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SEC Filings

DEFM14A
FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
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to, this Agreement or the Merger or the other Transactions (including any breach by the Company), the termination of this Agreement, the failure to consummate the Merger, the Debt Commitment Letter, the Debt Financing or the other Transactions or any claims or actions under applicable Laws arising out of any such breach, termination or failure, and (iv) the parties will take such actions as are necessary and sufficient so that the agreements contained in this Section 9.5 may be enforceable against such party, including executing and delivering any waivers, releases and similar instruments consistent therewith upon any other party’s request; provided, however, that this Section 9.5 will not limit the right of the parties hereto to specific performance of this Agreement pursuant to Section 10.5(f) (subject to the limitations set forth therein) or with respect to any provision of this Agreement that expressly survives termination of this Agreement.

9.6. Payment of Parent Termination Payment

(a) Notwithstanding anything to the contrary in this Agreement, in the event the Company determines in good faith that there exists a material risk that any amounts due to the Company under Section 9.5(d) would be treated as Nonqualifying Income upon the payment of such amounts to the Company, the amount paid to the Company pursuant to Section 9.5(d) in any tax year shall not exceed the maximum amount that can be paid to the Company in such year without causing the Company to fail to meet the REIT Requirements for any tax year, determined as if the payment of such amount were Nonqualifying Income as determined by the Company in good faith.

(b) If the amount payable for any tax year pursuant to Section 9.6(a) is less than the amount that Parent would otherwise be obligated to pay to the Company pursuant to Section 9.5(d) (the “Section 9.5(d) Amount”), then:

(i) Parent shall place the Section 9.5(d) Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Company and shall not release any portion thereof to the Company, and the Company shall not be entitled to any such amount, unless and until the Company delivers to Parent, at the sole option of the Company, (i) a letter (a “Section 9.5(d) Amount Company Letter”) from the Company indicating the maximum amount that can be paid at that time to the Company without causing the Company to fail to meet the REIT Requirements for any relevant taxable year, as determined by the Company in good faith, (ii) an opinion (a “Section 9.5(d) Amount Tax Opinion”) of the Company’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income or (iii) a private letter ruling issued by the IRS to the Company indicating that the receipt of any Section 9.5(d) Amount hereunder will not cause the Company to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with a Section 9.5(d) Amount Company Letter and a Section 9.5(d) Amount Tax Opinion, a “Release Document”). The escrow agreement shall also provide that (x) the amount in the Escrow Account shall be treated as the property of Parent, unless it is released from such Escrow Account to the Company, (y) all income earned upon the amount in the Escrow Account shall be treated as income of Parent and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, as income earned by Parent whether or not said income has been distributed during such tax year, and (z) the amount in the Escrow Account shall be invested in Permitted Investments only as determined by Parent in its sole discretion;

(ii) Pending the delivery of a Release Document by the Company to Parent, the Company shall have the right, but not the obligation, to borrow the Section 9.5(d) Amount from the Escrow Account pursuant to a loan agreement reasonably acceptable to the Company that (i) requires Parent to lend the Company immediately available cash proceeds in an amount equal to the Section 9.5(d) Amount, and (ii) provides for (A) a reasonable interest rate and reasonable covenants, taking into account the credit standing and profile of the Company or any guarantor of the Company at the time of such loan, and (B) a seven (7) year maturity with no periodic amortization;

(iii) Any amount held in escrow pursuant to this Section 9.6 for seven (7) years shall be released from such escrow to be used as determined by Parent in its sole and absolute discretion, and the Company shall have no rights in such amounts thereafter; and

 

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