EXHIBIT 10.36
[Date]
Performance Share Award -- Letter Agreement
Fiscal XXXX-YYYY -- Long-Term Incentive
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Dear <>:
I am pleased to advise you that the Compensation and
Nominating Committee (the "Committee") of The Reader's Digest
Association, Inc. (the "Company") has awarded to you the
opportunity to earn the Performance Shares shown below under The
Reader's Digest Association, Inc. [1994] Key Employee Long Term
Incentive Plan (the "Plan") for the Fiscal XXXX-YYYYPerformance
Cycle, which begins on [date] and ends on [date] (the "Performance
Cycle").
Threshold Target Maximum
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This award is subject to the following terms and conditions:
1. Each Performance Share shall be valued at the average
closing price of one share of the Company's Common Stock over the
last 20 trading days of the Performance Cycle. In accordance with
the terms of the Plan, each Performance Share shall automatically
be valued with reference to one share of the Company's Common Stock.
2(a).In accordance with paragraph 5 below, no portion of the
Performance Share Award shall be paid in cash or credited as
deferred compensation unless and until you have remained in the
continuous employment of the Company or its Designated Subsidiaries
(as defined in the Plan) for the Performance Cycle and provided the
Committee has certified the attainment of Performance Goals in
accordance with paragraph 3 below.
2(b).The number of Performance Shares earned as of the end of
the Performance Cycle shall be based on the Award Opportunity
Tables and methodology described in Schedule A.
3. Promptly after the end of the Performance Cycle, and
after certification in writing by the Committee of the extent of
the attainment of the Performance Goals set forth in Schedule A,
the value of any Performance Shares you have earned in accordance
with paragraph 2(b) above shall be paid out to you in cash, to the
extent not deferred as described in paragraph 4 below.
The Committee shall not have discretion to increase the amount
of compensation payable that would otherwise be due upon attainment
of the Performance Goals. Notwithstanding any other provisions of
this award, the Committee shall have the discretion to reduce the
compensation payable that would otherwise be due upon attainment of
the Performance Goal in the manner permitted under Section 162(m)
of the Internal Revenue Code of 1986, as amended.
4. At any time on or before [date], you may elect the
percentage, if any, of your Performance Share Award otherwise
payable to you, as provided in paragraph 2 and Schedule A, that you
wish to be deferred. An election form for this purpose is attached
to this letter (Schedule B).
5. Notwithstanding any provision to the contrary set forth
in any prior contract, agreement, plan or policy (including, but
not limited to, a provision calling for payment by the Company 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 the Company and its Designated Subsidiaries
terminates prior to the end of the Performance Cycle by reason of
retirement, death, disability, voluntary resignation or involuntary
termination for any reason, all of the Performance Shares subject
to this award and all of the performance shares (if any) subject to
any prior awards to you under the Plan that remain outstanding are
forfeited and canceled by the Company, and all such Performance
Shares shall be deemed not to have any value. Transfers within or
between the Company and its Designated Subsidiaries, shall not be
considered a termination of employment for purposes of this
paragraph.
6. Subject to the applicable provisions of this Letter
Agreement and the Plan, Performance Shares may not be transferred.
7. In the event of a "Change in Control" (as defined in the
Plan), the Performance Cycle will be deemed to have terminated on
the date of the Change in Control and you will be deemed to have
earned the target number of Performance Shares subject to this
award as of that date. Payment will be made within thirty (30)
days following the Change in Control, except to the extent that an
election to defer was in effect in accordance with paragraph 4 of
this Letter Agreement.
8. (a) Notwithstanding anything herein to the contrary, the
Committee may terminate this award immediately if you engage in any
Detrimental Activity.
(b) As a condition of the payment of this award, you shall
certify at the time of payment in a manner acceptable to the
Company that you are in compliance with the terms and conditions of
the Plan and that you have not engaged in, and do not intend to
engage in, any Detrimental Activity. In the event you engage in a
Detrimental Activity prior to, or during the two (2)-year period
after, your termination of employment with the Company and its
Designated Subsidiaries, the Company shall be entitled to recover
from you at any time within two (2) years after such termination of
employment, and you shall pay over to the Company, the full amount
of any payment to you under this award that was made within two (2)
years prior to your termination of employment, and the Company
shall be entitled to set-off against the amount of any such payment
any amount owed to you by the Company or its affiliates.
Furthermore, if you do not pay over to the Company within twenty
(20) days of demand any payment of this award, such amount shall
thereafter bear interest at the maximum rate permitted by law and
you shall be liable for all of the Company's costs of collection,
including but not limited to, reasonable legal fees.
(c) "Cause" for purposes of this award shall include, by way
of example, but not limited to, insubordination, dishonesty,
incompetence, moral turpitude, other misconduct of any kind,
conviction of (or pleading guilty or nolo contendere to ) a crime,
a material violation of any rules, policies, procedures or
guidelines of the Company or its affiliates, or refusal to perform
normal duties and responsibilities (for any reason other than
illness or incapacity) which, in any case, the Company classifies
as a termination for Cause.
