EXHIBIT 10.24






                      THE READER'S DIGEST ASSOCIATION, INC.



                           1994 KEY EMPLOYEE LONG TERM
                                 INCENTIVE PLAN
                 (Amended and Restated as of September 18, 2002)

           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
          As amended by Amendment No. 5, effective as of April 13, 2001
        As amended by Amendment No. 6, effective as of September 18, 2002




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                      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 stockholders.


                                   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 indirectly, 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, recapitalization, 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,
administrators, 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.

      (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
            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 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.


                                  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 Stockholder.  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
            relating to the restrictions applicable to the Restricted Stock
            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
            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 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.  For the purposes of the Plan, a "Change in
Control" means:

     (a)  if  the  Company's  equity  capital  structure  consists  of  Class  A
          Nonvoting  Common Stock and Class B Voting Common Stock,  as in effect
          on the date of adoption of this provision,  then an acquisition (other
          than  directly  from the  Company)  or  holding by a Person or a Group
          (other  than a Permitted  Holder) of  Beneficial  Ownership  of shares
          representing  at  least  35%  of  the  combined  voting  power  of the
          outstanding   voting  securities  of  the  Company  entitled  to  vote
          generally  in the  election of  Directors  (the  "Outstanding  Company
          Voting Power"),  if following such  acquisition or at the time of such
          holding,  the Funds do not own, in the aggregate,  at least 50% of the
          Outstanding Company Voting Power;  provided,  however, that a Business
          Combination  satisfying  clauses  12.2(d)(i) through (iii) below shall
          not constitute a Change in Control;

     (b)  if the  Company's  equity  capital  structure is  different  from that
          described in subsection 12.2(a) above, then an acquisition (other than
          directly  from the  Company) or holding by a Person or a Group  (other
          than  a  Permitted   Holder)  of   Beneficial   Ownership   of  shares
          representing 20% or more of either (i) the then outstanding  shares of
          common stock of the Company (the  "Outstanding  Company Common Stock")
          or (ii) the combined voting power of the outstanding voting securities
          of the Company entitled to vote generally in the election of Directors
          (the   "Outstanding   Company  Voting   Power"),   if  following  such
          acquisition  or at the time of such holding,  the Funds do not own, in
          the aggregate,  at least 30% of the Outstanding  Company Voting Power;
          provided,  however,  that a Business  Combination  satisfying  clauses
          12.2(d)(i)  through  (iii)  below  shall  not  constitute  a Change in
          Control;

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

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

          (i)  in which  all or  substantially  all of the  stockholders  of the
               Company  receive  Beneficial  Ownership  of more  than 50% of the
               voting  securities  of the company  resulting  from the  Business
               Combination,

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

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

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

            Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person or Group has Beneficial Ownership
of shares of Outstanding Company Common Stock or Outstanding Company Voting
Power equal to the 35% or 20% thresholds in subsections 12.2(a) and 12.2(b)
above (as the case may be) as a result of the acquisition by the Company of
such common stock or other voting securities which reduces the number of
shares of Outstanding Company Common Stock or reduces the Outstanding Company
Voting Power; provided, that if, after such acquisition by the Company, such
Person or Group obtains Beneficial Ownership of shares of common stock or
other voting securities that increases the percentage of Outstanding Company
Common Stock or Outstanding Company Voting Power Beneficially Owned by such
person while such Person or Group has met the 35% or 20% threshold in
subsections 12.2(a) and 12.2(b) above (as the case may be), a Change in
Control shall then be deemed to occur.

            For purposes of this Section 12.2:

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

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

            "Director" shall mean a member of the Board.

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

            "Permitted Holder" shall mean (i) the DeWitt Wallace-Reader's
Digest Fund, Inc. and the Lila Wallace-Reader's Digest Fund, Inc.
(collectively, the "Funds") and (ii) the Company or an employee benefit plan
of the Company or a corporation controlled by the Company.

