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Exhibit 4.21
February 25, 1998
To the attached Distribution List
Re: Credit Agreement by and among Forest City Rental Properties
Corporation, as Borrower, and the Lending Institutions named
on the attached Distribution List other than U.S. Bank
National Association (the "Original Banks"), KeyBank National
Association, as Administrative Agent for the Original Banks
and, National City Bank as Syndication Agent for the Original
Banks, dated as of December 10, 1997, as amended by First
Amendment to Credit Agreement among the same parties but
adding to the Original Banks U.S. Bank National Association
(all of the Lending Institutions listed on the attached
Distribution List are referred to herein as the "Banks"),
dated as of January 20, 1998 (the "Credit Agreement") and the
Guaranty of Payment of Debt by Forest City Enterprises, Inc.
in favor of the Original Banks, dated as of December 10, 1997,
and as amended by the First Amendment to Guaranty of Payment
of Debt, by Forest City Enterprises, Inc. in favor of the
Banks, dated as of January 20, 1998 (the "Guaranty")
Ladies and Gentlemen:
This letter will set forth our agreements with you concerning
certain amendments we have requested to the Credit Agreement and the Guaranty
and the terms and conditions on which you are willing to agree to our requests.
Unless otherwise defined herein, all terms shall have the respective meaning
ascribed to them in the Credit Agreement or the Guaranty, as the case may be.
The Guarantor proposes to issue senior notes in the original
principal amount of $200,000,000 under the terms of an indenture (the
"Indenture"), the material terms of which are summarized in the Description of
Notes attached hereto as Exhibit A and made a part hereof (the "Description of
Notes; the notes so described are referred to herein as the "Senior Notes"). It
is understood and agreed by the parties hereto that the Description of Notes may
be modified by the Guarantor to insert pricing information in the various blanks
without the consent of any Bank, provided, however, that the maturity date shall
be at least ten (10) years after the issuance date of the Senior Notes, the
interest payments shall be not less frequently than semi-annually and there
shall be no change in any redemption provisions included therein, nor shall any
additional redemption provisions be added (other than insertion of the
redemption dates and prices, provided, however, that the lockout periods for
optional redemptions, which are specified in the Description of Notes to end on
March ___, 2003 and on March ___, 2001, shall not be decreased).
We have represented to you, and hereby confirm, that the
entire net proceeds of the Senior Notes will be invested by the Guarantor as
equity in the Borrower, that a portion of the funds received by the Borrower
will be used to pay the entire outstanding balance of the Initial
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Term Loans and the Revolving Loans, and that the balance will be used for
general corporate purposes of the Borrower, including projects under current
development.
The indebtedness of the Guarantor under the Senior Notes and the
related Indenture would violate the terms of the Guaranty. Accordingly, we
request that the Guaranty be amended to permit the Senior Notes. We also
request that the Credit Agreement be amended by increasing the total Revolving
Loan Commitments to $225,000,000 and by eliminating the Banks' Commitments to
make the Initial Term Loans in the aggregate principal amount of $60,000,000.
We understand that the consent of all of the Banks is required.
We understand that you are willing to enter into amendments to the
Credit Agreement and/or the Guaranty to reflect our requests set forth above,
subject to the following terms and conditions:
1. INCREASE IN REVOLVING LOAN COMMITMENT TO $225,000,000. The Maximum
Amount of the Revolving Loan Commitment of each Bank shall be amended on a pro
rata basis to reflect the increase of the aggregate Revolving Loan Commitments
of the Banks to $225,000,000, as set forth on Exhibit B to this letter.
2. QUARTERLY REDUCTION IN REVOLVING LOAN COMMITMENT. On each Quarterly
Date commencing with April 1, 1998, the aggregate Revolving Loan Commitment
shall be reduced by $2,500,000 and the Maximum Amount of the Revolving Loan
Commitment of each Bank shall be reduced by such Bank's pro rata share of the
aggregate $2,500,000 reduction. If and to the extent that, upon giving effect
to such reduction, the outstanding principal balance of the Loans will exceed
the aggregate Revolving Loan Commitment, then the Borrower also shall, on such
Quarterly Date, make a principal payment sufficient to reduce the outstanding
principal balance of the Loans to an amount less than or equal to the reduced
aggregate Revolving Loan Commitment.
