RESTRICTED STOCK UNIT AWARD AGREEMENT
SPECIAL RETENTION AWARD-FORM A
RECITALS
A. The Corporation has implemented the Plan as an equity incentive program to encourage key
employees and officers of the Corporation and the non-employee members of the Board to remain in
the employ or service of the Corporation by providing them with an opportunity to acquire a
proprietary interest in the success of the Corporation.
B. Participant is to render valuable services to the Corporation (or any Parent or Subsidiary),
and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan
in connection with the Corporation’s issuance of shares of Class A Common Stock to Participant
under the Plan.
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached
Appendix A.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Restricted Stock Units. The Corporation hereby awards to Participant, as
of the Award Date, restricted stock units under the Plan. Each restricted stock unit that vests
hereunder shall entitle Participant to one share of the Corporation’s Class A Common Stock on the
designated issuance date. The number of shares of Class A Common Stock underlying the awarded
restricted stock units, the applicable vesting requirements for those units and the underlying
shares and the issuance dates for the shares that vest are set forth in the Award Summary below.
The remaining terms and conditions governing the Award are set forth in the remainder of this
Agreement.
AWARD SUMMARY
Participant: |
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Award Date: |
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Number of Shares Subject to Award: |
«Shares» shares of Class A Common Stock (the “Shares”) | |
Vesting Schedule:
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The Shares shall vest in a series of successive equal monthly installments over the period of Participant’s continued Service as follows:____________________________. Such Service-vesting schedule shall constitute the “Normal Vesting Schedule.” However, the Shares may vest on an accelerated basis in accordance with the applicable provisions of Paragraph 3(b) or Paragraph 5 of this Agreement. |
Issuance Schedule:
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Each Share in which Participant vests in accordance with the applicable provisions of the Normal Vesting Schedule will become issuable on the date (the “Issuance Date”) upon which occurs the earliest of the following: (i) the date of the Participant’s cessation of Service, (ii) the closing date of a Change in Control or (iii) the issuance date determined for that Share in accordance with the following schedule based on the period during which that Share vests in accordance with the Normal Vesting Schedule: |
| Vesting Period | Issuance Date |
| The actual issuance of the Shares shall be subject to the Corporation’s collection of all applicable Withholding Taxes and shall be effected on the applicable Issuance Date or as soon as administratively practicable thereafter, but in no event later than (A) the fifteenth (15th) day of the second calendar month following an Issuance Date triggered by Participant’s cessation from Service or a Change in Control or (B) with respect to an Issuance Date determined under the clause (iii) issuance schedule above, the fifteenth (15th) day of the third calendar month following the close of the Corporation’s fiscal year in which the applicable vesting period for those Shares commences. Any Issuance Date under this Agreement shall in all events be effected within the applicable short-term deferral period under Code Section 409A. The Shares which vest on an accelerated basis pursuant to Paragraph 3(b) or Paragraph 5 of this Agreement shall be issued in accordance with the provisions of the applicable paragraph. The applicable Withholding Taxes shall be collected pursuant to the procedures set forth in Paragraph 7 of this Agreement. |
2. Limited Transferability. Prior to the actual issuance of the Shares which vest
hereunder, Participant may not transfer any interest in the restricted stock units subject to the
Award or the underlying Shares or pledge or otherwise hedge the sale of those units or Shares,
including (without limitation) any short sale or any acquisition or disposition of any put or call
option or other instrument tied to the value of those Shares. However, any Shares which vest
hereunder but otherwise remain unissued at the time of Participant’s death shall be transferred to
Participant’s designated beneficiary or beneficiaries of this Award or, in the absence of such
designated beneficiaries, pursuant to the provisions of Participant’s will or the laws of
inheritance. Participant may make a beneficiary designation with respect to this Award at any time
by filing the appropriate form with the Plan Administrator or its designate.
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3. Cessation of Service.
(a) Except as otherwise provided in Paragraph 3(b) below, Participant shall not vest in any
additional Shares following his cessation of Service. Accordingly, should Participant cease Service
for any reason prior to vesting in one or more Shares subject to this Award, then the Award will be
immediately cancelled with respect to those unvested Shares, and the number of restricted stock
units will be reduced accordingly. Participant shall thereupon cease to have any right or
entitlement to receive any Shares under those cancelled units, and those Shares shall cease to be
subject to this Award.
(b) Should Participant cease Service prior to the completion of the Normal Vesting Schedule by
reason of death, then all of the unvested Shares at the time subject to this Award shall
immediately vest, and those Shares, together with any other unissued Shares in which Participant is
vested under this Agreement at such time, shall be issued to the Participant’s estate or his
designated beneficiaries upon the Participant’s death or as soon as administratively practicable
thereafter, but in event later than the fifteenth (15th) day of the second calendar month following
the date of Participant’s death or (if later) the last day of the applicable short-term deferral
period under Code Section 409A.
