Document:

Exhibit 10.27

 

 

THE READER’S DIGEST ASSOCIATION, INC.

READER’S DIGEST ROAD

PLEASANTVILLE, NY 10570-7000

 

	
  MARY
  G. BERNER

  	
   

  	
   

  	
   

  	
  TELEPHONE: (914) 244-5105

  
	
  President and CEO

  	
   

  	
   

  	
   

  	
  FAX: (914) 244-7555

  
	
   

  	
   

  	
   

  	
   

  	
  mary_berner@rd.com

  

 

July 27, 2007

 

Jeffrey S. Spar

27 Boulder Ridge Road 

Scarsdale, NY 10583

 

Dear Jeff:

 

This letter (the “Agreement”) serves to confirm those payments and
benefits that you will receive in consideration of your agreement to waive your
participation in The Reader’s Digest Association, Inc. 2001 Income
Continuation Plan for Senior Management, The Reader’s Digest Association, Inc.
2006 Income Continuation Plan for Senior Management (the “ICPs”), your
agreement to cancel that certain agreement between you and The Reader’s Digest
Association, Inc. (the “Company”) dated March 28, 2003 providing for
certain benefits upon your termination of employment (the “Termination
Agreement”), your agreement to waive participation in The Reader’s Digest
Association, Inc. Severance Plan and in any and all successors to such
plan and any other Company plan or policy respecting severance and/or
separation pay or benefits (all such plans are referred to herein as the “Severance
Plans”) and your agreement to the non-compete and non-solicitation restrictions
stated below.

 

1.                                       The
Company agrees to make a cash payment to you of $500,000.00 within 10 business
days of the execution of this Agreement, and a cash payment to you of $800,000
on January 2, 2008 (collectively, “Payment Dates”). In consideration and
exchange for these payments you agree:

 

(a)                                  to waive your
participation in the ICPs, cancel the Termination Agreement and waive your
right to participate in the Severance Plans, all effective upon the execution
of this Agreement,

 

(b)                                 should you decide to
voluntarily terminate your employment with the Company prior to January 2,
2009, you agree to provide the Company with not less than 90 days advance
written notice (“90-day Notice”) of any such termination and you agree to
devote your full-time, good faith efforts to provide the Company with such
transition assistance as it may reasonably request during that notice period. Should
the Company determine that you have not complied with this 90-day Notice
requirement, you agree to repay to the Company in a single lump sum within 10
business days of receiving written notice from the Company an amount equal to
twenty five percent (25%) of the payments actually made

 

 

to you as of that date under this Agreement under this paragraph 1 as
liquidated damages.

 

(c)                                  You
acknowledge and agree that no conditions exist currently that would constitute
a Constructive Termination under the ICPs, that this Agreement does not
constitute a Constructive Termination under the ICPs and that you waive any
right you may have to declare a Constructive Termination under the ICPs.

 

2.                                       In
addition, the Company agrees to make a cash payment to you of $300,000.00
within 10 business days of the execution of this Agreement. In exchange for
this payment you agree: (a) not to render any services at any time during
the 24-month period after your termination of employment with the Company and
its affiliates (the “Restricted Period”) for any organization, or to engage,
directly or indirectly, in any business which is competitive with the Company
or its affiliates, or which organization or business, or the rendering of
services to such organization or business, is otherwise prejudicial to or in
conflict with the interests of the Company or its affiliates, provided, however,
that the only organizations and businesses which shall be covered by this
non-compete restriction shall be those set forth on Exhibit A hereto, and (b) not
to directly or indirectly, solicit, induce or hire (or identify for the purpose
of soliciting, inducing or hiring) any non-clerical employee of the Company or
its affiliates to be employed by, or to perform services for, you or any person
or entity with which you are associated (including, but not limited to, due to
your employment by, consultancy for, equity interest in, or creditor relationship
with such person or entity) or any person or entity from which you receive
direct or indirect compensation or fees as a result of such solicitation,
inducement or hire (or the identification for solicitation, inducement or
hire). Should the Company have reasonable cause to believe and determine in
good faith that you are in breach of any aspect of these non-compete and/or
non-solicitation restrictions at any time during the Restricted Period, you
agree to repay to the Company within 10 business days of receiving written
notice from the Company the $300,000.00 payment as liquidated damages, which
shall be the Company’s sole monetary remedy with respect to such breach.

