Document:

Exhibit 10.17

 

 

 

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

  

 

The
Reader’s Digest Association, Inc.

TERMS
AND CONDITIONS

LONG-TERM
INCENTIVE PLAN AWARD

(Fiscal Year 2008-2009)

 

1.                                       LTIP
Award.  Effective as of August 13,
2007 (the “Grant Date”), «Name»
is hereby granted a Long-Term Incentive Plan award (the “LTIP Award”).  The LTIP Award represents an unfunded,
unsecured promise by The Reader’s Digest Association, Inc. (“Reader’s
Digest”) to deliver to you, subject to these Terms and Conditions, an amount in
cash equal to the Vesting Date Value (as defined below) of the LTIP Award.  The granting of the LTIP Award does not
involve an actual transfer of property on the Grant Date or at any time prior
to the payment of cash to you in accordance with these Terms and Conditions.

 

2.                                       Definitions.

 

(a)                                 Cause.  “Cause” means
insubordination, dishonesty, moral turpitude, other significant misconduct of
any kind, conviction of (or pleading guilty or nolo  contendere
to) a crime, or a significant violation of any rules, policies, procedures or
guidelines of Reader’s Digest or its affiliates, or refusal to perform normal
duties and responsibilities (for any reason other than illness or incapacity)
which, in any case, Reader’s Digest reasonably classifies as a termination for
Cause.  The determination of whether “Cause”
has occurred shall be solely in the discretion of the Chief Executive Officer
of Reader’s Digest, with the advice of the most senior Human Resources officer
of Reader’s Digest and the most senior legal officer of Reader’s Digest.

 

(b)                                Disability.  “Disability” means total disability as
defined in the Reader’s Digest Healthcare Program (or an equivalent plan, as
determined in the sole discretion of the Reader’s Digest’s Compensation
Committee (the “Committee”)).

 

(c)                                 Performance
Goals.   The LTIP Award is subject to the Performance
Goals set forth on Schedule 1.

 

 

(d)                                Performance
Period.  The LTIP Award relates to the
Performance Period set forth on Schedule 1.

 

(e)                                 Retirement.  “Retirement” means your termination of your
employment on or after age 55 after at least 10 years of employment by Reader’s
Digest and its affiliates and on or following July 1, 2008.

 

(f)                                   Target
Value.  The Target Value of the LTIP
Award shall be the Vesting Date Value of the LTIP Award payable to you, subject
to these Terms and Conditions, if the Performance Goals are met at the 100% level.  The Target Value of the LTIP Award is $«M_0809_Target».

 

(f)                                   Vesting
Date Value.  The Vesting
Date Value of the LTIP Award shall be the value determined pursuant to the
performance scale set forth on Schedule 1. 
As shown on Schedule 1, the maximum Vesting Date Value is $«M_0809_Maximum».

 

3.                                       Restrictions.  The LTIP Award is granted to you subject to
the following restrictions (the “Restrictions”).

 

(a)                                 Payment.  Subject to Section 4(b), the LTIP Award
shall be paid in cash only after and to the extent that the Performance Goals
are achieved, as certified by the Committee in its sole discretion.

 

(b)                                Forfeiture.  The LTIP Award may be forfeited by you upon
the termination of your employment prior to the Regular Vesting Date (as
defined below), as set forth in Paragraph 5.

 

4.                                       Conditions
for Lapse of Restrictions (Vesting) and Payment of LTIP Award.

 

(a)                                 Vesting.  Subject to Paragraph 5, the LTIP Award shall
vest on June 30, 2009 (the “Regular Vesting Date”).

 

(b)                                Payment.  After the end of the Performance Period, the
Committee shall certify, in its sole discretion, the extent to which the
Performance Goals have been attained.  On
or about December 31, 2009, but in any event prior to January 15,
2010, the Vesting Date Value of the LTIP Award (based on the extent to which
the Performance Goals have been attained) shall be paid to you.

 

5                                          Termination
of Employment.

 

(a)                             General.  Notwithstanding any
provision to the contrary set forth in any prior contract, agreement, plan or
policy (including, but not limited to any provision calling for payment by
Reader’s Digest of the value of any benefits that cannot be paid under the
existing or amended terms of any such contract, agreement, plan or policy), if
your employment with Reader’s Digest and its subsidiaries is terminated prior
to the Regular Vesting Date for any reason other than termination by Reader’s
Digest or one of its subsidiaries without Cause or your death, Disability or
Retirement, the LTIP Award shall be forfeited and canceled by Reader’s Digest,
and shall be deemed not to have any value. 
Transfers 

 

 

within or between Reader’s Digest
and its subsidiaries shall not be considered a termination of employment for
purposes of this Paragraph 5(a).

 

(b)                            Involuntary
Termination, Death or Disability.  If your employment with Reader’s
Digest and its subsidiaries is terminated prior to the Regular Vesting Date by
Reader’s Digest or any of its subsidiaries without Cause, or if you die or
become Disabled, the LTIP Award shall immediately
vest.  Promptly following any such
termination of your employment, death or Disability, but in no event later than
60 days following such event, an amount equal to the product of (i) the
Target Value of the LTIP Award and (ii) the quotient of (A) the
number of full months in the Performance Period prior to such termination of
employment and (B) 24, shall be paid to you.

 

(c)                             Retirement.  If your employment with Reader’s Digest and
its subsidiaries is terminated prior to the Regular Vesting Date by reason of
your Retirement, the LTIP Award shall remain outstanding through the end of the
Performance Period, and an amount equal to the product of (i) the Vesting
Date Value of the LTIP Award (based on the extent to which the Performance
Goals have been attained) and (ii) the quotient of (A) the number of
full months in the Performance Period prior to your Retirement and (B) 24
shall be paid to you at the same time as the Vesting Date Value would have been
payable to you pursuant to Paragraph 4 had you remained employed through the
Regular Vesting Date.

 

6.                                       Tax
Withholding.  In order to
satisfy any tax withholding obligation that is applicable with respect to the
LTIP Award, including any U.S., non-U.S. or social insurance tax withholding
obligation, Reader’s Digest is authorized to deduct the amount of the tax
withholding obligation from the amount payable to you.

 

7.                                       Miscellaneous.

 

(a)                                 The granting of
the LTIP Award does not confer upon you any right to continue in the employ of
Reader’s Digest or any of its subsidiaries or affiliates.

 

(b)                                You may not
anticipate, alienate, attach, sell, assign, pledge, encumber, charge or
otherwise transfer the LTIP Award.

 

(c)                                 The LTIP Award does not entitle you to
any benefit other than the benefits specifically and expressly granted
hereunder.  The LTIP Award is
unfunded and is payable from the general assets of Reader’s Digest.  Any benefits granted under the LTIP Award are
not part of your ordinary salary for any purpose, including, without
limitation, calculating any benefits, severance, redundancy, termination or
resignation or similar payments.

 

(d)                                The Committee
may amend these Terms and Conditions as necessary or appropriate to comply with
applicable laws and regulations or otherwise. 
The Committee may make adjustments in the Performance Goals in
recognition of unusual or nonrecurring events affecting Reader’s Digest or any
of its affiliates or the financial statements of Reader’s Digest or any of its
affiliates, and/or make adjustments in payment amounts as a result of its
assessment of the quality of the EBITDA that constitutes the Performance Goals.

 

 

(e)                                 These Terms and Conditions
shall be governed by the laws of the State of New York, excluding any conflict
of laws or choice of law rule or principle that might otherwise refer
construction or interpretation of these Terms and Conditions to the substantive
law of another jurisdiction.  You are
deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of New York, County of Westchester, to resolve any and all issues
that may arise out of or relate to these Terms and Conditions.

 

Kindly signify your
acceptance of this Long Term Incentive Award by signing and dating this letter
below and returning it within 30 days.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mary G. Berner

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Date

  

 

 

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

  

 

The
Reader’s Digest Association, Inc.

TERMS
AND CONDITIONS

LONG-TERM
INCENTIVE PLAN AWARD

(Fiscal Year 2008-2010)

 

1.                                       LTIP
Award.  Effective as of August 13,
2007 (the “Grant Date”), [NAME] is
hereby granted a Long-Term Incentive Plan award (the “LTIP Award”).  The LTIP Award represents an unfunded,
unsecured promise by The Reader’s Digest Association, Inc. (“Reader’s
Digest”) to deliver to you, subject to these Terms and Conditions, an amount in
cash equal to the Vesting Date Value (as defined below) of the LTIP Award.  The granting of the LTIP Award does not
involve an actual transfer of property on the Grant Date or at any time prior
to the payment of cash to you in accordance with these Terms and Conditions.

 

2.                                       Definitions.

 

(a)                                 Cause.  “Cause” means insubordination,
dishonesty, moral turpitude, other significant misconduct of any kind,
conviction of (or pleading guilty or nolo  contendere to) a crime,
or a significant violation of any rules, policies, procedures or guidelines of
Reader’s Digest or its affiliates, or refusal to perform normal duties and
responsibilities (for any reason other than illness or incapacity) which, in
any case, Reader’s Digest reasonably classifies as a termination for
Cause.  The determination of whether “Cause”
has occurred shall be solely in the discretion of the Chief Executive Officer
of Reader’s Digest, with the advice of the most senior Human Resources officer
of Reader’s Digest and the most senior legal officer of Reader’s Digest.

 

(b)                                Disability.  “Disability” means total disability as
defined in the Reader’s Digest Healthcare Program (or an equivalent plan, as
determined in the sole discretion of the Reader’s Digest’s Compensation
Committee (the “Committee”)).

 

 

(c)                                 Performance
Goals.   The LTIP Award is subject to the Performance
Goals set forth on Schedule 1.

 

(d)                                Performance
Period.  The LTIP Award relates to the
Performance Period set forth on Schedule 1.