4. Stockholder Rights.
(a) The holder of this Award shall not have any stockholder rights, including voting, dividend
or liquidation rights, with respect to the Shares subject to the Award until Participant becomes
the record holder of those Shares following their actual issuance upon the Corporation’s collection
of the applicable Withholding Taxes.
(b) Notwithstanding the foregoing, should any dividend or other distribution, whether regular
or extraordinary, payable other than in shares of Class A Common Stock, be declared and paid on the
Corporation’s outstanding Class A Common Stock in one or more calendar years during which Shares
remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for
purposes of entitlement to the dividend or distribution), then a special book account shall be
established for Participant and credited with a phantom dividend equivalent to the actual dividend
or distribution which would have been paid on the Shares had such Shares been issued and
outstanding and entitled to that dividend or distribution. As the Shares subsequently vest in one
or more installments hereunder, the phantom dividend equivalents credited to those Shares in the
book account shall vest, and those vested phantom dividend equivalents shall be distributed to
Participant (in cash or such other form as the Plan Administrator may deem appropriate in its sole
discretion) concurrently with the issuance of the vested Shares to which they relate. However, each
such distribution shall be subject to the Corporation’s collection of the Withholding Taxes
applicable to that distribution. In no event shall any phantom dividend equivalents vest or become
distributable unless the Shares to which they relate vest in accordance with the terms of this
Agreement.
5. Change in Control. Should a Change in Control be effected during the period of
Participant’s Service and at a time when one or more unvested Shares remain subject to this Award,
then Participant shall, immediately prior to the closing of that Change in Control
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transaction, vest in all those unvested Shares. The Shares that so vest, together with any
other vested but unissued Shares at the time subject to this Award, shall be converted into the
right to receive for each such Share the same consideration per share of Class A Common Stock
payable to the other holders of such Class A Common Stock in consummation of the Change in Control.
Such consideration shall be distributed at the same time as such stockholder payments, but in no
event shall such distribution to Participant be completed later than the fifteenth (15th) day of
the second calendar month following the effective date of that Change in Control. Each distribution
made under this Paragraph 5 shall be subject to the Corporation’s collection of the applicable
Withholding Taxes. This Agreement shall not in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
6. Adjustment in Shares. Should any change be made to the Class A Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the
outstanding Class A Common Stock as a class without the Corporation’s receipt of consideration, or
should the value of outstanding shares of Class A Common Stock be substantially reduced as a result
of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any
merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan
Administrator to the total number and/or class of securities issuable pursuant to this Award in
order to reflect such change and thereby prevent a dilution or enlargement of benefits hereunder.
In making such equitable adjustments, the Plan Administrator shall take into account any amounts
credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and
the determination of the Plan Administrator shall be final, binding and conclusive. However, in
the event of a Change of Control, the adjustments (if any) shall be made in accordance with the
applicable provisions of Section 13.8 of the Plan governing Change of Control transactions.
Notwithstanding the above, the conversion of any convertible securities of the Corporation shall
not be deemed to have been effected without the Corporation’s receipt of consideration.
7. Withholding Taxes.
(a) The Corporation shall collect the Withholding Taxes with respect to each distribution of
phantom dividend equivalents by withholding a portion of that distribution equal to the amount of
the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion
so withheld.
(b) The Corporation shall collect the applicable Withholding Taxes with respect to all Shares
which vest and become issuable pursuant to the provisions of this Agreement through the following
automatic share withholding method:
• On the applicable issuance date, the Corporation shall withhold, from the
vested Shares otherwise issuable to Participant at that time, a portion of those
Shares with a Fair Market Value (measured as of the issuance date) equal to the
applicable Withholding Taxes; provided, however, that the number of Shares which the
Corporation shall be required to so withhold shall not exceed in Fair
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Market Value (other than by reason of the rounding up of any fractional share to the
next whole Share) the amount necessary to satisfy the Corporation’s required tax
withholding obligations using the minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to supplemental
taxable income. Participant hereby expressly authorizes the Corporation to withhold
any such additional fractional Share that is needed to round up the Share
withholding to the next whole Share, with the Fair Market Value of that additional
fractional Share to be added to the amount of taxes withheld by the Corporation from
his or her wages for the calendar year in which the issuance date occurs, and to
report that additional tax withholding as part of his or her W-2 tax withholdings
for such year.
