<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998
REGISTRATION NO. 333-53433
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IDG BOOKS WORLDWIDE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2731 04-3078409
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
919 E. HILLSDALE BLVD., SUITE 400
FOSTER CITY, CA 94404
(650) 655-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN J. KILCULLEN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
IDG BOOKS WORLDWIDE, INC.
919 E. HILLSDALE BLVD., SUITE 400
FOSTER CITY, CA 94404
(650) 655-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALAN K. AUSTIN, ESQ. WINTHROP B. CONRAD, JR., ESQ.
BRIAN C. ERB, ESQ. DAVIS POLK & WARDWELL
WILSON SONSINI GOODRICH & ROSATI 450 LEXINGTON AVENUE
PROFESSIONAL CORPORATION NEW YORK, NY 10017
650 PAGE MILL ROAD (212) 450-4000
PALO ALTO, CA 94304-1050
(650) 493-9300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
- ------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
- ------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of common stock being registered. All amounts are estimates except
the Securities and Exchange Commission registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Securities and Exchange Commission registration fee......... $ 17,800
NASD filing fee............................................. 6,535
Nasdaq National Market listing fee.......................... 90,500
Printing and engraving expenses............................. 305,000
Legal fees and expenses..................................... 536,800
Accounting fees and expenses................................ 500,000
Blue Sky fees and expenses.................................. 5,000
Transfer agent fees......................................... 10,000
Miscellaneous............................................... 333,365
----------
Total............................................. $1,805,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.1 of the Registrant's Bylaws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
provides for such limitation of liability.
The Registrant intends to obtain directors, and officers, insurance
providing indemnification for certain of the Registrant's directors, officers
and employees for certain liabilities.
Reference is also made to Section 7 of the Underwriting Agreement to be
filed as Exhibit 1.1 to the Registration Statement for information concerning
the underwriters' obligation to indemnify the Registrant and its officers and
directors in certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On March 30, 1998, the Registrant issued 11,100,000 shares of its common
stock to IDG Enterprises, Inc., an indirect, wholly-owned subsidiary of
International Data Group, Inc., in return for all of the issued and
II-1
<PAGE> 3
outstanding capital stock of IDG Books Worldwide, Inc., a Massachusetts company
and the predecessor to the Registrant. The shares were issued in a private
placement in reliance on Section 4(2) of the Securities Act.
On May 6, 1998, the Registrant issued options to purchase 1,500,900 shares
of common stock to approximately 440 current employees of the Company at an
exercise price of $11.88 per share. The options were issued pursuant to Rule 701
of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1.1+ Form of Underwriting Agreement.
3.1+ Amended and Restated Certificate of Incorporation of the
Registrant.
3.2+ Bylaws of the Registrant.
4.1+ Form of Registrant's Class A common stock certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding the legality of the securities being
issued.
10.1 Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2+ 1998 Stock Plan and forms of related agreements.
10.3+ 1998 Employee Stock Purchase Plan.
10.4+ Employment Agreement between the Registrant and John J.
Kilcullen dated as of July 1, 1998.
10.5+ Employment Agreement between the Registrant and Steven H.
Berkowitz dated as of July 1, 1998.
10.6+ Compensation Agreement between the Registrant and John P.
Ball dated as of July 1, 1998.
10.7+ Compensation Agreement between the Registrant and James A.
Doehrman dated as of July 1, 1998.
10.8+ Compensation Agreement between the Registrant and Brenda L.
McLaughlin dated as of July 1, 1998.
10.9+ Corporate Services Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.10+ Registration Rights Agreement between the Registrant and IDG
Enterprises, Inc. dated as of June 1, 1998.
10.11+ Trademark License Agreement between the Registrant and IDG
dated June 1, 1998.
10.12+ Non-competition Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.13+ Tax Allocation Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.14 Restated Share Exchange Agreement between the Registrant,
IDG, IDG Enterprises, Inc. and State Street Bank and Trust
Company dated May 21, 1998.
10.15 Employee Stock Ownership Plan of Registrant effective as of
October 1, 1997.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2+ Consent and Report on Schedule of Deloitte & Touche LLP,
independent auditors.
24.1+ Power of Attorney.
27.1+ Financial Data Schedule.
27.2+ Financial Data Schedule.
</TABLE>
- ---------------
+ Previously filed.
(b)Financial Statement Schedule
Schedule II--Valuation and Qualifying Accounts.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
II-2
<PAGE> 4
ITEM 17. UNDERTAKINGS
(a) The undersigned hereby undertakes to provide to the underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereunder, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Foster City, State of California, on this 22nd day of July, 1998.
IDG Books Worldwide, Inc.
By: /s/ JOHN J. KILCULLEN
------------------------------------
John J. Kilcullen
Chairman of the Board and
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ JOHN J. KILCULLEN Chairman of the Board and July 22, 1998
- -------------------------------------------------------- Chief Executive Officer
John J. Kilcullen (Principal Executive Officer)
* President and Publisher July 22, 1998
- -------------------------------------------------------- (Principal Financial Officer)
Steven H. Berkowitz
* Vice President and Chief July 22, 1998
- -------------------------------------------------------- Financial Officer (Principal
James A. Doehrman Accounting Officer)
* Director July 22, 1998
- --------------------------------------------------------
Patrick J. McGovern
* Director July 22, 1998
- --------------------------------------------------------
James A. Casella
*By: /s/ JOHN J. KILCULLEN
---------------------------------------------------
John J. Kilcullen
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<S> <C> <C>
1.1+ Form of Underwriting Agreement.
3.1+ Amended and Restated Certificate of Incorporation of the
Registrant.
3.2+ Bylaws of the Registrant.
4.1+ Form of Registrant's Class A common stock certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding the legality of the securities being
issued.
10.1 Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2+ 1998 Stock Plan and forms of related agreements.
10.3+ 1998 Employee Stock Purchase Plan.
10.4+ Employment Agreement between the Registrant and John J.
Kilcullen dated as of July 1, 1998.
10.5+ Employment Agreement between the Registrant and Steven H.
Berkowitz dated as of July 1, 1998.
10.6+ Compensation Agreement between the Registrant and John P.
Ball dated as of July 1, 1998.
10.7+ Compensation Agreement between the Registrant and James A.
Doehrman dated as of July 1, 1998.
10.8+ Compensation Agreement between the Registrant and Brenda L.
McLaughlin dated as of July 1, 1998.
10.9+ Corporate Services Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.10+ Registration Rights Agreement between the Registrant and IDG
Enterprises, Inc. dated as of June 1, 1998.
10.11+ Trademark License Agreement between the Registrant and IDG
dated June 1, 1998.
10.12+ Non-competition Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.13+ Tax Allocation Agreement between the Registrant and IDG
dated as of June 1, 1998.
10.14 Restated Share Exchange Agreement between the Registrant,
IDG, IDG Enterprises, Inc. and State Street Bank and Trust
Company dated May 21, 1998.
10.15 Employee Stock Ownership Plan of Registrant effective as of
October 1, 1997.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2+ Consent and Report on Schedule of Deloitte & Touche LLP,
independent auditors.
24.1+ Power of Attorney.
27.1+ Financial Data Schedule.
27.2+ Financial Data Schedule.
</TABLE>
- ---------------
+ Previously filed.
<PAGE> 1
EXHIBIT 5.1
July 22, 1998
IDG Books Worldwide, Inc.
919 E. Hillsdale Blvd.
Suite 400
Foster City, CA 94404
RE: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 filed by you
with the Securities and Exchange Commission on May 22, 1998 (Registration No.
333-53433), as amended (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of up to 3,657,000
shares of your Class A Common Stock (the "Shares"), including an over-allotment
option granted to the underwriters of the offering to purchase up to 477,000
shares. We understand that you are selling the Shares to the underwriters for
resale to the public as described in the Registration Statement. As your legal
counsel, we have examined the proceedings taken, and are familiar with the
proceedings proposed to be taken, by you in connection with the sale and
issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken
or proposed to be taken by us, as your legal counsel, prior to the issuance of
the Shares, the Shares will be legally issued, fully paid and non-assessable
when sold in the manner described in the Registration Statement.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati, P.C.
------------------------------------------
<PAGE> 1
EXHIBIT 10.1
IDG BOOKS WORLDWIDE, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this ___ day
of ____, 1998, by and between IDG Books Worldwide, Inc., a Delaware corporation
(the "Company"), and _________________________ ("Indemnitee").
WHEREAS the Company and Indemnitee recognize the increasing difficulty
in obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and
WHEREAS the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, in consideration for Indemnitee's services as an officer
or director of the Company, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or any
alternative dispute resolution mechanism, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) actually and reasonably incurred by Indemnitee in
connection with such action, suit or proceeding if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that Indemnitee's conduct
was unlawful.
<PAGE> 2
(b) Proceedings By or in the Right of the Company. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement actually and reasonably incurred by Indemnitee
in connection with the defense or settlement of such action or suit if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company unless and
only to the extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection afforded by
this Agreement, if Indemnitee is a director of the Company he agrees to serve at
least for the six months after the effective date of this Agreement as a
director and not to resign voluntarily during such period without the written
consent of a majority of the Board of Directors. If Indemnitee is an officer of
the Company not serving under an employment contract, he agrees to serve in such
capacity at least for the balance of the current fiscal year of the Company and
not to resign voluntarily during such period without the written consent of a
majority of the Board of Directors. Following the applicable period set forth
above, Indemnitee agrees to continue to serve in such capacity at the will of
the Company (or under separate agreement, if such agreement exists) so long as
he is duly appointed or elected and qualified in accordance with the applicable
provisions of the Bylaws of the Company or any subsidiary of the Company or
until such time as he tenders his resignation in writing. Nothing contained in
this Agreement is intended to create in Indemnitee any right to continued
employment.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all
expenses incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action, suit or proceeding
referenced in Section 1(a) or (b) hereof (but not amounts actually
-2-
<PAGE> 3
paid in settlement of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby. The advances to be made hereunder shall be
paid by the Company to Indemnitee within thirty (30) days following delivery of
a written request therefor by Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the President of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three business days after the date postmarked if sent
by domestic certified or registered mail, properly addressed, five business days
if sent by airmail to a country outside of North America; otherwise notice shall
be deemed received when such notice shall actually be received by the Company.
In addition, Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 14 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee
shall be entitled to receive interim payments of expenses pursuant to Subsection
3(a) unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including it Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
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<PAGE> 4
(d) Notice to Insurers. If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of
the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ his counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested Directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken
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<PAGE> 5
while serving in an indemnified capacity even though he may have ceased to serve
in such capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
7. Officer and Director Liability Insurance. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
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<PAGE> 6
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company.
(d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that if Indemnitee is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an
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<PAGE> 7
employee benefit plan, its participants, or beneficiaries; and if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan,
Indemnitee shall be deemed to have acted in a manner "not opposed to the best
interests of the Company" as referred to in this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.
16. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware, as
applied to contracts between Delaware residents entered into and to be performed
entirely within Delaware without regard to the conflict of law principles
thereof.
17. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs,
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<PAGE> 8
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period; provided,
however, that if any shorter period of limitations is otherwise applicable to
any such cause of action, such shorter period shall govern.
18. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
IDG BOOKS WORLDWIDE, INC.
By:
------------------------------------------
Its:
-----------------------------------------
Address: 919 E. Hillsdale Blvd., Suite 400
Foster City, CA 94404
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<PAGE> 10
AGREED TO AND ACCEPTED:
INDEMNITEE:
- --------------------------------
- --------------------------------
(signature)
Address:
-------------------------
-------------------------
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<PAGE> 1
EXHIBIT 10.14
RESTATED SHARE EXCHANGE AGREEMENT
This Agreement is dated as of May 21, 1998 (as restated as of July 9,
1998, effective as of May 21, 1998) and is by and among IDG Books Worldwide,
Inc., a Delaware corporation (the "Company"), IDG Enterprises, Inc., a Delaware
corporation ("Enterprises"), International Data Group, Inc., a Massachusetts
corporation ("IDG"), and State Street Bank and Trust Company, not in its
individual or corporate capacities but solely in its capacity as trustee (the
"Trustee") of the IDG Books Worldwide, Inc. Employee Stock Ownership Trust (the
"Trust"), which implements and forms a part of the IDG Books Worldwide, Inc.
Employee Stock Ownership Plan (the "Plan").
PRELIMINARY STATEMENT
The Trust owns 1619.1 shares of the Class A common stock, $.01 par value,
of IDG (the "IDG Shares"). Subject to the terms and conditions of this
Agreement, the Trust will deliver the IDG Shares to Enterprises in exchange for
(a) the sum of $12,896, and (b) 394,251 shares (the "Company Shares") of the
Class B common stock, $.001 par value, of the Company (the "Class B Common
Stock").
AGREEMENTS
1. Exchange of Shares
1.1 Transfer of IDG Shares. The Trust hereby transfers and assigns to
Enterprises all of the IDG Shares, and hereby delivers to Enterprises
certificate no. 196 representing the IDG
<PAGE> 2
Shares, accompanied by a duly executed stock power providing for the transfer of
the IDG Shares to Enterprises.
1.2 Transfer of Company Shares. Enterprises hereby transfers and assigns
to the Trust all of the Company Shares, and hereby delivers to the Trust a check
in the amount of $12,896 and certificate no. CB-2 representing the Company
Shares.
2. Representations and Warranties of the Company
The Company hereby represents and warrants to the Trust as follows:
2.1 Corporate Organization and Good Standing of the Company. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as such business is now being conducted.
2.2 Capitalization. The Company's authorized capital stock consists of
25,000,000 shares of Class A common stock, $.001 par value (the "Class A Common
Stock") and 400,000 shares of Class B Common Stock, of which immediately prior
to the transactions contemplated hereby 10,705,749 shares of Class A Common
Stock and 394,251 shares of Class B Common Stock were issued, outstanding and
held of record by Enterprises. All of such shares, including the Company Shares,
have been duly authorized and validly issued and are fully paid and
non-assessable, and (assuming the accuracy of the representations and warranties
of IDG and Enterprises contained in section 3.2 hereof) the delivery of the
Company Shares to the Trust pursuant to this Agreement will convey to the Trust
indefeasible title thereto. Except for options issued to employees of the
Company for the purchase of an aggregate of not exceeding 1,700,000 shares of
Class A Common Stock, there are no outstanding options, warrants or other rights
to subscribe for or purchase, or securities convertible into or exchangeable
for, shares of the Company's capital stock, and there are no agreements,
arrangements or understandings to which
<PAGE> 3
the Company is a party or by which it is bound pursuant to which the Company is
or may be required to issue or sell additional shares of its capital stock.
2.3 Authority. The Company has all requisite corporate power and
authority to enter into, deliver and perform this Agreement and to consummate
the transactions contemplated herein. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes its valid and binding obligation, enforceable against the Company in
accordance with its terms except as the same may be limited by the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), or by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally, now or hereafter in effect, and subject to the availability of
equitable remedies.
2.4 No Conflicts. The execution, delivery and performance of this
Agreement by the Company, and the consummation of the transactions contemplated
herein, do not and will not (a) require the consent, approval, authorization,
order, filing, registration or qualification of or with any court, governmental
authority or third person which has not been obtained, (b) conflict with or
result in any violation of or default under any provision of the Amended and
Restated Certificate of Incorporation or By-laws of the Company, or any material
mortgage, indenture, lease, agreement or other material instrument, permit,
concession, grant, franchise or license to which the Company is a party or by
which it or its properties are bound, (c) violate any law, ordinance, rule,
regulation, judgment, order or decree applicable to the Company, or (d) result
in the creation of any security interest, claim, lien, charge or encumbrance
upon any of the Company Shares.
