The Reader's Digest Association, Inc.
                              
                              
                              
                 1994 Key Employee Long Term
                       Incentive Plan
        (Amended and Restated as of October 10, 1997)
                              
                              
                              
                              
            THE READER'S DIGEST ASSOCIATION, INC.
                              
                              
                              
         1994 KEY EMPLOYEE LONG TERM INCENTIVE PLAN
                              
                              
                          ARTICLE I
                           Purpose
                              
      The  purpose  of  this  1994 Key  Employee  Long  Term
Incentive Plan (the "Plan") is to enable The Reader's Digest
Association, Inc. (the "Company") to offer key employees  of
the  Company  and  Designated Subsidiaries  (defined  below)
performance-based   stock  incentives   and   other   equity
interests in the Company and other incentive awards, thereby
attracting, retaining and rewarding such key employees,  and
strengthening  the  mutuality  of  interests   between   key
employees and the Company's shareholders.


                         ARTICLE II
                         Definitions
                              
      For  purposes of this Plan, the following terms  shall
have the following meanings:

      2.1   "Award" shall mean any award under this Plan  of
any  Stock  Option,  Stock  Appreciation  Right,  Restricted
Stock, Performance Shares, Performance Units or Other Stock-
Based Award.  All Awards shall be granted by, confirmed  by,
and subject to the terms of, a written agreement executed by
the Company and the Participant.

      2.2  "Board" shall mean the Board of Directors of  the
Company.

      2.3   "Change in Control" shall have the  meaning  set
forth in Article 12.

      2.4   "Code" shall mean the Internal Revenue  Code  of
1986, as amended.

      2.5   "Committee" shall mean a committee of the  Board
appointed from time to time by the Board consisting of three
or more Directors, none of whom shall be eligible to receive
any Award pursuant to this Plan.

     2.6  "Common Stock" means the Class A non-voting Common
Stock, $.01 par value per share, of the Company.

      2.7   "Designated Subsidiary" shall mean one  of  such
subsidiaries  of  the Company, 80 percent  or  more  of  the
voting  capital  stock of which is owned, directly  or  indi
rectly,  by the Company, which are designated from  time  to
time by the Board.

      2.8   "Disability"  shall  mean  Total  Disability  as
defined in the Company's Long Term Disability Plan.

      2.9  "Eligible employees" shall mean the employees  of
the Company and the Designated Subsidiaries who are eligible
pursuant to Article 5 to be granted Awards under this Plan.

      2.10  "Fair Market Value" for purposes of  this  Plan,
unless otherwise required by any applicable provision of the
Code or any regulations issued thereunder, shall mean, as of
any date, the mean between the high and low sales prices  on
the  applicable date, or if no sales price is available  for
such date, the mean between the closing bid and asked prices
for such date, of a share of Common Stock (i) as reported by
the  principal  national securities exchange in  the  United
States on which it is then traded, or (ii) if not traded  on
any  such  national securities exchange,  as  quoted  on  an
automated   quotation  system  sponsored  by  the   National
Association  of Securities Dealers, or if the  Common  Stock
shall not have been reported or quoted on such date, on  the
first  day  prior  thereto on which  the  Common  Stock  was
reported  or  quoted.  If the Common Stock  is  not  readily
tradeable  on a national securities exchange or  any  system
sponsored by the National Association of Securities Dealers,
its  Fair  Market  Value shall be set by the  Board  on  the
advice of an investment advisor in good faith.

      2.11  "Incentive Stock Option" shall  mean  any  Stock
Option awarded under this Plan intended to be and designated
as an "Incentive Stock Option" within the meaning of Section
422A of the Code.

      2.12 "Non-Qualified Stock Option" shall mean any Stock
Option  awarded  under this Plan that is  not  an  Incentive
Stock Option.

      2.13  "Other  Stock-Based Award" shall mean  an  Award
under Article 11 of this Plan that is valued in whole or  in
part  by  reference to, or is payable in or otherwise  based
on, Common Stock.

      2.14  "Participant" shall mean an employee to whom  an
Award has been made pursuant to this Plan.

      2.15  "Performance Cycle" shall have the  meaning  set
forth in Section 10.1.

      2.16  "Performance Period" shall have the meaning  set
forth in Section 9.1.

      2.17  "Performance  Share" shall mean  an  Award  made
pursuant  to Article 9 of this Plan of the right to  receive
Common Stock or cash of an equivalent value at the end of  a
specified Performance Period.

      2.18  "Performance  Unit" shall  mean  an  Award  made
pursuant to Article 10 of this Plan of the right to  receive
a  fixed dollar amount, payable in cash or Common Stock or a
combination of both.

      2.19  "Reference Stock Option" shall have the  meaning
set forth in Section 7.1.

      2.20  "Restricted Stock" shall mean an Award of shares
of   Common  Stock  under  this  Plan  that  is  subject  to
restrictions under Article 8.

      2.21  "Restriction Period" shall have the meaning  set
forth in Subsection 8.3(a).

      2.22 "Retirement" shall mean termination of employment
by  an  employee who is at least 55 years of  age  after  at
least  5  years  of  employment  by  the  Company  and/or  a
Designated Subsidiary.

      2.23  "Stock Appreciation Right" shall mean the  right
pursuant  to  an Award granted under Article  7.   A  Tandem
Stock  Appreciation Right shall mean the right to  surrender
to  the  Company  all (or a portion) of a  Stock  Option  in
exchange  for an amount equal to the difference between  (i)
the  Fair Market Value, as of the date such Stock Option (or
such  portion  thereof) is surrendered,  of  the  shares  of
Common  Stock covered by such Stock Option (or such  portion
thereof),  and  (ii) the aggregate exercise  price  of  such
Stock  Option (or such portion thereof).  A Non-Tandem Stock
Appreciation Right shall mean the right to receive an amount
equal to the difference between (x) the Fair Market Value of
a  share  of  Common  Stock as of the  date  such  Right  is
exercised,  and  (y) the Fair Market Value  of  a  share  of
Common Stock as of the date such Right is awarded, otherwise
than on surrender of a Stock Option.

      2.24  "Stock Option" or "Option" shall mean any option
to  purchase  shares  of Common Stock (including  Restricted
Stock   and   Performance  Shares,  if  the   Committee   so
determines) granted pursuant to Article 6.

       2.25   "Termination  of  employment"  shall  mean   a
termination  of service for reasons other than  military  or
personal  leave  of  absence granted by  the  Company  or  a
transfer  of a Participant from the Company or a  Designated
Subsidiary  to  another  Designated  Subsidiary  or  to  the
Company or to any affiliate as defined in Section 414 of the
Code.

       2.26  "Transfer"  shall  mean  anticipate,  alienate,
attach,  sell, assign, pledge, encumber, charge or otherwise
transfer.

      2.27 "Withholding Election" shall have the meaning set
forth in Section 15.4.


                         ARTICLE III
                       Administration
                              
     3.1  The Committee.  The Plan shall be administered and
interpreted by the Committee.

      3.2   Awards.  The Committee shall have full authority
to  grant,  pursuant to the terms of this Plan, to  eligible
employees:   (i)  Stock  Options,  (ii)  Stock  Appreciation
Rights, (iii) Restricted Stock, (iv) Performance Shares, (v)
Performance  Units, and (vi) Other Stock-Based  Awards.   In
particular, the Committee shall have the authority:

          (a)   to  select  the eligible employees  to  whom
          Stock    Options,   Stock   Appreciation   Rights,
          Restricted  Stock, Performance Shares, Performance
          Units  and Other Stock-Based Awards may from  time
          to time be granted hereunder;

          (b)   to  determine  whether and  to  what  extent
          Incentive   Stock  Options,  Non-Qualified   Stock
          Options,  Stock  Appreciation  Rights,  Restricted
          Stock,  Performance Shares, Performance Units  and
          Other   Stock-Based  Awards,  or  any  combination
          thereof,  are to be granted hereunder  to  one  or
          more eligible employees;

          (c)   to  determine the number of shares of Common
          Stock  to  be  covered by each such Award  granted
          hereunder;

          (d)   to  determine the terms and conditions,  not
          inconsistent with the terms of this Plan,  of  any
          Award   granted  hereunder  (including,  but   not
          limited  to,  the share price, any restriction  or
          limitation,  any vesting schedule or  acceleration
          thereof, or any forfeiture restrictions or  waiver
          thereof, regarding any Stock Option or other Award
          and  the  shares of Common Stock relating thereto,
          based  on  such factors, if any, as the  Committee
          shall determine, in its sole discretion);

          (e)   to  determine whether, to  what  extent  and
          under  what  circumstances grants of  Options  and
          other Awards under this Plan are to operate  on  a
          tandem  basis and/or in conjunction with or  apart
          from  other awards made by the Company outside  of
          this Plan;

          (f)    to   determine  whether  and   under   what
          circumstances  a Stock Option may  be  settled  in
          cash,  Common  Stock,  Performance  Shares  and/or
          Restricted Stock under Subsection 6.4(k); and

          (g)   to  determine whether, to  what  extent  and
          under  what circumstances Common Stock  and  other
          amounts  payable with respect to  an  Award  under
          this  Plan  shall be deferred either automatically
          or at the election of the Participant.

