{"id":40582,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/split-dollar-agreement-martha-stewart-living-omnimedia-inc2.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"split-dollar-agreement-martha-stewart-living-omnimedia-inc2","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/split-dollar-agreement-martha-stewart-living-omnimedia-inc2.html","title":{"rendered":"Split-Dollar Agreement &#8211; Martha Stewart Living Omnimedia Inc., Martha Stewart and The Martha Stewart Family Limited Partnership"},"content":{"rendered":"<pre>                       AMENDMENT TO SPLIT-DOLLAR AGREEMENT\n\n         THIS Amendment is made and entered into this 28th day of January, 2002,\nby and among Martha Stewart Living Omnimedia, Inc., a Delaware corporation,\nhaving an address of 11 West 42nd Street, New York, New York, 10036\n(\"Corporation\"), Martha Stewart, an individual residing in the state of\nConnecticut (\"Employee\"), and The Martha Stewart Family Limited Partnership, a\nConnecticut limited partnership (\"Owner\").\n\n         WITNESSETH THAT:\n\n         WHEREAS, the Corporation, the Employee and the Owner (collectively the\n\"parties\") executed an agreement on February 28, 2001 known as the \"Split Dollar\nAgreement\" (the \"Agreement\"); and\n\n         WHEREAS, the Agreement terminates upon the second day of the sixteenth\nyear of the Policies; and\n\n         WHEREAS, the parties now wish to amend the Agreement in certain\nrespects;\n\n         NOW, THEREFORE, in consideration of the mutual promises contained in\nthis Agreement, the parties agree as follows:\n\n1.       The second sentence of Section 2.b. is amended to read as follows:\n\n         \"Specifically, but without limitation, the Corporation shall neither\nhave nor exercise any right as collateral assignee of any of the Policies which\ncould in any way defeat or impair the Owner's right to receive the cash\nsurrender values or the death proceeds of the Policies in excess of the amount\ndue the Corporation under this Agreement.\"\n\n2.       Section 4 is amended to read as follows:\n\n         \"4.      PAYMENT OF PREMIUMS.\n\n                  a. This paragraph 4.a. shall apply only for premiums due on a\nPolicy prior to the Original Termination Date. Thirty (30) days prior to the due\ndate of a premium on a Policy, the Corporation shall notify the Owner of the\nexact amount due from the Owner under this Agreement with respect to that\nPolicy. For each Policy, the amount due from the Owner shall equal the annual\ncost of current life insurance protection on the life of the Employee provided\nunder that Policy. Either the Owner, or the Employee on behalf of the Owner,\nshall pay the required contribution to the Corporation prior to a premium due\ndate. If neither the Employee nor the Owner timely pays a contribution, the\nCorporation, in its sole discretion, may elect to pay the Owner's portion of a\npremium, which shall be recovered by the Corporation as provided in this\nAgreement. On or before the due date of each Policy premium, or within the grace\n\nperiod provided therein, the Corporation shall pay, subject to the contribution\nprovided above, the full amount of the premium to the Insurer, and shall, upon\nrequest, promptly furnish the Owner evidence of timely payment of that premium.\nAny contribution towards a premium payment actually paid by the Owner, or the\nEmployee on behalf of the Owner, under this paragraph shall be considered to be\na payment by the Owner or the Employee of a portion (equal to that contribution)\nof that premium for purposes of calculating the amount to be repaid the\nCorporation under Sections 6, 7 and 9 of this Agreement.\n\n                  b. This paragraph 4.b. shall apply only for premiums due on a\nPolicy after the Original Termination Date. Thirty (30) days prior to the due\ndate of a premium on a Policy, the Corporation shall have notified the Owner of\nthe upcoming premium and the exact amount due from the Owner under this\nAgreement with respect to that Policy. For each Policy, the amount due from the\nOwner shall equal the annual cost of current life insurance protection on the\nlife of the Employee provided under that Policy. Either the Owner, or the\nEmployee on behalf of the Owner, shall have provided evidence to the Corporation\nof payment of the premium, or shall pay the required amount prior to a due date\nto the Corporation, which upon receipt shall forward that amount to the Insurer.