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Exhibit 10.24
SPLIT DOLLAR INSURANCE AGREEMENT AND ASSIGNMENT OF LIFE
INSURANCE POLICY AS COLLATERAL
This Agreement is entered into as of the 24th day of Oct., 1996 at
Cleveland, Ohio, by and between XXXXXX X. XXXXXX and XXXXX XXXXXX, Trustees
under the Xxxxxxx Xxxxxx 1989 Irrevocable Trust Agreement dated May 9, 1989
f/b/o Xxxxxx Xxxxxx (hereinafter referred to as the "Owner"), and FOREST CITY
ENTERPRISES, INC., an Ohio corporation (hereinafter referred to as "Assignee").
W I T N E S S E T H:
WHEREAS, the Owner has agreed to purchase a life insurance policy
(hereinafter referred to and defined as "the Policy") on the life of Xxxxxxx
Xxxxxx (hereinafter referred to as the "Insured") in the principal amount of
$625,000;
WHEREAS, the Owner is willing to pay a portion of the premium payments
on the Policy;
WHEREAS, the Owner, in order to induce Assignee to pay the remaining
premium payments, is willing to assign certain rights in the Policy to Assignee
and to pledge the Policy to Assignee as collateral;
WHEREAS, Assignee desires to invest and is willing to pay that portion
of the premium payments which are not paid by the Owner if certain rights in the
Policy are assigned to it; and
WHEREAS, Owner and Assignee desire to enter into this Agreement in order
to secure Assignee's repayment, out of the proceeds of the Policy, of the
portion of the premium payments paid by the Assignee and to grant certain other
rights to the Assignee;
NOW, THEREFORE, for value received, the receipt and sufficiency of which
are hereby acknowledged, the Owner and the Assignee mutually agree as follows:
1. DEFINITIONS. In this Agreement:
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a. Insurer.The "Insurer" is Northwestern Mutual Life Insurance
Company.
b. THE POLICY.
The following policy of life insurance on the
life of the Insured issued by the Insurer,
together with any supplementary contracts issued
by the Insurer in conjunction therewith: Policy
No. 13908095; Face Amount: $625,000.
c. POLICY INTEREST.
The Assignee's "Policy Interest" shall be an
amount equal to the LESSER of the "Cash
Surrender Value" of the Policy OR the Assignee's
"Premium Interest"; provided, if the Insured
dies while this Agreement is in effect, the
Assignee's Policy Interest shall be an amount
equal to 1.10 times the Assignee's Premium
Interest in the Policy; provided further, if the
Insured dies within two years after the Owner
terminates this Agreement (by paying to Assignee
the lesser of Cash Surrender Value of the Policy
or the Premium Interest of the Assignee), then
the Owner also shall pay to the Assignee the
amount (if any) by which (i) 1.10 times the
Assignee's Premium Interest, exceeds (ii) the
amount paid by the Owner to the Assignee to
terminate this Agreement. The existence of the
Assignee's Policy Interest shall be evidenced by
filing with the Insurer a copy of this
Agreement, along with a collateral assignment in
the form prescribed by the Insurer.
d. CASH SURRENDER VALUE AND PREMIUM INTEREST.
"Cash Surrender Value" shall mean the cash value
of the Policy; plus the cash value of any paid
up additions; plus any dividend accumulations
and unpaid dividends; and less any Policy loans
outstanding to Assignee (including any accrued
interest on such loans). The "Premium Interest"
shall be equal to the cumulative amount of
unreimbursed premiums paid on the Policy by the
Assignee, less any Policy loans outstanding to
Assignee (including any accrued interest on such
loans).
2. PREMIUM PAYMENTS.
a. Each annual premium on the Policy shall be paid when due as follows:
(i) The Owner shall pay a portion of each premium equal to the
Insurer's current term rate for the Insured's age, multiplied by the
excess of
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the current death benefit over the Assignee's current Premium Interest.
The Insurer's "current term rate" shall mean the lesser of (a) the
Insurer's current published premium rates charged by the Insurer for
individual one-year term life insurance (available generally to all
comparable policyholders of the Insurer), or (b) the cost of comparable
one-year term insurance as published or approved from time to time by
the Internal Revenue Service or (if no such IRS-approved tables are in
effect) as generally used in the insurance industry (e.g., for
single-life policies, the so-called "PS 58 rates"). The Owner's premium
contribution check (or checks) shall be delivered to the Insurer on or
before each premium due date.
(ii) The Assignee shall pay the remaining balance of each
premium due until the death of the Insured or, if earlier, until the
termination of this Agreement. The Assignee's premium contribution check
shall be delivered to the Insurer on or before each premium due date.
