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SEC Filings

DEFM14A
FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
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(iv) The Company shall bear all costs and expenses with respect to the Escrow Account.

(c) Parent shall cooperate in good faith with the Company (including amending this Section 9.6 at the reasonable request of the Company) in order to (x) maximize the portion of the payments that may be made to the Company hereunder without causing the Company to fail to meet the REIT Requirements, (y) improve the Company’s chances of securing a favorable REIT Qualification Ruling, or (z) assist the Company in obtaining a favorable Section 9.5(d) Amount Tax Opinion. Such cooperation shall include, for example, agreeing to make payments hereunder to a taxable REIT subsidiary of the Company or an affiliate or designee of the Company.

9.7. Payment of Company Termination Payment.

(a) Notwithstanding anything to the contrary in this Agreement, in the event the Parent determines in good faith that there exists a material risk that any amounts due to Parent under Section 9.5(b) would be treated as Nonqualifying Income in the hands of any direct or indirect owner of Parent that intends to qualify as a REIT (a “Parent REIT Affiliate”) upon the payment of such amounts to Parent, the amount paid to Parent pursuant to Section 9.5(b) in any tax year shall not exceed the maximum amount that can be paid to Parent in such year without causing any Parent REIT Affiliate 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 Parent in good faith.

(b) If the amount payable for any tax year pursuant to Section 9.7(a) is less than the amount that Company would otherwise be obligated to pay to Parent pursuant to Section 9.5(b) (the “Section 9.5(b) Amount”), then:

(i) the Company shall place the Section 9.5(b) Amount into an Escrow Account using an escrow agent and agreement reasonably acceptable to Parent and shall not release any portion thereof to Parent, and Parent shall not be entitled to any such amount, unless and until Parent delivers to the Company, at the sole option of the Company, a letter (a “Section 9.5(b) Amount Parent Letter”) from Parent indicating the maximum amount that can be paid at that time to Parent without causing any Parent REIT Affiliate to fail to meet the REIT Requirements for any relevant taxable year, as determined by Parent in good faith. The escrow agreement shall also provide that (x) the amount in the Escrow Account shall be treated as the property of the Company, unless it is released from such Escrow Account to Parent, (y) all income earned upon the amount in the Escrow Account shall be treated as income of the Company 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 the Company 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 the Company in its sole discretion;

(ii) Pending the delivery of the Section 9.5(b) Amount Parent Letter by Parent to the Company, Parent shall have the right, but not the obligation, to borrow the Section 9.5(b) Amount from the Escrow Account pursuant to a loan agreement reasonably acceptable to Parent that (i) requires the Company to lend Parent immediately available cash proceeds in an amount equal to the Section 9.5(b) Amount, and (ii) provides for (A) a reasonable interest rate and reasonable covenants, taking into account the credit standing and profile of Parent or any guarantor of Parent 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 9.7 for seven (7) years shall be released from such escrow to be used as determined by the Company in its sole and absolute discretion, and Parent shall have no rights in such amounts thereafter; and

(iv) Parent shall bear all costs and expenses with respect to the Escrow Account.

(c) The Company shall cooperate in good faith with Parent (including amending this Section 9.7 at the reasonable request of Parent) in order to maximize the portion of the payments that may be made to Parent hereunder without causing any Parent REIT Affiliate to fail to meet the REIT Requirements. Such cooperation shall include, for example, agreeing to make payments hereunder to an affiliate or designee of Parent.

 

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