      3.3   Guidelines.  Subject to Article 13  hereof,  the
Committee  shall  have the authority  to  adopt,  alter  and
repeal  such administrative rules, guidelines and  practices
governing  this  Plan  and perform all acts,  including  the
delegation  of  its administrative responsibilities,  as  it
shall,  from  time to time, deem advisable; to construe  and
interpret  the  terms and provisions of this  Plan  and  any
Award  issued  under this Plan (and any agreements  relating
thereto);  and to otherwise supervise the administration  of
this Plan.  The Committee may correct any defect, supply any
omission or reconcile any inconsistency in this Plan  or  in
any  agreement  relating thereto in the manner  and  to  the
extent  it  shall  deem necessary to carry  this  Plan  into
effect.   Notwithstanding the foregoing, no  action  of  the
Committee under this Section 3.3 shall impair the rights  of
any Participant without the Participant's consent.

      3.4  Decisions Final.  Any decision, interpretation or
other  action  made  or taken in good faith  by  or  at  the
direction  of  the Company, the Board, or the Committee  (or
any of its members) arising out of or in connection with the
Plan shall be within the absolute discretion of all and each
of them, as the case may be, and shall be final, binding and
conclusive on the Company and all employees and Participants
and   their  respective  heirs,  executors,  administrators,
successors and assigns.

     3.5  Reliance on Counsel.  The Company or the Committee
may  consult with legal counsel, who may be counsel for  the
Company or other counsel, with respect to its obligations or
duties   hereunder,  or  with  respect  to  any  action   or
proceeding or any question of law, and shall not  be  liable
with  respect to any action taken or omitted by it  in  good
faith pursuant to the advice of such counsel.


                         ARTICLE IV
                      Share Limitation

     4.1  Shares.  The maximum aggregate number of shares of
Common  Stock  which may be issued under this Plan  or  with
respect to which Non-Tandem Stock Appreciation Rights may be
granted shall not exceed 10,800,000 shares (subject  to  any
increase or decrease pursuant to Section 4.2) which  may  be
either  authorized and unissued Common Stock or  outstanding
Common Stock reacquired by the Company.  No more than 10% of
such  maximum shall be issued under this Plan as  Restricted
Stock.   If any Option granted under this Plan shall expire,
terminate or be cancelled for any reason without having been
exercised in full, or payment shall have been made in  other
than  Common  Stock, the number of unpurchased shares  shall
again  be  available for the purposes of the Plan; provided,
however,  that  if  such  expired, terminated  or  cancelled
Option  shall  have  been  issued in  tandem  with  a  Stock
Appreciation Right or other Award, none of such  unpurchased
shares  shall  again become available for purposes  of  this
Plan  to  the extent that the related Right or Award granted
under  this  Plan is exercised.  Further, if any  shares  of
Common  Stock granted hereunder are forfeited or such  Award
otherwise  terminates without the delivery  of  such  shares
upon  the lapse of restrictions, the shares subject to  such
grant,  to  the  extent of such forfeiture  or  termination,
shall again be available under this Plan.

      4.2   Changes.   In  the event of any  change  in  the
capital stock of the Company by reason of any stock dividend
or  distribution, stock split or reverse stock split, recapi
talization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, distribution with respect
to  its outstanding Common Stock of capital stock other than
Common   Stock,  reclassification  of  its  capital   stock,
issuance of warrants or options to purchase any Common Stock
or  securities  convertible into  Common  Stock,  or  rights
offering  to  purchase capital stock at a price  below  fair
market  value, or any similar change affecting  the  capital
stock of the Company; then the aggregate number and kind  of
shares  which thereafter may be issued under this Plan,  the
number  and  kind  of shares subject to outstanding  Options
granted under this Plan and the purchase price thereof,  and
the  number  and kind of shares subject to other outstanding
Awards  (including but not limited to Awards  of  Restricted
Stock,  Performance  Shares  and Other  Stock-Based  Awards)
granted  under  this  Plan, shall be appropriately  adjusted
consistent with such change in such manner as the  Committee
may  deem  equitable  to  prevent  substantial  dilution  or
enlargement  of  the rights granted to,  or  available  for,
Participants  under  this  Plan,  and  any  such  adjustment
determined  by the Committee in good faith shall be  binding
and  conclusive  on  the Company and  all  Participants  and
employees  and their respective heirs, executors, administra
tors,  successors  and  assigns.  Any such  adjusted  Option
price shall also be used to determine the amount payable  by
the  Company  upon  the exercise of any  Stock  Appreciation
Right associated with any Stock Option.

      4.3  Purchase Price.  Notwithstanding any provision of
this  Plan  to  the contrary, if authorized  but  previously
unissued shares of Common Stock are issued under this  Plan,
such  shares shall be issued for a consideration which shall
not be less than par value.


                          ARTICLE V
                         Eligibility
                              
       5.1   Senior  officers,  senior  management  and  key
employees of the Company and its Designated Subsidiaries and
members of the Executive Committee of the Company's Board of
Directors  are  eligible  to be granted  Options  and  other
Awards  under this Plan.  Eligibility under this Plan  shall
be determined by the Committee.


                         ARTICLE VI
                        Stock Options
                              
     6.1  Options.  Stock Options may be granted alone or in
addition  to  other Awards granted under  this  Plan.   Each
Stock  Option granted under this Plan shall be  one  of  two
types:   (i)  an  Incentive Stock  Option  or  (ii)  a  Non-
Qualified Stock Option.

     6.2  Grants.  The Committee shall have the authority to
grant  to  any  Participant  one  or  more  Incentive  Stock
Options, Non-Qualified Stock Options, or both types of Stock
Options  (in  each  case with or without Stock  Appreciation
Rights);  provided,  however, that no Participant  shall  be
granted  Stock  Options  or  Non-Tandem  Stock  Appreciation
Rights,  or  both,  with respect to a  total  of  more  than
500,000 shares of Common Stock during any fiscal year of the
Company.   To  the  extent that any Stock  Option  does  not
qualify as an Incentive Stock Option (whether because of its
provisions  or  the  time  or  manner  of  its  exercise  or
otherwise),  such Stock Option or the portion thereof  which
does  not  qualify shall constitute a separate Non-Qualified
Stock Option.

      6.3  Incentive Stock Options.  Anything in the Plan to
the  contrary notwithstanding, no term of this Plan relating
to  Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under
the Plan be so exercised, so as to disqualify the Plan under
Section  422A  of the Code, or, without the consent  of  the
Participants  affected, to disqualify  any  Incentive  Stock
Option under such Section 422A.

     6.4  Terms of Options.  Options granted under this Plan
shall  be subject to the following terms and conditions  and
shall be in such form and contain such additional terms  and
conditions,  not inconsistent with the terms of this  Plans,
as the Committee shall deem desirable:

          (a)  Option Price.  The option price per share  of
          Common  Stock  purchasable under  a  Stock  Option
          shall  be determined by the Committee at the  time
          of  grant but shall be not less than 100%  of  the
          Fair Market Value of the Common Stock at grant  if
          the  Stock  Option is intended to be an  Incentive
          Stock Option and shall not be less than 85% of the
          Fair Market Value of the Common Stock at grant  if
          the Stock Option is intended to be a Non-Qualified
          Stock Option.