(iii) For convenience, either the Assignee or the Owner may pay
the entire premium to the Insurer (by agreement between the Owner and
the Assignee), with reimbursement to be made promptly by the nonpaying
party to the other party, in the amount of the premium contribution due
from the nonpaying party (as determined under clauses (i) and (ii)
above).
b. Dividends on the Policy shall be applied to purchase paid up
additions, except as permitted otherwise pursuant to Section 3 below.
3. POLICY OWNERSHIP.
a. Except as provided in, or limited by, Section 4 and subparagraph b of
this Section, the Owner shall have all the rights of the "Owner" under the terms
of the
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Policy, including but not limited to the right to designate beneficiaries,
select settlement options and to surrender the Policy; provided, the Owner may
surrender paid up additions, borrow against the Policy or change dividend
options on the Policy only if and to the extent that, immediately after the
Owner takes such actions, the Cash Surrender Value of the Policy exceeds 110% of
the Assignee's Premium Interest.
b. In exchange for the Assignee's payment of its premium
contribution under Section 2, the Owner hereby assigns to the
Assignee the following limited ownership rights in the Policy:
(i) The right to obtain one or more loans or advances on
the Policy to the extent of the Assignee's Policy Interest and
to pledge or assign the Policy for such loans or advances.
(ii) The right to realize against the Cash Surrender
Value of the Policy to the extent of the Assignee's Policy
Interest, in the event of termination of this Agreement as
provided in Section 5.
(iii) The right to realize against the proceeds of the
Policy to the extent of Assignee's Policy Interest, in the event
of the Insured's death.
c. It is agreed that benefits may be paid under the
Policy by the Insurer either by separate checks to the parties
entitled thereto, or by a joint check. In the latter instance,
the Owner and the Assignee agree that the benefits shall be
divided as provided herein.
4. ASSIGNMENT BY THE OWNER. The Owner may assign any part or all of such
Owner's retained interest in the Policy or in this Agreement to any person,
entity or trust; provided that such assignment shall be effective only if (i)
the new Owner-assignee agrees in writing to be bound by the terms of this
Agreement, and (ii) the assigning Owner provides
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written notice to the Assignee of such assignment (identifying the name, address
and telephone number of such new Owner-Assignee).
5. TERMINATION OF AGREEMENT.
a. This Agreement shall terminate (i) upon surrender of the
Policy (or surrender of any supplemental contracts issued in connection
therewith) by the Owner, or (ii) at such time as the Owner otherwise
arranges to pay to the Assignee the full amount of Assignee's Policy
Interest. The Owner may surrender the Policy at any time; provided, the
Owner shall surrender the Policy or otherwise terminate this Agreement
only with the written consent of the Assignee at any time that the Cash
Surrender Value is less than the Premium Interest.
b. On any termination of this Agreement, at the option of the
Owner, either:
(i) An amount equal to the Policy Interest shall be paid
to the Assignee by the Insurer; or
(ii) The Owner shall direct the Assignee to assign its
Policy Interest to the Owner or as the Owner directs, in which
event the Owner shall pay the Assignee an amount equal to
Assignee's Policy Interest.
6. Death of the Insured. In the event of the death of the Insured
while this Agreement is in effect, a portion of the proceeds of the Policy equal
to the Policy Interest shall be paid to the Assignee and the balance of the
proceeds of the Policy shall be paid to the beneficiary or beneficiaries under
the Policy (as their interests may appear); provided, in computing the value of
Assignee's Policy Interest upon termination, Assignee shall be deemed to have
repaid to Insurer the amount of any outstanding Policy loans or advances to
Assignee
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(including accrued interest) immediately prior to such termination, and
such deemed repaid amount in turn shall be deemed to have been distributed to
Assignee.
7. The Insurer. The Insurer shall be bound only by the provisions
of and endorsements on the Policy. The copy of this Agreement filed with the
Insurer shall constitute directives of the Owner to the Insurer and any payments
made or actions taken by it in accordance therewith shall fully discharge
Insurer from all claims, suits and demands of all persons whatsoever. Insurer
shall in no way be bound by the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date stated above.
ASSIGNEE:
FOREST CITY ENTERPRISES, INC.
By /s/ Xxxxxx X. Xxxxx
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Title Sr. Vice President --
Chief Financial Officer
OWNER:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Trustee u/a dtd 05/09/89
f/b/o Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, Trustee u/a dtd 05/09/89
f/b/o Xxxxxx Xxxxxx
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