Document:

2006 Income Continuation Plan

    

     

    THE
      READER’S DIGEST ASSOCIATION, INC.

     

    2006
      INCOME CONTINUATION PLAN

    FOR
      SENIOR MANAGEMENT

     

     

    ARTICLE
      I

    Purpose
      of Plan

     

    1.1 The
      purpose of The Reader’s Digest Association, Inc. 2006 Income Continuation Plan
      for Senior Management (the “Plan”) is to provide certain officers and key
      employees of The Reader’s Digest Association, Inc. (the “Company”) with
      appropriate assurances of continued income and other benefits for a reasonable
      period of time in the event that the participant’s employment with the Company
      terminates under any of the circumstances described herein, thereby encouraging
      the continued attention and dedication of the participants to ensure the
      continued success of the Company.

     

    ARTICLE
      II

    Eligibility
      for Participation

     

    2.1 Each
      of
      the following positions at the Company shall be eligible to participate in
      the
      Plan, in the absolute discretion of, and as of the respective dates determined
      by, the Compensation and Nominating Committee (the “Committee”) of the Board of
      Directors of the Company (the “Board”), with the respective Severance
      Multipliers (as defined in Section 2.4) stated below:

     

    
      	
               

              Position

            	
              Severance
                Multiplier

            
	
              Chairman
                (executive)

            	
              3

            
	
              Chief
                Executive Officer

            	
              3

            
	
              Executive
                Vice President

            	
              3

            
	
              Chief
                Financial Officer

            	
              3

            
	
              Chief
                Human Resources Officer

            	
              2

            
	
              Chief
                Legal Officer

            	
              2

            
	
              President,
                U.S. Magazines

            	
              2

            
	
              President,
                North American Consumer Marketing and U.S. Books and Home
                Entertainment

            	
              2

            

    

    

    2.2 The
      Committee shall in its absolute discretion select the additional positions,
      if
      any, that shall be eligible to participate in the Plan from time to time and
      the
      respective Severance Multipliers that shall be applicable to such
      positions.

     

    2.3 The
      Committee shall in its absolute discretion select any executives that formerly
      participated in The Reader’s Digest Association, Inc. 2001 Income Continuation
      Plan for Senior Management that shall be eligible to participate in the Plan
      and
      the respective Severance Multipliers that shall be applicable to such
      positions.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    2.4 The
      level
      of participation of any position in the Plan shall be reflected as a number,
      which shall be applied in Sections 5.1(b) and 5.1(c) below (the “Severance
      Multiplier”). Subject to Section 3.2 below, the Committee shall have the
      authority to change the Severance Multiplier for any position.

     

    2.5 Participation
      in the Plan shall not in any respect be deemed to grant the participant either
      a
      right to continued participation in the Plan or a right to continued employment
      and such employment remains terminable at will by either the Company or the
      participant at any time for any reason or for no reason.

     

    ARTICLE
      III

    Term

     

    3.1 The
      Plan
      shall have an indefinite term.

     

    3.2 The
      Board
      may not terminate or reduce the level of the participation of a participant
      in
      the Plan, suspend or terminate the Plan, or amend the Plan so as to impair
      the
      rights of any participant in the Plan unless the Board has provided written
      notice to any participant whose participation in the Plan is affected by such
      suspension, termination or amendment at least twelve (12) months in advance
      of
      such suspension, termination or amendment.

     

    3.3 Subject
      to Section 3.2 above, the Board may, at any time and from time to time, modify
      or amend, in whole or in part, any or all of the provisions of the Plan, or
      suspend or terminate it entirely.

     

    ARTICLE
      IV

    Causes
      of
      Termination

     

    4.1 If
      the
      Company terminates a participant’s employment involuntarily, other than for
      reasons described in Section 4.5 below, during the twenty-four (24) months
      following a Change in Control (as defined below), the benefits described in
      Article V hereof shall become payable to the participant.

     

    4.2 Subject
      to the provisions of Section 4.3 below, if a participant terminates his
      employment due to Constructive Termination (as defined below) during the
      twenty-four (24) months following a Change in Control, and within 120 days
      of
      the participant’s knowledge of the event constituting Constructive Termination,
      the benefits described in Article V hereof shall become payable to the
      participant. For the purposes of the Plan, “Constructive Termination” means any
      of the following events, without the written consent of the
      participant:

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (a) the
      assignment to a participant of any duties inconsistent in any respect with
      his
      position (including status, offices, titles and reporting requirements), duties,
      responsibilities and authority with the Company immediately prior to the Change
      in Control, or an adverse and material change or a substantial diminution in
      his
      authority, reporting responsibilities, titles or offices as in effect
      immediately prior to the Change in Control, or the removal from or failure
      to
      re-elect the participant to any such position or office; provided that
      termination of the participant’s employment for Cause (as defined below), death,
      Total Disability (as defined in the Company’s Long Term Disability Plan) or
      mandatory retirement pursuant to the Company’s retirement policy shall not
      constitute a Constructive Termination event under the Plan;

     

    (b) a
      reduction in the participant’s base salary;

     

    (c) a
      reduction in the participant’s target incentive opportunities under the
      Management Incentive Compensation Plan or the Senior Management Incentive Plan,
      as applicable (each, as applicable, the “Incentive Compensation Plan”), or the
      Company’s 1994, 2002 and 2005 Key Employee Long Term Incentive Plans (the
“KELTIPs”);

     

    (d) a
      relocation of the participant to an office located anywhere other than within
      seventy-five (75) miles of a participant’s primary office immediately prior to
      the Change in Control, except for required travel on Company business to an
      extent substantially consistent with the participant’s business travel
      obligations immediately prior to the Change in Control;

     

    (e) any
      failure by the Company to continue in effect any employee benefit plan or fringe
      benefit program provided by the Company in which a participant participates
      (or
      the Company’s elimination or material reduction of the participant’s
      participation in such plan or program) that, by itself or in the aggregate,
      is
      material to a participant’s total compensation and benefits from the Company,
      unless there shall have been instituted a replacement or substitute plan or
      fringe benefit program providing comparable benefits or compensation providing
      comparable value; 

     

    (f) any
      failure by the Company to comply with and satisfy Section 6.1 below;
      or

     

    (g) any
      failure by the Company to permit the participant to participate in any new
      or
      additional compensation, incentive, employee benefit or fringe benefit plan
      or
      program that is made generally available to senior management of the Company
      or
      its successor, if such plan or program would be material to the participant’s
      total compensation and benefits.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    4.3 A
      termination of employment by a participant shall not constitute a Constructive
      Termination unless the participant provides notice to the Board stating that
      in
      the participant’s opinion an event constituting Constructive Termination has
      occurred and setting forth in reasonable detail the relevant facts and
      circumstances. If such event is isolated, inadvertent and insubstantial in
      nature, during the ten (10) business day-period after receipt of such notice
      (the “10-day cure period”), the Company may remedy or otherwise cure the
      situation to the participant’s satisfaction or persuade the participant that the
      facts and circumstances do not constitute an event constituting Constructive
      Termination, and, in such case, the event shall not be treated as a Constructive
      Termination event under the Plan. If the Company shall, within such 10-day
      cure
      period, remedy or otherwise cure the situation, a recurrence thereof or another
      occurrence constituting Constructive Termination shall constitute a new event
      for purposes of Section 4.2 above.

     

    Nothing
      herein shall require the participant to remain in the Company’s employ beyond
      the expiration of the 10-day cure period in order to qualify for the benefits
      described in Article V hereof. Any good-faith determination made by the
      participant of an event constituting Constructive Termination shall be
      conclusive.

     

    4.4 For
      the
      purposes of the Plan, a “Change in Control” means:

     

    (a) an
      acquisition (other than directly from the Company) or holding by a Person or
      a
      Group (other than a Permitted Holder) of Beneficial Ownership of shares
      representing 20% or more of either (i) the then outstanding shares of common
      stock of the Company (the “Outstanding Company Common Stock”) or (ii) the
      combined voting power of the outstanding voting securities of the Company
      entitled to vote generally in the election of Directors (the “Outstanding
      Company Voting Power”); provided, however, that a Business Combination
      satisfying clauses 4.4(c)(i) through (iii) below shall not constitute a Change
      in Control;

     

    (b) if
      the
      Directors who were members of the Board on the date of adoption of this
      provision (the “Initial Directors”) and any Directors whose election by the
      Company’s stockholders was approved by a majority of the Company’s Directors
      then still in office who were either Incumbent Directors or whose election
      or
      nomination for election was previously so approved, but excluding any such
      individual whose election as a Director occurs as a result of an actual or
      threatened proxy contest or consent solicitation by or on behalf of a person
      other than the Company or the Board (the “Approved Directors, and together with
      the Initial Directors, the “Incumbent Directors”), shall cease for any reason to
      constitute at least a majority of the Board;

     

    (c) consummation
      of a Business Combination, other than a transaction

     

    (i) in
      which
      all or substantially all of the stockholders of the Company receive Beneficial
      Ownership of more than 60% of the voting securities of the company resulting
      from the Business Combination,

     

    (ii) in
      which
      at least a majority of the board of directors of the resulting company are
      Incumbent Directors, and

     

    (iii) after
      which no Person or Group has Beneficial Ownership of 35% or more of the voting
      securities of the resulting company, who did not own at least such percentage
      of
      stock of the Company immediately before the Business Combination;
      or

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (d) stockholder
      approval of a complete liquidation or dissolution of the Company.

