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{FILENAME}l06556aexv10w41.txt

{DESCRIPTION}EX-10.41 GUARANTY OF PAYMENT OF DEBT

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                                                                   EXHIBIT 10.41



                               GUARANTY OF PAYMENT



                                     OF DEBT



                                       OF



                          FOREST CITY ENTERPRISES, INC.



                           DATED AS OF MARCH 22, 2004



                           --------------------------



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                                TABLE OF CONTENTS



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                                                                            Page

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{S}                                                                         {C}

1. DEFINITIONS ..........................................................      1



2. ACKNOWLEDGMENTS, CONSIDERATION .......................................      8



3. GUARANTY .............................................................      8



4. REINSTATEMENT ........................................................      9



5. WAIVERS ..............................................................      9



6. ADDITIONAL AGREEMENTS ................................................      9



7. REPRESENTATIONS AND WARRANTIES .......................................     10



8. NOTICES ..............................................................     11



9. COVENANTS ............................................................     11



10. DEFAULT; REMEDIES ...................................................     25



11. MISCELLANEOUS .......................................................     28



12. JURY TRIAL WAIVER ...................................................     28



13. NOTICES .............................................................     28



14. CONSENT TO JURISDICTION .............................................     29



15. ENTIRE AGREEMENT ....................................................     29



16. INDEPENDENCE OF COVENANTS ...........................................     29

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                                      (i)

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                           GUARANTY OF PAYMENT OF DEBT



                  THIS GUARANTY OF PAYMENT OF DEBT (this "Guaranty") is made and

issued by FOREST CITY ENTERPRISES, INC., an Ohio corporation (the "Guarantor"),

as of this 19th day of March, 2004, in order to induce the Banks (as hereinafter

defined), KEYBANK NATIONAL ASSOCIATION, as agent for the Banks (the "Agent") and

NATIONAL CITY BANK, as syndication agent for the Banks (the "Syndication Agent"

and together with the Agent, the "Agents"), to enter into, and lend money

pursuant to, a certain Credit Agreement of even date herewith (said Credit

Agreement as it may be from time to time amended, restated, or modified being

herein called the "Agreement"), by and among the Banks, the Agents and FOREST

CITY RENTAL PROPERTIES CORPORATION, a subsidiary of the Guarantor (the

"Borrower").



                  1. DEFINITIONS. As used in this Guaranty, the following terms

shall have the following meanings:



                  "Banks" shall mean each of the financing institutions that are

party to the Agreement as of the date of this Guaranty, any other bank(s) that

may become parties to the Agreement after the date hereof, and all successors

and assigns of any such bank; and "Bank" shall mean any one of the foregoing.



                  "Capital Stock" of any Person as used herein shall mean any

and all shares, interests, participations, or other equivalents (however

designated) of corporate stock or other equity participations or interests

including, without limitation, partnership interests, whether general or

limited, and membership interests, whether of managing or non-managing members,

of such Person.



                  "Cash Flow Coverage Ratio" shall mean, for any Test Period,

the ratio of (i) Consolidated Net Operating Cash Flow to (ii) Consolidated

Corporate Debt Service.



                  "Collateral" shall mean, collectively, all property, if any,

securing the Debt or any part thereof at the time in question.



                  "Company" shall mean the Guarantor and/or a Subsidiary of the

Guarantor.



                  "Completion Guaranty" shall mean any performance guarantee by

the Guarantor that construction of a real estate project will be completed in

accordance with applicable plans and specifications and that all costs



associated with such completion will be paid, provided, that such costs may

include an interest reserve only through completion of the project and not

through stabilization of such project.



                  "Consolidated Corporate Debt Service" shall mean, for any

period, the sum of (i) all scheduled payments of principal of (excluding balloon

payments) and interest on any Indebtedness owing by the Borrower (excluding any

non-recourse mortgage Indebtedness



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owing by the Borrower or any Subsidiary of the Borrower and Indebtedness

relating to the Term Loan), (ii) all scheduled payments of principal of

(excluding balloon payments) and interest on any Indebtedness owing by the

Guarantor and (iii) Dividends paid by the Guarantor.



                  "Consolidated GAAP Shareholders' Equity" shall mean the

consolidated shareholders equity of the Guarantor, as calculated in accordance

with GAAP.



