Document:

EX-10.3

This Separation Agreement, dated as of December 16, 2005 (the “Separation Agreement”), is
made by and between Golden Telecom Group, Inc., a Delaware corporation (the “Company”), and Brian
Allen Rich, a citizen of the United States of America (the “Employee”).

W I T N E S S E T H :

WHEREAS, the Employee has been employed by the Company pursuant to an offer letter, dated as
of August 4, 2004, made by and between the Company and the Employee (the “Offer Letter”);

WHEREAS, the Employee has tendered his notice of resignation from his positions as Senior Vice
President, Chief Financial Officer, and Treasurer;

WHEREAS, the Company and the Employee wish to define their continuing obligations to the other
under the Offer Letter and as provided herein;

WHEREAS, the Company wishes to provide additional consideration to the Employee in exchange
for the covenants of the Employee hereunder; and

WHEREAS, the Employee and the Company desire to reach an amicable resolution concerning the
Employee’s employment relationship with the Company and the termination thereof,

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. Termination of Employment. The Employee by executing this Separation Agreement
hereby tenders his notice of resignation from his positions as Senior Vice President, Chief
Financial Officer, and Treasurer effective as of December 16, 2005.

The Employee has agreed to continue to be an employee of the Company and to serve as Special
Advisor to the Chief Executive Officer of the Company for the period from December 16, 2005 to
February 17, 2006 (the “Separation Date”). The Company, in its sole and absolute discretion may,
at any time prior to the Separation Date, elect to either continue to employ the Employee, in whole
or in part, through the Separation Date, or continue to provide the Employee with salary and
benefits through the Separation Date in lieu of continued active employment. Additionally, the
Company reserves the right, in its sole and absolute discretion, to require that the Employee
remain off the Company’s premises or any related Company’s premises. As of December 16, 2005,
neither the Employee, nor any partner, agent or employee of the Employee has authority to enter
into any contracts that bind the Company or create obligations on the part of the Company.

2. Offer Letter Obligations.

Upon resignation the Company will continue to provide the Employee with the following:

(i) Base salary payments to be paid through the Separation Date in accordance with the
Company’s usual and customary payroll practices and procedures;

(ii) Employee benefits through the Separation Date, provided that the Company reserves the
right to amend, suspend, or terminate such employee benefits to the extent such amendment,
suspension, or termination is applicable to similarly situated participants, and further
provided that such employee benefits will cease upon the Employee’s receipt of comparable
benefits or coverage from a subsequent employer prior to the Separation Date:

(iii) Incentive Bonus for the 2005 fiscal year in the amount of US$105,000 (one hundred and
five thousand US dollars);

(iv) Reimbursement for any appropriate and reasonable business expenses in accordance with
the Company’s usual and customary practices and procedures, provided that the Employee
provides proper documentation of such expenses and submits the reimbursement request prior
to the Separation Date.

3. Additional Consideration to the Employee. In addition to the payments and benefits
set forth above, and in further consideration of the Employee’s covenants and obligations contained
in this Separation Agreement, and subject to the Employee’s execution of the Mutual Release
attached hereto as Exhibit A, the Company will provide the Employee with the following (subject to
Section 7 below):

(i) A separation payment in a gross amount totaling US$423,000 (four hundred and
twenty-three thousand US dollars) in lieu of salary and bonus that the Employee may have
earned from the Company during 2006; and

(ii) An additional payment of US$100,000 (one hundred thousand US dollars) in lieu of
 shares of restricted stock in Golden Telecom, Inc. that may have vested during 2006; and

(iii) An additional payment of US$26,500 (twenty-six thousand five hundred and U. S.
dollars) which amount is equal to the value of the Employee’s unused vacation during the
course of his employment with the Company; and

(iv) Reimbursement for the cost of continuing the Company’s medical, dental, and health
insurance coverage for the twelve-month period following the Separation Date or ceasing
upon such earlier date upon which the Employee receives comparable benefits or coverage
from a subsequent employer (such continued coverage to run concurrently with any continued
coverage requirements under the law known as “COBRA” or similar national, local, or state
laws); and

(v) A single lump sum payment of US$25,000 (twenty-five thousand US dollars) which amount
represents the estimated cost of moving the Employee’s household goods and pets from Moscow
to Atlanta, Georgia with an additional grossed up amount sufficient to provide the Employee
with net funds (after payment of U.S. federal, state and local income taxes on such
additional gross amount) equal to the additional federal, state or local income tax
liability imposed on the Employee as a result of the payment of this cost of moving; and

(vi) Reimbursement of the cost of one way business class tickets for the Employee and his
spouse grossed up for United States federal, state and local income taxes in the manner
provided for in 3(v) above; and

(vii) The use of a company car and driver until June 15, 2006; and

(ix) The use of DSL services and a mobile phone until June 15, 2006; and

(x) Reimbursement of the premium for life insurance coverage in the amount of $1,000,000
coverage from the Separation Date until June 15, 2006; and

(xi) Continuing personal property insurance coverage in Moscow until June 15, 2006 in the
amounts and on the terms as currently provided by the Company; and

(xii) Continuing visa and registration support for the Employee and his family through June
15, 2006.

Payments, with the exception of salary to be paid in accordance with 2(i), to be made under
Section 2 and Section 3 of this Separation Agreement, shall be made by the Company to the Employee
by December 30, 2005.

4. Company Car. The Employee will deliver to the Company, and the Company will take
possession of, the company car in the Employee’s possession (including all car keys), as soon as
practically possible, but in any event, no later than June 15, 2006.

5. Tax Equalization and Assistance In Preparation of Tax Declarations. In accordance
with Golden Telecom, Inc.’s Expatriate Tax Protection Policy (“Policy”), and pursuant to relevant
laws in the “host country” and “home country”, as defined in the Policy, any estimated federal,
state, local, and other taxes owed in the host and home countries by the Company under the Policy
will be paid in accordance with this Section.

Within thirty (30) days following the Employee’s Separation Date, the Tax Advisor will
determine an estimate of the correct amount of the liability owed by the Company pursuant to the
Policy (“Tax Equalization Liability”) for the time period during which the Employee was Employed by
the Company (“Employed”). Once the Tax Advisor has determined an estimate of the correct amount of
Tax Equalization Liability owed for the time period during which the Employee was Employed by the
Company, then the Company or the Employee within thirty (30) days of receiving written
notification of such Tax Equalization Liability, will, at the Employee’s option, provide full Tax
Equalization Liability reimbursement to the other party or will directly pay the Tax Equalization
Liability amounts to the relevant governmental authorities. All payments from the Company pursuant
this Agreement and the Policy will be considered “Company Income” under the Policy, and will be
subject to applicable protections, payments, reimbursements, and gross-ups under the Policy.

