Supplemental Retirement Benefit Agreement - Reader's Digest Association Inc. and Joseph M. Grecky
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THE READER'S DIGEST ASSOCIATION, INC.
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
Joseph M. Grecky of 13 Pelham Lane, Ridgefield, CT (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 $51,000 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 $21,405
to be made in five or, if the employee elects, fewer annual
installments computed 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 way 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.
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:
Virginia C. Bress Joseph M. Grecky
Virginia C. Bress Joseph M. Grecky
Employee
Virginia C. Bress George V. Grune
Virginia C. Bress George V. Grune
For The Reader's Digest Association, Inc.