exhibit10_1.htm


    Exhibit
10.1

    

    THE
READER’S DIGEST ASSOCIATION, INC.

    READER’S
DIGEST ROAD

    PLEASANTVILLE,
NY  10570-7000

    


    


    TODD C.
McCARTY                                                                                                                                                    TELEPHONE: (914)
244-5175

    Senior Vice
President                                                                                                                                                               FAX:  (914)
244-7944

    Global Human
Resources                                                                                                                                                                      todd_mccarty@rd.com

    


    


    


     

                    November 19,
2008

    


    


    Mr. Tom
Williams

    8 Hubert
Street

    Whippany,
NJ  07981

    


    


    Dear
Tom:

    


    I am
pleased to confirm the offer of employment extended to you for 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 based in
Pleasantville, New York.  Your date of hire is still to be
determined.

    


    Compensation and
benefits

    


    
      	
              1.  

            	
              As
      previously discussed, your annual base salary will be $500,000 payable in
      biweekly installments in accordance with Reader’s Digest’s payroll
      practices and subject to periodic adjustments based upon performance
      reviews administered within timeframes consistent with other senior level
      executives.

            


    

    


    
      	
              2.  

            	
              You
      will receive a sign-on bonus in the gross amount of $362,250, less
      appropriate tax withholding, payable at the end of sixty days of your
      employment with Reader’s Digest.  This payment will only be made
      if, and to the extent, you do not receive your 2008 bonus from your last
      employer.  By accepting this offer, you agree that, in the event
      you receive this payment from Reader’s Digest and that you voluntarily
      leave Reader’s Digest, or if you are terminated by the company for “Cause”
      (as defined in the attached) within the twelve months following receipt of
      payment, you will repay the full amount of the payment prior to the last
      day of your employment. By accepting this offer, you further agree that
      Reader’s Digest may deduct this amount from any other amounts Reader’s
      Digest owes you should you be obligated to repay this
    amount.

            


    


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    


    
      	
              3.  

            	
              You
      will receive a one-time payment in the gross amount of $350,000, less
      appropriate tax withholding, payable in November, 2009.  By
      accepting this offer, you agree that, in the event you receive this
      payment from Reader’s Digest and that you voluntarily leave Reader’s
      Digest, or if you are terminated by the company for “Cause” (as defined in
      the attached) within the twelve months following receipt of payment, you
      will repay the full amount of the payment prior to the last day of your
      employment. By accepting this offer, you further agree that Reader’s
      Digest may deduct this amount from any other amounts Reader’s Digest owes
      you should you be obligated to repay this
  amount.

            


    

    


    
      	
              4.  

            	
              You will participate in our annual
      incentive plan, the Reader’s Digest Management Incentive
      Plan.  The bonus target for this position is $500,000,
      with a range of opportunity from 0% to up to 200% of target (or up to
      $1,000,000).  This target shall not be decreased without your
      written consent. For FY2009 (July 1, 2008 – June 30, 2009) only, your
      bonus target will be pro-rated based on your date of
      hire.  Awards are based on Company, unit and individual
      performance against pre-established goals.  Receipt of a bonus
      requires that you be on the active payroll at the time awards are paid,
      which is typically in the late
summer/fall.

            


    

    


    
      	
              5.  

            	
              In connection with your employment
      and contingent upon the approval of both the Compensation Committee of the
      Board of Directors of Reader’s Digest (received as of the date of this
      letter) and the Board
      of Directors of RDA Holding Co., you will receive an equity stake in the
      company of .7440% or 443,727 shares delivered in the form of 332,795 stock
      options with an exercise price equal to the fair market value of RDA
      Holding Co.’s common stock on the date of grant, 55,466 restricted shares of RDA Holding
      Co. common stock, and 55,466 restricted stock units, all granted under the
      RDA Holding Co. Omnibus Incentive Compensation
      Plan.  The
      stock options and restricted stock will be awarded and vest in accordance
      with the standard terms and conditions.  The restricted stock
      units will vest upon hire and will have a payment date of the earlier of
      (a) the date of the executive’s involuntary termination from the company
      other than for “Cause” (as defined in the attached) or termination
      by you for “Good Reason” (as defined in the attached), and (b) the date of a “Liquidity
      Event” (as defined in the attached). Additional information concerning
      the terms and conditions of these awards will be provided to you upon
      employment.  Once granted, changes to terms and
      conditions of outstanding equity grants that may have an adverse effect on
      you will require your written
consent.

            


    

    


    
      	
              6.  

