Document:

2006 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 Exhibit 10.5 
  
 ZOLL MEDICAL CORPORATION 
  
 2006 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN 
  
 Section 1. General Purpose of the Plan; Definitions  
  
 The name of the plan is the ZOLL Medical Corporation 2006 Non-Employee Director Stock Option Plan (the “Plan”). The purpose of the
Plan is to promote the interests of ZOLL Medical Corporation, a Massachusetts corporation (the “Company”), by providing an inducement to obtain and retain the services of qualified persons who are not employees or officers of the Company
or any Subsidiary (as defined below) to serve as members of the Board of Directors of the Company (the “Board”). It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company. 
  
 The following terms shall be defined as set forth below: 
  
 “Act” means the Securities Act of 1933, as
amended, and the rules and regulations thereunder. 
  
 “Administrator” is defined in Section 2(a). 
  
 “Change of Control” is defined in Section 9. 
  
 “Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. 
  
 “Committee” means the Committee of the Board referred to in Section 2. 
  
 “Corporate Transaction” is defined in
Section 9(b)(iii). 
  
 “Effective
Date” means the date on which the Plan was approved by stockholders as set forth in Section 11. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

  
 “Fair Market Value” of the Stock on any given date means the
fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”),
NASDAQ National System or a national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding
such date for which there are market quotations. 
  
 “Incentive Stock
Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code. 
  
 “Incumbent Directors” is defined in Section 9(b)(ii). 
  
 “Non-Employee Director” means a member of the Board who is not also an employee of the
Company or any Subsidiary. 
  
 “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option. 
  
 “Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to
Section 5. 
  
 “Sale Event”
is defined in Section 3(c). 
  
 “Sale Price” is defined in Section 3(c). 
  
 “Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder. 
  

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 “Stock” means the Common Stock, par value $0.02 per share, of the
Company, subject to adjustments pursuant to Section 3. 
  
 “Subsidiary” or “Subsidiaries” means any corporation or other entity (other than the Company) in which the Company has a controlling interest, either directly or indirectly. 
  
 “Voting Securities” is defined in
Section 9(b)(i). 
  
 Section 2.
Administration of Plan; Administrator Authority  
  
 (a) Committee . The Plan shall be administered by either the Board or a committee of not less than two Non-Employee Directors (in either case, the “Administrator”). 
  
 (b) Powers of Administrator . The Administrator shall have the power
and authority to select the Non-Employee Directors to whom Options may from time to time be granted; to determine the time or times of grant, and the extent, if any, of Options granted to any one or more Non-Employee Directors; to determine the
number of shares of Stock to be covered by any Option; to at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Stock Option (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan. 
  
 All decisions and
interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees. 
  
 (c) Indemnification . Neither the Administrator, the Board nor the Committee, nor any member of any of them or any delegatee thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan, and the members of the Administrator, the Board and the Committee (and any delegatee thereof) shall be entitled in all cases to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors’ and officers’
liability insurance coverage which may be in effect from time to time. 
  
 Section 3. Stock Issuable Under the Plan; Mergers; Substitution  
  
 (a) Stock Issuable . The maximum number of shares of Stock reserved and available for issuance under the Plan shall be the sum of (i) 55,000 shares and (ii) the number of shares of
Stock remaining available for grant of options under the Company’s Non-Employee Director’s Stock Option Plan, originally adopted in 1996 (the “1996 Plan”), upon its expiration on April 22, 2006, subject to adjustment as
provided in Section 3(b). For purposes of this limitation, the shares of Stock underlying any Options granted hereunder or any options granted under the 1996 Plan which are forfeited, canceled, reacquired by the Company, satisfied without the
issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or
shares of Stock reacquired by the Company and held in its treasury. 
  
 (b) Changes in Stock . Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the
Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other
securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the
outstanding shares of Stock are converted into or exchanged for a different number or kind of securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the Plan, (ii) the number of Stock Options automatically granted to Non-Employee Directors, (iii) the number and kind of shares or other securities subject to
any then outstanding Stock Options under the Plan, and (iv) the price for each share subject to any then outstanding Stock Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number
of Stock Options) as to which such 

  

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Stock Options remain exercisable. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares. 
  
