Sample Business Contracts


Severance Agreement - Reader's Digest Association Inc. and Marcia M. Lefkowitz


                        [RDA letterhead]




                                September 8, 1997

Marcia M. Lefkowitz
2 Whippoorwill Lake Road
Chappaqua, New York  10514

Dear Marcia:

This  letter  serves to confirm those payments and benefits  that
you will receive, subject to and in accordance with the terms and
conditions of this Agreement in connection with a termination  of
your employment with the Company.

1.   Termination of Employment

1.1  The  Company may terminate your employment at any time, with
     or  without  stated reason.  You shall receive the  benefits
     provided  hereunder upon the termination of your  employment
     by  you for "Good Reason," as defined in Section 1.2, or the
     termination  of your employment by the Company, unless  such
     termination is for "Cause," as defined in Section 3.1 of the
     Severance  Plan.   In addition, if you terminate  employment
     for  any  reason after September 1, 2000 you  will  also  be
     entitled to the benefits hereunder.  Any termination by  you
     shall  be  communicated  by written  Notice  of  Termination
     indicating  the  termination  provision  in  this  Agreement
     relied  upon, if any, and the Date of Termination;  provided
     that  the  Date of Termination shall in no event be  earlier
     than 10 business days after the date on which such Notice of
     Termination is effective pursuant to Section 15 hereof.
     
1.2  For purposes of this Agreement, "Good Reason" shall mean the
     occurrence  of  any  of the following without  your  express
     written consent:
     
     1.2.1the  assignment to you without your written consent  of
          any  duties  materially  inconsistent  with  your  then
          current  position, duties, responsibilities and  status
          with   the   Company,  or  a  material  change   or   a
          substantial diminution in your then current  authority,
          reporting  responsibilities,  titles  or  offices,   or
          removal  from or failure to re-elect you  to  any  such
          position   or  office  except  in  the   event   of   a
          termination of your employment for Cause, death,  total
          disability   (as   defined  in  The   Reader's   Digest
          Association,   Inc.  Retirement  Plan)   or   mandatory
          retirement;
          
     1.2.2a  reduction by the Company in your annual base  salary
          as  in  effect on the date of this Agreement or as  the
          same  may  be increased from time to time, unless  such
          reduction  is part of and consistent with a good  faith
          management-wide  or Company-wide cost cutting  program,
          and  then  only if the percentage of your reduction  is
          no   greater   than   that  of  the  other   management
          personnel;
          
     1.2.3a  relocation without your written consent to an office
          located  anywhere other than within 50  miles  of  your
          primary  residence,  except  for  required  travel   on
          Company  business to an extent substantially consistent
          with your then current business travel obligations;
          
     1.2.4the  failure by the Company to continue in  effect  any
          compensation plan or other fringe benefit  provided  by
          the  Company  in which you participate on the  date  of
          this Agreement that, by itself or in the aggregate,  is
          material  to your total compensation from the  Company,
          unless  there shall have been instituted a  replacement
          or   substitute   plan  or  fringe  benefit   providing
          comparable benefits or unless such failure is  part  of
          and    consistent   with   a   good    faith    benefit
          discontinuance  applicable to  all  of  the  management
          personnel of the Company and then only if the scope  of
          the  discontinuance with respect to you is  no  greater
          than that of the other management personnel; or
          
     1.2.5the  failure  of  the Company to obtain a  satisfactory
          agreement  from any successor to the Company to  assume
          and  agree  to  perform  this Agreement.   The  Company
          shall  use  its  best efforts to require any  successor
          (whether  direct  or  indirect,  by  purchase,  merger,
          consolidation  or  otherwise) to all  or  substantially
          all  of  the  businesses or assets of  the  Company  to
          expressly assume and agree to perform this Agreement.
          
1.3  Any  termination of your employment by you for "Good Reason"
     shall  be made within 180 days after the occurrence  of  the
     "Good Reason."
     