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<PAGE> 4
2.5 ESOP Plan and Trust. The Plan and the Trust have been duly adopted,
and the Trustee has been duly appointed as trustee of the Trust, by all
necessary action on the part of the Company. The Plan and Trust are designed to
be in compliance with applicable provisions of ERISA, and the Company is not
aware of any respects in which the Plan and Trust are not in compliance
therewith.
2.6 Employer Securities. The Company Shares will constitute "employer
securities" within the meaning of Section 409(l) of the Internal Revenue Code of
1986, as amended (the "Code").
3. Representations and Warranties of Enterprises and IDG.
IDG and Enterprises hereby jointly and severally represent and warrant to
the Trust as follows:
3.1 Corporate Organization and Good Standing of Enterprises. Enterprises
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as such business is now being conducted.
3.2 Title to Stock. Enterprises has not caused any pledge, lien,
security interest, encumbrance, restriction on transfer or other defect to be
imposed on the Company Shares. Upon delivery of the Company Shares to the Trust
in accordance with this Agreement, the Trust will have indefeasible title to the
Company Shares.
3.3 Capitalization of IDG. IDG's authorized capital stock consists of
1,000,000 shares of Class A voting common stock, $.01 par value, of which
512,476 shares are presently issued and outstanding, and 1,000,000 shares of
Class B non-voting common stock, $.01 par value, of which no shares are
presently issued or outstanding. Except for outstanding options under which
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<PAGE> 5
IDG is required to purchase, and the optionees are required to sell, all shares
as to which such options are exercised, there are no outstanding options,
warrants or other rights to subscribe for or purchase, or securities convertible
into or exchangeable for, shares of IDG's capital stock, and there are no
agreements, arrangements or understandings to which IDG is a party or by which
it is bound pursuant to which IDG is or may be required to issue or sell
additional shares of its capital stock.
3.4 Necessary Authority. Enterprises and IDG have all requisite power
and authority to enter into, deliver and perform this Agreement and to
consummate the transactions contemplated herein. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary action on the
part of Enterprises and IDG. This Agreement has been duly executed and delivered
by Enterprises and IDG and constitutes the valid and legally binding obli-
gation of each corporation, enforceable against each corporation in accordance
with its terms except as the same may be limited by ERISA or by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally, now or hereafter in effect, and subject to the availability of
equitable remedies.
3.5 No Conflicts. The execution, delivery and performance of this
Agreement by Enterprises and IDG, and the consummation by each of the
transactions contemplated herein, do not and will not (a) require the consent,
approval, authorization, order, filing, registration or qualification of or with
any court, governmental authority or third person which has not been obtained,
(b) conflict with or result in any violation of or default under, any provision
of the Certificate of Incorporation or By-laws of Enterprises, the Articles of
Organization or By-laws of IDG, or any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise or license to which
Enterprises or IDG is a party or by which either corporation or its properties
are bound, (c) violate any law,
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<PAGE> 6
ordinance, rule, regulation, judgment, order or decree applicable to Enterprises
or IDG, or (d) result in the creation of any security interest, claim, lien,
charge or encumbrance upon any of the Company Shares.
4. Representations and Warranties of the Trust.
The Trustee, on behalf of the Trust, hereby represents and warrants to the
Company and to Enterprises as follows:
4.1 Title to the IDG Shares. The Trustee has not caused any pledge,
lien, security interest, encumbrance or restriction on transfer or other defect
in title to be imposed on the IDG Shares.
4.2 Necessary Authority. The Trustee, on behalf of the Trust, has full
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Trustee, on behalf of the Trust, and constitutes
the legal, valid and binding obligation of the Trust, enforceable against the
Trust in accordance with its terms, except as the same may be limited by ERISA
or by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally, now or hereinafter in effect, and
subject to the availability of equitable remedies.
4.3 No Conflicts. The execution, delivery and performance of this
Agreement by the Trustee, on behalf of the Trust, and the consummation of the
transactions contemplated herein, do not and will not (a) require the consent or
approval of, or filing with, any person or public authority, or (b) constitute
or result in a breach of any provision of the Plan, the Trust, or any other
agreement or arrangement to which the Trust is a party or by which it or its
properties are bound.
4.4 Valuation Opinion. The Trustee has received an opinion of Marshall &
Stevens dated as of the date of this Agreement to the effect that (a) the
consideration to be received by the Trust in exchange for the IDG Shares is no
less than the fair market value, within the meaning of Section
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<PAGE> 7
3(18)(B) of ERISA, of the IDG Shares, and (b) the exchange transaction provided
for herein is fair to the Trust from a financial point of view.
5. Agreements Relating to IPO.
The Company acknowledges that, as soon as practicable after the date
hereof, it intends to file a registration statement under the Securities Act of
1933, as amended (the "Act"), providing for an offering to the public of shares
of its authorized and unissued Class A Common Stock (the "IPO"). The parties
hereto hereby agree that, on and as of the date of the closing of the IPO (the
"IPO Closing Date"), the Trustee will transfer and assign all of the Company
Shares to Enterprises, and Enterprises shall transfer and assign to the Trust
such number of shares of Class A Common Stock held by it as shall equal the
number of Company Shares. Such transfer by the Trustee shall take place in two
installments as follows: (a) the first installment shall consist of the transfer
to Enterprises of 194,251 Company Shares in exchange for a like number of shares
of the Class A Common Stock held by Enterprises; and (b) the second installment
(i) shall occur immediately after the conversion by Enterprises of the aforesaid
194,251 Company Shares to Class A Common Stock pursuant to the terms of the
Company's certificate of incorporation, and (ii) shall consist of the transfer
by the Trustee of the 200,000-share balance of Company Shares in exchange for a
like number of the shares of Class A Common Stock held by Enterprises. The
parties hereto agree to execute and deliver such documents and take such other
action, including without limitation the delivery of certificates and stock
powers, as shall be necessary to carry out the provisions of this section 5. For
purposes of section 6 of this Agreement: the term "Company Shares" as applied to
periods prior to the IPO Closing Date shall mean the shares of Class B Common
Stock transferred by Enterprises to the Trust pursuant to this Agreement; and
the term "Company Shares" as applied to periods from and after the IPO Closing
Date shall mean the shares of Class A Common Stock transferred by Enterprises to
the Trust pursuant to this section 5.
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<PAGE> 8
6. Certain Covenants of the Company.
6.1 Valuation of Company Shares Prior to IPO Closing Date. The Company
acknowledges and agrees that, prior to the IPO Closing Date, so long as any
Company Shares are held by the Trust and the Class B Common Stock is not
eligible for trading in an established securities market, the Company Shares
will be appraised by an independent appraiser, as defined in Section 401(a)(28)
of the Code, at least once each Plan year, as required by Article I, paragraph
(x), of the Plan (the "Annual Appraisal").
6.2 Repurchase Obligation. The Company acknowledges and agrees that,
subsequent to the IPO Closing Date, the Company will purchase Company Shares
distributed to beneficiaries of the Trust if, and to the extent and on terms as,
required by any beneficiary put option that may hereafter be included in the
Plan.
6.3 Purchase of Shares from the Trustee. Within 90 days of the date of
this Agreement, the Company and IDG agree to enter into an agreement or
undertaking with the Trustee pursuant to which: (a) IDG will, during the period
prior to the IPO Closing Date, purchase Company Shares at no less than the value
ascribed to them as set forth in the opinion of Marshall & Stevens referred to
in Section 4.4 hereof or, after the first Annual Appraisal has been completed,
at no less than the value ascribed to them in the most recent Annual Appraisal,
as applicable, in the event that the Trustee offers Company Shares to IDG in the
exercise of its fiduciary duty as trustee of the Trust; (b) during the period
commencing 180 days after the IPO Closing Date, and until the first anniversary
of the IPO Closing Date, in the event that the Trustee requests the Company to
do so in the exercise of its fiduciary duty as trustee of the Trust, the Company
shall register under the Act such Company Shares as the Trustee shall request be
so registered, as soon as practicable after any such request, or, in the event
of the failure or refusal of the Company so to register such Company Shares as
aforesaid, the Company shall
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<PAGE> 9
purchase such Company Shares from the Trustee at their then current market
value; and (c) the Company shall register Company Shares under the Act as soon
as practicable after any request by the Trustee for such registration delivered
to the Company in writing at any time after the first anniversary of the IPO
Closing Date.
7. General
7.1 Notices. All notices or other communications given or made hereunder
shall be duly given when received if delivered in person or by facsimile or by
registered or certified mail, return receipt requested, postage prepaid, to any
party at the address for such party set forth on the signature page of this
Agreement, or such other address as the party to whom notice is to be given has
previously furnished in writing to the notifying party in the manner set forth
above.
7.2 Entire Agreement. Other than the engagement agreement between the
Company and the Trustee dated May 6, 1998, and the Share Exchange Agreement
dated as of May 21, 1998 of which this Agreement is a restatement, this
Agreement constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings, oral or written, between the parties hereto with
respect to such subject matter.
7.3 Governing Law. Except to the extent that ERISA applies, this
Agreement shall be construed in accordance with and governed by the internal
laws of The Commonwealth of Massachusetts applicable to contracts made and
performed in The Commonwealth of Massachusetts.
7.4 Headings. The section, paragraph and other headings contained in
this Agreement are for reference only and shall not be deemed to be a part of
this Agreement or to affect the meaning or interpretation of this Agreement.
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<PAGE> 10
7.5 Assignment. Neither this Agreement nor any interest herein or right
or obligation hereunder may be assigned by the Company or by the Trust in any
manner, by operation of law or otherwise, without the prior written consent of
the other party.
7.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
7.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or the application
thereof to any person or under any circumstances, shall be invalid or
unenforceable to any extent under applicable law, and the extent of such
invalidity or unenforceability does not destroy the basis for the bargain among
the parties as expressed herein, then such provision shall be deemed severed
from this Agreement with respect to such person or such circumstance and without
invalidating the remainder of this Agreement with respect to such person or such
circumstance, without invalidating the remainder of this Agreement or the
application of such provision to other persons or circumstances, and a new
provision shall be automatically substituted in lieu of the provision so
severed, which new provision shall be as similar in terms to the invalid or
unenforceable provision as possible.
7.8 Amendment. This Agreement may be amended only by an instrument in
writing executed on behalf of all of the parties hereto.
7.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
instrument.
[Balance of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Restated Share Exchange
Agreement to be executed on and as of July 9, 1998, effective as of May 21,
1998.
IDG BOOKS WORLDWIDE, INC. STATE STREET BANK AND TRUST
COMPANY, as Trustee
By__________________________________ By_______________________________________
Title: Exec. Vice President Title: Vice President
Address: Address:
919 East Hillsdale Blvd. John Marshall Building
Suite 400 Battery March Park,
Foster City, CA 94404 3 Pine Hill Dr.
Fax No.: 650-655-3072 Quincy, MA 02169
Fax No.: 617-376-7313
IDG ENTERPRISES, INC. INTERNATIONAL DATA GROUP, INC.
By__________________________________ By_______________________________________
Title: Vice President Title: Vice President
Address: Address:
c/o International Data One Exeter Plaza
Group, Inc. Boston, MA 02116
One Exeter Plaza Fax No.: 617-262-3636
Boston, MA 02116
Fax No.: 617-262-3636
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<PAGE> 1
EXHIBIT 10.15
IDG BOOKS WORLDWIDE, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
The International Data Group Books Worldwide, Inc. Employee Stock Ownership
Plan is made and entered into this _____ day of May, 1998, but is effective for
all purposes as of October 1, 1997, except as may be otherwise provided herein,
by IDG Books Worldwide, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has heretofore been a participating employer in the
International Data Group, Inc. Employee Stock Ownership Plan; and
WHEREAS, the Company desires to cover its eligible employees under a
separate plan; and
WHEREAS, the officers of the Company have been authorized and directed by
the Board of Directors of the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
ARTICLE I
DEFINITIONS
(a) "ACCOUNT" or "ACCOUNTS" shall mean, as required by the context, the
entire amount held from time to time for the benefit of any one Participant, or
the portion thereof attributable to a Participant's Employer Securities Account
and/or Other Investments Account.
(b) "ADMINISTRATOR" shall mean the Plan Administrator.
(c) "AFFILIATE" shall mean, with respect to an Employer, any corporation
other than such Employer that is a member of a controlled group of corporations,
within the meaning of Section 414(b) of the Code, of which such Employer is a
member; all other trades or businesses (whether or not incorporated) under
common control, within the meaning of Section 414(c) of the Code, with such
Employer; and any service organization other than such Employer that is a member
of an affiliated service group, within the meaning of Section 414(m) of the
Code, of which such Employer is a member; and any other organization that is
required to be aggregated with such Employer under Section 414(o) of the Code.
For purposes of determining the limitations on Annual Additions, the special
rules of Section 415(h) of the Code shall apply.
(d) "AGREEMENT AND DECLARATION OF TRUST" shall mean the agreement providing
for the Trust Fund, as it may be amended from time to time.
<PAGE> 2
(e) (1)"ANNUAL ADDITIONS" shall mean the sum of:
(A) the amount of Employer contributions (including elective
contributions other than amounts distributed as "excess deferrals" in
accordance with Treasury Regulation Section 1.402(g)-1(e)(2) or (3))
allocated to the Participant under any defined contribution plan
maintained by an Employer or an Affiliate;
(B) the amount of the Employee's contributions (other than
rollover contributions, if any) to any contributory defined
contribution plan maintained by an Employer or an Affiliate;
(C) except as provided in subparagraph (2), any forfeitures
separately allocated to the Participant under any defined contribution
plan maintained by an Employer or an Affiliate; and
(D) if the Participant is a Key Employee, to the extent required
by law, any contributions allocated to any individual account on
behalf of such Participant under Section 401(h) or Section 419A(d) of
the Code.
(2) The amount of any Employer contribution allocated to a Participant
for purposes of subparagraph (1)(A), if such contribution is used to repay
a loan for the purchase of Employer Securities, shall be equal to the
Participant's share of the repayment, and not to the value of Employer
Securities released from a suspense account and allocated to such
Participant's Employer Securities Account as a result of such repayment. If
no more than one-third of an Employer's contributions for a Plan Year that
are used to repay a loan for the purchase of Employer Securities are
allocated to Highly Compensated Employees, the Annual Additions for such
Plan Year shall not include
(A) forfeitures of Employer Securities that were acquired with
the proceeds of a loan, and
(B) amounts used to pay interest on a loan used for the purchase
of Employer Securities.
(f) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors of
the Company or, when required by the context, the board of directors of an
Employer other than the Company.
(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute. Reference to a specific section of the Code shall include a
reference to any successor provision.
(h) "COMPANY" shall mean IDG Books Worldwide, Inc. and its successors.
2.
<PAGE> 3
(i) (1) "COMPENSATION" shall mean the regular salaries and wages, bonuses,
commissions, and overtime pay paid by an Employer during a Plan Year, as
well as elective contributions made on behalf of a Participant to the
International Data Group, Inc. 401(k) Plan or to any cafeteria plan
maintained by an Employer pursuant to Section 125 of the Code, but shall
not include third party disability payments, tax deferred stock options,
relocation expense payments, credits or benefits under this Plan, any
amount contributed to any other employee stock ownership, pension (other
than elective contributions), employee welfare, life insurance or health
insurance plan or arrangement, or any other tax-favored fringe benefits.
