Exhibit 10.17


            The Reader's Digest Association, Inc.

                 1994 Key Employee Long Term
                       Incentive Plan
        (Amended and Restated as of August 13, 1999)

 As amended by Amendment No. 1, effective as of July 1, 1997
 As amended by Amendment No. 2, effective as of April 28, 1998
 As amended by Amendment No. 3, effective as of April 28, 1998
 As amended by Amendment No. 4, effective as of August 13, 1999


            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 17,300,000 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
1,200,000 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)  Transferability of Options.

           (1)  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.   Notwithstanding the foregoing, the  Committee
may  provide in the terms and conditions governing any Stock
Option other than an Incentive Stock Option, at the time  of
grant   or  thereafter,  that  the  Stock  Option   may   be
Transferred,  to  the  extent  vested,  to  members  of  the
Participant's  immediate family, to trusts  solely  for  the
benefit   of   such   immediate  family  members,   and   to
partnerships  in which such immediate family members  and/or
trusts  are  the only partners.  For this purpose "immediate
family  members"  means the Participant's  spouse,  parents,
children,  stepchildren, grandchildren and other  issue  and
legal  dependents.  Any Transfer of Stock Options made under
this  provision will not be effective until notice  of  such
Transfer is received by the Company.

           (2)   Notwithstanding any thing to  the  contrary
herein, if a Stock Option has been Transferred in accordance
with this Section 6.4, the Stock Option shall be exercisable
solely  by  the Transferee.  The Stock Option  shall  remain
subject  to  the provisions of the Plan, including  that  it
shall be exercisable only to the extent that the Participant
or Participant's estate would have been entitled to exercise
it  if the Participant had not Transferred the Stock Option.
In  the  event of the death of the Participant prior to  the
expiration  of  the right to exercise the Transferred  Stock
Option,  the period during which the Stock Option  shall  be
exercisable  shall terminate on the date one year  following
the  date of the Participant's death.  In the event  of  the
death of the Transferee prior to the expiration of the right
to  exercise the Stock Option, the period during  which  the
Stock   Option  shall  be  exercisable  by  the   executors,
administrators,   legatees   and   distributees    of    the
Transferee's estate, as the case may be, shall terminate  on
the  date  one  year following the date of the  Transferee's
death.   In  no  event, however, shall the Stock  Option  be
exercisable after the expiration of the Stock Option  period
set  forth in the terms and conditions of the Stock  Option.
The Stock Option shall be subject to such other rules as the
Committee shall determine.

      (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  terminates  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 otherwise 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
limitations 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  Committee, 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  Per
formance  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 Performance 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  Per
formance  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,  cur
rently  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 IV  above,  no  such
amendment or other action by the Committee shall impair  the
rights   of   any  holder  without  the  holder's   consent.
Notwithstanding  the foregoing, if a Stock Option  has  been
Transferred in accordance with the Plan, written consent  of
the  Transferee (and not the Participant) shall be necessary
to  impair the rights of the holder under the Stock  Option.
The  Committee  may  also substitute new Stock  Options  for
previously  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.

           Notwithstanding the foregoing, if  Stock  Options
have  been  Transferred, the Participant shall  provide  the
Company  with  funds sufficient to pay such tax  withholding
when   such  withholding  is  due.   Furthermore,  if   such
Participant  does not satisfy the applicable tax withholding
obligation, the Transferee may provide the funds  sufficient
to  enable the Company to pay the tax withholding.  However,
if  Stock  Options have been Transferred, the Company  shall
have no right to retain or sell without notice, or to demand
surrender from the Transferee of, shares of Common Stock  in
order to pay such tax withholding.

      15.5  No Assignment of Benefits.  No Option, Award  or
other  benefit  payable  under this Plan  shall,  except  as
otherwise  specifically provided by law or by the  Plan,  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.