2.   Compensation Upon Termination

2.1  If  your employment shall be terminated and you are entitled
     to  benefits under Section 1 of this Agreement then,  except
     as  provided  in Section 2.2 and 2.3, you shall receive  the
     following benefits for each year of the Severance Period (as
     defined below):
     
     2.1.1the  Company shall pay to you as severance pay a  total
          amount equal to the sum of
          
         (a)  your  highest annual base salary in effect any time
               during  the 12-month period prior to the  Date  of
               Termination plus
               
         (b)  the higher of the following:
               
              (i)  the  highest  amount paid  to  you  under  The
                    Reader's  Digest Association, Inc. Management
                    Incentive  Compensation  Plan  (the   "Annual
                    Incentive Plan") during the three plan  years
                    most  recently  ended prior to  the  Date  of
                    Termination; or
                    
              (ii) the  originally approved target amount of  the
                    highest  award,  if  any,  under  the  Annual
                    Incentive  Plan outstanding on  the  Date  of
                    Termination, as such target amount  may  have
                    been   increased  prior  to   the   Date   of
                    Termination.
                    
               Any compensation received by you or granted to you
               in  lieu  of  an  amount  paid  under  the  Annual
               Incentive Plan for any one-year period (whether in
               the  form of restricted stock or otherwise)  shall
               be  deemed  to be an amount paid to you under  the
               Annual   Incentive  Plan  for  purposes  of   this
               Section.   Any compensation receivable by  you  in
               lieu   of  an  amount  payable  under  the  Annual
               Incentive  Plan for any period shall be deemed  to
               be  an  additional target amount for  purposes  of
               this   Section.   The  amount  of   any   non-cash
               compensation received or receivable shall  be  the
               greater   of  the  fair  market  value   of   such
               compensation  on  the date of award  or  the  cash
               amount  that would have been received  by  you  in
               lieu of such non-cash compensation.
               
          The  aggregate amount of severance payable  under  this
          Section  shall be paid in equal installments on  a  bi-
          weekly basis, commencing upon the Date of Termination.
          
     2.1.2the  Company  shall maintain in full force and  effect,
          for  your  continued benefit for the Severance  Period,
          all  welfare benefit plans and programs or arrangements
          in  which  you  participated immediately prior  to  the
          Date  of  Termination,  provided  that  your  continued
          participation is possible under the general  terms  and
          conditions of such welfare plans and programs.  In  the
          event  that  your  participation in any  such  plan  or
          program  is barred, the Company shall provide you  with
          benefits  substantially  similar  to  those  which  you
          would  have been entitled to receive under such welfare
          plans  and  programs  had your participation  not  been
          barred.
          
2.2  If your employment is terminated by you for "Good Reason" or
     if  your employment is terminated by the Company other  than
     for  "Cause," then the Severance Period shall be the  period
     of two years immediately following the Date of Termination.
     
2.3  If  your  employment  is terminated for Cause,  the  Company
     shall  pay  you  your  base  salary  through  the  Date   of
     Termination,   and  the  Company  shall  have   no   further
     obligations to you under this Agreement.
     
3.   Long-Term Incentive Plan Benefits

3.1  You  shall have the right to exercise your outstanding stock
     options  and  stock appreciation rights under the  1989  and
     1994  Key Employee Long-Term Incentive Plans (the "Long Term
     Incentive  Plans")  to the extent they  are  exercisable  or
     would  become exercisable during the Severance Period as  if
     your  employment  with  the  Company  continued  during  the
     Severance Period.  Such stock options and stock appreciation
     rights shall continue to vest during the Severance Period as
     if  your  employment with the Company continued  during  the
     Severance  Period  and,  upon completion  of  the  Severance
     Period,  shall vest and be exercisable as if your employment
     terminated  at  that  time  by  reason  of  either  (a)   an
     involuntary termination without cause or a mutual  agreement
     (within the terms of the particular award) or (b) retirement
     (within the terms of the particular award), if applicable.
     
3.2  Your  outstanding  performance units, restricted  stock  and
     awards  (other  than  stock options and  stock  appreciation
     rights)  under the Long Term Incentive Plans shall  continue
     to be outstanding and payable during the Severance Period as
     if  your  employment with the Company continued  during  the
     Severance  Period  and,  if  applicable,  shall  vest   upon
     completion  of the Severance Period in accordance  with  the
     terms of the award as if your employment terminated at  that
     time  by  reason  of  either (a) an involuntary  termination
     without cause or a mutual agreement (within the terms of the
     particular award) or (b) retirement (within the terms of the
     particular  award), if applicable.  Any such award  that  is
     based  on  a  period of employment shall  be  payable  on  a
     prorated  basis  as if your employment had continued  during
     the Severance Period.
     