 

(e)                                 Retirement.  “Retirement” means your termination of your
employment on or after age 55 after at least 10 years of employment by Reader’s
Digest and its affiliates and on or following July 1, 2008.

 

(f)                                   Target
Value.  The Target Value of the LTIP
Award shall be the Vesting Date Value of the LTIP Award payable to you, subject
to these Terms and Conditions, if the Performance Goals are met at the 100%
level.  The Target Value of the LTIP
Award is $[•].

 

(f)                                   Vesting
Date Value.  The Vesting
Date Value of the LTIP Award shall be the value determined pursuant to the
performance scale set forth on Schedule 1. 
As shown on Schedule 1, the maximum Vesting Date Value is $[•].

 

3.                                       Restrictions.  The LTIP Award is granted to you subject to
the following restrictions (the “Restrictions”).

 

(a)                                 Payment.  Subject to Section 4(b), the LTIP Award
shall be paid in cash only after and to the extent that the Performance Goals
are achieved, as certified by the Committee in its sole discretion.

 

(b)                                Forfeiture.  The LTIP Award may be forfeited by you upon
the termination of your employment prior to the Regular Vesting Date (as
defined below), as set forth in Paragraph 5.

 

4.                                       Conditions
for Lapse of Restrictions (Vesting) and Payment of LTIP Award.

 

(a)                                 Vesting.  Subject to Paragraph 5, the LTIP Award shall
vest on June 30, 2010 (the “Regular Vesting Date”).

 

(b)                                 Payment.  After the end of the Performance Period, the
Committee shall certify, in its sole discretion, the extent to which the
Performance Goals have been attained.  On
or about December 31, 2010, but in any event prior to January 15,
2011, the Vesting Date Value of the LTIP Award (based on the extent to which
the Performance Goals have been attained) shall be paid to you.

 

5                                          Termination
of Employment.

 

(a)                             General.  Notwithstanding any
provision to the contrary set forth in any prior contract, agreement, plan or
policy (including, but not limited toany provision calling for payment by
Reader’s Digest of the value of any benefits that cannot be paid under the
existing or amended terms of any such contract, agreement, plan or policy), if
your employment with Reader’s Digest and its subsidiaries is terminated prior
to the Regular Vesting Date for any reason other than termination by Reader’s
Digest or one of its subsidiaries without Cause or your death, Disability or
Retirement, the LTIP Award shall be forfeited and canceled 

 

 

by Reader’s Digest, and shall
be deemed not to have any value. 
Transfers within or between Reader’s Digest and its subsidiaries shall
not be considered a termination of employment for purposes of this Paragraph
5(a).

 

(b)                            Involuntary
Termination, Death or Disability.  If your employment with Reader’s
Digest and its subsidiaries is terminated prior to the Regular Vesting Date by
Reader’s Digest or any of its subsidiaries without Cause, or if you die or
become Disabled, the LTIP Award shall immediately
vest.  Promptly following any such
termination of your employment, death or Disability, but in no event later than
60 days following such event, an amount equal to the product of (i) the
Target Value of the LTIP Award and (ii) the quotient of (A) the
number of full months in the Performance Period prior to such termination of
employment and (B) 36, shall be paid to you.

 

(c)                             Retirement.  If your employment with Reader’s Digest and
its subsidiaries is terminated prior to the Regular Vesting Date by reason of
your Retirement, the LTIP Award shall remain outstanding through the end of the
Performance Period, and an amount equal to the product of (i) the Vesting
Date Value of the LTIP Award (based on the extent to which the Performance
Goals have been attained) and (ii) the quotient of (A) the number of
full months in the Performance Period prior to your Retirement and (B) 36
shall be paid to you at the same time as the Vesting Date Value would have been
payable to you pursuant to Paragraph 4 had you remained employed through the
Regular Vesting Date.

 

6.                                       Tax
Withholding.  In order to
satisfy any tax withholding obligation that is applicable with respect to the
LTIP Award, including any U.S., non-U.S. or social insurance tax withholding
obligation, Reader’s Digest is authorized to deduct the amount of the tax
withholding obligation from the amount payable to you.

 

7.                                       Miscellaneous.

 

(a)                                 The granting of
the LTIP Award does not confer upon you any right to continue in the employ of
Reader’s Digest or any of its subsidiaries or affiliates.

 

(b)                                You may not
anticipate, alienate, attach, sell, assign, pledge, encumber, charge or
otherwise transfer the LTIP Award.

 

(c)                                 The LTIP Award does not entitle you to
any benefit other than the benefits specifically and expressly granted
hereunder.  The LTIP Award is
unfunded and is payable from the general assets of Reader’s Digest.  Any benefits granted under the LTIP Award are
not part of your ordinary salary for any purpose, including, without
limitation, calculating any benefits, severance, redundancy, termination or
resignation or similar payments.

 

(d)                                The Committee
may amend these Terms and Conditions as necessary or appropriate to comply with
applicable laws and regulations or otherwise. 
The Committee may make adjustments in the Performance Goals in
recognition of unusual or nonrecurring events affecting Reader’s Digest or any
of its affiliates or the financial statements of Reader’s Digest or any of its
affiliates, and/or make adjustments in payment amounts as a result of its
assessment of the quality of the EBITDA that constitutes the Performance Goals.

 

 

(e)                                  These Terms and
Conditions shall be governed by the laws of the State of New York, excluding
any conflict of laws or choice of law rule or principle that might
otherwise refer construction or interpretation of these Terms and Conditions to
the substantive law of another jurisdiction. 
You are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of New York, County of Westchester, to resolve any and
all issues that may arise out of or relate to these Terms and Conditions.

 

Kindly signify your
acceptance of this Long Term Incentive Award by signing and dating this letter
below and returning it to Edie O’Reilly, Director Compensation within 30 days
from the date hereof.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mary G. Berner

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  DateExhibit 10.24

 

EXECUTION
COPY

 

AMENDED
AND RESTATED

EMPLOYMENT AGREEMENT

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of February 1,
2008 (the “Restatement Date”), between The Reader’s Digest Association, Inc.,
a Delaware corporation (the “Company”), and Mary G. Berner (“Executive”).

 

WHEREAS, the
Company and the Executive entered into an Employment Agreement as to the terms
of her continuing employment dated as of March 1, 2007 (the “Initial
Agreement”);

 

WHEREAS, the
Company and the Executive desire to enter into the Agreement to bring the
Initial Agreement into compliance with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations and
Treasury guidance thereunder as in effect from time to time (collectively
hereinafter, “Section 409A”);

 

WHEREAS, except
as otherwise expressly provided herein, this Agreement shall supersede any
prior written agreement entered into between the Executive and the Company
prior to the Restatement Date with respect to the subject matter hereof,
including, without limitation, the Initial Agreement; and

 

WHEREAS the
Company desires to continue to employ Executive as its Chief Executive Officer
and Executive continues to be willing to serve the Company in such capacity for
the period and upon such other terms and conditions of this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual agreements, provisions and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as set forth below:

 

1. Term. (a)  Duration.
The term of Executive’s employment under this Agreement was effective as of the
consummation of the merger of Doctor Acquisition Co., a Delaware corporation,
with the Company on March 2, 2007 (the “Effective Date”), and shall
continue until the fifth anniversary of the Effective Date (the “Expiration
Date”). On the Expiration Date, and on each subsequent anniversary of the
Expiration Date, the term of Executive’s employment under this Agreement shall
be extended for one additional year unless either party provides written notice
to the other party at least 60 days prior to the Expiration Date (or any such
anniversary, as applicable) that Executive’s employment hereunder shall not be
so extended; provided, however, that Executive’s employment under
this Agreement may be terminated at any time pursuant to the provisions of Section 4.
The period of time from the Effective Date through the termination of Executive’s
employment under this Agreement is herein referred to as the “Term.”

 

(b)  No
Obligation. The parties agree and acknowledge that neither the Company nor
Executive has an obligation to extend the Term or to continue employment
following the Expiration Date, and each party expressly acknowledges that no
promises or understandings to the contrary have been made or reached. The
parties also agree and acknowledge that, should Executive and the Company
choose to continue Executive’s employment for any period of time 

 

 

following the Expiration Date
without extending the term of Executive’s employment under this Agreement or
entering into a new written employment agreement, Executive’s employment with
the Company shall be “at will,” such that the Company may terminate Executive’s
employment at any time, with or without reason and with or without notice, and
Executive may resign at any time, with or without reason and with or without
notice.

 

(c)  Definitions.
For purposes of this Agreement, the following terms, as used herein, shall have
the definitions set forth below.

 

“Affiliate(s)”
means, with respect to any specified Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such specified Person, provided that, in
any event, any business in which the Company has any direct or indirect
ownership interest shall be treated as an Affiliate of the Company.

 

“Control”
(including, with correlative meanings, the terms “Controlled by” and “under
common Control with”), as used with respect to any Person, means the direct
or indirect possession of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Limited
Affiliate(s)” means, with respect to any specified
Person, any other Person that directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or with respect to Persons in the
publishing or media business, is under common Control with, such specified
Person, provided that, in any event, any business in which the Company
has any direct or indirect ownership interest shall be treated as an Affiliate
of the Company.

 

“Person”
means any individual, firm, corporation, partnership, limited liability company,
trust, joint venture, association, governmental entity, unincorporated entity
or other entity.

 

2. Duties and
Responsibilities. (a)  During the Term, Executive agrees to be
employed and devote substantially all of Executive’s business time, attention
and efforts to the Company and the promotion of its interests and the
performance of Executive’s duties and responsibilities hereunder, upon the
terms and conditions of this Agreement. Executive shall render Executive’s
services hereunder as Chief Executive Officer of the Company, with the duties,
responsibilities and authority commensurate with Executive’s status, including
any duties and responsibilities as directed from time to time by the Board of
Directors of the Company (the “Board”) consistent with Executive’s
position hereunder. Executive shall report to the Board. Executive acknowledges
that the Board is currently comprised of at least a majority of directors who
are selected or designated by Ripplewood Holdings L.L.C. or one of its
Affiliates (collectively, “Ripplewood”). As of the Effective Date and
during the Term while the Company is not publicly traded, Ripplewood shall
cause Executive to be appointed or elected (and re-elected, as applicable) as a
member of the Board.

