Annual Report — Form 10-K
Filing Table of Contents
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1: 10-K Annual Report 99 304K
2: EX-4 Instrument Defining the Rights of Security Holders 4 10K
3: EX-10 Material Contract 20 74K
4: EX-21 Subsidiaries of the Registrant 2± 5K
5: EX-23 Consent of Experts or Counsel 1 5K
6: EX-27 Financial Data Schedule (Pre-XBRL) 1 6K
EX-10 — Material Contract
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104
DEVRY INC.
Deferred Compensation Plan
Effective September 1, 1999
105
DEVRY INC.
Deferred Compensation Plan
I. Purpose
II. Definitions
III. Eligibility; Participation Limits
IV. Account Determination and Valuation
V. Benefits
VI. Claim for Benefits Procedure
VII. Administration
VIII. Amendment and Termination
IX. Miscellaneous
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DEVRY INC.
Deferred Compensation Plan
I Purpose
The purpose of the DeVry Inc. Deferred Compensation Plan is to provide a means
whereby DeVry Inc. may provide a vehicle to permit Participants who also
participate in the 401(k) Profit Sharing Retirement Plan (401(k)) to defer
amounts in excess of the dollar limitation of IRC(P)402(g) applicable to the
401(k) Profit Sharing Retirement Plan, and to defer additional Salary and
Bonus amounts, and thereby afford senior management and certain other employees
with an opportunity to build additional financial security. The Company will
also credit a Participant's Deferred Benefit Account with an amount equivalent
to the amount which would have been contributed to the 401(k) Profit Sharing
Retirement Plan for a Participant but for IRS limitations on Company matching
contributions to the 401(k) Profit Sharing Retirement Plan.
This plan is intended to be an unfunded, deferred compensation plan for a
select group of management or highly compensated employees, as described in
sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income
Security Act of 1974 ("ERISA").
This Plan is similar to a defined contribution plan. Deferrals of Salary and
Bonus together with Company Allocations made pursuant to the Plan, will be
credited with Investment Results based on Investment Results which mirror
401(k) Plan investment results, in accordance with the Plan. The resulting
balance will be paid to the Participant (or his or her Beneficiary) as
described herein. By providing a means whereby Salary and Bonus may be
deferred into the future, and by restoring contributions otherwise foregone
because of the operation of IRC(P)(P)401(a)(17) and 415(c), the Plan will aid in
attracting and retaining managers of exceptional ability, provide them with
additional financial security at the time of Retirement, and supplement other
Company-sponsored benefits in the event of a Participant's death or Disability.
II Definitions and Additional Provisions
2.1 "Administrative Committee" and "Committee" mean the Plan
Committee appointed pursuant to Article VII to manage and administer the Plan.
2.2 "Agreement" means the DeVry Inc. Deferred Compensation Election
Agreement, executed between a Participant and the Company, whereby a
Participant agrees to participate in the Plan and may defer a portion of his
or her Salary and Bonus (as the case may be), pursuant to the provisions of
the Plan, and the Company agrees to pay benefits in accordance with the
provisions of the Plan and Agreement. A Participant shall file an Agreement for
each Plan Year in accordance with Section 3.2.
2.3 "Beneficiary" means the person, persons, or trust designated
Beneficiary pursuant to Section 5.10.
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2.4 "Bonus" means the gross annual bonus amount(s) payable to a
Participant from the Management Incentive Bonus Plan, or the Long Term Bonus
Program, or successor plan(s), if any, in effect for the Company fiscal year
ending within the Plan Year (but payable after the end of the Plan Year)
otherwise payable in cash, and considered "wages" for FICA and federal income
tax withholding, and including any amount deferred under this or any other plan
maintained by the Company.
2.5 "Change of Control" means the occurrence of any of the following
events:
(a) would be required to be reported in response to Item 1(a) of the
current report on Form 8-K, as in effect on the date hereof, pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
("Exchange Act"), even if the Company is not then subject to the
Exchange Act; or
(b) without limitation, such a Change of Control shall be deemed to
have occurred at such time as
(1) any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing thirty per
cent (30%) or more of the Company's outstanding securities,
exceptfor any securities of the Company purchased by any tax
qualified plan trust established by the Company; or
(2) a change in the composition of the Company's Board of
Directors, as a result of which fewer than two-thirds of the
incumbent directors are directors who either
(A) had been directors of the Company 24 months prior to
such change, or
(B) were elected, or nominated for election, to the Company's
Board of Directors with the affirmative votes of at least a
majority of the directors who had been directors of the Company
24 months prior to such change and who were still in office at
the time of the election or nomination; or
(3) a plan of reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Company, or similar
transaction occurs in which the Company is not the resulting
surviving entity; or
(4) the Board of Directors of the Company determines that a
Change of Control has occurred.
2.6 "Company" means DeVry Inc., a Delaware corporation, its successors
and assigns, and any subsidiary company which grants participation hereunder
to an employee with the Company's consent.
2.7 "Company Allocation" means an amount added to a Participant's
Deferred Benefit Account, pursuant to Section 3.6.
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2.8 "Compensation" means cash remuneration paid for services rendered
prior to the date paid.
2.9 "Deferred Benefit Account" and "Account" mean the separate
bookkeeping accounting record(s) maintained by the Company for each
Participant, pursuant to Articles IV and V. Each Participant's Deferred Benefit
Account shall consist of the sum of as many subaccounts as shall be necessary
to establish for recordkeeping purposes to reflect the Participant's Subaccount
Investment Election(s) with respect to the Investment Results to be applied to
amounts deferred under the Plan. The total amount of each Participant's
Deferred Benefit Account shall consist of the amounts described in Article IV.