 The Administrator may also adjust the number of shares subject to outstanding Options and the exercise price and the terms of outstanding Options to take into
consideration material changes in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the Administrator that such adjustment is appropriate to avoid
distortion in the operation of the Plan; provided that no such adjustment shall be made, without the consent of the grantee, if it would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the
Code. 
  
 (c) Mergers and Other Transactions . In the case of
and subject to the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger,
reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for a different kind of securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to
such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iv) the sale of all of the Stock of the Company to an unrelated person or entity (in each case,
a “Sale Event”), all Options that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event. Upon the effective time of the Sale Event, the Plan
and all outstanding Options granted hereunder shall terminate, unless provision is made in connection with the Sale Event in the sole discretion of the parties thereto for the assumption or continuation of Options theretofore granted by the
successor entity, or the substitution of such Options with new Options of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and the per share exercise prices, as such parties shall agree (after
taking into account any acceleration hereunder). In the event of such termination, each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all
outstanding Options held by such grantee, including those that will become exercisable upon the consummation of the Sale Event; provided, however, that the exercise of Options not exercisable prior to the Sale Event shall be subject to the
consummation of the Sale Event. 
  
 Notwithstanding anything to the contrary in
this Section 3(c), in the event of a Sale Event pursuant to which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Sale Event, the Company shall have the right, but not
the obligation, to make or provide for a cash payment to the grantees holding Options in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value as determined by the Administrator of the consideration
payable per share of Stock pursuant to the Sale Event (the “Sale Price”) times the number of shares of Stock subject to outstanding Options (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the
aggregate exercise price of all such outstanding Options. 
  
 Section 4. Eligibility  
  
 Only individuals who are Non-Employee Directors may be granted an Option under this Plan. 
  
 Section 5. Stock Options  
  
 Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve. Stock Options granted under the Plan shall be
Non-Qualified Stock Options. No Incentive Stock Options may be granted under the Plan. 
  
 (a) Grants of Stock Options .  
  
 (i) Initial Automatic Grant . Each Non-Employee Director who is first elected to serve as a Director at or after the
Company’s 2006 annual meeting of stockholders (the “2006 Annual Meeting”, and each subsequent annual meeting of the Company’s stockholders being referred to as an “Annual Meeting”), and who did not previously receive a
grant of a Stock Option to acquire 10,000 shares of Stock under the 1996 Plan, shall be granted on the third business day after his election a Stock Option to acquire 10,000 shares of Stock. 
  

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 (ii) Other Grants . The Board, in its discretion, may on one or more occasions grant additional
Options to one or more Non-Employee Directors. 
  
 (iii) Exercise Price
. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be 100 percent of the Fair Market Value on the date of grant. 
  
 (iv) Option Term . The term of each Stock
Option shall be 10 years after the date the Stock Option is granted. 
  
 (v) Exercisability; Rights of a Stockholder . Stock Options shall become exercisable in four equal annual installments over a four-year period beginning on the first anniversary of the date of grant. The
Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock
Options. 
  
 (vi) Method of Exercise . Stock Options may be
exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: 
  
 (A) In cash, by certified or bank check or other
instrument acceptable to the Administrator; 
  
 (B) Through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the optionee on the open market or that have been beneficially owned by the optionee for at least six months and are not then subject to restrictions under any Company
plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or 
  
 (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to
the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other
agreements as the Administrator shall prescribe as a condition of such payment procedure. 
  
 Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a
Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any
other requirements contained in the Option award agreement or applicable provisions of laws. In the event an optionee chooses to pay the purchase price with previously-owned shares of Stock through the attestation method, the number of shares of
Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of shares attested to. 
  
 (b) Non-transferability of Options . No Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee, or by the optionee’s legal representative or guardian in the event of the optionee’s incapacity. Notwithstanding the
foregoing, the Administrator, in its sole discretion, may provide in the Option award agreement regarding a given Option that the optionee may transfer his Stock Options to members of his immediate family, to trusts for the benefit of such family
members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option. 
  
 Section 6. Additional Conditions Applicable to
Nonqualified Deferred Compensation Under Section 409A.  
  
 In the event
any Stock Option under the Plan is granted with an exercise price of less than 100 percent of the Fair Market Value on the date of grant (regardless of whether or not such exercise price is intentionally or 

  

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unintentionally priced at less than Fair Market Value), or such grant is materially modified and deemed a new grant at a time when the Fair Market Value
exceeds the exercise price, or such grant is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the following additional conditions shall apply and
shall supersede any contrary provisions of this Plan or the terms of any agreement relating to such 409A Award. 
  
