Exhibit 10.43
FOREST CITY ENTERPRISES, INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
Forest City Enterprises, Inc. hereby establishes, effective as of January
1, 1999, the Forest City Enterprises, Inc. Deferred Compensation Plan For
Executives on the terms and conditions hereinafter set forth. Such 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
monthly 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. "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.
6. "Committee" shall mean the Compensation Committee of the Board or such
other Committee as may be authorized by the Board to administer the Plan.
7."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.
8. "Disability" shall have the meaning given to such term in the Company's
Long Term Disability Plan, as amended from time to time.
9. "Election Agreement" shall mean an agreement in substantially the form
attached hereto as Exhibit A, as such form shall be modified from time to time
by the Committee.
10. "Eligible Employee" shall mean an 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.
11. "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
12. "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.
13. "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.
14. "Participant" shall mean any Eligible Employee who has at any time
elected to defer the receipt of Base Salary or Incentive Compensation in
accordance with 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.
15. "Permitted Holder" shall mean (i) any of Samuel H. Miller, Albert B.
Ratner, Charles A. Ratner, James A. Ratner, Ronald A. Ratner, Nathan Shafran 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).
16. "Plan" shall mean this deferred compensation plan, which shall be known
as the Forest City Enterprises, Inc. 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.
17. "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.
18. "Year" shall mean a calendar year.
ARTICLE II
ELECTION TO DEFER
1. Eligibility. Subject to Section 3 of this Article, an Eligible Employee
may elect to defer receipt of all or a specified part of his or her Base Salary
or Incentive Compensation for any Year in accordance with Section 2 of this
Article. An Eligible Employee's entitlement to defer shall cease with respect to
the Year following the Year in which he or she ceases to be an Eligible
Employee.
2. Election to Defer. An Eligible Employee who desires to defer all or part
of his or her Base Salary or Incentive Compensation pursuant to the Plan must
complete and deliver an Election Agreement to the Committee before the first day
of the Year for which such compensation would otherwise be paid. An Eligible
Employee who timely delivers an executed Election Agreement to the Committee
shall be a Participant. An Election Agreement that is timely delivered to the
Committee shall be effective for the succeeding Year and, except as otherwise
specified by an Eligible Employee in his or her Election Agreement, shall
continue to be effective from Year to Year until revoked or modified by written
notice to the Committee or until terminated automatically upon either the
termination of the Plan, the Company becoming Insolvent or the Eligible
Employee's termination of employment. In order to be effective to revoke or
modify an election relating to Base Salary otherwise payable in any particular
Year or Incentive Compensation otherwise earned during any particular Year, a
revocation or modification must be delivered prior to the beginning of the first
Year of service for which such compensation is payable. Notwithstanding the
above, in the event that an employee first becomes an Eligible Employee during
the course of a Year, rather than as of the first day of a Year, the Eligible
Employee's Election Agreement must be filed no later than thirty (30) days
following the date the employee first becomes an Eligible Employee, and such
Election Agreement shall be effective only with regard to Base Salary and
Incentive Compensation earned following the filing of the Election Agreement
with the Committee.
3. Amount Deferred; Period of Deferral. 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 Year shall be, with respect
to such Year, the lesser of (i) $100,000 and (ii) 25% of the sum of the Base
Salary which the Participant would otherwise receive during such Year and the
Incentive Compensation which the Participant earned during such Year. A
Participant may specify in the Election Agreement that different percentages or
dollar amounts shall apply to Incentive Compensation payable under different
incentive compensation plans. Unless the Committee permits deferral until a
later date, the applicable percentage(s) or dollar amount(s) of Base Salary or
Incentive Compensation shall be deferred until the date the Participant ceases
to be an employee by death, retirement or Disability or otherwise ceases
employment.
4. Accounts. Base Salary and Incentive Compensation that a Participant
elects to defer shall be treated as if it 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 such rate and in
such manner as is determined from time to time by the Committee.
5. Payment of Account. The amount of a Participant's Account shall be paid
as provided in this Section 5.
(i) The amount of a Participant's Account attributable to deferral of
Base Salary and Incentive Compensation shall be paid to the Participant in
a lump sum or in a number of approximately equal annual installments (not
in excess of fifteen (15) installments) as designated by the Participant in
the Election Agreement. The lump sum payment or the first annual
installment, as the case may be, shall be made as soon as practicable
following the end of the period of deferral as specified in Section 3 of
this Article. In the event that the Account is paid in installments, the
amount of such Account remaining unpaid shall continue to bear interest, as
provided in Section 4 of this Article.