          (b)   Option Term.  The term of each Stock  Option
          shall  be fixed by the Committee, but no Incentive
          Stock  Option shall be exercisable more  than  ten
          years after the date the Option is granted, and no
          Non-Qualified  Stock Option shall  be  exercisable
          more than ten years and one day after the date the
          Option is granted.

          (c)   Exercisability.   Stock  Options  shall   be
          exercisable at such time or times and  subject  to
          such  terms  and conditions as shall be determined
          by  the  Committee  at grant;  provided,  however,
          that,  except as provided in subsections (f),  (g)
          and  (h)  below  and Article 3,  unless  otherwise
          determined  by  the Committee at grant,  no  Stock
          Option  shall  be exercisable prior to  the  first
          anniversary  date of the granting of  the  Option.
          If the Committee provides, in its discretion, that
          any   Stock   Option   is  exercisable   only   in
          installments,   the  Committee  may   waive   such
          installment exercise provisions at any time at  or
          after  grant  in whole or in part, based  on  such
          factors, if any, as the Committee shall determine,
          in its sole discretion.

          (d)   Method  of  Exercise.  Subject  to  whatever
          installment exercise and waiting period provisions
          apply  under  subsection (c) above, Stock  Options
          may  be exercised in whole or in part at any  time
          during  the option term, by giving written  notice
          of  exercise to the Company specifying the  number
          of  shares to be purchased.  Such notice shall  be
          accompanied  by  payment in full of  the  purchase
          price  in  such form as the Committee may  accept.
          If  and  to the extent determined by the Committee
          in  its sole discretion at or after grant, payment
          in full or in part may also be made in the form of
          Common  Stock (other than Restricted Stock)  owned
          by  the Participant (and for which the Participant
          has  good  title free and clear of any  liens  and
          encumbrances) or Restricted Stock, or by reduction
          in   the  number  of  shares  issuable  upon  such
          exercise  based, in each case, on the Fair  Market
          Value  of  the  Stock  on  the  payment  date   as
          determined by the Committee (without regard to any
          forfeiture  restrictions applicable to  Restricted
          Stock).  No shares of Stock shall be issued  until
          payment,  as  provided herein, therefor  has  been
          made.   A  Participant shall  generally  have  the
          rights   to  dividends  or  other  rights   of   a
          shareholder with respect to shares subject to  the
          Option  when the optionee has given written notice
          of  exercise, has paid for such shares as provided
          herein,   and,   if  requested,  has   given   the
          representation   described   in   Section    15.1.
          Notwithstanding the foregoing, if payment in  full
          or in part has been made in the form of Restricted
          Stock,  an  equivalent number of shares of  Common
          Stock  issued on exercise of the Option  shall  be
          subject  to  the same restrictions and conditions,
          and   during  the  remainder  of  the  Restriction
          Period,  applicable  to the shares  of  Restricted
          Stock surrendered therefor.

          (e)   Non-Transferability of  Options.   No  Stock
          Option  shall  be Transferable by the  Participant
          otherwise  than by will or by the laws of  descent
          and  distribution, and all Stock Options shall  be
          exercisable,  during  the Participant's  lifetime,
          only by the Participant.

          (f)   Termination by Death.  Subject to subsection
          (j)  below, if a Participant's employment  by  the
          Company  or a Designated Subsidiary terminates  by
          reason  of  death, any Stock Option held  by  such
          Participant,  unless otherwise determined  by  the
          Committee at grant, shall be fully vested and  may
          thereafter    be   exercised    by    the    legal
          representative of the estate, for a period of  one
          year  (or  such other period as the Committee  may
          specify  at grant) from the date of such death  or
          until  the expiration of the stated term  of  such
          Stock Option, whichever period is the shorter.

          (g)  Termination by Reason of Disability.  Subject
          to   subsection  (j)  below,  if  a  Participant's
          employment   by  the  Company  or   a   Designated
          Subsidiary terminates by reason of Disability, any
          Stock  Option  held  by such  Participant,  unless
          otherwise  determined by the Committee  at  grant,
          shall  be  fully  vested  and  may  thereafter  be
          exercised by the Participant for a period of three
          years  (or such other period as the Committee  may
          specify   at   grant)  from  the  date   of   such
          termination of employment or until the  expiration
          of the stated term of such Stock Option, whichever
          period is the shorter; provided, however, that, if
          the Participant dies within such three-year period
          (or  such  other  period as  the  Committee  shall
          specify  at  grant), any unexercised Stock  Option
          held  by such Participant shall thereafter be exer
          cisable  to the extent to which it was exercisable
          at the time of death for a period of twelve months
          from   the  date  of  such  death  or  until   the
          expiration  of  the  stated  term  of  such  Stock
          Option, whichever period is the shorter.   In  the
          event  of  termination of employment by reason  of
          Disability,  if  an  Incentive  Stock  Option   is
          exercised  after  the expiration of  the  exercise
          periods that apply for purposes of Section 422A of
          the  Code,  such Stock Option will  thereafter  be
          treated as a Non-Qualified Stock Option.

          (h)  Termination by Reason of Retirement.  Subject
          to  subsection (j), if a Participant's  employment
          by  the  Company or a Designated Subsidiary  termi
          nates  by  reason of Retirement, any Stock  Option
          held   by   such  Participant,  unless   otherwise
          determined  by  the Committee at grant,  shall  be
          fully  vested  and may thereafter be exercised  by
          the  Participant for a period of three  years  (or
          such other period as the Committee may specify  at
          grant)  from  the  date  of  such  termination  of
          employment or the expiration of the stated term of
          such   Stock  Option,  whichever  period  is   the
          shorter;   provided,   however,   that,   if   the
          Participant  dies  within such three-year  period,
          any   unexercised  Stock  Option  held   by   such
          Participant  shall thereafter be  exercisable,  to
          the extent to which it was exercisable at the time
          of  death, for a period of twelve months from  the
          date of such death or until the expiration of  the
          stated term of such Stock Option, whichever period
          is  the  shorter.  In the event of termination  of
          employment   by  reason  of  Retirement,   if   an
          Incentive  Stock  Option is  exercised  after  the
          expiration of the exercise periods that apply  for
          purposes  of Section 422A of the Code, such  Stock
          Option  will  thereafter  be  treated  as  a  Non-
          Qualified Stock Option.

          (i)     Other   Termination.    Unless   otherwise
          determined by the Committee at or after grant,  if
          a  Participant's employment by the  Company  or  a
          Designated  Subsidiary terminates for  any  reason
          other  than  death, Disability or Retirement,  the
          Stock  Option  shall thereupon  terminate,  except
          that  such Stock Option may be exercised,  to  the
          extent  it  was exercisable immediately  preceding
          such  termination, for the lesser of three  months
          or  the balance of such Stock Option's term if the
          Participant  is  involuntarily terminated  by  the
          Company   or  the  Designated  Subsidiary  without
          cause.

          (j)   Incentive Stock Option Limitations.  To  the
          extent  that  the  aggregate  Fair  Market   Value
          (determined as of the time of grant) of the Common
          Stock   with  respect  to  which  Incentive  Stock
          Options are exercisable for the first time by  the
          Participant  during any calendar  year  under  the
          Plan  and/or  any other stock option plan  of  the
          Company  or  any subsidiary or parent  corporation
          (within  the meaning of Section 425 of  the  Code)
          exceeds $100,000, such Options shall be treated as
          Options which are not Incentive Stock Options.

                To  the  extent  (if  any)  permitted  under
          Section  422A  of  the  Code,  or  the  applicable
          regulations thereunder or any applicable  Internal
          Revenue   Service   pronouncement,   if   (i)    a
          Participant's  employment with the  Company  or  a
          Designated Subsidiary is terminated by  reason  of
          death,  Disability  or  Retirement  and  (ii)  the
          portion of any Incentive Stock Option that is  oth
          erwise  exercisable  during  the  post-termination
          period specified under subsections (f), (g) or (h)
          above,  computed  without regard to  the  $100,000
          limitation currently contained in Section  422A(d)
          of  the Code, is greater than the portion of  such
          Stock Option that is immediately exercisable as an
          "incentive   stock  option"  during   such   post-
          termination period under Section 422A, such excess
          shall  be treated as a Non-Qualified Stock Option.
          If  the  exercise of an Incentive Stock Option  is
          accelerated by reason of a Change in Control,  any
          portion of such Option that is not exercisable  as
          an   Incentive  Stock  Option  by  reason  of  the
          $100,000  limitation contained in Section  422A(d)
          of  the  Code  shall be treated as a Non-Qualified
          Stock Option.

