EXHIBIT 10.11
1995 Directors' Deferred Compensation Plan
Scholastic Corporation
Amended and Restated May 25, 1999
Contents
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Page
Article 1. Establishment And Purpose 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Eligibility and Participation 4
Article 5. Deferral Opportunity 5
Article 6. Deferred Compensation Accounts 6
Article 7. Beneficiary Designation 7
Article 8. Rights of Participants 7
Article 9. Amendment and Termination 8
Article 10. Miscellaneous 8
Scholastic Corporation
1995 Directors' Deferred Compensation Plan
Article 1. Establishment And Purpose
1.1 Establishment. Scholastic Corporation, a Delaware corporation (the
"Company"), hereby establishes, effective as of October 1, 1995 (the "Effective
Date") and amends and restates as of May 25, 1999, a deferred compensation plan
for directors as described herein, which shall be known as the "Scholastic
Corporation Directors' Deferred Compensation Plan" (the "Plan").
1.2 Purpose. The primary purpose of the Plan is to provide Directors of
the Company with the opportunity to voluntarily defer all or a portion of their
Compensation, subject to the terms of the Plan. By adopting the Plan, the
Company desires to enhance its ability to attract and retain Directors of
outstanding competence.
Article 2. Definitions
Whenever used herein, the following terms shall have the meanings set
forth below, and, when the defined meaning is intended, the term is capitalized:
(a) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(b) "Change in Control" of the Company means, and shall be deemed to
have occurred upon, any of the following events:
(i) Any Person (defined, for this purpose, to include any
syndicate or group deemed to be a "person" under Section
13(d)(3) of the Securities Exchange Act of 1934), other than
the Company, any subsidiary of the Company or any employee
benefit plan of the Company and other than those Persons in
control of the Company as of the Effective Date or any person
in which any of the Persons in control of the Company as of
the Effective Date has a controlling interest, is or becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of
Director; or
(ii) There occurs any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another
Person into the Company, or any sale or transfer of all or
substantially all of the assets of the Company to another
Person, other than (a) any such transaction pursuant to which
the holders of the Company's common stock and Class A stock
immediately prior to such transaction have,
directly or indirectly, at least a majority of the common
equity of the continuing or surviving corporation immediately
after such transaction and (b) any merger which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of the Company's common
stock or Class A stock or which is affected solely to change
the jurisdiction of incorporation of the Company and results
in the classification, conversion or exchange of the Company's
outstanding shares of common stock or Class A stock solely
into shares of the Company's common stock or Class A stock.
However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to a Participant, if the Participant is part of a
purchasing group which consummates the Change in Control transaction. A
Participant shall be deemed "part of a purchasing group" for purposes of
the preceding sentence if the Participant is an equity participant in the
purchasing company or group (except for: (i) passive ownership of less
than one percent (1%) of the stock of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group which
is otherwise not significant, as determined prior to the Change in Control
by a majority of the nonemployee continuing Directors).
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Company" means Scholastic Corporation, a Delaware corporation.
(e) "Compensation" means the Retainer and Meeting Fees payable to a
Participant by the Company for services performed as a Director
during a Plan Year. In no event, however, shall amounts paid in the
form of Company stock or stock options qualify as Compensation
eligible for deferral under the Plan.
(f) "Director" means a member of the Board of Directors of the Company
on or following the Effective Date of the Plan who receives a
Retainer and Meeting Fees for service on the Board of Directors.
(g) "Disability" shall have the meaning ascribed to such term in the
Company's governing long-term disability plan or if no plan is then
in effect, shall mean the determination by the Board that the
physical or mental condition of a Participant renders such
Participant unable to carry out the duties and obligations as a
Director of the Company.
(h) "Effective Date" means the date the Plan becomes effective, as set
forth in Section 1.1 herein.
(i) "Meeting Fees" means fees paid by the Company to a Director, in
cash, for attendance at Board and various Board committee meetings
during the relevant Plan Year, and which is exclusive of any
Retainer earned during such Plan Year. For the purposes of the Plan,
"Meeting Fees" shall not include any fees paid or payable in Company
stock or stock options.
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(j) "Participant" means any Director who is actively participating in
the Plan.