Deferred Benefit Account(s), Deferred Benefit Account subaccounts, and
Subaccount Investment Results shall be utilized solely as a set of bookkeeping
devices for the measurement and determination of the amounts to be paid to the
Participant pursuant to this Plan, and shall be subject to Section 9.2 hereof.
Notwithstanding the provisions of Section 9.8, a Participant's Deferred Benefit
Account shall not constitute or be treated as a trust fund or escrow
arrangement of any kind.
2.10 "Determination Date" means the date on which the amount of a
Participant's Deferred Benefit Account is determined as provided in Articles IV
and V. The last day of each calendar month shall be a Determination Date.
2.11 "Disability" shall have the same meaning and be determined in the
same manner as in the DeVry Group Long-Term Disability Insurance Plan, as in
effect from time to time. In the absence of such a plan, "Disability" or
"Disabled" shall mean a permanent impairment of the physical or mental
condition of a Participant, determined in the sole discretion of the Committee,
which prevents the Participant from the performance of the usual duties of
employment attendant to the Participant's function with the Company. The
determination as to a Disability shall be made on the basis of such medical
and other competent evidence as the Committee shall deem relevant, and shall
be binding on Participant.
2.12 "ERISA Funded" means that the Plan does not meet the "unfunded"
criterion of the exceptions to the application of Parts 2 through 4 of
Subtitle B of Title I of the Employee Retirement Income Security Act of 1974
(ERISA).
2.13 "401(k) Plan" means the 401(k) Profit Sharing Retirement Plan , or
other 401(k) plans sponsored by the Company, as amended from time to time.
Unless the context requires otherwise, definitions as used herein shall have
the same meaning as in the 401(k) Profit Sharing Retirement Plan when applied
to this Plan.
2.14 "IRC" means the Internal Revenue Code of 1986, as amended.
2.15 "Participant" means an employee of the Company who is eligible to
participate in the Plan pursuant to Section 3.1, and who enters into an
Agreement with the Company.
2.16 "Plan" means the DeVry Inc. Deferred Compensation Plan, as
amended from time to time.
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2.17 "Plan Effective Date" means September 1, 1999.
2.18 "Plan Year" means the calendar year. For the Plan Year coincident
with the Plan Effective Date, the Plan Year shall be from September 1, 1999 to
December 31, 1999.
2.19 "Retirement Date" and "Retirement" mean the date of termination of
service of a Participant for reasons other than death or Disability after he
or she (i) attains age fifty-five (55) and has ten (10) Years of Service; (ii)
has attained age 65; or (iii) terminates under circumstances which the Company,
in its sole discretion, elects to treat as a Retirement for purposes of the
Plan.
2.20 "Salary" for purposes of the Plan shall be the total of the
Participant's base salary paid during a Plan Year, and considered "wages" for
FICA and federal income tax withholding, but before any deferral made
pursuant to this or any other plan maintained by the Company.
2.21 "Subaccount Investment Election" means the Participant's advance
notice request of future Investment Results to be applied to (the subaccounts
of) his or her Deferred Benefit Account, in such form as the Committee may
establish or accept. Such Subaccount Investment Election shall specify any
combination of whole percentage increments of one or any number of Subaccount
Investment Results from time to time offered under the Plan. The election
shall specify whether it applies to amounts not yet deferred, to amounts
previously credited to the Deferred Benefit Account, which, together with
Investment Results, represent the current Deferred Benefit Account balance, or
both.
2.22 "Subaccount Investment Results" and "Investment Results" means the
investment results, expressed as a percentage rate, achieved by each respective
"Investment Fund" (as that term is used in the 401(k) Plan) within the 401(k)
Profit Sharing Retirement Plan as of the most recent Determination Date, and
which represents each Investment Fund's investment results attributable to
interest, dividends, changes in market value, expenses, and gains and losses,
and which is to be used, for purposes of the Plan, as a hypothetical
investment earnings rate to be applied as Investment Results of the
respective subaccounts maintained under this Plan.
2.23 "Tax Funded" means that the interest of a Participant in the Plan will
be includable in the gross income of the Participant for federal income tax
purposes prior to actual receipt of Plan benefits by the Participant.
2.24 "Termination of Service" means the Participant's ceasing his or her
employment with the Company for any reason whatsoever, whether voluntarily
or involuntarily.
2.25 "Years of Service" means years of service credited to a Participant in
the 401(k) Plan.
III Eligibility; Participation Limits
3.1 Eligibility and Participation. Eligibility to participate in the Plan
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shall be limited to a select group of management and highly compensated
employees of the Company who meet all of the following conditions:
(a) each employee must be recommended as eligible by the Chief
Executive Officer and the Chief Operating Officer of the Company, and
approved by the Compensation Committee of the Board of Directors; and
(b) each employee must be eligible to participate in the 401(k) Plan, and
be a Participant, or have elected to become a Participant in the 401(k) Plan
(in accordance with its rules of eligibility and participation); and
(c) each employee must be considered a highly compensated employee
as defined in Section 414(g) of IRC; and
(d) each employee designated eligible to participate must file an
Agreement with the Company in accordance with Section 3.2 in order to
become a Participant in the Plan.