 

2

 

(b)  Place
of Employment; Business Travel. During the Term, Executive’s principal
place of employment shall be based initially at the Company’s Pleasantville,
New York office or in New York, New York, as determined by the Board, consistent
with the needs of the Company and as required in connection with the
performance of Executive’s duties and responsibilities hereunder. Executive
acknowledges that Executive’s duties and responsibilities shall require
Executive to travel on business to the extent reasonably necessary to fully
perform Executive’s duties and responsibilities hereunder.

 

(c)  Board
Membership; No Conflict. During the Term, Executive shall not be permitted
to be a member of the board of directors of any for-profit company without the
consent of the Company (such consent not to be unreasonably withheld) (for all
purposes under this Agreement, any required consent of the Company shall be
evidenced by the written approval of the Chairman of the Board), provided
that (i) Executive may serve on the board of directors of any other
portfolio company in which Ripplewood has any ownership interest; (ii) Executive
may continue to serve on the boards of directors listed on Exhibit A
attached hereto and Executive may serve, without approval, on the boards of
directors of not-for-profit entities; provided that such activities do
not interfere with the performance of the Executive’s duties and
responsibilities hereunder.

 

3. Compensation and
Related Matters. (a)   Base
Salary. During the Term, for all services rendered under this Agreement,
Executive shall receive an aggregate annual base salary (“Base Salary”)
at an initial rate of $500,000, payable in accordance with the Company’s
applicable payroll practices. Base Salary shall be subject to review by the
Board for increases, but not decrease, in its sole discretion and references in
this Agreement to “Base Salary” shall be deemed to refer to the most
recently effective annual base salary rate.

 

(b)  Annual
Bonus. During the Term, for each fiscal year, Executive shall be paid a
guaranteed annual bonus of $500,000 (the “Guaranteed Bonus”). In
addition, Executive shall be eligible to earn an annual performance bonus in an
amount up to 400% of Base Salary based on performance against specified
objective performance criteria as set forth on Exhibit B hereto
(the “Annual Bonus”). The Guaranteed Bonus, and any Annual Bonus that
Executive shall actually become entitled to receive hereunder, will be payable
by the Company at such time and in such manner that bonuses are paid to other
senior executives of the Company, but in no event later than the end of the
calendar year in which the fiscal year for which such bonus is earned ends. Nothing
herein to the contrary, Executive shall be entitled to an Annual Bonus for the
fiscal year ending June 30, 2007 prorated from November 1, 2006,
which Annual Bonus shall be paid in calendar year 2007. Executive acknowledges
that this payment has been made.

 

(c)  Benefits
and Perquisites. During the Term, Executive shall be entitled to
participate in the benefit and perquisite plans and programs, commensurate with
Executive’s position, that are established by the Company from time to time for
executive employees generally, subject to the terms and conditions of such
plans. Executive shall also be entitled to the use of a car service when
traveling between New York, NY and Pleasantville, NY. All amounts payable to
Executive under this Section 3(c) shall be reimbursed as soon as
practicable after Executive incurs such expense and submits documentation
thereof (which shall be submitted within ninety (90) days of the incurrence of
the expense), but, to the extent taxable income to Executive, in no event later
than the “Short-Term Deferral Date” (as defined below).

 

3

 

The “Short-Term Deferral Date”
shall mean, with respect to any fee or expense, the 15th day of the third month
following the later of the end of the calendar year or the end of the Company’s
fiscal year in which the fee or expense is incurred.

 

(d)  Vacation.
During the Term, Executive shall be entitled to paid vacation in accordance
with the Company’s vacation policies applicable to senior executives of the
Company, but in no event less than four (4) weeks per year.

 

(e)  Business
Expense Reimbursements. During the Term, the Company shall promptly
reimburse Executive for Executive’s reasonable business expenses incurred in
connection with performing Executive’s duties hereunder in accordance with its
then-prevailing policies and procedures for expense reimbursement, which shall
provide for travel and entertainment at a level commensurate with Executive’s
position. In addition to the foregoing, Executive shall be entitled to
reimbursement for the use of a car service when traveling between New York, NY
and Pleasantville, NY. All amounts payable to Executive under this Section 3(e) shall
be reimbursed as soon as practicable after Executive incurs such expense and
submits documentation thereof (which shall be submitted within ninety (90) days
of the incurrence of the expense), but, to the extent taxable income to
Executive, in no event later than the Short-Term Deferral Date.

 

(f)  Stock
Option. Promptly following the Effective Date, Executive shall be granted
an option to purchase 3% of the outstanding shares of common stock of RDA
Holding Co. (“Common Stock”) at an exercise price equal to the fair
market value on the date of grant (the “Stock Option”), pursuant to the
Nonqualified Stock Option Agreement the form of which is attached hereto as Exhibit C
(with such changes thereto as mutually agreed by the parties). The parties
agree that the Stock Option is not intended to qualify as an “incentive stock
option” within the meaning of Section 422 of the Code.

 

(g)  Restricted
Stock Units. Promptly following the Effective Date, Executive shall be
granted restricted stock units (“Restricted Stock Units”) with an
initial value of $2 million, which will vest and pay out in accordance with the
terms of the Restricted Stock Unit Agreement the form of which is attached
hereto as Exhibit D (with such changes thereto as mutually agreed
by the parties).

 

(h)  Co-investment.
Executive shall be entitled to co-invest on a carry-free basis side-by-side
with Ripplewood in shares of Common Stock in an amount up to $4.5 million, of
which 50% shall be funded with third-party leverage guaranteed by the Company.

 

(i)  Legal
Fees. The Company shall pay all reasonable attorneys’ fees and
disbursements incurred by Executive prior to the expiration of the Term in
connection with the negotiation of (i) this Agreement, and (ii) the
negotiation of any other agreements documenting Executive’s initial equity
arrangements with the Company and concomitant revisions of this Agreement. Any
reimbursement pursuant to this Section 3(i) shall be paid to
Executive promptly and in no event later than the Short-Term Deferral Date.

 

4

 

4. Separation from
Service with the Company.

 

(a)  Death
or Disability.

 

(i)  Executive’s
employment shall automatically terminate upon Executive’s death. The Company
may terminate Executive’s employment hereunder in the event of Executive’s “Disability”
(as defined below) upon 30 days’ written notice to Executive. In the event of a
termination of Executive’s employment hereunder by reason of death or by reason
of Disability, the Company shall pay to Executive or her estate, as applicable,
any accrued but unpaid Base Salary, accrued but unused vacation time,
unreimbursed business expenses, and unpaid Annual Bonus for any completed
fiscal year prior to the year of termination, and Executive or her estate shall
be entitled to receive employee benefits pursuant to the terms of the benefit
plans and programs applicable to terminated employees (collectively, the “Accrued
Rights”). The Accrued Rights shall be payable on their normal payment
dates; provided that accrued but unused vacation time shall be paid
within 30 days following the date of termination of Executive’s employment. In
addition, Executive shall be entitled to a pro-rata portion of the Annual Bonus
for the fiscal year of termination based on actual results of the Company,
which amount shall be calculated based upon a formula, the denominator of which
shall be 365 and the numerator of which shall be the number of days during the
fiscal year during which Executive was employed by the Company, and shall be
paid at such time as annual bonuses are ordinarily paid to other senior
executives of the Company in respect of the fiscal year in which Executive’s
termination occurs, but in no event later than the end of the calendar year in
which such fiscal year ends (the “Pro-Rata Bonus”).

 

(ii)  For
purposes of this Agreement, “Disability” means Executive has been
physically or mentally incapable for 6 consecutive months to perform her
material duties hereunder. Any question as to the existence of the Disability
of Executive as to which the Company and Executive shall not agree shall be
determined in writing by a qualified independent physician mutually acceptable
to Executive and the Company (and if Executive and the Company cannot agree as
to a qualified independent physician, each shall appoint a physician and those
two physicians shall select a third physician who shall make such determination
in writing, which shall be final and conclusive for all purposes of this
Agreement). In connection therewith, Executive agrees to submit to any medical
examination(s) as may be reasonably requested by the Company for such
purpose.

 

(b)   By the Company for Cause or By Executive
Without Good Reason.

 

(i)  The
Company may terminate Executive’s employment hereunder for “Cause” (as defined
below) at any time upon 30 days’ written notice to Executive and Executive may
terminate her employment hereunder without “Good Reason” (as defined below) at
any time upon 30 days’ written notice to the Company. In the event the Company
terminates Executive’s employment hereunder for Cause or Executive terminates
her employment hereunder without Good Reason, Executive shall be entitled to
her Accrued Rights and the Company shall have no further obligations to
Executive under this Agreement. The Accrued Rights shall be payable on 

 

5

 

their normal payment dates;
provided that accrued but unused vacation time shall be paid within 30 days
following the date of termination of Executive’s employment.

 

(ii)  For
purposes of this Agreement, “Cause” means:  (A) Executive’s willful failure to
substantially perform Executive’s duties hereunder (other than due to physical
or mental illness) after written notice of such failure to Executive, (B) Executive’s
conviction of, or plea of guilty or nolo contendere to a felony (or the
equivalent of a felony in a jurisdiction other than the United States) other
than, in any case, vicarious liability or traffic violations, (C) Executive’s
willful material breach of Sections 6, 7, or 9 hereof that, to the extent
curable, is uncured by Executive promptly following receipt of written notice given
by the Company of such breach, (D) Executive’s willful material violation
of the Company’s written policies of a material nature that has a detrimental
impact on the Company and that, to the extent curable, is uncured by Executive
promptly following receipt of written notice given by the Company of such
breach; (E) Executive’s fraud or embezzlement with respect to the Company;
(F) Executive’s  misappropriation or
misuse of funds or property belonging to the Company that is done in bad faith
and is more than de minimis in nature; (F) Executive’s use of illegal
drugs that interferes with the performance of Executive’s duties hereunder; or (G) Executive’s
gross misconduct, whether or not done in connection with employment, other than
an action done in the good faith belief that it was in the best interests of
the Company, that materially adversely affects the business or reputation of
the Company, its subsidiaries or Affiliates.