(k) "Plan" means the Scholastic Corporation Directors' Deferred
Compensation Plan.
(l) "Plan Administrator" means the executive(s) appointed by the Board
pursuant to Section 3.1 hereof to administer certain provisions of
the Plan as set forth herein, who shall initially be the Vice
President of Human Resources of the Company.
(m) "Plan Year" means the fiscal year of the Company (June 1 to May 31).
The first plan year begins on October 1, 1995 and ends on May 31,
1996.
(n) "Retainer" means the annual cash retainer paid by the Company and
earned by a Director during the relevant Plan Year with respect to
the Director's service on the Board, and which is exclusive of
Meeting Fees earned during such Plan Year. For purposes of the Plan,
"Retainer" shall not include any retainer paid or payable in Company
stock or stock options.
Article 3. Administration
3.1 Administration of the Plan. The Plan shall be administered by, and in
the sole and absolute discretion of, the Board. Subject to the provisions set
forth herein, the Board shall take such actions as are required or permitted to
be taken by it hereunder and shall have full and complete discretionary
authority to interpret the plan, to determine the rights of each Director and
the eligibility of a Director to participate in the Plan the amount of benefits
payable to a Director and the terms and conditions of each Director's
participation in the Plan; to construe and interpret the Plan and any agreement
or instrument entered into under the Plan, including any unclear, uncertain or
disputed terms thereof; to establish, amend, waive or rescind rules and
regulations for the Plan's administration; to amend (subject to the provisions
of Article 9 herein) the terms and conditions of the Plan and any agreement or
instrument entered into under the Plan and to make all other determinations
which may be necessary or advisable for the administration or the Plan. The
Board may employ accountants and counsel and other persons to assist or render
advice to it, all at the expense of the Company.
Subject to the terms of the Plan, the Board may delegate any or all of its
authority granted under the Plan to an executive or executives of the Company.
3.2 Decisions Binding. All determinations and decisions of the Board as to
any disputed question or any other issue arising under the Plan, including
questions of construction and interpretation, shall be final, conclusive, and
binding on all parties.
3.3 Indemnification. Each person who is or shall have been a member of the
Board shall be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by
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him or her in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party, or in which he or she may be
involved by reason of any action taken or failure to act under the Plan. The
Company shall, subject to the requirements and limitations of Delaware law, pay
such loss, cost, liability or expense imposed on or incurred by such person
promptly upon demand by him or her, whether or not he or she has actually
advanced such amount prior thereto.
The Company shall also indemnify each such person who is or shall have
been a member of the Board against and from any and all amounts paid by him or
her in settlement thereof, with the Company's approval, or paid by him against
him or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
Article 4. Eligibility and Participation
4.1 Eligibility. Each Director of the Company on or following the
Effective Date shall be eligible to participate in the Plan. In the event a
Participant no longer meets the requirements for eligibility to participate in
the Plan, such Participant shall become an inactive Participant retaining all of
the rights described under the Plan, except the right to make any further
deferrals hereunder. In the event a Director shall cease to serve as a member of
the Board of Directors but shall be designated as a Director Emeritus, the
Director shall become an inactive Participant, shall not be eligible to make
further deferrals under the Plan but shall not be deemed to have terminated
service as a Director until such time as his or her Director Emeritus status
shall terminate.
4.2 Participation. When a Director first becomes eligible to participate
in the Plan, such Director shall, as soon as practicable thereafter, be notified
by the Board of his or her eligibility to participate. At such time, the board
shall provide such Director with an "Election to Defer Form" which shall be
submitted by the Director as provided in Sections 5.2 hereof.
Unless otherwise determined by the Board, once notified of eligibility to
participate, each eligible Director shall be entitled to make deferrals with
respect to each subsequent Plan Year by submitting an Election to Defer Form as
provided in Section 5.2.
4.3 Partial Plan Year Participation. In the event a Director first becomes
eligible to participate in the Plan after the beginning of a Plan Year, the
Committee may, in its
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discretion, allow such Director to complete an Election to Defer Form within
thirty (30) days of becoming eligible to participate; such election to be valid
and applicable for the Plan Year then in progress. An Election to Defer Form
submitted pursuant to this Section 4.3 shall apply only to Compensation earned
subsequent to the date on which a valid Election to Defer Form is received by
the Board from the Participant.