(2) No Compensation in excess of $160,000 (adjusted by the
Commissioner of the Internal Revenue Service in accordance with Section
401(a)(17)(B) of the Code) shall be taken into account for any Employee.
(j) "DIRECT ROLLOVER" shall mean a payment of an Eligible Rollover
Distribution by the Plan to an Eligible Retirement Plan specified by the
Distributee.
(k) (1) "DISABILITY (STANDARD)" shall mean the total and permanent
incapacity of a Participant to perform the usual duties of his employment
with his Employer and shall be deemed to have occurred only when certified
by a physician who is acceptable to the Plan Administrator and only if such
proof is received by the Administrator within sixty (60) days after the
date of the termination of such Participant's employment.
(2) "DISABILITY (SOCIAL SECURITY)" shall mean a Participant's total
and permanent disability if such Participant is also entitled to receive
and is receiving disability benefits under the Social Security Act as a
result of such total and permanent disability.
(3) Unless otherwise specified, the term "DISABILITY" shall mean
either Disability (Standard) or Disability (Social Security), as the case
may be.
(l) "DISTRIBUTEE" shall mean
(1) a Participant, or former Participant, who is entitled to benefits
payable as a result of his retirement, Disability or other severance of
employment as provided under the terms of this Plan,
(2) a Participant's, or former Participant's, surviving Eligible
Spouse who is entitled to death benefits payable under the terms of this
Plan, and
(3) a Participant's, or former Participant's, spouse or former spouse
who is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, entitled to benefits payable as
provided under the terms of this Plan.
3.
<PAGE> 4
(m) (1) "DIVERSIFICATION ELECTION PERIOD (REQUIRED)" shall mean the six
Plan Year period beginning with the later of
(A) the Plan Year after the Plan Year in which the Participant
attains age 55; and
(B) the Plan Year after the Plan Year in which the Participant
first completes ten (10) years of participation in the Plan.
(2) "DIVERSIFICATION ELECTION PERIOD (IDG BOOKS)" shall mean the
period beginning with the date the sum of a Participant's age and his years
of participation in the Plan equals 60.
(n) (1) "EARLY RETIREMENT DATE (STANDARD)" shall mean the date on which a
Participant has reached the age of 55 years and completed 25 Years of
Service.
(2) "EARLY RETIREMENT DATE (RULE OF 75)" shall mean the date on which
the sum of a Participant's age and his Years of Service equals 75.
(3) Unless otherwise specified, the term "EARLY RETIREMENT DATE" shall
mean either Early Retirement Date (Standard) or Early Retirement Date (Rule
of 75), as the case may be.
(o) "EARNINGS" shall mean, with respect to a Valuation Period, the
aggregate of the unrealized appreciation or depreciation accruing to the Trust
Fund during such a period; and the income earned or the loss sustained by the
Trust Fund during such period, whether from investments or from the sale or
exchange of assets.
(p) "EFFECTIVE DATE" shall mean October 1, 1997, except as otherwise
provided herein.
(q) "ELIGIBLE RETIREMENT PLAN" shall mean an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts a Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to a Participant's, or former
Participant's, surviving Eligible Spouse who is entitled to death benefits
payable under the terms of the Plan, an Eligible Retirement Plan shall mean an
individual retirement account or individual retirement annuity.
(r) "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean any distribution of all or
any portion of the balance to the credit of a Distributee, other than:
(1) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
4.
<PAGE> 5
(A) for the life (or life expectancy) of the Distributee, or the
joint lives (or life expectancies) of the Distributee and the
Distributee's designated beneficiary, or
(B) for a specified period of ten years or more;
(2) any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Notwithstanding the preceding provisions of this paragraph (r), an Eligible
Rollover Distribution shall not include one or more distributions during a Plan
Year if the aggregate amount distributed during the Year is less than $200
(adjusted under such regulations as may be issued from time to time by the
Secretary of the Treasury).
(s) "EMPLOYEE" shall mean any person employed by an Employer or an
Affiliate other than:
(1) a member of a collective bargaining unit if retirement benefits
were a subject of good faith bargaining between such unit and an Employer,
and
(2) a non-resident alien who does not receive earned income from
sources within the United States.
The term "Employee" shall also include any individual required to be treated as
an Employee by reason of Section 414(n) or Section 414(o) of the Code (but only
for the purposes specified in such Sections).
(t) "EMPLOYER" shall mean the Company and any other subsidiary, related
corporation, or other entity that adopts this Plan with the consent of the
Company.
(u) "EMPLOYER SECURITIES" shall mean common stock, any other type of stock
or any marketable obligation (as defined in Section 407(e) of ERISA) issued by
the Company or any Affiliate of the Company; provided, however, that if Employer
Securities are purchased with borrowed funds, Employer Securities, to the extent
required by Section 4975 of the Code, shall only include
(1) such securities that are readily tradable on an established
securities market, or
(2) if none of the stock of an Employer (or an Affiliate of such
Employer other than a member of an affiliated service group that includes
such Employer) is publicly tradable on an established securities market,
common stock issued by the Employer having a
5.
<PAGE> 6
combination of voting power and dividend rights equal to or in excess of
(A) that class of common stock of the Employer or any Affiliate having the
greatest voting power, and (B) that class of common stock of the Employer
or any Affiliate having the greatest dividend rights, or
(3) noncallable preferred stock that is convertible at any time into
stock meeting the requirements of subparagraph (1) or (2) (whichever is
applicable), if such conversion is at a reasonable price (determined
pursuant to Treasury Regulation Section 54.4975-11(d)(5) as of the date of
acquisition by the Trustee).
(v) "EMPLOYER SECURITIES ACCOUNT" shall mean an account established
pursuant to Article VII(b) with respect to Employer contributions invested in
Employer Securities, and adjustments thereto.
(w) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute. References to a specific section of ERISA
shall include references to any successor provisions.
(x) "FAIR MARKET VALUE" shall mean the closing price (or, if there is no
closing price, then the closing bid price) of Employer Securities as reported on
the Composite Tape, or if not reported thereon, then such price as reported in
the trading reports of the principal securities exchange in the United States on
which such Employer Securities are listed, or if the Employer Securities are not
listed on a securities exchange in the United States, the mean between the
dealer closing "bid" and "ask" prices on the over-the-counter market as reported
by the National Association of Securities Dealers Automated Quotation System
(NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market
value of the securities as determined in good faith and based on all relevant
factors; provided, however, that the Fair Market Value of Employer Securities
not readily tradable on an established securities market shall be determined by
an independent appraiser pursuant to Section 401(a)(28)(C) of the Code.
(y) "HARDSHIP" shall mean an immediate and heavy financial need of the
Participant that cannot be met by his other reasonably available financial
resources. An immediate and heavy financial need shall include
(1) expenses of medical care of the Participant or a member of his
family,
(2) expenses related to the purchase or repair of the Participant's
principal residence or payments to prevent the impending foreclosure upon
or eviction from his residence,
(3) expenses related to the education of a member of the Participant's
family, and
6.
<PAGE> 7
(4) solely for purposes of paragraph (a) of Article X, other
substantial financial hardships of a similar nature as determined by the
Administrator in a uniform and nondiscriminatory manner.
(aa) "HIGHLY COMPENSATED EMPLOYEE"
(1) The term "Highly Compensated Employee" shall mean any Employee
who:
(A) was a 5% owner of an Employer at any time during the Plan
Year or the preceding Plan Year; or
(B) for the preceding Plan Year,
(i) had Section 415 Compensation in excess of $80,000
(adjusted under such regulations as may be issued by the
Secretary of the Treasury), and
(ii) if an Employer elects the application of this
subsection (ii) for such preceding Plan Year, was a member of the
"top paid group." As used herein, "top paid group" shall mean all
Employees who are in the top 20% of the Employer's work force on
the basis of Section 415 Compensation paid during the year.
In determining whether an Employee is a Highly Compensated Employee, this
subparagraph (1) shall be treated as having been in effect for Plan Years
beginning after December 31, 1995.
(2) The term "Highly Compensated Employee" shall also mean any former
Employee who separated from service (or was deemed to have separated from
service) prior to the Plan Year, performs no service for an Employer during
the Plan Year, and was an actively employed Highly Compensated Employee in
the separation year or any Plan Year ending on or after the date the
Employee attained age 55.
(bb) "HOUR OF SERVICE" shall mean
(1) (A) an hour for which an Employee is paid, or entitled to payment,
for the performance of duties for an Employer or an Affiliate (but not
hours for which an Employee is paid, or entitled to payment, for the
performance of duties for an Affiliate prior to its becoming
affiliated with an Employer);
(B) an hour for which an Employee is paid, or entitled to
payment, by an Employer or an Affiliate on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), lay-off, jury duty,
military duty or leave of absence. Notwithstanding the preceding,
7.
<PAGE> 8
(i) no more than 501 Hours of Service shall be credited
under this section (B) to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year);
(ii) an hour for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period during which
no duties are performed shall not be credited to the Employee if
such payment is made or due under a plan maintained solely for
the purpose of complying with applicable workmen's compensation,
or unemployment compensation or disability insurance laws; and
(iii) an hour shall not be credited for a payment which
solely reimburses an Employee for medical or medically related
expenses incurred by the Employee; and
(C) an hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or an
Affiliate; provided, however, that the same Hour of Service shall not
be credited both under section (A) or section (B), as the case may be,
and under this section (C). Crediting of an Hour of Service for back
pay awarded or agreed to with respect to periods described in section
(B) shall be subject to the limitations set forth in that section.
The definition set forth in this subparagraph (1) is subject to the special
rules contained in Department of Labor Regulations Sections 2530.200b-2(b) and
(c), and any regulations amending or superseding such sections, which special
rules are hereby incorporated in the definition of "Hour of Service" by this
reference.
(2) (A) Notwithstanding the other provisions of this "Hour of Service"
definition, in the case of an Employee who is absent from work for any
period by reason of her pregnancy, by reason of the birth of a child
of the Employee, by reason of the placement of a child with the
Employee in connection with the adoption of such child by the Employee
or for purposes of caring for such child for a reasonable period
beginning immediately following such birth or placement, the Employee
shall be treated as having those Hours of Service described in section
(B).
(B) The Hours of Service to be credited to an Employee under the
provisions of section (A) are the Hours of Service that otherwise
would normally have been credited to such Employee but for the absence
in question or, in any case in which the Plan is unable to determine
such hours, eight Hours of Service per day of such absence; provided,
however, that the total number of hours treated as Hours of Service
under this subparagraph (2) by reason of any such pregnancy or
placement shall not exceed 501 hours.
8.
<PAGE> 9
(C) The hours treated as Hours of Service under this subparagraph
(2) shall be credited only in the Plan Year in which the absence from
work begins, if crediting is necessary to prevent One Year Break in
Service in such Plan Year or, in any other case, in the immediately
following Plan Year.
(D) Credit shall be given for Hours of Service under this
subparagraph (2) solely for purposes of determining whether a One Year
Break in Service has occurred for participation or vesting purposes;
credit shall not be given hereunder for any other purposes (including,
without limitation, benefit accrual).
(A) Notwithstanding any other provision of this subparagraph (2),
no credit shall be given under this subparagraph (2) unless the
Employee in question furnishes to the Administrator such timely
information as the Administrator may reasonably require to establish
that the absence from work is for reasons referred to in section (A)
and the number of days for which there was such an absence.
(cc) "IDG ESOP" shall mean the International Data Group, Inc. Employee
Stock Ownership Plan.
(dd) "KEY EMPLOYEE" shall mean any Employee or former Employee (and the
beneficiaries of such Employee) who is at any time during the Plan Year (or was
at any time during the four preceding Plan Years)
(1) an officer of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates in excess of 50%
of the amount in effect under Section 415(b)(1)(A) of the Code for any such
Plan Year; provided, however, that no more than the lesser of--
(A) 50 Employees, or
(B) the greater of (i) three Employees or (ii) 10 percent of all
Employees,
shall be treated as officers, and such officers shall be those with
the highest annual compensation in the five-year period;
(2) one of the ten Employees owning (or considered as owning) the
largest interests in an Employer or an Affiliate, owning more than a 1/2%
interest in the Employer or an Affiliate, and having an aggregate annual
compensation from the Employer and its Affiliates of more than the
limitation in effect under Section 415(c)(1)(A) of the Code for the
calendar year that includes the last day of the Plan Year;
(3) a 5% owner of an Employer or an Affiliate; or
9.
<PAGE> 10
(4) a 1% owner of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates of more than
$150,000.
Ownership shall be determined in accordance with Section 416(i)(1)(B) and (C) of
the Code. For purposes of section (2), if two Employees have the same ownership
interest in an Employer or an Affiliate, the Employee having the greatest annual
compensation from the Employer and all Affiliates shall be treated as having a
larger interest. For purposes of this paragraph, "compensation" shall mean
compensation as defined in Section 415(c)(3) of the Code, but including amounts
contributed by an Employer on behalf of an Employee pursuant to a salary
reduction agreement which are excludable from the Employee's gross income under
Section 125, Section 402(a)(8), Section 402(h), or Section 403(b) of the Code.
(ee) "LEAVE OF ABSENCE" shall mean the time granted to an Employee for
vacation, sick leave, temporary layoff or other purposes, all as authorized in
accordance with uniform rules adopted by his Employer from time to time. Leave
of Absence shall also include the time that an Employee serves in the armed
forces of the United States of America during a period of national emergency or
as a result of the operation of a compulsory military service law of the United
States of America and during any period after his discharge from such armed
forces in which his employment rights are guaranteed by law.
(ff) "LIMITATION YEAR" shall mean the Plan Year.
(gg) "NON-KEY EMPLOYEE" shall mean, with respect to any Plan Year, an
Employee or former Employee who is not a Key Employee (including any such
Employee who formerly was a Key Employee).
(hh) "NORMAL RETIREMENT DATE" shall mean the date on which a Participant
attains the age of 65 years.
(ii) "ONE YEAR BREAK IN SERVICE" shall mean a Plan Year in which an
Employee has 500 or fewer Hours of Service, and it shall be deemed to occur on
the last day of any such Plan Year.
(jj) "OTHER INVESTMENTS ACCOUNT" shall mean an account established pursuant
to Article VII(b) with respect to Employer contributions invested in assets
other than Employer Securities, and adjustments thereto.
(kk) "PARTICIPANT" shall mean any eligible Employee of an Employer who has
become a Participant under the Plan and shall include any former employee of an
Employer who became a Participant under the Plan and who still has a balance in
an Account under the Plan.
(ll) "PLAN" shall mean the IDG Books Worldwide, Inc. Employee Stock
Ownership Plan as herein set forth, as it may be amended from time to time.
10.
<PAGE> 11
(mm) "PLAN ADMINISTRATOR" shall mean the Company.
(nn) "PLAN YEAR" shall mean the 12-month period ending on each September
30.