     

    Notwithstanding
      the foregoing, a Change in Control shall not be deemed to occur solely because
      any Person or Group has Beneficial Ownership of shares of Outstanding Company
      Common Stock or Outstanding Company Voting Power greater than or equal to the
      20% threshold in subsection 4.4(a) above as a result of the acquisition by
      the
      Company of common stock or other voting securities which reduces the number
      of
      shares of Outstanding Company Common Stock or reduces the Outstanding Company
      Voting Power; provided, that if, after such acquisition by the Company, such
      Person or Group obtains Beneficial Ownership of shares of common stock or other
      voting securities that increases the percentage of Outstanding Company Common
      Stock or Outstanding Company Voting Power Beneficially Owned by such person
      while such Person or Group has met the 20% threshold in subsection 4.4(a) above,
      a Change in Control shall then be deemed to occur.

     

    For
      purposes of this Section 4.4:

     

    “Beneficial
      Ownership” shall have the meaning given to that term under Rule 13d-3 under the
      Securities Exchange Act of 1934.

     

    “Business
      Combination” shall mean a merger, consolidation or reorganization involving the
      Company or its subsidiaries or a sale, lease, exchange or other disposition
      of
      all or substantially all of the Company’s assets.

     

    “Director”
      shall mean a member of the Board.

     

    “Group”
      shall have the meaning given to that term under Rule 13d-5 under the Securities
      Exchange Act of 1934.

     

    “Permitted
      Holder” shall mean the Company or an employee benefit plan of the Company or a
      corporation controlled by the Company.

     

    “Person”
      shall have the meaning given to that term under Section 13(d)(3) or 14(d)(2)
      of
      the Securities Exchange Act of 1934.

     

    “Securities
      Exchange Act of 1934” shall mean the Securities Exchange Act of 1934, as amended
      from time to time.

     

    4.5     (a) If
      the
      Company shall terminate a participant’s employment involuntarily by reason of:
      (i) Cause; (ii) Total Disability (as defined in the Company’s Long Term
      Disability Plan); (iii) mandatory retirement pursuant to the Company’s
      retirement policy; or (iv) death, then no benefits shall become payable to
      a
      participant under the Plan.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (b) For
      the
      purposes of the Plan, “Cause” shall mean: 

     

    (i) the
      willful and continued failure of the participant to perform substantially the
      participant’s duties with the Company (other than any such failure resulting
      from incapacity due to physical or mental illness or following the participant’s
      delivery of a notice of termination for Constructive Termination), after a
      written demand for substantial performance is delivered to the participant
      by
      the Board that specifically identifies the manner in which the Board believes
      that the participant has not substantially performed the participant’s
      duties;

     

    (ii) the
      willful engaging by the participant in illegal conduct or gross misconduct
      either of which is materially and demonstrably injurious to the Company;
      or

     

    (iii) the
      participant’s conviction of, or plea of guilty or nolo
      contendere
      to, a
      felony.

     

    (c) For
      purposes of this Section 4.5, no act, or failure to act, on the part of the
      participant shall be considered “willful” unless it is done, or omitted to be
      done, by the participant in bad faith or without reasonable belief that the
      participant’s action or omission was in the best interests of the Company. Any
      act, or failure to act, based upon authority given pursuant to a resolution
      duly
      adopted by the Board or upon the instructions of the Chief Executive Officer
      of
      the Company or a senior officer of the Company or based upon the advice of
      counsel for the Company shall be conclusively presumed to be done, or omitted
      to
      be done, by the participant in good faith and in the best interests of the
      Company. The cessation of employment of the participant shall not be deemed
      to
      be for Cause unless and until there shall have been delivered to the participant
      a copy of a resolution duly adopted by the affirmative vote of not less than
      three-quarters of the entire membership of the Board (excluding the participant,
      if the participant is a member of the Board) at a meeting of the Board called
      and held for such purpose (after reasonable notice is provided to the
      participant and the participant is given an opportunity, together with counsel
      for the participant, to be heard before the Board), finding that, in the good
      faith opinion of the Board, the participant is guilty of any of the conduct
      described in Section 4.5(b), and specifying the particulars thereof in
      detail.

     

    4.6 Notice
      of
      any termination of employment by the Company or by a participant pursuant to
      this Article IV shall be given in writing and shall specify the effective date
      of termination.

     

    4.7 In
      no
      event shall a voluntary resignation or retirement by a participant give rise
      to
      any benefits under the Plan; provided, that a termination of employment under
      Section 4.2 shall not be treated as a voluntary resignation or
      retirement.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

     

    ARTICLE
      V

    Benefits

     

    5.1 In
      the
      event of a participant’s termination of employment covered by Section 4.1 or 4.2
      above, the Company shall provide to the participant:

     

    (a) within
      ten (10) days following the participant’s date of termination of employment, a
      lump sum payment of (i) the participant’s annual base salary earned through the
      date of termination of employment to the extent not theretofore paid and (ii)
      the product of (x) the higher of (A) the participant’s annual target bonus under
      the Incentive Compensation Plan in the Company’s fiscal year in which the
      participant’s date of termination of employment occurs and (B) the average of
      the three (3) annual cash bonuses earned by the participant under the Incentive
      Compensation Plan immediately preceding the Company’s fiscal year in which the
      participant’s date of termination of employment occurs (such higher amount of
      (A) and (B), hereinafter referred to as the “Severance Bonus Amount”) and (y) a
      fraction, the numerator of which is the number of days in the fiscal year in
      which the date of termination of employment occurs through the date of
      termination of employment and the denominator of which is 365 (for purposes
      of
      determining the Severance Bonus Amount, (a) any bonus awarded for any fiscal
      year in which the participant was employed for less than twelve (12) full months
      shall be annualized, (b) any bonus earned by a participant for a fiscal year
      shall be treated as earned in such fiscal year, notwithstanding whether payment
      is deferred, and (c) if a participant was not employed by the Company (or a
      successor to the Company) for the entire three-year period preceding the
      Company’s fiscal year in which the date of termination of employment occurs,
      only the years during which the participant was so employed shall be considered
      for purposes of determining the average in clause (B) above; Annex A to the
      Plan
      sets forth illustrative examples of the calculation of the Severance Bonus
      Amount);

     

    (b) within
      ten (10) days following the participant’s date of termination of employment, a
      lump sum payment equal to the product of (i) the Severance Multiplier and (ii)
      the participant’s annual base salary at the rate of pay in effect immediately
      prior to the participant’s date of termination of employment or, if higher,
      immediately prior to the Change in Control; 

     

    (c) within
      ten (10) days following the participant’s date of termination of employment, a
      lump sum payment equal to the product of (i) the Severance Multiplier and (ii)
      the Severance Bonus Amount; and

     

    (d) outplacement
      counseling services at the Company’s sole expense commensurate with the
      participant’s position and as customarily provided by the Company immediately
      prior to the Change in Control, or, if greater, after the Change in
      Control.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    Notwithstanding
      the foregoing, in the event that a participant is a “key employee” (a “§409A Key
      Employee”) for purposes of Section 409A of the Internal Revenue Code of 1986, as
      amended (the “Code”) on the participant’s date of termination of employment,
      payments of benefits under this Section 5.1 (other than with respect to payments
      under Section 5.1(a)(i)) shall be made within ten (10) days following (x) the
      date that is six months after the date of the participant’s date of termination
      of employment or (ii) the date of the participant’s death, if
      earlier.

     

    5.2 In
      addition to the severance payments described in Section 5.1 above, in the event
      of a termination of employment covered by Section 4.1 or 4.2 above, all
      outstanding performance share awards, restricted stock units and similar
      long-term incentive awards previously granted to the participant under the
      KELTIP or under a similar plan maintained by the Company or any successor to
      the
      Company (“Performance Awards”) shall immediately vest in the participant and
      such Performance Awards shall be paid out in cash in a lump sum within ten
      (10)
      days following the participant’s date of termination of employment either (a) as
      if the applicable performance goals had been achieved at target (100%), with
      the
      payment prorated for the number of months completed in the applicable
      performance period at the time of such termination of employment or (b) in
      such
      greater amount as the Committee shall determine, if at least half of the
      performance period will have been completed at the time of such termination
      of
      employment; provided, however, that if the participant is a §409A Key Employee,
      payment may not be made before (x) the date that is six months after the date
      of
      the participant’s termination of employment or (y) the date of the participant’s
      death, if earlier).

     

    5.3     (a) In
      the
      event of a participant’s termination of employment covered by Section 4.1 or 4.2
      above, the Company shall in lieu of continued participation in all medical,
      dental and group life insurance plans provided by the Company to active
      employees, pay to the participant, in a single cash lump sum, an amount equal
      to
      the cost that the Company would have incurred to provide such benefits to the
      participant as an active employee under the applicable welfare plan, as if
      the
      participant had continued as an active employee during the period following
      the
      participant’s date of termination of employment for a number of years equal to
      the Severance Multiplier; provided, however, that if the participant is a §409A
      Key Employee, payment may not be made before (x) the date that is six months
      after the date of the participant’s termination of employment or (y) the date of
      the participant’s death, if earlier).