Article 5. Deferral Opportunity
5.1 Amount Which May be Deferred. A Participant may elect to defer fifty
percent (50%) or one hundred percent (100%) of his or her aggregate Compensation
in any Plan Year.
5.2 Deferral Election. Participants shall make their elections to defer
Compensation under the Plan prior to the beginning of each Plan Year, or not
later than thirty (30) calendar days following notification of initial
eligibility to participate for a partial Plan Year, as applicable. All deferral
elections shall be irrevocable and shall be made on an "Election to Defer Form,"
as described herein, which shall specify, with regard to the applicable Plan
Year, the percentage of Compensation which the Participant elects to defer.
If a Participant makes an initial election to defer Compensation under the
Plan, such election, including the designation of the percentage of Compensation
to be deferred, shall be valid with respect to the Participant's initial Plan
Year of participation, or part thereof, and with respect to each subsequent Plan
Year until such time as the Participant makes a subsequent valid election under
the Plan with regard to a subsequent Plan Year.
5.3 Length of Deferral. Except as otherwise provided herein, all deferrals
hereunder and earnings thereon shall be maintained in deferred status until the
expiration of the deferral period specified by the Director (not to exceed 15
years) or termination of service as a Director for any reason, whichever is
later.
5.4 Payments of Deferred Amounts. Participants shall receive payment of
deferred amounts, together with earnings accrued thereon pursuant to Section
6.2, at the end of the applicable deferral period. Such payment shall be made in
cash, in a single lump-sum payment within thirty (30) calendar days of the date
specified for payment, as determined under Section 5.3 herein.
Notwithstanding the foregoing, any unpaid deferred amounts and accumulated
earnings thereon shall be paid to the Participant in the event that, at any time
prior to full payment of such deferred amounts and earnings thereon, a Change in
Control of the Company occurs, as determined by the Board. In such event,
payment shall be made in a single lump sum, in cash, within thirty (30) calendar
days after the effective date of a Change in Control, as applicable.
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5.5 Financial Hardship. The Plan Administrator shall have the authority to
alter the timing or manner of payment of deferred amounts to a Participant in
the event that the Participant establishes severe financial hardship. In such
event, the Plan Administrator may, subject to Board approval:
(a) Authorize the cessation of deferrals by such Participant under
the Plan; or
(b) Provide that all, or a portion, of the amount previously
deferred by the Participant shall immediately be paid in a
lump-sum cash payment; or
(c) Provide for such other payment schedule as deemed appropriate
by the Plan Administrator, subject to Board approval, under
the circumstances.
For purposes of this Section 5.5, "severe financial hardship" shall mean a
financial hardship resulting from an extraordinary and unforeseeable emergency
arising as a result of one or more recent events beyond the control of the
Participant. The Plan Administrator shall have the sole discretion to determine
whether the facts of each case constitute a severe financial hardship arising
from an extraordinary and unforeseeable emergency, but, in any event, payment of
deferred amounts may not be made to the extent such emergency is or may be
relieved: (i) through the reimbursement or compensation by insurance or
otherwise; (ii) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship; and
(iii) by cessation of deferrals under the Plan. Deferred amounts shall be paid
to the Participant in the case of a severe financial hardship only to the extent
reasonably necessary to satisfy the financial hardship.
The existence and severity of the financial hardship shall be judged by
the Plan Administrator. The Plan Administrator's decision with respect to the
severity of financial hardship and the manner in which, if at all, the
Participant's future deferral opportunities shall cease, and/or the manner in
which, if at all the payment of deferred amounts to the Participant shall be
altered or modified, shall be final, conclusive, and not subject to appeal,
except as otherwise determined by the Board.
Article 6. Deferred Compensation Accounts
6.1 Participants' Accounts. The Company shall establish and maintain an
individual bookkeeping account for deferrals made by each Participant, and
earnings thereon, under Article 5 herein. Each account shall be credited as of
the date the amount deferred otherwise would have become due and payable to the
Participant. The term "account" and other measures representing the value of a
Director's deferrals under the Plan are bookkeeping entries only and shall not
constitute property of any kind or any interest in the Company or specific
assets thereof.