 

3.                                       Should
you voluntarily terminate your employment without Good Reason (as defined below)
effective before any Payment Date, or should you provide the 90-day Notice of
such voluntary termination prior to November 15, 2007, you acknowledge and
agree that you will forfeit any payment due with respect to any Payment Date
occurring after such termination or notice, as the case may be. In the event
the Company terminates your employment other than for Cause or you terminate
your employment for Good Reason prior to any Payment Date, payments not made to
you as of your termination date with respect to any subsequent Payment Date
shall be paid to you in a lump sum payment on your termination date. For
purposes of this Agreement “Good Reason” shall have the definition and
procedures for determination as described in the Termination Agreement,
notwithstanding the cancellation of the Termination Agreement under the terms of this Agreement “Cause”
shall mean termination of your employment occurring by reason of:

 

(a)                                  Your
willful and continued failure to perform substantially your duties for the
Company (other than any such failure resulting from incapacity due to physical
or mental illness or following your delivery of a notice of termination for
Good Reason as defined in the Termination Agreement), after written notice by
the undersigned of this Agreement and your failure

 

2

 

to effectively cure the failure within 10 business days of delivery of
such notice;

 

(b)                                 Your conviction of, or
plea of guilty or nolo contendere to, a
felony or another charge involving moral turpitude;

 

(c)                                  A material violation
of any written material Company policy, including but not limited to a material
violation of the Company’s Proprietary and Confidential Information Policy or a
material violation of the Company’s Ethical, Legal and Business Conduct
Policies

 

4.                                       The
Company believes that the payments made to you under this Agreement will not
result in the imposition of an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”). However, in the event
that an excise tax under Section 4999 of the Code is imposed on you based
on the payments made to you under this Agreement (or any payment you received
from the Company as the result of the transaction involving the Company which
was consummated on March 2, 2007) , the Company agrees to provide you with
a tax gross up equal to the tax gross up that would have been provided had the
payments been made pursuant to The Reader’s Digest Association, Inc. 2001
Income Continuation Plan for Senior Management ( the “2001 ICP”) under the same
terms and conditions and for this purpose, Section 5.9 of the 2001 ICP is
specifically incorporated herein and made a part of this Agreement by this
reference.. In addition, the Company shall provide you with (A) a gross-up
payment in an amount equal to the amount of any interest and excise tax that
are imposed on you due to the application of Section 409A(a)(1)(B) of
the Internal Revenue Code of 1986, as amended, to any payments to which you are
entitled pursuant to this letter, and (B) an amount equal to any income
tax imposed as a result of such gross-up payment.

 

5.                                       Except
as otherwise provided herein, this Agreement constitutes the entire agreement between
the parties relating to the subject matter hereof and supersedes any and all
prior agreements, or understandings, written or oral, relating to the subject
matter hereof, including, but not limited to, the ICPs, the Termination Agreement and the Severance Plans. The
Company may withhold from any payments under this Agreement all federal, state,
local or other applicable taxes as shall be required pursuant to any law or
governmental regulation or ruling. In the event of your death or termination
because of your Disability while any amounts are still payable to you under this
Agreement, the Company shall pay all such unpaid amounts to you or your
designated beneficiary or, if none has been designated, to your estate. For
these purposes, “Disability” will be determined in accordance with Internal
Revenue Code Section 409A(a)(2)(C) and the regulations and guidance
issued thereunder.

 

6.                                       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.

 

7.                                       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.

 

8.                                       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

 

3

 

that
State. The parties hereby agree and consent to exclusive jurisdiction of any
dispute under this Agreement in the federal or state courts of Westchester
County in New York State. .

 

9.                                       By execution of this Agreement on behalf of
the Company, the undersigned certifies
and affirms that she has the requisite authority to sign this Agreement on
behalf of the Company and the appropriate approvals necessary for its execution
have been obtained from the Company’s Board of Directors and/or its
compensation committee (if such committee is duly authorized by the Board of
Directors to authorize such agreements).

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  The Reader’s Digest Association, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary G. Berner

  
	
   

  	
   

  	
  Name:

  	
  Mary G. Berner

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  

 

Agreed to and accepted as of 8/1, 2007

 

	
  By:

  	
  /s/ Jeffrey S. Spar

  	
   

  	
   

  	
   

  
	
   

  	
  Name:   Jeffrey S. Spar

  	
   

  	
   

  	
   

  

 

4Exhibit 10.28

 

 

THE READER’S DIGEST ASSOCIATION, INC.

READER’S DIGEST ROAD

PLEASANTVILLE, NY 10570-7000

 

	
  MARY
  G. BERNER

  	
   

  	
  TELEPHONE: (914) 244-5105

  
	
  President and CEO

  	
   

  	
  FAX: (914) 244-7555

  
	
   

  	
   

  	
  mary_berner@rd.com

  

 

June 26, 2007

 

Lisa Cribari

27 Tarleton Road

Bedford, NY 10506

 

Dear Lisa:

 

This letter (the “Agreement”) serves to confirm those payments and
benefits that you will receive in consideration of your agreement to waive your
participation in The Reader’s Digest Association, Inc. 2001 Income
Continuation Plan for Senior Management, The Reader’s Digest Association, Inc.
2006 Income Continuation Plan for Senior Management (the “ICPs”), your
agreement to cancel that certain agreement between you and The Reader’s Digest
Association, Inc. (the “Company”) dated January 10, 2006 providing
for certain benefits upon your termination of employment (the “Termination
Agreement”), your agreement to waive participation in The Reader’s Digest
Association, Inc. Severance Plan and in any and all successors to such
plan and any other Company plan or policy respecting severance and/or
separation pay or benefits (all such plans are referred to herein as the “Severance
Plans”) and your agreement to the non-compete and non-solicitation restrictions
stated below.

