Exhibit 10.28
[RDA Letterhead]
April 10, 1997
Xx. Xxxxxx X. Xxxxxxx
Vice President and
President Reader's Digest USA
The Reader's Digest Association, Inc.
Pleasantville, NY 10570-7000
Dear George:
This letter serves to confirm those payments and benefits that you
will receive, subject to and in accordance with the terms and
conditions of this Agreement in connection with a termination of your
employment with the Company.
1. Termination of Employment
1.1 The Company may terminate your employment at any time, with or
without stated reason. You shall receive the benefits provided
hereunder upon the termination of your employment by you for
"Good Reason," as defined in Section 1.2, or the termination of
your employment by the Company, unless such termination is for
"Cause," as defined in Section 3.1 of the Severance Plan. Any
termination by you shall be communicated by written Notice of
Termination indicating the termination provision in this
Agreement relied upon, if any, and the Date of Termination;
provided that the Date of Termination shall in no event be
earlier than 10 business days after the date on which such
Notice of Termination is effective pursuant to Section 15
hereof.
1.2 For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without your express written
consent:
1.2.1 the assignment to you without your
written consent of any duties materially inconsistent with
your then current position, duties, responsibilities and
status with the Company, or a material change or a
substantial diminution in your then current authority,
reporting responsibilities, titles or offices, or removal
from or failure to re-elect you to any such position or
office except in the event of a termination of your
employment for Cause, death, total disability (as defined
in The Reader's Digest Association, Inc. Retirement Plan)
or mandatory retirement;
1.2.2 a reduction by the Company in your
annual base salary as in effect on the date of this
Agreement or as the same may be increased from time to
time, unless such reduction is part of and consistent with
a good faith management-wide or Company-wide cost cutting
program, and then only if the percentage of your reduction
is no greater than that of the other management personnel;
1.2.3 a relocation without your written
consent to an office located anywhere other than within 50
miles of your primary residence, except for required travel
on Company business to an extent substantially consistent
with your then current business travel obligations;
1.2.4 the failure by the Company to
continue in effect any compensation plan or other fringe
benefit provided by the Company in which you participate on
the date of this Agreement that, by itself or in the
aggregate, is material to your total compensation from the
Company, unless there shall have been instituted a
replacement or substitute plan or fringe benefit providing
comparable benefits or unless such failure is part of and
consistent with a good faith benefit discontinuance
applicable to all of the management personnel of the
Company and then only if the scope of the discontinuance
with respect to you is no greater than that of the other
management personnel; or
1.2.5 the failure of the Company to
obtain a satisfactory agreement from any successor to the
Company to assume and agree to perform this Agreement. The
Company shall use its best efforts to require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the businesses or assets of the Company to expressly assume
and agree to perform this Agreement.
1.3 Any termination of your employment by you for "Good Reason"
shall be made within 180 days after the occurrence of the "Good
Reason."
2. Compensation Upon Termination
2.1 If your employment shall be terminated and you are entitled to
benefits under Section 1 of this Agreement then, except as
provided in Section 2.2 and 2.3, you shall receive the following
benefits for each year of the Severance Period (as defined
below):
2.1.1 the Company shall pay to you as
severance pay a total amount equal to the sum of
(a) your highest annual base salary in effect any time
during the 12-month period prior to the Date of
Termination plus
(b) the higher of the following:
(i) the highest amount paid to you under The Reader's
Digest Association, Inc. Management Incentive
Compensation Plan (the "Annual Incentive Plan")
during the three plan years most recently ended
prior to the Date of Termination; or
(ii) the originally approved target amount of the
highest award, if any, under the Annual Incentive
Plan outstanding on the Date of Termination, as
such target amount may have been increased prior
to the Date of Termination.
Any compensation received by you or granted to you in
lieu of an amount paid under the Annual Incentive Plan
for any one-year period (whether in the form of
restricted stock or otherwise) shall be deemed to be
an amount paid to you under the Annual Incentive Plan
for purposes of this Section. Any compensation
receivable by you in lieu of an amount payable under
the Annual Incentive Plan for any period shall be
deemed to be an additional target amount for purposes
of this Section. The amount of any non-cash
compensation received or receivable shall be the
greater of the fair market value of such compensation
on the date of award or the cash amount that would
have been received by you in lieu of such non-cash
compensation.
The aggregate amount of severance payable under this
Section shall be paid in equal installments on a bi-weekly
basis, commencing upon the Date of Termination.