     3.2.1If  any  such  award is subject to specific performance
          goals  and  your employment is terminated  by  you  for
          "Good  Reason" or your employment is terminated by  the
          Company  other than for "Cause," then the  award  shall
          be  payable  to the extent such performance  goals  are
          attained.
          
3.3  If any benefits due under Section 3 cannot be paid under the
     existing  or  amended terms of an applicable plan  or  award
     agreement,  the  Company shall pay you  the  value  of  such
     benefits at the time they would otherwise be payable if they
     were payable under such terms.
     
4.   Retirement Plan Benefits

4.1  The  Company  shall  pay  to you  an  amount  equal  to  the
     difference  between your monthly retirement benefit  payable
     under The Reader's Digest Association, Inc.  Retirement Plan
     (the  "Retirement Plan"), the Excess Benefit Retirement Plan
     of  The  Reader's  Digest  Association,  Inc.  (the  "Excess
     Benefit  Retirement Plan") and The Reader's Digest Executive
     Retirement  Plan (the "Executive Retirement Plan")  and  the
     amount  that  would  have  been  payable  if  your  age  and
     aggregate periods of service under those plans included  the
     Severance  Period.  In addition, the Severance Period  shall
     be  considered  to be additional Credited  Service  for  all
     purposes  (including vesting) under the Executive Retirement
     Plan.   Any amount payable under this Section 4.1  shall  be
     payable  at  the  same time and in the  same  form  as  such
     payments would have been made under the Retirement Plan.
     
4.2  Upon  completion of the Severance Period,  if  you  are  not
     vested under the Retirement Plan, the Excess Retirement Plan
     or  the  Executive Retirement Plan, you will receive a  lump
     sum  payment in the amount of the equivalent actuarial value
     (as determined under the Retirement Plan) of pension credits
     that would have been earned through the end of the Severance
     Period, without regard to vesting, with any such payment  to
     be made within 90 days of the end of the Severance Period.
     
5.   Your  participation in The Reader's Digest Employees Profit-
     Sharing Plan and the Profit Sharing Benefit Restoration Plan
     of  The  Reader's  Digest  Association,  Inc.  (the  "Profit
     Sharing  Plans") ceases upon your termination of  employment
     with  the Company.  However, you shall receive cash payments
     equal  to the amounts that would have been computed to  your
     account  had your employment with the Company continued  for
     the Severance Period, with payments to be made to you by the
     Company  at  the time any contributions have been  made  for
     participants in the Profit-Sharing Plans.  In addition,  the
     Severance  Period  shall  be  considered  to  be  additional
     Credited Service for purposes of your vesting in any amounts
     previously  contributed  to your account  under  the  Profit
     Sharing Plans.
     
6.   Any  benefits payable under this Agreement shall be  reduced
     by the amount of any benefits paid under The Reader's Digest
     Association,  Inc. Severance Plan for Senior  Management  or
     The  Reader's  Digest Association, Inc. Income  Continuation
     Plan for Senior Management.
     
7.   The  payment of any amounts or benefits under this Agreement
     is  expressly conditioned on the receipt by the Company from
     you  of a duly executed General Waiver and Release of Claims
     in   the  form  specified  under  the  Severance  Plan,  the
     repayment  by you of any outstanding advances or  loans  due
     the Company and the return by you of all Company property.
     
8.   Any reference to a specific plan in this Agreement shall  be
     deemed to include any similar plan or program of the Company
     then in effect that is the predecessor of, the successor to,
     or the replacement for, such specific plan.
     
9.   The  Company  may withhold from any benefits  payable  under
     this Agreement all federal, state, local or other applicable
     taxes   as  shall  be  required  pursuant  to  any  law   or
     governmental regulation or ruling.
     
10.  In case of your death while any amounts are still payable to
     you  under  this Agreement, the Company shall pay  all  such
     amounts to your designated beneficiary or, if none has  been
     designated,  to  your  estate  as  if  your  employment  had
     continued until the end of the Severance Period.
     
11.  The  Company shall indemnify you and hold you harmless  from
     any and all liabilities, losses, costs or damages, including
     defense  costs and expenses (including, without  limitation,
     fees  and  disbursements of counsel incurred by you  in  any
     action  or  proceeding between the parties to this Agreement
     or  between  you  and  any  third  party  or  otherwise)  in
     connection with all claims, suits or proceeding relating  to
     or arising from a breach or alleged breach of this Agreement
     by the Company.
     