Pursuant to the Policy and in accordance with this Section, the Company will continue to
provide professional tax and accounting assistance in the preparation of relevant home and host
country tax filings (federal, state, and local) and home and host country tax payments (federal,
state, and local), as necessary, for tax years 2005 and 2006 with regard to any and all Company
Income and Personal Income earned by the Employee. During the preparation of the 2005 and 2006
home and host country tax filings, if it is determined that the Company has additional Tax
Equalization Liability pursuant to the Policy or this Agreement, reimbursements or payments by the
Company shall be made in accordance with this Section.

For purposes of this Section, “Employment” or “Employ” includes all time periods the Employee
received or will receive compensation from the Company. For purposes of this Section, the “Tax
Equalization Liability” calculation by the Tax Advisor will include tax on all payments or
reimbursements of all “home country” and “host country” taxes and gross-ups as defined within the
Policy. For purposes of this section, “Tax Advisor” as defined here and in the Policy, will be
Ernst & Young in the host country and the home country, and the Company will inform the Employee of
the relevant tax advisors from Ernst & Young in both the host country and home country.

6. Withholdings; All payments made under this Separation Agreement will be subject to
any required tax withholdings subject to Section 5 above.

7. Mutual Release. As a condition to the receipt of the benefits set forth in Section
3 above, the Employee must execute the Mutual Release attached hereto as Exhibit A and such Mutual
Release must become irrevocably effective.

8. Non-Disparagement. The Employee will not disparage, portray in a negative light,
or take any action which would be harmful to, or lead to unfavorable publicity for, the Company, or
any of its current or former officers, directors, employees, agents, consultants, contractors,
owners, divisions, parents, subsidiaries, or successors, whether public or private, including
without limitation, in any and all interviews, oral statements, written materials, electronically
displayed materials, and materials or information displayed on Internet-related sites; provided
that this provision will not apply to the extent the Employee is seeking to enforce his rights
under this Separation Agreement. The Company will not authorize its current or former officers,
directors, employees, agents, consultants, contractors, owners, divisions, subsidiaries or
successors to disparage, portray in a negative light, or take any action which would be harmful to,
or lead to unfavorable publicity for, the Employee, whether public or private, including without
limitation, in any and all interviews, oral statements, written materials, electronically displayed
materials, and materials or information displayed on Internet-related sites; provided that this
provision will not apply to the extent the Company is seeking to enforce its rights under this
Separation Agreement.

9. Non-Disclosure of Information. The Employee affirms that he has not, and will not,
without the specific prior written consent of the Company, directly or indirectly, at any time
after the date of this Separation Agreement, whether before or after the Separation Date, use on
behalf of or divulge to any person or entity, any confidential or proprietary information of the
Company or any related company (or any of their clients, suppliers, and vendors) concerning the
business, affairs, or clients of the Company or any related company, including without limitation,
client lists, customer records, names and addresses, financial documents and statistics, prices,
contractual terms and arrangements, surveys and reports, market data, trade secrets, technical
data, business or research plans and proposals, or any other information which may have commercial
value to the Company, insofar as the same have come to the Employee’s knowledge during or as a
result of his employment with the Company, all of which information is confidential and proprietary
to the Company and will remain the sole and exclusive property of the Company. However, the
Employee will have the right to use the generic knowledge and expertise he acquired during his
employment with the Company so as to enable him to be otherwise gainfully employed within the
Company’s industry. The Company also expressly acknowledges that the Employee may disclose such
information as may be required by law or to comply with legal process, or any such information
which is known to the general public or ascertainable from the public or from published information
(other than as a result of the Employee’s unauthorized disclosure of such information).

10. Non-Solicitation and Return of Company Property. The Employee will not, for a
period of twelve months commencing upon the Separation Date, either alone or with or for others, in
whatever capacity, directly or indirectly, without first obtaining the Company’s written approval,
(a) solicit, or attempt to solicit, or interfere with any business or services from any customers
or clients of the Company or any related company (including without limitation, Golden
TeleServices, Inc. and the Company’s affiliated operating companies in Russia, Ukraine, and
Kazakhstan), whom the Employee personally served, whose accounts the Employee directly or
indirectly supervised, or about whom the Employee was privy to privileged and confidential
information, while employed by the Company, or (b) solicit, or attempt to solicit, for employment
or any other consulting relationship, any employee holding a management position equal to or above
a departmental “Manager” with, or any officer or director of, the Company or any related company
(including without limitation, Golden TeleServices, Inc. and the Company’s affiliated operating
companies in Russia, Ukraine, and Kazakhstan), who was employed by or provided services to the
Company or any related company during the twelve-month period immediately prior to the Separation
Date, and without regard to whether such employee, officer, or director continues to be employed by
or provide services to the Company or any related company during the twelve-month non-solicitation
period.

It is acknowledged and understood that by executing this Separation Agreement, the parties
hereto regard the restrictions of this Section 10 to be reasonable and compatible with their
respective rights.

To the extent not dealt with elsewhere in this Separation Agreement, the Employee will deliver
promptly, but no later than the Separation Date, to the Company (and not keep in his possession or
deliver to any other person or entity) any and all property belonging to the Company or any related
company, including without limitation, computer hardware and software, palm pilots, pagers, other
electronic equipment, credit cards, keys, records, data, notes, reports, correspondence, client
files and information, confidential and/or proprietary information, and other documents or
information (including any and all copies of such property).

11. Duty to Cooperate. Prior to the Separation Date, the Employee will provide full
cooperation to the Company, any related company, and their counsels with respect to any matter,
including without limitation, litigation, investigation, audit, or governmental proceeding, which
relates to any matter with which the Employee was directly or indirectly involved while employed by
the Company.

12. Injunctive Relief. The Employee acknowledges and understands that the remedy at
law for his breach of Sections 8, 9, 10, or 11 above will be inadequate, and that the damages
flowing from such breach will not be readily susceptible to being measured in monetary terms.
Accordingly, upon a violation of any part of Sections 8, 9, 10, or 11 above, the Company will be
entitled to immediate injunctive relief and may obtain a temporary order restraining any further
violation. Nothing in this Section 12 will be deemed to limit the Company’s remedies at law or in
equity for any breach by the Employee of any of the parts of Sections 8, 9, 10, or 11 above which
may be pursued or availed of by the Company.

13.. Judicial Modification. The Employee acknowledges that it is the intent of the
parties hereto that the restrictions of Sections 8, 9, 10, or 11 above be enforced to the fullest
extent permissible under the laws of each jurisdiction in which enforcement is sought. If any of
the restrictions in Sections 8, 9, 10, or 11 is for any reason held by an arbitrator or court to be
excessively broad as to duration, activity, geographical scope, or subject, then such restriction
will be construed or judicially modified so as to thereafter be limited or reduced to the extent
required to be enforceable in accordance with applicable law.