2.1.2 the Company shall maintain in full
force and effect, for your continued benefit for the
Severance Period, all welfare benefit plans and programs or
arrangements in which you participated immediately prior to
the Date of Termination, provided that your continued
participation is possible under the general terms and
conditions of such welfare plans and programs. In the
event that your participation in any such plan or program
is barred, the Company shall provide you with benefits
substantially similar to those which you would have been
entitled to receive under such welfare plans and programs
had your participation not been barred.
2.2 If your employment is terminated by you for "Good Reason" or if
your employment is terminated by the Company other than for
"Cause," then the Severance Period shall be the period of two
years immediately following the Date of Termination.
2.3 If your employment is terminated for Cause, the Company shall
pay you your base salary through the Date of Termination, and
the Company shall have no further obligations to you under this
Agreement.
3. Long-Term Incentive Plan Benefits
3.1 You shall have the right to exercise your outstanding stock
options and stock appreciation rights under the 1989 and 1994
Key Employee Long-Term Incentive Plans (the "Long Term Incentive
Plans") to the extent they are exercisable or would become
exercisable during the Severance Period as if your employment
with the Company continued during the Severance Period. Such
stock options and stock appreciation rights shall continue to
vest during the Severance Period as if your employment with the
Company continued during the Severance Period and, upon
completion of the Severance Period, shall vest and be
exercisable as if your employment terminated at that time by
reason of either (a) an involuntary termination without cause or
a mutual agreement (within the terms of the particular award) or
(b) retirement (within the terms of the particular award), if
applicable.
3.2 Your outstanding performance units, restricted stock and awards
(other than stock options and stock appreciation rights) under
the Long Term Incentive Plans shall continue to be outstanding
and payable during the Severance Period as if your employment
with the Company continued during the Severance Period and, if
applicable, shall vest upon completion of the Severance Period
in accordance with the terms of the award as if your employment
terminated at that time by reason of either (a) an involuntary
termination without cause or a mutual agreement (within the
terms of the particular award) or (b) retirement (within the
terms of the particular award), if applicable. Any such award
that is based on a period of employment shall be payable on a
prorated basis as if your employment had continued during the
Severance Period.
3.2.1 If any such award is subject to
specific performance goals and your employment is
terminated by you for "Good Reason" or your employment is
terminated by the Company other than for "Cause," then the
award shall be payable to the extent such performance goals
are attained.
3.3 If any benefits due under Section 3 cannot be paid under the
existing or amended terms of an applicable plan or award
agreement, the Company shall pay you the value of such benefits
at the time they would otherwise be payable if they were payable
under such terms.
4. Retirement Plan Benefits
4.1 The Company shall pay to you an amount equal to the difference
between your monthly retirement benefit payable under The
Reader's Digest Association, Inc. Retirement Plan (the
"Retirement Plan"), the Excess Benefit Retirement Plan of The
Reader's Digest Association, Inc. (the "Excess Benefit
Retirement Plan") and The Reader's Digest Executive Retirement
Plan (the "Executive Retirement Plan") and the amount that would
have been payable if your age and aggregate periods of service
under those plans included the Severance Period. In addition,
the Severance Period shall be considered to be additional
Credited Service for all purposes (including vesting) under the
Executive Retirement Plan. Any amount payable under this
Section 4.1 shall be payable at the same time and in the same
form as such payments would have been made under the Retirement
Plan.
4.2 Upon completion of the Severance Period, if you are not vested
under the Retirement Plan, the Excess Retirement Plan or the
Executive Retirement Plan, you will receive a lump sum payment
in the amount of the equivalent actuarial value (as determined
under the Retirement Plan) of pension credits that would have
been earned through the end of the Severance Period, without
regard to vesting, with any such payment to be made within 90
days of the end of the Severance Period.
5. Your participation in The Reader's Digest Employees Profit-
Sharing Plan and the Profit -Sharing Benefit Restoration Plan of
The Reader's Digest Association, Inc. (the "Profit-Sharing
Plans") ceases upon your termination of employment with the
Company. However, you shall receive cash payments equal to the
amounts that would have been contributed to your account had
your employment with the Company continued for the Severance
Period, with payments to be made to you by the Company at the
time any contributions have been made for participants in the
Profit-Sharing Plans. In addition, the Severance Period shall
be considered to be additional Credited Service for purposes of
your vesting in any amounts previously contributed to your
account under the Profit-Sharing Plans.
