UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2006
THE READER'S DIGEST ASSOCIATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10434 13-1726769
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
Pleasantville, New York 10570-7000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(914) 238-1000
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[_] Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14a-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 1. REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01. Entry into a Material Definitive Agreement
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On March 31, 2006, The Reader's Digest Association, Inc. (the
"Company") entered into a definitive Agreement and Plan of Merger (the "Merger
Agreement") with Allrecipes.com, Inc. ("Allrecipes") and a wholly owned
subsidiary of the Company. The Merger Agreement provides that, on the terms and
subject to the conditions provided in the Merger Agreement, the Company's
subsidiary will merge with and into Allrecipes, with Allrecipes being the
surviving corporation of the merger (the "Merger"). As a result of the Merger
(i) Allrecipes will become a wholly-owned subsidiary of the Company, (ii) each
outstanding share of Allrecipes common and preferred stock will be converted
solely into the right to receive a cash payment equal to approximately $1.08
("Merger Consideration Per Share") and (iii) each outstanding vested option and
currently exercisable warrants will be converted into solely the right to
receive a cash payment equal to the difference between the Merger Consideration
Per Share and the exercise price of the vested option or warrant. In addition,
the Board of Directors of Allrecipes approved a partial acceleration of unvested
outstanding options held by Allrecipes employees and directors. Pursuant to the
partial acceleration, 239,072 options that would have otherwise vested on or
before December 31, 2006 will accelerate and become vested and exercisable
effective immediately prior to the effective time of the Merger. As a result of
the acceleration of options, such employees and directors will be entitled to
receive a cash payment equal to the difference between the Merger Consideration
Per Share and the exercise price of the accelerated option.
The Merger Agreement contains representations and warranties of each
of the parties to the Merger Agreement and the assertions embodied in those
representations and warranties are qualified by information in confidential
disclosure schedules that the parties delivered in connection with the execution
of the Merger Agreement. In addition, certain representations and warranties may
not be accurate or complete as of any specified date because they are subject to
a contractual standard of materiality used for the purpose of allocating risk
between the parties rather than establishing matters as facts. Accordingly,
investors should not rely on the representations and warranties as
characterizations of the actual state of facts, or for any other purpose, at the
time they were made or otherwise. Although the requisite number of Allrecipe
shareholders have approved the Merger, it remains subject to customary closing
conditions.
In connection with the entry into the Merger Agreement, shareholders
holding at least 75% of the outstanding shares of Allrecipes capital stock,
including directors of Allrecipes and certain key employees, have entered into a
Support Agreement with the Company that, among other things, contains (a)
representations and warranties relating to their ownership of their shares of
Allrecipes capital stock, (b) an agreement to maintain certain information of
Allrecipes and the Company confidential, (c) for Allrecipes shareholders who are
members of management or are members of Allrecipes' Board of Directors,
non-solicitation agreements and (d) an agreement to be bound by the
indemnification obligations set forth in the Merger Agreement. In addition, the
Support Agreement also imposes a three-year non-competition agreement on William
Moore and Tim Hunt, Allrecipes' Chief Executive Officer and Senior Vice
President Product Development, respectively. The parties to the Support
Agreement have further agreed to vote against any action that would result in
the withdrawal or modification, in a manner adverse to the Company, of such
shareholder's approval of the Merger.
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The foregoing description of the Merger Agreement and Support
Agreement is qualified in its entirety by reference to the full text of the
Merger Agreement and the Support Agreement filed herewith as Exhibits 2.1 and
10.1, respectively, and are incorporated herein by reference. A copy of the
press release issued by the Company on March 31, 2006 concerning the Merger is
filed herewith as Exhibit 99.1 and is incorporated herein by reference.
SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 Financial Statements and Exhibits.
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(c) Exhibits
Filed herewith are the following:
Exhibit Number Description
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2.1 Merger Agreement dated March 31, 2006 by and among the
Company, RD Merger Sub, Inc. and Allrecipes.com, Inc.
10.1 Form of Support Agreement dated March 31,2006 by and among
the Company, RD Merger Sub, Inc. and the signatories
thereto.
99.1 News release issued by the Company on March 31, 2006,
relating to the Company's entry into a Merger Agreement
dated March 31, 2006 by and among the Company, RD Merger
Sub, Inc. and Allrecipes.com, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE READER'S DIGEST ASSOCIATION, INC.
(Registrant)
Date: April 3, 2006
/s/ Clifford H.R. DuPree
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Clifford H.R. DuPree
Vice President, Corporate Secretary and
Associate General Counsel
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EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1 Merger Agreement dated March 31, 2006 by and among the
Company, RD Merger Sub, Inc. and Allrecipes.com, Inc.
10.1 Form of Support Agreement dated March 31, 2006 by and among
the Company, RD Merger Sub, Inc. and the signatories
thereto.
99.1 News release issued by the Company on March 31, 2006,
relating to the Company's entry into a Merger Agreement
dated March 31, 2006 by and among the Company, RD Merger
Sub, Inc. and Allrecipes.com, Inc.
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