Exhibit 10.13


 





 


THE READER’S DIGEST ASSOCIATION, INC.


READER’S DIGEST ROAD


PLEASANTVILLE, NY  10570-7000


 




	
  Brad
  Thomas

  	
   

  	
  TELEPHONE: (914) 244-5175

  	
   

  
	
  Senior Vice President

  	
   

  	
  FAX: (914) 244-5449

  	
   

  
	
  Global Human Resources

  	
   

  	
  brad_thomas@rd.com

  	
   

  






 


May 26,
2010


 


Mr. Tom
Williams

The Reader’s Digest Association, Inc.

Pleasantville, NY  10570


 


Dear
Tom:


 


I
am pleased to confirm this new offer of continued employment in the position of
Senior Vice President, Chief Financial Officer of The Reader’s Digest
Association, Inc., reporting to Mary Berner, Chief Executive Officer of
The Reader’s Digest Association, Inc. (“Reader’s Digest” or the “Company”),
the details of which are outlined below. This position is currently based in
Pleasantville, New York and expected to relocate to New York City within a few
months.


 


1.               Base Salary. As previously
discussed, commencing upon the date of this letter agreement, your annual base
salary will be $600,000 payable in biweekly installments in accordance with the
Company’s payroll practices and subject to periodic adjustments based upon
performance reviews administered within timeframes consistent with other senior
level executives.


 


2.               Benefits.  You will be eligible to participate in the
benefit programs that are made generally available to Reader’s Digest employees
in accordance with their terms, as from time to time in effect, including The
Reader’s Digest Association, Inc. Retirement Plan (cash balance account),
which currently provides an annual age-based contribution of 5% of eligible
compensation, The 401(k) Partnership of The Reader’s Digest Association, Inc.,
and medical, dental, life insurance, short- and long-term disability plans.
Details of these benefit plans have previously been provided to you.


 


3.               Bonus Opportunities.  For the performance period ending June 30,
2010, you will be eligible to participate in the Company’s “Variable
Compensation Plan” and “Enterprise Value Maximization Plan,” as previously
communicated to you, consistent with the Restructuring 


 


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Support Agreement dated August 17, 2009.  For performance periods beginning after June 30,
2010, you shall be eligible to participate in the Company’s annual cash bonus
plan as the Company shall implement with a cash annual bonus target equal to
$600,000.


 


4.               Equity Compensation.  You will be granted 81,400 Restricted Stock
Units and 203,137 Stock Options, on terms and conditions to be specified in the
applicable Award Agreements to be provided to you in connection with such
grants, as approved by the Compensation Committee.


 


5.               You will be eligible for
four (4) weeks of vacation annually.


 


6.               You will be eligible for the
following executive level perquisites: financial planning benefits provided
through Ayco, the Company’s service provider and a calendar year flexible
perquisite allowance (under the “Flexnet Program”) of $25,500.


 


7.               Severance.  You will be eligible for a severance payment
equal to $1,200,000 if your employment is terminated involuntarily by the
Company for reasons other than “Cause” (as defined in the attached) or
by you for “Good Reason” (as defined in the attached) which amount shall
be paid, subject to the provisions of Section 11 hereof, over the
twelve-month period following the termination; provided that such payments
shall not commence unless and until you shall have signed a Release of Claims
in a form reasonably satisfactory to the Company and such Release of Claims has
become effective in accordance with its terms. 
You shall have 45 days to sign and return the Release.  Notwithstanding anything in this letter
agreement to the contrary, payment of this severance amount is expressly
contingent upon your continued substantial compliance with the terms and conditions
of Sections 8, 9 and 10 of this letter agreement; provided you have
received notice thereof and failed promptly to cure any such breach to the
extent curable.  You recognize that,
except as expressly provided in this Section 7 or pursuant to the terms of
your equity grant agreements, no compensation is owed to you after termination
of your employment.


 


8.               Nonsolicitation.  By virtue of accepting these terms of
employment with Reader’s Digest, you also agree that for the 24 month period
following your termination for any reason at any time, you will not, directly
or indirectly, solicit, recruit or hire (or have a third party solicit, recruit
or hire on your behalf) any employees of or persons who have worked for Reader’s
Digest (or its affiliates or subsidiaries) during the 12 month period prior to
the termination of your employment, or solicit or encourage (or have a third
party solicit or encourage on your behalf) any such employee to cease
employment with those entities or seek employment elsewhere.