(c) Notwithstanding the foregoing provisions of this Paragraph 7, the employee portion of the
federal, state and local employment taxes required to be withheld by the Corporation in connection
with the vesting of the Shares or any other amounts payable hereunder (the “Employment Taxes”)
shall in all events be collected from the Participant no later than the last business day of the
calendar year in which the Shares or other amounts vest hereunder. Accordingly, to the extent the
applicable issuance date for one or more vested Shares or the distribution date for such other
amounts is to occur in a year subsequent to the calendar year in which those Shares or other
amounts vest, the Participant shall, on or before the last business day of the calendar year in
which the Shares or other amounts vest, deliver to the Corporation a check payable to its order in
the dollar amount equal to the Employment Taxes required to be withheld with respect to those
Shares or other amounts. The provisions of this Paragraph 7(c) shall be applicable only to the
extent necessary to comply with the applicable tax withholding requirements of Code Section
3121(v).
(d) Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all
restricted stock units which vest under the Award shall be made solely in shares of Class A Common
Stock. No fractional share of Class A Common Stock shall be issued pursuant to this Award, and any
fractional share resulting from any calculation made in accordance with the terms of this Agreement
shall be rounded down to the next whole share of Class A Common Stock.
8. Compliance with Laws and Regulations. The issuance of shares of Class A Common
Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with
all applicable requirements of law relating thereto and with all applicable regulations of any
Stock Exchange on which the Class A Common Stock may be listed for trading at the time of such
issuance.
9. Notices. Any notice required to be given or delivered to the Corporation under the
terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices or shall be effected by properly addressed electronic mail delivery. Any notice
required to be given or delivered to Participant shall be in writing and addressed to Participant
at the most recent address then on file for Participant in the Corporation’s Human Resources
Department. All notices shall be deemed effective upon personal or electronic
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delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party
to be notified.
10. Successors and Assigns. Except to the extent otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and Participant and the legal representatives, heirs and
legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.
11. Code Section 409A
(a) It is the intention of the parties that the provisions of this Agreement shall comply with
the requirements of the short-term deferral exception to Section 409A of the Code and Treasury
Regulations Section 1.409A-1(b)(4). Accordingly, to the extent there is any ambiguity as to
whether one or more provisions of this Agreement would otherwise contravene the requirements or
limitations of Code Section 409A applicable to such short-term deferral exception, then those
provisions shall be interpreted and applied in a manner that does not result in a violation of the
requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply
to such exception.
(b) If and to the extent this Agreement may be deemed to create an arrangement subject to the
requirements of Code Section 409A, then the following provisions shall apply:
• No shares of Class A Common Stock or other amounts which become issuable or
distributable under this Agreement by reason of Participant’s cessation of Service
shall actually be issued or distributed to Participant until the date of
Participant’s Separation from Service or as soon thereafter as administratively
practicable, but in no event later than the fifteenth day of the second calendar
month following the date of such Separation from Service.
• No shares of Class A Common Stock or other amounts which become issuable or
distributable under this Agreement by reason of Participant’s Separation from
Service shall actually be issued or distributed to Participant prior to the earlier
of (i) the first day of the seventh (7th) month following the date of such
Separation from Service or (ii) the date of Participant’s death, if Participant is
deemed at the time of such Separation from Service to be a specified employee under
Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as
determined by the Plan Administrator in accordance with consistent and uniform
standards applied to all other Code Section 409A arrangements of the Corporation,
and such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). The deferred shares or other
distributable amount shall be issued or distributed in a lump sum on the first day
of the seventh (7th) month following the date of Participant’s Separation from
Service or, if earlier, the first day of the
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month immediately following the date the Corporation receives proof of
Participant’s death.
• No amounts that vest and become payable under Paragraph 5 of this Agreement
by reason of a Change in Control shall be distributed to the Participant at the time
of such Change in Control, unless that transaction also qualifies as a change in
control event under Code Section 409A and the Treasury Regulations thereunder. In
the absence of such a qualifying change in control, the distribution shall not be
made until the earlier of (i) the date of Participant’s Separation from Service or
(ii) the applicable Issuance Date determined pursuant to the issuance date schedule
set forth in Paragraph 1 of this Agreement for the Shares to which those amounts
relate or as soon as administratively practicable following the earlier of such
dates, but in no event later than the fifteenth (15th) day of the second calendar
month following that date, subject, however, to any required deferral pursuant to
the preceding paragraph.