 

(iii)  For
purposes of this Agreement, “Good Reason” means (A) any diminution
in Executive’s title or position or a material diminution in Executive’s
duties, authorities or responsibilities (excluding for this purpose an
insubstantial or inadvertent action taken in good faith and which is remedied
by the Company promptly after receipt of notice thereof given by Executive); (B) the
assignment to Executive of duties inconsistent with her position (excluding for
this purpose an insubstantial or inadvertent action taken in good faith and
which is remedied by the Company promptly after receipt of notice thereof given
by Executive); (C) any material breach by the Company of this Agreement,
any Exhibit hereto or any other agreement or letter executed between the
Company and the Executive simultaneously with or following the date of this
Agreement that specifically provides that such agreement or letter is intended
to modify or supplement this Agreement, in each case that, to the extent
curable, is uncured by the Company promptly following receipt of written notice
thereof from Executive; (D) any reduction of Executive’s Base Salary,
Guaranteed Bonus or Annual Bonus opportunity; (E) the transfer or
relocation of Executive’s principal place of employment to a location further
in miles and/or travel time from New York, New York than is Pleasantville, New
York; (F) any failure to re-elect Executive to the Board if the Company is
not public, or to nominate Executive for election to the Board if the Company
is public, or the removal of Executive from the Board other than for cause in
accordance with the Company’s by-laws or in connection with a termination for “Cause”
under the terms of this agreement; or (G) the failure of the Company to
obtain the assumption of this Agreement by any person, firm, corporation or
other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company and the failure to deliver a copy of the
document effecting such assumption to the Executive upon Executive’s written
request.

 

(c)  By
the Company Other Than for Cause or by Executive for Good Reason. The
Company may terminate Executive’s employment hereunder other than for Cause
(and other 

 

6

 

than due to Disability) at any
time upon thirty (30) days’ advance written notice to Executive and Executive
may terminate her employment hereunder at any time upon thirty (30) days’
advance written notice to the Company. In the event of a termination of
Executive’s employment hereunder by the Company other than for Cause or by
Executive for Good Reason, Executive shall be entitled to her Accrued Rights
(payable on their normal payment dates; provided that accrued but unused
vacation time shall be paid within thirty (30) days following the date of
termination of Executive’s employment) plus the following benefits
(collectively, the “Separation Benefits”):  (i) a severance payment equal to two
times the sum of (A) Executive’s then current Base Salary and (B) the
Guaranteed Bonus, which amount shall be paid, subject to the provisions of Section 16
hereof, in a lump-sum on the 53rd day following the date of termination; (ii) a
Pro-Rata Bonus, payable at such time as annual bonuses are ordinarily paid to
other senior executives of the Company in respect of the fiscal year in which
Executive’s termination occurs, but in no event later than the end of the
calendar year in which such fiscal year ends; (iii) continuation of any
fully insured health, dental and vision insurance benefits and any life insurance
benefits for Executive and her dependents, for twelve (12) months following
termination of employment (at a cost no less favorable than that applicable to
other participants in the Company’s benefit plans during such time); (iv) subject
to the provisions of Section 16 hereof, monthly payments to Executive of
the difference between Executive’s share of the monthly COBRA premiums for any
fully or partially self-funded health, dental and vision plan coverage provided
by the Company and the active employee monthly contribution therefor, for
twelve (12) months following termination of employment (provided that any such
payments otherwise payable to Executive within the first 52 days following such
termination shall not be paid on the otherwise scheduled payment date but shall
instead accumulate and be paid on the 53rd day following the date of
termination); (v) an
additional twelve (12) months of vesting credit with respect to the Stock
Option. Notwithstanding the foregoing, unless, on or prior to the 52nd day
following the date of termination of employment, Executive shall have signed
the Release of Claims in the form attached hereto as Exhibit E and
such Release of Claims shall have become effective in accordance with its terms,
(w) no payment shall be paid or made available to Executive under clause (i) or
(iv) of this Section 4(c), (x) the Company shall be relieved of
all obligations to make any further payments, or provide or make available any
further benefits, to Executive pursuant to clause (ii) or (iii) of
this Section 4(c), (y) Executive shall be required to repay the
Company, in cash, within five (5) business days after written demand is
made therefor by the Company, an amount equal to the value of any payments or
benefits received by Executive pursuant to clause (ii) or (iii) of
this Section 4(c) and (z) Executive shall forfeit any portion of
the Stock Option that vested pursuant to clause (v) of Section 4(c). Notwithstanding
anything in this Agreement to the contrary, payment of any or all of the Separation
Benefits is expressly contingent upon the Executive’s continued substantial
compliance with the terms and conditions of Sections 6, 7, 8 and 9 of this
Agreement; provided Executive had received notice thereof and failed
promptly to cure any such breach to the extent curable. Executive recognizes
that, except as expressly provided in this Section 4 or pursuant to the
terms of Executive’s equity grant agreements, no compensation is owed to her
after termination of her employment.

 

(d)  Expiration
of Term. If Executive’s employment shall terminate by reason of the
expiration of the Term as a result of either party giving notice of
non-extension of the Term to the other party pursuant to Section 1(a),
Executive shall be entitled to the Accrued Rights. The Accrued Rights shall be
payable on their normal payment dates; provided that accrued but unused 

 

7

 

vacation time shall be paid
within 30 days following the date of termination of Executive’s employment.

 

(e)  Resignation
from Board. Upon termination of Executive’s employment for any reason, and
regardless of whether Executive continues as a consultant to the Company, upon
the Company’s request Executive agrees to resign, as of the date of such
termination of employment or such other date requested, from the Board and any
committees thereof (and, if applicable, from the board of directors (and any
committees thereof) of any subsidiary or Affiliate of the Company) to the
extent Executive is then serving thereon.

 

(f)  Amounts
Due Under Plans. Subject to the provisions hereof, the payment of any
amounts accrued under any benefit plan, program or arrangement in which
Executive participates shall be subject to the terms of the applicable plan,
program or arrangement, and any elections Executive has made thereunder.

 

(g)  Waiver
of Notice. The Board may waive any notice required of Executive and
Executive may waive any notice required of the Company under this Section 4
without liability, penalty or cost.

 

5. Acknowledgments. (a) 
Executive acknowledges that the Company has expended and shall continue to
expend substantial amounts of time, money and effort to develop business
strategies, employee and customer relationships and goodwill and build an
effective organization. Executive acknowledges that Executive is and shall
become familiar with the Company’s Confidential Information (as defined below),
including trade secrets, and that Executive’s services are of special, unique
and extraordinary value to the Company, its subsidiaries and Affiliates. Executive
acknowledges that the Company has a legitimate business interest and right in
protecting its Confidential Information, business strategies, employee and
customer relationships and goodwill, and that the Company would be seriously
damaged by the disclosure of Confidential Information and the loss or
deterioration of its business strategies, employee and customer relationships
and goodwill. The Company acknowledges that Executive is a long serving
executive in the industry and has acquired significant industry experience and
knowledge during her career.

 

(b)  Executive
acknowledges (i) that the business of the Company, its subsidiaries and
Affiliates is national in scope and without geographical limitation within the
United States and (ii) notwithstanding the jurisdiction of formation or
principal office of the Company, its subsidiaries and Affiliates, or the
location of any of their respective executives or employees (including, without
limitation, Executive), it is expected that the Company and its subsidiaries
and Affiliates will have business activities and have valuable business
relationships within their respective industries throughout the United States. Executive
also agrees and acknowledges that the potential harm to the Company of the
non-enforcement of Sections 6, 7, 8, 9 and 12 outweighs any potential harm
to Executive of its enforcement by injunction or otherwise. In addition, the
Company agrees and acknowledges that the potential harm to the Executive of the
non-enforcement of Section 12 outweighs any potential harm to the Company
of its enforcement by injunction or otherwise.

 

8

 

(c)  Executive
acknowledges that she has carefully read this Agreement and has given careful
consideration to the restraints imposed upon Executive by this Agreement, and
is in full accord as to the necessity of such restraints for the reasonable and
proper protection of the Confidential Information, business strategies,
employee and customer relationships and goodwill of the Company and its
subsidiaries and Affiliates now existing or to be developed in the future. Executive
expressly acknowledges and agrees that each and every restraint imposed by this
Agreement is reasonable with respect to subject matter, time period and
geographical area. Executive further acknowledges that although Executive’s
compliance with the covenants contained in Sections 6 and 7 may prevent
Executive from earning a livelihood in a business similar to the business of
the Company, Executive’s experience and capabilities are such that Executive
has other opportunities to earn a livelihood and adequate means of support for
Executive and Executive’s dependents.