               Should any of the foregoing provisions not be
          necessary  in  order  for  the  Stock  Options  to
          qualify as Incentive Stock Options, or should  any
          additional  provisions be required, the  Committee
          may   amend  the  Plan  accordingly,  without  the
          necessity  of  obtaining  the  approval   of   the
          shareholders of the Company.

          (k)    Buyout  and  Settlement  Provisions.    The
          Committee  may  at any time offer to  buy  out  an
          Option previously granted, based on such terms and
          conditions  as  the Committee shall establish  and
          communicate  to the Participant at the  time  that
          such offer is made.

                In  addition,  if  the Option  agreement  so
          provides   at  grant  or  is  amended  (with   the
          Participant's consent) after grant  and  prior  to
          exercise to so provide, the Committee may  require
          that  all or part of the shares to be issued  with
          respect to the spread value of an exercised Option
          take  the form of Performance Shares or Restricted
          Stock,  which  shall  be valued  on  the  date  of
          exercise on the basis of the Fair Market Value  of
          such   Performance  Shares  or  Restricted   Stock
          determined  without regard to  the  deferral  limi
          tations and/or forfeiture restrictions involved.


                         ARTICLE VII
                  Stock Appreciation Rights
                              
       7.1    Tandem   Stock  Appreciation  Rights.    Stock
Appreciation Rights may be granted in conjunction  with  all
or  part  of  any Stock Option (a "Reference Stock  Option")
granted   under   this  Plan  ("Tandem  Stock   Appreciation
Rights").  In the case of a Non-Qualified Stock Option, such
rights  may  be granted either at or after the time  of  the
grant  of  such Reference Stock Option.  In the case  of  an
Incentive Stock Option, such rights may be granted  only  at
the time of the grant of such Reference Stock Option.

      7.2  Terms and Conditions of Tandem Stock Appreciation
Rights.   Tandem Stock Appreciation Rights shall be  subject
to  such  terms  and conditions, not inconsistent  with  the
provisions of this Plan, as shall be determined from time to
time by the Committee, including the following:

          (a)   Term.  A Tandem Stock Appreciation Right  or
          applicable portion thereof granted with respect to
          a  Reference Stock Option shall terminate  and  no
          longer  be  exercisable upon  the  termination  or
          exercise  of  the Reference Stock  Option,  except
          that,   unless   otherwise   determined   by   the
          Committee, in its sole discretion, at the time  of
          grant,  a Tandem Stock Appreciation Right  granted
          with  respect  to  less than the  full  number  of
          shares covered by the Reference Stock Option shall
          not  be  reduced until and then only to the extent
          the exercise or termination of the Reference Stock
          Option causes the number of shares covered by  the
          Tandem  Stock  Appreciation Right  to  exceed  the
          number   of   shares   remaining   available   and
          unexercised under the Reference Stock Option.

          (b)   Exercisability.  Tandem  Stock  Appreciation
          Rights  shall be exercisable only at such time  or
          times  and to the extent that the Reference  Stock
          Options  to which they relate shall be exercisable
          in accordance with the provisions of Article 6 and
          this Article 7; provided, however, that any Tandem
          Stock Appreciation Right granted subsequent to the
          grant  of the Reference Stock Option shall not  be
          exercisable  during the first six  months  of  its
          term,  except  that this special limitation  shall
          not  apply in the event of death or Disability  of
          the Participant prior to the expiration of the six-
          month period.

          (c)    Method   of  Exercise.   A   Tandem   Stock
          Appreciation Right may be exercised by an optionee
          by  surrendering  the applicable  portion  of  the
          Reference  Stock Option.  Upon such  exercise  and
          surrender,  the Participant shall be  entitled  to
          receive   an  amount  determined  in  the   manner
          prescribed  in  this Section 7.2.   Stock  Options
          which  have  been so surrendered, in whole  or  in
          part, shall no longer be exercisable to the extent
          the  related Tandem Stock Appreciation Rights have
          been exercised.

          (d)  Payment.  Upon the exercise of a Tandem Stock
          Appreciation Right a Participant shall be entitled
          to  receive up to, but no more than, an amount  in
          cash  and/or shares of Common Stock equal in value
          to  the  excess of the Fair Market  Value  of  one
          share  of  Common Stock over the option price  per
          share  specified  in  the Reference  Stock  Option
          multiplied  by the number of shares in respect  of
          which  the  Tandem Stock Appreciation Right  shall
          have been exercised, with the Committee having the
          right to determine the form of payment.

          (e)      Non-Transferability.     Tandem     Stock
          Appreciation  Rights  shall be  Transferable  only
          when  and to the extent that the underlying  Stock
          Option  would  be  Transferable  under  Subsection
          6.4(e) of the Plan.

          (f)   Deemed  Exercise of Reference Stock  Option.
          Upon  the  exercise of a Tandem Stock Appreciation
          Right,  the Reference Stock Option or part thereof
          to  which such Stock Appreciation Right is related
          shall  be  deemed to have been exercised  for  the
          purpose  of the limitation set forth in Article  4
          of  the  Plan  on the number of shares  of  Common
          Stock to be issued under the Plan.

      7.3  Non-Tandem Stock Appreciation Rights.  Non-Tandem
Stock  Appreciation  Rights  may  also  be  granted  without
reference  to  any  Stock Options granted under  this  Plan;
provided,  however,  that no Participant  shall  be  granted
Stock  Options or Non-Tandem Stock Appreciation  Rights,  or
both, with respect to a total of more than 500,000 shares of
Common Stock during any fiscal year of the Company.

       7.4    Terms  and  Conditions  of  Non-Tandem   Stock
Appreciation  Rights.  Non-Tandem Stock Appreciation  Rights
shall   be  subject  to  such  terms  and  conditions,   not
inconsistent with the provisions of this Plan, as  shall  be
determined from time to time by the Committee, including the
following:

          (a)   Term.   The  term of each  Non-Tandem  Stock
          Appreciation   Right  shall  be   fixed   by   the
          Committee, but shall not be greater than ten years
          and one day after the date the Right is granted.

          (b)      Exercisability.      Non-Tandem     Stock
          Appreciation Rights shall be exercisable  at  such
          time  or  times  and  subject to  such  terms  and
          conditions as shall be determined by the Committee
          at  grant; provided, however, that any Right shall
          not be exercisable during the first six months  of
          its  term,  except  that this  special  limitation
          shall   not  apply  in  the  event  of  death   or
          Disability  of the Participant prior to expiration
          of   this  six-month  period.   If  the  Committee
          provides,  in its discretion, that any such  Right
          is exercisable only in installments, the Committee
          may waive such installment exercise provisions  at
          any  time  at or after grant in whole or in  part,
          based  on  such factors, if any, as the  Committee
          shall determine, in its sole discretion.

          (c)   Method  of  Exercise.  Subject  to  whatever
          installment exercise and waiting period provisions
          apply under subsection (b) above, Non-Tandem Stock
          Appreciation Rights may be exercised in  whole  or
          in  part  at any time during the option  term,  by
          giving  written notice of exercise to the  Company
          specifying the number of Rights to be exercised.

          (d)   Payment.  Upon the exercise of a  Non-Tandem
          Stock  Appreciation Right a Participant  shall  be
          entitled to receive, for each Right exercised,  up
          to,  but  no  more than, an amount in cash  and/or
          shares  of  Common Stock equal  in  value  to  the
          excess  of the Fair Market Value of one  share  of
          Common  Stock  on the date the Right is  exercised
          over  the Fair Market Value of one share of Common
          Stock  on  the date the Right was awarded  to  the
          Participant, with the Committee having  the  right
          to determine the form of payment.

          (e)   Non-Transferability.   No  Non-Tandem  Stock
          Appreciation  Right shall be Transferable  by  the
          Participant otherwise than by will or by the  laws
          of  descent and distribution, and all such  Rights
          shall  be  exercisable, during  the  Participant's
          lifetime, only by the Participant.