14. Joint Communication. The Company or its affiliated companies shall make a public
announcement by December 16, 2005 regarding the Employee’s resignation.

15. Arbitration. Any dispute or controversy between the Company and the Employee
arising under this Separation Agreement will be settled by arbitration administered by the American
Arbitration Association (“AAA”) in Arlington, Virginia pursuant to the AAA’s National Rules for the
Resolution of Employment Disputes (or their equivalent), which arbitration will be confidential,
final, and binding to the fullest extent permitted by law. BOTH PARTIES HERETO WAIVE THEIR RIGHTS
TO SEEK A REMEDY IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL. Notwithstanding the foregoing, to
the extent there is no adequate remedy at law and injunctive relief only is sought, the parties
hereto select state court in Arlington County, Virginia as the exclusive forum to resolve their
disputes, and both parties submit to personal jurisdiction. Either party may be represented by an
attorney or other selected representative, provided that each party will be responsible to pay its
own attorneys’ or representation fees. The costs of the arbitration and filing fees will be paid
by the Company.

16. Entire Agreement. This Separation Agreement contains the entire agreement between
the Employee and the Company with respect to its subject matter, and supersedes all prior
agreements and understandings, whether oral or written, including without limitation, the Offer
Letter, between the Employee and the Company with respect to the subject matter of this Separation
Agreement. Notwithstanding the foregoing, the Restricted Stock Agreement executed by Golden
Telecom, Inc. and the Employee and dated July 21, 2005 shall remain in full force and effect. This
Separation Agreement may be amended only by an agreement in writing signed by both the Employee and
the Company.

17. Equity Plan and Restricted Shares. For the avoidance of doubt, the Employee and
the Company acknowledge and agree that, provided that the Employee remains in the employ of the
Company through the Separation Date, the Employee shall as of the Separation Date hold 2,755 (two
thousand seven hundred and fifty-five) unvested shares of restricted shares of Golden Telecom,
Inc. common stock; and the Employee acknowledges and agrees that the Employee’s right to all
unvested shares of restricted stock held by the Employee as of the Separation Date shall
immediately expire, be forfeited, and no longer be of any force or effect. The Employee and the
Company acknowledge and agree that any sale, transfer or other disposition, and the validity,
termination, and sale, of shares of restricted stock of Golden Telecom held by the Employee as of
the Separation Date which are vested will be subject to disposition by the Employee in strict
compliance with the 1999 GTI Equity Participation Plan, as amended on June 26, 2001, the Restricted
Stock Agreement executed by the Company and the Employee as of July 11, 2005, and all applicable
rules and regulations of the US Securities and Exchange Commission and other federal and state
regulatory organs.

18. No Other Benefits. The Employee acknowledges and understands that the benefits
provided for in this Separation Agreement are the only benefits to which the Employee is entitled,
and are the only benefits the Employee will receive, as a result of the separation of his
employment with the Company. The Employee further acknowledges and understands that the benefits
provided for in this Separation Agreement are inclusive of, and exceed, any benefits to which the
Employee is entitled from the Company pursuant to common law, statutory law, contract, or
otherwise.

19. Severability. In the event that any of the provisions of this Separation
Agreement, or the application of any such provisions to the Employee or the Company with respect to
obligations hereunder, is held to be unlawful or unenforceable by any court or arbitrator, the
remaining portions of this Separation Agreement will remain in full force and effect and will not
be invalidated or impaired in any manner.

20. Waiver. No waiver by any party hereto of the breach of any term or covenant
contained in this Separation Agreement, whether by conduct or otherwise, in any one or more
instances, will be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of any other term or covenant contained in this Separation Agreement.

21. Governing Law. This Separation Agreement will be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia without giving effect to its conflict of
laws principles.

22. Counterparts. This Separation Agreement may be executed in any number of
counterparts, each of which so executed will be deemed to be an original, and such counterparts
will together constitute but one agreement.

HAVING READ AND UNDERSTOOD THIS SEPARATION AGREEMENT, AND HAVING CONSULTED COUNSEL OR
VOLUNTARILY ELECTING NOT TO CONSULT SUCH COUNSEL, AND HAVING HAD SUFFICIENT TIME TO CONSIDER
WHETHER TO EXECUTE THIS SEPARATION AGREEMENT, IN WITNESS WHEREOF, the parties hereto have signed
this Separation Agreement as of the date first written above.

	 	 	 
	Golden Telecom Group, Inc.	 	Brian Allen Rich
	By:      

Name: Jean-Pierre Vandromme

	 	     

Title: Chief Executive Officer

1

EXHIBIT A — MUTUAL RELEASE

FOR AND IN CONSIDERATION OF the terms and conditions of the Separation Agreement, dated as of
December 16, 2005 (the “Separation Agreement”), by and between Brian Allen Rich (the “Employee”)
and Golden Telecom Group, Inc. (the “Company”), Employee, on behalf of himself, his heirs,
executors, administrators, successors, and assigns (collectively the “Employee Released Parties”),
and the Company, and its respective current and former officers, directors, employees, agents,
owners, subsidiaries, divisions, affiliates, parents, successors, and assigns (collectively the
“Company Released Parties”) each expressly releases and discharges the other from any and all
actions and causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
agreements, judgments, charges, claims, and demands whatsoever (“Losses”) which either party has,
or may hereafter have, against the other party or any of them arising out of or by reason of any
cause, matter, or thing whatsoever from the beginning of the world to the date hereof:. Employee
understands and agrees that his release of the Company Released Parties includes but is not limited
to:

(a) Any and all matters relating to the Employee’s employment by the Company and the cessation
thereof, including claims of wrongful termination, defamation, infliction of emotional distress,
and interference with contractual relationship;

(b) Any and all matters relating to the Employee’s employment agreement, or any other contract
of employment between the Company and the Employee, whether oral or written, or actual or implied;

(c) Any and all matters relating to the Employee’s compensation or benefits, including wages,
overtime, vacation, severance, bonuses, commissions, pensions, deferred compensation, or retirement
benefits (except to the extent such individual items are already vested);

(d) Any and all matters relating to claims of discrimination, harassment, or retaliation based
upon any trait protected by law, including age, national origin, citizenship, race, ethnicity,
religion, gender, sexual orientation, physical or mental disability, marital status, or veteran
status; and

(e) Any and all matters arising under any national, federal, state, provincial, municipal, or
local statute, rule, or regulation, or principle of contract law or common law, including without
limitation, the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201
et seq., the Family and Medical Leave Act of 1993, as amended, 29
U.S.C. §§ 2601 et seq., Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. §§ 2000e et seq., the Age Discrimination in Employment
Act of 1967, as amended, 29 U.S.C. §§ 621 et seq. (the “ADEA”), the
Americans with Disabilities Act of 1990, as amended, 42 U.S.C. §§ 12101 et
seq., the Worker Adjustment and Retraining Notification Act of 1988, as
amended, 29 U.S.C. §§ 2101 et seq., the Virginia Human Rights Act,
as amended, Va. Code Ann. §§ 2.1-714 et seq., the Virginia Persons
with Disabilities Act, as amended, Va. Code Ann. §§ 51.5-1 et seq.,
and any other equivalent or similar national, federal, state, provincial, municipal, or local
statute.