 

6. Restrictive Covenants.
(a)  Noncompetition and Nonsolicitation. Executive agrees that Executive shall
not, while an employee of the Company and during the one-year period following
termination of employment (such one-year period, the “Restriction Period”),
directly or indirectly, without the prior written consent of the Company:

 

(i)  engage
in activities or businesses within the United States on behalf of any Person
that is in competition with a portion of the Company’s business from which the
Company derives at least 15% of its revenues based on the Company’s fiscal
prior to the earlier of the activity or termination (“Competitive Activities”),
including (A) selling goods or services of the type sold by the Company or
any of its subsidiaries; (B) soliciting or attempting to solicit any
customer or client or prospective customer or client of the Company or any of
its subsidiaries or Limited Affiliates including, without limitation, actively
sought prospective customers or clients, to purchase any goods or services of
the specific type sold by the Company or any of its subsidiaries from anyone
other than the Company or any of its subsidiaries; and (C) assisting any
Person in any way to do, or attempt to do, anything prohibited by (A) or (B) above;
provided, however, that the foregoing shall not prevent or be violated
by Executive’s service in a non-competitive portion of a company or business
enterprise which is engaged in Competitive Activities with the Company or, as a
result thereof, owning compensatory equity in such a company or business
enterprise engaged in Competitive Activities; or

 

(ii)  (A) solicit,
recruit or hire any employees of the Company or any of its subsidiaries or
Limited Affiliates or Persons who have worked for the Company or any of its
subsidiaries or Limited Affiliates in the prior 6 months; (B) solicit or
encourage any employee of the Company or any of its subsidiaries or Limited
Affiliates to leave the employment of the Company or any of its subsidiaries or
Limited Affiliates; or (C) intentionally interfere with the relationship
of the Company or any of its subsidiaries or Limited Affiliates with any Person
who or which is employed by or otherwise engaged to perform services for the
Company or any of its subsidiaries or Limited Affiliates. The restrictions in
this Section 6(a)(ii) shall not apply to (x) general
solicitations that are not specifically directed to employees of the Company or
any Limited Affiliate, (y) serving as a reference at the request of an
employee or (z) actions taken in the good faith performance of her duties
for the Company.

 

(iii)  Notwithstanding
the foregoing provisions of this Section 6(a), in the event Executive’s
employment hereunder terminates due to the expiration of the Term, the
Restriction 

 

9

 

Period shall not apply unless
the Company provides Executive with at least 60 days advance written notice
prior to the date of such expiration of its election to have the Restriction Period
apply and in connection therewith agrees to pay the Executive $1,000,000
payable ratably over the Restriction Period in equal monthly installments.

 

The Restriction Period shall be
tolled during (and shall be deemed automatically extended by) any period in
which Executive is determined to be in violation of the provisions of this Section 6
by a relevant trier of fact, but only with respect to specific provisions to
which the breach relates.

 

(b)  Notwithstanding
anything to the contrary contained in this Agreement, the provisions of Section 6(a) shall
not be deemed breached as a result of Executive’s passive ownership of: (i) less
than an aggregate of 3% of any class of securities of a Person engaged,
directly or indirectly, in Competitive Activities; provided, however,
that such stock is listed on a national securities exchange, is quoted on the
National Market System of NASDAQ or is otherwise publicly traded; (ii) less
than an aggregate of 3% in value of any instrument of indebtedness of a Person
engaged, directly or indirectly, in Competitive Activities; or (iii) less
than 3% in interest in mutual funds, private equity funds, hedge funds and
similar pooled entities that have interests in or are engaged, directly or
indirectly, in Competitive Activities, so long as such investments are totally
passive.

 

(c)  If a
final and non-appealable judicial determination is made that any of the
provisions of this Section 6 constitutes an unreasonable or otherwise
unenforceable restriction against Executive, the provisions of this Section 6
will not be rendered void but will be deemed to be modified to the minimum
extent necessary to remain in force and effect for the longest period and
largest geographic area that would not constitute such an unreasonable or
unenforceable restriction. Moreover, notwithstanding the fact that any
provision of this Section 6 is determined not to be specifically
enforceable, the Company will nevertheless be entitled to recover monetary
damages as a result of Executive’s breach of such provision to the extent
permitted by applicable law.

 

7. Nondisclosure of
Confidential Information. (a)  Executive acknowledges that the
Confidential Information obtained by Executive while employed by the Company
and its subsidiaries and Affiliates is the property of the Company or its
subsidiaries and Affiliates, as applicable. Therefore, Executive agrees that
other than in connection with the good faith performance of her duties,
Executive shall not disclose to any unauthorized Person or use for Executive’s
own purposes any Confidential Information without the prior written consent of
the Company, unless and to the extent that the aforementioned matters (i) become
generally known in the relevant trade or industry or the public domain other
than as a result of Executive’s acts or omissions in violation of this
Agreement, (ii) become available to Executive on a non-confidential basis
or (iii) were within Executive’s possession prior to its being obtained by
Executive in the course of Executive’s employment with the Company; provided,
however, that if Executive receives a request to disclose Confidential
Information pursuant to a deposition, interrogation, request for information or
documents in legal proceedings, subpoena, civil investigative demand, governmental
or regulatory process or similar process, (A) Executive shall promptly
notify in writing the Company, and reasonably consult with and reasonably
assist the Company in seeking a protective order or request for other
appropriate remedy, (B) in the event that such protective order or remedy
is not obtained, or if the Company waives compliance with 

 

10

 

the terms hereof, Executive shall disclose
only that portion of the Confidential Information that, according to Executive’s
counsel, is legally required to be disclosed and (C) to the extent
possible, the Company shall be given an opportunity to review the Confidential
Information prior to disclosure thereof.

 

(b)  For
purposes of this Agreement, “Confidential Information” means information
and data concerning the business or affairs of the Company and its subsidiaries
and Affiliates, including, without limitation, all business information
(whether or not in written form) which relates to the Company, its subsidiaries
or Affiliates, or their customers, suppliers or contractors or any other third
parties in respect of which the Company or its subsidiaries or Affiliates has a
business relationship or owes a duty of confidentiality, or their respective
businesses or products, and which is not known to the public generally or
within the industry other than as a result of Executive’s breach of this
Agreement, including but not limited to: 
technical information or reports; trade secrets; unwritten knowledge and
“know-how”; operating instructions; training manuals; customer lists; customer
buying records and habits; product sales records and documents, and product
development, marketing and sales strategies; market surveys; marketing plans;
profitability analyses; product cost; long-range plans; information relating to
pricing, competitive strategies and new product development; information
relating to any forms of compensation or other personnel-related information;
contracts; and supplier lists. Confidential Information will not include such
information known to Executive prior to Executive’s involvement with the
Company or its subsidiaries or Affiliates or information rightfully obtained
from a third party (other than pursuant to a breach by Executive of this
Agreement). Without limiting the foregoing, Executive and the Company agree to
keep confidential the existence of, and any information concerning, any dispute
between Executive and the Company or its subsidiaries and Affiliates, except
that Executive and the Company may disclose information concerning such dispute
to the court that is considering such dispute or to Executive’s or the Company’s
legal counsel or related advisors and experts (provided that such
Persons may not disclose any such information other than as necessary to the
prosecution or defense of such dispute)

 

(c)  Except
as expressly set forth otherwise in this Agreement or to the extent previously
disclosed by the Company, Executive agrees that Executive shall not disclose
the terms of this Agreement, except (i) to Executive’s family and
Executive’s financial and legal advisors, (ii) as may be required by law
or ordered by a court or other governmental entity with subpoena power or (iii) as
may be reasonably necessary for the Company to implement the terms of this
Agreement. Executive further agrees that any disclosure to Executive’s
financial and legal advisors will only be made after such advisors acknowledge
and agree to maintain the confidentiality of this Agreement and its terms to
the extent such advisors are not otherwise bound by a duty of non-disclosure; provided
that if Executive has obtained such agreement and acknowledgement or to the
extent the advisor is otherwise so bound, Executive shall have no liability for
disclosure of such information by Executive’s financial and legal advisors that
is made without Executive’s knowledge or involvement.

 

(d)  Executive
further agrees that Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employers or
any other Person to whom Executive has an obligation of confidentiality, and
will not bring onto the premises of the Company, its subsidiaries or Affiliates
any unpublished documents or any property belonging 

 

11

 

to any former employer or any
other Person to whom Executive has an obligation of confidentiality unless
consented to in writing by the former employer or other Person.

 

8. Return of Property.
Executive acknowledges that all notes, memoranda, specifications, devices,
formulas, records, files, lists, drawings, documents, models, equipment,
property, computer, software or intellectual property relating to the
businesses of the Company and its subsidiaries and Affiliates, in whatever form
(including electronic), and all copies thereof, that are received or created by
Executive while an employee of the Company or its subsidiaries or Affiliates
(including but not limited to Confidential Information) are and shall remain
the property of the Company and its subsidiaries and Affiliates, and Executive
shall immediately return such property to the Company upon the termination of
Executive’s employment and, in any event, at the Company’s request. Executive
further agrees that any property situated on the premises of, and owned by, the
Company or its subsidiaries or Affiliates, including disks and other storage
media, filing cabinets or other work areas, is subject to inspection by Company’s
personnel at any time with or without notice. Notwithstanding the foregoing,
Executive shall be permitted to retain her rolodex and similar address books,
including those in electronic form and the parties agree that the names and
contact information therein are not Confidential Information.

 

9. Intellectual Property
Rights. (a)  Executive agrees that the results and proceeds of
Executive’s services for the Company or its subsidiaries or Affiliates
(including, but not limited to, any trade secrets, products, services,
processes, know-how, designs, developments, techniques, formulas, methods,
developmental or experimental work, improvements, discoveries, inventions,
ideas, source and object codes, programs, matters of a literary, musical,
dramatic or otherwise creative nature, writings and other works of authorship)
resulting from services performed while an employee of the Company and any
works in progress, whether or not patentable or registrable under copyright or
similar statutes, that were made or conceived or reduced to practice or learned
by Executive, either alone or jointly with others (collectively, “Inventions”),
shall be works-made-for-hire and the Company (or, if applicable or as directed
by the Company, any of its subsidiaries or Affiliates) shall be deemed the sole
owner throughout the universe of any and all trade secret, patent, copyright
and other intellectual property rights (collectively, “Proprietary Rights”)
of whatsoever nature therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, with the right to use the same in
perpetuity in any manner the Company determines in its sole discretion, without
any further payment to Executive whatsoever. If, for any reason, any of such
results and proceeds shall not legally be a work-made-for-hire and/or there are
any Proprietary Rights which do not accrue to the Company (or, as the case may
be, any of its subsidiaries or Affiliates) under the immediately preceding
sentence, then Executive hereby irrevocably assigns and agrees to assign any
and all of Executive’s right, title and interest thereto, including any and all
Proprietary Rights of whatsoever nature therein, whether or not now or
hereafter known, existing, contemplated, recognized or developed, to the
Company (or, if applicable or as directed by the Company, any of its subsidiaries
or Affiliates), and the Company or such subsidiaries or Affiliates shall have
the right to use the same in perpetuity throughout the universe in any manner
determined by the Company or such subsidiaries or Affiliates without any
further payment to Executive whatsoever. As to any Invention that Executive is
required to assign, Executive shall promptly and fully disclose to the Company
all information known to Executive concerning such Invention.

