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Sample Business Contracts

Severance Agreement - Reader's Digest Association Inc. and Paul A. Soden

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                                   April 1, 1996

Mr. Paul A. Soden
Senior Vice President, General Counsel and Secretary
The Reader's Digest Association, Inc.
Pleasantville, NY  10570-7000

Dear Paul:

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.  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:

     1.2.1     the 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;
     
     1.2.2     a 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;
     
     1.2.3     a 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;
     
     1.2.4     the 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
     
     1.2.5     the 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):

     2.1.1     the 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.
     
     2.1.2     the 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.

     3.2.1     If 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 contributed 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
                                   
                                   Name:  Joseph M. Grecky
                                          Joseph M. Grecky
                                   Title: Senior Vice President,
                                          Human Resources


Agreed to and accepted as of 4/1/96:


Name:  Paul A. Soden
       Paul A. Soden