EXHIBIT 10.24
TOOTSIE ROLL INDUSTRIES, INC.
EXECUTIVE SPLIT DOLLAR INSURANCE AGREEMENT
AGREEMENT, between Tootsie Roll Industries, Inc., a Virginia
corporation (the "Corporation"), and James M. Hunt.
WHEREAS, James M. Hunt (the "Employee") is presently
employed by the Corporation, his services have contributed to the successful
operation of the Corporation, and the Corporation's board of directors believes
it is in the best interest of the Corporation to retain the services of the
Employee; and
WHEREAS, the Corporation is desirous of transferring to
James M. Hunt (the "Owner") Policy No. 1A2282449-0 issued by Pacific Mutual Life
Insurance Company on the Employee's life (the "policy") now owned by the
Corporation pursuant to this "split dollar" arrangement, subject to the Owner's
agreement to assign the policy to the Corporation as collateral for the "current
value" (defined below) of the policy and the premium payments to be made by the
Corporation under this agreement by an instrument of collateral assignment
attached as Exhibit A (the "assignment") and to record the assignment with the
"Insurer" (defined below).
NOW, THEREFORE, in consideration of the premises, and the
services to be rendered to the Corporation by the Employee, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
Corporation and the Owner hereby mutually covenant and agree as follows:
ARTICLE I -- PAYMENT OF PREMIUMS AND ECONOMIC BENEFIT
1.1. As long as this agreement is in force, the Owner and
the Corporation agree to pay the amounts and in the manner set forth below.
1.2. The Owner shall pay each year to the Corporation an
amount equal to the economic benefit that would be taxable as gross income for
federal income tax purposes to the Employee but for the payment by the Owner of
such amount. The Owner shall have the option, exercisable upon 30 days' written
notice delivered to the Corporation, to pay a greater amount to the Corporation.
1.3. For purposes of Section 1.2 above, the economic benefit
that would be taxable to the Employee shall be computed in accordance with
Revenue Rulings 64-328, 1964-2 C.B. 11, and 66-110, 1966-1 C.B. 12, and the
Corporation shall be responsible for computing such amount. The Corporation
will advise the Owner of the amount payable by the Owner pursuant to Section
1.2, and the Owner shall pay that amount directly to the Corporation.
1.4. In order to facilitate the payment of premiums on the
policy, the Owner and the Corporation agree that the Corporation will forward to
the Insurer the entire premiums due on the policy, if any.
ARTICLE II -- POLICY OWNERSHIP AND RESTRICTIONS
2.1. The Owner shall be the sole owner of the policy. The
Corporation's payment of premiums hereunder shall constitute a liability of the
Owner subject to repayment as provided herein.
2.2. The Owner agrees to assign the policy to the
Corporation as collateral for such liabilities and the Corporation shall have
those rights granted to it under the assignment and this agreement. The Owner
agrees that while this agreement is in force, the Owner may not borrow or
withdraw from or surrender any part of the policy prior to the 15th anniversary
of this agreement. As between the Owner and the Corporation, this agreement
shall take precedence over any provision of the assignment in case of a conflict
between the terms of this agreement and the assignment.
ARTICLE III -- DEATH OF EMPLOYEE
3.1. On the Employee's death while this agreement is in
force, the Owner will pay to the Corporation an amount equal to the sum of (i)
the terminal reserve value of the policy plus unearned premiums on the date the
policy is transferred to the Owner (the "current value") and (ii) the total
premiums paid by the Corporation from the date of this agreement to the date of
the Employee's death, reduced by the total payments made to the Corporation by
the Owner pursuant to Section 1.2 above.
ARTICLE IV -- TERMINATION OF AGREEMENT
4.1. This agreement shall automatically terminate upon the
happening of any of the following events:
(a) At the option of the Corporation, if the Employee
terminates employment for any reason other than death or a "change of
control" (defined below). The Employee shall be deemed to be employed
by the Corporation during any period in which he is "permanently
disabled" (defined below).
(b) At the surrender, lapse or termination of the
policy.
(c) Upon delivery by the Owner of written notice of
such termination to the Corporation.
(d) Upon failure of the Owner to make a payment
required by Section 1.2 above.
(e) Upon agreement of the parties.
4.2. In the event of a termination under Section 4.1(a)
above, the Owner will pay to the Corporation not later than the 15th anniversary
of this agreement an amount equal to the lesser of (i) the cash surrender value
of the policy on the date of such termination, not reduced by any loan or
withdrawal and not less than the current value or (ii) the amount the
Corporation would have been entitled to receive at the Employee's death under
Section 3.1 determined as if such death occurred on the date of such termination
(the "repayment amount"). The Owner acknowledges that, until the repayment
amount has been paid in full to the Corporation, the Owner must continue to pay
the amounts required under Section 1.2 above notwithstanding the termination of
the Employee's employment and the termination of the Corporation's obligation to
pay further premiums.
4.3. In the event of any other termination under Section 4.1
above, the Owner will pay the repayment amount to the Corporation within 60 days
after such termination.
