DEFERRED STOCK AWARD (FISCAL 2006)

 

 

 

 

 

                       DEFERRED STOCK AWARD (FISCAL 2006)

 

                                                                 August 12, 2005

<<First_plus_Middle>> <<Last>>

 

Dear <<First>>:

 

           I am pleased to inform you that The Reader's Digest Association, Inc.

(the "Company") hereby grants to you, as of the date of this letter, a Deferred

Stock Award relating to <<Restricted_Shares>> shares of its Common Stock, $.01

par value, subject to the provisions of The Reader's Digest Association, Inc.

2002 Key Employee Long Term Incentive Plan, and the attached statement of Terms

and Conditions.

 

         In consideration of the grant of the Deferred Stock Award to you, you

hereby agree that the Award is governed by, and subject to, the Terms and

Conditions attached (including, without limitation, the conditions regarding

"Cancellation and Recovery") and is also subject to the provisions of the

Company's 2002 Key Employee Long Term Incentive Plan, as amended. You recognize

and acknowledge that the Cancellation and Recovery provisions of the attached

Terms and Conditions are an integral condition of this Award grant and that,

except for your agreement to such provisions, this Award would not be granted to

you. You also agree that such Cancellation and Recovery provisions and any

Exhibit A to the attached Terms and Conditions shall apply to and supersede any

analogous provisions in the Terms and Conditions of each prior equity-based

award of any type made to you from and including 1998 under the Company's 1989,

1994 and 2002 Key Employee Long Term Incentive Plans as if such provisions and

such Exhibit A were incorporated in and attached to the Terms and Conditions of

those prior awards.

 

            Kindly signify your acceptance of this Deferred Stock grant by

signing and dating this letter below and returning it to the address indicated

below within 30 days from the date hereof.

 

           This award is intended to be a one-time grant. It is not the

Company's intention to make this type of award on any regular or periodic basis

or cycle.

 

           If you have any questions, please contact Lisa Cribari.

 

                                           Very truly yours,

                                           THE READER'S DIGEST ASSOCIATION, INC.

 

 

 

 

                                         By:____________________________________

                                                      Thomas O. Ryder

                                            Chairman and Chief Executive Officer

 

Accepted:

 

---------------------------------                    ---------------------------

 Signature                                                      Date

 

     Return  signed and dated copy to:  Lisa  Cribari,  Vice  President,  Global

Compensation and Benefits.

 

 

<PAGE>

 

 

                                       -5-

                      The Reader's Digest Association, Inc.

                              TERMS AND CONDITIONS

                       DEFERRED STOCK AWARD (Fiscal 2006)

 

The Deferred Stock Award specified in the Grant Letter to which these Terms and

Conditions are attached is subject to the provisions of The Reader's Digest

Association, Inc. 2002 Key Employee Long Term Incentive Plan (the "Plan") and

the Terms and Conditions detailed below.

 

1.   Deferred  Stock Award Subject to Conditions  and  Restrictions.  This award

     represents an unfunded  promise by The Reader's  Digest  Association,  Inc.

     ("Reader's Digest") to deliver to you a number of shares of Reader's Digest

     Common Stock, $0.01 par value,  specified in a Grant Letter, at one or more

     future dates (a "Deferred Stock Award"). The shares deliverable pursuant to

     the Deferred Stock Award are referred to as "Deferred  Stock." The granting

     of the Deferred Stock Award does not involve an actual transfer of property

     on the date of grant or at any time prior to the lapse of the  Restrictions

     (referred to below).

 

2.   Restrictions.  The  Deferred  Stock  Award is granted to you subject to the

     following restrictions (the "Restrictions").

 

     (a)  Transfer.  You may not anticipate,  alienate,  attach,  sell,  assign,

          pledge,  encumber,  charge or otherwise  transfer  the Deferred  Stock

          Award without the written  consent of Reader's Digest as authorized by

          its Board of Directors or the Committee (as defined in the Plan) under

          the Plan.

 

     (b)  Forfeiture.  Upon your  Termination  of Employment  (as defined in the

          Plan)  with  Reader's  Digest or any of its  Designated  Subsidiaries,

          then,  except as  provided in  Paragraphs  5(a) and 5(b)  hereof,  any

          portion  of the  Deferred  Stock  Award  that is still  subject to the

          Restrictions  shall be canceled by Reader's Digest and shall be deemed

          to have been forfeited by you.

 

3.   Conditions  for Lapse of  Restrictions  (Vesting)  and Delivery of Deferred

     Stock.  Subject to prior lapse of the Restrictions  pursuant to Paragraph 4

     or 5 hereof,  the Restrictions  shall lapse with respect to (a) one-half of

     the  Deferred  Stock Award after two years from the date of grant,  and (b)

     one-half  of the  Deferred  Stock  Award after three years from the date of

     grant.  Notwithstanding  the  foregoing,  the  Committee  may,  in its sole

     discretion  at any time  after  the  grant  of the  Deferred  Stock  Award,

     accelerate  the  lapse  of the  Restrictions  as to all or any  part of the

     Deferred Stock Award.

 

4.   Change in Control. The Restrictions  applicable to the Deferred Stock Award

     shall lapse upon a Change in Control (as defined in the Plan) in accordance

     with the terms of the Plan.

 

5.   Termination of Employment.

 

     (a)  Total  Disability.   If  your  employment  by  Reader's  Digest  or  a

          Designated  Subsidiary  terminates by reason of a total  disability as

          defined in Reader's  Digest's  Healthcare  Program  (or an  equivalent

          plan, as determined in the sole  discretion of Reader's  Digest),  the

          Restrictions shall lapse upon such Termination of Employment.

 

     (b)  Death.   If  your  employment  by  Reader's  Digest  or  a  Designated

          Subsidiary  terminates by reason of your death, the Restrictions shall

          lapse upon your death.

 

     (c)  Other  Termination.  If  your  employment  by  Reader's  Digest  or  a

          Designated  Subsidiary  terminates  for any  reason  other  than total

          disability  or death as provided  in (a) and (b) above,  respectively,

          the Deferred Stock Award shall be forfeited pursuant to Paragraph 2(b)

          above.

 

6.   Adjustments.  If there  is any  change  in the  capital  stock of  Reader's

     Digest,  the term  "Deferred  Stock" shall include any securities and other

     property  that you would have  received or become  entitled to receive upon

     lapse of the Restrictions, and the Committee may make any other adjustments

     as it may determine to be  appropriate  in accordance  with the Plan,  such

     determination to be final and binding.

 

7.   Tax  Withholding.  You are  responsible  for satisfying any tax withholding

     obligation  that is applicable  to you,  including