\nAny payment actually made by the Owner, or the Employee on behalf of the Owner,\nunder this paragraph shall be considered to be a payment by the Owner or the\nEmployee for purposes of calculating the amount to be repaid the Corporation\nunder Sections 6, 7 and 9 of this Agreement.\n\n                  c. Prior to the Original Termination Date, the premiums on\nboth Policies shall total ONE MILLION ONE HUNDRED SEVENTY-FOUR THOUSAND\nSIXTY-NINE DOLLARS ($1,174,069) annually. For purposes of this Section 4, the\n\"annual cost of current life insurance protection\" under a Policy on the life of\nthe Employee provided under that Policy, shall be calculated using the lower of\n(1) the Table 2001 rate, set forth in Internal Revenue Service Notice 2002-8 (or\nthe corresponding applicable provision of any future Internal Revenue Service\nauthority), or (2) the Insurer's current published premium rate for annually\nrenewable term insurance for standard risks. The Corporation shall annually\nfurnish the Employee a statement of the amount of income reportable by the\nEmployee, if any, for federal and state income tax purposes as a result of the\ninsurance protection provided the Owner as the policy beneficiary.\n\n3.       A new sentence is added to the end of Section 5 as follows:\n\n         \"This paragraph shall not preclude the corporation from seeking, under\nother provisions of this Agreement, from the Owner any amounts still due (after\ntaking into consideration amounts actually repaid as noted above) the\nCorporation under Sections 6.c., 7.b. and 9.a. of this Agreement.\"\n\n4.       Sections 6.a. and 6.b. are amended to read as follows:\n\n         \"a. While this Agreement is in effect, the Owner shall take no action\n\n                                       2\n\nregarding any Policy subject to this Agreement that would in any way compromise\nor jeopardize the Corporation's right to be repaid the amounts it has paid\ntoward premiums on, plus any other amounts owed the Corporation under this\nAgreement with respect to, those Policies.\n\n         b. Subject to the terms of this Agreement, the Owner may pledge or\nassign a Policy to secure a loan from the Insurer or from a third party, or make\nwithdrawals from a Policy, in an amount not to exceed (1) the cash surrender\nvalue of that Policy as of the date to which premiums have been paid less (2)\nthe aggregate amounts paid toward premiums on that Policy by the Corporation\nplus any unpaid Interest Amount for that Policy plus any unpaid Remaining Amount\nfor any other policy that has been previously surrendered or cancelled. Interest\ncharges on such a loan shall be the responsibility of and be paid by the Owner.\"\n\n5.       The first two sentences of Section 6.c. are amended to read as \nfollows:\n\n         \"c. The Owner shall have the sole right to surrender or cancel a\nPolicy, and to receive the cash surrender value of that Policy from the Insurer\nafter the Corporation has been paid as follows: upon the surrender or\ncancellation of that Policy, the Corporation shall have the unqualified right to\nreceive directly from the Insurer a portion of the cash surrender value of that\nPolicy equal to the Original Termination Amount for that Policy, plus any unpaid\nInterest Amount for that Policy calculated as of the surrender or cancellation,\nplus any unpaid Remaining Amounts for any other Policy that has been previously\nsurrendered or cancelled.\"\n\n6.       Section 7.b. is amended to read as follows:\n\n         \"b. Upon the death of the Employee, the Corporation shall have the\nunqualified right to receive directly from the Insurer a portion of the death\nbenefits of a Policy that remains subject to this Agreement equal to the\naggregate amount of the premiums paid by the Corporation with respect to that\nPolicy, plus any unpaid Interest Amount with respect to that Policy, plus any\nunpaid Remaining Amounts for any other policy that has been previously\nsurrendered or cancelled (all determined as of the date of death). The balance\nof the death benefit, if any, shall be paid directly to the Owner, in the manner\nand in the amount or amounts provided in the beneficiary designation provision\nof that Policy. No amount shall be paid from a Policy's death benefit to the\nOwner until the full amount due the Corporation with respect to that Policy has\nbeen paid. The parties agree that the beneficiary designation provision of each\nPolicy shall conform to the provisions of this Agreement, and that the Parties\nshall take any actions necessary to effect that conformity.\"\n\n7.       Section 8.a.