Original Credit Agreement”); and
WHEREAS, the Banks
required, as a condition to entering into the Original Credit
Agreement, that the Guarantor execute and deliver to the Agents and
the Banks a certain Amended and Restated Guaranty of Payment of
Debt, dated as of June 6, 2007 (the “Guaranty”)
and the Guarantor agreed to and did execute and deliver the
Guaranty to the Agents and the Banks; and
WHEREAS, the
Borrower and the Guarantor have requested that the Banks and the
Agents agree to certain amendments to the Original Credit Agreement
and to the Guaranty; and
WHEREAS, the
Borrower, the Banks and the Agents have entered into a First
Amendment to Amended and Restated Credit Agreement, dated as of the
date hereof (said Amendment together with the Original Credit
Agreement, the “Credit Agreement”), that requires as
one of its conditions to effectiveness that the Guarantor enter
into this First Amendment to Guaranty.
NOW, THEREFORE, it
is mutually agreed as follows:
1.
AMENDMENTS TO SECTION 1 OF THE GUARANTY .
Section 1 of the Guaranty shall be amended as
follows:
(a)
Amendment of Definition of “Consolidated Net Operating
Cash Flow “ . Section 1 of the Guaranty shall be
amended by deleting the definition for “Consolidated Net
Operating Cash Flow” contained therein and replacing it with
the following definition for “Consolidated Net Operating Cash
Flow”:
“Consolidated
Net Operating Cash Flow” shall mean, for any Test Period, Net
Operating Income (a) less (i) all scheduled payments of
principal of non-recourse mortgage Indebtedness owing by the
Guarantor and/or its Subsidiaries (excluding any balloon payments),
(ii) all interest payments on such non-recourse Indebtedness,
(iii) Twelve Million Dollars ($12,000,000) of normal recurring
capital expenditures and (b) plus (i) net income
(loss) before taxes, corporate interest expense and non-cash
expenses incurred in connection with stock-based compensation, in
each case incurred by or charged to the Land Group, (ii) net income
(loss) before taxes, corporate interest expense (including,
but not limited to, interest incurred on Debt, subordinated debt or
any other third party debt) and non-cash expenses incurred in
connection with stock-based compensation, in each case incurred by
or charged to the Corporate Activity Group, (iii) actual cash
taxes paid on the Net Operating Income and the income set forth in
subsections (b)(i) and (b)(ii) above, (iv) non-cash interest
expense accrued but not currently payable up to a maximum of Five
Million Dollars ($5,000,000) with respect to Indebtedness owing by
the Guarantor and its Subsidiaries other than Indebtedness owing by
the Guarantor and/or its Subsidiaries to the government of the
United States or any state or municipality thereof or any agencies
of any of the foregoing and (v) non-cash interest expense
accrued but not currently payable with respect to Indebtedness by
the Guarantor and/or its Subsidiaries owing to the government of
the United States or any state or municipality thereof or any
agencies of any of the foregoing.
(b)
Amendment of Definition of “EBDT” .
Section 1 of the Guaranty shall be amended by deleting the
definition for “EBDT” contained therein and replacing
it with the following definition for “EBDT”:
“EBDT”
shall mean, for any period for the Guarantor, (a) the sum of
the amounts for such period of (i) net earnings
(losses) from operations before depreciation, amortization and
deferred taxes on income for such period as reported on the Form
8-K that is furnished to the Securities and Exchange Commission
with respect to such period, (ii) non-cash expenses incurred
in connection with stock-based compensation or as a result of
development project write-offs, early extinguishment of
Indebtedness and derivative losses, in each case to the extent
deducted in determining such net earnings (or losses),
(iii) depreciation and amortization expenses incurred in
connection with the Nets basketball team segment, to the extent
deducted in determining such net earnings (or losses) and
(iv) other extraordinary, unusual or non-recurring losses and
expenses to the extent disclosed or reported on the Form 8-K that
is furnished to the Securities and Exchange Commission with respect
to such period less (b) (i) the amount for such period
of any gains resulting from the re-appraisal or write-up of any
assets or with respect to derivatives and (ii) other
extraordinary, unusual or non-recurring gains except to the extent
such gains described in this clause (ii) are disclosed or reported
in the Form 8-K that is furnished to the Securities and Exchange
Commission with respect to such period, in each case as determined
in accordance with the Pro Rata Consolidation Method.
(c)
Amendment of Definition of “Indemnification
Lien” . Section 1 of the Guaranty shall be amended
by deleting the word “owned” contained in clause
(c) of the definition of “Indemnification Lien”
contained therein and replacing it with the word
“owed.
(d)
Amendment of Definition of “Net Operating
Income” . Section 1 of the Guaranty shall be amended
by deleting the definition of “Net Operating Income”
contained therein and replacing it with the following definition
for “Net Operating Income”:
“Net
Operating Income” shall mean for any relevant period, the
excess of the Borrower’s revenues over the Borrower’s
operating expenses; provided , however , Net
Operating Income (a) shall not include any gains or losses
from the sale of income producing real property, other than gains
or losses obtained from the sale of outlot parcels up to a total
maximum aggregate amount of $20,000,000 for the immediately
preceding four consecutive quarters, (b) 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, (c) shall not include
any gains resulting from the re-appraisal or write-up of any assets
or with respect to derivatives, (d) shall not include non-cash
expenses incurred in connection with stock-based compensation or as
a result of development project write-offs, early extinguishment of
Indebtedness and derivative losses and (e) shall not include
other extraordinary, unusual or non-recurring gains, losses or
expenses to the extent such gains, losses or expenses are disclosed
or reported in the Form 8-K that is furnished to the Securities and
Exchange Commission with respect to such period, in each case
(including, without limitation, the calculation of revenues and
operating expenses) as determined in accordance with the Pro Rata
Consolidation Method.
(e)
Amendment of Definition of “Pro Rata Consolidation
Method” . Section 1 of the Guaranty shall be amended
by deleting the definition of “Pro Rata Consolidation
Method” contained therein and replacing it with the following
definition for “Pro Rata Consolidation Method
“:
“Pro
Rata Consolidation Method” shall mean the pro rata method of
consolidation as fully reconciled to GAAP and as reported on each
Form 8-K that is furnished by the Guarantor (or on its behalf) to
the Securities and Exchange Commission.
2.
AMENDMENT TO SECTION 2 OF THE GUARANTY .
Section 2 of the Guaranty shall be amended by adding the
phrase “and other extensions of credit” immediately
after the phrase “for Revolving Loans” contained in the
second sentence thereof, but leaving it the same in all other
respects.
3.
AMENDMENTS TO SECTION 9.7 OF THE GUARANTY .
Section 9.7 of the Guaranty shall be
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