 


9.               Nondisclosure of
Confidential Information.  You
acknowledge that the Confidential Information obtained by you while employed by
the Company and its subsidiaries and affiliates is the property of the Company
or its subsidiaries and affiliates, as applicable. Therefore, you agree that
other than in connection with the good faith performance of your duties (and
the Company acknowledges that in connection with your duties you communicate
with third parties such as investors and analysts about the Company, and, so
long as you act in good faith in performing such duties and are not grossly
negligent or reckless, actions taken in connection with your job duties shall
not be deemed a violation of this section), you 


 


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shall not disclose to any unauthorized person or use for your own
purposes any Confidential Information without the prior written consent of the
Company, unless and to the extent that the aforementioned matters (i) become
generally known in the relevant trade or industry or the public domain other
than as a result of your acts or omissions in violation of this letter
agreement, (ii) become available to you on a non-confidential basis or (iii) were
within your possession prior to its being obtained by you in the course of your
employment with the Company; provided, however, that if you receive a
request to disclose Confidential Information pursuant to a deposition,
interrogation, request for information or documents in legal proceedings,
subpoena, civil investigative demand, governmental or regulatory process or
similar process, (A) you shall promptly notify in writing the Company, and
reasonably consult with and reasonably assist the Company in seeking a
protective order or request for other appropriate remedy, (B) in the event
that such protective order or remedy is not obtained, or if the Company waives
compliance with the terms hereof, you shall disclose only that portion of the
Confidential Information that, according to your counsel, is legally required
to be disclosed and (C) to the extent possible, the Company shall be given
an opportunity to review the Confidential Information prior to disclosure
thereof.


 


(a)           For purposes of this letter
agreement, “Confidential Information” means information and data
concerning the business or affairs of the Company and its subsidiaries and
Affiliates, including, without limitation, all business information (whether or
not in written form) which relates to the Company, its subsidiaries or
affiliates, or their customers, suppliers or contractors or any other third
parties in respect of which the Company or its subsidiaries or affiliates has a
business relationship or owes a duty of confidentiality, or their respective
businesses or products, and which is not known to the public generally or
within the industry other than as a result of Executive’s breach of this letter
agreement, including but not limited to: technical information or reports;
trade secrets; unwritten knowledge and “know-how”; operating instructions;
training manuals; customer lists; customer buying records and habits; product
sales records and documents, and product development, marketing and sales
strategies; market surveys; marketing plans; profitability analyses; product
cost; long-range plans; information relating to pricing, competitive strategies
and new product development; information relating to any forms of compensation
or other personnel-related information; contracts; and supplier lists.
Confidential Information will not include such information known to you prior
to your involvement with the Company or its subsidiaries or Affiliates or
information rightfully obtained from a third party (other than pursuant to a
breach by you of this letter agreement). Without limiting the foregoing, you
and the Company agree to keep confidential the existence of, and any
information concerning, any dispute between you and the Company or its
subsidiaries and affiliates, except that you and the Company may disclose
information concerning such dispute to the court that is considering such
dispute or to your or the Company’s legal counsel or related advisors and
experts (provided that such persons may not disclose any such
information other than as necessary to the prosecution or defense of such
dispute).


 


(b)           Except as expressly set forth
otherwise in this letter agreement or to the extent previously disclosed by the
Company, you agree that you shall not disclose the terms of this letter
agreement, except (i) to your family and your financial and legal
advisors, (ii) as may be required by law or ordered by a court or other
governmental 


 


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entity
with subpoena power or (iii) as may be reasonably necessary for the
Company to implement the terms of this letter agreement. You further agree that
any disclosure to your financial and legal advisors will only be made after
such advisors acknowledge and agree to maintain the confidentiality of this
letter agreement and its terms to the extent such advisors are not otherwise
bound by a duty of non-disclosure; provided that if you have obtained
such agreement and acknowledgement or to the extent the advisor is otherwise so
bound, you shall have no liability for disclosure of such information by your
financial and legal advisors that is made without your knowledge or involvement.


 


(c)           You further agree that you will not
improperly use or disclose any confidential information or trade secrets, if
any, of any former employers or any other person to whom you have an obligation
of confidentiality, and will not bring onto the premises of the Company, its
subsidiaries or affiliates any unpublished documents or any property belonging
to any former employer or any other person to whom you have an obligation of
confidentiality unless consented to in writing by the former employer or other
person.