(1) is amended to read \"(1) January 27, 2017 (the `Original\nTermination Date');\", and the following paragraph c. is added to Section 8 of\nthe Agreement:\n\n                                       3\n\n         \"c. Notwithstanding paragraph a. of this Section 8, the Owner, by\nnotice to the Corporation given at any time prior to the Original Termination\nDate of the Policies, may elect to postpone the termination of this Agreement.\"\n\n9.       The first two sentences of Section 9.a. of the Agreement are amended\nto read as follows:\n\n         \"a. For sixty (60) days after the date of the termination of this\nAgreement during the Employee's lifetime, the Owner shall have the option of\nobtaining the release of the collateral assignment of a Policy to the\nCorporation. To obtain the release of a Policy, the Owner shall repay to the\nCorporation the Original Termination Amount with respect to that Policy and any\nunpaid Interest Amount with respect to that Policy, plus any unpaid Remaining\nAmounts for any other policy that has been previously surrendered or cancelled,\n(all as determined as of the date of termination).\"\n\n10.      The second sentence of Section 9.b. of the Agreement is amended to\nread as follows:\n\n         \"Alternatively the Corporation may enforce, pursuant to the collateral\nassignment of that Policy, the Corporation's right to be repaid, out of that\nPolicy's cash surrender value, the amount which the Corporation would otherwise\nbe paid under Section 9.a. if the Owner had obtained the appropriate release;\nprovided that if the cash surrender value of that Policy exceeds the amount due\nthe Corporation, that excess shall be paid to the Owner.\"\n\n11.      A new Section 16 is added as follows:\n\n\"16.     PAYMENT OF INTEREST AMOUNT. If the Owner has made the election\ndescribed in Section 8 c. of this Agreement, the Interest Amount shall accrue\nfrom the Original Termination Date, and shall be payable by the Owner to the\nCorporation on each anniversary of that date, except that the Corporation may\nelect to allow the Interest Amount accrued for the prior year to be added to\n\"Principal,\" as described under Section 19.\"\n\n12.      A new Section 17 is added as follows:\n\n\"17.     DEFICIENCIES AND OTHER SECURITY.\n\n         a. Upon (1) the earlier of the termination of this Agreement (whether\nor not extended by the Owner as set forth above) or the surrender or\ncancellation of all Policies subject to this Agreement, or (2) the death of the\nInsured, if earlier than (1), the Owner shall pay the Corporation (3) the total\namount the Corporation would have received under Section 9. (or Section 6. as\nthe case may be) if the cash surrender values of the Policies\n\n\n                                       4\n\nhad been sufficient or under Section 7 if the death benefits had been\nsufficient, less (4) amounts paid or payable to the Corporation from the\nPolicies.\n\n         b. From time to time after the Original Termination Date, the Owner\nshall promptly execute and deliver all instruments and documents and take all\naction that the Corporation may reasonably request to grant, perfect or protect\none or more security interests in the Owner's assets (other than the Policies)\nto the extent that the Corporation reasonably considers itself insecure with\nrespect to the amounts owed to it under this Agreement, taking into\nconsideration, however, the unencumbered cash surrender value of the Policies.\n\n         c. During any time that the Employee does not have the right to vote\nshares of stock of the Corporation having more than 50% of the total combined\nvoting power of all classes of stock of the Corporation, and is not a\ncontrolling stockholder of the Corporation within the meaning of the regulations\nissued by the Treasury under Section 2042 of the Internal Revenue Code of 1986,\nas amended (or any successor provision), the Corporation shall have the power to\ndirect the Owner as to the exercise of the investment powers with respect to the\nPolicies. For purposes of this provision, the Employee shall be deemed to have\nthe right to vote all shares of stock of the Corporation owned by the Owner and\nthe shares of stock of the Corporation owned by any other entity which she\ncontrols directly or indirectly.\"\n\n13.      A new Section 18 is added as follows:\n\n\"18.     DEFAULT.\n\nIf, within 90 days after the Owner has been notified by the Corporation of a\ndefault, that default has not been cured, this Agreement shall terminate. A\ndefault shall be considered to have occurred only if (1) the Owner fails to pay\ninterest when due, as set forth in Section 16 above or (2) there is a breach of\nSection 17.b.\"\n\n14.      