(oo) "SECTION 415 COMPENSATION" shall include all wages and other payments
of compensation to a Participant from all Employers and all Affiliates for
personal services actually rendered for which the Employers and Affiliates are
required to furnish the Participant a written statement under Sections 6041(d),
6051(a)(3) and 6052 of the Code (and without regard to any provisions under
Section 3401(a) of the Code that limit the remuneration included in wages based
on the nature or location of the employment or the services performed);
provided, however, that beginning after December 31, 1997, the term "Section 415
Compensation" shall also include any amount that is contributed by an Employer
at the election of the Employee and that is not includible in the gross income
of the Employee under Sections 125, 401(k), 402(h), 403(b), or 457 of the Code.
(pp) "TOP HEAVY PLAN" shall mean this Plan if the aggregate account
balances (not including voluntary rollover contributions made by any Participant
from an unrelated plan) of the Key Employees and their beneficiaries for such
Plan Year exceed 60% of the aggregate account balances (not including voluntary
rollover contributions made by any Participant from an unrelated plan) for all
Participants and their beneficiaries. Such values shall be determined for any
Plan Year as of the determination date for such Year. The account balances on
any determination date shall include the aggregate distributions made with
respect to Participants during the five-year period ending on the determination
date. For the purposes of this definition, the aggregate account balances for
any Plan Year shall include the account balances and accrued benefits of all
retirement plans qualified under Section 401(a) of the Code with which this Plan
is required to be aggregated to meet the requirements of Section 401(a)(4) or
410 of the Code (including terminated plans that would have been required to be
aggregated with this Plan) and all plans of an Employer or an Affiliate in which
a Key Employee participates; and such term may include (at the discretion of the
Plan Administrator) any other retirement plan qualified under Section 401(a) of
the Code that is maintained by an Employer or an Affiliate, provided the
resulting aggregation group satisfies the requirements of Sections 401(a) and
410 of the Code. In addition, for the purposes of this definition the
determination date for any Plan Year shall mean the last day of the immediately
preceding Plan Year. All calculations shall be on the basis of actuarial
assumptions that are specified by the Plan Administrator and applied on a
uniform basis to all plans in the applicable aggregation group. The account
balance of any Participant shall not be taken into account if:
(1) he is a Non-Key Employee for any Plan Year, but was a Key Employee
for any prior Plan Year, or
(2) he has not performed any service for an Employer during the
five-year period ending on the determination date.
11.
<PAGE> 12
(qq) "TRANSFER DATE" shall mean the date on which Accounts of Employees of
the Company are transferred from the IDG ESOP to this Plan.
(rr) "TRUST" shall mean the trust established by the Agreement and
Declaration of Trust.
(ss) "TRUSTEE" shall mean the individual, individuals or corporation
designated as trustee under the Agreement and Declaration of Trust.
(tt) "TRUST FUND" shall mean the trust fund established under the Agreement
and Declaration of Trust from which the amounts of supplementary compensation
provided for by the Plan are to be paid or are to be funded.
(uu) "VALUATION DATE" shall mean September 30 of each Plan Year, or such
other date or dates as may be selected by the Trustee.
(vv) "VALUATION PERIOD" shall mean the period beginning with the first day
after a Valuation Date and ending with the next Valuation Date.
(ww) (1) "YEAR OF SERVICE" shall mean a Plan Year during which an Employee
completes 1,000 or more Hours of Service.
(2) For all purposes of the Plan, "Years of Service" shall not include
service with an Affiliate prior to its becoming affiliated with an
Employer.
(3) For all purposes of the Plan, "Years of Service" shall include
service (determined in accordance with the provisions of this Plan) for
International Data Group, Inc. or any of its subsidiaries.
ARTICLE II
AMENDMENT AND RESTATEMENT, AND NAME OF THE PLAN
The Company's employee stock ownership plan is hereby established in
accordance with the terms hereof and shall be known as the "IDG BOOKS
WORLDWIDE, INC. EMPLOYEE STOCK OWNERSHIP PLAN."
ARTICLE III
PURPOSE OF THE PLAN AND THE TRUST
12.
<PAGE> 13
(a) EXCLUSIVE BENEFIT. This Plan is created for the sole purpose of
providing benefits to the Participants and enabling them to share in the growth
of the Company, and is designed to invest primarily in Employer Securities.
Except as otherwise permitted by law, in no event shall any part of the
principal or income of the Trust be paid to or reinvested in any Employer or be
used for or diverted to any purpose whatsoever other than for the exclusive
benefit of the Participants and their beneficiaries.
(b) RETURN OF CONTRIBUTIONS. Notwithstanding the foregoing provisions of
paragraph (a), any contribution made by an Employer to this Plan by a mistake of
fact may be returned to the Employer within one year after the payment of the
contribution; and any contribution made by an Employer that is conditioned upon
the deductibility of the contribution under Section 404 of the Code (each
contribution shall be presumed to be so conditioned unless the Employer
specifies otherwise) may be returned to the Employer if the deduction is
disallowed and the contribution is returned (to the extent disallowed) within
one year after the disallowance of the deduction.
(c) PARTICIPANTS' RIGHTS. The establishment of this Plan shall not be
considered as giving any Employee, or any other person, any legal or equitable
right against any Employer, any Affiliate, the Plan Administrator, the Trustee
or the principal or the income of the Trust, except to the extent otherwise
provided by law. The establishment of this Plan shall not be considered as
giving any Employee, or any other person, the right to be retained in the employ
of any Employer or any Affiliate.
(d) QUALIFIED PLAN. This Plan and the Trust are intended to qualify under
the Code as a tax-free employees' plan and trust, and particularly as an
employee stock ownership plan within the meaning of Section 4975(e)(7) of the
Code, and the provisions of this Plan and the Trust should be interpreted
accordingly.
ARTICLE IV
PLAN ADMINISTRATOR
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall control and
manage the operation and administration of the Plan, except with respect to
investments. The Administrator shall have no duty with respect to the
investments to be made of the funds in the Trust except as may be expressly
assigned to it by the terms of the Agreement and Declaration of Trust.
(b) POWERS AND DUTIES. The Administrator shall have complete control over
the administration of the Plan herein embodied, with all powers necessary to
enable it to carry out its duties in that respect. Not in limitation, but in
amplification of the foregoing, the Administrator shall have the power and
discretion to interpret or construe this Agreement and to determine all
questions that may arise as to the status and rights of the Participants and
others hereunder.
13.
<PAGE> 14
(c) DIRECTION OF TRUSTEE. It shall be the duty of the Administrator to
direct the Trustee with regard to the allocation and the distribution of the
benefits to the Participants and others hereunder.
(d) SUMMARY PLAN DESCRIPTION. The Administrator shall prepare or cause to
be prepared a Summary Plan Description (if required by law) and such periodic
and annual reports as are required by law.
(e) DISCLOSURE. At least once each year, the Administrator shall furnish to
each Participant a statement containing the value of his interest in the Trust
Fund and such other information as may be required by law.
(f) CONFLICT IN TERMS. The Administrator shall notify each Employee, in
writing, as to the existence of the Plan and Trust and the basic provisions
thereof. In the event of any conflict between the terms of this Plan and Trust
as set forth in this Agreement and in the Agreement and Declaration of Trust and
as set forth in any explanatory booklet or other description, this Agreement and
the Agreement and Declaration of Trust shall control.
(g) NONDISCRIMINATION. The Administrator shall not take any action or
direct the Trustee to take any action whatsoever that would result in unfairly
benefiting one Participant or group of Participants at the expense of another or
in improperly discriminating between Participants similarly situated or in the
application of different rules to substantially similar sets of facts.
(h) RECORDS. The Administrator shall keep a complete record of all its
proceedings as such Administrator and all data necessary for the administration
of the Plan. All of the foregoing records and data shall be located at the
principal office of the Administrator.
(i) FINAL AUTHORITY. Except to the extent otherwise required by law, the
decision of the Administrator in matters within its jurisdiction shall be final,
binding and conclusive upon each Employer and each Employee, member and
beneficiary and every other interested or concerned person or party.
(j) CLAIMS.
14.
<PAGE> 15
(l) Claims for benefits under the Plan may be made by a Participant or
a beneficiary of a Participant on forms supplied by the Plan Administrator.
Written notice of the disposition of a claim shall be furnished to the
claimant by the Administrator within ninety (90) days after the application
is filed with the Administrator, unless special circumstances require an
extension of time for processing, in which event action shall be taken as
soon as possible, but not later than one hundred eighty (180) days after
the application is filed with the Administrator; and in the event that no
action has been taken within such ninety (90) or one hundred eighty (180)
day period, the claim shall be deemed to be denied for the purposes of
subparagraph (2). In the event that the claim is denied, the denial shall
be written in a manner calculated to be understood by the claimant and
shall include the specific reasons for the denial, specific references to
pertinent Plan provisions on which the denial is based, a description of
the material information, if any, necessary for the claimant to perfect the
claim, an explanation of why such material information is necessary and an
explanation of the claim review procedure.
(2) If a claim is denied (either in the form of a written denial or by
the failure of the Plan Administrator, within the required time period, to
notify the claimant of the action taken), a claimant or his duly authorized
representative shall have sixty (60) days after the receipt of such denial
to petition the Plan Administrator in writing for a full and fair review of
the denial, during which time the claimant or his duly authorized
representative shall have the right to review pertinent documents and to
submit issues and comments in writing. The Plan Administrator shall
promptly review the claim and shall make a decision not later than sixty
(60) days after receipt of the request for review, unless special
circumstances require an extension of time for processing, in which event a
decision shall be rendered as soon as possible, but not later than one
hundred twenty (120) days after the receipt of the request for review. If
such an extension is required because of special circumstances, written
notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. The decision of the review shall be in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, with specific
references to the Plan provisions on which the decision is based.
(k) APPOINTMENT OF ADVISORS. The Administrator may appoint such
accountants, counsel (who may be counsel for an Employer), specialists and other
persons that it deems necessary and desirable in connection with the
administration of this Plan. The Administrator, by action of its Board of
Directors, may designate one or more of its employees to perform the duties
required of the Administrator hereunder.
15.
<PAGE> 16
ARTICLE V
ELIGIBILITY AND PARTICIPATION
(a) CURRENT PARTICIPANTS IN THE IDG ESOP. Any Employee of the Company on
the Transfer Date, who is then a Participant in the IDG ESOP, shall become a
Participant in this Plan as of the Effective Date of this Plan.
(b) ELIGIBILITY AND PARTICIPATION. Thereafter, any other Employee of an
Employer shall become a Participant in the Plan upon completing one Hour of
Service for an Employer.
(c) REHIRED PARTICIPANTS. An Employee who ceases to be a Participant and
who subsequently reenters the employ of an Employer shall again become a
Participant on the date of his reemployment.
(d) FORMER EMPLOYEES. Any former Employee of the Company, whose termination
of employment occurred prior to the Transfer Date, but who continues to have an
account balance under the IDG ESOP, shall continue to have all the rights
provided to him under the IDG ESOP but shall not become a Participant of this
Plan unless and until he performs an Hour of Service for an Employer under this
Plan on or after the Transfer Date.
ARTICLE VI
CONTRIBUTIONS TO THE TRUST
(a) EMPLOYER CONTRIBUTIONS. The amount, if any, to be contributed to the
Trust by an Employer for each Plan Year shall be determined by its Board of
Directors.
(1) It is the present intention of each Employer to make recurring and
substantial contributions to the Trust for each Plan Year, but in no event
shall such contribution for any corresponding taxable year of an Employer
exceed the maximum amount deductible from the Employer's income for such
taxable year under Section 404(a) of the Code.
(2) Each Employer shall continue to have discretion as to the amount
of its contributions, if any, in the event a loan used to purchase Employer
Securities remains outstanding, even if failure to make a contribution
places the ESOP in default on such loan.
(b) FORM AND TIMING OF CONTRIBUTIONS. Payments on account of the
contributions due from an Employer for any Plan Year shall be made in cash,
qualifying employer real property, and/or Employer Securities. Such payments may
be made by a contributing Employer at any time, but payment of the contribution
for any Plan Year shall be completed on or before the time prescribed by
16.
<PAGE> 17
law, including extensions thereof, for filing such Employer's federal income tax
return for its corresponding taxable year.
(c) VOLUNTARY CONTRIBUTIONS. The Administrator shall not accept any
voluntary Employee contributions designated by the Participant as nondeductible
Employee contributions (subject to the provisions of Code Section 72(e)).
(d) NO DUTY TO INQUIRE. The Trustee shall have no right or duty to inquire
into the amount of any contribution made by an Employer or the method used in
determining the amount of any such contribution, or to collect the same, but the
Trustee shall be accountable only for funds actually received by it.
ARTICLE VII
PARTICIPANTS' ACCOUNTS AND ALLOCATION OF CONTRIBUTIONS
(a) COMMON FUND. The assets of the Trust shall constitute a common fund in
which each Participant shall have an undivided interest.
(b) ESTABLISHMENT OF ACCOUNTS. The Plan Administrator shall establish and
maintain with respect to each Participant at least two accounts, designated as
an Employer Securities Account and an Other Investments Account, that shall
reflect the Participant's interest in the Trust Fund with respect to
contributions made by his Employer. A Participant's Employer Securities Account
and Other Investments Account shall be deemed to be a single account for
purposes of determining forfeitures under paragraph (c)(3) of Article VIII.
(c) SUSPENSE ACCOUNTS. The Plan Administrator shall establish and maintain
a suspense account to which shall be credited any units of Employer Securities
purchased by the Trustee with borrowed funds (such term including, for all
purposes of this Plan, purchase-money transactions). A separate suspense account
shall be maintained for each such purchase. The shares released from a suspense
account each year, if any, shall be allocated as of each Valuation Date to the
Participants' Employer Securities Accounts under the provisions of paragraph (e)
of this Article VII as Employer Securities attributable to Employer
contributions. The number of units of Employer Securities to be released from a
suspense account each Plan Year shall be determined under one of the following
methods, as selected by the Plan Administrator with respect to a particular
suspense account:
(1) The number of units to be released for each Employer shall equal
the number of units held in the suspense account immediately before the
release for the current Plan Year multiplied by a fraction, the numerator
of which is the amount of principal and interest paid by the Trustee on
behalf of the Employer for the Plan Year with respect to the loan in
question and the denominator of which is the sum of the amount of principal
and interest paid on behalf of all Employers with respect to such loan for
the current Plan Year plus the amount
17.
<PAGE> 18
of principal and interest to be paid on behalf of all Employers with
respect to such loan for all future Plan Years; or
(2) The number of units to be released for each Employer shall equal
the number of units held in the suspense account immediately before the
release for the current Plan Year multiplied by a fraction, the numerator
of which is the amount of principal paid by the Trustee on behalf of the
Employer for the Plan Year with respect to the loan in question and the
denominator of which is the sum of the amount of principal paid on behalf
of all Employers with respect to such loan for the current Plan Year plus
the amount of principal to be paid on behalf of all Employers with respect
to such loan for all future Plan Years; provided, however, that:
(A) The loan must provide for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than
level annual payments of such amounts for ten years (this requirement
is not satisfied from the time that, by reason of a renewal, extension
or refinancing, the sum of the expired duration of the loan, the
renewal period, the extension period and the duration of a new exempt
loan (used to refinance) exceeds ten years); and
(B) Interest included in any repayment may be disregarded for
release purposes only to the extent that it would be determined to be
interest under standard loan amortization tables.
(d) INTEREST OF PARTICIPANT. The interest of a Participant in the Trust
Fund shall be the combined balances remaining from time to time in his Employer
Securities Account and his Other Investments Account after making the
adjustments required in paragraph (e).
