Exhibit 10.22
ESI EXECUTIVE
DEFERRED BONUS COMPENSATION PLAN
ARTICLE I
Nature and Purpose of Plan
1.1 Nature. The Plan is
established by the Company as an unfunded, non-qualified deferred
compensation plan for a select group of management and highly compensated
employees of the Company.
1.2 Purposes. The
purpose of the Plan is to provide Eligible Employees with an opportunity to
defer all or a portion of their Bonus.
ARTICLE II
Definitions and Rules of Construction
2.1 Definitions. As used in
the Plan, the following words and phrases, when capitalized, have the
following meanings:
(a)
"Account" means a bookkeeping account reflecting the amount of a
Participant's Bonus deferred under the Plan and, where applicable, interest
credited on deferred amount.
(b)
"Beneficiary" means the person or persons designated to receive
benefits under the Plan in the event of the Participant's death.
(c)
"Board" means the Board of Directors of the Company.
(d)
"Bonus" means the annual bonus compensation earned by an Eligible
Employee for a Plan Year under the Bonus Plan.
(e) "Bonus
Plan" means, with respect to a calendar year, the annual incentive
bonus plan established by the Company.
(f)
"Cash Bonus" means, with respect to an Eligible Employee for a
Plan Year, the portion of the Eligible Employee's Bonus that is payable in
Cash under the terms of the Bonus Plan.
(g)
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and interpretive rules and regulations.
(h)
"Committee" means the committee appointed by the Company pursuant
to Article IV to administer the Plan.
(i)
"Company" means ITT Educational Services, Inc.
(j)
"Deferred Cash Account" means the Account maintained by the
Company to reflect the amount of Cash Bonus and interest credited to a
Participant's Account pursuant to Section 5.2.
(k)
"Deferred Share Account" means the Account maintained by the
Company to reflect the Shares and dividends credited to a Participant's
Account pursuant to Section 5.3.
(l)
"Effective Date" means March 15, 2000.
(m)
"Eligible Employee" means an Employee who is (1) a highly
compensated employee within the meaning of Code subsection 414(q), and (2)
designated by the Board of Directors pursuant to Article III as a key
management employee who is eligible to participate in the Plan.
(n)
"Employee" means any person employed by ESI as a salaried
employee, who receives compensation from ESI that is initially reported on a
federal wage and tax statement (Form W-2).
(o)
"ESI" means the Company and all Related Employers.
(p)
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(q) "Fair
Market Value" means, with respect to Shares, the last sale price on the
applicable date (or if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of one Share
on the principal exchange on which the Shares are listed, or if not listed
on any exchange, on the Nasdaq National Market System or any similar system
then in use, or if the Shares are not listed on the Nasdaq National Market
System, the mean between the closing high bid and low asked quotations
of one Share on the date in question as reported by Nasdaq or any similar
system then in use, or, if no quotations are available, the Fair Market
Value on such date of one Share as the Board shall determine.
(r)
"Participant" means an Eligible Employee who elects to defer all
or a portion of his Bonus under the Plan.
(s)
"Plan" means the ESI Executive Deferred Bonus Compensation Plan,
as set forth in this document, as amended from time to time.
(t) "Plan
Year" means (1) the period beginning on the Effective Date and ending
on December 31, 2000, and (2) each subsequent calendar year.
(u)
"Related Employer" means an employer that, together with the
Company, is a part of a controlled group of trades or businesses within the
meaning of Code subsection 414(b) or (c) or part of an affiliated service
group within the meaning of Code Section 414(m).
(v)
"Share" means the $.01 par value common stock of the Company.
(w) "Stock
Bonus" means, with respect to an Eligible Employee for a Plan Year,
that portion of the Eligible Employee's Bonus that is payable in Shares
under the terms of the Bonus Plan.
2.2 Rules of Construction. The
following rules of construction will govern in interpreting the Plan:
(a) Words
used in the masculine gender will be construed to include the feminine
gender, where appropriate.
