Exhibit 10.4
Scholastic
Corporation
Directors’
Deferred Compensation Plan
(Amended and
Restated on September 23, 2008)
Article
1. Introduction.
1.1
Establishment
.
Scholastic Corporation, a Delaware corporation (the
“Company”) established the Scholastic Corporation 1995
Directors’ Deferred Compensation Plan (the
“Plan”) effective as of October 1, 1995 (the
“Effective Date”). The Company has amended the Plan
from time to time since its adoption. The plan was last amended and
restated effective as of January 1, 2005 pursuant to which the Plan
was renamed the “Scholastic Corporation Directors’
Deferred Compensation Plan.”
1.2
Purpose
.
The primary purpose of the Plan is to provide Directors of the
Company with the opportunity to voluntarily defer all or a portion
of their Compensation, subject to the terms of the Plan. By
adopting the Plan, the Company desires to enhance its ability to
attract and retain Directors of outstanding competence. All
capitalized terms not defined herein shall have the meanings set
forth in Article 2 of the Plan.
1.3
Restatement
.
The Company hereby amends and restates the Plan to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended effective January 1, 2005.
1.4
Effect of
Restatement; Plan Bifurcation. Deferrals made
under the Plan on and after January 1, 2005 shall be made in
accordance with, and shall be governed by, the terms and conditions
of the plan document as set forth herein. Deferrals made under the
Plan prior to January 1, 2005 and all earnings thereon shall be
governed by the terms and conditions of the Plan as in effect on
December 31, 2004. The Plan, as in effect immediately prior to
January 1, 2005 shall be known and referred to as the
“Grandfathered Plan.”
1.5
Section 409A of
the Code. This Plan is
intended to comply with the applicable requirements of Section 409A
of the Code and shall be limited, construed and interpreted in
accordance with such intent. To the extent that any payment or
benefit hereunder is subject to Section 409A of the Code, it shall
be paid in a manner that will comply with Section 409A of the Code,
including regulations or any other guidance issued by the Secretary
of the Treasury and the Internal Revenue Service with respect
thereto. Notwithstanding anything herein to the contrary, any
provision in this Plan that is inconsistent with Section 409A of
the Code shall be deemed to be amended to comply with Section 409A
of the Code and to the extent such provision cannot be amended to
comply therewith, such provision shall be null and void.
Article 2.
Definitions
Whenever used
herein, the following terms shall have the meanings set forth
below, and, when the defined meaning is intended, the term is
capitalized:
|
|
(a)
|
“Board”
or “Board of Directors” means the Board of Directors of
the Company.
|
|
|
|
|
|
|
(b)
|
“Chairperson
Fees” means fees paid by the Company to a Director, in cash,
for serving as Chairperson of a Board Committee during the relevant
Plan Year and which is exclusive of any Retainer or Meetings Fees
earned during such Plan Year.
|
|
|
|
|
|
|
(c)
|
“Change
in Control” of the Company means, and shall be deemed to have
occurred upon, any of the following events:
|
|
|
|
|
|
|
|
(i)
|
a “change
in ownership of the Company” which means the date that any
one person, or more than one person acting as a group (as defined
below), acquires ownership of stock of the Company that, together
with stock held by such person or group, constitutes more than 50%
of the total fair market value or total voting power of the stock
of the Company; provided, that, if any one person or more than one
person acting as a group, is considered to own more than 50% of the
total fair market value or total voting power of the stock of the
Company, the acquisition of additional stock by the same person or
persons is not considered to cause a change in the ownership of the
Company (or to cause a “change in the effective
control” (as
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 10.4
|
|
|
|
|
|
|
|
defined in
subsection (ii) below). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result
of a transaction in which the Company acquires its stock in
exchange for property will be treated as an acquisition of stock
for purposes of this section.
|
|
|
|
|
|
|
|
|
(ii)
|
a “change
in effective control of the Company,” which means the date
that either: (A) any one person, or more than one person acting as
a group (as defined below), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition
by such person or persons) ownership of stock of the Company
possessing 35% or more of the total voting power of the stock of
the Company; or (B) a majority of members of the Board are replaced
during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board
prior to the date of the appointment or election.
|
|
|
|
|
|
|
|
|
(iii)
|
a “a
change in the ownership of a substantial portion of the
Company’s assets,” which means the date that any one
person, or more than one person acting as a group (as defined
below), acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair
market value equal to or more than 40% of the total gross fair
market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the Company, or the
value of the assets being disposed of, determined without regard to
any liabilities associated with such assets. Notwithstanding the
foregoing, a Change of Control shall not occur when there is a
transfer to an entity that is controlled by the shareholders of the
Company immediately after the transfer, as provided
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
Exhibit 10.4
|
|
|
|
in this
paragraph (iii). A transfer of assets by the Company is not treated
as a change in the ownership of such assets if the assets are
transferred to:
|
|
|
|
|
|
|
(a)
|
A shareholder
of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
|
|
|
|
|
|
|
(b)
|
An entity, 50%
or more of the total value or voting power of which is owned,
directly or indirectly, by the Company; or
|
|
|
|
|
|
|
(c)
|
A person, or
more than one person acting as a group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all
the outstanding stock of the Company; or
|
|
|
|
|
|
|
(d)
|
An entity, at
least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph
(c).
|
Persons will not be considered to be acting as a group solely
because they purchase or own stock or purchase assets of the same
corporation at the same time, or as a result of the same public
offering. However, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of stock or assets,
or similar business transaction with the corporation. If a person,
including an entity shareholder, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of
stock or assets, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation
prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other
corporation.