 (a) Exercise and Distribution . Except as provided in Section 6 hereof, no 409A Award shall be exercisable or distributable earlier than upon one of
the following: 
  
 (i) Specified Time . A specified time or a
fixed schedule set forth in the written instrument evidencing the 409A Award. 
  
 (ii) Separation from Service . Separation from service (within the meaning of Section 409A) by the 409A Award grantee; provided, however, that if the 409A Award grantee is a “key employee” (as defined
in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of the Company’s Stock is publicly traded on an established securities market or otherwise, exercise or distribution under this Section 6(a)(ii)
may not be made before the date that is six months after the date of separation from service. 
  
 (iii) Death . The date of death of the 409A Award grantee. 
  
 (iv) Disability . The date the 409A
Award grantee becomes disabled (within the meaning of Section 6(c)(ii) hereof). 
  
 (v) Unforeseeable Emergency . The occurrence of an unforeseeable emergency (within the meaning of Section 6(c)(iii) hereof), but only if the net value (after payment of the exercise price) of the number of
shares of Stock that become issuable does not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the exercise, after taking into account the extent to which the emergency
is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the grantee’s other assets (to the extent such liquidation would not itself cause severe financial hardship). 
  
 (vi) Change in Control Event . The occurrence of a Change in Control
Event (within the meaning of Section 6(c)(i) hereof), including the Company’s discretionary exercise of the right to accelerate vesting of such grant upon a Change in Control Event or to terminate the Plan or any 409A Award granted
hereunder within 12 months of the Change in Control Event. 
  
 (b) No Acceleration . A 409A Award may not be accelerated or exercised prior to the time specified in Section 6(a) hereof, except in the case of one of the following events: 
  
 (i) Domestic Relations Order . The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an individual other than the grantee as may be necessary to comply with the terms of a domestic relations order (as defined in Section 414(p)(1)(B) of the Code). 
  
 (ii) Conflicts of Interest . The 409A Award may permit the
acceleration of the exercise or distribution time or schedule as may be necessary to comply with the terms of a certificate of divestiture (as defined in Section 1043(b)(2) of the Code). 
  
 (iii) Change in Control Event . The Administrator may exercise the
discretionary right to accelerate the vesting of such 409A Award upon a Change in Control Event or to terminate the Plan or any 409A Award granted thereunder within 12 months of the Change in Control Event and cancel the 409A Award for
compensation. 
  
 (c) Definitions . Solely for purposes of
this Section 6 and not for other purposes of the Plan, the following terms shall be defined as set forth below: 
  
 (i) ”Change in Control Event” means the occurrence of a change in the ownership of the Company, a change in effective control of the Company, or a change
in the ownership of a substantial portion of the assets of the Company (as defined in Section 1.409A-3(g) of the proposed regulations promulgated under Section 409A by the Department of the Treasury on September 29, 2005 or any
subsequent guidance). 
  

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 (ii) ”Disabled” means a grantee who (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company or its Subsidiaries. 
  
 (iii) ”Unforeseeable Emergency” means a severe financial hardship to the grantee resulting from an illness or accident of the grantee, the grantee’s spouse, or a dependent (as defined in Section 152(a) of the Code)
of the grantee, loss of the grantee’s property due to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the grantee. 
  
 Section 7. Amendments and Termination 

  
 The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Stock Option for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Option without the
holder’s consent. Except as provided in Sections 3(b) or 3(c), in no event may the Administrator exercise its discretion to permit a repricing (or decrease in exercise price) of outstanding Stock Options. Any material Plan amendments
(other than amendments that curtail the scope of the Plan), including any Plan amendments that (i) increase the number of shares reserved for issuance under the Plan; (ii) expand the type of awards available, materially expand the
eligibility to participate, or materially extend the term of the Plan; or (iii) materially change the method of determining Fair Market Value, shall be subject to approval by the Company stockholders entitled to vote at a meeting of
stockholders. Nothing in this Section 7 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c). 
  
 Section 8. Status of Plan  
  
 With respect to the portion of any Stock Option that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee
shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Option or Options. In its sole discretion, the Administrator may authorize the creation
of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Options hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

  
 Section 9. Change of Control
Provisions  
  
 Upon the occurrence of a
Change of Control as defined in this Section 9: 
  
 (a) Each outstanding Stock Option shall automatically become fully exercisable. 
  