 


10.         Nondisparagement.  You shall not, whether in writing or orally,
directly or indirectly, criticize, denigrate or disparage the Company, its
subsidiaries or affiliates or their respective predecessors and successors, or
any of the current or former directors, officers, employees, or, in their
capacity as such, any of the current or former shareholders, partners, members,
agents or representatives of any of the foregoing, with respect to any of their
respective past or present activities, or otherwise publish (whether in writing
or orally) statements that tend to portray any of the aforementioned parties in
an unfavorable light; provided that the foregoing shall only apply with
respect to persons that you know or reasonably should know are covered thereby
and shall not apply to statements made by you in the reasonable good faith
performance of your duties while employed by the Company; provided
further than nothing herein shall create any right or cause of action with
respect to any third party.  The Company’s
directors, its chief executive officer and his or her direct reports shall not,
and the Company shall take all reasonable measures to ensure that the
directors, officers and employees of the Company and its subsidiaries and
affiliates shall not, whether in writing or orally, directly or indirectly,
criticize, denigrate or disparage you with respect to your respective past or
present activities, or otherwise publish (whether in writing or orally)
statements that tend to portray you in an unfavorable light; provided
that the foregoing shall not apply to statements made by the foregoing persons
in the reasonable good faith performance of their duties while rendering
services with respect to the Company while you are in the employ of the Company.  The foregoing provisions of this Section 10
shall cease to apply 2 years after the end of your employment with the Company
and shall not apply to truthful testimony, normal competitive-type statements,
statements not made with an intent to damage the other party or statements made
in rebuttal of statements made by the other party.


 


11.         To the extent that any of
the payments or benefits provided under this agreement are determined to be
subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)
it is the intention of the parties hereto that such payments or benefits shall
comply in all respects with Section 409A and the final regulations issued
thereunder and that this agreement shall, to the fullest extent possible, be construed
consistently with such intention.


 


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(a)           For purposes of applying the
exemption to Section 409A for short-term deferrals, each installment
payment under this agreement shall be treated as a separate payment for
purposes of Section 409A. Accordingly, any payments paid within 2-1/2
months of the end of the Company’s taxable year containing your termination
date or within 2-1/2 months of the end of the calendar year containing your
termination date (the “Short-Term Deferral Period”) shall be exempt from
Section 409A and the delayed payment provisions below and shall be paid in
the normal course according to this letter agreement.


 


(b)           In addition, any severance payments
payable to you after the Short-Term Deferral Period which are equal to or less
than the lesser of the amounts described in Treasury Regulation Section 1.409A-1
(b)(9)(iii)(A)(1) and (2) shall also be exempt from Section 409A
and the delayed payment provision below and shall be paid in the normal course
according to this letter agreement.


 


(c)           If you are a “specified employee” (as
defined in Section 409A and the regulations thereunder) upon your “separation
from service” (as defined in Section 409A and the regulations thereunder),
to the extent any portion of your severance pay benefit is not exempt under
either subsections (i) or (ii) above, then the remaining portion of
the severance pay benefit that would otherwise be payable in the first 6 months
following your termination date (the “Deferred Severance Payment”) will not be
paid to you until the first payroll date of the 7th month following your
termination of employment.  The Deferred
Severance Payment will be paid in a lump sum and will be adjusted for
interested calculated at the prime rate as reported in the Wall Street
Journal.  Thereafter, the remainder of
your severance pay benefit shall be paid in the normal course according to this
letter agreement.


 


(d)           If any action on the part of the
Board relating to an award of compensation, including equity compensation or
benefits, causes you to incur any additional tax or interest under Section 409A,
the Company shall indemnify and hold you harmless, on an after-tax basis, from
and against any accelerated or additional tax (including interest and penalties
with respect thereto) that may be imposed on you by reason thereof; provided
that you shall not compromise or settle any claim relating to Section 409A
without the Company’s written consent. 
Any payment or reimbursement for taxes made pursuant to this Section 11(d) shall
be paid to you no later than the end of the calendar year next following the
calendar year in which you pay the applicable tax.