     

    (b) The
      lump
      sum payment required to be provided under this Section 5.3 shall apply to each
      of the participant’s eligible dependents who was receiving such benefits under
      the applicable welfare plan as of the participant’s date of termination of
      employment to the extent such dependent remains eligible. 

     

    (c) In
      the
      event of a participant’s termination of employment covered by Section 4.1 or 4.2
      above, “COBRA” continuation coverage under Section 4980B of the Code shall begin
      on the date such coverage under the Company’s healthcare programs ceases to be
      provided and shall be available for the greater of (i) the number of years
      equal
      to the Severance Multiplier applicable to the participant or (ii) the minimum
      period required under the Code.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    5.4 The
      provisions of this Section 5.4 shall govern the treatment of a participant
      who
      experiences a termination of employment covered by Section 4.1 or 4.2 above
      for
      purposes of the participant’s benefits under such of the Nonqualified Plans (as
      defined in the next sentence) in which the participant is a participant
      immediately before such termination of employment, notwithstanding any provision
      to the contrary in the Nonqualified Plans. The “Nonqualified Plans” means The
      Reader’s Digest Association, Inc. Executive Cash Balance Plan (the “Executive
      Cash Balance Plan”) and the Excess Benefit Retirement Plan of The Reader’s
      Digest Association, Inc. (the “Excess Cash Balance Plan”).

     

    (a) Executive
      Cash Balance Plan.
      In the
      event of a participant’s termination of employment covered by Section 4.1 or 4.2
      above, if the participant is a participant in the Executive Cash Balance Plan
      immediately prior to such termination of employment, the participant’s entire
      account balance under such plan shall immediately vest as of the participant’s
      date of termination of employment. In addition, the Company shall pay to any
      participant who was also a participant in the Executive Cash Balance Plan before
      January 1, 2005 within ten (10) days following the
      participant’s date of termination of employment a cash lump sum amount equal to
      1.5 times the Contribution Credits (as defined in the Executive Cash Balance
      Plan) that would have been made to the participant’s account under the Executive
      Cash Balance Plan, assuming that: (i) the participant had remained an active
      employee during the one-year period following the participant’s termination of
      employment and (ii) the participant’s Compensation (as defined in the Executive
      Cash Balance Plan) for such period was equal to the sum of (1) the participant’s
      annual base salary at the rate described in Section 5.1(b)(ii) hereof and (2)
      the Severance Bonus Amount provided, however, that if the participant is a
§409A
      Key Employee, payment may not be made before (x) the date that is six months
      after the date of the participant’s termination of employment or (y) the date of
      the participant’s death, if earlier.

     

    (b) Excess
      Cash Balance Plan and Qualified Retirement Plan.
      In the
      event of a participant’s termination of employment covered by Section 4.1 or 4.2
      above, if the participant is a participant in the Excess Cash Balance Plan
      immediately prior to such termination of employment, the participant’s benefit
      under the Excess Cash Balance Plan shall be adjusted so that the participant’s
      combined retirement benefits under the Excess Cash Balance Plan and The Reader’s
      Digest Association, Inc. Retirement Plan (the “Qualified Retirement
      Plan”) are
      equal
      to the retirement benefits to which the participant would have been entitled
      if
      the participant’s entire account balance under each plan had vested as of the
      participant’s date of termination of employment.

     

    5.5 The
      Company may withhold from any benefits payable under the Plan all federal,
      state, local or other taxes as shall be required to be withheld pursuant to
      any
      law or governmental regulation or ruling.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    5.6 Each
      participant shall enter into an agreement (in the form set forth as Exhibit
      A to
      the Agreement) not to solicit employees of the Company or its subsidiaries
      against the interests of the Company during the two-year period following a
      termination of employment, without the prior written consent of the Board or
      a
      committee thereof appointed to administer the Plan, and not to disclose any
      confidential information relating to the Company’s business at any time, except
      as may be provided in the agreement. Such agreement shall be subject to
      exclusive jurisdiction in the federal or state courts of Westchester County
      in
      New York State. Notwithstanding the foregoing, any provisions providing for
      the
      forfeiture of awards or the recovery of gains from the exercise of awards under
      the 1989 Key Employee Long Term Incentive Plan or the KELTIPs (or applicable
      award agreements under such plans) shall no longer apply upon and following
      a
      Change in Control.

     

    5.7 
(a) No
      participant shall be required to mitigate the amount of any benefits provided
      for in this Article V by seeking other employment or otherwise, nor shall the
      amount of any monthly or lump sum benefits provided for in the Plan be reduced
      by any compensation earned by the participant as a result of employment after
      the date of termination of employment by the Company. 

     

      
      (b) The
      Company’s obligation to make the payments provided for in the Plan and otherwise
      to perform its obligations hereunder shall not be affected by any set-off,
      counterclaim, recoupment, defense, or other claim, right or action that the
      Company may have against a participant or a third party.

    

    5.8 Except
      as
      otherwise provided herein, no provision of the Plan or any benefit provided
      hereunder shall reduce any amounts otherwise payable, or in any way diminish
      a
      participant’s existing rights, or rights which may accrue to the participant
      solely as a result of the passage of time, under any pension or welfare plan,
      incentive plan or other contract, plan or arrangement maintained by the
      Company.

     

    5.9 
(a) Anything
      in the Plan or any other plan, agreement or arrangement to the contrary
      notwithstanding, in the event it shall be determined that any Payment to a
      participant would be subject to the Excise Tax, then the participant shall
      be
      entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
      such that, after payment by the participant of all taxes (and any interest
      or
      penalties imposed with respect to such taxes), including, without limitation,
      any income taxes and employment taxes (and any interest and penalties imposed
      with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
      participant retains an amount of the Gross-Up Payment equal to the Excise Tax
      imposed upon the Payments. Notwithstanding
      the foregoing provisions of this Section 5.9(a), if it shall be determined
      that
      the participant is entitled to a Gross-Up Payment, but the Parachute Value
      of
      the Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up
      Payment shall be made to the Participant and the Plan Payments, in the
      aggregate, shall be reduced (but not below zero) such that the Parachute Value
      of all Payments equals the Safe Harbor Amount, determined in such a manner
      as to
      maximize the Value of all Payments actually made to the Participant.
The
      Company’s obligation to make Gross-Up Payments under this Section 5.9 shall not
      be conditioned upon the participant’s termination of employment. If the
      participant is a §409A Key Employee, a Gross-Up Payment may not be made before
      (x) the date that is six months after the date of the participant’s termination
      of employment or (y) the date of the participant’s death, if
      earlier.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (b) Subject
      to the provisions of Section 5.9(c), all determinations required to be made
      under this Section 5.9, including whether and when a Gross-Up Payment is
      required, the amount of such Gross-Up Payment and the assumptions to be utilized
      in arriving at such determination, shall be made by Ernst & Young LLP, or
      such other nationally recognized certified public accounting firm as may be
      designated by the participant (the “Accounting Firm”). The Accounting Firm shall
      provide detailed supporting calculations both to the Company and the participant
      within fifteen (15) business days of the receipt of notice from the participant
      that there has been a Payment or such earlier time as is requested by the
      Company. In the event that the Accounting Firm is serving as accountant or
      auditor for the individual, entity or group effecting the Change in Control,
      the
      participant may appoint another nationally recognized accounting firm to make
      the determinations required hereunder (which accounting firm shall then be
      referred to as the Accounting Firm hereunder). All fees and expenses of the
      Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
      as
      determined pursuant to this Section 5.9, shall be paid by the Company to the
      participant within five (5) days of the receipt of the Accounting Firm’s
      determination. Any determination by the Accounting Firm shall be binding upon
      the Company and the participant. As a result of the uncertainty in the
      application of Section 4999 of the Code at the time of the initial determination
      by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
      will not have been made by the Company should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder.
      In the event the Company exhausts its remedies pursuant to Section 5.9(c),
      and
      the participant thereafter is required to make a payment of any Excise Tax,
      the
      Accounting Firm shall determine the amount of the Underpayment that has occurred
      and any such Underpayment shall be promptly paid by the Company to or for the
      benefit of the participant.