            	
              You
      will participate in Reader’s Digest’s Senior Executive Long-Term Incentive
      Program (LTIP).  This plan measures and rewards performance over
      a multi-year period.  A new performance cycle begins each
      year.  The incentive target for this position is
      $500,000.  Your incentive target for the FY08-09 and FY08-10
      cycles will be pro-rated based upon your date of hire as indicated
      below.  The award earned can range from 0% to 250% of target
      depending on the extent to which the performance goals are
      achieved.  Performance cycles and incentive targets are outlined
      below.

            


    

    


    
      	
               

              Cycle

            	
               

              Target

            	
              Anticipated

              Payout
      Date

            
	
              2008-2009

            	
              $125,000

            	
              December
      2009

            
	
              2008-2010

            	
              $250,000

            	
              December
      2010

            
	
              2009-2011

            	
              $500,000

            	
              December
      2011

            


    

    


    Once granted, changes to terms and
conditions of outstanding performance cycles that may have an adverse effect on
you will require your written consent.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    


    


    
      	
              7.  

            	
              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., a savings
      plan which currently provides a 50% match on the first 6% of pre-tax
      contributions, and medical, dental, life insurance, short- and long-term
      disability plans.  Details of these benefit plans are included
      in the attached information packet.

            


    

    


    
      	
              8.  

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

            


    

    


    
      	
              9.  

            	
              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.

            


    

    


    
      	
              10.  

            	
              You
      will be eligible for severance totaling 12 months of base salary and
      target bonus 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), provided you timely execute a
      release in a reasonable and customary form satisfactory to the Company and
      return all Company property.   The severance payments will
      be made over the 12-month period following your
    termination.

            


    

     

    
      	
              11.  

            	
              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.

            


    

     

    
      	
              12.  

            	
              Your
      employment is contingent upon verification of the accuracy of information
      obtained in the employment process through an independently conducted
      background investigation (already complete as of the date of this letter)
      and authorization to work pursuant to the Immigration Reform and Control
      Act of 1986 (“IRCA”).  Further, this offer is contingent in its
      entirety on approval by the Compensation Committee of the Board of
      Directors of Reader’s Digest (received as of the date of this letter).
      Your employment cannot commence until all of these conditions have been
      satisfied.

            


    

    


    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 any
conversation is intended to create an employment contract.  The terms
of this letter are binding on the Company, its successors and assigns, replaces
in its entirety the letter to you dated November 13, 2008, and any dispute will
be governed by the laws of New York.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    


    We look
forward to you joining the senior leadership team of Reader’s Digest, and are
confident that you will make a significant difference for our
Company.

    


                                Sincerely,

    


                            

    


                                Todd
McCarty,

                                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
employment offer letter 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:

    


    (i) a
reduction by the Company in your annual base salary or your annual target bonus
opportunity under the Company’s Management Incentive Compensation
Plan;

    


    (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 by written notice to the Company within 60
days after your knowledge of the occurrence of the event constituting Good
Reason and the Company shall have 10 days to cure the event in which case, if
cured, the termination will not be effective.

    


    


    Definition
of “Liquidity Event” for purposes of restricted stock unit award
for Mr. Tom
Williams (capitalized terms defined in the RSU agreement)

    


    “Liquidity Event” means (a) the
disposition by the Equity Investors in one or more transactions of at least 50%
of the Shares originally acquired by the Equity Investors for all cash
consideration or for a combination of cash and non-cash consideration where the
cash portion of the consideration represents consideration for at least 50% of
the Shares originally acquired by the Equity Investors (other than a disposition
to an Affiliate of any Equity Investor or to any other Equity Investor), (b) a
distribution by Ripplewood Partners II, L.P. (or any Affiliate to which it
transfers Shares) of at least 50% of the Shares originally acquired by the
Affiliates of Ripplewood Holdings, L.L.C. to the limited partners of Ripplewood
Partners II, L.P (or any such Affiliate to which it transfers Shares); or (c)
the payment of an extraordinary cash dividend on the Shares by the Company in
connection with an IPO, but only if the value of such dividend per Share is
greater than 50% of the price per Share paid by the initial purchasers in the
IPO; provided that if the Board determines that any recapitalization, stock
split, reverse stock split, split-up or spin-off, reorganization, merger,
consolidation, combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Board in its
discretion to be appropriate or desirable, then the Board may, in such manner as
it may deem equitable or desirable, amend or modify this
definition.

    


    


    


    



    
      
         


      

      
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