(e) ADJUSTMENTS TO ACCOUNTS. Subject to the provisions of paragraph (f) the
Employer Securities Account and Other Investments Account of a Participant shall
be adjusted from time to time as follows:
(1) STOCK DIVIDENDS. As of each Valuation Date, the Participant's
Employer Securities Account shall be credited with any stock dividends for
the Valuation Period ending with such current Valuation Date that are
received on Employer Securities that are allocated to his Employer
Securities Account (and that are not used, pursuant to paragraph (e)(6), to
repay a loan).
(2) EARNINGS FACTOR. As of each Valuation Date, the Participant's
Other Investments Account shall be credited or charged, as the case may be,
with a share of the Other Investments Account "earnings factor" for the
Valuation Period ending with such current Valuation Date; provided,
however, that such Participant was also a Participant as of the immediately
preceding Valuation Date. The Other Investments Account earnings factor and
a Participant's share thereof are to be determined as follows:
18.
<PAGE> 19
(A) The Other Investments Account earnings factor for any
Valuation Period shall consist of
(i) the aggregate of the unrealized appreciation or
depreciation occurring in the value of the portion of the Trust
Fund invested in assets other than Employer Securities during
such period that are attributable to contributions theretofore
made by an Employer,
(ii) that portion of the income earned or the loss sustained
by the portion of the Trust Fund invested in assets other than
Employer Securities during such period (whether from investments
or from the sale or exchange of assets) that are attributable to
contributions theretofore made by an Employer,
(iii) cash dividends received on Employer Securities not
allocated to any Participant's Employer Securities Account (to
the extent such cash dividends are not used, pursuant to
paragraph (e)(6), to repay a loan), and
(iv) cash dividends received on Employer Securities
allocated to Participant's Employer Securities Accounts (to the
extent such cash dividends are not used, pursuant to paragraph
(e)(6), to repay a loan).
(B) A Participant's share of the Other Investments Account
earnings factor for any Valuation Period shall be that amount that
shall bear the same ratio to such earnings factor as the balance in
such Participant's Other Investments Account as of the end of the
immediately preceding Valuation Period (less any amounts distributed
from such Account to the Participant, or debited to such Account for
any payments made with the assets of such Account for the purchase of
Employer Securities, during the Valuation Period ending with the
current Valuation Date) bears to the aggregate of the balances in the
Other Investments Accounts as of the end of the immediately preceding
Valuation Period of all Participants who are entitled to share in such
earnings factor (less the aggregate amounts distributed from such
Accounts to such Participants, or debited to such Accounts for any
payments made with the assets of such Accounts for the purchase of
Employer Securities, during the Valuation Period ending with the
current Valuation Date).
(C) Under no circumstances shall the Other Investments Account
earnings factor, or a Participant's share thereof, include any
appreciation, depreciation, income or loss attributable to the Plan's
investment in Employer Securities.
(3) EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(A) As of each Valuation Date, the Employer Securities Account of
a Participant shall be credited with his allocable share of:
19.
<PAGE> 20
(i) Employer Securities attributable to contributions by his
Employer (including any Employer Securities that are released
during such Plan Year from a suspense account maintained pursuant
to paragraph (c));
(ii) Forfeitures of Employer Securities; and
(iii) Employer Securities purchased, directly or indirectly,
with the assets of the Participant's Other Investments Account.
The Employer Securities Account of a Participant shall be debited for
any payments made with the assets of such Account for the purchase,
directly or indirectly, of Employer Securities.
(B) As of each Valuation Date, the Other Investments Account of a
Participant shall be credited with his allocable share of
(i) contributions by his Employer in a form other than
Employer Securities (except for Employer contributions used to
pay principal or interest on any outstanding debts or liabilities
incurred by the Trustee in connection with the purchase of
Employer Securities); and
(ii) forfeitures of assets other than Employer Securities.
The Other Investments Account of a Participant shall be debited for
any payments made with the assets of such Account for the purchase,
directly or indirectly, of Employer Securities.
(C) The adjustments called for by sections (A) and (B) shall be
made as follows:
(i) Each Employer's contributions, represented by Employer
Securities and contributions of assets other than Employer
Securities, shall be allocated, as of each Valuation Date that is
the last day of a Plan Year, among the Employer Securities
Accounts and the Other Investments Accounts, as the case may be,
of the Participants employed by such Employer on the last day of
the Plan Year (regardless of whether such Plan Year constitutes a
Year of Service) based on the ratio that the Compensation of each
Participant bears to the aggregate Compensation of all
Participants employed by such Employer on the last day of the
Plan Year. For each Plan Year in which this Plan is a Top Heavy
Plan, a Participant who is employed by an Employer on the last
day of such Plan Year and who is a Non-Key Employee shall be
entitled to share in the contribution (as described in this
subsection) to the extent such allocation, together with any
amount allocated to the Non-Key Employee as a forfeiture
20.
<PAGE> 21
pursuant to subsection (ii), does not exceed three percent (3%)
of such Non-Key Employee's Section 415 Compensation (or, if less,
the highest percentage of such Section 415 compensation allocated
a Key Employee's Accounts hereunder, as well as the Key
Employee's employer contribution accounts under any other defined
contribution plan maintained by such Employer or an Affiliate,
and including any Key Employee's elective contribution to any
plan subject to Code Section 401(k)). To the extent provided in
the previous sentence, such contribution shall be required
regardless of whether the Non-Key Employee has completed a Year
of Service.
(ii) Forfeitures of Employer Securities and of assets other
than Employer Securities occurring during a Plan Year (to the
extent such forfeitures are not used to reinstate the account
balances of reemployed Participants pursuant to paragraph (c)(4)
of Article VIII) shall be allocated among the Employer Securities
Accounts and the Other Investments Accounts, as the case may be,
of all Participants in the Plan who are employed by any Employer
on the last day of the Plan Year (regardless of whether such Plan
Year constitutes a Year of Service) based on the ratio that the
Compensation of each Participant bears to the aggregate
Compensation of all Participants employed by all Employers on the
last day of the Plan Year.
(4) DISTRIBUTIONS. As of each Valuation Date, a Participant's Employer
Securities Account and his Other Investments Account shall be charged with
the amount of any distributions made to the Participant or his beneficiary
from such Accounts pursuant to Article IX during the Valuation Period
ending with the current Valuation Date.
(5) TRANSFER FOR DIVERSIFICATION. In the event that a Participant
elects to receive a diversification distribution from his Employer
Securities Account pursuant to Article XI, the Participant's Employer
Securities Account shall be charged with the amount of the Employer
Securities that are distributed during the Valuation Period ending with the
current Valuation Date.
(6) DIVIDENDS. Dividends attributable to Employer Securities that are
credited to Participants' Employer Securities Accounts, as well as to the
suspense account established pursuant to paragraph (c) shall be used, to
the extent required by the terms of the Agreement of Trust, to repay any
loan used to purchase the Employer Securities on account of which the
dividends were paid.
(7) ACCOUNTING AND VALUATION METHODS. Except as otherwise required in
any Agreement and Declaration of Trust, for purposes of all computations
required by this Article VII, the accrual method of accounting shall be
used, and the Trust Fund, each separate portion of the Trust Fund and the
assets thereof shall be valued at their Fair Market Value as of each
Valuation Date. Employer Securities shall be accounted for as provided in
Treas. Reg. Section 1.402(a)-1(b)(2)(ii), as amended, or any successor
regulation or statute.
21.
<PAGE> 22
(8) ACCOUNTING PROCEDURES. The Plan Administrator may adopt such
additional accounting procedures as are necessary to accurately reflect
each Participant's interest in the Trust Fund or in any Fund, which
procedures shall be effective upon approval by the Company. All such
procedures shall be applied in a consistent, nondiscriminatory manner.
(f) LIMITATION ON ANNUAL ADDITIONS.
(1) Notwithstanding anything contained in this Plan to the contrary,
the aggregate Annual Additions to a Participant's Accounts under this Plan
and under any other defined contribution plans maintained by an Employer or
an Affiliate for any Limitation Year shall not exceed the lesser of:
(A) $30,000 (adjusted under such regulations as may be issued by
the Secretary of the Treasury), or
(B) 25% of the Participant's Section 415 Compensation for the
Plan Year.
(2) In the event that the Annual Additions, under the normal
administration of the Plan, would otherwise exceed the limits set forth
above for any Participant, or in the event that any Participant
participates in both a defined benefit plan and a defined contribution plan
maintained by any Employer or any Affiliate and the aggregate Annual
Additions to and projected benefits under all of such plans, under the
normal administration of such plans, would otherwise exceed the limits
provided by law, then the Plan Administrator shall take such actions,
applied in a uniform and nondiscriminatory manner, as will keep the Annual
Additions and projected benefits for such Participant from exceeding the
applicable limits provided by law. Excess Annual Additions shall be
disposed of as provided in subparagraph (3). Adjustments shall be made to
all other plans, if necessary to comply with such limits, before any
adjustments shall be required to this Plan.
(3) If as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Section 415 Compensation or other
circumstances permitted under Section 415 of the Code, the Annual Additions
attributable to Employer contributions for a particular Participant would
cause the limitations set forth in this paragraph (f) to be exceeded, the
excess amount shall be held unallocated in a suspense account for the
Limitation Year and reallocated among the Participants as of the end of the
next Plan Year to all of the Participants in the Plan in the same manner as
an Employer contribution under the terms of paragraph (e) of this Article
VII before any further Employer contributions are allocated to the Accounts
of the Participants, and such allocations shall be treated as Annual
Additions to the Accounts of the Participants. In the event that the limits
on Annual Additions for any Participant would be exceeded before all of the
amounts in the suspense account are allocated among the Participants, then
such excess amounts shall be retained in the suspense account to be
reallocated as of the end of the next Plan Year and any succeeding Plan
Years until all amounts in the
22.
<PAGE> 23
suspense account are exhausted. The suspense account shall be credited or
charged, as the case may be, with a share of the "earnings factor" for each
Valuation Period during which it is in existence as if it were an Account
of a Participant.
(4) In the event that any Participant participates in both a defined
benefit plan and a defined contribution plan maintained by his Employer or
an Affiliate thereof, then, for Limitation Years beginning before January
1, 2000, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year shall not exceed 1.0.
For these purposes,
(A) The Defined Benefit Plan Fraction is a fraction, the
numerator of which is the projected annual benefit of the Participant
under the defined benefit plan determined as of the close of the
Limitation Year and the denominator of which is the lesser of (1) the
product of 1.25 times the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Limitation Year or (2) the product
of 1.4 times the amount that may be taken into account under Section
415(b)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
(B) The Defined Contribution Plan Fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Accounts as of the close of the Limitation Year (less
any amount that may be subtracted from the numerator so that the sum
of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction does not exceed 1.0 for the last Limitation Year beginning
before January 1, 1983) and the denominator of which is the sum of the
lesser of the following amounts determined for such year and for each
prior Year of Service with the Employer: (1) the product of 1.25 times
the dollar limitation in effect under Section 415(c)(1)(A) of the Code
for such Limitation Year (determined without regard to Section
415(c)(6) of the Code) or (2) the product of 1.4 times the amount that
may be taken into account under Section 415(c)(1)(B) of the Code with
respect to such Participant for such Limitation Year.
(C) The figure "1.0" shall be substituted for the figure "1.25"
set forth in sections (A) and (B) for each year in which this Plan is
a Top Heavy Plan unless (1) the defined benefit plan provides a
minimum benefit equal to 3% of each Participant's Compensation times
the number of years (not exceeding 10) the Plan is a Top Heavy Plan or
the defined contribution plan provides a minimum contribution equal to
4% (7-1/2% if the Participant participates in both the defined benefit
plan and the defined contribution plan) of each Participant's Section
415 Compensation, and (2) the present value of the cumulative accrued
benefits (not including rollover contributions made after December 31,
1983) of the Key Employees for such year does not exceed 90% of the
present value of the accrued benefits (not including rollover
contributions made after December 31, 1983) under all plans. Such
values shall be determined in the same manner as described in the "Top
Heavy" definition in Article I.
23.
<PAGE> 24
(D) At the election of the Administrator, the denominator under
section (B) may be determined with respect to all Limitation Years
ending before January 1, 1983, by multiplying (1) the denominator, as
calculated under section (B) (as in effect for the Plan Year ending in
1982), for the Limitation Year ending in 1982 by (2) the transition
fraction. For these purposes, the term transition fraction' means a
fraction with a numerator equal to the lesser of (1) $51,875 or (2)
1.4 multiplied by 25% of the Compensation of the Participant for the
Limitation Year ending in 1981 and with a denominator equal to the
lesser of (1) $41,500 or (2) 25% of the Compensation of the
Participant for the Plan Year ending in 1981. The transition fraction
shall be applied by substituting the figure $41,500 for the figure
$51,875 if this Plan is a Top Heavy Plan.
ARTICLE VIII
BENEFITS UNDER THE PLAN
(a) RETIREMENT BENEFIT.
(1) A Participant shall be entitled to retire from the employ of his
Employer upon such Participant's Early or Normal Retirement Date. Until a
Participant actually retires from the employ of his Employer, no retirement
benefits shall be payable to him, and he shall continue to be treated in
all respects as a Participant; provided, however, that a Participant who
attains age 70-1/2 shall begin receiving payment of his retirement benefit
no later than the April 1 after the end of the calendar year in which he
attains age 70-1/2 or retires, whichever is later; provided, further, that
an Employee who is a 5% owner (as defined in Section 416 of the Code) shall
begin receiving payment of his retirement benefit no later than the April 1
after the end of the calendar year in which he attains age 70-1/2, even if
he has not actually retired from the employ of his Employer at that time.
Notwithstanding the preceding provisions of this subparagraph (1), nothing
contained herein shall affect the Participants rights to begin receiving
the benefit in accordance with the minimum distribution requirements under
Section 401(a)(9) of the Code.
(2) Upon the retirement of a Participant as provided in subparagraph
(1), such Participant shall be entitled to a retirement benefit in an
amount equal to 100% of the balance in his Accounts as of the Valuation
Date immediately preceding or concurring with the date of his retirement
reduced by any amount distributed subsequent to such Valuation Date and
prior to the date of his retirement.
(b) DISABILITY BENEFIT. In the event a Participant's employment with his
Employer is terminated by reason of his Disability and subject to adjustment as
provided in paragraph (e) of Article IX, such Participant shall be entitled to a
disability benefit in an amount equal to 100% of the balance in his Accounts as
of the Valuation Date immediately preceding or concurring with the date of the
24.
<PAGE> 25
termination of his employment, reduced by any amount distributed subsequent to
such Valuation Date and prior to his termination of employment.
(c) SEVERANCE OF EMPLOYMENT BENEFIT.
(1) In the event a Participant's employment with his Employer is
terminated for reasons other than retirement, Disability or death, and
subject to adjustment as provided in paragraph (e) of Article IX, such
Participant shall be entitled to a severance of employment benefit in an
amount equal to his vested interest in the balance in his Accounts as of
the Valuation Date immediately preceding or concurring with the date of the
termination of his employment, reduced by any amount distributed subsequent
to such Valuation Date and prior to his termination of employment.