     

    (c) The
      participant shall notify the Company in writing of any claim by the Internal
      Revenue Service that, if successful, would require the payment by the Company
      of
      the Gross-Up Payment. Such notification shall be given as soon as practicable,
      but no later than ten (10) business days after the participant is informed
      in
      writing of such claim. The participant shall apprise the Company of the nature
      of such claim and the date on which such claim is requested to be paid. The
      participant shall not pay such claim prior to the expiration of the 10-day
      period following the date on which the participant gives such notice to the
      Company (or such shorter period ending on the date that any payment of taxes
      with respect to such claim is due). If the Company notifies the participant
      in
      writing prior to the expiration of such period that the Company desires to
      contest such claim, the participant shall:

     

    (i) give
      the
      Company any information reasonably requested by the Company relating to such
      claim,

     

    (ii) take
      such
      action in connection with contesting such claim as the Company shall reasonably
      request in writing from time to time, including, without limitation, accepting
      legal representation with respect to such claim by an attorney reasonably
      selected by the Company,

     

    (iii) cooperate
      with the Company in good faith in order effectively to contest such claim,
      and

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (iv) permit
      the Company to participate in any proceedings relating to such
      claim;

     

    provided,
      however, that the Company shall bear and pay directly all costs and expenses
      (including additional interest and penalties) incurred in connection with such
      contest, and shall indemnify and hold the participant harmless, on an after-tax
      basis, for any Excise Tax or income tax and employment tax (including interest
      and penalties) imposed as a result of such representation and payment of costs
      and expenses. Without limitation on the foregoing provisions of this Section
      5.9(c), the Company shall control all proceedings taken in connection with
      such
      contest, and, at its sole discretion, may pursue or forgo any and all
      administrative appeals, proceedings, hearings and conferences with the
      applicable taxing authority in respect of such claim and may, at its sole
      discretion, either direct the participant to pay the tax claimed and sue for
      a
      refund or contest the claim in any permissible manner, and the participant
      agrees to prosecute such contest to a determination before any administrative
      tribunal, in a court of initial jurisdiction and in one or more appellate
      courts, as the Company shall determine; provided, however, that, if the Company
      directs the participant to pay such claim and sue for a refund, the Company
      shall advance the amount of such payment to the participant, on an interest-free
      basis, and shall indemnify and hold the participant harmless, on an after-tax
      basis, from any Excise Tax or income tax and employment tax (including interest
      or penalties) imposed with respect to such advance or with respect to any
      imputed income in connection with such advance; and provided, further, that
      any
      extension of the statute of limitations relating to payment of taxes for the
      taxable year of the participant with respect to which such contested amount
      is
      claimed to be due is limited solely to such contested amount. Furthermore,
      the
      Company’s control of the contest shall be limited to issues with respect to
      which the Gross-Up Payment would be payable hereunder, and the participant
      shall
      be entitled to settle or contest, as the case may be, any other issue raised
      by
      the Internal Revenue Service or any other taxing authority.

     

    (d) If,
      after
      the receipt by the participant of an amount advanced by the Company pursuant
      to
      Section 5.9(c), the participant becomes entitled to receive any refund with
      respect to such claim, the participant shall (subject to the Company’s complying
      with the requirements of Section 5.9(c)) promptly pay to the Company the amount
      of such refund (together with any interest paid or credited thereon after taxes
      applicable thereto). If, after the receipt by the participant of an amount
      advanced by the Company pursuant to Section 5.9(c), a determination is made
      that
      the participant shall not be entitled to any refund with respect to such claim
      and the Company does not notify the participant in writing of its intent to
      contest such denial of refund prior to the expiration of ten (10) days after
      such determination, then such advance shall be forgiven and shall not be
      required to be repaid and the amount of such advance shall offset, to the extent
      thereof, the amount of Gross-Up Payment required to be paid.

     

    (e) Notwithstanding
      any other provision of this Section 5.9, the Company may, in its sole
      discretion, withhold
      and pay over to the Internal Revenue Service or any other applicable taxing
      authority, for the benefit of the participant, all or any portion of any
      Gross-Up Payment, and the participant hereby consents to such withholding;
      provided,
      that
      such withholding and payment shall in no event place the participant in a less
      favorable tax position than had such payments been made to the participant
      by
      the Company.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (f) Definitions.
      The
      following terms shall have the following meanings for purposes of this Section
      5.9.

     

    (i) “Excise
      Tax” shall mean the excise tax imposed by Section 4999 of the Code, together
      with any interest or penalties imposed with respect to such excise
      tax.

     

    (ii) “Parachute
      Value” of a Payment shall mean the present value as of the date of the Change of
      Control for purposes of Section 280G of the Code of the portion of such Payment
      that constitutes a "parachute payment" under Section 280G(b)(2), as determined
      by the Accounting Firm for purposes of determining whether and to what extent
      the Excise Tax will apply to such Payment.

     

    (iii) A
      “Payment” shall mean any payment or distribution in the nature of compensation
      (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit
      of
      the participant, whether paid or payable pursuant to the Plan or
      otherwise.

     

    (iv) “Plan
      Payment” shall mean a Payment paid or payable pursuant to the Plan (disregarding
      this Section 5.9).

     

    (v) “Safe
      Harbor Amount” shall mean the maximum Parachute Value of all Payments that the
      participant can receive without any Payments being subject to the Excise
      Tax.

     

    (vi) “Value”
      of a Payment shall mean the economic present value of a Payment as of the date
      of the Change in Control for purposes of Section 280G of the Code, as determined
      by the Accounting Firm using the discount rate required by Section 280G(d)(4)
      of
      the Code.

     

    ARTICLE
      VI

    General
      Provisions

     

    6.1 The
      Company shall 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 adopt the Plan.
      

     

    6.2 If
      any
      participant entitled to receive benefits under Article V of the Plan as a result
      of a termination of employment covered by Section 4.1 or 4.2 above should die
      while any amounts are still payable to the participant hereunder, all unpaid
      benefits under the Plan with respect to such participant shall be paid to the
      participant’s designated beneficiary or, if no designation has been made, to the
      participant’s estate.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    6.3 The
      Company agrees to pay as incurred (within ten (10) days following the Company’s
      receipt of an invoice from the participant), to the fullest extent permitted
      by
      law, all legal fees and expenses that the participant may reasonably incur
      as a
      result of any contest (regardless of the outcome thereof) by the Company, the
      participant or others of the validity or enforceability of, or liability under,
      any provision of the Plan or any guarantee of performance thereof (including
      as
      a result of any contest by the participant about the amount of any payment
      pursuant to the Plan), plus, in each case, interest on any delayed payment
      at
      the applicable federal rate provided for in Section 7872(f)(2)(A) of the
      Code.

     

    6.4 Nothing
      contained in the Plan shall be construed as a contract of employment between
      the
      Company and any participant, or as a right of any participant to continue in
      the
      employ of the Company, or as a limitation of the right of the Company to
      discharge any participant, with or without Cause.

     

    6.5 The
      Plan
      shall be administered as an unfunded plan designed primarily for the purpose
      of
      providing benefits to a select group of management or highly compensated
      employees of the Company. Payments under the Plan shall at all times be made
      solely from the general assets of the Company. No assets shall be segregated
      or
      earmarked in respect of any amount due hereunder. The Plan and the amounts
      due
      hereunder shall not constitute a trust. The Plan is intended to comply with
      the
      requirements of Section 409A of the Code and the regulations promulgated
      thereunder.

     

    6.6 Any
      notice or other communication pursuant to the Plan intended for a participant
      shall be deemed given when personally delivered to such participant or sent
      to
      such participant by registered or certified mail, return receipt requested,
      at
      such participant’s residence address as it appears on the records of the
      Company, or at such other address as such participant shall have specified
      by
      notice to the Company in the manner herein provided. Any notice or other
      communication pursuant to the Plan intended for the Company shall be deemed
      given when personally delivered to the Secretary by registered or certified
      mail, return receipt requested, at its headquarters in Pleasantville, New York
      10570, or at such other address as the Company shall have specified by notice
      to
      the participants in the manner herein provided.

     

    6.7 Except
      as
      provided in Section 6.2, a participant may not assign, anticipate, transfer,
      pledge, hypothecate or alienate in any manner any interest arising under the
      Plan, nor shall any such interest be subject to attachment, bankruptcy
      proceedings or to any other legal processes or to the interference or control
      of
      creditors or others.

     

    6.8 Except
      as
      specifically provided otherwise herein, determinations under the Plan shall
      be
      made by the Board. If any body of law should be used or applied in determining
      the meaning or effect of the Plan, it shall be the law of the State of New
      York.
      Any dispute under this Plan shall be subject to the exclusive jurisdiction
      in
      the federal or state courts of Westchester County in New York State, and by
      becoming a participant in the Plan, each participant shall be treated as having
      consented to such exclusive jurisdiction.

     

    6.9 Any
      reference to a specific policy, plan or program in this Plan shall be deemed
      to
      include any similar policy, plan or program of the Company then in effect that
      is the predecessor of, the successor to, or the replacement for, such specific
      policy, plan or program.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    6.10 In
      the
      construction of the Plan, the masculine shall include the feminine and the
      singular the plural, and vice-versa, in all cases where such meaning would
      be
      appropriate.

     

    6.11 In
      the
      event any provision of the Plan, if challenged, would be declared invalid,
      illegal or unenforceable, such provision shall be construed and enforced as
      if
      it had been more narrowly drawn so as not to be illegal, invalid or
      unenforceable and the validity, legality and enforceability of the remaining
      provisions shall not be affected or impaired thereby.

     

    6.12 In
      the
      event a participant receives severance benefits under Article V of the Plan,
      such participant shall not be entitled to severance or termination benefits
      under any other severance plan of the Company or its affiliates, including,
      without limitation, the Company’s Income Continuation Plan for Senior
      Management, the Company’s 2001 Income Continuation Plan for Senior Management,
      or under any individual employment or severance agreement, unless such
      individual agreement otherwise specifies for certain payments to be made
      thereunder in addition to, or in lieu of, the severance benefits under Article
      V.