Provided, however, that (i) the Employee Released Parties do not release or discharge the Company
Released Parties from any obligations, payments, claims or causes of action which arise out of or
in connection with the Separation Agreement or from any Losses arising under the ADEA which arise
after the date on which the Employee executes this Mutual Release and (ii) the Company Released
Parties do not release or discharge the Employee Released Parties from responsibility for criminal
violations, fraud, embezzlement or breach of confidentiality provisions applicable to the Employee
Released Parties. This Mutual Release will not release or discharge the Company Released Parties
from any claims or causes of action which arise out of any rights which the Employee Released
Parties may not legally waive. This Mutual Release includes claims which arise under the laws of
the United States and its political subdivisions, and the laws of any other country or jurisdiction
and its political subdivisions.

It is understood that nothing in this Mutual Release is to be construed as an admission on
behalf of the Company Released Parties of any wrongdoing with respect to the Employee, any such
wrongdoing being expressly denied.

The Employee represents and affirms that he has not filed, and agrees not to initiate or cause
to be initiated on his behalf, any complaint, charge, claim, or proceeding against the Company
Released Parties before any national, federal, state, provincial, municipal, local, or other
similar agency, court, or other body relating to his employment and the cessation thereof, and
agrees not to voluntarily participate in such a proceeding. However, nothing in this Mutual
Release shall preclude or prevent the Employee from filing a claim which challenges the validity of
this Mutual Release solely with respect to the Employee’s waiver of any Losses arising under the
ADEA.

The Employee agrees not to make any public statements in any form whatsoever to the media or
any other public forum about the Company Released Parties or the Employee’s present or past
employment relationship with the Company, including his role as Chief Financial Officer and
Treasurer of Golden Telecom, Inc., without the express advance written consent of the Company;
provided, however, that sworn testimony or any communication which, in the opinion of the
Employee’s legal counsel, is legally required, is excepted from this restriction; provided that the
Employee shall provide the Company with immediate written notice if sworn testimony or any other
communication is required.

The Employee and the Company respectively each represent and warrant that it fully understands
the terms of this Mutual Release, that it has had the benefit of advice of counsel or has
voluntarily not sought such advice, and that it knowingly and voluntarily, of its own free will
without any duress, being fully informed and after due deliberation, accepts its terms and signs
the same as its own free act. The Employee understands that as a result of executing this Mutual
Release, he will not have the right to assert that the Company unlawfully terminated his employment
or violated any of his rights in connection with his employment.

The Employee may take up to twenty-one (21) days to consider whether to execute this Mutual
Release. Alternatively, having had the advice of counsel or having been encouraged to seek such
counsel, which the Employee hereby acknowledges, the Employee knowingly waives the remainder of
such twenty-one-day period. Upon the Employee’s execution of this Mutual Release, the Employee
will have seven (7) days after such execution in which he may revoke such execution. In the event
of revocation, the Employee must present written notice of such revocation to the Company’s General
Counsel. If seven (7) days pass without receipt of such notice of revocation by the Company, this
Mutual Release shall become binding and effective on the eighth (8th) day.

This Mutual Release shall be governed by the laws of the Commonwealth of Virginia without
giving effect to its conflict of laws principles.

Brian Allen Rich

     

Date: December 16, 2005

Golden Telecom Group, Inc

	 	 	 
	By:      

Name: Jean-Pierre Vandromme

	 	

Date: December 16, 2005

Title: Chief Executive Officer

2EX-10.1

Exhibit 10.1

FOREST CITY ENTERPRISES, INC.

2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES

(As Amended and Restated Effective January 1, 2005)

Forest City Enterprises, Inc. does hereby amend and completely restate the Forest City
Enterprises, Inc. 2005 Deferred Compensation Plan For Executives on the terms and conditions
hereinafter set forth, effective as of January 1, 2005. The original effective date of the Plan
was January 1, 2005. The Plan provides a select group of management or highly compensated
employees of the Company with the opportunity to defer base salary, or incentive compensation
payments which may be paid to such executives under any plan which the Committee (as defined below)
may designate from time to time, in accordance with the provisions of the Plan.

ARTICLE I

DEFINITIONS

For the purposes hereof, the following words and phrases shall have the meanings set forth
below, unless their context clearly requires a different meaning:

1. “Account” shall mean the bookkeeping account maintained by the Committee on behalf of each
Participant pursuant to Section 4 of Article II that is credited with Base Salary or Incentive
Compensation which is deferred by a Participant, and the interest on such amounts as determined in
accordance with Section 4 of Article II.

2. “Base Salary” shall mean the annual fixed or base compensation, payable biweekly or
otherwise to a Participant.

3. “Beneficiary” or “Beneficiaries” shall mean the person or persons, including one or more
trusts, designated by a Participant in accordance with the Plan to receive payment of the remaining
balance of the Participant’s Account in the event of the death of the Participant prior to receipt
of the entire amount credited to the Participant’s Account.

4. “Board” shall mean the Board of Directors of the Company.

5. “Bonus Year” shall mean each fiscal year commencing February 1 and ending on the following
January 31, commencing with the fiscal year commencing on February 1, 2005.

6. “Calendar Year” shall mean each calendar year commencing on or after January 1, 2005.