 (b) ”Change of Control” shall mean the occurrence of any one of the following events: 
  
 (i) any “Person,” as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all
“affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 25 percent or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Company’s Board of
Directors (“Voting Securities”) (in such case other than as a result of an acquisition of securities directly from the Company); or 
  

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 (ii) persons who, as of the Effective Date, constitute the Company’s Board of Directors (the “Incumbent
Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the
Company subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by either (A) a vote of at least a majority of the Incumbent Directors
or (B) a vote of at least a majority of the Incumbent Directors who are members of a nominating committee comprised, in the majority, of Incumbent Directors; but provided further, that any such person whose initial assumption of office is in
connection with an actual or threatened election contest relating to the election of members of the Board of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by
reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or 
  
 (iii) the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction in which the stockholders of the Company immediately prior to the Corporate Transaction, would, immediately after the Corporate Transaction, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the corporation issuing cash or securities in the Corporate Transaction (or of its
ultimate parent corporation, if any); or 
  
 (iv) the approval by the stockholders of any plan or proposal for the liquidation or dissolution of the Company. 
  
 Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 25 percent or more of
the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other
than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 25 percent or more of the combined voting power of all
then outstanding Voting Securities, then a “Change of Control” shall be deemed to have occurred for purposes of the foregoing clause (i). 
  
 Section 10. General Provisions  
  
 (a) No Distribution; Compliance with Legal Requirements . The Administrator may require each person acquiring Stock pursuant to an Option to represent
to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. 
  
 No shares of Stock shall be issued pursuant to an Option until all applicable securities law and other legal and stock exchange or similar requirements have been
satisfied. The Administrator may require the placing of such stop-orders and restrictive legends on certificates for Stock and Options as it deems appropriate. 
  

(b) Delivery of Stock Certificates . Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all
purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with
the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). 
  
 (c) Other Compensation Arrangements; No Continued Service Rights . Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Options do not confer upon any Non-Employee Director
any right to continued service with the Company or any Subsidiary. 
  

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 (d) Trading Policy Restrictions . Option exercises under the Plan shall be subject to the
Company’s insider trading policy, as in effect from time to time. 
  
 (e) Designation of Beneficiary . Each grantee to whom an Option has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Option or receive any payment under any Option payable on or after
the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the
designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate. 
  
 Section 11. Effective Date of Plan  
  

This Plan became effective on January 25, 2006, following approval by the holders of a majority of the votes cast at the 2006 Annual Meeting of Stockholders of the
Company. No grants of Stock Options may be made hereunder after January 25, 2016. 
  
 Section 12. Governing Law  
  
 This Plan and all Stock Options and actions taken thereunder shall be governed by, and construed in accordance with, the laws of The Commonwealth of Massachusetts,
applied without regard to conflict of law principles. 
  
 DATE APPROVED BY BOARD OF DIRECTORS: November 15, 2005 
  
 DATE APPROVED BY STOCKHOLDERS: January 25, 2006
  
 LIBC/2638120.8 
  

 8Summary of Certain Director and Executive Compensation

 Exhibit 10.48 
  
 Description of the Compensation of 
 ITT Educational Services, Inc.’s 
 President and Chief Operating Officer 
  
 On April 26, 2005, Kevin M. Modany was elected President and Chief
Operating Officer of the Registrant by its Board of Directors, effective April 26, 2005. Under the terms of his employment arrangement with the Registrant, Mr. Modany will receive a base salary payable at an annual rate of $310,000.
Mr. Modany was also granted a stock option as of May 4, 2005 to purchase 12,000 shares of the Registrant’s common stock at a price equal to the fair market value of the stock at the close of business on May 3, 2005. The option
will vest in three equal annual installments beginning one year from the date of grant and will expire on the seventh anniversary date of the grant. Mr. Modany will continue his participation in the Registrant’s 2005 Executive Bonus
Parameters disclosed in the Registrant’s current report on Form 8-K dated January 25, 2005 and incorporated herein by reference. 
  
 In his new position, Mr. Modany will also have the use of a leased car, an allowance to be used for tax return preparation and financial planning,
and tickets to sporting, theater and other events.

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