Preferred Stock Summary Description

EX-10.2 3 l39021exv10w2.htm EX-10.2 exv10w2

Exhibit 10.2

PRIVATE PLACEMENT PURCHASE AGREEMENT

(including any other persons or entities purchasing Preferred Stock (as defined below) hereunder for whom the undersigned Holder holds contractual and investment authority, the “Holder”) enters into this Private Placement Purchase Agreement (the “Agreement”) with Forest City Enterprises, Inc., an Ohio corporation (the “Company”), on , 2010 whereby the Holder will purchase (the “Purchase”) the Company’s ___% Series A Cumulative Perpetual Convertible Preferred Stock (“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: Purchase of Preferred Stock

The Holder hereby agrees to purchase from the Company, and the Company hereby agrees to issue and sell to the Holder, the number of shares of Preferred Stock described below for the cash purchase price specified below:


Number of Shares of Preferred Stock to be Purchased:

		(the “Holder’s Preferred Stock”)

Purchase Price for Preferred Stock:

		(the “Purchase Price”)

The closing of the Purchase (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 the Purchase Price, and (b) the Company shall issue to the Holder the Holder’s Preferred Stock; 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 Holder’s Preferred Stock, (ii) such delay is no longer than three business days, and (iii) dividends shall accrue on the Holder’s Preferred Stock from the Closing Date. Simultaneously with or after the Closing, the Company may issue Preferred Stock to others.

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 Purchase.

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 Purchase contemplated hereby. If the Holder that is signatory hereto is executing this Agreement to effect the purchase of the Preferred Stock 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 acquiring Holder’s Preferred Stock, and (b) Exhibit A hereto is a true, correct and complete list of

(i) the name of each party acquiring (as beneficial owner) Holder’s Preferred Stock hereunder, and (ii) the number of shares of Holder’s Preferred Stock being acquired by such Holder.

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 Purchase 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 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 2.4 Restricted Stock. The Holder (a) acknowledges that the issuance of the Holder’s Preferred Stock pursuant to the Purchase, and the issuance of any of the shares of the Company’s Class A common stock, par value $0.33 1/3 per share (the “Class A Common Stock”) upon conversion of the Holder’s Preferred Stock (the “Conversion Shares”), have not been and will not be registered under the Securities Act or any state securities laws, and the Holder’s Preferred Stock and Conversion Shares are being offered and sold in reliance upon exemptions provided in the Securities Act and state securities laws for transactions not involving any public offering and, therefore, cannot be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless they are subsequently registered and qualified under the Securities Act and applicable state laws or unless an exemption from such registration and qualification is available, and that evidence of the Holder’s Preferred Stock and Conversion Shares will bear a legend to such effect, and (b) is purchasing the Holder’s Preferred Stock and Conversion Shares for investment purposes only for the account of the Holder and not with any view toward a distribution thereof or with any intention of selling, distributing or otherwise disposing of the Holder’s Preferred Stock or Conversion Shares in a manner that would violate the registration requirements of the Securities Act. The Holder is able to bear the economic risk of holding the Holder’s Preferred Stock and Conversion Shares for an indefinite period and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment in the Holder’s Preferred Stock and Conversion Shares. The Holder has received all such information regarding the Purchase and the Holder’s Preferred Stock and Conversion Shares as it deems necessary to make a decision with respect to the Purchase.

Section 2.5 No Related Party or 5% Shareholder Status. The Holder and its affiliates collectively beneficially own and will beneficially own as of the Closing Date (but without giving effect to the Purchase) (i) less than 5% of the aggregate number of outstanding shares of Class A Common Stock and the Company’s 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”) of the Company. 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 Purchase).

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 Purchase and has had the opportunity to review the Company’s filings with the Securities 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 Purchase, (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 Purchase, and make an informed investment decision with respect to such Purchase, 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 Holder’s Preferred Stock, and that there is no assurance that a public market will ever develop for the Holder’s 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 Purchase.

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 Purchase 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 Purchase 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 Purchase against delivery of the Purchase Price 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 Purchase exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, and (b) 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 the Company’s Class A Common Stock 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 Purchase (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 Purchase 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:						By:

Name:						Name:

Title:						Title:

EXHIBIT A
Purchasing Beneficial Owners


		Number of Shares of
Name of		Holder’s Preferred
Beneficial Owner		Stock

EXHIBIT B
Preferred Stock Designation