7. “Change in Control” shall mean that:

(i) The Company is merged or consolidated or reorganized into or with another
corporation or other legal person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting power of the securities of such
corporation or person that are outstanding immediately following the consummation of such
transaction is held in the aggregate by either (a) the holders of Voting Stock (as
hereinafter defined) of the Company immediately prior to such transaction or (b) Permitted
Holders;

(ii) The Company sells or otherwise transfers all or substantially all of its assets to
any other corporation or other legal person, and as a result of such sale or transfer less
than a majority of the combined voting power of the securities of such corporation or person
that are outstanding immediately following the consummation of such sale or transfer is held
in the aggregate by either (a) the holders of Voting Stock (as hereinafter defined) of the
Company immediately prior to such sale or transfer or (b) Permitted Holders;

(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) thereto, each as promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), disclosing that any person (as the term
“person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than a
Permitted Holder has become the beneficial owner (as the term “beneficial owner” is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of
securities representing 20 percent or more of the combined voting power of the
then-outstanding securities entitled to vote generally in the election of the Board (the
“Voting Stock”);

(iv) The Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) that a change in control of the
Company has or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction, other than with respect to a Permitted Holder; or

(v) If during any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board cease for any reason to constitute at least a majority
of the members thereof, unless the election, or the nomination for election by the Company’s
stockholders, of each member of the Board first elected during such period was approved by a
vote of at least two-thirds of the members of the Board then still in office who were
members of the Board at the beginning of any such period.

Notwithstanding the foregoing provisions of subsection (iii) or (iv) hereof, a “Change in Control”
shall not be deemed to have occurred for purposes of the Plan, either (1) solely because the
Company, a Subsidiary, or any Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company, files or becomes obligated to file a report or a proxy statement under
or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because the
Company reports that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or (2) solely because of a change in
control of any Subsidiary by which any Participant may be employed. Notwithstanding the foregoing
provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv)
hereof that may be instituted by any person who is not an officer or director of the Company, or
prior to any disclosed proposal that may be instituted by any person who is not an officer or
director of the Company that could lead to any such event, management proposes any restructuring of
the Company that ultimately leads to an event described in subsections (i-iv) hereof pursuant to
such management proposal, then a “Change in Control” shall not be deemed to have occurred for
purposes of the Plan.

8. “Code” shall mean the Internal Revenue Code of 1986, as amended.

9. “Committee” shall mean the Compensation Committee of the Board or such other Committee as
may be authorized by the Board to administer the Plan.

10. “Company” shall mean Forest City Enterprises, Inc. and its successors, including, without
limitation, the surviving corporation resulting from any merger or consolidation of Forest City
Enterprises, Inc. with any other corporation or corporations.

11. “Deferral Election” shall mean the Election Agreement (or portion thereof) completed by a
Participant and filed with the Committee that indicates the amount of his or her Base Salary and/or
Incentive Compensation that is or will be deferred under the Plan for a Deferral Period.

12. “Deferral Period” shall mean (i) with respect to Base Salary, the calendar year that
commences after each Election Filing Date, and (ii) with respect to Incentive Compensation, the
Bonus Year that commences after each Election Filing Date.

13. “Disability” shall have the meaning given to such term in the Company’s Long Term
Disability Plan, as amended from time to time.

14. “Election Agreement” shall mean an agreement in the form that the Committee may designate
from time to time, including, without limitation, the “Election Agreement for 2005” that was filed
by Participants in December 2004 and the “Election Agreement for 2006” filed by Participants in
December 2005.

15. “Election Filing Date” shall mean December 31 of the calendar year next preceding the
first day of (i) in the case of Base Salary, the Calendar Year for which such Base Salary would
otherwise be earned and (ii) in the case of Incentive Compensation, the Bonus Year for which such
Incentive Compensation would otherwise be earned.

16. “Eligible Employee” shall mean a full-time or part-time employee of the Company (or a
Subsidiary that has adopted the Plan) who is, as determined by the Committee, a member of a “select
group of management or highly compensated employees,” within the meaning of Sections 201, 301 and
401 of ERISA, and who is selected by the Committee to participate in the Plan. Unless otherwise
determined by the Committee, an Eligible Employee shall continue as such until Termination of
Employment.

17. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

18. “Fixed Installment Payment Method” shall mean the method of calculating the amount of each
biweekly installment described in Section 5(ii)(c) of Article II of the Plan.

19. “Incentive Compensation” shall mean cash incentive compensation payable pursuant to an
incentive compensation plan, whether such plan is now in effect or hereafter established by the
Company, which the Committee may designate from time to time.

20. “Insolvent” shall mean that the Company has become subject to a pending voluntary or
involuntary proceeding under the United States Bankruptcy Code or has become unable to pay its
debts as they mature.

21. “Key Employee” shall mean a key employee as defined in Section 409A of the Code and
Section 416(i) of the Code (without regard to paragraph (5) thereof) of the Company (or a
controlled group member).

22. “Moody’s Rate” shall mean the interest rate which is the sum of (i) the average of the
Moody’s A, Aa and Aaa Bond rates plus (ii) .50. For purposes of determining the amount of interest
to be credited to an Account under Section 4 of Article II of the Plan, the Moody’s Rate shall be
determined and applied on a quarterly basis.

23. “Participant” shall mean any Eligible Employee who has at any time made a Deferral
Election in accordance with Section 2 of Article II of the Plan and who, in conjunction with his or
her Beneficiary, has not received a complete distribution of the amount credited to his or her
Account.

24. “Payment Election” shall mean the Election Agreement (or portion thereof) completed by a
Participant and filed with the Committee that indicates the time of commencement of payment and
form of payment of the Participant’s Base Salary and/or Incentive Compensation that is or will be
deferred pursuant to a Deferral Election under the Plan.

25. “Permitted Holder” shall mean (i) any of Samuel H. Miller, Albert B. Ratner, Charles A.
Ratner, James A. Ratner, Ronald A. Ratner or any spouse of any of the foregoing, and any trusts for
the benefit of any of the foregoing, (ii) RMS, Limited Partnership and any general partner or
limited partner thereof and any person (other than a creditor) that upon the dissolution or winding
up of RMS, Limited Partnership receives a distribution of capital stock of the Company, (iii) any
group (as defined in Section 13(d) of the Exchange Act) of two or more persons or entities that are
specified in the immediately preceding clauses (i) and (ii), and (iv) any successive recombination
of the persons or groups that are specified in the immediately preceding clauses (i), (ii) and
(iii).

26. “Plan” shall mean this deferred compensation plan, which shall be known as the Forest City
Enterprises, Inc. 2005 Deferred Compensation Plan For Executives. The Plan is unfunded and is
maintained by the Company primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees of the Company.

27. “Subsidiary” shall mean any corporation, joint venture, partnership, unincorporated
association or other entity in which the Company has a direct or indirect ownership or other equity
interest and directly or indirectly owns or controls 50 percent or more of the total combined
voting or other decision-making power.

28. “Termination of Employment” shall mean a separation from service as defined under Section
409A of the Code.

29. “Unforeseeable Emergency” shall mean a severe financial hardship to a Participant or
Beneficiary resulting from (i) an illness or accident of the Participant or Beneficiary or his or
her spouse or dependent (as defined in Section 152(a) of the Code), (ii) loss of the Participant’s
or Beneficiary’s property due to casualty, or (iii) other similar or extraordinary circumstances
arising as a result of events beyond the control of the Participant or Beneficiary.