     

    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    ANNEX
      A - Examples of Severance Bonus Amount 

     

    Set
      forth
      below are illustrative examples of calculations of the Severance Bonus Amount
      under Section 5.1(a):

     

    A. Target
      Bonus Exceeds Average Bonus

     

    

      
        	
                ·  Target
                  Bonus

                 

              	
                =

                 

              	
                $350,000

                 

              
	
                ·  Bonuses
                  In Last Three Years

                 

              	
                =

                 

              	
                $500,000

                 

              
	
                 

                 

              	
                =

                 

              	
                $200,000

                 

              
	
                 

                 

              	
                =

                 

              	
                $200,000

                 

              
	
                ·  Average
                  Bonuses

                 

              	
                =

                 

              	
                $300,000

                 

              
	
                ·  Severance
                  Bonus Amount

                 

              	
                =

                 

              	
                $350,000

                 

              

      

    

     

    B. Average
      Bonus (one year annualized) Exceeds Target Bonus

     

    

      
        	
                ·  Target
                  Bonus

                 

              	
                =

                 

              	
                $200,000

                 

              
	
                ·  Bonuses
                  In Last Three Years

                 

              	
                =

                 

              	
                $300,000
                  (employed six months)

                 

              
	 	
                =

                 

              	
                $200,000

                 

              
	 	
                =

                 

              	
                $400,000

                 

              
	
                ·  Average
                  Bonuses

                 

              	
                =

                 

              	
                $300,000

                 

              
	
                ·  Severance
                  Bonus Amount

                 

              	
                =

                 

              	
                $300,000

                 

              

      

      

       

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    C. Average
      Highest Bonuses (employed two years) Exceeds Largest Bonus

     

    
      
        	
                ·  Target
                  Bonus

                 

              	
                =

                 

              	
                $250,000

                 

              
	
                ·  Bonuses
                  In Last Three Years (only employed 2 years)

                 

              
	 	
                =

                 

              	
                $300,000

                 

              
	 	
                =

                 

              	
                $400,000

                 

              
	
                ·  Average
                  Bonuses

                 

              	
                =

                 

              	
                $350,000

                 

              
	
                ·  Severance
                  Bonus Amount

                 

              	
                =

                 

              	
                $350,000

                 

              

      

      

       

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    

      ANNEX
        B - Determination of Gross-up on Excise Tax Under Section
        5.9(a)

       

      A.
        

      
        	
                Parachute
                  Value of Payments[1]

              	
                Base
                  Amount

              	
                Safe
                  Harbor Amount

              	
                Parachute
                  Value of Payments in Excess of Safe Harbor Amount

              	
                Parachute
                  Value of Payments as a Percent of Safe Harbor
                  Amount

              
	
                $2,000,000

              	
                $680,000

              	
                $2,039,999

              	
                $0

              	
                98%

              
	
                 

              	
                5-year
                  Average W2 Income

              	
                2.99
                  x Base Amount

              	
                 

              	
                 

              

      

      

      	·  	
              Parachute
                value of payments does
                not
                exceed “safe harbor” amount and therefore no excise tax is
                triggered.

            

       

      B.
        

      
        	
                Parachute
                  Value of Payments[1]

              	
                Base
                  Amount

              	
                Safe
                  Harbor Amount

              	
                Parachute
                  Value of Payments in Excess of Safe Harbor Amount

              	
                Parachute
                  Value of Payments as a Percent of Safe Harbor
                  Amount

              
	
                $2,100,000

              	
                $650,000

              	
                $1,949,999

              	
                $150,001

              	
                108%

              
	
                 

              	
                5-year
                  Average W2 Income

              	
                2.99
                  x Base Amount

              	
                 

              	
                 

              

      

      

      	·  	
              Parachute
                value of payments does
                not
                exceed 110% of “safe harbor” amount and therefore no gross-up payment is
                made and the participant’s parachute value of payments is capped at the
                “safe harbor” amount of $1,949,999.

            

       

      C.
        

      
        	
                Parachute
                  Value of Payments[1]

              	
                Base
                  Amount

              	
                Safe
                  Harbor Amount

              	
                Parachute
                  Value of Payments in Excess of Safe Harbor Amount

              	
                Parachute
                  Value of Payments as a Percent of Safe Harbor
                  Amount

              
	
                $2,500,000

              	
                $700,000

              	
                $2,099,999

              	
                $400,001

              	
                119%

              
	
                 

              	
                5-year
                  Average W2 Income

              	
                2.99
                  x Base Amount

              	
                 

              	
                 

              

      

      

      	·  	
              Parachute
                Value of payments does
                exceed 110% of “safe harbor” amount and therefore a gross-up payment is
                made to the participant.

            

       

      [1]
        Parachute value of payments calculated according to Section 280G of the Internal
        Revenue Code.

    

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A - Non Solicitation Agreement

    

    [Name
      of
      Participant]

    The
      Reader's Digest Association, Inc.

    Reader's
      Digest Road

    Pleasantville,
      NY 10570

    

    Dear
      [Name of Participant]:

    

    Under
      Section 5.6 of The Reader’s Digest Association, Inc. (the “Company”) 2006 Income
      Continuation Plan for Senior Management (the “Plan”), each participant in the
      Plan is required to enter into a non-solicitation and confidentiality agreement.
      In consideration of your participation in the Plan, you agree as
      follows:

    

    
      	
              1.

            	
              You
                will not, without the written consent of the Company signed by the
                Chief
                Human Resources Officer or the General Counsel of the Company, during
                the
                two-year period following your termination of employment with the
                Company,
                attempt, directly or indirectly, to solicit, induce or hire (or identify
                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).

            

    

    

    
      	
              2.

            	
              You
                will not, without the written consent of the Chief Human Resources
                Officer
                or the General Counsel of the Company, at any time following your
                termination of employment with the Company, disclose to anyone outside
                the
                Company or its affiliates, or use in other than the Company’s or its
                affiliate’s business, 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.

            

    

    

    
      	
              3.

            	
              This
                letter 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. I hereby agree and consent
                to
                exclusive jurisdiction of any dispute under this letter agreement
                in the
                federal or state courts of Westchester County in New York
                State.

            

    

    

    If
      the
      foregoing represents your understanding, please indicate your agreement and
      acceptance by executing below and returning one fully executed copy of this
      agreement to the undersigned.

     

    
      

      
        	 	 	
                Very
                  truly yours,

              
	 	 	 
	 	 	
                THE
                  READER’S DIGEST ASSOCIATION, INC.

              
	 	 	 
	 	 	
                By ______________________________

              
	 	 	
                Name:
                  Lisa A. Cribari

              
	 	 	
                Vice
                  President, Global Human Resources

              
	
                Agreed
                  to and accepted as of ____________

              	 	 
	 	 	 
	
                _______________________________

              	 	 
	
                Name:
                  [Names of Executive]Executive Cash Balance Plan

    

     

    

     

    

     

    

     

    

     

    

     

    THE
      READER'S DIGEST ASSOCIATION, INC.

     

    EXECUTIVE
      CASH BALANCE PLAN

     

    (Amended
      & Restated June 30, 2006)

     

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	
               

               

               

               

              ITEM

               

            	
               

               

               

               

              ARTICLE

               

            	
               

               

               

               

              PAGE

               

            
	
              DEFINITIONS

               

            	
              1

               

            	
              2

               

            
	
              ELIGIBILITY
                AND PARTICIPATION

               

            	
              2

               

            	
              8

               

            
	
              EXECUTIVE
                CASH BALANCE PLAN BENEFIT

               

            	
              3

               

            	
              10

               

            
	
              VESTING

               

            	
              4

               

            	
              11

               

            
	
              DISTRIBUTION
                OF EXECUTIVE CASH BALANCE PLAN BENEFIT; SUBSEQUENT
                RE-EMPLOYMENT

            	
              5

               

            	
              12

               

            
	
              DEATH
                BENEFITS

               

            	
              6

               

            	
              14

               

            
	
              MEDICAL
                BENEFITS

               

            	
              7

               

            	
              16

               

            
	
              DISABILITY

               

            	
              8

               

            	
              17

               

            
	
              GENERAL
                PROVISIONS

               

            	
              9

               

            	
              18

               

            

    

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

     

    The
      Reader's Digest Association, Inc.

     

    Executive
      Cash Balance Plan

     

    

     

    PREAMBLE

     

    The
      Reader's Digest Association, Inc. (the "Company") has adopted the Reader's
      Digest Executive Cash Balance Plan (the "Plan") effective October 1, 1999,
      to
      provide participants with a defined contribution plan that is complementary
      to
      the cash balance provisions of The Reader's Digest Association, Inc. Retirement
      Plan (the "Cash Balance Plan") made effective as of July 1, 1999. The Plan
      has
      previously been amended and restated, effective January 1, 2005, to comply
      with
      Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
      The Plan provides benefits to a designated group of executives, which are
      supplemental to the benefits provided under The Reader's Digest Association,
      Inc. Retirement Plan and The Reader's Digest Association, Inc. Excess Benefit
      Retirement Plan.