 

12

 

(b)  Executive
agrees that, from time to time, as may be reasonably requested by the Company
and at the Company’s sole cost and expense, Executive shall do any and all
things that the Company may reasonably deem useful or desirable to establish or
document the Company’s exclusive ownership throughout the United States of
America or any other country of any and all Proprietary Rights in any such
Inventions, including the execution of appropriate copyright and/or patent
applications or assignments. To the extent Executive has any Proprietary Rights
in the Inventions that cannot be assigned in the manner described above,
Executive unconditionally and irrevocably waives the enforcement of such
Proprietary Rights. This Section 9(b) is subject to and shall not be
deemed to limit, restrict or constitute any waiver by the Company of any
Proprietary Rights of ownership to which the Company may be entitled by
operation of law by virtue of the Company’s being Executive’s employer. Executive
shall reasonably assist the Company in every proper and lawful way to obtain
and from time to time enforce Proprietary Rights relating to Inventions in any
and all countries. To this end, Executive shall execute, verify and deliver
such documents and perform such other reasonable acts (including appearances as
a witness) as the Company may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining, and enforcing such Proprietary
Rights and the assignment thereof. In addition, Executive shall execute, verify,
and deliver assignments of such Proprietary Rights to the Company or its
designees. Executive’s obligation to assist the Company with respect to
Proprietary Rights relating to such Inventions in any and all countries shall
continue beyond the termination of Executive’s employment with the Company, provided
that the Company shall compensate Executive at a reasonable rate after such
termination for the time actually spent by Executive at the Company’s request
on such assistance.

 

(c)  In
the event the Company is unable for any reason, after reasonable effort, to
secure Executive’s signature on any document required in connection with the
actions specified in Section 9(b), Executive hereby irrevocably designates
and appoints the Company and its duly authorized officers and agents as
Executive’s agent and attorney in fact, to act for and in Executive’s behalf to
execute, verify and deliver any such documents and to do all other lawfully
permitted acts to further the purposes of Section 9(b) with the same
legal force and effect as if executed by Executive. Executive hereby waives and
quitclaims to the Company any and all claims, of any nature whatsoever, that
Executive now or may hereafter have for infringement of any Proprietary Rights
assigned hereunder to the Company.

 

10. Notification of
Subsequent Employer. Executive hereby agrees that prior to accepting
employment with any other Person during any period during which Executive
remains subject to any of the covenants set forth in Section 6, Executive
shall provide such prospective employer with written notice of such provisions
of this Agreement, with a copy of such notice delivered to the Company within a
reasonable time thereafter.

 

11. Remedies and
Injunctive Relief. The parties acknowledges that a violation by Executive
or the Company of any of the covenants applicable to Executive or the Company
and contained in Section 6, 7, 8, 9 or 12 would cause irreparable damage
to Executive or the Company in an amount that would be material but not readily
ascertainable, and that any remedy at law (including the payment of damages)
would be inadequate. Accordingly, the parties agree that, notwithstanding any
provision of this Agreement to the contrary, each party shall be entitled
(without the necessity of showing economic loss or other actual damage) to
injunctive relief (including temporary restraining orders, preliminary
injunctions and/or permanent injunctions) in 

 

13

 

any court of competent jurisdiction for any actual
or threatened breach of any of the covenants set forth in Section 6, 7, 8,
9 or 12 in addition to any other legal or equitable remedies either may have. The
preceding sentence shall not be construed as a waiver of the rights that the
parties may have for damages under this Agreement or otherwise, and all of the
rights held by either Executive or the Company shall be unrestricted.

 

12. Nondisparagement.
Executive shall not, whether in writing or orally, directly or indirectly,
criticize, denigrate or disparage Ripplewood, the Company, its subsidiaries or
Affiliates or their respective predecessors and successors, or any of the
current or former directors, officers, employees, or, in their capacity as
such, any of the current or former shareholders, partners, members, agents or
representatives of any of the foregoing, with respect to any of their
respective past or present activities, or otherwise publish (whether in writing
or orally) statements that tend to portray any of the aforementioned parties in
an unfavorable light; provided that the foregoing shall only apply with
respect to persons that Executive knows or reasonably should know are covered
thereby and shall not apply to statements made by Executive in the reasonable
good faith performance of her duties while employed by the Company; provided
further than nothing herein shall create any right or cause of action with
respect to any third party. Tim Collins, Harvey Golub, the managing director in
charge of Ripplewood’s investment in the Company, the Company’s directors, its
chief executive officer and his or her direct reports shall not, and the
Company shall take all reasonable measures to ensure that the directors,
officers and employees of the Company and its subsidiaries and Affiliates shall
not, whether in writing or orally, directly or indirectly, criticize, denigrate
or disparage Executive with respect to her respective past or present
activities, or otherwise publish (whether in writing or orally) statements that
tend to portray her in an unfavorable light; provided that the foregoing
shall not apply to statements made by the foregoing persons in the reasonable
good faith performance of their duties while rendering services with respect to
the Company while Executive is in the employ of the Company. The foregoing
provisions of this Section 12 shall cease to apply 2 years after the end
of Executive’s employment with the Company and shall not apply to truthful
testimony, normal competitive-type statements, statements not made with an
intent to damage the other party or statements made in rebuttal of statements
made by the other party.

 

13. Representations of
Executive. (a)  Executive represents, warrants and covenants that (i) Executive
has the full right, authority and capacity to enter into this Agreement and
perform Executive’s obligations hereunder, (ii) Executive is not bound by
any agreement that conflicts with or prevents or restricts the full performance
of Executive’s duties and obligations to the Company hereunder during or after
the Term and (iii) the execution and delivery of this Agreement shall not
result in any breach or violation of, or a default under, any existing
obligation, commitment or agreement to which Executive is subject.

 

(b)  Prior
to execution of this Agreement, Executive was advised by the Company of
Executive’s right to seek independent advice from an attorney of Executive’s
own selection regarding this Agreement. Executive acknowledges that Executive
has entered into this Agreement knowingly and voluntarily and with full
knowledge and understanding of the provisions of this Agreement after being
given the opportunity to consult with counsel. Executive further represents
that in entering into this Agreement, Executive is not relying on any
statements or representations made by any of the Company’s directors, officers,
employees or 

 

14

 

agents which are not expressly
set forth herein, and that Executive is relying only upon Executive’s own
judgment and any advice provided by Executive’s attorney.

 

14. Cooperation. Executive
agrees that, upon reasonable notice and without the necessity of the Company
obtaining a subpoena or court order, Executive shall provide reasonable
cooperation in connection with any suit, action or proceeding (or any appeal
from any suit, action or proceeding), and any investigation and/or defense of
any claims asserted against the Company or any of its subsidiaries or
Affiliates, which relates to events occurring during Executive’s employment
with the Company, its subsidiaries and Affiliates as to which Executive may
have relevant information (including but not limited to furnishing relevant
information and materials to the Company or its designee and/or providing
testimony at depositions and at trial). With respect to such cooperation
occurring following termination of employment, the Company shall compensate
Executive at a reasonable per diem rate to be mutually agreed (other than with
regard to actual testimony), as well as reimburse Executive, on an after-tax
basis, for expenses reasonably incurred in connection therewith, including
legal fees, provided that any such cooperation occurring after the
termination of Executive’s employment shall be scheduled to the extent
reasonably practicable so as not to unreasonably interfere with Executive’s
business or personal affairs.

 

15. Withholding. The
Company may deduct and withhold from any amounts payable under this Agreement
such Federal, state, local, foreign or other taxes as are required or permitted
to be withheld pursuant to any applicable law or regulation.

 

16. Section 409A of the
Code. (a)    It is intended that the provisions of this
Agreement comply with Section 409A, and all provisions of this Agreement
shall be construed in a manner consistent with the requirements for avoiding
taxes or penalties under Section 409A. If any provision of this Agreement
(or of any award of compensation, including equity compensation or benefits)
would cause Executive to incur any additional tax or interest under Section 409A,
the Company shall, after consulting with Executive, reform such provision to
comply with Section 409A, provided that the Company agrees to maintain, to
the maximum extent practicable, the original intent and economic benefit to
Executive of the applicable provision without violating the provisions of Section 409A.
The Company shall timely amend any plan or program in which Executive
participates to bring it in compliance with Section 409A.