 


12.         Withholding. The Company
may deduct and withhold from any amounts payable under this letter agreement
such Federal, state, local, foreign or other taxes as are required or permitted
to be withheld pursuant to any applicable law or regulation.


 


13.         In all instances mentioned
above, the specific terms of the applicable plans and awards govern, and Reader’s
Digest reserves the right to amend or terminate those plans or policies in
accordance with their terms, other than as explicitly set forth in this
letter.  Additionally, our policy is that
“all employment by the Company is at will and the Company reserves the right to
terminate any employee at any time with or without cause” and neither this
letter nor 


 


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any conversation is intended to create an employment contract.  Any dispute will be governed by the laws of
New York.


 


14.         Entire Agreement. This letter
agreement (including the exhibits hereto and any other agreements or side
letters entered into simultaneously with or following the date hereof that
specifically provide that they are intended to modify or supplement this letter
agreement) constitutes the entire agreement and understanding between the
Company and you with respect to the subject matter hereof and supersedes all
prior agreements and understandings (whether written or oral), between you and
the Company, relating to such subject matter (including, but not limited to
your offer of employment letter dated November 19, 2008, as amended, and
the letter agreement dated as of August 17, 2009, as amended). None of the
parties shall be liable or bound to any other party in any manner by any
representations and warranties or covenants relating to such subject matter
except as specifically set forth herein.


 


 


	
   

  	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Brad Thomas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Brad
  Thomas

  
	
   

  	
   

  	
  Senior
  Vice President Global Human Resources

  
	
   

  	
   

  	
   

  
	
  Please
  sign below to indicate your acceptance:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Tom Williams

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tom
  Williams

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc:
  Mary Berner

  	
   

  	
   

  



 


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Definition
of “Cause” for purposes of the letter agreement between Reader’s Digest
and Mr. Tom Williams:


 


“Cause”
means: (A) your willful failure to substantially perform your duties
(other than due to physical or mental illness) that, to the extent curable, is
uncured by you promptly following receipt of written notice given by the
Company of such failure, (B) your conviction of, or plea of guilty or nolo
contendere to a felony (or the equivalent of a felony in a jurisdiction other
than the United States) other than, in any case, vicarious liability or traffic
violations, (C) your willful improper communication of confidential
information regarding the Company obtained in the course of your employment, (D) your
willful violation of the Company’s written policies that has a detrimental
impact on the Company and that, to the extent curable, is uncured by you
promptly following receipt of written notice given by the Company of such
breach; (E) your fraud or embezzlement with respect to the Company; (F) your
personal misappropriation or misuse of funds or property belonging to the
Company; (F) your use of illegal drugs that interferes with the
performance of your duties hereunder; or (G) your gross misconduct,
whether or not done in connection with employment, other than an action done in
the good faith belief that it was in the best interests of the Company, that
materially adversely affects the business or reputation of the Company, its
subsidiaries or affiliates.


 


The
determination of whether Cause has occurred shall be made in the reasonable
discretion of the Company’s Chief Executive Officer, with the advice of the
Company’s Senior Vice President, Global Human Resources, and the Company’s
General Counsel.


 


Definition
of “Good Reason” for purposes of employment offer letter between Reader’s
Digest and Mr. Tom Williams:


 


“Good
Reason” shall mean the occurrence of any of the following without your
express written consent, provided that you expressly acknowledge and agree that
no event that occurred prior to the date of this letter agreement shall provide
you with Good Reason to terminate:


 


(i)            a reduction by the Company in your
annual base salary or your annual bonus opportunity described in Section 3
above;


 


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


 


(iii)          a relocation to an office located
anywhere other than within seventy-five (75) miles of your current primary
office.


 


Any
termination of your employment by you for Good Reason shall be made within
ninety (90) days after your knowledge of the occurrence of the event
constituting Good Reason; provided, that a termination of employment shall not
be for Good Reason unless you provide notice to the Company stating that in
your opinion an event constituting Good Reason has occurred and setting forth
in reasonable detail the relevant facts and circumstances.  The notice must be provided within 60 days
following the occurrence of an event constituting Good Reason.  Upon receiving the notice, the Company shall
have 30 days during which it may remedy or otherwise 


 


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cure
the situation.  If the Company shall,
within such 30-day cure period, remedy or otherwise cure the situation, a
recurrence thereof or another occurrence constituting Good Reason shall
constitute a new event for purposes of this letter agreement.


 


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