An employee who meets all of the requirements of this Section shall become a
Participant in the Plan effective as of the January 1 or July 1 following the
Participant's date of eligibility. Except as otherwise provided in Section 3.4,
once an employee becomes a Participant in the Plan, he or she shall remain a
Participant until all benefit payments, if any, to the Participant (or his or
her Beneficiary) have been made.
3.2 Deferral of Salary and Bonus. Eligible employees of the Company who
elect to participate in the Plan must file an Agreement with the Company in
order to participate in the Plan. A Participant must file an Agreement to
defer Salary prior to the beginning of the Plan Year in which the Salary is to
be earned. For the first Plan Year, September 1, 1999 to December 31, 1999,
the Participant must file an Agreement prior to September 1, the first date
Salary deferrals will begin.
A Participant must file an Agreement to defer his or her Bonus prior to the
beginning of the Plan Year in which the Bonus, if any, is to be earned.
Provided that Section 3.4 is not applicable, an eligible employee who fails to
file an Agreement to defer Salary and Bonus with respect to a Plan Year may
file an Agreement to defer Salary and Bonus with respect to a subsequent
Plan Year. A Participant's Agreement shall be subject to all of the limitations
of Section 3.3.
3.3 Deferral Limitations. A Participant's Agreement to participate in the
Plan and to defer Salary and Bonus shall be subject to the following
limitations:
(a) a Participant may elect to defer no less than two percent (2%) and no
more than fifteen percent (15%) of Salary, in increments of one percentage
point (1%); and
(b) for the Plan Year coincident with the Plan Effective Date, a Participant
may elect to defer no less than two percent (2%) nor more than seventy-five
percent (75%) of Salary, remaining to be paid in the 1999 Plan Year; and
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(c) a Participant's Agreement to defer up to one hundred percent (100%) of
Bonus shall be in increments of ten percentage points (10%); and
(d) a Participant's deferral of Salary and Bonus is limited to a combined
maximum of $100,000 per Plan Year; and
(e) any Agreement to defer Salary, Bonus, or both, may not apply to a Plan
Year after the 2004 Plan Year (January 1 - December 31, 2004); and
(f) the Agreement shall be irrevocable upon acceptance by the Company.
3.4 Suspension of Agreement to Defer. A Participant's Agreement to defer
Salary and Bonus, shall be suspended in the event that the Company, in its
sole discretion, reasonably determines that a Participant ceases to meet the
eligibility requirements of the Plan. Subject to Section 8.3(d), a Participant
whose Agreement has been suspended pursuant to this Section shall not be deemed
to have incurred a Termination of Service, and his or her Deferred Benefit
Account shall continue to be maintained under the terms of the Plan.
3.5 Timing of Deferral Credits. The amount of Salary and Bonus that a
Participant elects to defer in the Agreement shall cause an equivalent
reduction in his or her Salary and Bonus payment, and shall be credited to
the Participant's Deferred Benefit Account throughout the Plan Year as the
Participant is paid (or would have been paid) the non-deferred portion of his
or her Salary and Bonus in each Plan Year. Any Company Allocation to be made
to a Participant's Deferred Benefit Account in accordance with Section 3.6
shall be credited to his or her Deferred Benefit Account at the same time the
Company's contributions are made (or would have been made) to the 401(k) Plan,
or at such other time as may be reasonably determined.
3.6 Company Allocation. The Company shall credit a Company Allocation
to a Participant's Deferred Benefit Account. The amount of the Company
Allocation, if any, shall be determined and calculated as follows:
(a) any reduction of Company Matching Contribution (as that term is
defined in the 401(k) Plan) caused by the limitations of IRC(P)(P)401(a)(17),
402(g), and 415; and
(b) any reduction of Company Matching Contribution (as those terms are
defined in the 401(k) Plan) caused by the Participant's reduction in Salary
and Bonus attributable to participation in this Plan.
In order to qualify for a Company Allocation to be credited in accordance with
this Section, a Participant must elect (or have elected):
(a) to defer at least two percent (2%) of Salary and Bonus as a
contribution to both the 401(k) Plan and the Deferred Compensation Plan,
and
(b) to defer the maximum elective contributions permitted under the
401(k) Plan or a percentage amount which would result (but for the limits
112
of IRC (P)402(g)) in a deferral amount which exceeds the maximum dollar
amount permitted under IRC (P)402(g).
The Company may credit, from time to time, a Participant's Deferred Benefit
Account with a discretionary contribution as the Company determines. Such
amount shall vest in accordance with Section 3.8.
Any Company allocation made to a Participant's Deferred Benefit Account in
accordance with this Section shall be credited to his or her Deferred Benefit
Account at the same time as Company Matching Contributions are made (or
would have been made) to the 401(k) Plan.
3.7 No Constructive Receipt. The operation of Section 3.6 shall not permit
the Participant to receive any amount credited to the Account of a Participant
as an annual Company Allocation in accordance with Section 3.6, prior to the
date such amount is actually paid to a Participant pursuant to Article V of
this Plan.
3.8 Vesting. A Participant shall at all times be one hundred percent
(100%) vested in the amount of his or her Salary and Bonus deferred. Any
amount credited to a Participant's Deferred Benefit Account as a Company
Allocation attributable to the 401(k) Plan in accordance with Section 3.6,
together with any Subaccount Investment Results attributable thereto, shall vest
in the same percentages as if such Company Allocation had been a Company
contribution made to the 401(k) Plan account of a Participant.