 

(b)  A
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “separation from service” (within the meaning of Section 409A) and,
for purposes of any such provision of this Agreement, references to a “termination”
or “termination of employment” shall mean separation from service. If Executive
is deemed on the date of termination of her employment to be a “specified
employee”, within the meaning of that term under Section 409A(a)(2)(B) of
the Code and using the identification methodology selected by the Company from
time to time (or if none, the default methodology), then with regard to any
payment or the providing of any benefit made subject to this Section 16,
and any other payment or the provision of any other benefit that is required to
be delayed in compliance with Section 409A(a)(2)(B) of the Code, such
payment or benefit shall not be made or provided prior to the earlier of (i) the

 

15

 

expiration of the six-month
period measured from the date of Executive’s separation from service or (ii) the
date of Executive’s death. On the first day of the seventh month following the
date of Executive’s separation from service or, if earlier, on the date of her
death, all payments delayed pursuant to this Section 16(b) (whether
they would have otherwise been payable in a single sum or in installments in
the absence of such delay) shall be paid or reimbursed to Executive in a lump
sum, and any remaining payments and benefits due under this Agreement shall be
paid or provided in accordance with the normal payment dates specified for them
herein. In addition to the foregoing, to the extent required by Section 409A(a)(2)(B) of
the Code, the payment of any compensation (other than amounts accrued as of the
date of SFS Disability (as defined below) that are paid at such time as they
otherwise would have been paid) to Executive under this Agreement shall be
suspended for a period of six months commencing at such time that Executive
shall be deemed to have had, prior to the occurrence of a Disability
termination as provided in Section 4(a)(i) hereof, a separation from
service because either (A) a sick leave ceases to be a bona fide sick
leave of absence, or (B) the permitted time period for a sick leave of
absence expires (an “SFS Disability”), without regard to whether such
SFS Disability actually results in a Disability termination. Promptly following
the expiration of such six-month period, all compensation suspended pursuant to
the foregoing sentence (whether it would have otherwise been payable in a
single sum or in installments in the absence of such suspension) shall be paid
or reimbursed to Executive in a lump sum.

 

(c)  If
any action on the part of the Board relating to any award of compensation,
including equity compensation or benefits, causes Executive to incur any
additional tax or interest under Section 409A, the Company shall indemnify
and hold harmless, on an after-tax basis, Executive from and against any
accelerated or additional tax (including interest and penalties with respect
thereto) that may be imposed on Executive by reason thereof; provided
that Executive shall not compromise or settle any claim relating to Section 409A
without the Company’s written consent. Any payment or reimbursement for taxes
made pursuant this Section 16(c) shall be paid to Executive no later
than the end of the calendar year next following the calendar year in which the
applicable tax is paid by Executive.

 

(d)  Notwithstanding
anything to the contrary herein, Executive’s rights under this Section 16
shall survive the termination of her employment for any reason and the
termination or expiration of this Agreement for any reason.

 

(e)  With
regard to any provision herein that provides for reimbursement of expenses or
in-kind benefits, except as permitted by Section 409A, (i) the right
to reimbursement or in-kind benefits is not subject to liquidation or exchange for
another benefit, (ii) the amount of expenses eligible for reimbursement,
or in-kind benefits, provided during any taxable year shall not affect the
expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year, provided that the foregoing clause (ii) shall
not be violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in effect.

 

17. Parachute Payments
and Excise Taxes. (a)    So long
as the Company is described in Section 280G(b)(5)(A)(ii)(I) of the
Code, if any payment or benefit (within the meaning of Section 280G(b)(2) of
the Code), to Executive or for Executive’s benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in 

 

16

 

connection with, or arising out of, Executive’s
employment with the Company or a change in ownership or effective control of
the Company or of a substantial portion of its assets (any such payment or
benefit, a “Parachute Payment”), would be subject to the excise tax
imposed by Section 4999 of the Code, or if any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then Executive will be entitled to
receive additional payments (a “Gross-Up Payment”) in an amount equal to
the Excise Taxes imposed upon the Parachute Payment and the Gross-Up Payment. Except
as expressly provided in this Section 17(a), Executive shall not be
entitled to any additional payments in connection with any Parachute Payments
or Gross-Up Payments, including any reimbursement for the income tax thereon,
so long as the Company is described in Section 280G(b)(5)(A)(ii)(I).

 

(b)  If
the Company is not described in Section 280G(b)(5)(A)(ii)(I) of the
Code, and if Executive shall become entitled to a Parachute Payment, which
Parachute Payment will be subject to the Excise Tax, subject to Section 17(e) below,
then the Company shall pay to Executive at the time specified below (i) a
Gross-Up Payment such that the net amount retained by Executive, after
deduction of any Excise Tax on the Parachute Payment and any Federal, state,
and local income or payroll tax upon the Gross-Up Payment provided for by this
paragraph, but before deduction for any Federal, state, and local income or
payroll tax on the Parachute Payment, shall be equal to the Parachute Payment,
and (ii) an amount equal to the product of any deductions disallowed for
Federal, state or local income tax purposes because of the inclusion of the
Gross-Up Payment in Executive’s adjusted gross income multiplied by the highest
applicable marginal rate of Federal, state or local income taxation,
respectively, for the calendar year in which the Gross-Up Payment is to be
made.

 

(c)  Notwithstanding
the foregoing, if it shall be determined that Executive is entitled to a
Gross-Up Payment, but that if the Parachute Payment (other than that portion
valued under Treasury Regulation Section 1.280G, Q&A 24(c)) (the “Cash
Payment”) is reduced by the amount necessary such that the receipt of the
Cash Payment would not give rise to any Excise Tax (the “Reduced Payment”)
and the Reduced Payment would not be less than 90% of the Cash Payment, then no
Gross-Up Payment shall be made to Executive and the Cash Payments, in the
aggregate, shall be reduced to the Reduced Payments. If the Reduced Payment is
to be effective, payments shall be reduced in the following order (i) any
cash severance based on a multiple of Base Salary or Annual Bonus, (ii) any
other cash amounts payable to Executive, (iii) any benefits valued as
parachute payments, (iv) acceleration of vesting of any Stock Options for
which the exercise price exceeds the then fair market value, and (v) acceleration
of vesting of any equity not covered by subsection (iv) above, unless
Executive elects another method of reduction by written notice to the Company
prior to the change of ownership or effective control.

 

(d)  In
the event that the Internal Revenue Service or court ultimately makes a
determination that the excess parachute payments plus the base amount is an
amount other than as determined initially, an appropriate adjustment shall be
made with regard to the Gross-Up Payment or Reduced Payment, as applicable to
reflect the final determination and the resulting impact on whether the
preceding Section 17(c) applies.

 

(e)  For
purposes of determining whether any of the Parachute Payments and Gross-Up
Payments (collectively the “Total Payments”) will be subject to the
Excise Tax and the 

 

17

 

amount of such Excise Tax, (i) the Total
Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “parachute payments” in excess of the “base amount” (as
defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that, in the opinion
of the Company’s independent certified public accountants appointed prior to
any change in ownership (as defined under Section 280G(b)(2) of the
Code) or tax counsel selected by such accountants or the Company (the “Accountants”),
there is a reasonable reporting position that such Total Payments (in whole or
in part) either do not constitute “parachute payments,” including giving effect
to the recalculation of stock options in accordance with Treasury Regulation Section 1.280G-1,
Q&A 33, represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the
“base amount” or are otherwise not subject to the Excise Tax, and (ii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Accountants in accordance with the principles of Section 280G
of the Code.  To the extent permitted
under Revenue Procedure 2003-68, the value determination shall be recalculated
to the extent it would be beneficial to Executive.  All determinations hereunder shall be made by
the Accountants which shall provide detailed supporting calculations both to
the Company and Executive at such time as they are requested by the Company or
Executive.  If the Accountants determine
that payments under this Agreement must be reduced pursuant to this paragraph,
they shall furnish Executive with a written opinion to such effect.  The determination of the Accountants shall be
final and binding upon the Company and Executive.

 

(f)  For purposes of
determining the amount of the Gross-Up Payment, Executive’s marginal blended
rates of Federal, state and local income taxation in the calendar year in which
the change in ownership or effective control that subjects Executive to the
Excise Tax occurs shall be used.  In the
event that the Excise Tax is subsequently determined by the Accountants to be
less than the amount taken into account hereunder at the time the Gross-Up
Payment is made, Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of
the prior Gross-Up Payment attributable to such reduction (plus the portion of
the Gross-Up Payment attributable to the Excise Tax and Federal, state and
local income tax imposed on the portion of the Gross-up Payment being repaid by
Executive if such repayment results in a reduction in Excise Tax or a Federal,
state and local income tax deduction), plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.  Notwithstanding the foregoing, in
the event any portion of the Gross-Up Payment to be refunded to the Company has
been paid to any Federal, state and local tax authority, repayment thereof (and
related amounts) shall not be required until actual refund or credit of such
portion has been made to Executive, and interest payable to the Company shall
not exceed the interest received or credited to Executive by such tax authority
for the period it held such portion. 
Executive and the Company shall mutually agree upon the course of action
to be pursued (and the method of allocating the expense thereof) if Executive’s
claim for refund or credit from such tax authority is denied.

 

(g)  In the event that the
Excise Tax is later determined by the Accountants or the Internal Revenue
Service to exceed the amount taken into account hereunder at the time the
Gross-Up Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest or penalties payable with respect to such excess) at the
time that the amount of such excess is finally determined.

 

18

 

(h)  The Gross-up Payment
or portion thereof provided for above shall be paid not later than the sixtieth
day following a change in ownership or effective control covered by Section 280G(b)(2) of
the Code that subjects Executive to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof cannot be
finally determined on or before such day, the Company shall pay to Executive on
such day an estimate, as determined in good faith by the Accountant, of the
minimum amount of such payments and shall pay the remainder of such payments,
subject to further payments pursuant to Section 17(d), as soon as the
amount thereof can reasonably be determined, but in no event later than the
ninetieth day after the occurrence of the event subjecting Executive to the
Excise Tax.  In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, subject to Section 17(l), such excess shall constitute a loan by
the Company to Executive, payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code).

 

(i)  In the event of any
controversy with the Internal Revenue Service (or other taxing authority) with
regard to the Excise Tax, Executive shall permit the Company to control issues
related to the Excise Tax (at its expense), but Executive shall control any
other issues unrelated to the Excise Tax. 
In the event that the issues are interrelated, Executive and the Company
shall cooperate in good faith.  In the
event of any conference with any taxing authority as to the Excise Tax or
associated income taxes, Executive shall permit the representative of the
Company to accompany Executive, and Executive and her representative shall
cooperate with the Company and its representative.