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6.2 Earnings on Deferred Amounts. Compensation deferred under the Plan
shall accrue interest on a quarterly basis at a rate equal to the 30 year
Treasury Bill rate of interest in effect as of the first business day of each
calendar quarter. Each Participant's deferred compensation account shall be
credited on the last day of each calendar quarter, with interest computed on the
average balance in the account during such quarter. Interest earned on deferred
amounts shall be paid out to Participants at the same time and in the same
manner as the underlying deferred amounts.
6.3 Charges Against Accounts. There shall be charged against each
Participant's deferred compensation account any payments made to the Participant
or to his or her beneficiary.
Article 7. Beneficiary Designation
Each Participant shall designate a beneficiary or beneficiaries who, upon
the Participant's death, will receive the amounts that otherwise would have been
paid to the Participant under the Plan. All designations shall be signed by the
Participant, and shall be in such form as prescribed by the Board. Each
designation shall be effective as of the date delivered to a Company employee so
designated by the Board.
Participants may change their designations of beneficiary on such form as
prescribed by the Board. The payment of amounts deferred under the Plan shall be
in accordance with the last unrevoked written designation of beneficiary that
has been signed by the Participant and delivered by the Participant to the
designated employee prior to the Participant's death.
In the event that all the beneficiaries named by a Participant pursuant to
this Article 7 predecease the Participant, the deferred amounts that would have
been paid to the Participant or the Participant's beneficiaries under the Plan
shall be paid to the Participant's estate.
In the event a Participant does not designate a beneficiary, or for any
reason such designation is ineffective, in whole or in part, the amounts that
otherwise would have been paid to the Participant or the Participant's
beneficiaries under the Plan shall be paid to the Participant's estate.
Article 8. Rights of Participants
8.1 Contractual Obligation. The Plan shall create a contractual obligation
on the part of the Company to make payments from the Participants' accounts when
due. Payment of account balances shall be made out of the general funds of the
Company.
8.2 Unfunded Plan. The Plan constitutes an unfunded, unsecured promise of
the Company to make payments in the future of the amounts deferred under the
Plan and is
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intended to constitute a nonqualified deferred compensation plan which is
unfunded for tax purposes and for the purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended. Nothing contained in the
Plan and no action taken pursuant to the provisions of the Plan shall create, or
be construed to create, a trust of any kind, a fiduciary relationship between
the Company and any Director or any other person. No special or separate fund
shall be established or other segregation of assets made to assure payment of
deferred amounts hereunder. No Director or any other person shall have any
preferred claim on, or beneficial ownership interest in, any assets of the
Company prior to the time that deferred amounts are paid to the Director as
provided herein. The rights of a Director to receive benefits from the Company
shall be no greater than any general unsecured creditor of the Company.
8.3 Service as a Director. Neither the establishment of the Plan, nor any
action taken hereunder, shall in any way obligate (i) the Company to nominate a
Director for reelection or to continue to retain a Director; or (ii) a Director
to agree to be nominated for reelection or to continue to serve on the Board.
Article 9. Amendment and Termination
The Company hereby reserves the right to amend, modify, or terminate the
Plan at any time by action of the Board. No such amendment or termination shall
in any material manner adversely affect any Participant's rights to deferred
amounts or interest earned thereon, without the consent of the Participant.
Article 10. Miscellaneous
10.1 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing and hand delivered, or
sent by registered or certified mail to the Plan Administrator. Such notice, if
mailed, shall be addressed to the principal executive offices of the Company.
Notice mailed to a Participant shall be at such address as is given in the
records of the Company. Notices shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
10.2 Successors. All obligations of the Company under the Plan shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the
Company.
10.3 Nontransferability. Participants' rights to deferred amounts,
contributions, and investment return earned thereon under the Plan may not be
sold, transferred, assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. In no event shall the
Company make any payment under the Plan to any assignee or creditor of a
Participant.
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10.4 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
10.5 Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.
10.6 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.
10.7 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the state of Delaware without giving effect to any
choice or conflict of law provision or rule.
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