Notwithstanding
the foregoing, an event shall not be considered to be a
“Change of Control” for payment purposes if, for
purposes of Section 409A of the Code, such event would not be
considered to be a “Change in Control Event” under
Section 409A of the Code and regulations issued thereunder by the
Secretary of the Treasury.
|
|
(d)
|
“Code”
means the Internal Revenue Code of 1986, as amended. Reference to
any section or subsection of the Code includes reference to any
comparable or succeeding provisions of any legislation that amends,
supplements or replaces such section or subsection.
|
|
|
|
|
|
|
(e)
|
“Company”
means Scholastic Corporation, a Delaware corporation.
|
|
|
|
|
|
|
(f)
|
“Compensation”
means the Retainer, Meeting Fees and, if applicable, Chair- person
Fees payable to a Participant by the Company for services performed
as a Director during a Plan Year. In no event, however, shall
amounts paid in the form of Company stock or stock options qualify
as Compensation eligible for deferral under the Plan.
|
|
|
|
|
|
|
(g)
|
“Director”
means each member of the Board of Directors of the Company who
receives a Retainer and Meeting Fees for service on the Board of
Directors and who is not an employee of the Company.
|
3
Exhibit 10.4
|
|
(h)
|
“Disability”
means the inability of a Participant to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that may result in death and, in any case, is
expected to continue for a period of not less than 12
months.
|
|
|
|
|
|
|
(i)
|
“Effective
Date” means the date the Plan became effective, as set forth
in Section 1.1 herein.
|
|
|
|
|
|
|
(j)
|
“Grandfathered
Plan” means the terms and provisions of the Plan in effect
immediately prior to the Restatement Effective Date.
|
|
|
|
|
|
|
(k)
|
“Meeting
Fees” means fees paid by the Company to a Director, in cash,
for attendance at Board and various Board committee meetings during
the relevant Plan Year, and which is exclusive of any Retainer or
Chairperson Fees earned during such Plan Year. For the purposes of
the Plan, “Meeting Fees” shall not include any fees
paid or payable in Company stock or stock options.
|
|
|
|
|
|
|
(l)
|
“Participant”
means any Director who is actively participating in the
Plan.
|
|
|
|
|
|
|
(m)
|
“Plan”
means the Scholastic Corporation Directors’ Deferred
Compensation Plan.
|
|
|
|
|
|
|
(n)
|
“Plan
Administrator” means the executive(s) appointed by the Board
pursuant to Section 3.1 hereof to administer certain provisions of
the Plan as set forth herein and shall initially be the Vice
President of Human Resources of Scholastic Inc.
|
|
|
|
|
|
|
(o)
|
“Plan
Year” means the fiscal year of the Company beginning on June
1 st and ending on May 31 st .
|
|
|
|
|
|
|
(p)
|
“Restatement
Effective Date” means January 1, 2005.
|
|
|
|
|
|
|
(q)
|
“Retainer”
means the annual cash retainer paid by the Company and earned by a
Director during the relevant Plan Year with respect to the
Director’s service on the Board, and which is exclusive of
Meeting Fees or Chairperson Fees earned during such Plan Year. For
purposes of the Plan, “Retainer” shall not include any
retainer paid or payable in Company stock or stock
options.
|
|
|
|
|
|
|
(r)
|
“Transition
Relief” means the extended time period permitted by
Q&A-21 of Notice 2005-1 issued by the Internal Revenue Service
in which a valid deferral election could be made with respect to
compensation to be earned in, or during a portion of, calendar year
2005.
|
Article 3. Administration
3.1
Administration
of the Plan . The Plan
shall be administered by, and in the sole and absolute discretion
of, the Board. Subject to the provisions set forth herein, the
Board shall take such actions as are required or permitted to be
taken by it hereunder and shall have full and complete
discretionary authority to interpret the Plan, to determine the
rights of each Director and the eligibility of a Director to
participate in the Plan, the amount of benefits payable to a
Director
4
Exhibit 10.4
and the terms
and conditions of each Director’s participation in the Plan;
to construe and interpret the Plan and any agreement or instrument
entered into under the Plan, including any unclear, uncertain or
disputed terms thereof; to establish, amend, waive or rescind rules
and regulations for the Plan’s administration; to amend
(subject to the provisions of Article 9 herein) the terms and
conditions of the Plan and any agreement or instrument entered into
under the Plan and to make all other determinations which may be
necessary or advisable for the administration of the Plan. The
Board may employ accountants and counsel and other persons to
assist or render advice to it, all at the expense of the
Company.
Subject to the
terms of the Plan, the Board may delegate any or all of its
authority granted under the Plan to an executive or executives of
the Company. The executive or executives to whom the Board has
delegated authority to administer the Plan shal