(2) (A) The vested interest in the Employer Securities Account and
Other Investments Account of each Participant shall be a percentage of
the balance of such Accounts as of the applicable Valuation Date,
based upon such Participant's Years of Service as of the date of the
termination of his employment, as follows:
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
YEARS OF SERVICE INTEREST
<S> <C>
Less than 3 Years of Service 0%
3 years, but less than 4 years 20%
4 years, but less than 5 years 40%
5 years, but less than 6 years 60%
6 years, but less than 7 years 80%
7 years or more 100%
</TABLE>
Notwithstanding the foregoing, on the Effective Date each Participant
shall have a vesting percentage that is no less than his vesting
percentage as of such date under the IDG ESOP.
(B) Notwithstanding the provisions of subparagraph (2)(A), for
any Plan Year in which this Plan is a Top Heavy Plan, the vested
interest in the Employer Securities Account and Other Investments
Account of each Participant performing at least one Hour of Service on
or after the first day of such Plan Year shall be a percentage of the
balance of such Accounts as of the applicable Valuation Date, based
upon such Participant's Years of Service as of the date of the
termination of his employment, as follows:
25.
<PAGE> 26
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
YEARS OF SERVICE INTEREST
<S> <C>
Less than 1 Year of Service 0%
1 year, but less than 2 years 10%
2 years, but less than 3 years 20%
3 years, but less than 4 years 40%
4 years, but less than 5 years 60%
5 years, but less than 6 years 80%
6 years or more 100%
</TABLE>
(C) If at any time this Plan ceases to be a Top Heavy Plan after
being a Top Heavy Plan for one or more Plan Years, the change from
being a Top Heavy Plan shall be treated as if it were an amendment to
the Plan's vesting schedule for purposes of paragraphs (a)(3) and
(a)(5) of Article XIV of this Plan.
(D) Notwithstanding the foregoing, a Participant shall be 100%
vested in his Employer Securities Account and Other Investments
Account upon attaining his Early or Normal Retirement Date.
26.
<PAGE> 27
(3) (A) If the termination of employment results in five consecutive
One Year Breaks in Service, then upon the occurrence of such five
consecutive One Year Breaks in Service, the non-vested interest of the
Participant in his Accounts as of the Valuation Date immediately
preceding or concurring with the date of his termination of employment
shall be deemed to be forfeited and such forfeited amount shall be
reallocated, pursuant to the provisions of paragraph (e) of Article
VII, at the end of the Plan Year concurring with the date the fifth
such consecutive One Year Break in Service occurs. If the Participant
is later reemployed by an Employer or an Affiliate, the unforfeited
balance, if any, in his Employer Securities Account and Other
Investments Account that has not been distributed to such Participant
shall be set aside in separate accounts, and such Participant's Years
of Service after any five consecutive One Year Breaks in Service
resulting from such termination of employment shall not be taken into
account for the purpose of determining the vested interest of such
Participant in the balance of his Accounts that accrued before such
five consecutive One Year Breaks in Service. If any portion of a
Participant's Accounts is forfeited, his Employer Securities Account
and his Other Investments Account shall be treated as a single account
for purposes of this subparagraph and Employer Securities that were
purchased with borrowed funds and allocated to such Participant's
Employer Securities Account after release from a suspense account
shall be forfeited only after all other assets in such Participant's
Employer Securities and Other Investments Accounts. If interests in
more than one class of Employer Securities have been so allocated to
such Participant's Accounts, the Participant shall forfeit the same
proportion of each such class. Except as otherwise required, whenever
forfeitures are required for any Employer Securities the Participant
shall forfeit specific Employer Securities on a last-in-first-out
basis.
(B) Notwithstanding any other provision of this paragraph (c), if
a Participant is reemployed by an Employer or an Affiliate and, as a
result, no five consecutive One Year Breaks in Service occur, the
Participant shall not be entitled to any severance of employment
benefit as a result of such termination of employment; provided,
however, that nothing contained herein shall require or permit the
Participant to return or otherwise have restored to his Accounts any
funds distributed to him prior to his reemployment and the
determination that no five consecutive One Year Breaks in Service
would occur.
(C) If a Participant is less than 100% vested in his Accounts and
he receives all or a part of his severance of employment benefit,
then, if the Participant resumes employment with an Employer or an
Affiliate before the occurrence of five consecutive One Year Breaks in
Service, until such time as there is a fifth consecutive One Year
Break in Service, the Participant's vested portion of the balance in
his Accounts at any time shall be equal to an amount ("X") determined
by the formula X = P(AB + D) - D, where "P" is the vested percentage
of the Participant at such time, "AB" is the balance in the
Participant's Accounts at such time and "D" is the amount distributed
as a severance of employment benefit.
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(4) (A) Notwithstanding any other provision of this paragraph (c), if
at any time a Participant is less than 100% vested in his Accounts
and, as a result of his severance of employment, he receives his
entire vested severance of employment benefit pursuant to the
provisions of Article IX, and the distribution of such benefit is made
not later than the close of the fifth Plan Year following the Plan
Year in which such termination occurs (or such longer period as may be
permitted by the Secretary of the Treasury, through regulations or
otherwise), then upon the occurrence of such distribution, the
non-vested interest of the Participant in his Accounts shall be deemed
to be forfeited and such forfeited amount shall be reallocated,
pursuant to the provisions of paragraph (e) of Article VII, at the end
of the Plan Year immediately following or concurring with the date
such distribution occurs.
(B) If a Participant is not vested as to any portion of his
Employer Securities Account and Other Investments Account, he will be
deemed to have received a distribution immediately following his
severance of employment. Upon the occurrence of such deemed
distribution, the nonvested interest of the Participant in his
Employer Securities Account and Other Investments Account shall be
deemed to be forfeited and such forfeited amount shall be reallocated,
pursuant to the provisions of paragraph (e) of Article VII, at the end
of the Plan Year immediately following or concurring with the date
such distribution occurs.
(C) If a Participant whose interest is forfeited under this
subparagraph (4) is reemployed by an Employer or an Affiliate prior to
the occurrence of five consecutive One Year Breaks in Service, then
such Participant shall have the right to repay to the Trust, within
five years after the Participant's resumption of employment, or, if
earlier, no later than the date of completion of the Participant's
fifth consecutive One Year Break in Service commencing after his
distribution, the full amount of the severance of employment benefit
previously distributed to him. A Participant who was subject to the
provisions of section (B) and who is reemployed prior to the
occurrence of five consecutive One Year Breaks in Service shall be
deemed to have repaid his distribution as of the date of his
reemployment by an Employer. If the Participant elects to repay (or is
deemed to repay) such amount to the Trust within the time periods
prescribed herein, the non-vested interest of the Participant
previously forfeited pursuant to the provisions of section (A) shall
be restored to the Accounts of the Participant, such restoration to be
made from forfeitures of non-vested interests and, if necessary, by
contributions of his Employer, so that the aggregate of the amounts
repaid by the Participant and restored by the Employer shall not be
less than the Accounts balance of the Participant at the time of
forfeiture unadjusted by any subsequent gains or losses.
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(d) DEATH BENEFIT.
(1) In the event of the death of a Participant and subject to
adjustment as provided in paragraph (e) of Article IX, his beneficiary
shall be entitled to a death benefit in an amount equal to 100% of the
balance in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of his death, reduced by any amount distributed
subsequent to such Valuation Date and prior to his date of death.
(2) Subject to the provisions of subparagraph (3), at any time and
from time to time, each Participant shall have the unrestricted right to
designate a beneficiary to receive his death benefit and to revoke any such
designation. Each designation or revocation shall be evidenced by written
instrument signed by the Participant and filed with the Plan Administrator.
In the event that a Participant has not designated a beneficiary or
beneficiaries, or if for any reason such designation shall be legally
ineffective, or if such beneficiary or beneficiaries shall predecease the
Participant, then the Participant's surviving spouse, and if none, his
issue, per stirpes, and if none, the personal representative of the estate
of such Participant shall be deemed to be the beneficiary designated to
receive such death benefit, or if no personal representative is appointed
for the estate of such Participant, then his next of kin under the statute
of descent and distribution of the state of such Participant's domicile at
the date of his death shall be deemed to be the beneficiary or
beneficiaries to receive such death benefit.
(3) Notwithstanding the foregoing, if the Participant is married as of
the date of his death, the Participant's surviving spouse shall be deemed
to be his designated beneficiary and shall receive the full amount of the
death benefit attributable to the Participant unless the spouse consents or
has consented to the Participant's designation of another beneficiary. Any
such consent to the designation of another beneficiary must acknowledge the
effect of the consent, must be witnessed by a Plan representative or by a
notary public and shall be effective only with respect to that spouse. A
spouse's consent shall be a restricted consent (which may not be changed as
to the beneficiary unless the spouse consents to such change in the manner
described herein).
ARTICLE IX
PAYMENTS OF BENEFITS
(a) (1) Except as otherwise provided under this Article IX, the amount of
the benefit to which a Participant is entitled under paragraphs (a), (b) or
(d) of Article VIII shall be paid to him (or, in the case of a death
benefit, shall be paid to said Participant's beneficiary or beneficiaries)
in accordance with one of the following options:
(A) As a lump sum payment in cash as soon as practicable
following the Participant's retirement, Disability (Social Security)
or death, as the case may be; or
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<PAGE> 30
(B) If the aggregate vested interest in a Participant's Accounts
exceeds $65,000, his benefit shall be paid to him in annual cash
installments of $65,000 (or such lesser amount as may remain the
Participant's vested Accounts for the final Plan Year in which an
installment is paid); provided, however, that any amount that has not
been distributed before the commencement of the eighth Plan Year
following the first Plan Year in which distributions are made to the
Participant shall be distributed as a final, ninth payment in such
Plan Year; and provided, further, that any amount attributable to the
Participant's Employer Securities Account and distributed as a final,
ninth payment shall be paid to such Participant, to the extent
possible, in units of Employer Securities, except that no fractional
shares shall be issued and the value of any fractional shares to which
a Participant would otherwise be entitled, as well as amounts
attributable to any other Accounts, shall be paid in cash.
Distributions made pursuant to this section B shall commence as soon
as practicable following the Participant's retirement, Disability
(Social Security) or death, as the case may be. Throughout the
distribution period, the Trustee shall liquidate sufficient shares of
Employer Securities annually to fund the installment payment for the
Plan Year. The Trustee shall continue to invest the remainder of the
Participant's vested Accounts in Employer Securities and such other
investments as it shall determine to be appropriate.
(2) Notwithstanding the foregoing, once a Participant reaches his
Early Retirement Date, he may elect to receive his benefit as follows:
(A) STANDARD EARLY RETIREMENT OPTION - Such amount shall be paid,
beginning on the Participant's Early Retirement Date (Standard) (or,
if later, the date that is three months following the date the
Participant gave written notice to the Plan Administrator of his
intention to take early retirement), in annual cash installments not
exceeding $155,000, or such greater amount as may be permitted to be
distributed without imposition of a penalty tax pursuant to Section
4980A of the Code; provided, however, that any amount that has not
been distributed before the date the Participant reaches age 59-1/2
shall be distributed in cash in a lump sum as soon as practicable
following the date the Participant reaches such age. The Trustee shall
continue to invest the undistributed portion of the Participant's
vested Accounts in Employer Securities and such other investments as
it shall determine to be appropriate.
(B) RULE OF 75 EARLY RETIREMENT OPTION - If the Participant's
Account balance is less than or equal to $650,000, and he has reached
his Early Retirement Date (Rule of 75), such amount shall be paid in
annual installments of $65,000, subject to the limitations of this
subparagraph. If the Participant's Account balance is greater than
$650,000, and he has reached his Early Retirement Date (Rule of 75),
such amount shall be paid in annual installments of 10% of his Account
balance each year, subject to the limitations of this subparagraph;
provided, however, that such Participant may elect to limit any given
annual installment to $155,000 or such greater
30.
<PAGE> 31
amount as may be permitted to be distributed without imposition of a
penalty tax pursuant to Section 4980A of the Code.
(i) If the Participant elects to receive his benefit under
one of the foregoing options, such installment shall be paid
beginning on the Participant's Early Retirement Date (Rule of 75)
(or, if later, the date that is three months following the date
he gave written notice to the Plan Administrator of his intention
to take early retirement).
(ii) Notwithstanding anything contained in this section (B)
to the contrary, any amount that has not been distributed before
the commencement of the eighth Plan Year following the first Plan
Year in which distributions are made to the Participant shall be
distributed as a final, ninth payment in such Plan Year.
The Trustee shall continue to invest the undistributed portion of the
Participant's vested Accounts in Employer Securities and such other
investments as it shall determine to be appropriate.
(b) Except as otherwise provided under this Article IX, the amount of the
Disability (Standard) benefit or the severance of employment benefit to which a
Participant is entitled under paragraph (c) of Article VIII, shall be paid to
him as follows:
(1) If the aggregate vested interest in a Participant's Accounts does
not exceed $5,000, his benefit shall be paid to him as a lump sum payment
in cash as soon as practicable following the Participant's severance of
employment or Disability (Standard).
(2) If the aggregate vested interest in a Participant's Accounts
exceeds $5,000 but does not exceed $65,000, his benefit shall be paid to
him as a lump sum payment in cash, at the election of the Participant,
either:
(A) as soon as practicable following the Participant's severance
of employment or Disability (Standard); or
(B) as soon as practicable following the Participant's Early or
Normal Retirement Date, whichever is earlier.
Within a reasonable period of time after the Participant's severance of
employment or Disability (Standard), the Plan Administrator shall provide
the Participant with a form for the purpose of selecting a payment date
under the foregoing provisions of this subparagraph (2). Accompanying such
election form shall be a written explanation of the terms and conditions of
the election. The Participant shall be permitted to submit his election to
the Administrator in writing within a reasonable period after receiving
notice from the Administrator. If the Participant fails during the election
period to select either payment date, the Participant shall
31.
<PAGE> 32
be deemed to have elected to receive his benefits as soon as practicable
following his Normal Retirement Date, and such deemed election shall be
irrevocable. If the Participant selects either payment date during the
election period, his election shall be irrevocable.
(3) If the aggregate vested interest in a Participant's Accounts
exceeds $65,000, his benefit shall be paid to him in accordance with one of
the following options:
(A) Option A - Such amount shall be paid in annual cash
installments of $65,000 (or such lesser amount as may remain the
Participant's vested Accounts for the final Plan Year in which an
installment is paid); provided, however, that any amount that has not
been distributed before the commencement of the eighth Plan Year
following the first Plan Year in which distributions are made to the
Participant shall be distributed as a final, ninth payment in such
Plan Year; and provided, further, that any amount attributable to the
Participant's Employer Securities Account and distributed as a final,
ninth payment shall be paid to such Participant, to the extent
possible, in units of Employer Securities, except that no fractional
shares shall be issued and the value of any fractional shares to which
a Participant would otherwise be entitled, as well as amounts
attributable to any other Accounts, shall be paid in cash.
Distributions made pursuant to this Option A shall commence as soon as
practicable following the Participant's severance of employment or
Disability (Standard), as the case may be. Throughout the distribution
period, the Trustee shall liquidate sufficient shares of Employer
Securities annually to fund the installment payment for the Plan Year.
The Trustee shall continue to invest the remainder of the
Participant's vested Accounts in Employer Securities and such other
investments as it shall determine to be appropriate.
(B) Option B - Such amount shall be paid at the election of the
Participant pursuant to the options outlined in paragraph (a) of this
Article IX as either a lump sum payment or in annual cash
installments, and such election may be made as soon as practicable
following either the Participant's Early Retirement Date or his Normal
Retirement Date.
(C) Option C - If the Participant has reached his Early
Retirement Date (Standard), such amount shall be paid in accordance
with subparagraph (a)(1) of this Article IX.