IV Determination and Valuation of Account
4.1 Deferred Benefit Account. The Company shall establish each
Participant's Deferred Benefit Account in accordance with the Plan, and shall
maintain such number of subaccounts as may be necessary as a recordkeeping
device to reflect the Participant's Subaccount Investment Election(s). Each
Participant's Deferred Benefit Account as of each Determination Date shall
consist of:
(a) the value of the Participant's Salary and Bonus deferred pursuant to
Section 3.2, and the value of any Company Allocation made pursuant to
Section 3.6, both amounts, if any, credited to a Participant's Account since
the immediately preceding Determination Date, and held to be allocated to
one or more subaccounts in accordance with Section 4.2, and
(b) the value of each subaccount established and maintained in
subaccount units under the Plan, after deduction of any subaccount units
converted to cash and paid as a benefit under Article V. The value of each
subaccount shall be determined in accordance with Section 4.4.
4.2 Subaccount Investment Election. Investment Results shall be applied
to the respective subaccounts of a Participant's Account. Investment Results
shall be determined as follows:
(a) As of the Plan Effective Date, and at such other times as the
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Committee shall permit, the Participant shall file and deliver to the Company
his or her Subaccount Investment Election. Such form may specify, in whole
percentage amounts, the percentage allocation to be applied
(1) to the subaccount(s) to which amounts deferred thereafter in
accordance with Section 3.2 may be credited,
(2) between or among subaccounts, for purposes of determining the
Subaccount Investment Results applicable to amounts previously
deferred, or
(3) to any Company Allocation credited to his or her Account in
accordance with Section 3.6,
in such manner as approved or accepted by the Committee;
(b) A Participant's election shall remain in effect until changed by the
Participant. The Committee may limit the percentage amounts, number of
times a Participant may change the Subaccount Investment Results to be
applied to a Participant's Account Limitations, and establish such other
rules as it deems reasonable with respect to the Participant's Subaccount
Investment Election(s).
4.3 Reallocation of Subaccounts. In effecting a reallocation requested by
the Participant, units in a subaccount shall be converted to dollar amounts
prior to redistribution between or among subaccounts, and reconverted to
subaccount units as necessary to effect the Participant's reallocation request,
both conversions to be as of the most recent Determination Date. A
Participant's reallocation request shall be in the form of a Subaccount
Investment Election, which shall be filed and delivered to the Company at such
times and within such other limitations as the Committee may establish. In the
absence of any Subaccount Investment Election(s) as may be required by the
Participant (or his or her Beneficiary) in order to designate one hundred
percent (100%) of his or her Deferred Benefit Account, the portion of the
Account not designated shall be allocated to a subaccount selected by the
Committee.
4.4 Determination of Subaccount Value. A Participant's subaccounts shall
be valued in dollars, based on the dollar value of each unit credited to a
subaccount. The dollar value of each subaccount unit shall be based on the net
asset value of such unit as of the close of the business day coincident with or
immediately preceding a Determination Date.
(a) Each subaccount shall be credited with the number of full and partial
units which the dollar value of any amount credited to the subaccount of a
Participant in accordance with Section 4.1 would purchase at the closing net
asset value of each unit on the Determination Date.
(b) On the date a dividend or other distribution would have been paid
based on a subaccount unit, each subaccount shall be credited with the
number of additional full and partial subaccount units which would have been
purchased if the subaccount units then credited to the subaccount had been
held as shares. In the case of a dividend or other distribution paid in
114
property other than cash or shares, the Committee shall determine the fair
value of such property for purposes of the computation immediately above.
V Benefits
5.1 Retirement Benefit. Upon a Participant's Retirement Date, the
Company shall pay to the Participant, as Compensation earned prior to
Retirement, a benefit equal to the value of his or her Deferred Benefit
Account, with the Company Allocation vested in accordance with Section 3.8,
determined under Article IV. The form of benefit payment shall be as provided
in Section 5.7. Upon and after such Retirement Date, the Participant shall
immediately cease to be eligible for any benefit provided under Section 5.2,
5.3, 5.4, 5.5, or 5.6 of the Plan.
5.2 Termination Benefit. Upon Termination of Service of the Participant
before his or her Retirement Date for reasons other than his or her death or
Disability, the Company shall pay to the Participant, as Compensation earned
prior to his or her Termination of Service, a benefit equal to the value of
his or her Deferred Benefit Account, vested in accordance with Section 3.8,
determined under Article IV as of the date of Termination of Service. The value
of the Participant's Deferred Benefit Account paid as a Termination Benefit
shall be converted to cash and paid in a lump sum, and shall cause a reduction
in the number of units in a Participant's subaccounts equivalent to the value
of the lump sum amount paid. The lump sum shall be paid in the next January
following the Participant's Termination of Service. Upon a Termination of
Service, the Participant shall immediately cease to be eligible for any benefit
provided under Section 5.1, 5.3, 5.4, 5.5, or 5.6 of the Plan.
5.3 Death Benefit. Upon the death of the Participant prior to his or her
Termination of Service, the Company shall pay to the Beneficiary of the
deceased Participant, as Compensation earned prior to his or her death, a
benefit equal to the value of the Participant's Deferred Benefit Account,
vested in accordance with Section 3.8, determined under Article IV as of the
Determination Date coincident with or next following the Participant's date of
death. The value of the Participant's Deferred Benefit Account paid as a death
benefit shall be converted to cash and paid in a lump sum, and shall cause a
reduction in the number of units in a Participant's subaccounts equivalent to
the value of the lump sum amount paid. The lump sum shall be paid in the next
January following the Participant's death, or earlier at the request of the
Participant's Beneficiary. Upon a Termination of Service, the Participant shall
immediately cease to be eligible for any benefit provided under Section 5.1,
5.2, 5.4, 5.5, or 5.6 of the Plan.