(ii) Notwithstanding the payment terms designated by a Participant on
the Election Agreement, but subject to the approval of the Committee as
described below in this Section, a Participant may elect to change the form
of payment of his or her Account to a form of payment otherwise permitted
under Section 5(i) of this Article II; provided such election shall be in
writing on a form provided by the Committee, and provided further that any
election made less than one year prior to the Participant's termination of
employment by death, retirement, Disability or otherwise shall not be
valid, and in such case, payment shall be made in accordance with the
Participant's original Election Agreement. Any such election may be changed
or revoked by the Participant at any time and from time to time by the
filing of a later written election with the Committee provided that any
election made less than one year prior to a Participant's termination of
employment by death, retirement, Disability or otherwise shall not be
valid, and in such case, payment shall be made in accordance with the
latest valid election of the Participant. The payment of a lump sum amount,
or the payment of a number of approximately equal annual installments, not
in excess of fifteen (15) payments, as designated by the Participant in the
Election Agreement, to a Participant (or his or her Beneficiary) pursuant
to this Section shall discharge all obligations of the Company to such
Participant (or his or her Beneficiary) under the Plan.
6. 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 substantially in the form attached
hereto as Exhibit B (the "Beneficiary Designation") in accordance with the
Participant's latest valid election, or in accordance with a special payment
election filed by the Participant with the Committee that is to be operative and
override any other payment election filed by the Participant in the event of the
death of the Participant. 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 a lump sum amount within 90 days after the
appointment of an executor or administrator. In the event of the death of the
Beneficiary or Beneficiaries after the death of a Participant, any amount
remaining in the Account shall be paid in a lump sum to the estate of the last
surviving Beneficiary within 90 days after the appointment of an executor or
administrator.
7. Small Payments. Notwithstanding the foregoing, if installment payments
elected by a Participant would result in a payment of less than $500, the entire
amount of the Participant's Account may at the discretion of the Committee be
paid in a lump sum in accordance with Section 5 of this Article.
8. Acceleration.
(i) Notwithstanding the above, in the event of an unforeseeable
emergency, as defined in section 1.457-2(h)(4) and (5) of the Income Tax
Regulations, that is caused by an event beyond the control of the
Participant or Beneficiary and that would result in severe financial
hardship to the individual if acceleration were not permitted, the
Committee may in its sole discretion accelerate the payment to the
Participant or Beneficiary of the amount of his or her Account, but only up
to the amount necessary to meet the emergency.
(ii) Notwithstanding any other provision of the Plan, the Participant,
or his or her Beneficiary in the event of his or her death, shall be
permitted, at any time, to make an election to receive, payable as soon as
practicable after such election is received by the Committee, the remaining
amount of the Account in the form of a single lump sum, if (and only if)
the Account is reduced by 10%, which 10% amount shall thereupon irrevocably
be forfeited.
9. Termination of Participation. Notwithstanding any other provision of the
Plan, a Participant's 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. Upon such a determination, the Company or the
Subsidiary, as the case may be, that employs the Participant shall make an
immediate lump sum payment to the Participant equal to the amount credited to
his or her Account.
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.
ARTICLE IV
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan at any time
by action of the Board; provided, however, 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.
ARTICLE V
MISCELLANEOUS
1. Non-alienation of Deferred Compensation. Except as permitted by the
Plan, no right or interest under the Plan of any Participant or Beneficiary
shall, without the written consent of the Company, 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.
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 (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. 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.
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.
EXECUTED at Cleveland, Ohio on December 29, 1998
FOREST CITY ENTERPRISES, INC.
By: THOMAS T. KMIECIK
Title: Assistant Treasurer
EXHIBIT A
FOREST CITY ENTERPRISES, INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
ELECTION AGREEMENT
I,__________ , hereby elect to participate in the Forest City Enterprises,
Inc. Deferred Compensation Plan For Executives (the "Plan") with respect to Base
Salary which I otherwise would be entitled to receive beginning on or after
January 1, 1999 and with respect to Incentive Compensation that I may earn on or
after January 1, 1999. I hereby elect to defer payment of the Base Salary and
Incentive Compensation which I otherwise would be entitled to receive as
follows:
1. Deferral of Base Salary Otherwise Payable During 1999. Percentage or
dollar amount of Base Salary, if any, otherwise payable during 1999 (check one):
