1
Exhibit 10.32
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, OH 44130
Attention: Thomas G. Smith
Re: Split-Dollar Insurance Agreement
--------------------------------
Dear Tom:
This letter supplements the Split-Dollar Insurance Agreement and
Assignment of Life Insurance as Collateral (the "Agreement") dated November 2,
1996, between Forest City Enterprises, Inc. ("FCE") and the undersigned as
Trustees under the Charles Ratner 1992 Irrevocable Trust Agreement dated March
12, 1992, with respect to a certain second-to-die Northwestern Mutual Life
Insurance Policy (the "Policy") identified in such Agreement, insuring the lives
of Charles Ratner and Ilana Ratner.
Pursuant to Section 2 of the Agreement, FCE is obligated to pay
a portion of the annual premiums on the Policy each year the Agreement is in
effect, and Policy dividends are to be applied to purchase paid-up additions
(unless otherwise applied at the direction of the undersigned pursuant to
Section 3 of the Agreement).
If the financial performance of the Policy meets or exceeds the
projections attached hereto as Exhibit 1 (the "Projections") during any period
on or after the date when 8 annual premium payments have been made under the
Agreement on the Policy, then it has been (and is hereby) agreed between FCE and
the undersigned that, only during such period on or after such date that the
Policy meets or exceeds the Projections, (i) the undersigned shall waive premium
payments by FCE under the Agreement, and (ii) the undersigned shall elect to
apply Policy dividends when and as necessary to reduce premiums to keep the
Policy in force without premium payments by FCE during such period.
The terms of this letter are effective, along with the
Agreement, as of November 2, 1996.
Sincerely yours,
/s/ James Ratner 12/6/96
-----------------------------
James Ratner, Trustee Date
/s/ Albert Ratner 12/6/96
-----------------------------
Albert Ratner, Trustee Date
Acknowledged and Agreed:
FOREST CITY ENTERPRISES, INC.
By: /s/ Thomas G. Smith
----------------------------
Title: Senior Vice President,
Chief Financial Officer,
and Secretary
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Page 1 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
CORP CORP EXEC EXEC
NET CORP NET EXEC NET NET
CORP AFTER NET CASH NET EXEC EXEC EXEC AFTER CASH
POLICY EXEC TAX DEATH SURR DEATH TAXABLE TAX POLICY TAX SURR
YEAR OUTLAY BONUS OUTLAY BENEFIT VALUE BENEFIT INCOME DUE OUTLAY OUTLAY VALUE
- ---- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
5 N/A 750 33271 0 0 5000000 N/A N/A N/A N/A 148674
6 32774 828 33271 32774 32774 4967226 828 331 497 0 156880
7 32679 937 33271 65453 65453 4934547 987 395 592 0 167818
8 32555 1144 33271 98038 98038 4901962 1144 458 686 0 182615
9 32443 1380 33271 130481 130148 4869319 1380 552 828 0 201250
10 32382 1532 33271 162833 162833 4837167 1532 613 919 0 223926
11 32166 1842 33271 194999 194999 4805002 1842 737 1105 0 250994
12 31982 2148 33271 226981 224981 4773019 2148 859 1280 0 284851
13 31754 2529 33271 258735 258735 4741265 2529 1011 1517 0 323862
14 0 1201 721 258735 258735 4741265 3030 1201 0 0 344395
------- ----- ------- ----- ----- ----- -----
259735 14340 300160 16391 7137 8433 N/A
15 0 1391 834 258735 258735 4741265 3477 1391 0 0 411364
16 0 1644 986 258735 258735 4741265 4109 1644 0 0 459540
17 0 1960 1176 258735 258735 4741265 4899 1960 0 0 510356
18 0 2307 1384 258735 258735 4741265 5769 2307 0 0 564084
19 0 2718 1631 258735 258735 4741265 6796 2718 0 0 620757
20 0 3224 1934 258735 258735 4741265 8060 3224 0 0 680360
21 0 3825 2295 258735 258735 4741265 9562 3825 0 0 742949
22 0 4520 2712 258735 258735 4741265 11300 4520 0 0 801474
23 0 5342 3205 258735 258735 4741265 13355 5342 0 0 877378
24 0 6322 3779 258735 258735 4741265 13804 6322 0 0 930565
------- ------- ------- ------- ------- ------- -------
259735 47592 320111 99521 40409 8433 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-135105 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
3
Page 2 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5
TOTAL
END ANNUAL PAYMENTS* ----- CASH VALUES -----
OF TOTAL CASH FROM
YEAR INSURANCE* OUTLAY* 02/02/97* TOTAL* GUAR.