                  "Consolidated Net Operating Cash Flow" shall mean, for any

Test Period, Net Operating Income (a) less (i) all scheduled payments of

principal of non-recourse mortgage Indebtedness owing by the Guarantor and/or

its Subsidiaries (excluding any balloon payments), (ii) all interest payments on

such non-recourse Indebtedness, (iii) Twelve Million Dollars ($12,000,000) of

normal recurring capital expenditures and (b) plus (i) net income (loss) before

taxes and corporate interest expense of the Land Group, (ii) net income (loss)

before taxes of the Lumber Trading Group, (iii) net income (loss) before taxes

and corporate interest expense (including, but not limited to, interest incurred

on Debt, subordinated debt or any other third party debt) of the Corporate

Activity Group, (iv) actual cash taxes paid on the Net Operating Income and the

income set forth in subsections (b)(i), (b)(ii) and (b)(iii) above, (v) non-cash

interest expense accrued but not currently payable up to a maximum of Five

Million Dollars ($5,000,000) with respect to Indebtedness owing by the Guarantor

and its Subsidiaries other than Indebtedness owing by the Guarantor and/or its

Subsidiaries to the government of the United States or any state or municipality

thereof or any agencies of any of the foregoing and (vi) non-cash interest

expense accrued but not currently payable with respect to Indebtedness by the

Guarantor and/or its Subsidiaries owing to the government of the United States

or any state or municipality thereof or any agencies of any of the foregoing.



                  "Contingent Obligation" shall mean, with respect to any Person

at the time of any determination, without duplication, any obligation,

contingent or otherwise, of such Person guaranteeing or having the economic

effect of guaranteeing any Indebtedness of any other Person in any manner,

whether directly or otherwise; provided, that the term "Contingent Obligation"

shall not include endorsements for collection or deposit, in each case in the

ordinary course of business. The amount of any Contingent Obligation shall be

deemed to be an amount equal to the stated or determinable amount of the

Indebtedness in respect of which such Contingent Obligation is made or, if not

stated or determinable, the maximum reasonable anticipated liability in respect

thereof (assuming such Person is required to perform thereunder).



                  "Controlled Group" shall mean a controlled group of

corporations as defined in Section 1563 of the Internal Revenue Code of 1986, as

may be amended from time to time, of which Guarantor or any Subsidiary is a

part.



                  "Debt" shall mean, collectively, (a) all Indebtedness now

owing or hereafter incurred by the Borrower to the Agents and/or the Banks

arising under or in connection with the Agreement, whether pursuant to

commitment or otherwise, and including, without limitation, the principal amount

of all Loans made pursuant to the Agreement, all interest thereon determined as

provided in the Agreement, all fees provided to be paid by the Borrower to the

Banks and/or the Agents pursuant to the Agreement or any Related Writing and all

liabilities in respect of letters of credit issued by the Agent and/or any of

the Banks for the account of the Borrower (but not including Indebtedness held

by any Bank arising and outstanding under any





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transaction or document referred to in Sections 8.04 (other than that referred

to in subclause (a) thereof), and/or 8.07 of the Agreement), (b) each renewal,

extension, consolidation or refinancing of any such Indebtedness in whole or in

part, and (c) all interest from time to time accruing on any of the foregoing

Indebtedness.



                  "Distributions" shall have the meaning set forth in Section

9.13(e) hereof.



                  "Dividends" shall include all dividends (in cash or otherwise)

paid, capital returned, and other distributions of any kind made on any share of

Capital Stock outstanding at the time.



                  "EBDT" shall mean net earnings from operations before

depreciation, amortization and deferred taxes on income and excludes provision

for decline in real estate, gain (loss) on disposition of properties and

extraordinary gains.



                  "Environmental Laws" means all provisions of law, statutes,

ordinances, rules, regulations, permits, licenses, judgments, writs,

injunctions, decrees, orders, awards and standards promulgated by the government

of the United States of America or by any state or municipality thereof or by

any court, agency, instrumentality, regulatory authority or commission of any of

the foregoing, now or hereafter in effect, and in each case, as amended,

concerning or relating to health, safety and protection of, or regulation of the

discharge of substances into, the environment.



                  "ERISA Net Worth" shall mean (a) as to any Subsidiary, the

excess of the net book value of such Subsidiary's assets (other than patents,

treasury stock, goodwill and similar intangibles but including unamortized

mortgage and lease costs) over all of its liabilities (other than liabilities to

any other Company), such excess being determined in accordance with GAAP applied

on a basis consistent with the Guarantor's present accounting procedures, and

(b) as to the Guarantor, the excess of the net book value (after deducting all

applicable reserves and deducting any value attributable to the re-appraisal or

write-up of any asset) of the Guarantor's assets (other than patents, good will,

treasury stock and similar intangibles but including unamortized mortgage and

lease costs) over all of its liabilities as determined on an accrued and

consolidated and consolidating basis and in accordance with GAAP not

inconsistent with the Guarantor's present accounting principles consistently

applied.



                  "Event of Default" shall have the meaning set forth in Section

10 hereof.



                  "Fiscal Quarterly Date" shall mean each of January 31, April

30, July 31 and October 31.



                  "GAAP" shall mean generally accepted accounting principles in

the United States of America, in effect from time to time.