(D) Option D - If the Participant has reached his Early
Retirement Date (Rule of 75), such amount shall be paid in accordance
with subparagraph (a)(2) of this Article IX.
Within a reasonable period of time after the Participant's severance of
employment or Disability (Standard), the Plan Administrator shall provide
the Participant with a form for the purpose of selecting one of the
foregoing options. Accompanying such election form shall be a written
explanation of the terms and conditions of the election. The Participant
shall be permitted to submit his election to the Administrator in writing
within a reasonable period after receiving
32.
<PAGE> 33
notice from the Administrator. If the Participant fails during the election
period to select an option, the Participant shall be deemed to have elected
to receive his benefits under Option B, and such deemed election shall be
irrevocable. If the Participant selects an option during the election
period, his election shall be irrevocable.
(4) In the event that the Participant's distribution of benefits is
deferred pursuant to subparagraph (2) or (3), the portion of each vested
Account balance of the Participant that is not needed to make annual
payments during the then current Plan Year shall remain a part of the Trust
Fund under Article VII. In the event of the Participant's death or
Disability (Social Security), before receiving his entire vested Account
balance, his remaining vested interest shall be paid to him (or, in the
event of his death, to his beneficiary or beneficiaries) as a lump sum
payment in cash as soon as practicable after notice is provided to the Plan
Administrator of the Participant's Disability (Social Security) or death.
In the event that the Participant has attained the age of 55 years and
incurs a qualifying Hardship before receiving his entire vested Account
balance, all or any portion of his remaining vested interest may be paid to
him pursuant to paragraph (a) of Article X.
(5) Any units of Employer Securities paid to the Participant pursuant
to Option A described in subparagraph (3) shall be distributed subject to a
requirement that such units be immediately resold to the Company. The
Company shall purchase such units at their Fair Market Value as of the
Valuation Date coincident with or most recently preceding the date of
redemption. Payment of the purchase price shall be made by the Company, at
the election of the Company, either in cash on the date of redemption or by
an installment purchase. Any installment purchase shall provide for
adequate security, a reasonable interest rate and a payment schedule
providing for cumulative payments at any time not less than the payments
that would be made if made in substantially equal annual installments
beginning within 30 days and ending not more than five years after the date
of redemption. The Plan shall have the right, at the discretion of the
Trustee, to assume the rights and obligations of the Company to purchase
any such Employer Securities.
(c) Notwithstanding the foregoing, no distribution shall be made of any
Participant's benefit payable pursuant to paragraph (a), (b), or (c) of Article
VIII prior to his Normal Retirement Date unless the value of his benefit does
not exceed $5,000, or unless the Participant consents to the distribution. The
Plan Administrator shall provide each Participant entitled to a distribution of
more than $5,000 with a written notice of his rights, which shall include an
explanation of the alternative dates for distribution of benefits and the
optional forms of benefit available to the Participant. The Participant may
elect to exercise such rights, no less than 30 days and no more than 90 days
before the first date upon which distribution of the Participant's vested
account balances may be made; provided, however, that such distribution may
commence less than 30 days after the notice if the Plan Administrator clearly
informs the Participant that the Participant has a right to a period of at least
30 days after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option), and
if the Participant, after receiving the notice affirmatively elects a
distribution. In the event that a Participant does not consent to a distribution
of a benefit in excess of $5,000 to which he is entitled under paragraph (a),
(b) or (c) of Article VIII, the
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<PAGE> 34
amount of his benefit shall be paid to the Participant not later than sixty (60)
days after the last day of the Plan Year in which the Participant reaches his
Normal Retirement Date. In addition, payments under any of the options described
in paragraphs (a) and (b) shall satisfy the incidental death benefit
requirements and all other applicable provisions of Section 401(a)(9) of the
Code, the regulations issued thereunder (including Prop. Reg. Section
1.401(a)(9)-2), and such other rules thereunder as may be prescribed by the
Commissioner.
(d) In no event shall the amount of the Participant's benefit payable
pursuant to Article VIII be paid later than the earlier of:
(1) the 60th day after the last day of the Plan Year in which the
Participant's employment is terminated as a result of his retirement,
Disability or death or, if later, in which occurs the Participant's Normal
Retirement Date; or
(2) April 1 of the calendar year immediately following the calendar
year in which he attains age 70-1/2 or retires, whichever is later;
provided, however, that an Employee who is a 5% owner (as defined in
Section 416 of the Code) shall begin receiving payment of his retirement
benefit no later than the April 1 immediately following the calendar year
in which he attains age 70-1/2, even if he has not actually retired from
the employ of his Employer at that time. Notwithstanding the foregoing,
nothing contained herein shall effect a Participant's right to begin
receiving his benefit in accordance with the minimum distribution
requirements under Section 401(a)(9) of the Code.
(e) Notwithstanding the foregoing, payments under any of the options
described in paragraphs (a) and (b) of this Article IX shall satisfy the
requirements of Section 409(o) of the Code, the regulations issued thereunder
and such other rules thereunder as may be prescribed by the Commissioner, but
only with respect to stock acquired by the Plan after December 31, 1986, as
follows:
(1) Payments of any benefit to which a Participant is entitled under
paragraph (a) or (b) of Article VIII shall begin no later than one year
after the close of the Plan Year in which the Participant retires or
becomes Disabled.
(2) Payment of any severance of employment benefit to which a
Participant is entitled under paragraph (c) of Article VIII shall begin not
later than one year after the close of the Plan Year in which the
Participant incurs his fifth consecutive One Year Break in Service.
(3) Payment of any benefit to which a Participant's beneficiary or
beneficiaries are entitled under paragraph (d) of Article VIII shall begin
not later than one year after the close of the Plan Year of the
Participant's death.
(4) Unless the Participant (or his beneficiary) elects otherwise,
payments made under subparagraphs (1), (2) and (3) of this paragraph (e),
during any Plan Year, shall not be
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less than the amount that would be paid if the Participant's vested
Accounts were distributed in substantially equal periodic payments (not
less frequently than annually) over a period not longer than the greater of
(A) 5 years, or
(B) in the case of a Participant with an account balance in
excess of $500,000, five years plus one additional year (but not more
than five additional years) for each $100,000 or fraction thereof by
which such balance exceeds $500,000 (such amounts to be adjusted under
such regulations as may be issued by the Secretary of the Treasury).
(5) Notwithstanding the foregoing, any portion of a Participant's
account attributable to shares of Employer Securities that were purchased
with a loan described in Section 404(a)(9) of the Code, shall not be
required to be distributed until the close of the Plan Year in which such
loan is repaid in full.
(f) PERIODIC ADJUSTMENTS. To the extent that the balance of a Participant's
Accounts has not been distributed and remains in the Plan, and notwithstanding
anything contained in the Plan to the contrary, the value of such remaining
balance shall be subject to adjustment from time to time pursuant to the
provisions of Article VII.
(g) DIRECT ROLLOVER DISTRIBUTIONS. Notwithstanding any provision of the
Plan to the contrary, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have all or any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover. In the event that a Distributee elects to
have only a portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan, the portion must not be valued at less than $500
(adjusted under such regulations as may be issued from time to time by the
Secretary of the Treasury).
(h) NO DISTRIBUTIONS BEFORE OCTOBER 1, 1998. Notwithstanding the foregoing,
no distribution from this Plan shall be permitted during the period beginning
with the date shares of International Data Group, Inc. are converted into shares
of IDG Books Worldwide, Inc. and ending September 30, 1998.
35.
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ARTICLE X
HARDSHIP DISTRIBUTIONS AND LOANS
(a) (1) A Participant who has attained the age of 55 years, has terminated
his employment with his Employer for reasons other than retirement,
Disability, or death, and whose vested benefits will be distributed
pursuant to paragraph (b)(2)(B) or (b)(3) of Article IX, shall be eligible
to receive an accelerated distribution on account of Hardship. Upon receipt
of a request for a Hardship distribution, the Administrator shall determine
whether an immediate and heavy financial need exists and the amount
necessary to meet the need in a uniform and nondiscriminatory manner.
(2) The determination of whether a Participant has an immediate and
heavy financial need shall be made on the basis of all relative facts and
circumstances. Each Participant requesting an accelerated distribution
shall provide the Plan Administrator with a financial statement, in the
form required by the Administrator.
(3) If the Plan Administrator determines that the Participant is
entitled to an accelerated distribution pursuant to this paragraph (a), the
portion of the Participant's remaining vested benefit determined to be
necessary to satisfy his financial need shall be paid to the Participant as
soon as practicable after the existence of a Hardship has been determined.
The Participant's remaining vested benefit, if any, shall be distributed in
accordance with the terms of paragraphs (b)(2)(B) and (b)(3) of Article IX.
(4) The Plan Administrator shall not make any distribution to a
Participant on account of Hardship unless such Participant has terminated
his employment with his Employer and has met all other requirements of this
paragraph (a).
(b) (1) Upon application of a Participant who is actively employed by an
Employer, based on Hardship, the Plan Administrator, in accordance with its
uniform nondiscriminatory policy, may direct the Trustee to make a loan to
the Participant.
(A) The Administrator, in its absolute discretion, shall
determine whether such Participant has incurred a Hardship (as defined
in paragraph (y) of Article I) and shall determine the amount of such
Hardship loan, pursuant to the terms of this paragraph (b); provided,
however, that no loan shall be approved in an amount less than $1,000.
(B) Until otherwise directed by the Administrator, the Company's
Benefits Manager shall be designated as the person authorized to
administer the loan program set forth herein. Applications shall be
submitted to such person on forms obtained from such person.
(2) The amount advanced may not exceed the lesser of:
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<PAGE> 37
(A) $50,000, reduced by the excess, if any, of:
(i) the Participant's highest aggregate outstanding balance
of all loans from the Plan during the 12-month period ending on
the day before the date on which the loan is made, over
(ii) the aggregate outstanding balance of all loans from the
Plan on the date on which the loan is made; or
(B) 50% of the vested balance of the Participant's Employer
Securities Account and Other Investments Account.
Notwithstanding the foregoing, no Participant shall be entitled to borrow
an amount that the Plan Administrator determines could not be adequately
secured by the portion of such Participant's Accounts that is permitted to
be held as security pursuant to applicable Department of Labor Regulations.
(3) TIME AND MANNER OF REPAYMENT. Any loan made under this paragraph
(b) shall be repayable to the Trust at such times and in such manner as may
be provided by the Administrator, subject to the following limitations:
(A) Each loan shall be secured by 50% of the vested interest of
the Participant in his Accounts. The Administrator shall not accept
any other form of security. Each Participant shall agree to have each
required loan payment deducted from his pay and remitted to the
Trustee.
(B) Each loan shall bear interest at a reasonable rate and shall
provide for substantially level amortization of principal and interest
no less frequently than quarterly. The interest rate charged shall be
comparable to the rate charged by the Bank of Boston (or a similar
institution selected by the Plan Administrator) for comparable loans
as determined at the time the loan is approved by the Plan
Administrator.
(C) Each loan shall be repaid within a specified period of time
not to exceed five (5) years, unless used to acquire the principal
residence of the Participant.
(D) Each Participant shall agree that, notwithstanding any other
provision of his loan agreement, all outstanding principal and
interest attributable to his loan will become immediately due and
payable as of the date of commencement of his distribution of
benefits.
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(4) DEFAULT. If the loan is not paid on the due date, the Trustee, at
the direction of the Administrator, may proceed to collect said loan with
any legal remedy available, including reducing the amount of any
distribution permitted under Article VIII by the amount of any such loan
that may be due and owing as of the date of distribution or any other
action that may be permitted by law.
(5) PRIOR LOANS. Notwithstanding the foregoing, this Amendment and
Restatement, in and of itself, does not require the early repayment of any
loan outstanding and not otherwise due on the date of this Amendment and
Restatement.
ARTICLE XI
DIVERSIFICATION DISTRIBUTIONS
(a) DIVERSIFICATION DISTRIBUTIONS (REQUIRED) . For Plan Years beginning
after December 31, 1986 and with respect to Employer Securities acquired after
December 31, 1986, any Participant who has attained age 55 and completed ten
(10) years of participation in the Plan (disregarding any years of participation
beginning prior to January 1, 1986) shall have the right to direct the Trustee
to distribute a portion of his Employer Securities Account before his
retirement, death, Disability, or severance of employment as a diversification
distribution.
(1) Such a Participant may elect, within ninety (90) days after the
close of the first Plan Year in the Diversification Election Period
(Required), to receive a distribution of cash in an amount not exceeding
25% of the portion of the balance of his Employer Securities Account
attributable to Employer Securities acquired by, or contributed to, the
Plan after December 31, 1986, determined as of the last day of such Plan
Year.
(2) Within ninety (90) days after the close of the second, third,
fourth and fifth Plan Years in the Diversification Election Period
(Required), such a Participant may elect to receive a distribution of cash
in an amount equal to the difference between
(A) 25% of the portion of the balance of his Employer Securities
Account attributable to Employer Securities acquired by, or
contributed to, the Plan after December 31, 1986, determined as of the
last day of such Plan Year, and
(B) the amount with respect to which a diversification
distribution was previously elected;
(3) In the final Plan Year of the Diversification Election Period
(Required), the Participant may elect to receive a distribution in cash in
an amount equal to the difference between
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(A) 50% of the portion of the balance of his Employer Securities
Account attributable to Employer Securities acquired by, or
contributed to, the Plan after December 31, 1986, determined as of the
last day of such Plan Year, and
(B) the amount with respect to which a diversification
distribution was previously elected.
(4) Notwithstanding the foregoing, if the annual valuation of Employer
Securities has not been made by the close of any Plan Year in the
Diversification Election Period (Required), the applicable ninety (90) day
election period shall not close until ninety (90) days after such valuation
has been made.
(5) If any Participant elects to receive a diversification
distribution in any year in the Diversification Election Period (Required),
the Trustee shall sell Employer Securities that are allocated to the
Account of the Participant with a value equal to the amount to be
distributed. The proceeds of such sale shall be distributed to the
Participant no later than ninety (90) days after the Participant's election
is made.
(b) DIVERSIFICATION DISTRIBUTIONS (IDG BOOKS). For Plan Years ending no
earlier than ninety (90) days before the Internal Revenue Service issues a
determination letter with respect to the tax qualified status of this Plan, any
Participant whose attained age and years of participation in the Plan total 60
or more shall have the right to direct the Trustee to distribute a portion of
his Employer Securities Account before his retirement, death, Disability, or
severance of employment as a diversification distribution.
(1) Such a Participant may elect, within ninety (90) days after the
close of each Plan Year in the Diversification Election Period (IDG Books),
to make a diversification election of an amount not exceeding the lesser of
$65,000 or 10% of his Employer Securities Account, determined as of the
last day of such Plan Year.
(2) If a Participant makes a diversification election under this
paragraph (b) of Article XI, the Trustee shall transfer the amount elected
by the Participant in subparagraph (1) to the International Data Group
401(k) Plan.
(3) Notwithstanding the foregoing, if the annual valuation of Employer
Securities has not been made by the close of any Plan Year in the
Diversification Election Period (IDG Books), the applicable ninety (90) day
election period shall not close until ninety (90) days after such valuation
has been made.