     

    ARTICLE
      1

     

    Definitions

     

    The
      following words and phrases as used herein shall have the following meanings,
      unless a different meaning is plainly required by the context. All terms with
      initial capital letters not defined herein shall have the same meanings as
      set
      forth in the Cash Balance Plan or 401(k) Plan.

     

    AFFILIATE

     

    Any
      person with whom the Employer would be considered a single employer under
      Section 414(b) and (c) of the Code.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    APPLICABLE
      INTEREST RATE:

     

    The
      average of the annual rates of interest on 30-year Treasury securities for
      the
      fourth and fifth months preceding the month in which the distribution is made.
      

     

    BENEFICIARY:

     

    The
      person or persons (including a trust or estate) who are entitled to receive
      any
      benefits under the Plan by reason of the death of a Participant.

     

    BOARD:
      

     

    The
      Board
      of Directors of The Reader's Digest Association, Inc.

     

    CASH
      BALANCE PLAN:

     

    The
      Reader's Digest Association, Inc. Retirement Plan, restated as of July 1, 1999
      and as such plan may be amended and restated from time to time and as such
      plan
      applies to participants with a Cash Balance Account. 

     

    CODE:

     

    The
      Internal Revenue Code of 1986, as amended.

     

    COMPANY:

     

    The
      Reader's Digest Association, Inc. or any successor corporation by merger,
      purchase, consolidation or otherwise.

     

    COMPENSATION:

     

    Base
      Pay
      earned, plus any Management Incentive Bonus earned, for a Year.

     

    COMPENSATION
      COMMITTEE:

     

    The
      compensation committee appointed by the Board.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    CONTRIBUTION
      CREDITS:

     

    Annual
      Adjustments to a Participant's Executive Cash Balance Plan Benefit made as
      of
      September 30 in an amount equal to (i) 20% of the Participant's
      Compensation for the previous Year, less (ii) pay credits that have been or
      will
      be allocated to his Cash Balance Account in the Cash Balance Plan and the Excess
      Plan for such Year. Contribution Credits shall be made only to accounts of
      Participants who are employed on the date the Contribution Credit is made or
      who
      died, became disabled, or had a Termination of Employment on or after his Early
      Retirement Date since the previous September 30. No Contribution Credits shall
      be made with respect to any period of severance or during any period of
      disability other than those covered under The Reader’s Digest Association, Inc.
      Short-Term Disability Plan.

     

    EARLY
      RETIREMENT DATE:

     

    The
      date
      coincident with or subsequent to a Participant's attainment of age fifty-five
      (55) upon which his Periods of Service for Credited Service plus his attained
      age equal or exceed sixty-five (65) years. 

     

    EMPLOYER:

     

    The
      Company and any subsidiary of the Company which, with the approval of the Board
      and subject to such conditions as the Board may impose, adopts this Plan, and
      any successor or successors of any of them. For purposes of this Plan, a
      subsidiary shall include any corporation at least fifty-one percent (51%) of
      the
      voting stock of which is owned by the Company or its stockholders or by one
      or
      more corporations fifty-one percent (51%) of the voting stock of which is owned
      by the Company or its stockholders.

     

    EXCESS
      PLAN:

     

    The
      Reader's Digest Association, Inc. Excess Benefit Retirement Plan, as amended
      and
      restated as of July 1, 1994 and as such plan may be amended and restated from
      time to time. 

     

    EXECUTIVE
      CASH BALANCE PLAN BENEFIT:

     

    The
      Participant's Opening Balance, if any, as adjusted by any Contribution Credits
      and Investment Adjustments. 

     

    EXECUTIVE
      RETIREMENT PLAN:

     

    The
      Reader's Digest Association, Inc. Executive Retirement Plan, as amended as
      of
      November 1, 1997 and as such plan may be further amended and restated from
      time
      to time. 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    401(k)
      PLAN:

     

    The
      Employee Ownership Plan and the 401(k) Partnership of The Reader's Digest
      Association, Inc., as restated as of July 1, 1997 and as such plan may be
      amended and restated from time to time. 

     

    INVESTMENT
      ADJUSTMENTS:

     

    Adjustments
      to a Participant’s Executive Cash Balance Plan Benefit in an amount equal to the
      investment return deemed earned based on the deemed investments elected under
      Section 3.2. Investment Adjustments shall be made at the end of the last
      business day of each month. 

     

    KEY
      EMPLOYEE:

     

    Consistent
      with Section 416(i)(1) of the Code, an employee of the Employer or Affiliate
      who
      is (i) an officer of the Employer or Affiliate with an annual compensation
      greater than $130,000 (or such greater amount as determined under Section
      416(i)(1)(A)(iii) of the Code); (ii) a 5-percent owner of the Employer or
      Affiliate; or (iii) a 1-percent owner of the Employer or Affiliate with an
      annual compensation from the Employer or Affiliate of more than $150,000, at
      any
      time during the 12-month period ending on June 30 with respect to the 12-month
      period beginning on the October 1 thereafter. 

     

    MANAGEMENT
      INCENTIVE BONUS:

     

    Any
      compensation award under The Reader's Digest Association, Inc. Senior Management
      Incentive Plan, The Reader's Digest Association, Inc. Management Incentive
      Compensation Plan or any similar or equivalent plan.

     

    NORMAL
      RETIREMENT DATE:

     

    The
      first
      day of the month coincident with or next following a Participant's
      65th
      birthday. 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    OPENING
      BALANCE:

     

    The
      present lump sum Equivalent Actuarial Value of the Participant’s Normal
      Retirement Benefit as defined under the Executive Retirement Plan based on
      Service through September 30, 1999 and Retirement Salary as of June 30,
      1999, the interest rate of 5.55%, and the prevailing commissioners' standard
      mortality table described in Section 807(d)(5)(A) of the Code, provided,
      however, that the Opening Balance of a Participant who has attained age 39
      but
      not age 55 as of September 30, 1999, shall be increased by the following
      percentage:

     

    
      	
               

              Age
                as of September 30, 1999

            	
               

              Percentage
                Increase

            
	
              54

            	
              40.0

            
	
              53

            	
              37.5

            
	
              52

            	
              35.0

            
	
              51

            	
              32.5
                

            
	
              50

            	
              30.0
                

            
	
              49

            	
              27.5
                

            
	
              48

            	
              25.0
                

            
	
              47

            	
              22.5
                

            
	
              46

            	
              20.0
                

            
	
              45

            	
              17.5

            
	
              44

            	
              15.0

            
	
              43

            	
              12.5

            
	
              42

            	
              10.0

            
	
              41

            	
               7.5

            
	
              40

            	
               5.0

            
	
              39

            	
               2.5

            

    

    

    In
      the
      case of an Employee who was not a Participant in the Executive Retirement Plan,
      his Opening Balance will be equal to zero. In the case of an Employee who has
      a
      Termination of Employment after October 1, 1999 and who is a Participant in
      the
      Executive Retirement Plan as of his Date of Termination and who is subsequently
      rehired by the Employer, his Opening Balance will be equal to zero.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    If
      a
      Participant who has received a distribution of his entire vested Executive
      Cash
      Balance Plan Benefit upon a Termination of Employment returns to the employ
      of
      an Employer, he shall have upon his return to employment an Opening Balance
      of
      zero. If a Participant who has not received a distribution of his entire vested
      Executive Cash Balance Plan Benefit upon a Termination of Employment returns
      to
      the employ of an Employer, he shall have upon his return to employment an
      Executive Cash Balance Plan Benefit equal to his remaining vested Executive
      Cash
      Balance Plan Benefit.

     

    Notwithstanding
      the foregoing, the Board, in its discretion, may augment any Participant’s
      Opening Balance and may provide an Opening Balance for a Participant who would
      otherwise have an Opening Balance of zero.

     

    PARTICIPANT:

     

    An
      eligible Employee designated to participate in the Plan in accordance with
      the
      terms herein.

     

    PLAN:

     

    The
      Reader's Digest Association, Inc. Executive Cash Balance Plan, effective
      October 1, 1999 and as such plan may be amended and restated from time to
      time.

     

    RETIREE
      HEALTH PLAN:

     

    The
      retiree healthcare provisions of The Reader’s Digest Association, Inc.
      Healthcare Program, as restated effective January 1, 1996.

     

    RETIREMENT
      SALARY:

     

    The
      average annual regular or basic salary of a Participant and Management Incentive
      Bonus including all amounts contributed by the Employer on behalf of the
      Participant as an Employee Tax Deferred Contribution under the 401(k) Plan
      or to
      a cafeteria plan as described in Section 125 of the Code, but excluding
      severance pay, bonuses which are not Management Incentive Bonuses, contributions
      made under any other deferred compensation plan on behalf of a Participant
      or
      other extra compensation, during the three consecutive years in the last ten
      years of employment which are counted under the Cash Balance Plan as of June
      30,
      1999 (or fewer, if applicable) which provides the highest average. For purposes
      of this definition, the Management Incentive Bonus shall be determined by
      reference to amounts payable with respect to the same period for which the
      annual regular or basic salary is determined. 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    SPOUSE:

     

    The
      spouse of a Participant who is legally married to the Participant on the date
      of
      the Participant's death.