A new Section 19 is added as follows:\n\n\"19.     MISCELLANEOUS AND DEFINITIONS.\n\n         a. For purposes of this Agreement in the event that both Policies are\nin fact surrendered or cancelled on the same date, the Policy whose surrender or\ncancellation would result in the largest \"Remaining Amount\" shall be deemed to\nhave been surrendered or cancelled prior to the other Policy. Moreover, if the\nOwner surrenders or cancels one but not both Policies, and if surrender or\ncancellation of either Policy would result in a \"Remaining Amount,\" the Owner\nmay surrender or cancel only that Policy whose surrender or cancellation would\nresult in the largest \"Remaining Amount.\"\n\n         b.       As used in this Agreement:\n\n\n                                        5\n\n         \"Original Termination Amount\" means, with respect to a Policy, the\nlesser of (1) the aggregate amount of premiums paid by the Corporation with\nrespect to that Policy; and (2) the cash surrender value of that Policy plus the\namount of the aggregate unreturned withdrawals from that Policy. For purposes of\nthis provision, the use of some or all of a Policy's cash surrender value to pay\nany part of a loan secured by that Policy shall be treated as a withdrawal from\nthat Policy. The Original Termination Amount of a Policy shall be calculated\nupon the earliest to occur of: the Original Termination Date, the date a Policy\nis surrendered or cancelled, and the date this Agreement is terminated.\n\n         \"Remaining Amount\" means, with respect to a Policy, the Original\nTermination Amount less the cash surrender value, but not below zero.\n\n         \"Interest Amount\" means, at the time the term is being applied with\nrespect to a Policy, an amount equal to the interest that would have accrued at\nthe Rate on a loan assuming the principal (the \"Principal\") of the loan equaled\n(1) the Original Termination Amount for that Policy, plus (2) the unpaid\nRemaining Amount for a Policy that has been surrendered or cancelled prior to\nthe Original Termination Date, plus (3) any Interest Amount for which the\nCorporation makes an election under Section 16. When and to the extent payments\nare made under this Agreement reducing any items used above in calculating the\n\"Principal\" for a Policy, the Principal shall be reduced in accordance with\ncustomary commercial terms.\n\n         \"Rate\" means for each twelve month period after the Original\nTermination Date, the minimum rate necessary in the Corporation's reasonable and\ngood faith judgment to avoid, for securities laws purposes, reporting\ncompensation to the Employee due to the payment or accrual of interest under\nthis Agreement; however, \"Rate\" shall not be less than the rate at which the\nCorporation may borrow from its customary lender(s) at the time the term is\nbeing applied.\n\n15.      In all other respects, the parties ratify the terms of the Agreement.\n\n\n                                       6\n\n         The parties have executed this Agreement as of the day and year first\nabove written\n\n\n\n                                    MARTHA STEWART LIVING OMNIMEDIA, INC.\n\n\n\n                                    By: \/s\/ James Follo\n                                       -----------------------------------------\n                                       James Follo, Chief Financial Officer\n\n                                        \/s\/ Martha Stewart\n                                       -----------------------------------------\n                                       Martha Stewart\n\n                                    MARTHA STEWART FAMILY LIMITED PARTNERSHIP\n\n                                    --------------------------------------------\n\n                                    By: \/s\/ Martha Stewart\n                                       -----------------------------------------\n                                       Martha Stewart, General Partner\n\n\n\n                                       7\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8137],"corporate_contracts_industries":[9464],"corporate_contracts_types":[9539,9544],"class_list":["post-40582","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-martha-stewart-living-omnimedia-inc","corporate_contracts_industries-media__books","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40582","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40582"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40582"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40582"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}