6. Any benefits payable under this Agreement shall be reduced by
the amount of any benefits paid under The Reader's Digest
Association, Inc. Severance Plan for Senior Management or The
Reader's Digest Association, Inc. Income Continuation Plan for
Senior Management.
7. The payment of any amounts or benefits under this Agreement is
expressly conditioned on the receipt by the Company from you of
a duly executed General Xxxxxx and Release of Claims in the form
specified under the Severance Plan, the repayment by you of any
outstanding advances or loans due the Company and the return by
you of all Company property.
8. Any reference to a specific plan in this Agreement shall be
deemed to include any similar plan or program of the Company
then in effect that is the predecessor of, the successor to, or
the replacement for, such specific plan.
9. The Company may withhold from any benefits payable under this
Agreement all federal, state, local or other applicable taxes as
shall be required pursuant to any law or governmental regulation
or ruling.
10. In case of your death while any amounts are still payable to you
under this Agreement, the Company shall pay all such amounts to
your designated beneficiary or, if none has been designated, to
your estate as if your employment had continued until the end of
the Severance Period.
11. The Company shall indemnify you and hold you harmless from any
and all liabilities, losses, costs or damages, including defense
costs and expenses (including, without limitation, fees and
disbursements of counsel incurred by you in any action or
proceeding between the parties to this Agreement or between you
and any third party or otherwise) in connection with all claims,
suits or proceeding relating to or arising from a breach or
alleged breach of this Agreement by the Company.
12. You acknowledge that (i) prior to executing this Agreement, you
had an opportunity to consult with an attorney of your choosing
and review this Agreement with such counsel, (ii) you are
executing this Agreement knowingly and voluntarily and (iii) you
understand all of the terms set forth herein.
13. In the event the Company terminates your employment for Cause
and you dispute the Company's right to do so or you claim that
you are entitled to terminate your employment for Good Reason
and the Company disputes your right to do so, a mediator
acceptable to you and the Company will be appointed within 10
days to assist in reaching a mutually satisfactory resolution,
but will have no authority to issue a binding decision. Such
mediation must be concluded within 60 days of the date of
termination or claim to termination for Good Reason. You agree
that you will not institute any legal proceeding relating to the
matter until the conclusion of such mediation. Should such
mediation fail to reach an acceptable conclusion and you are
successful in any litigation or settlement that issues from such
dispute, you shall be entitled to receive from the Company all
of the expenses incurred by you in connection with any such
dispute, including reasonable attorney's fees.
14. Acts Detrimental to the Company
14.1 You agree that you will not do any of the following during the
Severance Period:
14.1.1 commit any criminal act against the Company or any act
that would constitute "Cause;"
14.1.2 disclose any information likely to be regarded as
confidential and relating to the Company's business;
14.1.3 solicit the Company's employees to work for a
competitor of the Company; or
14.1.4 perform any act detrimental to the Company or its
employees, including, but not limited to, disparaging the
Company, its senior management or its products.
14.2 You agree that any breach or threatened breach of Section 14.1
shall entitle the Company to apply for and to obtain injunctive
relief, which shall be in addition to any and all other rights
and remedies available to the company at law or in equity.
14.3 All of your rights and benefits under this Agreement shall cease
upon any breach by you of Section 14.1 of this Agreement.
15. Miscellaneous
15.1 Notices and other communications provided for herein shall be in
writing and shall be effective upon delivery addressed as
follows:
if to the Company:
The Reader's Digest Association, Inc.
Reader's Digest Road
Pleasantville, NY 10570-7000
Attention: Senior Vice President, Human Resources
with a copy to
The Reader's Digest Association, Inc.
Reader's Digest Road
Pleasantville, NY 10570-7000
Attention: General Counsel
or if to you, at the address set forth above,
or to such other address as to which either party shall give
notice in accordance with the foregoing.
15.2 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement may not be
assigned by either party without the consent of the other party.
15.3 Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
15.4 This Agreement constitutes the entire understanding of the
parties hereto with respect to the subject matter hereof and
supersedes any prior agreements, written or oral, with respect
thereto.
15.5 This Agreement may be amended or modified only by a written
agreement duly executed by both of the parties hereto.
15.6 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to
contracts executed in and to be wholly performed within that
State.
Very truly yours,
The Reader's Digest Association,
Inc.
By XXXXXX X. XXXXXXXX
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President,
Strategic Planning and Human Resources
Xxxxxx to and accepted as of April 29, 1997:
By: XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