(d) Except in the event that a Change in Control has occurred
and your employment with the Company and its Designated
Subsidiaries has terminated involuntarily without Cause (as defined
in paragraph 8(c)), "Detrimental Activity" means:
(i) the disclosure to anyone outside the Company or its
affiliates, or the use in other than the Company's or its
affiliate's business, without written authorization from the
Company, of any confidential information or proprietary
information, relating to the business of the Company or its
affiliates, acquired by you during employment with the Company
or its affiliates;
(ii) activity while employed that results, or if known
could result, in termination of your employment that is
classified by the Company as a termination for Cause as
defined in paragraph 8(c) above;
(iii) any attempt, directly or indirectly, to solicit,
induce or hire (or the identification for solicitation,
inducement or hire) any non-clerical employee of the Company
or its affiliates to be employed by, or to perform services
for, you or any person or entity with which you are associated
(including, but not limited to, due to your employment by,
consultancy for, equity interest in, or creditor relationship
with such person or entity) or any person or entity from which
you receive direct or indirect compensation or fees as a
result of such solicitation, inducement or hire (or the
identification for solicitation, inducement or hire) without,
in all cases, written authorization from the Company;
(iv) any attempt, directly or indirectly, to solicit in a
competitive manner any current or prospective customer (other
than the ultimate consumer) or advertiser of the Company or
its affiliates without, in all cases, written authorization
from the Company;
(v) your Disparagement, or inducement of others to do so,
of the Company or its affiliates or their past and present
officers, directors, employees or products;
(vi) without written authorization from the Company, the
rendering of services, at any time during the period of one
(1) year after your termination of employment with Reader's
Digest and its Designated Subsidiaries, for any organization,
or engaging, directly or indirectly, in any business, which is
competitive with the Company or its affiliates, or which
organization or business, or the rendering of services to such
organization or business, is otherwise prejudicial to or in
conflict with the interests of the Company or its affiliates,
provided however that the only organizations and businesses
which shall be covered by this subparagraph (vi) shall be
those set forth on Schedule C hereto (which list may be
changed or expanded by the Committee at any time on 90 days
written notice to you which notice shall become effective 90
days after the giving of such notice, if you are then employed
by the Company or any Designated Subsidiaries); or
(vii) any other conduct or act determined by the
Committee, in its sole discretion, to be injurious,
detrimental or prejudicial to any interest of the Company or
its affiliates.
In the event that a Change in Control has occurred and your
employment with the Company and its Designated Subsidiaries has
terminated involuntarily without Cause (as defined in paragraph
8(c)), "Detrimental Activity" shall have the meaning stated in
subparagraph 8(d)(i), only.
For purposes of subparagraphs 8(d)(i), (iii), (iv) and (vi)
above, the Chief Executive Officer, the most senior Human Resources
Officer and the most senior Legal Officer of the Company shall each
have authority to provide you with written authorization to engage
in the activities contemplated thereby and no other person shall
have authority to provide you with such authorization.
(e) "Disparagement" includes, without limitation, comments or
statements to the press, the Company's or its affiliates' employees
or any individual or entity with whom the Company or its affiliates
has a business relationship which would adversely affect in any
manner: (i) the conduct of the business of the Company or its
affiliates (including, without limitation, any products or business
plans or prospects), or (ii) the business reputation of the Company
or its affiliates, or any of their products, or their past or
present officers, directors or employees.
9. Any portion of a Performance Share Award that does not
become payable or creditable to a Participant in accordance with
paragraph 2, 5, 7, or 8 above and Schedule A shall be retained by
the Company and canceled.
10. Nothing in this Letter Agreement is intended to or shall
give you any right or status of any kind as a stockholder of the
Company or entitle you to dividends in respect of the shares of
Common Stock on which the Performance Shares are based. This
Letter Agreement does not confer upon you any right to continue in
the employ of the Company or any of its subsidiaries or
affiliates. The granting of this award does not entitle you to any
benefit other than the benefits specifically and expressly granted
hereunder. Any benefits granted under this award are not part of
your ordinary salary, and shall not be considered as part of such
salary in the event of severance, redundancy or resignation. This
Letter Agreement is subject to and is to be construed in accordance
with the terms and provisions of the Plan and any terms defined
therein shall have the same meanings when used herein. In the
event of any conflict between this Letter Agreement and the terms
and provisions of any prior contract, agreement, plan or policy,
the terms and provisions of this Letter Agreement shall control.
11. The Plan and this Letter Agreement 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 the Plan and this Letter
Agreement 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 the
Plan and this Letter Agreement.
Please indicate your acceptance by signing this letter and
returning it to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Global
Compensation and Benefits.
Sincerely,
THE READER'S DIGEST ASSOCIATION, INC.
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
Accepted:______________________________________
Participant's Signature