5.4 Disability Benefit. In the event of Disability prior to his or her
Retirement Date, the Company shall pay to the Disabled Participant, as
Compensation earned prior to his Disability, a benefit equal to the value of
his Deferred Benefit Account, with the Company Allocation vested in accordance
with Section 3.8, determined under Article IV. The value of the Participant's
Deferred Benefit Account paid as a disability benefit shall be converted to
cash and paid in annual installments, as provided in Section 5.7, until the
earliest of the following events:
(a) The Participant ceases to be Disabled and resumes employment with
the Company;
115
(b) The Participant ceases to be Disabled and does not resume employment
with the Company. If the Participant has attained his Retirement Date,
he shall be entitled to the benefits provided for in Section 5.1. If the
Participant has not attained his Retirement Date, his Deferred Benefit
Account shall be recomputed and adjusted to reflect the vesting provisions
of Section 3.8. Upon any such recomputation and adjustment, the value of
his Deferred Benefit Account, if any, shall be paid in a lump sum as a
Termination Benefit in the manner provided in Section 5.2. In no event shall
the recomputation and adjustment of a Participant's Deferred Benefit
Account made pursuant to this subsection operate to require that such
previously Disabled Participant repay any Disability benefit paid hereunder;
(c) The Participant dies. The Deferred Benefit Account balance remaining
shall be paid in a lump sum as provided in Section 5.3; or
(d) The value of the Participant's Deferred Benefit Account balance
reaches zero.
If a Disability occurs during the period elected in the Agreement, the Disabled
Participant's Agreement shall be suspended, and further deferrals shall not be
required during the period of Disability. Upon a written request by a
Participant filed with the Committee, the Committee may, in its sole
discretion, pay a Disability benefit equal to the value of the Disabled
Participant's Deferred Benefit Account in a single lump sum payment.
5.5 Interim Distribution Benefit. A Participant may elect in his or her
Agreement to have a portion his or her Deferred Benefit Account converted to
cash and paid to him or her at the time specified in such Agreement. If the
Participant so elects, the Company shall pay to the Participant, as
Compensation earned prior to the interim distribution date, a lump sum benefit
equal to the amount so elected in the Agreement, subject to all of the
following:
(a) The date selected for the interim distribution is a January 1
occurring on or after the fifth (5th) anniversary of the first day of the
Plan Year the Agreement became effective;
(b) The amount to be distributed pursuant to such Agreement will be
equal to the amount by which his or her Salary and Bonus were reduced (but
in no event greater than a Participant's Deferred Benefit Account) pursuant
to such Agreement;
(c) A Participant's Agreement may not provide for more than one date on
which a benefit shall be paid in accordance with this Section. The date
specified in the Agreement shall be disregarded if the Participant's
Termination of Service occurs prior to such date. An election to receive an
interim distribution benefit at a date specified in the Agreement shall be
irrevocable, unless the Administrative Committee, in its sole discretion,
grants a Participant's request to revoke his or her election. Any such
request to revoke his or her election must be filed with and approved by the
Committee at least one year prior to the January 1 that the interim
distribution would otherwise be made. If the request is granted by the
Committee, the value of such benefit shall remain as a credit to the balance
of the Participant's Deferred Benefit Account, to be maintained in the manne
provided in Section 4.1, and paid instead in the manner provided in Sections
5.1, 5.2, 5.3, 5.4, or 5.6; and
116
(d) The amount to be distributed in accordance with this Section shall be
distributed without Committee approval required, and shall cause a reduction
in the number of units in a Participant's subaccounts equivalent to the value
of the lump sum amount paid.
5.6 Emergency Benefit. In the event that the Committee, upon written
petition of the Participant, determines, in its sole discretion, that the
Participant has suffered a severe financial hardship, the Company shall pay to
the Participant, as soon as practicable following such determination, as
Compensation earned prior to the severe financial hardship, a benefit equal to
the amount necessary to meet the severe financial hardship not in excess of the
value of the vested portion of the Participant's Deferred Benefit Account,
including Investment Results. Any such payment shall cause a reduction in the
number of units in a Participant's subaccounts equivalent to the value of the
amount paid. For purposes of this Section, a severe financial hardship is an
unexpected need for cash arising from an illness, casualty loss, sudden
financial reversal, or other such unforeseeable occurrence. Cash needs arising
from events such as the purchase of a house or education expenses for children,
shall not be considered to be the result of a severe financial hardship. For
purposes of this Section, the criteria for establishing and determining a
severe financial hardship shall be made in accordance with IRC (P)457(d)(1)(A),
and Internal Revenue Service Regulation 1.457-2(h)(4).