30. “Variable Installment Payment Method” shall mean the method of calculating the amount of
each biweekly installment described in Section 5(ii)(d) of Article II of the Plan.

ARTICLE II

ELECTION TO DEFER

1. Eligibility. An Eligible Employee may make an annual Deferral Election with
respect to receipt of all or a specified part of his or her Base Salary for any Calendar Year or
Incentive Compensation earned for any Bonus Year in accordance with Section 2 of this Article. An
Eligible Employee who makes a Deferral Election must also make a Payment Election with respect to
the amount deferred in accordance with Section 5 of this Article. An Eligible Employee’s
entitlement to defer shall cease with respect to the Deferral Period following the Deferral Period
in which he or she ceases to be an Eligible Employee.

2. Deferral Elections. Subject to Section 2(iii) of this Article, all Deferral
Elections, once effective, shall be irrevocable, shall be made on an Election Agreement filed with
the Committee and shall comply with the following requirements:

(i) The Deferral Election shall specify the amount of Base Salary and/or Incentive
Compensation that is to be deferred within the limits under Section 3 of this Article.

(ii) The Deferral Election shall be made by, and shall be effective as of, the
applicable Election Filing Date; provided, however, that to the extent
permitted by Section 409A of the Code, the Company may permit Participants to make a
Deferral Election with respect to Incentive Compensation that constitutes “performance-based
compensation” (within the meaning of Section 409A(a)(4)(B)(iii) of the Code) at a time later
than the time described earlier in this first sentence but no later than six (6) months
prior to the end of the performance period with respect to which the Incentive Compensation
is earned. Notwithstanding the foregoing, an employee who first becomes an Eligible
Employee (A) during the course of a Calendar Year, rather than as of the first day of such
Calendar Year, shall make such Deferral Election with respect to Base Salary within thirty
(30) days following the date the employee first becomes an Eligible Employee, and such
Deferral Election shall be effective on the date made and shall be effective only with
regard to Base Salary earned during such Calendar Year following the filing of the Election
Agreement with the Committee and (B) during the course of a Bonus Year, rather than as of
the first day of such Bonus Year, shall make such Deferral Election with respect to
Incentive Compensation within thirty (30) days following the date the employee first becomes
an Eligible Employee, and such Deferral Election shall be effective on the date made and,
unless the proviso in the first sentence of this Section 2(ii) applies, shall be effective
only with regard to the amount of Incentive Compensation earned during such Bonus Year
following the filing of the Election Agreement with the Committee as determined pursuant to
the pro-ration method permitted under Section 409A of the Code.

(iii) In accordance with Question and Answer 20 of Internal Revenue Service Notice
2005-1, on or before December 31, 2005 a Participant may elect to terminate participation in
the Plan or cancel the Deferral Election that he or she made under the Election Agreement
for 2005 with respect to Base Salary earned during the Calendar Year beginning January 1,
2005 and Incentive Compensation earned during the Bonus Year beginning February 1, 2005,
provided that the amounts subject to such termination or cancellation are
includible in the gross income of the Participant in the taxable Calendar Year in which the
amounts are earned and vested. In the event of any such termination or cancellation by a
Participant, the amount subject to such termination or cancellation shall be distributed to
the Participant in the Calendar Year that it is earned and vested.

3. Amount Deferred. A Participant shall designate on the Election Agreement the
percentage or the dollar amount of his or her Base Salary or Incentive Compensation that is to be
deferred, provided, however, that the maximum deferral by a Participant during any
one Deferral Period shall be, with respect to such Deferral Period, the lesser of (i) $100,000 and
(ii) 25% of the sum of the Base Salary and Incentive Compensation which the Participant would
otherwise earn during such Deferral Period.

4. Accounts. Base Salary and Incentive Compensation that a Participant elects to
defer shall be treated as if they were set aside in an Account on the date the Base Salary or
Incentive Compensation would otherwise have been paid to the Participant. Such Account will be
credited with interest at the Moody’s Rate as determined by the Committee on a quarterly basis.

5. Initial Payment Elections. Subject to Sections 5(iii), 5(iv), 6, 7, 8, and 9 of
this Article, all Payment Elections shall be irrevocable, shall be made annually on an Election
Agreement filed with the Committee and shall comply with the following requirements:

(i) The Payment Election shall contain the Participant’s elections regarding the time
of the commencement of payment of amounts in his or her Account.

(a) A Participant may elect to commence payment (1) upon the date on which he or she
incurs a Termination of Employment for any reason, including, without limitation, by reason
of death, retirement, or Disability, or (2) with the Committee’s written approval at the
time that the Participant files his or her Election Agreement with the Committee, in a
specified year that begins at least two years after the date on which the Deferral Election
becomes effective.

(b) Payments made in accordance with the Participant’s election under Section
5(i)(a)(1) shall be paid or commence to be paid on the date of the Termination of Employment
and payments made in accordance with the Participant’s election under Section 5(i)(a)(2)
shall be paid or commence to be paid on the first payroll date next following June 1 of the
specified year.

(c) Notwithstanding the foregoing provisions of this Section 5(i), in the event that a
Participant elects (with the Committee’s approval as described in Section 5(i)(a)(2)) to
commence payments in a specified year, and prior to the date such payment is due to be paid
or commence to be paid (as described Section 5(i)(b)) he or she incurs a Termination of
Employment, payment of the Participant’s Account shall commence, in the form or forms
elected pursuant to Sections 5(ii) and/or 5(iii), on the date of such Termination of
Employment.

(ii) The Payment Election shall also contain the Participant’s elections regarding the
form of payment of amounts in his or her Account.

(a) The Participant may elect to receive amounts in his or her Account in one of the
following forms: (1) a single, lump sum payment, (2) a number of biweekly installments over
a period of five (5) years, or (3) a number of biweekly installments over a period of ten
(10) years.

(b) In the case of a Participant who elects installment payments under Section
5(ii)(a), such Participant shall also elect one of the following methods of calculating
installment payments: (1) the Fixed Installment Payment Method or (2) the Variable
Installment Payment Method.

(c) In the event that all or a portion of a Participant’s Account is payable under the
Fixed Installment Payment Method, all of the biweekly installment payments during the
installment period shall be equal in amount and the amount of each biweekly installment
shall be calculated so that the total installment payments have a present value equivalent
to the value of the Participant’s Account subject to an installment Payment Election at the
time such payments commence. The interest rate used for purposes of determining the
installment payment amount in the prior sentence shall be the average of the Moody’s Rates
in effect during the four quarters that precede the quarter in which installment payments
commence.