(b) Words used
in the singular will be construed to include the plural, where appropriate,
and vice versa.
(c) If any
provision of the Plan will be held to be illegal or invalid for any reason,
that provision shall be deemed to be null and void, but the invalidation of
that provision will not otherwise impair or affect the Plan.
ARTICLE III
Eligibility and Participation
3.1 Eligibility. The Plan is
intended to be an unfunded plan of deferred compensation for a select group
of management and highly compensated Employees. An Employee will be an
Eligible Employee and thereby eligible for membership in this Plan only if
(1) the Employee is a highly compensated employee within the meaning of
Code subsection 414(q); (2) the Employee is designated by the
Compensation Committee of the Board of Directors as a key management
employee who is eligible to participate.
3.2 Participation. An Eligible
Employee will become a Participant by filing an election form in accordance
with the provisions of Section 5.1. A Participant will remain a Participant
until the Participant has received all payments to which the Participant is
entitled under the terms of the Plan.
ARTICLE IV
Plan Administration
4.1 The Committee. The Plan
will be administered by the ESI Employee Benefits Administration and
Investment Committee.
4.2 Authority of the
Committee. The Committee has sole discretion to make all
determinations that may be necessary or advisable for the administration of
the Plan, including the discretionary authority to interpret the provisions
of the Plan. All determinations and decisions made by the Committee pursuant
to the provisions of the Plan, and all related orders or resolutions of the
Board, shall be final, conclusive and binding upon all persons, including
the Company, ESI, Participants, and their estates and beneficiaries.
4.3 Section 16 Compliance. It
is the intention of the Company that the Plan and the administration of the
Plan comply in all respects with Section 16(b) of the Exchange Act and the
rules and regulations promulgated thereunder. If any Plan provision, or any
aspect of the administration of the Plan, is found not to be in compliance
with Section 16(b) of the Exchange Act, the provision or administration will
be deemed null and void, and in all events the Plan will be construed in
favor of meeting the requirements of Rule 16b-3 promulgated under the
Exchange Act.
ARTICLE V
Deferral Elections
5.1 Making of Election. Prior
to the beginning of each Plan Year, each Eligible Employee may elect in
writing, in the manner and on the form prescribed by the Committee, to defer
payment of all or a portion of the Executive's Cash Bonus and Stock Bonus
for the Plan Year, provided that any deferral of Cash Bonus pursuant to this
Section must be made in increments of 25%, and any deferral of Stock Bonus
pursuant to this Section must be made in increments of 25%. Notwithstanding
the foregoing, the Committee, in its sole discretion, may permit a new
Eligible Employee to enroll in the Plan during the Plan Year in which he
first becomes an Eligible Employee, no later than 30 days after becoming an
Eligible Employee, and make an election to defer all or a portion of the
Executive's Bonus for that Plan Year. An Eligible Employee's election to
defer a portion of his Bonus for a Plan Year must specify the payment option
selected by the Eligible Employee pursuant to Section 6.1. Any election made
by an Eligible Employee pursuant to this Section for a Plan Year will be
irrevocable.
5.2 Deferred Cash Account. A
Participant's Deferred Cash Account will be credited with the Cash Bonus
deferred on behalf of the Participant pursuant to Section 5.1, as of the
date the Cash Bonus would have been paid to the Participant in the absence
of a deferral election. Interest will be credited to each Deferred Cash
Account at the rate of six percent (6%) compounded annually. This assumed
interest shall be compounded annually and treated as earned from the date
deferred cash is credited to the Deferred Cash Account to the date of
distribution.
5.3 Deferred Share Account. A
Participant's Deferred Share Account will be credited with that number of
Shares otherwise payable to the Eligible Employee pursuant to the Bonus
Plan, but deferred under Section 5.1, as of the date the Shares would
have been issued to the Participant in the absence of a deferral election. A
Participant's Account will also be credited with any cash dividends
attributable to the number of Shares credited to the Participant's Deferred
Share Account as of the record date set by the Board for the payment of
dividends. Each January 1 and July 1, additional Shares will be credited to
a Participant's Share Account equal to the whole number obtained by dividing
the amount of cash credits in the Participant's Share Account as of that
date by the Fair Market Value of Shares on that date.