     

    TERMINATION
      OF EMPLOYMENT:

     

    A
      separation from service (other than due to death or a Termination of Employment
      for Cause), including, retirement, cessation of benefits under Section 8.1
      of
      the Plan and The Reader’s Digest Association, Inc. Long-Term Disability Plan, or
      other termination of employment, other than where the Participant provides
      more
      than insignificant services for the Employer or Affiliate. Whether a Participant
      has a separation from service or performs insignificant services will be
      determined in accordance with Section 409A of the Code. 

     

    TERMINATION
      OF EMPLOYMENT FOR CAUSE:

     

    The
      discharge of an Employee for (i) the intentional failure to perform reasonably
      assigned duties, (ii) dishonesty or willful misconduct in the performance
      of duties, (iii) involvement in a transaction in connection with the
      performance of duties to the Company or Affiliate which transaction is adverse
      to the interests of the Company or Affiliate and which is engaged in for
      personal profit or (iv) willful violation of any law, rule or regulation in
      connection with the performance of duties (other than traffic violations or
      similar offenses), moral turpitude or other misconduct of any kind.

     

    YEAR:

     

    The
      twelve month period beginning on July 1.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    ARTICLE
      2

     

    Eligibility
      and Participation 

     

    Section
      2.1 Unless
      otherwise determined by the Board or the Compensation Committee, eligibility
      of
      an Employee to participate in the Plan upon his employment, promotion or
      re-employment shall be determined from time to time by the Chief Human Resources
      Officer, with the approval of the Chief Executive Officer, in their discretion,
      but shall be limited to senior officers, senior management and other key
      Employees of an Employer who are hired or promoted to Grade 21 or higher and
      who
      execute an agreement in a form designated by the Compensation Committee to
      be
      covered by this Plan. 

     

    Section
      2.2 Notwithstanding
      the provisions of the preceding Section, any eligible Employee who was hired
      and/or promoted to Grade 21 or higher on or before October 1, 1999, and who
      is a participant in the Executive Retirement Plan, shall continue to participate
      in the Executive Retirement Plan and shall not be eligible to participate in
      this Plan if (i) he meets the early retirement criteria set forth under
      such plan, or (ii) if he does not meet such early retirement criteria, and
      prior
      to November 1, 1999 executes an agreement in a form designated by the
      Compensation Committee to be covered by the Executive Retirement Plan. Failure
      of an eligible Employee to make a timely election under Subsection (ii)
      will result in continued coverage under the Executive Retirement Plan in lieu
      of
      eligibility for participation under this Plan. This Section does not apply
      to an
      Employee who has a Termination of Employment after October 1, 1999 and then
      is subsequently rehired by an Employer. In such a case, the re-employed
      executive is only eligible to participate in this Plan pursuant to the preceding
      Section. 

     

    Section
      2.3 Unless
      otherwise provided herein, each Participant shall commence participation on
      the
      date of his designation as a Participant. When an Employee first becomes a
      Participant in the Plan, the Chief Human Resources Officer shall notify him
      promptly of that fact and of his rights hereunder.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    Section
      2.4 A
      Participant who has a Termination of Employment shall be entitled to a
      distribution of the vested portion of his Executive Cash Balance Plan Benefit
      at
      the time and in the manner specified in Article 5. In addition, to the extent
      that benefits are payable by reason of death, the Participant's Beneficiary
      shall be entitled to benefits in accordance with Article 6. 

     

    Section
      2.4 A
      Participant who has a Termination of Employment for Cause shall not be eligible
      for any benefit under this Plan regardless of whether the benefits are vested
      under this Plan. 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    ARTICLE
      3

     

    Executive
      Cash Balance Plan Benefit

     

    Section
      3.1 A
      Participant’s Executive Cash Balance Plan Benefit shall be equal to the sum of
      his Opening Balance, if any, plus annual Contribution Credits, as defined
      herein, as adjusted by Investment Adjustments on a monthly basis as determined
      below. 

     

    Section
      3.2 (i)
      Fifty
      percent (50%) of each Contribution Credit and fifty percent (50%) of the Opening
      Balance (if any) shall be deemed invested as directed by the Participant among
      the Investment Funds available under the 401(k) Plan in the percentages (in
      whole numbers) elected by the Participant. If a Participant fails to specify
      the
      Investment Funds to which this portion of his Opening Balance, if any, or
      Contribution Credits are to be allocated under this Plan, this portion of the
      Participant’s Executive Cash Balance Plan Benefit shall be credited with
      interest as provided in Section 4.2(d) (iii) of the Cash Balance Plan. A
      Participant or the Participant’s beneficiary may elect, in the form specified by
      the Company, a new allocation in which this portion of his Executive Cash
      Balance Plan Benefit will be deemed invested among the Investment Funds. Any
      new
      allocation among Investment Funds must be requested by the second to last
      business day of the month to be deemed effective as of the first day of the
      following month and must be in percentages in whole numbers. 

     

    (ii) Fifty
      percent (50%) of each annual Contribution Credit and fifty percent (50%) of
      the
      Opening Balance (if any) shall be deemed invested in the Company’s Common Stock.
      A Participant may elect, in the form specified by the Company, to allocate
      any
      of this portion of his Executive Cash Balance Plan Benefit so that it will
      be
      deemed invested among the Investment Funds. Any new allocation to the Investment
      Funds must be requested by the second to last business day of the month to
      be
      deemed effective as of the first day of the following month and must be in
      percentages in whole numbers.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    ARTICLE
      4

     

    Vesting

     

    Section
      4.1 A
      Participant shall become vested in his Executive Cash Balance Plan Benefit
      under
      this Plan in accordance with the following schedule. 

     

    
      	
              Total
                Completed Years of Participation in Plan and Executive Retirement
                Plan

            	
              Percentage
                

              Vested

               

            
	
              Less
                than 5

            	
              0

            
	
              5

            	
              50

            
	
              6

            	
              60

            
	
              7

            	
              70

            
	
              8

            	
              80

            
	
              9

            	
              90

            
	
              10

            	
              100

               

            

    

    

    Upon
      the
      Termination of Employment of a Participant on or after his Early Retirement
      Date, the Board may determine that the Participant is 100% vested in the
      Executive Cash Balance Plan Benefit. 

     

    Section
      4.2 Notwithstanding
      any provision herein to the contrary, a Participant shall not be entitled to,
      and shall forfeit, all benefits accrued under this Plan (whether vested or
      not)
      if he has a Termination of Employment for Cause.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    

     

    ARTICLE
      5

     

    Distribution
      of Executive Cash Balance Plan Benefit;

    Subsequent
      Re-Employment

    

    Section
      5.1 If
      a
      Participant is entitled to a distribution of his Executive Cash Balance Plan
      Benefit hereunder, the Participant shall receive his distribution in ten annual
      installments commencing in January of the year following a Termination of
      Employment; provided, however, that if a Key Employee has a Termination of
      Employment between July 1 and December 31 of any calendar year, the first
      installment will commence in July of the calendar year immediately following
      the
      calendar year of the Participant’s Termination of Employment (or as soon as
      practicable thereafter), with all subsequent installment payments to be made
      in
      each January thereafter. Each payment shall be a fraction of the vested value
      of
      the Participant’s Executive Cash Balance Account as of the preceding December 31
      made in accordance with the following schedule: 

     

    
      	
              Payment

            	
              Payment
                Fraction

            
	
              1

            	
              1/10

            
	
              2

            	
              1/9

            
	
              3

            	
              1/8

            
	
              4

            	
              1/7

            
	
              5

            	
              1/6

            
	
              6

            	
              1/5

            
	
              7

            	
              1/4

            
	
              8

            	
              1/3

            
	
              9

            	
              1/2

            
	
              10

            	
              Balance
                remaining

            

    

    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    Section
      5.2 If
      a
      Participant who is receiving a distribution of his Executive Cash Balance Plan
      Benefit or Executive Retirement Plan Benefit returns to the employ of the
      Employer as an Employee, the distribution of the benefit shall continue. Subject
      to the approval of the Board, the Participant will participate in the Plan
      upon
      his re-employment and the Employer shall make Contribution Credits and
      Investment Adjustments for the period of reemployment.

     

      
      (i) Upon
      a
      subsequent Termination of Employment, the vested Executive Cash Balance Plan
      Benefit of such Employee as of that date that was earned subsequent to the
      Employee’s re-employment date shall be payable as described herein.

     

              
(ii) Upon
      a
      subsequent Termination of Employment for Cause, the Participant will forfeit
      his
      benefits earned subsequent to his re-employment date. 

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    ARTICLE
      6

     

    Death
      Benefits

     

    Section
      6.1 In
      the
      event of a Participant's death after benefits under the Plan have commenced,
      his
      Beneficiary shall receive any amounts provided under the form of payment under
      which the Participant was receiving such benefits at the time of his
      death.

     

    Section
      6.2 In
      the
      event of a Participant's death while in the employ of the Employer prior to
      his
      benefit commencement date under the Plan, his Beneficiary shall receive the
      value of the Executive Cash Balance Plan Benefit without regard to vesting
      payable in ten annual installments beginning in the January following the death
      of the Participant.