(4) If any Participant elects to make a diversification election in
any year in the Diversification Election Period (IDG Books), the Trustee
shall sell Employer Securities that are allocated to the Account of the
Participant with a value equal to the amount to be transferred to the
International Data Group 401(k) Plan. The proceeds of such sale shall be
diversified on behalf of the Participant no later than ninety (90) days
after the Participant's election is made.
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(c) ELECTION. An eligible Participant's diversification election shall be
made in writing on such forms as may be approved by the Plan Administrator, with
the Participant's designating the amount to be distributed as a percentage of
the portion of his Employer Securities Account that is available for
distribution as described in paragraphs (a) and (b).
(d) MINIMUM DISTRIBUTION. Notwithstanding any other provision of this
Article XI, no diversification distribution shall be made to any Participant
unless the value of the Employer Securities acquired by or contributed to this
Plan, and allocated to the Participant's Employer Securities Account, exceeds
$500 as of the Valuation Date immediately preceding the first day on which the
Participant may elect a diversification distribution.
ARTICLE XII
TRUST FUND
The Trust Fund shall be held by State Street Bank and Trust Company, as
Trustee, or by a successor trustee or trustees, for use in accordance with the
Plan under the Agreement and Declaration of Trust. The Agreement and Declaration
of Trust may from time to time be amended in the manner therein provided.
Similarly, the Trustee may be changed from time to time in the manner provided
in the Agreement and Declaration of Trust.
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ARTICLE XIII
EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND
The Company shall bear all expenses of implementing this Plan and the
Trust. For its services, any corporate trustee shall be entitled to receive
reasonable compensation in accordance with its rate schedule in effect from time
to time for the handling of a retirement trust. Any individual Trustee shall be
entitled to such compensation as shall be arranged between the Company and the
Trustee by separate instrument; provided, however, that no person who is already
receiving full-time pay from any Employer or any Affiliate shall receive
compensation from the Trust Fund (except for the reimbursement of expenses
properly and actually incurred). The Company may pay all expenses of the
administration of the Trust Fund, including the Trustee's compensation, the
compensation of any investment manager, the expense incurred by the Plan
Administrator in discharging its duties, all income or other taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon or
in respect of the Trust Fund, and any interest that may be payable on money
borrowed by the Trustee for the purpose of the Trust and any Employer may pay
such expenses as relate to Participants employed by such Employer. Any such
payment by the Company or an Employer shall not be deemed a contribution to this
Plan. Such expenses shall be paid out of the assets of the Trust Fund unless
paid or provided for by the Company or another Employer. Notwithstanding
anything contained herein to the contrary, no excise tax or other liability
imposed upon the Trustee, the Plan Administrator or any other person for failure
to comply with the provisions of any federal law shall be subject to payment or
reimbursement from the assets of the Trust.
ARTICLE XIV
AMENDMENT AND TERMINATION
(a) RESTRICTIONS ON AMENDMENT AND TERMINATION. It is the present intention
of the Company to maintain the Plan set forth herein indefinitely. Nevertheless,
the Company specifically reserves to itself the right at any time, and from time
to time, to amend or terminate this Plan in whole or in part; provided, however,
that no such amendment:
(1) shall have the effect of vesting in any Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent funds held subject to the terms of the Trust;
(2) shall cause or permit any property held subject to the terms of
the Trust to be diverted to purposes other than the exclusive benefit of
the Participants and their beneficiaries or for the administrative expenses
of the Plan Administrator and the Trust;
(3) shall reduce any vested interest of a Participant on the later of
the date the amendment is adopted or the date the amendment is effective,
except as permitted by law;
(4) shall reduce the Accounts of any Participant;
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(5) shall amend any vesting schedule with respect to any Participant
who has at least three Years of Service at the end of the election period
described below, except as permitted by law, unless each such Participant
shall have the right to elect to have the vesting schedule in effect prior
to such amendment apply with respect to him, such election, if any, to be
made during the period beginning not later than the date the amendment is
adopted and ending no earlier than sixty (60) days after the latest of the
date the amendment is adopted, the amendment becomes effective or the
Participant is issued written notice of the amendment by his Employer or
the Plan Administrator; or
(6) shall increase the duties or liabilities of the Trustee without
its written consent.
(b) AMENDMENT OF PLAN. Subject to the limitations stated in paragraph (a),
the Company shall have the power to amend this Plan in any manner that it deems
desirable, and, not in limitation but in amplification of the foregoing, it
shall have the right to change or modify the method of allocation of
contributions hereunder, to change any provision relating to the administration
of this Plan and to change any provision relating to the distribution or
payment, or both, of any of the assets of the Trust.
(c) TERMINATION OF PLAN. Any Employer, in its sole and absolute discretion,
may permanently discontinue making contributions under this Plan or may
terminate this Plan and the Trust (with respect to all Employers if it is the
Company, or with respect to itself alone if it is an Employer other than the
Company), completely or partially, at any time without any liability whatsoever
for such permanent discontinuance or complete or partial termination. In any of
such events whether or not initiated by the Employer, the affected Participants,
notwithstanding any other provisions of this Plan, shall have fully vested
interests in the amounts credited to their respective Accounts at the time of
such complete or partial termination of this Plan and the Trust or permanent
discontinuance of contributions. All such vested interests shall be
nonforfeitable.
(d) METHOD OF DISCONTINUANCE. In the event an Employer decides to
permanently discontinue making contributions, such decision shall be evidenced
by an appropriate resolution of its Board and a certified copy of such
resolution shall be delivered to the Plan Administrator and the Trustee. All of
the assets in the Trust Fund belonging to the affected Participants on the date
of discontinuance specified in such resolutions shall, aside from becoming fully
vested as provided in paragraph (c), be held, administered and distributed by
the Trustee in the manner provided under this Plan. In the event of a permanent
discontinuance of contributions without such formal documentation, full vesting
of the interests of the affected Participants in the amounts credited to their
respective Accounts will occur on the last day of the year in which a
substantial contribution is made to the Trust.
(e) METHOD OF TERMINATION.
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(1) In the event an Employer decides to terminate this Plan and the
Trust, such decision shall be evidenced by an appropriate resolution of its
Board and a certified copy of such resolution shall be delivered to the
Plan Administrator and the Trustee. After payment of all expenses and
proportional adjustments of individual accounts to reflect such expenses
and other changes in the value of the Trust Fund as of the date of
termination, each affected Participant or the beneficiary of any such
Participant shall be entitled to receive, in a lump sum, any amount then
credited to his Accounts.
(2) At the election of the Participant, the Plan Administrator may
transfer the amount of any Participant's distribution under this paragraph
(e) to the trustee of another qualified plan or the trustee of an
individual retirement account or individual retirement annuity instead of
distributing such amount to the Participant. Any such election by a
Participant shall be in writing and filed with the Plan Administrator.
(f) INVOLUNTARY TERMINATION. Notwithstanding the provisions of paragraph
(a), if it is finally determined that the Plan and the Trust do not qualify
initially as a tax-free employees plan and trust under the Code, then, in that
event, at the election of the Company, the Plan and Trust may terminate as of
the date of such final determination, in which event the Plan Administrator
shall direct the Trustee to return Accounts transferred from the IDG ESOP to the
IDG ESOP (to the extent that the Trustee of the IDG ESOP agrees to such return),
and to pay the then aggregate of any remaining balances in the Employer
contribution accounts to the appropriate Employer.
(1) The Participants and their beneficiaries shall have no
further right under this Plan or the Trust; and
(2) The Trustee shall be discharged of all obligations and duties
under the Trust.
ARTICLE XV
MISCELLANEOUS
(a) MERGER OR CONSOLIDATION. This Plan and the Trust may not be merged or
consolidated with, and the assets or liabilities of this Plan and the Trust may
not be transferred to, any other plan or trust unless each Participant would
receive a benefit immediately after the merger, consolidation or transfer, if
the plan and trust then terminated, that is equal to or greater than the benefit
the Participant would have received immediately before the merger, consolidation
or transfer if this Plan and the Trust had then terminated.
(b) (1) PROHIBITION ON ALIENATION. Except as provided in paragraphs (b)(2)
and (b)(3), no Participant or beneficiary of a Participant shall have any
right to assign, transfer, appropriate, encumber, commute, anticipate or
otherwise alienate his interest in this Plan or
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the Trust or any payments to be made thereunder; no benefits, payments,
rights or interests of a Participant or beneficiary of a Participant of any
kind or nature shall be in any way subject to legal process to levy upon,
garnish or attach the same for payment of any claim against the Participant
or beneficiary of a Participant; and no Participant or beneficiary of a
Participant shall have any right of any kind whatsoever with respect to the
Trust, or any estate or interest therein, or with respect to any other
property or right, other than the right to receive such distributions as
are lawfully made out of the Trust, as and when the same respectively are
due and payable under the terms of this Plan.
(2) QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding the
provisions of paragraph (b)(1), the Plan Administrator shall direct the
Trustee to make payments pursuant to a Qualified Domestic Relations Order
as defined in Section 414(p) of the Code and as determined by the
Administrator pursuant to this subparagraph (2).
(A) DETERMINATION. The Plan Administrator shall determine whether
a court order purporting to qualify under Section 414(p) of the Code
actually meets such requirements as soon as practicable following
receipt of such order. The Administrator shall establish procedures
for making such determination.
(i) The Administrator shall refuse to approve any order
which, in its opinion, does not comply strictly with the
requirements of Section 414(p) of the Code. No order may be
approved if the Administrator determines that it contains any
ambiguity, or if any provision is inconsistent with any other
requirement of applicable law.
(ii) The Administrator may require an order to include
provisions that it deems necessary to properly administer the
order under the terms of this Plan, including (without
limitation):
a. the amount or percentage of the Participant's
benefits to be paid to the alternate payee, such amount or
percentage to be determined as of a specified Plan Valuation
Date.
b. clear provisions specifying the disposition of
unpaid benefits of the alternate payee in the event of the
death of either the Participant or the alternate payee:
1. A qualified domestic relations order may
provide that the unpaid balance of an alternate
payee's benefits be paid to the alternate payee's
estate or personal representative. An alternate payee
may not designate an individual death beneficiary.
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2. If the alternate payee is to receive any
unpaid benefits provided under the order
notwithstanding the prior death of the Participant,
the order must clearly so provide in full compliance
with the provisions of ERISA and the Code.
c. clear provisions allocating any applicable annual
distribution limitation between (or among) the Participant
and any alternate payee(s).
(B) NOTIFICATION. The Administrator shall notify the Participant
and the alternate payee of receipt of such order as soon as
practicable following such receipt. The Administrator shall notify the
Participant and the alternate payee of the Plan Administrator's
determination as to whether such order is qualified as soon as
practicable following such determination. If the Plan Administrator is
able to determine whether an order is qualified promptly upon receipt
of such order, the Administrator may send one notice which informs the
Participant and the alternate payee both of the receipt of the order
and of the Administrator's determination.
(C) SUSPENSE ACCOUNT WHILE ORDER IS BEING EVALUATED. During the
time that the Plan Administrator is considering whether such an order
is qualified, any amount to which the Administrator reasonably
believes that the order purports to apply shall not be paid to the
Participant, even if the Participant would otherwise be entitled to
receive such amount.
(i) If an amount would otherwise be paid to the Participant
while the Plan Administrator is considering such an order, such
amount shall be credited to a separate suspense account. The
Participant shall retain any right he may have to direct
diversification of the investments of such suspense account to
the same extent as if no order had been received.
(ii) If the Administrator determines that the order is
qualified, the amounts in the suspense account shall be paid to
the alternate payee to the extent provided in the order. Any
remaining amounts in the suspense account shall be paid to the
Participant. If the Administrator determines that the order is
not qualified, the amounts in the suspense account shall be paid
to the Participant.
(iii) The Plan Administrator shall determine the date
following its determination as of which the amounts in the
suspense account are to be released to the Participant and/or the
alternate payee. The Administrator may allow a reasonable period
during which either party may appeal its determination as to the
status of the order before releasing the amounts from the
suspense account. If either party appeals such determination, the
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Administrator shall not release the amounts from the suspense
account until the Administrator makes its decision on appeal. If
a substitute order is received during the appeal period, the
Administrator shall not release any amounts from the suspense
account that the Administrator reasonably believes to be covered
by the substitute order until after it has determined whether the
substitute order is qualified.
(iv) No amount shall remain in a suspense account longer
than 18 months, except that the receipt of a substitute order
with respect to funds already held in a suspense account shall
extend such period until 18 months following receipt by the
Administrator of such substitute order. If, at the end of such
period, the Administrator still has not determined whether the
order (or substitute order) is qualified, the amounts in the
suspense account shall be distributed to the Participant.
(D) FREEZE ON ACCOUNT IN ANTICIPATION OF ORDER.
(i) If the Plan Administrator is informed that a person who
would qualify as an alternate payee intends to obtain a qualified
domestic relations order with respect to the Accounts of a
Participant, the Administrator may refuse, for a reasonable
period, to permit the distribution to the Participant from such
Accounts of any amount which the Administrator reasonably
believes such alternate payee will claim.
(ii) Even in the absence of specific information that a
potential alternate payee is seeking a qualified domestic
relations order, the Plan Administrator may refuse to permit the
distribution to the Participant from his Accounts of any amount
if the Administrator reasonably believes that distribution of
such amount to the Participant would result in a violation of the
community property rights of the Participant's spouse or former
spouse.
(iii) In the event the Administrator refuses to permit a
distribution in accordance with subsection (i) or (ii) of this
section (D), the Participant shall retain any right he may have
to direct diversification of the investments to the same extent
as if the Administrator had not received such information or
formed such belief.
(E) TIME OF DISTRIBUTION TO ALTERNATE PAYEE. An alternate payee
who is entitled to benefits under a qualified domestic relations order
may begin to receive a distribution of benefits, to the extent
permitted by such order, as soon as practicable following the Plan
Administrator's determination that the order is qualified but not
before the participant either terminates employment or reaches age 50,
whichever is earlier.
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(3) LEVY BY INTERNAL REVENUE SERVICE. Notwithstanding the provisions
of paragraph (b)(1), the Plan Administrator shall direct the Trustee to
comply with the lawful terms of a levy of the Internal Revenue Service.
(b) GOVERNING LAW. This Plan shall be administered, construed and enforced
according to the laws of the Commonwealth of Massachusetts, except to the extent
such laws have been expressly preempted by federal law.
(c) VETERANS' REEMPLOYMENT RIGHTS. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service shall be provided in accordance with Section 414(u)
of the Code.
(d) ACTION BY EMPLOYER. Whenever the Company or another Employer under the
terms of this Plan is permitted or required to do or perform any act, it shall
be done and performed by the Board of Directors of the Company or such other
Employer and shall be evidenced by proper resolution of such Board of Directors
certified by the Secretary or Assistant Secretary of the Company or such other
Employer.
(e) ALTERNATIVE ACTIONS. In the event it becomes impossible for the
Company, another Employer, the Plan Administrator or the Trustee to perform any
act required by this Plan, then the Company, such other Employer, the Plan
Administrator or the Trustee, as the case may be, may perform such alternative
act that most nearly carries out the intent and purpose of this Plan.
(f) GENDER. Throughout this Plan, and whenever appropriate, the masculine
gender shall be deemed to include the feminine and neuter; the singular, the
plural; and vice versa.
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IN WITNESS WHEREOF, this Agreement has been executed this _____ day of May,
1998.
ATTEST: IDG BOOKS WORLDWIDE, INC.
(CORPORATE SEAL)
By:
Secretary President
"COMPANY"
48.
