EXCHANGE AGREEMENT (Unrestricted Stock)
Exhibit 10.1
EXCHANGE AGREEMENT
(Unrestricted Stock)
(Unrestricted Stock)
___________________ (the “Undersigned”), for itself and on behalf of the beneficial owners
listed on Exhibit A hereto (“Accounts”) for whom the Undersigned holds contractual and
investment authority (each Account, as well as the Undersigned if it is exchanging Notes
(as defined below) hereunder, a “Holder”), enters into this Exchange Agreement (the “Agreement”)
with Forest City Enterprises, Inc., an Ohio corporation (the “Company”), on January [__], 2011
whereby the Holders will exchange (the “Exchange”) the Company’s 5.00% Convertible Senior Notes due
2016 (the “Notes”) for shares of the Company’s Class A common stock, par value $0.33-1/3 per share
(the “Class A Common Stock”), and a cash payment.
On and subject to the terms hereof, the parties hereto agree as follows:
Article I: Exchange of the Notes for Class A Common Stock
At the Closing (as defined herein), the Undersigned hereby agrees to cause the Holders to
exchange and deliver to the Company the following Notes, and in exchange therefor the Company
hereby agrees to issue to the Holders the number of shares of
Class A Common Stock described below*
and to pay in cash the following accrued but unpaid interest on such Notes:
Principal Amount of Notes to be Exchanged: $____________________________
(the “Exchanged Notes”).
Number of Shares of Class A Common Stock to be issued in Exchange: ______________________ shares
(the “Shares”).
Cash Payment of Accrued but Unpaid Interest on Exchanged Notes: $____________________
(the “Cash Payment”).
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) each Holder
shall deliver or cause to be delivered to the Company all right, title and interest in and to its
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 deliver to
each Holder the number of Shares and the portion of the Cash Payment specified on Exhibit A
hereto (or, if there are no Accounts, the Company shall deliver to the Undersigned, as the sole
Holder, all of the Shares and Cash Payment specified above); provided, however, that the parties
acknowledge that the delivery of the Shares to the Holders 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 Shares, and (ii) such delay is no longer than three business days.
Article II: Covenants, Representations and Warranties of the Holders
Each Holder (and, where specified below, the Undersigned) hereby covenants (solely as to
itself) as follows, and makes the following representations and warranties (solely as to itself),
each of which is and shall be true and correct on the date hereof and at the Closing, to the
Company, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants,
representations and warranties shall survive the Closing.
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 Undersigned is executing
| * | Cash will be paid in lieu of a fractional share at a price per share agreed upon by the parties. |
this Agreement on behalf of Accounts, (a) the Undersigned
has all requisite discretionary and contractual authority to enter into this Agreement on behalf
of, and bind, each such Account, and (b) Exhibit A hereto is a true, correct and complete
list of (i) the name of each Account, (ii) the principal amount of such Account’s Exchanged Notes,
(iii) the number of Shares to be issued to such Account in respect of its Exchanged Notes, and (iv)
the portion of the Cash Payment to be paid to such Account 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 Undersigned and the Holder and constitutes a legal, valid and
binding obligation of the Undersigned and the Holder, enforceable against the Undersigned and 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 Undersigned’s or the Holder’s organizational
documents, (ii) any agreement or instrument to which the Undersigned or the Holder is a party or by
which the Undersigned or the Holder or any of their respective assets are bound, or (iii) any laws,
regulations or governmental or judicial decrees, injunctions or orders applicable to the
Undersigned or the Holder.
Section 2.3
Title to the Exchanged Notes. The Holder is the sole legal and beneficial
owner of the Exchanged Notes set forth opposite its name on Exhibit A hereto (or, if there
are no Accounts, the Undersigned is the sole legal and beneficial owner of all of the Exchanged
Notes). The Holder has good, valid and marketable title to its 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 its Exchanged Notes
or its rights in its 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 its Exchanged Notes. Upon
the Holder’s delivery of its Exchanged Notes to the Company pursuant to the Exchange, such
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 and Class B common stock, par value $0.33 1/3 per share (the “Class B Common Stock;”
and 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. Each of the Undersigned and the Holder has not,
directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it
has, engaged in any transactions in the securities of the Company (including, without limitation,
any Short Sales (as defined below)
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involving any of the Company’s securities) since the time that
the Undersigned was first contacted by either the Company, Lazard Frères & Co. LLC or Lazard
Capital Markets LLC or any other person regarding the Exchange, this Agreement or an investment in
the Class A Common Stock or the Company. Each of the Undersigned and the Holder covenants that
neither it nor any person acting on its behalf or pursuant to any understanding with it 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 Undersigned’s and the Holder’s
compliance with its obligations under the U.S. federal securities laws and the Undersigned’s and
the Holder’s internal policies, (a) “Undersigned” and “Holder” shall not be deemed to include any
employees, subsidiaries or affiliates of the Holder that are effectively walled off by appropriate
“Chinese Wall” information barriers approved by the Undersigned’s or the Holder’s respective legal
or compliance department (and thus have not been privy to any information concerning the Exchange),
and (b) the foregoing representations of this Section 2.6 shall not apply to any transaction by or
on behalf of an Account that was effected without the advice or participation of, or such Account’s
receipt of information regarding the Exchange provided by, the Undersigned.
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 and submissions with the Securities and Exchange Commission (the “SEC”), including, without
limitation, all information filed or furnished 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 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 accounting, tax, financial, legal 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) the publicly available filings and submissions made by the Company with the SEC under the
Exchange Act and (ii) the representations and warranties made by the Company in this Agreement.
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 at the Closing,
to the Holders, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants,
representations and warranties shall survive the Closing.
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 Agreement; 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. This Agreement and consummation of the Exchange will not
violate, conflict with or result in a breach of or default under (i) the Company’s charter, bylaws
or other organizational documents, (ii) any agreement or instrument to which the Company is a party
or by which the Company or any
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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 Valid Issuance of the Class A Common Stock. The Shares have been duly
authorized by the Company and, when issued and delivered pursuant to the Exchange against delivery
of the Exchanged Notes in accordance with the terms of this Agreement, the Shares will be validly
issued, fully paid and non-assessable. The Shares will not, at the Closing, be subject to any
preemptive, participation, rights of first refusal or other similar rights. Assuming the accuracy
of each Holder’s representations and warranties hereunder, the Shares (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, at the Closing, be free of any restrictions on resale by such
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 Shares.
Section 3.4 Listing. When issued in the Exchange, the Shares shall be listed on the
New York Stock Exchange.
Section 3.5 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.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of
the date first above written.
“UNDERSIGNED”:
|
“COMPANY”: | |||
__________________________________ (in its capacities described in the first paragraph hereof) |
FOREST CITY ENTERPRISES, INC. | |||
| By: | ||||
By:
|
Name: Xxxxxx X. X’Xxxxx | |||
Name:
|
Title: Executive Vice President and Chief Financial Officer | |||
Title: |
Signature Page to Exchange Agreement
[Name of Holder]
[Name of Holder]
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EXHIBIT A
Exchanging Beneficial Owners
Exchanging Beneficial Owners
| Name of Beneficial Owner |
Principal Amount of Exchanged Notes |
Number of Shares of Class A Common Stock |
Cash Interest Payment | ||||||||
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