- -----------------------------------------------------------------------------------------------------
5 5000000 N/A N/A 154416 65662
6 5000000 33271 33271 196738 83539
7 5000000 33271 66542 242414 102016
8 5000000 33271 99813 291684 121107
9 5000000 33271 133084 344785 140813
10 5000000 33271 166333 402009 161148
11 5000000 33271 199686 445640 182083
12 5000000 33271 232897 534104 203632
13 5000000 33271 265168 588246 225767
14 5000000 0 266168 632235 248460
15 5000000 0 266168 678947 271710
16 5000000 0 266168 762433 299531
17 5000000 0 266168 780760 319924
18 5000000 0 266168 835983 344903
19 5000000 0 266168 896139 370453
20 5000000 0 266168 953292 396547
21 5000000 0 266168 1019691 432141
22 5000000 0 266168 1087317 450135
23 5000000 0 266168 1139031 477471
24 5000000 0 266168 1234765 505094
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-161559 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE
4
Page 3 of 3
POLICY NUMBER 12110582 POLICY DATE 02/02/92
APPROXIMATION - BILLING AND ANNUAL POLICY STATEMENTS CONTAIN ACTUAL VALUES
EXHIBIT 1
$5,000,000 JOINT COMPLIFE PLAN - INSURANCE PAYABLE ON SECOND DEATH
FOR ILANA H RATNER AGE 42 FEMALE. BASIC AMOUNT.............. $1,429,000
CHARLES A RATNER AGE 50 MALE. ADDITIONAL PROTECTION..... $3,571,000**
CURRENT ANNUAL PREMIUM $33,270.98 (INCLUDES $13,768.00 ADDITIONAL PREMIUM) QUIK PAY PLUS
----DIVIDENDS PURCHASE ADDITIONS FOR 12 YEARS AND THEN REDUCE PREMIUMS WITH ANY EXCESS TO ADDITIONS----
1 2 3 4 5
TOTAL
END ANNUAL PAYMENTS ----- CASH VALUES -----
OF TOTAL CASH FROM
YEAR INSURANCE* OUTLAY* 02/02/97* TOTAL* GUAR.
- -----------------------------------------------------------------------------------------------------
25 5000000 0 266168 1314624 532988
26 5000000 0 266168 1398758 561154
27 5000000 0 266168 1487292 589648
28 5000000 0 266168 1580352 618456
29 5000000 0 266168 1678044 647931
35 5000000 0 266168 2372738 823418
45 5140804 0 266168 4050984 1073375
55 8389936 0 266168 7698136 1287943
- -------------------------------------------------------------------------------------------------------
ASSUMES THAT BOTH INSUREDS REMAIN ALIVE.
** THE PREMIUM FOR THE ADDITIONAL PROTECTION PORTION OF THE TOTAL INSURANCE IS NOT GUARANTEED. INCREASED PREMIUM MAY BE REQUIRED
TO MAINTAIN COVERAGE.
* ILLUSTRATED VALUES AND BENEFITS INCLUDE DIVIDENDS. ILLUSTRATED DIVIDENDS REFLECT CURRENT (1996 SCALE) CLAIM, EXPENSE AND
INVESTMENT EXPERIENCE AND ARE NOT ESTIMATES OR GUARANTEES OF FUTURE RESULTS. DIVIDENDS ACTUALLY PAID MAY BE LARGER OR SMALLER
THAN THOSE ILLUSTRATED. THIS ILLUSTRATION DOES NOT REFLECT THAT MONEY IS PAID AND RECEIVED AT DIFFERENT TIMES. 7.39% VARIABLE
LOAN RATE PROVISION. ILLUSTRATION DOES NOT REFLECT ANY POLICY ACTIVITY AFTER 10/10/96.
LUMP SUMS AND UNSCHEDULED INCREASES IN ADDITIONAL PREMIUMS ARE SUBJECT TO NEW UNDERWRITING AND SERVICE FEES.
NM SELECT/CLASS 3 1 OH 10/29/96 PRESENTED BY STEVEN A. KALIN, CLU
ILLUSTRATION NO. 102996-161559 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY - MILWAUKEE