(d) In the event that all or a portion of a Participant’s Account is payable under the
Variable Installment Payment Method, the amount of each installment shall be determined as
follows:

	 	(1)	 	The value, at the time of the
first installment payment, of the portion of the Participant’s
Account payable under the Variable Installment Payment Method
shall be divided by the number of installment payments that will
be made during the installment period;

	 	(2)	 	The amount determined under (1)
shall be paid to the Participant on each payment date through
the end of the calendar year in which the installment payments
begin;

	 	(3)	 	After the end of the calendar
year described in (2), the value at the end of such calendar
year of the portion of the Account payable in installments shall
be divided by the number of installment payments then remaining
in the installment period;

	 	(4)	 	The amount determined under (3)
shall be paid to the Participant on each payment date during the
following calendar year;

	 	(5)	 	The procedures described in (3)
and (4) shall be followed for any following calendar year in
which installment payments will be made;

	 	(6)	 	The portion of the Account
subject to such installment payments that remains unpaid from
time to time shall continue to be credited with gains, losses,
interest and other earnings as provided in Section 4 of this
Article; and

	 	(7)	 	The final installment payment
shall include an adjustment for gains, losses, interest and
other earnings pursuant to Section 4 of this Article during the
period between the beginning of the calendar year in which the
final installment payment is made and the date of such final
payment.

(iii) The Payment Election shall be made by, and shall be effective as of, the
applicable Election Filing Date. A Participant may not have more than: (A) two Payment
Elections described in Section 5(i)(a)(2) in effect at any one time, (B) three Payment
Elections in total in effect at any one time, and (C) two Payment Elections in effect at any
one time that provide for payments in installments.

(iv) In accordance with Question and Answer 19(c) of Internal Revenue Service Notice
2005-1, a Participant may make a new Payment Election with respect to the time of
commencement of payment and form of payment of the portion of his or her Account
attributable to the amount deferred (including earnings) pursuant to the Deferral Election
that he or she made under the Election Agreement for 2005. Any such new Payment Election
shall specify the time at which the Participant has elected to have such portion of his or
her Account paid under Section 5(i) of this Article and the form of payment under Section
5(ii) of this Article.

(v) Notwithstanding the foregoing provisions of this Section 5, if the Participant is a
Key Employee, payment on account of Termination of Employment shall commence on the first
payroll date next following the first business day of the seventh month following such
Termination of Employment (or, if earlier, the date of death). In the event that all or a
portion of a Key Employee’s Account is payable in installments upon a Termination of
Employment, the total amount of biweekly installment payments to which such Key Employee
would otherwise be entitled during the six-month period following the date of such
Termination of Employment shall also be paid on the first payroll date next following the
first business day of the seventh month following such Termination of Employment (or, if
earlier, the date of death).

(vi) The payment of a single, lump-sum amount, or the payment of a number of biweekly
installments as designated by the Participant in the Election Agreement, to a Participant
(or his or her Beneficiary) pursuant to this Section 5 shall discharge all obligations of
the Company to such Participant (or his or her Beneficiary) under the Plan.

6. Subsequent Payment Elections. A Participant may make a subsequent Payment Election
to change the time of the commencement of payment(s) of his or her Account, the form of payment of
his or her Account, or both, with respect to an amount previously deferred under a Deferral
Election if all of the following requirements are met:

(i) Such subsequent Payment Election may not take effect until at least twelve (12)
months after the date on which the subsequent Payment Election is made;

(ii) In the case of a subsequent Payment Election related to a payment not described in
Section 7 or 9 of this Article, the first payment under such subsequent Payment Election
shall in all cases be deferred for a period of not less than five (5) years from the date
such payment would otherwise have been made (or, in the case of installment payments, which
are treated as a single payment for purposes of this Section 6, five (5) years from the date
the first installment payment was scheduled to be paid); and

(iii) Any subsequent Payment Election related to a distribution that is to be made at a
specified time or pursuant to a fixed schedule pursuant to Section 5 of this Article must be
made not less than twelve (12) months prior to the date the payment was scheduled to be made
under the prior Payment Election (or, in the case of installment payments, which are treated
as a single payment for purposes of this Section 6, twelve (12) months prior to the date the
first installment payment was scheduled to be paid).

7. Death of a Participant. In the event of the death of a Participant, the remaining
amount of the Participant’s Account shall be paid to the Beneficiary or Beneficiaries designated in
a writing on a form that the Committee may designate from time to time (the “Beneficiary
Designation”), in accordance with the Participant’s Payment Election, or in accordance with a
special payment election filed by the Participant with the Committee at the same time as the
Participant’s Payment Election under Section 5 or 6 of this Article is filed with the Committee
that is to be operative and override any other payment election under the Participant’s Payment
Election in the event of the death of the Participant. Any special payment election filed by a
Participant subsequent to the filing of his or her initial Payment Election under Section 5 of this
Article must meet such additional requirements as the Committee determines are appropriate to avoid
the inclusion of the amounts subject to such special payment election in the gross income of a
Participant or Beneficiary under Section 409A(a)(1) of the Code, including, without limitation, the
requirements under Section 6 of this Article. A Participant’s Beneficiary Designation may be
changed at any time prior to his or her death by the execution and delivery of a new Beneficiary
Designation. The Beneficiary Designation on file with the Company that bears the latest date at
the time of the Participant’s death shall govern. In the absence of a Beneficiary Designation or
the failure of any Beneficiary to survive the Participant, the amount of the Participant’s Account
shall be paid to the Participant’s estate in accordance with the elections made on the
Participant’s Payment Election. In the event of the death of the Beneficiary or Beneficiaries
after the death of a Participant, the amount of the Participant’s Account shall be paid to the
estate of the last surviving Beneficiary in accordance with the elections made on the Participant’s
Payment Election or special payment election, as applicable.

8. Small Payments. Notwithstanding the foregoing, if at the time of a Participant’s
Termination of Employment the Participant’s Account balance does not exceed $10,000, such Account
shall be automatically paid to such Participant in a single, lump-sum payment on the date of such
Termination of Employment, provided, however, that if the Participant is a Key
Employee, payment shall occur on the first payroll date next following the first business day of
the seventh month after such Termination of Employment (or, if earlier, the date of death).

9. Unforeseeable Emergency. Notwithstanding the foregoing, in the event of an
Unforeseeable Emergency and at the request of a Participant or Beneficiary, accelerated payment
shall be made to the Participant or Beneficiary of all or a part of his or her Account. Payments
of amounts as a result of an Unforeseeable Emergency may not exceed the amount necessary to satisfy
such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution(s), after taking into account the extent to which the hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship).