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

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

      12.3  Effect of Certain Transactions.  Subject to Sections 12.1 and
12.2 or as otherwise provided in an Award agreement, in the event of (a) the
liquidation or dissolution of the Company, or (b) a merger, consolidation,
reorganization or other corporate transaction of the Company (a
"Transaction"), the Plan and the Awards issued hereunder shall continue in
effect with their respective terms, except that following a Transaction, at
the Committee's sole discretion, either (i) each outstanding Award shall be
treated as provided for in the agreement entered into in connection with the
Transaction, or (ii) if not so provided in such agreement, each Participant
shall be entitled to receive in respect of each share of Common Stock or
other stock or securities subject to any outstanding Awards, as the case may
be, upon exercise of any Option or payment or transfer in respect of any
Award, the same number and kind of stock, securities, cash, property or other
consideration that each holder of a share of Common Stock or other stock or
securities was entitled to receive in the Transaction in respect of such
share; provided, however, that such stock, securities, cash, property, or
other consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the Awards
prior to such Transaction.  The treatment of any Award as provided in this
Section shall be conclusively presumed to be appropriate for purposes of
Section 4.2.


                                  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; or (iv) reduce the option price of an outstanding
Stock Option, either by lowering the option price or by canceling an
outstanding Stock Option and granting a replacement Stock Option with a lower
exercise price, or (v) 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.




<PAGE>


                                   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.

      (a)   At such times as a Participant recognizes taxable income in
            connection with the receipt of shares of Common Stock or cash
            hereunder (a "Taxable Event"), the Participant shall pay to the
            Company an amount equal to the federal, state and local income
            taxes and other amounts as may be required by law to be withheld
            by the Company in connection with the Taxable Event (the "Tax
            Withholding") prior to the issuance, or release from escrow, of
            such shares of Common Stock or the payment of such cash.  The
            Company shall have the right to deduct from any payment of cash
            to a Participant an amount equal to the Tax Withholding in
            satisfaction of the obligation to pay Tax Withholding.  In
            satisfaction of the obligation to pay Tax Withholding to the
            Company, a Participant may make a written election (the "Tax
            Election"), which may be accepted or rejected in the sole
            discretion of the Committee, to have withheld a portion of the
            shares then issuable to him or her having an aggregate Fair
            Market Value equal to the Tax Withholding.

      (b)   To the extent required by the Committee in its discretion, if a
            Participant makes a disposition, within the meaning of Section
            424(c) of the Code and regulations promulgated thereunder, of any
            share or shares of Common Stock issued to the Participant
            pursuant to the exercise of an Incentive Stock Option within the
            two-year period commencing on the day after the date of grant or
            within the one-year period commencing on the day after the
            transfer of such share or shares of Common Stock to the
            Participant pursuant to such exercise, the Participant shall,
            within ten (10) days after such disposition, notify the Company
            thereof, by delivery of written notice to the Company at its
            principal executive office.

      (c)   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 Tax 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.  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  Deferral Election.  A Participant may elect, in the sole
discretion of the Committee and consistent with any rules, procedures or
regulations established by the Committee, to defer the delivery of the
proceeds of any Award.  A Participant may elect to have the payment of a
portion of each Award deferred in accordance with the terms and procedures
set forth in the Company's Deferred Compensation Plan, or any equivalent or
successor plan, as in effect from time to time (the "Deferred Compensation
Plan").  The election to defer the delivery of the proceeds from any eligible
Award must be made on or before the Election Date (as such term is defined in
the Deferred Compensation Plan).

      15.6  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.

      15.7  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
            15.7, 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.

      15.8  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).

      15.9  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.

      15.10 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.

      15.11 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.

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

      15.13 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.

      15.14 Severability.  Whenever possible, each provision of the Plan or
an Award agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of the Plan or an Award
agreement shall be held by a court of competent jurisdiction to be prohibited
by or invalid of unenforceable under applicable law, then (a) such provision
shall be deemed to be amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law and (b) all
other provisions of the Plan or the Award agreement shall remain in full
force and effect.

                                   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 stockholders.


                                  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.