5.7 Form of Benefit Payment. Upon a participant's Retirement or
Disability, the Company shall pay to the Participant (or his or her
Beneficiary) the amount calculated in accordance with this Section in
substantially equal annual installments. All payments made hereunder shall
cause a reduction in the number of units in a Participant's subaccounts
equivalent to the value of the installment amount paid, and shall be calculated
and determined as follows:
(a) An annual installment payment shall be determined for the
Participant's Deferred Benefit Account. The initial and each subsequent
installment shall be paid each January following the date of Retirement or
Disability. The amount of the installment payment shall be a determined using
factors selected by the Committee to amortize the unpaid balance of the
Deferred Benefit Account balance in fifteen (15) substantially equal annual
installments, and may be based on the Investment Results available for the
most recent Plan Year ended at the time payments commence, or upon such
Investment Results as the Committee, in its sole discretion, determines as
the rate of Investment Results to be applied prospectively to determine
installment payments. The Committee may recompute the amount of the
installment each year to reflect actual Subaccount Investment Results, and
based on current or projected Investment Results and on subaccount
balances of the Participant's Deferred Benefit Account and on his or her
Subaccount Investment Election(s) then in effect. The amount of each
installment payment shall be equal to the balance remaining in the
Participant's deferred compensation account immediately prior to each such
payment, multiplied by a fraction, the numerator of which is one (1), and the
denominator of which is the number of installments remaining, with the last
installment consisting of the balance of the Participant's account.
Installment benefit payments shall cease when the Deferred Benefit Account
balance reaches zero, or with the final payment determined hereunder.
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(b) Unless an annual payment is the final annual installment payment,
each annual installment payment shall be at least equal to $5,000.
Notwithstanding the amortization method described in subsection (a)
immediately above, in the event an installment payment determined under
subsection (a) is less than $5,000, the annual installment payment shall be
$5,000. Annual installment payments in the amount of $5,000 shall continue
until the amount of the installment is recomputed, in accordance with
subsection (a), or until the remaining Account balance is less than $5,000.
Once the Account balance is less than $5,000, the subsequent annual payment,
which shall be the final payment, shall equal the remaining Deferred Benefit
Account balance.
Upon the death of a Participant after the commencement of payment of benefits
pursuant to Section 5.1, the Deferred Benefit Account remaining shall be paid
to the Beneficiary in annual installments over the remaining number of years
determined above. Upon a written request of such Beneficiary of a deceased
Participant, or upon the request of a Disabled Participant, the Committee may,
in its sole discretion, pay the value of a Disabled or deceased Participant's
Deferred Benefit Account in a lump sum.
Upon a written request by a Participant filed with the Committee prior to the
commencement of benefits under this Plan, the Committee may, in its sole
discretion, elect to pay the value of his or her Deferred Benefit Account in a
lump sum or in fewer than fifteen (15) annual installments.
5.8 Withholding; Employment Taxes. To the extent required by the law
in effect at the time payments are made, the Company shall withhold any taxes
required to be withheld by the federal, or any state or local, government.
5.9 Commencement of Payments. Unless otherwise provided, payments
under this Plan shall commence as provided in Sections 5.2, 5.3, and 5.7.
5.10 Recipients of Payments; Designation of Beneficiary. All payments to
be made by the Company under the Plan shall be made to the Participant during
his or her lifetime, provided that if the Participant dies prior to the
commencement or completion of such payments, then all subsequent payments under
the Plan shall be made by the Company to the Beneficiary or Beneficiaries
determined in accordance with this Section 5.10. The Participant shall
designate a Beneficiary by filing a written notice of such designation with
the Committee in such form as the Committee requires and may change such
designation without the consent of such Beneficiary or Beneficiaries by filing
a new designation in writing with the Committee. (In community property states,
the spouse of a married Participant shall join in any designation of a
Beneficiary other than the spouse.) If no designation shall be in effect at
the time when any benefits payable under this Plan shall become due, the
Beneficiary shall be the Beneficiary under the 401(k) Plan, and otherwise shall
be the executor(s) or administrator(s) of the deceased Participant's estate.
5.11 Facility of Payment. Any benefit payable hereunder to any person
under a legal disability, or to any person who, in the judgment of the
Committee, is unable to properly administer his or her financial affairs, may
be paid to the legal representative of such person, or may be applied for the
benefit of such person in a manner which the Committee may select.
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5.12 Loans to Participants. No loan, advancement, or other transaction in
the nature of an anticipatory assignment of income shall be permitted under the
Plan.
5.13 Court Order. The Company is authorized to make any payments
directed by court order in any action in which the Plan, Company, or the
Administrative Committee has been named as a party. In addition, if a court
determines that a spouse or former spouse of a Participant has an interest in
the Participant's Deferred Benefit Account under the Plan in connection with
a property settlement or otherwise, the Company, in its sole discretion, shall
have the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse's or former spouse's interest in the
Participant's Deferred Benefit Account under the Plan to that spouse or former
spouse.
VI Claim For Benefits Procedure
6.1 Claim for Benefits. Any claim for benefits under the Plan shall be made
in writing to the Committee. If such claim for benefits is wholly or partially
denied by the Committee, the Committee shall, within a reasonable period of
time, but not later than ninety (90) days after receipt of the claim, notify
the claimant of the denial of the claim. Such notice of denial shall be in
riting and shall contain:
(a) the specific reason or reasons for the denial of the claim;
(b) a reference to the relevant Plan provisions upon which the denial is
based;
(c) a description of any additional material or information necessary
for the claimant to perfect the claim, together with an explanation of why
such material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
6.2 Request for Review of a Denial of a Claim for Benefits. Upon the
receipt by the claimant of written notice of denial of the claim, the claimant
may within sixty (60) days file a written request to the Committee, requesting
a review of the denial of the claim, which review shall include a hearing if
deemed necessary by the Committee. In connection with the claimant's appeal of
the denial of his or her claim, he or she may review relevant documents and may
submit issues and comments in writing.