10. Termination of Participation. Notwithstanding any other provision of the Plan, a
Participant’s active participation in the Plan shall terminate upon a determination by the
Committee that the Participant is not a member of a select group of management or highly
compensated employees of his or her employer, within the meaning of ERISA.

ARTICLE III

ADMINISTRATION

The Company, through the Committee, shall be responsible for the general administration of the
Plan and for carrying out the provisions hereof. The Committee shall have all such powers as may
be necessary to carry out the provisions of the Plan, including the power to (i) resolve all
questions relating to eligibility for participation in the Plan and the amount in the Account of
any Participant and all questions pertaining to claims for benefits and procedures for claim
review, (ii) resolve all other questions arising under the Plan, including any factual questions
and questions of construction, and (iii) take such further action as the Company shall deem
advisable in the administration of the Plan. The actions taken and the decisions made by the
Committee hereunder shall be final and binding upon all interested parties. In accordance with the
provisions of Section 503 of ERISA, the Committee shall provide a procedure for handling claims of
Participants or their Beneficiaries under the Plan. Such procedure shall be in accordance with
regulations issued by the Secretary of Labor and shall provide adequate written notice within a
reasonable period of time with respect to the denial of any such claim as well as a reasonable
opportunity for a full and fair review by the Committee of any such denial. It is intended that
the Plan comply with the provisions of Section 409A of the Code, as enacted by the American Jobs
Creation Act of 2004, so as to prevent the inclusion in gross income of any amounts deferred
hereunder in a taxable year that is prior to the taxable year or years in which such amounts would
otherwise actually be distributed or made available to Participants or Beneficiaries. This Plan
shall be administered in a manner that effects such intent.

ARTICLE IV

AMENDMENT AND TERMINATION

The Company reserves the right to amend or terminate the Plan at any time by action of the
Board, except that that no such action shall adversely affect any Participant or Beneficiary who
has an Account, or result in any change in the timing or manner of payment of the amount of any
Account (except as otherwise permitted under the Plan), without the consent of the Participant or
Beneficiary (provided, however, that this limitation requiring the consent of
Participants or Beneficiaries to certain actions shall not apply to any amendment or termination
that is deemed necessary by the Company to ensure compliance with Section 409A of the Code).

ARTICLE V

MISCELLANEOUS

1. Non-Alienation of Deferred Compensation. No right or interest under the Plan of
any Participant or Beneficiary shall be (i) assignable or transferable in any manner, (ii) subject
to alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal
process or (iii) in any manner liable for or subject to the debts or liabilities of the Participant
or Beneficiary. Notwithstanding the foregoing, to the extent permitted by Section 409A of the
Code, the Committee shall honor a judgment, order or decree from a state domestic relations court
which requires the payment of part or all of a Participant’s or Beneficiary’s interest under this
Plan to an “alternate payee” as defined in Section 414(p) of the Code.

2. Participation by Employees of Subsidiaries. An Eligible Employee who is employed
by a Subsidiary (that has adopted the Plan) and who elects to participate in the Plan shall
participate on the same basis as an Eligible Employee of the Company. The Account of a Participant
employed by a Subsidiary shall be paid in accordance with the Plan solely by such Subsidiary to the
extent attributable to Base Salary or Incentive Compensation that would have been paid by such
Subsidiary in the absence of deferral pursuant to the Plan, unless the Committee otherwise
determines that the Company shall be the obligor.

3. Interest of Participant. The obligation of the Company under the Plan to make
payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company
to make payments from its general assets and no Participant or Beneficiary shall have any interest
in, or a lien or prior claim upon, any property of the Company. Further, no Participant or
Beneficiary shall have any claim whatsoever against any Subsidiary for amounts reflected in an
Account. Nothing in the Plan shall be construed as guaranteeing future employment to Eligible
Employees. It is the intention of the Company that the Plan be unfunded for tax purposes and for
purposes of Title I of ERISA. The Company may create a trust to hold funds to be used in payment
of its obligations under the Plan, and may fund such trust; provided, however, that
any funds contained therein shall remain liable for the claims of the Company’s general creditors.
Notwithstanding the above, upon the earlier to occur of (i) a Change in Control or (ii) a
declaration by the Board that a Change in Control is imminent, the Company shall promptly to the
extent it has not previously done so:

(a) establish an irrevocable trust, substantially in the form of the Rabbi Trust
attached hereto as Exhibit A (the funds of which shall be subject to the claims of
the Company’s general creditors) to hold funds to be used in payment of its obligations
under the Plan; and

(b) transfer to the trustee of such trust, to be added to the principal thereof, an
amount equal to (I) the aggregate amount credited to the Accounts of all of the Participants
and Beneficiaries under the Plan, less (II) the balance, if any, in the trust at such time.

4. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any other person, firm or corporation any legal or equitable right as against the Company
or any Subsidiary or the officers, employees or directors of the Company or any Subsidiary, except
any such rights as are specifically provided for in the Plan or are hereafter created in accordance
with the terms and provisions of the Plan.

5. Severability; Failure to Satisfy Section 409A. The invalidity and unenforceability
of any particular provision of the Plan shall not affect any other provision hereof, and the Plan
shall be construed in all respects as if such invalid or unenforceable provision were omitted. Any
provisions that would cause any amount deferred or payable under the Plan to be includible in the
gross income of any Participant or Beneficiary under Section 409A(a)(1) of the Code shall have no
force and effect unless and until amended to cause such amount to not be so includible (which
amendment may be retroactive to the extent permitted by Section 409A of the Code).

6. Governing Law. Except to the extent preempted by federal law, the provisions of
the Plan shall be governed and construed in accordance with the laws of the State of Ohio.

7. Relationship to Other Plans. The Plan is intended to serve the purposes of and to
be consistent with any incentive compensation plan approved by the Committee for purposes of the
Plan.

8. Headings; Interpretation.

(i) Headings in this Plan are inserted for convenience of reference only and are not to
be considered in the construction of the provisions hereof.

(ii) Any reference in this Plan to Section 409A of the Code will also include any
proposed, temporary or final regulations, or any other guidance, promulgated with respect to
such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

(iii) For purposes of the Plan, the phrase “permitted by Section 409A of the Code,” or
words or phrases of similar import, shall mean that the event or circumstance that may occur
or exist only if permitted by Section 409A of the Code would not cause an amount deferred or
payable under the Plan to be includible in the gross income of a Participant or Beneficiary
under Section 409A(a)(1) of the Code.

EXECUTED at Cleveland, Ohio on December 13, 2005.

FOREST CITY ENTERPRISES, INC.

By: /s/ THOMAS G. SMITH

Title: Executive Vice President,

Chief Financial Officer and Secretary

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