3. RESTRICTIONS ON DIVIDENDS. The Credit Agreement shall be amended to
prohibit payment by the Borrower of (a) any dividends (in cash or otherwise)
or any other distributions in respect of its capital stock, or any loans by
the Borrower to the Guarantor (any such dividends, distributions or loans are
referred to hereinafter as "Distributions"), in the event of and during the
continuance of any failure by the Borrower or the Guarantor to make payment of
principal, interest or any other charge due, whether at maturity or by
acceleration, under the Credit Agreement or the Guaranty (a "Payment Default"),
and (b) of any Distributions in excess of the sum of amounts sufficient to pay,
when due, all interest payments in respect of the Senior Notes and amounts
sufficient to pay, when due, all taxes of the Company, in the event of and
during the continuance of any Event of Default under the Credit Agreement or
the Guaranty other than a Payment Default, with the further understanding that
any such Distributions permitted by the foregoing shall be applied by the
Company strictly to the permitted uses specified above. Further, the Guaranty
shall be amended to prohibit the Guarantor from causing the Borrower to pay, or
from accepting, (i) any Distributions in the event of and during the continuance
of Payment Default under the Credit Agreement or the Guaranty and (ii) any
Distributions in excess of the sum of amounts sufficient to pay, when due, all
interest payments in respect of the Senior Notes and amounts sufficient to pay,
when due, all taxes of the Company, in the event of any
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Event of Default under the Credit Agreement or the Guaranty other than a
Payment Default under the Credit Agreement or the Guaranty, with the further
understanding that any such Distributions permitted by the foregoing shall be
applied by the Company strictly to the permitted uses specified above.
4. RESTRICTIONS ON PAYMENTS TO SENIOR NOTE HOLDERS. The Guaranty
shall be amended to provide that the Guarantor shall not make any payment on
account of the Senior Notes in the event of and during the continuance of any
failure by the Borrower or the Guarantor to make payment of principal, interest
or any other charge due, whether at maturity or by acceleration, under the
Credit Agreement or the Guaranty.
5. CROSS-DEFAULT PROVISIONS: The Credit Agreement and the Guaranty
shall be amended to provide that the Borrower and the Guarantor shall provide
notice to the Banks of any default under the Senior Notes or the Indenture or
other documents relating thereto (after giving effect to any applicable grace
periods), and the occurrence of any such default (after giving effect to any
applicable grace periods) shall constitute an Event of Default under the Credit
Agreement and under the Guaranty. However, the Senior Notes, the Indenture or
any other documents relating thereto may NOT provide that an Event of Default
under the Credit Agreement and/or under the Guaranty shall constitute a default
under the Senior Notes, the Indenture or any other documents relating thereto,
except in the case of any Event of Default which results in the acceleration of
the payment of the Debt or constitutes the failure to pay the Debt when due at
maturity or after acceleration.
6. PROHIBITION OF UPSTREAM GUARANTY OF SENIOR NOTES BY THE BORROWER.
The Credit Agreement shall be amended to prohibit expressly any guaranty of the
Senior Notes, the Indenture or any other documents relating thereto, or any
amendment thereto, by the Borrower. The Guaranty shall be amended to prohibit
expressly the Guarantor from causing the Borrower to provide any such guaranty.
7. BANK'S CONSENT REQUIRED FOR AMENDMENTS TO SENIOR NOTES. The
Guaranty shall be amended to prohibit any amendment or modification of the
Final Drafts (as hereinafter defined) of the Senior Notes, the Indenture or any
other document related thereto without the prior written consent of the
Required Banks, other than amendments or modifications that do not adversely
affect the Credit Agreement and the Guaranty or their relationship to the
Senior Notes, the Indenture or any other documents relating thereto. The
Guarantor shall provide to the Banks not less than thirty (30) days prior
written notice of any such proposed amendment or modification, accompanied by a
copy thereof, whether or not the Guarantor believes that the consent of the
Required Banks is needed therefor.