6.3 Decision Upon Review of Denial of Claim for Benefits. The Committee
shall render a decision on the claim review promptly, but no more than sixty
(60) days after the receipt of the claimant's request for review, unless
special circumstances (such as the need to hold a hearing) require an
extension of time, in which case the sixty (60) day period shall be extended to
one hundred-twenty (120) days. Such decision shall:
(a) include specific reasons for the decision;
(b) be written in a manner calculated to be understood by the claimant;
and
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(c) contain specific references to the relevant Plan provisions upon
which the decision is based.
The decision of the Committee shall be final and binding in all respects on
both the Company and the claimant.
VII Administration
7.1 Plan Administrative Committee. The Plan shall be administered by the
Compensation Committee of the Board of Directors, which shall be the
Administrative Committee of the Plan. The Administrative Committee may assign
duties to an officer or other employees of the Company, and delegate such
duties as it sees fit.
7.2 General Rights, Powers and Duties of Administrative Committee. The
Administrative Committee shall be responsible for the management, operation
and administration of the Plan. In addition to any powers, rights, and duties
set forth elsewhere in the Plan, it shall have the following powers and duties
to:
(a) adopt such rules and regulations consistent with the provisions of
the Plan as it deems necessary for the proper and efficient administration
of the Plan;
(b) administer the Plan in accordance with its terms and any rules and
regulations it establishes;
(c) maintain records concerning the Plan sufficient to prepare reports,
returns, and other information required by the Plan or by law;
(d) construe and interpret the Plan, and to resolve all questions arising
under the Plan;
(e) direct the Company to pay benefits under the Plan, and to give such
other directions and instructions as may be necessary for the proper
administration of the Plan;
(f) employ or retain agents, attorneys, actuaries, accountants or other
persons who may also be employed by or represent the Company; and
(g) be responsible for the preparation, filing, and disclosure on behalf
of the Plan of such documents and reports as are required by any applicable
federal or state law.
7.3 Information to be Furnished to Committee. The records of the
Company shall be determinative of each Participant's period of employment, age,
Termination of Service and the reason therefor, Disability, leave of absence,
reemployment, personal data, and Salary and Bonus. Participants and their
Beneficiaries shall furnish to the Committee such evidence, data or
information, and execute such documents as the Committee requests.
7.4 Responsibility. No member of the Committee shall be liable to any
person for any action taken or omitted in connection with the administration of
120
this Plan unless attributable to his or her own fraud or willful misconduct;
nor shall the Company be liable to any person for any such action unless
attributable to fraud or willful misconduct on the part of a director, officer
or employee of the Company. Further, the Company shall hold harmless and defend
any individual in the employment of the Company and any Director of the Company
(a person) against any claim, action, or liability asserted against him or her
in connection with any action or failure to act regarding the Plan, except as
and to the extent such liability may be based upon the person's own willful
misconduct or fraud. This indemnification shall not duplicate, but may
supplement, any coverage available under any applicable insurance coverage.
VIII Amendment and Termination
8.1 Amendment. The Plan may be amended in whole or in part by the
Company at any time. Notice of any material amendment shall be given in
writing to the Committee and to each Participant and to each Beneficiary of a
deceased Participant. No amendment shall retroactively decrease the balance of
a Participant's Deferred Benefit Account or retroactively decrease the
Subaccount Investment Results obtained, without the Participant's consent,
prior to the date of the amendment.
8.2 Company's Right to Terminate. The Company reserves the sole right
to terminate the Plan. The Company also reserves the sole right to terminate
the Agreement pertaining to a Participant at any time prior to the commencement
of payment of his or her benefits. In the event of any such termination, the
Company shall continue to be obligated to pay benefits accrued prior to the
date of such termination in accordance with the Plan. The Participant shall be
deemed to have incurred a Termination of Service, and his or her Deferred
Benefit Account shall be paid in the manner provided in Section 5.2.
8.3 Special Termination. Any other provision of the Plan to the contrary
notwithstanding, the Plan shall terminate if the Plan is held to be ERISA
Funded or Tax Funded by a federal court, and appeals from that holding are no
longer timely or have been exhausted. The Company may terminate the Plan if it
determines, based on legal advice which is satisfactory to the Company, that
either judicial authority or the opinion of the U.S. Department of Labor,
Treasury Department or Internal Revenue Service (as expressed in proposed or
final regulations, advisory opinions or rulings, or similar administrative
announcements) creates a significant risk that the Plan will be held to be
ERISA Funded or Tax Funded, and failure to so terminate the Plan could subject
the Company or the Participants to material penalties. Upon any such
termination, the Company may:
(a) transfer the rights and obligations of the Participants and the
Company to a new plan established by the Company, which is not deemed
to be ERISA Funded or Tax Funded, but which is similar in all other respect
to this Plan, if the Company determines that it is possible to establish such
a Plan;
(b) if the Company, in its sole discretion, determines that it is not
possible to establish the Plan in (a) above, each Participant shall be paid a
lump sum benefit equal to the value of the vested portion of his or her
Deferred Benefit Account;
(c) pay a lump sum benefit equal to the value of the vested portion of
the Participant's Deferred Benefit Account to the extent that a federal court
121
has held that the interest of the Participant in the Plan is includable in
the gross income of the Participant for federal income tax purposes prior to
actual payment of Plan benefits. The value of any amount remaining in the
Participant's Deferred Benefit Account shall remain as an obligation of the
Company, to be paid to the Participant as provided in the Plan;
(d) pay to a Participant a lump sum benefit equal to the vested portion
of a Participant's Deferred Benefit Account if, based on legal advice
satisfactory to the Company, there is a significant risk that such
Participant will be determined not to be part of a "select group of
management or highly compensated employees" for purposes of ERISA.