12. Construction. This Agreement and the Award evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in the Award. To
the extent there is any conflict between the provisions of this Agreement and Participant’s
existing employment agreement with the Corporation, the provisions of this Agreement shall be
controlling, and none of the special vesting acceleration/continuation provisions of that
employment agreement shall be applicable to this Award, and this Award shall not be deemed to be a
New Equity Award for purposes of those provisions. Accordingly, the vesting of this Award shall
be governed solely by the express terms and conditions of this Agreement. In addition, this
Agreement and the Award evidenced hereby shall not be subject to the pro-rata vesting provisions of
the Corporation’s Senior Executive Severance Pay Plan, and those provisions shall not afford any
additional vesting to Participant other than the vesting provided by the express terms and
conditions of this Agreement.
13. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Arizona without resort to that State’s
conflict-of-laws rules.
14. Participant Acceptance. The Participant must accept the terms and conditions of
this Agreement either electronically through the electronic acceptance procedure established by the
Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to
the Corporation. In no event shall any shares of Class A Common Stock be issued under this
Agreement in the absence of such acceptance.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated
above.
| APOLLO GROUP, INC. |
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| By: | ||||
| Title: | ||||
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APPENDIX A
DEFINITIONS
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.
B. Award shall mean the award of restricted stock units made to Participant pursuant
to the terms of this Agreement.
C. Award Date shall mean the date the restricted stock units are awarded to
Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the
Agreement.
D. Board shall mean the Corporation’s Board of Directors.
E. Change in Control shall have the meaning assigned to such term in Section 3.1(e) of
the Plan.
F. Code shall mean the Internal Revenue Code of 1986, as amended.
G. Class A Common Stock shall mean shares of the Corporation’s Class A common stock.
H. Corporation shall mean Apollo Group, Inc., an Arizona corporation, and any
successor corporation to Apollo Group, Inc. which shall by appropriate action adopt the Plan.
I. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.
J. Fair Market Value per share of Class A Common Stock on any relevant date shall be
the closing price per share of such Class A Common Stock on the date in question on the Stock
Exchange serving as the primary market for the Class A Common Stock, as such price is reported by
the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global
Select Market) or as officially quoted in the composite tape of transactions on any other Stock
Exchange on which the Class A Common Stock is then primarily traded. If there is no closing
selling price for the Class A Common Stock on the date in question, then the Fair Market Value
shall be the closing price on the last preceding date for which such quotation exists.
K. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
L. Participant shall mean the person to whom the Award is made pursuant to the
Agreement.
M. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.
N. Plan shall mean the Corporation’s 2000 Stock Incentive Plan, as amended or restated
from time to time.
O. Plan Administrator shall mean the Compensation Committee of the Board acting in its
capacity as administrator of the Plan.
P. Separation from Service shall mean Participant’s cessation of Employee status by
reason of his or her death, retirement or termination of employment. Participant shall be deemed
to have terminated employment for such purpose at such time as the level of his or her bona fide
services to be performed as an Employee (or as a consultant or independent contractor) permanently
decreases to a level that is not more than twenty percent (20%) of the average level of services
he rendered as an Employee during the immediately preceding thirty-six (36) months (or such
shorter period for which he may have rendered such services). Any such determination as to
Separation from Service shall be made in accordance with the applicable standards of the Treasury
Regulations issued under Section 409A of the Code.
Q. Service shall mean Participant’s performance of services for the Corporation (or
any Parent or Subsidiary) in the capacity of an Employee. However, Participant shall, for purposes
of the vesting provisions of this Agreement, be deemed to cease Service immediately upon the
occurrence of the any of the following events: (i) Participant no longer performs services in an
Employee capacity for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which
Participant renders services in an Employee capacity ceases to remain a Parent or Subsidiary of the
Corporation, even though Participant may subsequently continue to perform services for that entity
or (iii) if Participant is employed on the Award Date in a capacity other than (or in addition to)
a faculty member, Participant ceases to remain employed in that capacity and is accordingly
employed by the Corporation (or any Parent or Subsidiary) solely in the capacity of a faculty
member. Service as an Employee shall not be deemed to cease during a period of military leave,
sick leave or other personal leave approved by the Corporation; provided, however, that except to
the extent otherwise required by law or expressly authorized by the Plan Administrator or by the
Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting
purposes for any period Participant is on a leave of absence.
R. Shares shall mean the shares of Class A Common Stock which may vest and become
issuable under the Award pursuant to the terms of this Agreement.
S. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global
Select Market or the New York Stock Exchange.
T. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
V. Withholding Taxes shall mean the (i) the employee portion of the federal, state and
local employment taxes required to be withheld by the Corporation in connection with the vesting of
the shares of Class A Common Stock under the Award, any phantom dividend equivalents relating to
those shares and any other amounts payable with respect to those shares and (ii) the federal, state
and local income taxes required to be withheld by the Corporation in connection with the issuance
of those vested shares and the distribution of any phantom dividend equivalents relating to such
shares and any other amounts payable with respect to those shares.