          (f)   Termination  by Death.  If  a  Participant's
          employment   by  the  Company  or   a   Designated
          Subsidiary terminates by reason of death, any Non-
          Tandem  Stock  Appreciation  Right  held  by  such
          Participant,  unless otherwise determined  by  the
          Committee at grant, shall be fully vested and  may
          thereafter    be   exercised    by    the    legal
          representative of the estate, for a period of  one
          year  (or  such other period as the Committee  may
          specify  at grant) from the date of such death  or
          until  the expiration of the stated term  of  such
          Right, whichever period is the shorter.

          (g)   Termination  by  Reason  of  Disability   or
          Retirement.  If a Participant's employment by  the
          Company  or a Designated Subsidiary terminates  by
          reason of Disability or Retirement, any Non-Tandem
          Stock Appreciation Right held by such Participant,
          unless  otherwise determined by the  Committee  at
          grant, shall be fully vested and may thereafter be
          exercised by the Participant for a period of three
          years  (or such other period as the Committee  may
          specify   at   grant)  from  the  date   of   such
          termination of employment or until the  expiration
          of the stated term of such Right, whichever period
          is  the  shorter; provided, however, that, if  the
          Participant dies within such three-year period (or
          such  other period as the Committee shall  specify
          at   grant),  any  unexercised  Non-Tandem   Stock
          Appreciation Right held by such Participant  shall
          thereafter be exercisable to the extent  to  which
          it  was  exercisable at the time of  death  for  a
          period  of  twelve months from the  date  of  such
          death  or until the expiration of the stated  term
          of such Right, whichever period is the shorter.

          (h)     Other   Termination.    Unless   otherwise
          determined by the Committee at or after grant,  if
          a  Participant's employment by the  Company  or  a
          Designated  Subsidiary terminates for  any  reason
          other  than  death, Disability or Retirement,  the
          Non-Tandem   Stock   Appreciation   Right    shall
          thereupon terminate, except that such Right may be
          exercised,   to  the  extent  it  was  exercisable
          immediately  preceding such termination,  for  the
          lesser  of  three  months or the  balance  of  the
          stated  term  of such Right if the Participant  is
          involuntarily  terminated by the  Company  or  the
          Designated Subsidiary without cause.

      7.5   Cash Settlements of Tandem and Non-Tandem  Stock
Appreciation Rights.  A Participant required to file reports
under  Section 16(a) of the Securities Exchange Act of  1934
with  respect to securities of the Company may receive  cash
in  complete or partial settlement of a Tandem or Non-Tandem
Stock  Appreciation  Right only  if  any  election  by  such
Participant to receive cash in full or partial settlement of
the Stock Appreciation Right, as well as any exercise by him
of  his Stock Appreciation Right for such cash, is made  (i)
during  the  period  beginning on  the  third  business  day
following  the  date  of  release  for  publication  of  the
quarterly or annual summary statements of sales and earnings
of  the  Company  and  ending on the  twelfth  business  day
following  such  date, or (ii) during any  other  period  in
which  such  election  or exercise may  be  made  under  the
provisions of Rule 16b-3 promulgated pursuant to the Act.



                        ARTICLE VIII
                      Restricted Stock

      8.1  Awards of Restricted Stock.  Shares of Restricted
Stock  may  be issued either alone or in addition  to  other
Awards   granted  under  the  Plan.   The  Committee   shall
determine  the  eligible persons to whom, and  the  time  or
times at which, grants of Restricted Stock will be made, the
number  of  shares to be awarded, the price (if any)  to  be
paid by the recipient (subject to Section 8.2), the time  or
times within which such Awards may be subject to forfeiture,
the vesting schedule and rights to acceleration thereof, and
all other terms and conditions of the Awards.

      The  Committee may condition the grant  of  Restricted
Stock upon the attainment of specified performance goals  or
such  other factors as the Committee may determine,  in  its
sole discretion.

       8.2    Awards   and  Certificates.   The  prospective
Participant  selected  to receive a Restricted  Stock  Award
shall not have any rights with respect to such Award, unless
and  until  such Participant has delivered a fully  executed
copy  of  the agreement evidencing the Award to the  Company
and  has  otherwise complied with the applicable  terms  and
conditions  of  such Award.  Further, such  Award  shall  be
subject to the following conditions:

          (a)   Purchase Price.  Subject to Section 4.3, the
          purchase price for shares of Restricted Stock  may
          be less than their par value and may be zero.

          (b)   Acceptance.  Awards of Restricted Stock must
          be  accepted within a period of 60 days  (or  such
          shorter  period  as the Committee may  specify  at
          grant)  after  the  Award  date,  by  executing  a
          Restricted  Stock Award agreement  and  by  paying
          whatever   price  (if  any)  the   Committee   has
          designated thereunder.

          (c)    Legend.    Each  Participant  receiving   a
          Restricted  Stock Award shall be  issued  a  stock
          certificate   in   respect  of  such   shares   of
          Restricted  Stock.   Such  certificate  shall   be
          registered  in  the name of such Participant,  and
          shall bear an appropriate legend referring to  the
          terms, conditions, and restrictions applicable  to
          such Award, substantially in the following form:

                "The  anticipation, alienation,  attachment,
          sale, transfer, assignment, pledge, encumbrance or
          charge  of the shares of stock represented  hereby
          are subject to the terms and conditions (including
          forfeiture)  of  The Reader's Digest  Association,
          Inc.  (the "Company") 1994 Key Employee Long  Term
          Incentive  Plan  and  an  Agreement  entered  into
          between the registered owner and the Company dated
          .   Copies of such Plan and Agreement are on  file
          at the principal office of the Company."

          (d)   Custody.   The Committee shall require  that
          the  stock certificates evidencing such shares  be
          held   in   custody  by  the  Company  until   the
          restrictions thereon shall have lapsed, and  that,
          as  a condition of any Restricted Stock Award, the
          Participant  shall have delivered  a  duly  signed
          stock  power, endorsed in blank, relating  to  the
          Common Stock covered by such Award.

      8.3   Restrictions  and  Conditions.   The  shares  of
Restricted  Stock  awarded pursuant to this  Plan  shall  be
subject to the following restrictions and conditions:

          (a)    Restriction   Period.    Subject   to   the
          provisions  of this Plan and the Award  agreement,
          during  a  period set by the Committee  commencing
          with  the  date  of  such Award (the  "Restriction
          Period"),  the Participant shall not be  permitted
          to  Transfer  shares of Restricted  Stock  awarded
          under   this  Plan.   Within  these  limits,   the
          Committee, in its sole discretion, may provide for
          the lapse of such restrictions in installments and
          may accelerate or waive such restrictions in whole
          or  in  part, based on service, performance and/or
          such  other  factors or criteria as the  Committee
          may determine in its sole discretion.

          (b)  Rights as Shareholder.  Except as provided in
          this subsection (b) and subsection (a) above,  the
          Participant shall have, with respect to the shares
          of Restricted Stock, all of the rights of a holder
          of shares of Common Stock of the Company including
          the  right  to receive any dividends.  The  Commit
          tee, in its sole discretion, as determined at  the
          time  of  Award, may permit or require the payment
          of dividends to be deferred.

          (c)   Termination of Employment.  Subject  to  the
          applicable  provisions of the Award agreement  and
          this  Plan,  upon  termination of a  Participant's
          employment   with  the  Company  or  a  Designated
          Subsidiary  for any reason during the  Restriction
          Period,  all  Restricted Shares still  subject  to
          restriction   will  vest  or   be   forfeited   in
          accordance   with   the   terms   and   conditions
          established by the Committee at grant.

          (d)   Hardship.  In the event of hardship or other
          special  circumstances  of  a  Participant   whose
          employment   with  the  Company  or  a  Designated
          Subsidiary is involuntarily terminated (other than
          for   cause),  the  Committee  may,  in  its  sole
          discretion, waive in whole or in part any  or  all
          remaining  restrictions  with  respect   to   such
          Participant's shares of Restricted Stock, based on
          such   factors   as   the   Committee   may   deem
          appropriate.

