Supplemental Retirement Benefit Agreement - Reader's Digest Association Inc. and Peter Davenport
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
Peter Davenport of Mt. Kisco, NY (hereinafter referred to as the "Employee") and
The Reader's Digest Association, Inc., a Delaware corporation with its
headquarters at New Castle, New York (hereinafter referred to as the "Company")
hereby agree as follows:
1. Subject to fulfillment of the terms and conditions set forth in this
Agreement, the Company shall pay the Employee, a supplemental retirement benefit
of $60,000 per year for 15 years commencing at his normal retirement date. If he
retires early, the Employee may elect to commence benefit payments at that
earlier date which in no event shall be prior to attainment of age 55. In the
event of such election for earlier payment, the Employee's supplemental
retirement benefit will be reduced at the rate of 3% for each year by which the
payment commencement date precedes his normal retirement age.
2. The Employee agrees to fund his supplemental retirement benefit through
the voluntary and irrevocable reduction in future earned compensation or by
other payment in the amount of $16,943 to be made in five or, if the employee
elects, fewer annual installments commuted to be of equivalent value.
In the event that the Employee has elected to fund his benefit by
reduction of future bonus payments and any such bonus is not paid or is
insufficient to meet that year's payment schedule contemplated by this
Agreement, the Employee shall be permitted to make or complete his annual
payment amount by entering into a salary reduction agreement with the Company or
by otherwise contributing the necessary funds to the Company not later than
December 31 of that year or by such other date as the Company in its sole
discretion shall determine. The method of funding his benefit is reflected on
Schedule A attached to this Agreement and made a part hereof.
3. Upon the completion of all installments described in paragraph 2 above,
and provided the Employee is not in violation of the provisions of paragraph 4
below, or has not been discharged for cause as provided in paragraph 5 below,
the Employee shall be fully vested in his supplemental retirement benefit.
4. The Employee agrees that he will at no time disclose directly or
indirectly any secret or other confidential information of the Company to any
competitor or to any person not expressly authorized by the Company to receive
such information.
5. If the Employee's employment with the Company is involuntarily
terminated for cause, or if the Employee is in violation of the provision of
paragraph 4 above, the Employee shall forfeit all the rights and benefits of
this Agreement and shall receive within 90 days of the event constituting such
forfeiture, the total amount deferred or paid theretofore under this Agreement
with interest compounded annually at the rate of 8%.
For the purposes of this Agreement, cause shall mean a discharge from
employment occurring by reason of the Employee's embezzlement, proven
dishonesty, fraud, conviction of felonious or other charge involving moral
turpitude, improper communication of confidential information obtained in the
course of employment with the Company, willful failure or refusal to perform the
Employee's duties and responsibilities, or conspiracy against the Company.
6. If the Employee shall die after having commenced the payments required
in paragraph 2 above but before he has received any installments of his
supplemental income benefit under paragraph 1 above, his beneficiary shall
become immediately vested in a survivor's income benefit as described in
Schedule A attached hereto and the Company shall pay the benefit to his
beneficiary in such manner as the beneficiary, with the Company's consent, shall
elect.
7. If the Employee fails to complete all payment installments required
under paragraph 2 above, whether because of his disability, departure from the
Company or for any other reason, excluding only death in active service, the
Company shall pay him, not later than March 31 of the year following the year in
which such failure to complete payment occurred, the total amounts deferred or
paid theretofore under this Agreement with interest compounded annually at 8%.
8. If the Employee shall die after the benefits described in paragraph 1
have commenced but before all annual installments have been made, the unpaid
balance shall be paid to his beneficiary in such manner as the beneficiary, with
the Company's consent, may elect.
9. Upon application by the Employee to the Compensation Committee of the
Company's Board of Directors, and provided the Employee is then fully vested in
his supplemental retirement benefit, the Committee may, in its sole discretion,
allow distribution to the Employee of all or part of the benefit, which shall
not in any event exceed the then projected value of the benefit, prior to the
agreed upon commencement date for benefits under paragraph 1 above. Any amount
so distributed shall be limited to that which is necessary to relieve the
hardship or meet the financial emergency which triggered the application. Any
distribution made under this paragraph shall cause a reduction in equivalent
value to the benefits thereafter payable under this Agreement and a revised
Schedule A shall be prepared and attached hereto.