defer ____% defer $____
2. Deferral of Incentive Compensation Otherwise Earned During 1999.
Percentage or dollar amount of Incentive Compensation, if any, which I may earn
during 1999 (check one):
defer ____% defer $____
NOTE: AMOUNTS EARNED UNDER THE STRATEGIC PLAN FOR THE FOUR-YEAR PERIOD ENDING IN
1999 ARE NOT ELIGIBLE FOR DEFERRAL UNDER THE PLAN.
3. Form of Distributions. Please make payment of the above specified
deferrals, together with accrued interest reflected in my Account, as follows
(check one):
a. ___ Pay in a lump sum
b. ___ Pay in ___ (not more than 15) approximately equal annual
installments
4. Special Death Election. If I die before I receive the entire amount
credited to my Account, without regard to any other election I have made on this
Election Agreement, please defer payment or make payment of the first annual
installment to my Beneficiary as follows (check one and complete blank if
necessary):
a. ___ Defer until ____ year(s) (not more than 2) after my death
and pay to my Beneficiary in a lump sum or in ____ (not more
than 15) approximately equal annual installments (check one
and complete blank if necessary)
b. ___ Defer until my death and pay to my Beneficiary in a lump sum
or in ____ (not more than 15) approximately equal annual
installments (check one and complete blank if necessary)
I acknowledge that I have reviewed the Plan and understand that my
participation will be subject to the terms and conditions contained in the Plan.
I understand that this Election Agreement must be returned to the Committee no
later than December 31, 1998 to be effective. I also understand that the maximum
dollar amount which I may defer during 1999 is the lesser of (i) $100,000 and
(ii) 25% of the sum of my Base Salary otherwise payable during 1999 and my
Incentive Compensation earned during 1999. Capitalized terms used, but not
otherwise defined, in this Election Agreement shall have the respective meanings
assigned to them in the Plan.
I understand that (i) this Election Agreement shall continue to be
effective for all payments of Base Salary which would otherwise be paid to me
after 1999 and any Incentive Compensation which I may earn after 1999 and (ii) I
may not revoke or modify this Election Agreement with respect to the deferral of
Base Salary otherwise payable during 1999 and Incentive Compensation which I may
earn during 1999, although I may elect to terminate the future deferral of Base
Salary and Incentive Compensation as of the first day of any later Year by
delivering written notice to the Committee prior to the first day of such Year.
I also understand that I may change the form of payment of my Account to a form
of payment otherwise permitted under the Plan, provided that if I make an
election to change my form of payment less than one year prior to my termination
of employment by death, retirement, Disability or otherwise, such election will
not be effective and, in such case, payment shall be made in accordance with my
latest valid election.
I acknowledge that I have been advised to consult with my own financial,
tax, estate planning and legal advisors before making this election to defer in
order to determine the tax effects and other implications of my participation in
the Plan.
Dated this___day of______, 1998.
_____________________________ _________________________________
(Signature) (Print or type name)
Exhibit B
FOREST CITY ENTERPRISES, INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
BENEFICIARY DESIGNATIONS
In accordance with the terms and conditions of the Forest City Enterprises,
Inc. Deferred Compensation Plan For Executives (the "Plan"), I hereby designate
the person(s) indicated below as my beneficiary(ies) to receive the amounts
payable under said Plan.
Name ___________________________ Name ____________________________
Portion of Account ________% Portion of Account _________%
Address _________________________ Address _________________________
_________________________________ _________________________________
_________________________________ _________________________________
Social Sec. No. of Social Sec. No. of
Beneficiary _____________________ Beneficiary _____________________
Relationship ____________________ Relationship ___________________
Date of Birth ___________________ Date of Birth __________________
In the event that the above-named beneficiary(ies) predecease(s) me, I
hereby designate the following person as beneficiary(ies);
Name ___________________________ Name ____________________________
Portion of Account ________% Portion of Account _________%
Address _________________________ Address _________________________
_________________________________ _________________________________
_________________________________ _________________________________
Social Sec. No. of Social Sec. No. of
Beneficiary _____________________ Beneficiary _____________________
Relationship ____________________ Relationship ___________________
I hereby expressly revoke all prior designations of beneficiary(ies),
reserve the right to change the beneficiary(ies) herein designated and agree
that the rights of said beneficiary(ies) shall be subject to the terms of the
Plan. In the event that there is no beneficiary living at the time of my death,
I understand that the amounts payable under the Plan will be paid to my estate.
_______________ _____________________ ______________________________
Date (Signature) (Print or type name)