 

(j)  The Company shall be
responsible for all charges of the Accountant.

 

(k)  The Company and
Executive shall promptly deliver to each other copies of any written
communications, and summaries of any verbal communications, with any taxing
authority regarding the Excise Tax covered by this provision.

 

(l)  Nothing in this Section 17
is intended to violate the Sarbanes-Oxley Act and to the extent that any
advance or repayment obligation hereunder would do so, such obligation shall be
modified so as to make the advance a nonrefundable payment to Executive and the
repayment obligation null and void.

 

(m)  Notwithstanding the
foregoing, any payment or reimbursement made pursuant to Section 17(a),
17(b), 17(d), 17(f) or 17(g) shall be paid to the Executive promptly
and in no event later than the end of the calendar year next following the
calendar year in which the related tax is paid by the Executive.

 

18.  Assignment.  (a)   
This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive, except for the
assignment by will or the laws of descent and distribution of any accrued
pecuniary interest of Executive, and any assignment in violation of this
Agreement shall be void.

 

(b)  This Agreement shall
be binding on, and shall inure to the benefit of, the parties to it and their
respective heirs, legal representatives, successors and permitted assigns 

 

19

 

(including, without limitation, in the event
of Executive’s death, Executive’s estate and heirs in the case of any payments
due to Executive hereunder).

 

(c)  Executive
acknowledges and agrees that all of Executive’s covenants and obligations to
the Company, as well as the rights of the Company hereunder, shall run in favor
of and shall be enforceable by the Company and its successors and assigns, provided that
the successor or assignee is the successor to all or substantially all of the
assets of the Company and such assignee or successor assumes the rights and
duties of the Company as contained in this Agreement, either contractually or as
a matter of law.

 

19.  Indemnification
and Insurance; Legal Expenses. 
During the Term and for so long thereafter as liability exists with
regard to Executive’s activities during the Term on behalf of the Company, its
Affiliates, or as a fiduciary of any benefit plan of any of them, the Company
shall indemnify Executive to the fullest extent permitted by applicable law
(other than in connection with Executive’s gross negligence or willful
misconduct), and shall pay, or reimburse Executive for, reasonable attorneys’
fees and expenses as such fees and expenses are incurred, which amounts shall
be paid or reimbursed as soon as practicable after Executive incurs such fees
and expenses and submits documentation thereof (which shall be submitted within
ninety (90) days of the incurrence of the fees or expenses), but in no event
later than the Short-Term Deferral Date (subject to an undertaking from
Executive to repay such advances if it shall be finally determined by a
judicial decision which is not subject to further appeal that Executive was not
entitled to the reimbursement of such fees and expenses).  During the Term and thereafter while
liability exists, Executive shall be entitled to the protection of any
insurance policies the Company shall elect to maintain generally for the
benefit of its directors and officers (“Directors and Officers Insurance”)
against all costs, charges and expenses incurred or sustained by her in
connection with any action, suit or proceeding to which she may be made a party
by reason of her being or having been a director, officer or employee of the
Company or any of its Affiliates or her serving or having served any other
enterprise or benefit plan as a director, officer, fiduciary or employee at the
request of the Company (other than any dispute, claim or controversy arising
under or relating to this Agreement), provided that Executive
shall, in all cases, be entitled to Directors and Officers Insurance coverage
no less favorable than that (if any) then currently provided to any other
present or former director or officer of the Company.

 

20.  No
Mitigation; No Offset.  Executive
shall not be required to seek other employment or otherwise mitigate the amount
of any payments to be made by the Company pursuant to this Agreement.  The
payments provided pursuant to this Agreement shall not be reduced by any
compensation earned by Executive as the result of employment by another
employer after the termination of Executive’s employment or otherwise.  Except as specifically provided in this Agreement,
the Company’s obligation to make the payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against Executive or others.

 

21.  Governing
Law.  This Agreement shall be deemed
to be made in the State of New York, and the validity, interpretation,
construction, and performance of this Agreement in all respects shall be
governed by the laws of the State of New York without regard to its principles
of conflicts of law.  No provision of
this Agreement or any related document will be 

 

20

 

construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority by reason of
such party having or being deemed to have structured or drafted such provision.

 

22.  Consent
to Jurisdiction.  (a)  Except as
otherwise specifically provided herein, Executive and the Company each hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York (or, if subject matter jurisdiction
in that court is not available, in any state court located within the Borough
of Manhattan, New York) over any dispute arising out of or relating to this
Agreement.  Except as otherwise
specifically provided in this Agreement, the parties undertake not to commence
any suit, action or proceeding arising out of or relating to this Agreement in
a forum other than a forum described in this Section 22(a); provided, however,
that nothing herein shall preclude the Company from bringing any suit, action
or proceeding in any other court for the purposes of enforcing the provisions
of this Section 22 or enforcing any judgment obtained by the Company.

 

(b)  The agreement of the
parties to the forum described in Section 22(a) is independent of the
law that may be applied in any suit, action, or proceeding and the parties
agree to such forum even if such forum may under applicable law choose to apply
non-forum law.  The parties hereby waive,
to the fullest extent permitted by applicable law, any objection which they now
or hereafter have to personal jurisdiction or to the laying of venue of any
such suit, action or proceeding brought in an applicable court described in Section 22(a),
and the parties agree that they shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.  The parties agree that, to the fullest extent
permitted by applicable law, a final and non-appealable judgment in any suit,
action or proceeding brought in any applicable court described in Section 22(a) shall
be conclusive and binding upon the parties and may be enforced in any other
jurisdiction.

 

(c)  The parties hereto
irrevocably consent to the service of any and all process in any suit, action
or proceeding arising out of or relating to this Agreement by the mailing of
copies of such process to such party at such party’s address specified
herein.  In addition, Executive
irrevocably appoints the General Counsel of the Company as Executive’s agent
for service of process in connection with any suit, action or proceeding, who
shall promptly advise Executive of any such service of process.

 

(d)  The prevailing party
in an action hereunder, as determined by the applicable court, shall be
entitled to recover reasonable legal fees and related costs from the other
party; provided that such fees and costs are incurred prior to the fifth
anniversary of the expiration of the Term, and that in the event the Company is
entitled to recover such fees and costs from Executive, the amount of such
recovery shall be limited to $150,000. 
In the event that Executive is entitled to recover such fees and costs
all such amounts shall be paid to her within thirty (30) days after the award
of such fees and costs by the applicable court.

 

23.  Amendment;
No Waiver.  No provisions of this
Agreement may be amended, modified, waived or discharged except by a written
document signed by Executive and a duly authorized officer of the Company
(other than Executive).  The failure of a
party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of such party’s rights or deprive
such party of the right thereafter to insist upon strict adherence 

 

21

 

to that term or any other term of this Agreement.  No failure or delay by either party in
exercising any right or power hereunder will operate as a waiver thereof, nor
will any single or partial exercise of any such right or power, or any
abandonment of any steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power.

 

24.  Severability.  If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any applicable law or public
policy, all other conditions and provisions of this Agreement shall nonetheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

 

25.  Entire
Agreement.  This Agreement (including
the Exhibits hereto and any other agreements or side letters entered into
simultaneously with or following the date hereof that specifically provide that
they are intended to modify or supplement this Agreement) constitutes the
entire agreement and understanding between the Company and Executive with
respect to the subject matter hereof and supersedes all prior agreements and
understandings (whether written or oral), between Executive and the Company,
relating to such subject matter.  None of
the parties shall be liable or bound to any other party in any manner by any
representations and warranties or covenants relating to such subject matter
except as specifically set forth herein.

 

26.  Survival.  The rights and obligations of the parties
under the provisions of this Agreement shall survive, and remain binding and
enforceable, notwithstanding the expiration of the Term, the termination of
this Agreement, the termination of Executive’s employment hereunder or any
settlement of the financial rights and obligations arising from Executive’s
employment hereunder, to the extent necessary to preserve the intended benefits
of such provisions.

 

27.  Notices.  All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand or sent by facsimile or sent, postage prepaid, by registered, certified
or express mail or overnight courier service and shall be deemed given when so
delivered by hand or facsimile, or if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service) to the
parties at the following addresses or facsimiles (or at such other address for
a party as shall be specified by like notice):

 

22

 

	
  If to the
  Company:

  	
   

  	
  The Reader’s
  Digest Association, Inc.

  Roaring
  Brook Road

  Pleasantville,
  New York 10570

  Attention:
  Board of Directors and General Counsel

  Fax:
  914-244-5644

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Ripplewood Holdings L.L.C.

  One Rockefeller Plaza, 32nd Floor

  New York, NY 10020

  Attention: Christopher Minnetian

  Fax: 212-218-2769

  

 

23

 

	
  If to Executive:

  	
   

  	
  To the address last shown on the records of the Company

  

 

Notices delivered by facsimile shall have the same legal effect as if
such notice had been delivered in person.

 

28.  Headings
and References.  The headings of this
Agreement are inserted for convenience only and neither constitute a part of
this Agreement nor affect in any way the meaning or interpretation of this
Agreement.  When a reference in this
Agreement is made to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated.

 

29.  Counterparts.  This Agreement may be executed in one or more
counterparts (including via facsimile and electronic image scan (pdf)), each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.

 

24

 

IN WITNESS WHEREOF, this Agreement has been
executed by the parties as of the date first written above.

 

	
   

  	
  THE READER’S DIGEST

  ASSOCIATION, INC.,

  
	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Harvey Golub

  
	
   

  	
   

  	
   Name:  Harvey Golub

  
	
   

  	
   

  	
   Title:    Chairman
  of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MARY BERNER

  
	
   

  	
   

  	
  /s/ Mary
  Berner

  
					

 

25

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