10. The Company may own a policy or policies of permanent cash value life
insurance on the life of the Employee, and the Company shall be the sole owner
and beneficiary of any such policies. The Employee agrees to cooperate with the
Company in the application process for any such insurance. If the Company shall
acquire an insurance policy or any other asset in connection with its obligation
under this Agreement, it is expressly understood and agreed that neither the
Employee nor any beneficiary or successor to the interest of the Employee shall
have any right to, or claim against, such policy or other asset. Such policy or
asset shall not be deemed to be held under any trust for the benefit of the
Employee, his beneficiaries, successors or assigns, or to be held in any pay as
collateral security for the fulfillment of the obligations of the Company under
this Agreement but shall be and remain a general, unpledged asset of the
Company.
11. The Employee shall have the right to designate in writing his
beneficiary or beneficiaries under this Agreement. Such designation shall not be
effective unless filed with the Company. The Employee shall have the right to
change his beneficiary and to name successive or contingent beneficiaries. If
there is no effective designation of a beneficiary on file at the time of the
Employee's death, any death benefit payable hereunder shall be paid to the
Employee's spouse, if any, and if none, to his children, if any, in equal
shares, and if none, to his personal representatives. For all purposes of this
Agreement, such person shall be treated as the beneficiary hereunder.
12. It is expressly agreed that nothing contained in this Agreement shall
be construed as giving an Employee the right to be retained in the employ of the
Company, or as restricting the right of the Company or the Employee to terminate
the employment relationship for any reason.
13. This Agreement shall bind and run to the benefit of the successors and
assigns of the Company, including any corporation or other form of business
organization with which it may merge or consolidate, or to which it may transfer
substantially all of its assets.
14. The rights of the Employee under this Agreement shall not be
anticipated, alienated, assigned, hypothecated, or otherwise transferred in any
manner.
15. The validity, construction, interpretation and administration of this
Agreement shall be determined solely in accordance with the laws of the State of
New York.
<PAGE>
IN WITNESS WHEREOF, said Employee has hereunto signed his name and the
Company has caused this instrument to be executed in its name and on its behalf
by its duly authorized officer as of the 25 day of August, 1988.
Witnesseth:
/S/DOROTHY M. CRAFT /S/ PETER DAVENPORT
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Employee
/S/VIRGINA BREEN /S/JOSEPH M. GRECKY
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For The Reader's Digest
Association, Inc.
<PAGE>
SUPPLEMENTAL EMPLOYEE'S RETIREMENT PLAN
PAYMENT ELECTION FORM
1. I elect to fund the supplemental retirement benefit by agreeing to an
irrevocable reduction of future incentive bonus payments and/or base salary
based upon the following schedule:
Year Amount
1988 16,943
------
1989 16,943
------
1990 16,943
------
1991 16,943
------
1992 16,943
------
Total $ 84,715
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CHECK ONE:
1a. If the incentive bonus is insufficient in any year to complete the annual
payment, I elect to fund the remaining balance by a salary reduction commencing
on the first pay period in October and continuing in equal installments for the
remainder of the Fiscal Year.
1b. [X] If the incentive bonus is insufficient in any year to complete the
annual payment, I elect to pay the remaining balance by check no later than
December 31 of each year.
OR
2. I elect to fund the supplemental retirement benefit by
forwarding checks payable to The Reader's Digest Association, Inc. no
later than December 31, of each year:
Year Amount
1989 ____________
1990 ____________
1991 ____________
1992 ____________
1993 ____________
Total $___________
/S/ PETER DAVENPORT
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Signature
August 24, 1988
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Date
<PAGE>
Beneficiary Designation Form
Pursuant to paragraph 11 of the Supplemental Retirement Agreement dated as
of 8/25/88 between Peter Davenport and The Reader's Digest Association, Inc. I
hereby designate the following to be my designated beneficiary(ies) under the
Agreement.
A) Primary Beneficiary(ies):
The Estate of Peter Davenport
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name relationship Social Security #
--------------------------------- ------------------------
name relationship Social Security #
--------------------------------- ------------------------
name relationship Social Security #
(for additional beneficiaries, please see reverse)
B) Contingent Beneficiary(ies) in the event that no one designated as primary
beneficiary under (A) above is living at the date of my death:
--------------------------------- ------------------------
name relationship Social Security #
--------------------------------- ------------------------
name relationship Social Security #
--------------------------------- ------------------------
name relationship Social Security #
(for additional beneficiaries, please see reverse)
I reserve the right to revoke or change my beneficiaries by filing a new
form with the Company.
/S/ PETER DAVENPORT
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Employee Signature
3/10/90
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Date