          (e)   Lapse  of  Restrictions.  If  and  when  the
          Restriction   Period  expires  without   a   prior
          forfeiture of the Restricted Stock subject to such
          Restriction  Period,  the  certificates  for  such
          shares shall be delivered to the Participant.  All
          legends shall be removed from said certificates at
          the time of delivery to the Participant.


                         ARTICLE IX
                     Performance Shares

      9.1   Award of Performance Shares.  Performance Shares
may  be  awarded either alone or in addition to other Awards
granted under this Plan.  The Committee shall determine  the
eligible  persons  to whom and the time or  times  at  which
Performance   Shares  shall  be  awarded,  the   number   of
Performance Shares to be awarded to any person, the duration
of  the period (the "Performance Period") during which,  and
the  conditions under which, receipt of the Shares  will  be
deferred, and the other terms and conditions of the Award in
addition to those set forth in Section 9.2.

            The   Committee  may  condition  the  grant   of
Performance   Shares  upon  the  attainment   of   specified
performance goals or such other factors or criteria  as  the
Committee shall determine, in its sole discretion.

      9.2  Terms and Conditions.  Performance Shares awarded
pursuant to this Article 9 shall be subject to the following
terms and conditions:

          (a)     Non-Transferability.    Subject   to   the
          applicable  provisions of the Award agreement  and
          this  Plan,  Performance Share Awards may  not  be
          Transferred during the Performance Period.

          (b)   Dividends.  Unless otherwise  determined  by
          the  Committee at the time of Award, amounts equal
          to  any  dividends declared during the Performance
          Period  with  respect to the number of  shares  of
          Common Stock covered by a Performance Share  Award
          will not be paid to the Participant.

          (c)   Payment.  Subject to the provisions  of  the
          Award  agreement and this Plan, at the  expiration
          of  the  Performance  Period,  share  certificates
          and/or  cash  of  an  equivalent  value  (as   the
          Committee  may  determine in its sole  discretion)
          shall  be  delivered  to the Participant,  or  his
          legal  representative, in a number  equal  to  the
          vested  shares  covered by the  Performance  Share
          Award.

          (d)   Termination of Employment.  Subject  to  the
          applicable  provisions of the Award agreement  and
          this  Plan,  upon  termination of a  Participant's
          employment   with  the  Company  or  a  Designated
          Subsidiary  for any reason during the  Performance
          Period  for a given Award, the Performance  Shares
          in   question   will  vest  or  be  forfeited   in
          accordance   with   the   terms   and   conditions
          established by the Committee at grant.

          (e)    Accelerated  Vesting.   Based  on  service,
          performance and/or such other factors or criteria,
          if  any,  as  the  Committee  may  determine,  the
          Committee  may, at or after grant, accelerate  the
          vesting  of  all  or any part of  any  Performance
          Share  Award and/or waive the deferral limitations
          for all or any part of such Award.

          (f)   Hardship.  In the event of hardship or other
          special  circumstances  of  a  Participant   whose
          employment   with  the  Company  or  a  Designated
          Subsidiary is involuntarily terminated (other than
          for   cause),  the  Committee  may,  in  its  sole
          discretion, based on such factors as the Committee
          may  deem appropriate, waive in whole or  in  part
          any  or  all of the remaining deferral limitations
          imposed  hereunder with respect to any or  all  of
          the Participant's Performance Shares.


                          ARTICLE X
                      Performance Units

     10.1 Award of Performance Units.  Performance Units may
be  awarded  either  alone or in addition  to  other  Awards
granted under this Plan.  The Committee shall determine  the
eligible  persons  to whom and the time or  times  at  which
Performance   Units  shall  be  awarded,   the   number   of
Performance Units to be awarded to any person, the  duration
of  the  period (the "Performance Cycle") during which,  and
the  conditions  under  which,  a  Participant's  right   to
Performance   Units   will  be  vested,   the   ability   of
Participants to defer the receipt of payment of such  Units,
and  the other terms and conditions of the Award in addition
to those set forth in Section 10.2.

     A Performance Unit shall have a fixed dollar value.

      The Committee may condition the vesting of Performance
Units upon the attainment of specified performance goals  or
such  other  factors  or  criteria as  the  Committee  shall
determine, in its sole discretion.

      10.2  Terms  and  Conditions.  The  Performance  Units
awarded pursuant to this Article 10 shall be subject to  the
following terms and conditions:

          (a)     Non-Transferability.    Subject   to   the
          applicable  provisions of the Award agreement  and
          this  Plan,  Performance Unit Awards  may  not  be
          Transferred.

          (b)    Vesting.    At   the  expiration   of   the
          Performance  Cycle, the Committee shall  determine
          the  extent  to which the performance  goals  have
          been   achieved,   and  the  percentage   of   the
          Performance  Units of each Participant  that  have
          vested.

          (c)    Payment.    Subject   to   the   applicable
          provisions  of the Award agreement and this  Plan,
          at  the expiration of the Performance Cycle,  cash
          and/or  share certificates of an equivalent  value
          (as  the  Committee  may  determine  in  its  sole
          discretion) shall be delivered to the Participant,
          or  his  legal representative, in payment  of  the
          vested  Performance  Units  covered  by  the   Per
          formance Unit Award.

          (d)   Termination of Employment.  Subject  to  the
          applicable  provisions of the Award agreement  and
          this  Plan,  upon  termination of a  Participant's
          employment   with  the  Company  or  a  Designated
          Subsidiary  for any reason during the  Performance
          Cycle for a given Award, the Performance Units  in
          question  will vest or be forfeited in  accordance
          with  the terms and conditions established by  the
          Committee at grant.

          (e)    Accelerated  Vesting.   Based  on  service,
          performance and/or such other factors or criteria,
          if  any,  as  the  Committee  may  determine,  the
          Committee  may, at or after grant, accelerate  the
          vesting of all or any part of any Performance Unit
          Award  and/or  waive the deferral limitations  for
          all or any part of such Award.

          (f)   Hardship.  In the event of hardship or other
          special  circumstances  of  a  Participant   whose
          employment   with  the  Company  or  a  Designated
          Subsidiary is involuntarily terminated (other than
          for   cause),  the  Committee  may,  in  its  sole
          discretion, based on such factors as the Committee
          may  deem appropriate, waive in whole or  in  part
          any  or  all of the remaining deferral limitations
          imposed  hereunder with respect to any or  all  of
          the Participant's Performance Units.


                         ARTICLE XI
                  Other Stock-Based Awards

      11.1  Other Awards.  Other Awards of Common Stock  and
other  Awards  that  are  valued in  whole  or  in  part  by
reference  to,  or  are payable in or  otherwise  based  on,
Common   Stock  ("Other  Stock-Based  Awards"),   including,
without limitation, Awards valued by reference to subsidiary
performance, may be granted either alone or in  addition  to
or  in tandem with Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares or Performance Units.

           Subject  to  the  provisions of  this  Plan,  the
Committee  shall have authority to determine the persons  to
whom  and  the time or times at which such Awards  shall  be
made,  the  number of shares of Common Stock to  be  awarded
pursuant  to  such Awards, and all other conditions  of  the
Awards.   The  Committee may also provide for the  grant  of
Common  Stock  under such Awards upon the  completion  of  a
specified performance period.

      11.2  Terms and Conditions.  Other Stock-Based  Awards
made  pursuant  to this Article 11 shall be subject  to  the
following terms and conditions:

          (a)     Non-Transferability.    Subject   to   the
          applicable  provisions of the Award agreement  and
          this  Plan,  shares  of Common  Stock  subject  to
          Awards  made  under this Article  11  may  not  be
          Transferred prior to the date on which the  shares
          are  issued, or, if later, the date on  which  any
          applicable  restriction, performance  or  deferral
          period lapses.

          (b)   Dividends.  Unless otherwise  determined  by
          the Committee at the time of Award, subject to the
          provisions  of the Award agreement and this  Plan,
          the  recipient of an Award under this  Article  11
          shall  be entitled to receive, currently or  on  a
          deferred  basis, dividends or dividend equivalents
          with  respect  to the number of shares  of  Common
          Stock  covered by the Award, as determined at  the
          time  of  the Award by the Committee, in its  sole
          discretion.

          (c)  Vesting.  Any Award under this Article 11 and
          any  Common Stock covered by any such Award  shall
          vest or be forfeited to the extent so provided  in
          the   Award  agreement,  as  determined   by   the
          Committee, in its sole discretion.