     

    Section
      6.3 A
      Participant may designate primary and contingent Beneficiaries on a form
      designated by the Compensation Committee. A contingent Beneficiary shall receive
      benefits only if no primary Beneficiary is alive upon the Participant's death.
      If a Participant does not properly name a Beneficiary, or if no Beneficiary
      is
      alive upon the Participant's death, the benefit shall be paid to the
      Participant's surviving Spouse, or, if none, the Participant's estate. If a
      Participant designates multiple primary or contingent Beneficiaries, percentages
      of the benefit may be allocated equally or unequally as the Participant
      designates. The Executive Cash Balance Plan Benefit shall be divided
      (i) among all primary Beneficiaries who are alive upon the Participant's
      death, or (ii) among all contingent Beneficiaries who are alive upon the
      Participant's death, if no primary Beneficiaries are alive. The share of a
      Beneficiary who is not alive upon the Participant’s death shall be divided among
      the remaining Beneficiaries in that Beneficiary group (primary or contingent)
      in
      the proportion that their shares bear to one another.

    
      
         

         

      

      
        -14-

        
          

        

      

      
         

      

    

    

          Section
        6.4 The
        Employer shall pay to each Participant who participates in the Executive
        Retirement Plan as of [specify date prior to choice on whether to participate
        in
        ECB] cash, on the same terms as he receives his regular compensation, in
        an
        amount sufficient to purchase term life insurance equal to three times the
        Participant's Base Pay, reduced by (i) the greater of the amount of insurance
        provided to the Participant under the Employer’s Group Life Insurance Policy or
        the amount of group life insurance provided to the Participant as of June
        30,
        1998, (ii) the amount of benefits payable upon the Participant's death as
        provided in the Participant's Supplemental Executive Retirement Benefit
        Agreements (if any) reduced by Employee contributions under such agreements
        accumulated at 8% to the date of death, and (iii) the value of the Participant’s
        Executive Cash Balance Plan Benefit as of the preceding October 1. Such
        amount shall be recalculated each January 1 based on the Employee's age,
        base salary and the then current annual rates under the Employer’s Group
        Universal Life Insurance Policy. 

       

    
 

    
      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

    

     

    

      ARTICLE
        7

       

    

    Medical
      Benefits

     

    Section
      7.1 If
      a
      Participant who participated in the Plan prior to January 1, 2005 has a
      Termination of Employment on or after his Early Retirement Date and is not
      eligible for benefits under the Retiree Health Plan, the Participant shall
      receive an annual cash payment in the amount of (a) $500 per year of active
      service after age 40 up to a maximum of $7,500 until he becomes Medicare
      eligible and (b) $900 per year thereafter. If the Participant has a spouse
      or
      domestic partner who was covered under the Reader’s Digest Medical Plan for at
      least one year before the Participant’s Termination of Employment, the
      Participant shall receive, for as long as the spouse or domestic partner’s
      status as such continues, an annual cash payment in the amount of (a) $1,000
      per
      year of active service after age 40 up to a maximum of $15,000 until the
      Participant becomes Medicare eligible and (b) $1,800 per year
      thereafter.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    

     

    ARTICLE
      8

     

    Disability

     

    Section
      8.1 If
      a
      Participant who participated in the Plan prior to January 1, 2005 becomes
      totally disabled (as defined under The Reader’s Digest Long Term Disability
      Plan), the Participant shall be entitled to an annual disability benefit payable
      in monthly installments. The annual disability benefit shall equal 60% of the
      Base Pay in effect immediately before the Participant became disabled, up to
      a
      maximum benefit of $30,000 per month. The disability benefit will be paid until
      the earlier to occur of (i) the lapse of five (5) years from the date such
      benefit begins or (ii) the date the Participant is no longer totally disabled.
      This benefit shall be offset by any benefit paid under The Reader's Digest
      Long-Term Disability Plan (or any successor plan). All Contribution Credits
      shall cease during any disability period other than those covered under The
      Reader’s Digest Association, Inc. Short-Term Disability Plan.

     

    Section
      8.2 If
      a
      Participant becomes disabled, then solely for the purposes of determining “Total
      Completed Years of Participation in Plan and Executive Retirement Plan” and
      vesting under Section 4.1 of this Plan, the Participant shall be considered
      to
      continue to be a Participant in this Plan during the period in which disability
      benefits are paid pursuant to Section 8.1 of this Plan or under The Reader’s
      Digest Association, Inc. Long-Term Disability Plan.

     

    Section
      8.3 If
      a
      Participant dies during the period when payments are being made under this
      Article, disability payments shall cease. The Beneficiary shall be entitled
      to
      receive any undistributed portion of the Executive Cash Balance Plan
      Benefit.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      9

     

    General
      Provisions

     

    Section
      9.1 The
      Employer shall only have a contractual obligation to make payments to the
      Participant or Beneficiary, as applicable, referred to herein when due, and
      the
      amounts of such payments shall not be held in trust for the Participant or
      Beneficiary, as applicable, but shall be paid from the general assets of the
      Employer. This Plan is intended to constitute an unfunded plan and no assets
      shall be segregated or earmarked in respect of any amount due
      hereunder.

     

    Section
      9.2 Nothing
      contained herein shall confer any right on a Participant to be continued in
      the
      employ of the Company or any other Employer, or as a limitation of the right
      of
      the Company or Employer to discharge any Participant with or without cause,
      nor
      shall anything herein affect the right of the Participant to participate in
      and
      receive benefits under and in accordance with any pension, profit sharing,
      incentive compensation or other benefit plan or program of any Employer. Nothing
      herein shall be construed as a contract of employment between the Employer
      and
      any Participant.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    Section
      9.3 This
      Plan
      shall be binding upon any successor to or purchaser of substantially all the
      assets of the Company or an Employer with respect to such Employer's Employees.
      The Board reserves the right at any time and from time to time to modify, amend
      or terminate in whole or in part any or all of the provisions of the Plan,
      provided that no such modification, amendment, or termination may be effected
      if
      it is in violation of Section 409A of the Code. Upon any such termination of
      this Plan, the Company may in its sole discretion accelerate payment of all
      benefits that are in pay status on the date of termination and benefits to
      which
      a Participant or Beneficiary, as applicable, would be entitled under the terms
      of the Plan then in effect based on events which occur prior to the date of
      termination of the Plan; provided, that (1) the Company terminates all
      other compensation arrangements that are required to be aggregated with this
      Plan pursuant to Prop. Treas. Reg. § 1.409A-1(c), (2) no payments may be
      made within the first twelve months following such termination that would not
      otherwise have been made if the termination did not occur, and (3) all
      payments are made within twenty four months of the termination of this Plan.
      In
      no event, however, shall any modification, amendment or plan termination by
      the
      Board deprive any Participant or Beneficiary, as applicable, of any amount
      which
      is payable to such person under the Plan by reason of the Participant's
      attainment of age 65 or death prior to such modification, termination or
      amendment.

     

    Section
      9.4 No
      right
      or interest of a Participant or Beneficiary, as applicable, under this Plan
      shall be subject to voluntary or involuntary alienation, assignment or transfer
      of any kind.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    Section
      9.5 The
      administration of this Plan and the interpretation thereof, including the
      authority to decide all questions that arise thereunder, shall be the
      responsibility of the Compensation Committee or such other person or entity
      as
      the Company shall designate, and shall be consistent with Section 409A of the
      Code. The decisions and interpretations of such administrator of the Plan shall
      be final and binding upon each Employer that shall have adopted this Plan,
      Employees of such Employers, each Participant and his Beneficiary, and other
      interested parties.

     

    Section
      9.6 The
      Company shall have the right to deduct from any payment to be made pursuant
      to
      this Plan any federal, state, local or other taxes required by law to be
      withheld.

     

    Section
      9.7 If
      any
      payment to be made under this Plan is to be made on account of a Participant
      who
      was employed by an Employer that shall have adopted this Plan, other than the
      Company, the cost of such benefit payment shall be borne by the Employer of
      the
      Employee.

     

    Section
      9.8 This
      Plan
      shall be construed, regulated and administered for all purposes according to
      the
      laws of the State of New York and the United States.

     

    Section
      9.9 No
      member
      of the Board, no Employee and no member of the Compensation Committee (nor
      the
      Compensation Committee itself) shall be liable for any act or action hereunder,
      including acts of omission or commission, by any other member or Employee or
      by
      any agent to whom duties in connection with the administration of the Plan
      have
      been delegated or, except in circumstances involving bad faith, gross negligence
      or fraud, for anything done or omitted to be done by himself.

     

    Section
      9.10 Wherever
      any words are used in this Plan in the masculine gender they shall be construed
      as though they were also used in the feminine gender in all cases where they
      would so apply, and wherever any words are used herein in the singular form
      they
      shall be construed as though they were also used in the plural form in all
      cases
      where they would so apply.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    

     

    Section
      9.11 In
      the
      event any provision of this Plan, if challenged, would be declared invalid,
      illegal or unenforceable, such provision shall be construed and enforced as
      if
      it had been more narrowly drawn so as not to be illegal, invalid or
      unenforceable and the validity, legality and enforceability of the remaining
      provisions shall not be affected or impaired thereby.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]