12.  You  acknowledge that (i) prior to executing this Agreement,
     you  had an opportunity to consult with an attorney of  your
     choosing  and review this Agreement with such counsel,  (ii)
     you  are  executing this Agreement knowingly and voluntarily
     and (iii) you understand all of the terms set forth herein.
     
13.  In  the  event  the Company terminates your  employment  for
     Cause  and you dispute the Company's right to do so  or  you
     claim that you are entitled to terminate your employment for
     Good Reason and the Company disputes your right to do so,  a
     mediator acceptable to you and the Company will be appointed
     within 10 days to assist in reaching a mutually satisfactory
     resolution,  but will have no authority to issue  a  binding
     decision.  Such mediation must be concluded within  60  days
     of  the date of termination or claim to termination for Good
     Reason.   You  agree that you will not institute  any  legal
     proceeding  relating to the matter until the  conclusion  of
     such  mediation.   Should such mediation fail  to  reach  an
     acceptable  conclusion  and  you  are  successful   in   any
     litigation or settlement that issues from such dispute,  you
     shall  be  entitled to receive from the Company all  of  the
     expenses  incurred  by  you  in  connection  with  any  such
     dispute, including reasonable attorney's fees.
     
14.  Acts Detrimental to the Company

14.1 You  agree that you will not do any of the following  during
     the Severance Period:
     
     14.1.1  commit any criminal act against the Company  or  any
          act that would constitute "Cause";
          
     14.1.2     disclose any information likely to be regarded as
          confidential and relating to the Company's business;
          
     14.1.3     solicit  the Company's employees to  work  for  a
          competitor of the Company; or
          
     14.1.4     perform any act detrimental to the Company or its
          employees,  including, but not limited to,  disparaging
          the Company, its senior management or its products.
          
14.2 You  agree  that any breach or threatened breach of  Section
     14.1  shall entitle the Company to apply for and  to  obtain
     injunctive relief, which shall be in addition to any and all
     other rights and remedies available to the company at law or
     in equity.
     
14.3 All  of your rights and benefits under this Agreement  shall
     cease  upon  any  breach  by you of  Section  14.1  of  this
     Agreement.
     
15.  Miscellaneous

15.1 Notices  and other communications provided for herein  shall
     be in writing and shall be effective upon delivery addressed
     as follows:
     
     if to the Company:
          
          The Reader's Digest Association, Inc.
          Reader's Digest Road
          Pleasantville, NY 10570-7000
          Attention:  Senior Vice President, Human Resources
          
     with a copy to
          
          The Reader's Digest Association, Inc.
          Reader's Digest Road
          Pleasantville, NY 10570-7000
          Attention:  General Counsel
     
     or if to you, at the address set forth above,
          
     or to such other address as to which either party shall give
     notice in accordance with the foregoing.
     
15.2 This Agreement shall be binding upon and shall inure to  the
     benefit   of   the  parties  hereto  and  their   respective
     successors  and  assigns;  provided,  however,   that   this
     Agreement  may not be assigned by either party  without  the
     consent of the other party.
     
15.3 Any  provision  of  this  Agreement that  is  prohibited  or
     unenforceable  in  any  jurisdiction  shall,  as   to   such
     jurisdiction,   be  ineffective  to  the  extent   of   such
     prohibition  or  unenforceability without  invalidating  the
     remaining  provisions  of this Agreement  or  affecting  the
     validity  or enforceability of such provision in  any  other
     jurisdiction.
     
15.4 This  Agreement constitutes the entire understanding of  the
     parties hereto with respect to the subject matter hereof and
     supersedes  any  prior  agreements, written  or  oral,  with
     respect thereto.
     
15.5 This  Agreement may be amended or modified only by a written
     agreement duly executed by both of the parties hereto.
     
15.6 This  Agreement  shall  be governed by  and  interpreted  in
     accordance with the laws of the State of New York applicable
     to  contracts executed in and to be wholly performed  within
     that State.
     
                              Very truly yours,

                              The Reader's Digest Association,
                              Inc.
                              
                              By: GEORGE V. GRUNE
                               George V. Grune
                               Chairman and Chief Executive
                               Officer
                               
                               
Agreed to and accepted as of December 5, 1997

By:  MARCIA M. LEFKOWTIZ
        Marcia M. Lefkowitz



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