          (d)   Waiver of Limitation.  In the event  of  the
          Participant's Retirement, Disability or death,  or
          in  cases  of special circumstances, the Committee
          may,  in it sole discretion, waive in whole or  in
          part   any  or  all  of  the  limitations  imposed
          hereunder (if any) with respect to any or  all  of
          an Award under this Article 11.

          (e)   Price.  Common Stock issued on a bonus basis
          under  this Article 11 may be issued for  no  cash
          consideration; Common Stock purchased pursuant  to
          a  purchase  right awarded under this  Article  11
          shall be priced as determined by the Committee.


                         ARTICLE XII
                Change in Control Provisions
                              
      12.1 Benefits.  In the event of a Change in Control of
the  Company  (as  defined below), and except  as  otherwise
provided  by the committee upon the grant of an  Award,  the
Participant shall be entitled to the following benefits:

          (a)   All outstanding Stock Options and Non-Tandem
          Stock  Appreciation  Rights  of  such  Participant
          granted  prior to the Change in Control  shall  be
          fully  vested and immediately exercisable in their
          entirety.   In its sole discretion, the  Committee
          may  provide  for the purchase of any  such  Stock
          Options  by  the Company or Designated  Subsidiary
          for  an amount of cash equal to the excess of  the
          Change in Control price (as defined below) of  the
          shares  of  Common  Stock covered  by  such  Stock
          Options, over the aggregate exercise price of such
          Stock Options.  For purposes of this Section 12.1,
          Change  in Control price shall mean the higher  of
          (i)  the  highest price per share of Common  Stock
          paid  in  any transaction related to a  Change  in
          Control  of the Company, or (ii) the highest  Fair
          Market Value per share of Common Stock at any time
          during  the  60-day period preceding a  Change  in
          Control.

          (b)   All Performance Share Awards and Performance
          Unit  Awards of such Participant granted prior  to
          the Change in Control shall vest, at a minimum, as
          if    the   applicable   Performance   Period   or
          Performance  Cycle had ended upon such  Change  in
          Control  and  the determination of the  extent  to
          which  any specified performance goals or  targets
          had been achieved had been made at such time.

          (c)   The  restrictions to  which  any  shares  of
          Restricted Stock of such Participant granted prior
          to  the Change in Control are subject shall  lapse
          as  if the applicable Restriction Period had ended
          upon such Change in Control.

      Any  determination by the Committee made  pursuant  to
paragraph  (a) of this Section 12.1 may be made  as  to  all
outstanding Awards or only as to certain outstanding  Awards
specified by the Committee and any such determination may be
made prior to or after a Change in Control.

     12.2 Change in Control.  A "Change in Control" shall be
deemed  to  occur  if  (1) there shall  be  consummated  any
consolidation  or  merger of the Company with  or  into  any
other  corporation,  any corporate reorganization  involving
the Company, any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all,
or  substantially all, of the assets of the Company, or  any
sale or other disposition of shares of capital stock of  the
Company, and (2) as a result of such consolidation,  merger,
reorganization, sale, lease, exchange or other  disposition,
(A)  any person or group (as such terms are used in Sections
13(d)(3)  and  14(d)(2) of the Securities  Exchange  Act  of
1934,  as  amended (the "Exchange Act")), shall have  become
the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of a majority of the Company's outstanding
voting stock, or (B) any person other than the Company shall
be  the  beneficial owner of the assets of  the  Company  as
described  above;  provided, however, that the  non-employee
members  of  the Board immediately prior to such transaction
may  determine that a Change in Control for purposes of  the
Plan  has  not occurred where control is to be acquired  by:
(i) an employee stock ownership plan of the Company; (ii)  a
group  of  persons who immediately prior to the  transaction
were officers and senior employees of the Company; (iii)  an
entity  organized  directly  or indirectly  by  persons  who
immediately  prior  to  the transaction  were  officers  and
senior employees of the Company and who upon consummation of
the  transaction  will  be officers  and  employees  of  the
Company   and   of   the   acquiring   entity,   will   have
representation  on the Board of Directors of  the  acquiring
entity and will own at least 10% of the voting shares of the
acquiring  entity; (iv) an entity or entities  that  acquire
shares  of  the  Company  in a corporate  reorganization  or
restructuring  that involves no substantial  change  in  the
effective  beneficial ownership or control of  the  Company;
(v)  any one or more non-profit organizations designated  by
the  Board of Directors pursuant to this Section 12.2(v)  at
least  12  months  prior to the Change in  Control;  (vi)  a
person  or  persons  who at the time  of  or  prior  to  the
transaction  announce their intention to make no substantial
change  in the composition of the Board; provided,  however,
that if during the 24 months after a transaction referred to
in  this clause (vi) of Section 12.2, individuals who at the
beginning of such period constituted the entire Board  shall
cease for any reason to constitute a majority thereof unless
the election of each new director who was not a director  at
the  beginning of such period was approved by a vote  of  at
least  two-thirds of the directors then still in office  who
were  directors at the beginning of the period, a Change  in
Control shall be deemed to have occurred as of the date  the
composition of the Board is so changed.

      12.3 Limitation.  In the event that any benefits to  a
Participant  under this Plan, either alone or together  with
any  other  payments or benefits otherwise owed to  the  Par
ticipant  by  the Company or a Designated Subsidiary  on  or
after a Change in Control would, in the Company's good faith
opinion,  be deemed under Section 280G of the Code,  or  any
successor provision, to be parachute payments, the  benefits
under this Plan shall be reduced to the extent necessary  in
the  Company's good faith opinion so that no portion of  the
benefits   provided   herein  shall  be  considered   excess
parachute  payments under Section 280G of the  Code  or  any
successor provision.  The Company's good faith opinion shall
be conclusive and binding upon the Participants.


                        ARTICLE XIII
            Termination or Amendment of the Plan

      13.1  Termination  or Amendment.  Notwithstanding  any
other provision of this Plan, the Board may at any time, and
from time to time, amend, in whole or in part, any or all of
the  provisions of the Plan (including any amendment  deemed
necessary  to  ensure that the Company may comply  with  any
regulatory  requirement  referred  to  in  Article  15),  or
suspend   or   terminate  it  entirely,   retroactively   or
otherwise;   provided,  however,  that,   unless   otherwise
required by law, the rights of a Participant with respect to
Options  or  other Awards granted prior to  such  amendment,
suspension  or termination, may not be impaired without  the
consent  of such Participant and, provided further,  without
the  approval of the holders of the Company's stock entitled
to  vote,  no amendment may be made which would (i) increase
the  aggregate number of shares of Common Stock that may  be
issued under this Plan (except by operation of Section 4.2);
(ii)  change the definition of employees eligible to receive
Stock  Awards  under  this Plan; (iii) decrease  the  option
price  of  any Stock Option to less than 100%  of  the  Fair
Market  Value  on  the  date of grant  for  a  Stock  Option
intended to be an Incentive Stock Option or to less than 85%
of  the  Fair Market Value on the date of grant for a  Stock
Option intended to be a Non-Qualified Stock Option; or  (iv)
extend  the maximum option period under Section 6.4  of  the
Plan.

           The  Committee may amend the terms of  any  Stock
Option or other Award theretofore granted, prospectively  or
retroactively,  but, subject to Article  4  above,  no  such
amendment or other action by the Committee shall impair  the
rights  of  any  holder without the holder's  consent.   The
Committee  may also substitute new Stock Options  for  previ
ously  granted  Stock Options having higher option  exercise
prices   than   the  new  Stock  Options  being  substituted
therefor.


                         ARTICLE XIV
                        Unfunded Plan

     14.1 Unfunded Status of Plan.  This Plan is intended to
constitute  an  "unfunded" plan for incentive  and  deferred
compensation.  With respect to any payments as  to  which  a
Participant  has a fixed and vested interest but  which  are
not  yet  made  to  a  Participant by the  Company,  nothing
contained herein shall give any such Participant any  rights
that  are  greater than those of a general creditor  of  the
Company.