ARTICLE V -- OTHER PROVISIONS
5.1. The Corporation agrees that it will not merge or
consolidate with another corporation or organization, or permit its business
activities to be taken over by any other organization unless and until the
succeeding or continuing corporation or other organization shall expressly
assume the rights and obligations of the Corporation herein set forth.
5.2. This agreement will be governed by and construed in
accordance with the laws of Illinois, where it is made and to be performed. It
sets forth the entire agreement between the parties concerning the subject
matter thereof, and any amendment or discharge will be made only in writing.
This agreement will bind and benefit the parties and their legal representatives
and successors.
5.3. This agreement shall not be deemed to constitute a
contract of employment between the Corporation and the Employee, nor shall any
provision restrict the right of the Corporation to discharge the Employee, or
restrict the Employee's right to terminate employment.
5.4. The provisions required by the Employee Retirement
Income Security Act of 1974 (ERISA).
5.5. The Owner may assign his interest in this agreement at
any time by filing with the Corporation the statement attached as Exhibit C
signed by his assignee. This agreement may be amended or modified in whole or
in part by the Owner and the Corporation in writing at any time.
5.6. A "change of control" of the Corporation shall occur
when: (1) any person, including a "group," as described in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, acquires after the effective
date of this agreement the beneficial ownership of, and the right to vote,
shares having the right to cast at least 20% of the votes permitted to be cast
in any election of members to the Corporation's board of directors; or (2) as
the result of any tender or exchange offer, substantial purchase of the
Corporation's equity securities, merger, consolidation, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Corporation immediately prior to such
transaction or transactions do not constitute a majority of the Corporation's
board of directors (or of the board of directors of any successor to or assignee
of the Corporation) immediately after the next meeting of stockholders of the
Corporation (or any successor or assignee) following such transaction; except
that no event described in clause (1) or (2) above shall constitute a "change of
control" if immediately after such event Melvin J. Gordon, Ellen R. Gordon,
their descendants (and spouses of such descendants) and any trusts or estates in
which such persons have an interest own, directly or indirectly, shares having
the right to cast at least 50% of the votes permitted to be cast in any election
of members of the Corporation's board of directors. The Employee shall be
deemed to be "permanently disabled" if he is unable to perform his stated duties
with the Corporation by reason of illness, accident or other incapacity and is
not engaged in any occupation or employment for wage or profit for which he is
reasonably qualified by education, training, or experience; provided however,
that in the event the Corporation maintains a long-term disability plan in which
the Employee is entitled to receive benefits, the Employee shall be deemed to be
permanently disabled when he suffers a physical illness, injury or other
impairment in respect to which he is entitled to receive benefits under such
long-term disability plan.
5.7. Notwithstanding the provisions of this agreement, the
life insurance company (the "Insurer") which has issued the policy is hereby
authorized to act in accordance with the terms of the policy as if this
agreement did not exist, and the payment or other performance of the contractual
obligations by the Insurer, in accordance with the terms of the policy, shall
completely discharge the Insurer from all claims, suits and demands of all
persons whatsoever.
IN WITNESS WHEREOF, the parties hereto have signed this
agreement on July 30, 1994.
James M. Hunt
TOOTSIE ROLL INDUSTRIES, INC.
EXHIBIT A (JAMES M. HUNT)
COLLATERAL ASSIGNMENT
1. James M. Hunt (the "Assignor"), hereby assigns, transfers and sets over
to Tootsie Roll Industries, Inc., a Virginia corporation (the "Assignee"), to
the extent of the amounts defined in and owing from time to time from Assignor
to Assignee under the Executive Split Dollar Insurance Agreement dated July 30,
1994, between the Assignor and the Assignee (the "Assignee's Interest"), Policy
No. 1A2282449-0 issued by Pacific Mutual Life Insurance Company on the life of
James M. Hunt, subject to all the terms and conditions of the policy and to all
superior liens, if any, which the insurer may have against the policy. The
Assignor by this instrument agrees and the Assignee by the acceptance of this
assignment agrees to the conditions and provisions herein set forth.
1. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:
(a) The right to prohibit the Assignor's borrowing or withdrawal from
or surrender of any part of the policy prior to the 15th anniversary of the
Executive Split Dollar Insurance Agreement.
(b) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of the
Assignee's Interest in the policy.
(c) The right to collect, upon the insured's death, the net proceeds
of the policy up to the amount of the Assignee's Interest in the policy.
2. The insurer hereby is authorized to recognize the Assignee's claim to
rights hereunder without investigating the reason for any action taken by the
Assignee, or the giving of any notice, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. The sole signature of the
Assignee shall be sufficient for the exercise of its rights under the policy and
the sole receipt of the Assignee for any sums received shall be a full discharge
and release therefor to the insurer.
Dated: July 30, 1994.
James M. Hunt Assignor
TOOTSIE ROLL INDUSTRIES, INC.
Assignee
Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY