EMPLOYMENT AGREEMENT by RDA Holding Co.

Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the “Agreement”) dated as of January 9, 2012 (the “Effective Date”), between The Reader’s Digest Association, Inc., a Delaware corporation (the “Company”), RDA Holding Co., a Delaware corporation (“RDA Holding”), and Robert Guth (“Executive”).

WHEREAS, Executive was elected by the Board of Directors of the Company and RDA Holding to be the Chief Executive Officer of the Company and RDA Holding effective as of September 12, 2011, and accepted employment as such (the “Employment Date”);

WHEREAS, the Company desires to continue to employ Executive as its Chief Executive Officer and Executive is willing to serve in such capacity for the period and upon such other terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as set forth below:

1.             Term.  (a)  Duration.  The term of Executive’s employment under this Agreement shall continue until December 31, 2013, unless terminated earlier as hereinafter provided (the “Expiration Date”). The period of time from the Employment Date through the termination of Executive’s employment under this Agreement is herein referred to as the “Term.”

(b)           No Obligation.  The parties agree and acknowledge that, should Executive and the Company choose to continue Executive’s employment for any period of time following the Expiration Date without extending the term of Executive’s employment under this Agreement or entering into a new written employment agreement, Executive’s employment with the Company shall be “at will,” such that the Company may terminate Executive’s employment at any time, with or without reason and with or without notice, and Executive may resign at any time, with or without reason and with or without notice.

(c)           Definitions.  For purposes of this Agreement, the following terms, as used herein, shall have the definitions set forth below.

“Affiliate(s)” means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person, provided that, in any event, any business in which the Company has any direct or indirect ownership interest shall be treated as an Affiliate of the Company.

“Approved Change in Control” means a Change in Control as defined in the RDA Holding Co. 2010 Equity Incentive Plan provided that such Change of Control is approved by the majority of the Current Board, and excluding clause (b) of such definition.

“Control” (including, with correlative meanings, the terms “Controlled by” and “under common Control with”), as used with respect to any Person, means the direct or indirect possession of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract

or otherwise.

“Current Board” means (i) the members of the RDA Holding Board who as of the Effective Date were members of the RDA Holding Board, and (ii) the members of the RDA Holding Board whose election or nomination for election was approved by a majority of the Current Board.

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, association, governmental entity, unincorporated entity or other entity.

2.             Duties and Responsibilities.

(a)           During the Term, Executive agrees to be employed and devote substantially all of Executive’s business time, attention and efforts to the Company and RDA Holding and the promotion of its interests and the performance of Executive’s duties and responsibilities hereunder, upon the terms and conditions of this Agreement. Executive shall render Executive’s services hereunder as Chief Executive Officer of the Company and RDA Holding, with the duties, responsibilities and authority commensurate with Executive’s status, including any duties and responsibilities as directed from time to time by the Board of Directors of the Company (the “Board”) and the Board of Directors of RDA Holding (the “RDA Holding Board”) consistent with Executive’s position hereunder. Executive shall report to the Board and the RDA Holding Board. In addition, the Company may, from time to time, direct Executive to perform similar duties and hold the same or similar offices for any of its Affiliates. As of the Employment Date and during the Term, Executive shall be appointed or elected (and re-elected, as applicable) as a member of the Board and the RDA Holding Board.

(b)           Place of Employment; Business Travel.  During the Term, Executive’s principal place of employment shall be at the Company’s New York, New York or White Plains, New York office. Executive acknowledges that Executive’s duties and responsibilities shall require Executive to travel on business to the extent reasonably necessary to fully perform Executive’s duties and responsibilities hereunder.

(c)           Board Membership; No Conflict.  During the Term, except as set forth on Exhibit A which appointments were in existence prior to the Employment Date, Executive shall not be permitted to be a member of the board of directors of any for-profit company without the consent of the Company (such consent not to be unreasonably withheld) (for all purposes under this Agreement, any required consent of the Company shall be evidenced by the written approval of the Chairman of the Board); provided that, Executive may serve, without approval, on the boards of directors of not-for-profit entities; provided further that, such activities do not interfere with the performance of Executive’s duties and responsibilities hereunder.

3.             Compensation and Related Matters.  (a)  Base Salary. During the Term, for all services rendered under this Agreement, Executive shall receive an aggregate annual base salary (“Base Salary”) at an initial rate of $1,200,000, payable in accordance with the Company’s applicable payroll practices. Base Salary shall be subject to review by the Compensation Committee of the Board (the “Committee”) or, if applicable, the Board, for increase, but not decrease, in its sole discretion and references in this Agreement to “Base Salary” shall be deemed to refer to the most recently effective annual base salary rate; provided however that it is not anticipated that the Base Salary will be increased during the Term.

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(b)           Bonus Opportunities.  During the Term, Executive shall be eligible to receive an annual cash bonus under the Company’s annual management incentive plan as in effect from time to time (the “Annual Bonus”) based on Executive’s achievement of the financial and/or other goals (“Goals”) established by the Committee or, if applicable, the Board, after consultation with Executive, provided, that the Annual Bonus payable to Executive upon achievement of the applicable annual Goals shall be $400,000 (the “Target Bonus”), and payment in the case of overachievement or underachievement of the Goals shall be adjusted from the Target Bonus consistent with the formula applied to other senior executives of the Company for similar performance.  For 2011, the Target Bonus shall be pro-rated from the Employment Date.

Any Annual Bonus that Executive shall actually become entitled to receive pursuant to the arrangements described above, will be payable by the Company at such time and in such manner that bonuses are paid to other senior executives of the Company in accordance with the terms of the applicable annual management incentive plan, and is in any event intended to be paid as “short-term deferral” income, within the meaning of Section 409A (as such term is defined in Section 16 below).

(c)           Benefits and Perquisites.  During the Term, Executive shall be entitled to participate in the benefit and perquisite plans and programs, commensurate with Executive’s position, that are established by the Company from time to time for executive employees generally, subject to the terms and conditions of such plans.

(d)           Vacation.  During the Term, Executive shall be entitled to paid vacation in accordance with the Company’s vacation policies applicable to senior executives of the Company, but in no event less than four (4) weeks per year.

(e)           Expenses.

(i)                        During the Term, the Company shall promptly reimburse Executive for Executive’s reasonable business expenses incurred in connection with performing Executive’s duties hereunder, in accordance with Company policy, as in effect from time to time.

(ii)                       During the Term, the Company shall provide housing in New York City to Executive at the Company’s expense, and shall provide reimbursement to Executive of commuting expenses (between North Carolina or Florida and New York) for Executive and his spouse, up to five round-trips per month each.  In addition, if Executive is required to work in White Plains, New York, the Company shall provide Executive with car service from New York City to the White Plains office.

(f)            Legal Fees.  The Company shall pay all reasonable attorneys’ fees and disbursements incurred by Executive in connection with the negotiation and documentation of this Agreement (and any equity awards), up to a maximum of $8,500. Any reimbursement pursuant to this Section 3(g) shall be paid to Executive promptly upon remittance of documentation of such fees.

(g)           Equity Compensation Opportunities. The Company shall grant to Executive an initial equity award under the RDA Holding Co. 2010 Equity Incentive Plan, as soon as reasonably practicable after the Effective Date. In addition to the initial equity award, Executive shall be eligible to receive additional equity awards on an annual basis, subject to such terms as may be determined by the Board.

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4.             Separation from Service with the Company.

(a)           Death or Disability.

(i)                Executive’s employment shall automatically terminate upon Executive’s death. The Company may terminate Executive’s employment hereunder in the event of Executive’s “Disability” (as defined below) upon thirty (30) days’ written notice to Executive. In the event of a termination of Executive’s employment hereunder by reason of death or by reason of Disability, the Company shall pay to Executive or Executive’s estate, as applicable, any accrued but unpaid Base Salary, accrued but unused vacation time, unreimbursed business expenses, and unpaid Annual Bonus for any completed performance period prior to the year of termination, and Executive or Executive’s estate shall be entitled to receive employee benefits pursuant to the terms of the benefit plans and programs applicable to terminated employees (collectively, the “Accrued Rights”). In all cases where Accrued Rights are payable to Executive, Accrued Rights shall be payable on their normal payment dates; provided that accrued but unused vacation time shall be paid within 30 days following the date of termination of Executive’s employment. In addition, Executive shall be entitled to a pro-rata portion of the Annual Bonus that relates to the performance period in which the termination of employment occurs, based on actual results of the Company as of the date of termination, which amount shall be calculated based upon a formula, the denominator of which shall be 365 and the numerator of which shall be the number of days during the applicable performance period during which Executive was employed by the Company, and shall be paid within sixty (60) days following the date of termination (the “Pro-Rata Bonus”).

(ii)               For purposes of this Agreement, “Disability” means Executive has been physically or mentally incapable for six (6) consecutive months (or six (6) months in any twelve (12) month period) to perform Executive’s duties hereunder, as determined reasonably and in good faith by the Board.

(b)           By the Company for Cause or By Executive Without Good Reason.

(i)                The Company may terminate Executive’s employment hereunder for “Cause” (as defined below) at any time upon written notice to Executive and Executive may terminate Executive’s employment hereunder without “Good Reason” (as defined below) at any time upon thirty (30) days’ written notice to the Company. In the event the Company terminates Executive’s employment hereunder for Cause or Executive terminates Executive’s employment hereunder without Good Reason, Executive shall be entitled to Executive’s Accrued Rights and the Company shall have no further obligations to Executive under this Agreement.

(ii)               For purposes of this Agreement, “Cause” means: (A) Executive’s willful failure to substantially perform Executive’s duties hereunder (other than due to physical or mental illness) after written notice of such failure to Executive, (B) Executive’s 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 traffic violations, (C) Executive’s material breach of this Agreement that, to the extent curable, is uncured by Executive promptly following receipt of written notice given by the Company of such breach, (D) Executive’s material violation of the Company’s written policies of a nature that has a material detrimental impact on the Company or its Affiliates and that, to the extent curable, is uncured by Executive promptly following receipt of written notice given

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by the Company of such breach; (E) Executive’s fraud or embezzlement with respect to the Company or its Affiliates; (F) Executive’s misappropriation or misuse of funds or property belonging to the Company or its Affiliates that is more than de minimis in nature; (F) Executive’s use of illegal drugs or misuse of prescription drugs that interferes with the performance of Executive’s duties hereunder; or (G) Executive’s 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 adversely affects the business or reputation of the Company, its Affiliates.

(iii)              For purposes of this Agreement, “Good Reason” means (A) any diminution in Executive’s title or position or a material diminution in Executive’s duties, authorities or responsibilities (excluding for this purpose an insubstantial or inadvertent action taken in good faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive); (B) any material breach by the Company of this Agreement that, to the extent curable, is uncured by the Company promptly following receipt of written notice thereof from Executive; (C) any material reduction of Executive’s Base Salary or Target Bonus; (D) the transfer or relocation of Executive’s principal place of employment to a location more than forty (40) miles from New York, New York (; (E) any failure to re-elect Executive to the Board if the Company is not public, or to nominate Executive for election to the Board if the Company is public, or the removal of Executive from the Board other than for cause in accordance with the Company’s by-laws or in connection with a termination for “Cause” under the terms of this agreement;  or (F) other than in connection with an Approved Change of Control, the failure of the Company to obtain the assumption of this Agreement by any Person which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company and the failure to deliver a copy of the document effecting such assumption to Executive upon Executive’s written request.

(c)           By the Company Other Than for Cause or by Executive for Good Reason.  The Company may terminate Executive’s employment hereunder other than for Cause (and other than due to Disability) at any time upon written notice to Executive and Executive may terminate Executive’s employment hereunder for Good Reason within thirty (30) days following the occurrence of the event constituting Good Reason upon thirty (30) days’ written notice to the Company. In the event of a termination of Executive’s employment hereunder (i) by the Company other than for Cause (but not in connection with an Approved Change of Control as set forth in paragraph (d) below), or (ii) by Executive for Good Reason, Executive shall be entitled to Executive’s Accrued Rights plus the following benefits (collectively, the “Separation Benefits”): (i) a severance payment equal to the sum of (A) Executive’s then current Base Salary plus (B) the Target Bonus plus (C) a pro-rata portion of the Target Bonus for the calendar year in which the termination occurs which pro rata amount shall be calculated based upon a formula, the denominator of which shall be 365 and the numerator of which shall be the number of days during the applicable performance period during which Executive was employed by the Company; which aggregate amount shall be paid, subject to the provisions of Section 16