                  "Hedge Agreement" shall mean any non-fully paid derivative,

such as interest rate swaps or collar agreements or other similar agreements or

arrangements designed to hedge the position of a Person with respect to interest

rates, excluding any such agreements as to which all obligations of such Person

are paid or payable within twelve (12) months of the date such agreement is

entered into by such Person.





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                  "Indebtedness" shall mean, with respect to any Person at the

time of any determination, without duplication, all obligations of such Person

which in accordance with GAAP should be classified upon the balance sheet of

such Person as liabilities, but in any event including: (a) all obligations of

such Person for borrowed money, (b) all obligations of such Person evidenced by

bonds, debentures, notes or other similar instruments, (c) all obligations of

such Person upon which interest charges are customarily paid or accrued, (d) all

written obligations of such Person to maintain working capital, equity capital

or other financial statement condition of another Person so as to enable such

other Person to pay its Indebtedness or otherwise to protect the holder of such

Indebtedness against loss in respect thereof, (e) all obligations of such Person

issued or assumed as the deferred purchase price of property or services, (f)

all obligations of others secured by any Lien on property owned or acquired by

such Person, whether or not the obligations secured thereby have been assumed,

(g) all capitalized lease obligations of such Person, (h) all obligations of

such Person in respect of Hedge Agreements, (i) all obligations of such Person,

actual or contingent, as an account party in respect of letters of credit or

bankers' acceptances, and, without duplication, all drafts drawn thereunder, and

(j) all obligations of any partnership or joint venture as to which such Person

is or may become personally liable, provided, that, Indebtedness shall not

include (i) any obligations incurred as a result of fraud, misappropriation,

misapplication and environmental indemnities, as are usual and customary in

commercial loan transactions, or (ii) trade payables, deferred revenue, taxes

and accrued expenses, in each case arising in the ordinary course of business

and that is due and payable less than twelve (12) months after the date such

debt was incurred.



                  "Indemnity Agreement" shall mean any indemnity agreement in

form and substance satisfactory to the Agents and the Banks, by and between the

Guarantor and a Surety, and as each such Indemnity Agreement may be amended,

restated or otherwise modified.



                  "Indenture" shall mean the indenture dated as of May 19, 2003,

between the Guarantor and The Bank of New York, as indenture trustee and

relating to the Senior Notes.



                  "Measured Credit Risk" shall mean the product of (i) the

notional amount of a Hedge Agreement entered into or guaranteed by the Guarantor

or entered into by Forest City Capital Corporation, in each case with any Person

other than a Bank that has a remaining time to maturity of greater than twelve

(12) months, times (ii) the number of years to maturity of such Hedge Agreement,

times (iii)1.25%.



                  "Net Earnings" shall mean the Guarantor's net earnings, as

determined separately for each fiscal year, after taxes, upon a consolidated

basis (after deducting minority interests) and in accordance with GAAP

consistently applied.



                  "Net Losses" shall mean the Guarantor's net losses, as

determined separately for each fiscal year, after taxes, upon a consolidated

basis (after deducting minority interests) in accordance with GAAP consistently

applied.



                  "Net Operating Income" shall mean for any relevant period, the

excess of the Borrower's revenues over the Borrower's operating expenses, in

each case as determined in accordance with the Pro Rata Consolidation Method.

For purposes of this definition, Net





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Operating Income (i) shall not include any gains or losses from the sale of

income producing real properties, other than gains or losses obtained from the

sale of net outlot parcels to a maximum aggregate amount of Twenty Million

Dollars ($20,000,000) for the immediately preceding four consecutive quarters

and (ii) shall include adjustments for cash flow of properties pursuant to which

the Borrower is receiving a preferred return over and above its ownership

percentage in such properties.



                  "Non-Affiliate Construction Project" shall mean any real

property and all improvements to be constructed thereon (collectively, the

"Non-Affiliate Property") (i) with respect to which the Borrower or a Subsidiary

of the Borrower, as the case may be, (a) may make a Permitted Non-Affiliate

Loan, and (b) is the developer pursuant to an agreement with a Non-Affiliated

Entity as owner of the Non-Affiliate Property; and (ii) with respect to which

the Borrower or an Affiliate of the Borrower, as the case may be, holds an

irrevocable option from either the Non-Affiliated Entity or the parent of the

Non-Affiliated Entity to acquire, respectively, either (a) the Non-Affiliate

Property, or (b) all of the equity interests owned by the parent of the

Non-Affiliated Entity in and to such Non-Affiliated Entity.



                  "Non-Affiliated Entity" shall mean any Person that is not an

Affiliate of the Borrower and that is wholly-owned by another Person.



                  "Obligor" shall mean any Person or entity who, or any of whose

property is or shall be, obligated on the Debt or any part thereof in any manner

and includes, without limiting the generality of the foregoing, the Borrower,

the Guarantor and any co-maker, endorser, other guarantor of payment,

subordinating creditor, assignor, grantor of a security interest, pledgor,

mortgagor or hypothecator of property, if any.

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