8. BANKS' CONSENT REQUIRED FOR OPTIONAL REDEMPTION, ETC. The Guaranty
shall be amended to prohibit any optional redemption or defeasance of the
Senior Notes by the Guarantor without the prior written consent of the Required
Banks.
9. CHANGE OF CONTROL. The provisions of the Credit Agreement shall be
amended to substitute for clause (i) of the definition of "Change of Ownership
Event" the provisions of the definition of "Change of Control" set forth in the
Description of Notes.
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10. FEE TO BANKS. Not later than upon the execution of the formal
amendment to the Credit Agreement contemplated by this letter agreement,
Borrower shall pay to the Banks a fee equal to 25 basis points times the
$60,000,000 increase in the aggregate Revolving Loan Commitment. The fee will
be distributed to the Banks pro rata, based upon the Maximum Amount of the
Revolving Loan Commitment of each Bank.
11. NO MATERIAL CHANGES TO SENIOR NOTES DOCUMENTS. The agreement of
the Banks to the foregoing is subject to the final drafts of the Senior Notes,
the Indenture and any other document relating thereto, including, without
limitation, the final draft of the Description of Notes, containing no change
of a material nature as compared to the Description of Notes attached hereto,
other than as to the insertion of the pricing information as permitted by the
second grammatical paragraph of this letter (such final drafts, conforming with
the provisions of this letter, are referred to as the "Final Drafts").
12. AMENDMENT DOCUMENTS. An amendment to the Credit Agreement and the
Guaranty incorporating the foregoing provisions and corresponding changes to
the Credit Agreement and Guaranty, as well as substitute Notes, will be
prepared by counsel for the Agents and circulated for signature in due course.
In addition, as we have previously discussed, the amendment to the Credit
Agreement will modify Section 4.03(b) to provide for payment of interest on all
Loans subject to the LIBOR Rate Option, in arrears, on the first day of each
calendar month. Execution of this letter agreement confirms the agreement of
all parties hereto to execute the amendments contemplated above, provided that
the amendment documents shall conform in all material respect to the foregoing
terms and provisions. Furthermore, the amendments to the Credit Agreement and
the Guaranty contemplated above shall be executed by all parties prior
to issuance of the Senior Notes, all parties agreeing to cooperate and use
reasonable efforts to achieve completion of the execution of the amendment by
March 10, 1998. This letter agreement is binding upon the Borrower, the
Guarantor and the Banks, and their respective successors and assigns.
The foregoing terms and conditions are accepted by the Borrower and
the Guarantor. Kindly execute the enclosed copies of this letter to confirm
your agreement likewise therewith. This letter agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
Thank you for your courtesies in considering our requested changes.
Forest City Enterprises, Inc.
By: /s/ Forest City Enterprises, Inc.
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Title:
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Forest City Rental Properties
Corporation
By: /s/ Forest City Rental Properties Corporation
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Title:
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Agreed and accepted by:
KeyBank National Association,
Individually and as Administrative
Agent
By: /s/ KeyBank National Association
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Title:
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National City Bank, individually and as
Syndication Agent
By: /s/ National City Bank
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Title:
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The Huntington National Bank
By: /s/ The Huntington National Bank
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Title:
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Comerica Bank
By: /s/ Comerica Bank
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Title:
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First Merit Bank
By: /s/ First Merit Bank
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Title:
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Credit Lyonnais
By: /s/ Credit Lyonnais
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Title:
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Star Bank
By: /s/ Star Bank
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Title:
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Manufacturers and Traders Trust
Company
By: /s/ Manufacturers and Traders Trust Company
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Title:
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U.S. Bank National Association
By: /s/ U.S. Bank National Association
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Title:
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