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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
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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
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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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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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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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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 Xxxxxxxx &
Xxxxxxx 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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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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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 Xxxxxxxx & Xxxxxxx 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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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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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.
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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:
000 Xxxx Xxxxxxxxx Xxxx. Xxxx Xxxxxxxx Building
Suite 000 Xxxxxxx Xxxxx Xxxx,
Xxxxxx Xxxx, XX 00000 0 Xxxx Xxxx Xx.
Fax No.: 000-000-0000 Xxxxxx, XX 00000
Fax No.: 000-000-0000
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. Xxxxxx, XX 00000
One Exeter Plaza Fax No.: 000-000-0000
Xxxxxx, XX 00000
Fax No.: 000-000-0000
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