 

Within 10 days of the execution of this Agreement, the Company will pay
you in a single lump sum $800,000. In consideration and exchange for this
payment you agree to waive your participation in the ICPs, cancel the
Termination Agreement and waive your right to participate in the Severance
Plans, all effective upon the execution of this Agreement and you further agree
that should you decide to voluntarily terminate your employment with the
Company during the 12-month period following the date of this Agreement, you will
provide the Company with not less than 90 days advance written notice of any
such termination and you will devote your full-time, good faith efforts to
provide the Company with such transition assistance as it may reasonably
request during that notice period. Should the Company determine that you have
not complied with the 90-day notice requirements, you agree to repay to the
Company in a single lump sum within 10 business days of receiving written
notice from the Company $200,000 representing 25% of the above consideration as
liquidated damages. You also acknowledge and agree that no conditions exist
currently that would constitute a Constructive Termination under the ICPs, that
this Agreement does not constitute a Constructive Termination under the ICPs and
that you waive any right you may have to declare a Constructive Termination
under the ICPs.

 

Within 10 days of the execution of this Agreement, the Company will
also pay you in a single lump sum $500,000 (the “Non-Compete Advance”).

 

 

In consideration and exchange for the Non-Compete Advance, you agree: (a) not
to render any services at any time during the 24-month period after your
termination of employment with the Company and its affiliates (the “Restricted
Period”) for any organization, or to engage, directly or indirectly, in any
business which is competitive with the Company or its affiliates, or which
organization or business, or the rendering of services to such organization or
business, is otherwise prejudicial to or in conflict with the interests of the
Company or its affiliates, provided, however,
that the only organizations and businesses which shall be covered by this
non-compete restriction shall be those set forth on Exhibit A hereto, and (b) not
to directly or indirectly, solicit, induce or hire (or identify for the purpose
of soliciting, inducing or hiring) any non-clerical employee of the Company or
its affiliates to be employed by, or to perform services for, you or any person
or entity with which you are associated (including, but not limited to, due to
your employment by, consultancy for, equity interest in, or creditor
relationship with such person or entity) or any person or entity from which you
receive direct or indirect compensation or fees as a result of such
solicitation, inducement or hire (or the identification for solicitation,
inducement or hire). Should the Company determine that you are in breach of any
aspect of these non-compete and/or non-solicitation restrictions at any time
during the Restricted Period, you agree to repay to the Company within 10
business days of receiving written notice from the Company, the Non-Compete
Advance, as determined by the Company in its discretion.

 

The Company believes that the payments and benefits made to you under
this Agreement will not result in the imposition of an excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”). However, in the
event that an excise tax under Section 4999 of the Code is imposed on you
based on the payments and benefits made to you under this Agreement, the
Company agrees to provide you with a tax gross up equal to the tax gross up
that would have been provided had the payments and benefits been made pursuant
to The Reader’s Digest Association, Inc. 2001 Income Continuation Plan for
Senior Management under the same terms and conditions.

 

In addition, the Company shall provide you with (A) a gross-up
payment in an amount equal to the amount of any interest and excise tax that
are imposed on you due to the application of Section 409A(a)(1)(B) of
the Internal Revenue Code of 1986, as amended, to any payments to which you are
entitled pursuant to this letter, and (B) an amount equal to any income
tax imposed as a result of such gross-up payment.

 

Except as otherwise provided herein, this Agreement constitutes the
entire agreement between the parties relating to the subject matter hereof and
supersedes any and all prior agreements, or understandings, written or oral,
relating to the subject matter hereof, including, but not limited to, the ICPs,
the Termination Agreement and the Severance Plans. The Company may withhold
from any payments under this Agreement all federal, state, local or other
applicable taxes as shall be required pursuant to any law or governmental
regulation or ruling. In the event of your death while any amounts are still
payable to you under this Agreement, the Company shall pay all such unpaid
amounts to your designated beneficiary or, if none has been designated, to your
estate. 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.

 

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.

 

2

 

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. The parties hereby agree and consent to
exclusive jurisdiction of any dispute under this Agreement in the federal or
state courts of Westchester County in New York State.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  The
  Reader’s Digest Association, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Mary G. Berner

  
	
   

  	
   

  	
  Name:

  	
  Mary
  G. Berner

  
	
   

  	
   

  	
  Title:

  	
  President
  and CEO

  

 

Agreed to and accepted as of 6/28, 2007

 

	
  By: 

  	
  /s/ Lisa Cribari

  	
   

  
	
   

  	
  Name:   Lisa Cribari

  	
   

  

 

3

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