Any benefit payable under this Section shall be payable as soon as practicable
following the Company's determination that the Plan is ERISA Funded or Tax
Funded, but in no event later than ninety (90) days following receipt of notice
by the Committee that the Plan is ERISA Funded or Tax Funded, or at such other
date as may be determined by the Committee in its sole discretion.
A lump sum payment to be made in accordance with this Section shall be paid
in cash and shall be subject to the provisions of Section 5.2. As determined by
the Committee in its sole discretion, the termination benefit shall cause a
reduction in the number of units in a Participant's subaccounts equivalent to
the value of the lump sum amount paid.
IX Miscellaneous
9.1 Separation of Plan; No Implied Rights. The Plan shall not operate to
increase any benefit payable to or on behalf of a Participant (or his or her
Beneficiary) from any other Plan maintained by the Company. Neither the
establishment of the Plan nor any amendment thereof shall be construed as
giving any Participant, Beneficiary, or any other person any legal or equitable
right unless such right shall be specifically provided for in the Plan or
conferred by specific action of the Company in accordance with the terms and
provisions of the Plan. Except as expressly provided in this Plan, the Company
shall not be required or be liable to make any payment under this Plan.
9.2 No Right to Company Assets. Neither the Participant nor any other
person shall acquire by reason of the Plan any right in or title to any assets,
funds or property of the Company whatsoever, including, without limiting the
generality of the foregoing, any specific funds, assets or other property which
the Company, in its sole discretion, may set aside in anticipation of a
liability hereunder. Any benefits which become payable hereunder shall be paid
from the general assets of the Company. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder, unsecured by any
asset of the Company or by a Trust pursuant to Section 9.8. Nothing contained
in the Plan constitutes a guarantee by the Company that the assets of the
Company shall be sufficient to pay any benefits to any person.
9.3 No Employment Rights. Nothing herein shall constitute a contract of
employment or of continuing service or in any manner obligate the Company to
continue the services of the Participant, or obligate the Participant to
continue in the service of the Company, or as a limitation of the right of the
122
Company to discharge any of its employees, with or without cause. Nothing
herein shall be construed as fixing or regulating the Salary, Bonus, or other
remuneration payable to the Participant.
9.4 Offset. If, at the time payments or installments of payments are to be
made hereunder, the Participant or the Beneficiary or both are indebted or
obligated to the Company, then the payments remaining to be made to the
Participant or the Beneficiary or both may, at the discretion of the Company,
be reduced by the amount of such indebtedness or obligation, provided, however,
that an election by the Company not to reduce any such payment or payments
shall not constitute a waiver of its claim, or prohibit or otherwise impair the
Company's right to offset future payments for such indebtedness or obligation.
9.5 Non-assignability. Neither the Participant nor any other person shall
have any voluntary or involuntary right to commute, sell, assign, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate, or convey
in advance of actual receipt the amounts, if any, payable hereunder, or any
part thereof, which are expressly declared to be unassignable and non-
transferrable except by will or in accordance with the laws of descent and
distribution. No part of the amounts payable shall be, prior to actual payment,
subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by the Participant or any other person,
or be transferrable by operation of law in the event of the Participant's or
any other person's bankruptcy or insolvency.
9.6 Notice. Any notice required or permitted to be given under the Plan
shall be sufficient if in writing and hand delivered, or sent by registered or
certified mail to the last known address of the Participant if to the
Participant, or, if given to the Company, to the principal office of the
Company, directed to the attention of the Plan Committee. Such notice shall be
deemed given as of the date of delivery, or, if delivery is made by mail, as
of the date shown on the postmark or the receipt for registration or
certification.
9.7 Governing Laws. The Plan shall be construed and administered
according to the laws of the State of Illinois.
9.8 Deferred Compensation Plan Trust. The Company may establish a
Trust or Trusts with (an) independent trustee(s), and shall comply with the
terms of the Trust(s). The Company shall transfer to the trustee(s) an amount
of cash, marketable securities, or other property acceptable to the trustee(s)
("Trust Property") equal in value to the amount necessary, calculated on an
actuarial basis in accordance with the terms of the Trust(s), to pay the
Company's obligations under the Plan (the "Funding Amount"), and may make
additional transfers to the trustee(s) as may be necessary in order to
maintain the Funding Amount. Trust Property so transferred shall be held,
managed, and disbursed by the Trustee(s) in accordance with the terms of the
Trust(s). To the extent that Trust Property shall be used to pay the Company's
obligations under the Plan, such payments shall discharge obligations of the
Company; however, the Company shall continue to be liable for amounts not paid
by the Trust(s). In the event of a Change of Control, the amount and timing of
the payment of benefits shall be as determined under any provisions of the
Trust agreement relating thereto, which shall replace the payment provisions of
Article V herein. Trust Property will nevertheless be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency, and the
Participant's rights under the Plan and Trust(s) shall at all times be subject
to the provisions of Section 9.2.
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IN WITNESS WHEREOF, the Company has adopted the DeVry Inc. Deferred
Compensation Plan as of the Plan Effective Date.
DEVRY INC.
By /s/ Marilynn J. Cason
----------------------
Marilynn J. Cason
Its Senior Vice President and
General Counsel
Date August 27, 1999
Dates Referenced Herein and Documents Incorporated by Reference
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