                         ARTICLE XV
                     General Provisions
                              
      15.1  Legend.  The Committee may require  each  person
purchasing shares pursuant to a Stock Option or other  Award
under the Plan to represent to and agree with the Company in
writing that the Participant is acquiring the shares without
a  view  to distribution thereof.  In addition to any legend
required by this Plan, the certificates for such shares  may
include any legend which the Committee deems appropriate  to
reflect any restrictions on Transfer.

           All  certificates  for  shares  of  Common  Stock
delivered  under  the Plan shall be subject  to  such  stock
transfer orders and other restrictions as the Committee  may
deem  advisable  under  the  rules,  regulations  and  other
requirements of the Securities and Exchange Commission,  any
stock  exchange upon which the Stock is then listed  or  any
national  securities exchange system upon whose  system  the
Stock  is  then  quoted,  any applicable  Federal  or  state
securities  law, and any applicable corporate law,  and  the
Committee  may cause a legend or legends to be  put  on  any
such  certificates  to make appropriate  reference  to  such
restrictions.

     15.2 Other Plans.  Nothing contained in this Plan shall
prevent   the  Board  from  adopting  other  or   additional
compensation  arrangements, subject to shareholder  approval
if  such approval is required; and such arrangements may  be
either  generally applicable or applicable only in  specific
cases.

     15.3 No Right to Employment.  Neither this Plan nor the
grant of any Option or other Award hereunder shall give  any
Participant  or  other employee any right  with  respect  to
continuance  of employment by the Company or any subsidiary,
nor  shall they be a limitation in any way on the  right  of
the  Company  or  any  subsidiary by which  an  employee  is
employed to terminate his employment at any time.

      15.4 Withholding of Taxes.  The Company shall have the
right to deduct from any payment to be made pursuant to this
Plan,  or  to  otherwise require, prior to the  issuance  or
delivery of any shares of Common Stock or the payment of any
cash  hereunder, payment by the Participant of, any Federal,
state or local taxes required by law to be withheld.

           The  Committee  may permit any  such  withholding
obligation to be satisfied by reducing the number of  shares
of Common Stock otherwise deliverable.  A person required to
file  reports under Section 16(a) of the Securities Exchange
Act  of  1934 with respect to securities of the Company  may
elect  to have a sufficient number of shares of Common Stock
withheld  to  fulfill  such tax obligations  (hereinafter  a
"Withholding  Election") only if the election complies  with
such  conditions as are necessary to prevent the withholding
of  such shares from being subject to Section 16(b)  of  the
Securities  Exchange Act of 1934.  To the  extent  necessary
under  then  current law, such conditions shall include  the
following:  (x) the Withholding Election shall be subject to
the  disapproval  of the Committee and (y)  the  Withholding
Election  is  made  (i) during the period beginning  on  the
third  business  day  following  the  date  of  release  for
publication of the quarterly or annual summary statements of
sales  and earnings of the Company and ending on the twelfth
business day following such date, (ii) six months before the
Stock  Award  becomes  taxable, or (iii)  during  any  other
period in which a Withholding Election may be made under the
provisions  of Rule 16b-3 promulgated pursuant to  the  Act.
Any  fraction of a share of Common Stock required to satisfy
such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Participant.

      15.5  No Assignment of Benefits.  No Option, Award  or
other  benefit  payable  under this Plan  shall,  except  as
otherwise  specifically provided by law, be Transferable  in
any  manner,  and any attempt to Transfer any  such  benefit
shall  be void, and any such benefit shall not in any manner
be   liable   for  or  subject  to  the  debts,   contracts,
liabilities, engagements or torts of any person who shall be
entitled  to  such  benefit, nor  shall  it  be  subject  to
attachment or legal process for or against such person.

     15.6 Listing and Other Conditions.

          (a)   As long as the Common Stock is listed  on  a
          national  securities exchange or system  sponsored
          by a national securities association, the issue of
          any  shares of Common Stock pursuant to an  Option
          or  other  Award  shall be conditioned  upon  such
          shares  being listed on such exchange  or  system.
          The Company shall have no obligation to issue such
          shares unless and until such shares are so listed,
          and  the  right  to exercise any Option  or  other
          Award  with  respect  to  such  shares  shall   be
          suspended until such listing has been effected.

          (b)   If at any time counsel to the Company  shall
          be  of  the  opinion that any sale or delivery  of
          shares  of  Common Stock pursuant to an Option  or
          other  Award  is  or may in the  circumstances  be
          unlawful  or  result in the imposition  of  excise
          taxes under the statutes, rules or regulations  of
          any  applicable  jurisdiction, the  Company  shall
          have  no obligation to make such sale or delivery,
          or  to  make  any application or to effect  or  to
          maintain  any qualification or registration  under
          the  Securities  Act  of  1933,  as  amended,   or
          otherwise  with respect to shares of Common  Stock
          or Awards, and the right to exercise any Option or
          other  Award  shall  be suspended  until,  in  the
          opinion  of  said counsel, such sale  or  delivery
          shall  be  lawful  or  will  not  result  in   the
          imposition of excise taxes.

          (c)   Upon termination of any period of suspension
          under  this  Section 15.6, any Award  affected  by
          such  suspension which shall not then have expired
          or terminated shall be reinstated as to all shares
          available before such suspension and as to  shares
          which would otherwise have become available during
          the   period  of  such  suspension,  but  no  such
          suspension shall extend the term of any Option.

      15.7  Governing Law.  This Plan and actions  taken  in
connection  herewith  shall  be governed  and  construed  in
accordance  with  the  laws  of  the  State  of   New   York
(regardless  of  the law that might otherwise  govern  under
applicable New York principles of conflict of laws).

     15.8 Construction.  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.

     15.9 Liability.  No member of the Board, no employee of
the  Company  and  no  member  of  the  Committee  (nor  the
Committee  itself)  shall be liable for any  act  or  action
hereunder, whether 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  his  bad
faith,  gross  negligence or fraud,  for  anything  done  or
omitted to be done by himself.

      15.10     Other Benefits.  No Award payment under this
Plan  shall be deemed compensation for purposes of computing
benefits  under  any retirement plan of the Company  or  its
subsidiaries nor affect any benefits under any other benefit
plan   now  or  subsequently  in  effect  under  which   the
availability or amount of benefits is related to  the  level
of compensation.

      15.11      Costs.  The Company shall bear all expenses
incurred  in administering this Plan, including expenses  of
issuing Common Stock pursuant to any Awards hereunder.

     15.12     No Right to Same Benefits.  The provisions of
Awards   need  not  be  the  same  with  respect   to   each
Participant, and such Awards to individual Participants need
not be the same in subsequent years.


                         ARTICLE XVI
                   Effective Date of Plan

     The Plan shall become effective upon the date specified
by the Board in its resolution adopting the Plan, subject to
the approval of the Plan by the holders of a majority of the
capital stock of the Company entitled to vote thereon within
one  year  after the Plan is adopted.  Any grants of  Awards
hereunder  prior  to such approval shall be  effective  when
made  (unless  otherwise specified by the Committee  at  the
time of grant), but shall be conditioned on, and subject to,
such approval of the Plan by shareholders.


                        ARTICLE XVII
                        Term of Plan

      No  Stock Option, Stock Appreciation Right, Restricted
Stock,  Performance Shares, Performance Unit or Other Stock-
Based  Award  shall be granted pursuant to the  Plan  on  or
after  the tenth anniversary of the earlier of the date  the
Plan  is  adopted  or the date of shareholder  approval  but
Awards  granted prior to such tenth anniversary  may  extend
beyond that date.


                        ARTICLE XVIII
                        Name of Plan

      This  Plan  shall  be  known as "The  Reader's  Digest
Association,  Inc.  1994 Key Employee  Long  Term  Incentive
Plan."


                         ARTICLE XIX
  Election to Receive Awards in Lieu of Other Compensation

      The  Committee, in its sole discretion, may  permit  a
Participant  to elect pursuant to this Plan, on  such  terms
and  conditions  as shall be approved by the  Committee,  to
receive  an  Award  under this Plan  in  lieu  of  receiving
payment of other compensation, under this Plan or otherwise,
from   the  Company  or  any  Designated  Subsidiary.    The
Committee  shall  have  sole discretion  to  consent  to  or
disapprove any such election by any Participant.  The  grant
of  Awards pursuant to such election shall be subject to the
provisions and limitations of this Plan and applicable law.