5.4 Annual Statement. Within
90 days following the end of each Plan Year, the Company shall provide to
each Participant a written statement reflecting the amount of cash and
Shares credited to the Participant's Accounts.
ARTICLE VI
Payment of Deferred Amounts
6.1 Payment Options. In each
election that a Participant makes pursuant to Section 5.1, the Participant
will elect a payment option from the payment options described below. The
payment options from which the Participant may choose are the following:
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(a) |
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a lump sum payable as soon as administratively possible after
Participant terminates employment for any reason; or |
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(b) |
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a lump sum payable in January of the calendar year irrevocably
designated by the Participant at the time he files his written election
under Section 5.1, which can be no earlier that the second calendar year
after the year in which the Bonus is determined. |
If a Participant fails to elect a payment option, the Participant will be
deemed to have elected the payment option specified in Paragraph (a) above.
In all cases, payment from a Participant's Deferred Cash Account will be
made in cash, and payment from a Participant's Deferred Share Account will
be made in Shares, except for any remaining cash dividends credited to the
Deferred Share Account, which will be paid in cash.
6.2 Payment Upon Death. If a
Participant dies before all amounts due to him under the Plan have been
paid, then within a reasonable time following the Participant's death, the
unpaid balance credited to a Participant's Accounts will be paid in a lump
sum to the Participant's Beneficiary. Payment from the Participant's
Deferred Cash Account will be made in cash, and payment from a Participant's
Deferred Share Account will be made in Shares, except for any remaining cash
dividends credited to the Deferred Share Account, which will be paid in
cash. A Participant may designate a Beneficiary or Beneficiaries under the
Plan to receive payment of the Participant's Accounts upon the Participant's
death by submitting a Beneficiary designation form to the Committee, in the
form and manner provided by the Committee. If no designated Beneficiary or
Beneficiaries survive the Participant, payment of the Participant's Accounts
will be made to the Participant's estate.
ARTICLE VII
Miscellaneous
7.1 Assignability. No right to
receive payments under this Plan will be transferable or assignable by a
Participant except by will or by the laws of descent and distribution.
7.2 Amendment or Termination.
The Board may at any time and from time to time and in any respect amend or
modify this Plan; provided, however, that the Board may not amend this Plan
more than once during any six-month period, and provided further, that any
amendments requiring shareholder approval in order to maintain the exemption
of the Plan under the Exchange Act), as in effect from time to time, shall
be subject to approval by the shareholders of the Company in the manner
required by the Rule. No amendment, modification or termination of the Plan
will, without the consent of a Participant, reduce the benefits that a
Participant has already accrued under the Plan.
7.3 Participant's Rights
Unsecured. The right of any Participant to receive payment of
deferred amounts under the provisions of the Plan will be an unsecured claim
against the general assets of the Company. The maintenance of individual
Participant Accounts is for bookkeeping purposes only. The Company is not
obligated to acquire or set aside particular assets for the discharge of its
obligations, nor will any Participant have any property rights in any
particular assets held by the Company, whether or not held for the purpose
of funding the Company's obligations under the Plan.
7.4 Tax Withholding. The
Company will withhold from any payment made under the Plan such amounts as
may be required by applicable federal, state, or local laws.
7.5 Governing Law. To the
extent not preempted by federal law, this Plan will be governed by, and
construed in accordance with, the laws of Indiana, with regard to its
conflict of law rules.
IN WITNESS WHEREOF, the Company has caused
the Plan to be executed this 16th
day of February, 2000.
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ITT EDUCATIONAL SERVICES, INC.
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By: /s/ Clark D. Elwood |
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Printed Name: Clark D. Elwood |
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| | Title: Senior
Vice President, General Counsel
and Secretary |
