EMPLOYMENT AGREEMENT
Exhibit 10.2
This EMPLOYMENT AGREEMENT (the “Agreement” or “Employment Agreement”) dated July 8, 2008
(“Effective Date”) between Xxxx X. Xxxxx (“Employee”) and Universal Technical Institute, Inc., a
Delaware corporation (the “Company”) provides:
WHEREAS, the Company wishes to obtain the future services of Employee and Employee is willing
to continue to provide services to the Company; and
WHEREAS, the parties wish to revise and update the existing Employment and Non-Interference
Agreement between them to reflect the current status of Employee’s employment and to ensure
compliance with applicable laws and regulations; and
WHEREAS, Employee wishes to have the protection provided for in this Agreement and, in
exchange for such protection, is willing to give to the Company, under certain circumstances, a
covenant not to compete and a release of all liability.
NOW, THEREFORE, the parties hereto agree as follows:
1. Previous Agreement Superseded. The previous Employment and Non-Interference
Agreement between the parties dated April 1, 2002 (the “Previous Employment Agreement”) is hereby
superseded, replaced in its entirety and considered null and void.
2. Definitions.
d. “Board of Directors” means the Board of Directors of the
Company.
e. “Cause” means any one or more of the following:
(i) Employee’s conviction of, or plea of guilty or nolo contendere to, any
felony or a crime involving embezzlement, conversion of property or moral turpitude;
(ii) A finding by a majority of the Board of Directors of Employee’s fraud,
embezzlement or conversion of the Company’s property;
(iii) Employee’s conviction of, or plea of guilty or nolo contendere to, a
crime involving the acquisition, use or expenditure of federal, state or local
government funds relating to the business and affairs of the Company;
(iv) An administrative or judicial determination that Employee committed fraud
or any other violation of law involving federal, state or local government funds
relating to the business and affairs of the Company;
(v) A final, nonappealable finding by a majority of the Board of Directors of
Employee’s knowing breach of any of Employee’s fiduciary duties to any company in
the Company Group or the Company’s stockholders or making of an intentional misrepresentation or omission which breach, misrepresentation or
omission would reasonably be expected to have a material adverse effect on the
business relationship, the business, properties, assets, operations, condition
(financial or other) or prospects of any company in the Company Group;
(vi) Employee’s alcohol or substance abuse, which materially interferes with
Employee’s ability to discharge the duties, responsibilities and obligations
prescribed by this Agreement as determined by a majority of the Board of Directors;
(vii) Employee’s material and knowing failure to observe or comply with law
applicable to the business of the Company as an officer or employee of the Company
which would reasonably be expected to have a material adverse effect on the business
relationship, the business, properties, assets, operations, condition (financial or
other), or prospects of any company in the Company Group as determined by a majority
of the Board of Directors or;
(viii) Employee’s willful gross misconduct relating to the business of the
Company that results in significant harm to the Company or its operation,
properties, reputation, goodwill or business relationships as determined by a
majority of the Board of Directors,
provided that (i) any finding or determination made by the Board of Directors concerning
the existence of Cause must be made in good faith and not for purposes of evading the
Company’s obligations hereunder; and (ii) a finding or determination of Cause by the Board
of Directors may not be made unless, prior to determining that Cause exists, the Employee
shall be given written notice stating in reasonable detail the facts and circumstances
deemed by the Company to constitute Cause, and thirty (30) days from receipt of such notice
Employee has failed to cure the facts and circumstances set forth in such notice.
f. “Change of Control” means: (i) any sale, lease, exchange, or other transfer (in one
transaction or series of related transactions) of all or substantially all of the Company’s
assets to any person or group of related persons under Section 13(d) of the Securities and
Exchange Act of 1934 (“Group”); (ii) the Company’s shareholders approve and complete any
plan or proposal for the liquidation or dissolution of the Company; (iii) any person or
Group becomes the beneficial owner, directly or indirectly, of shares representing more than
50% of the aggregate voting power of the issued and outstanding stock entitled to vote in
the election of directors of the Company (“Voting Stock”) and such person or Group has the
power and authority to vote such shares; (iv) any person or Group acquires sufficient shares
of Voting Stock to elect a majority of the members of the Board of Directors; or (v) the
completion of a merger or consolidation of the Company with another entity in which holders
of the Company’s stock immediately before the completion of the transaction hold, directly
or indirectly, immediately after the transaction, 50% or less of the common equity interest
in the surviving corporation in the transaction. Notwithstanding the foregoing, in no event
will a Change of Control be deemed to have occurred as a result of an initial public
offering of the Company’s stock.
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Also, notwithstanding anything to the contrary herein, the fact that a transaction or
event is defined as a Change of Control for purposes of this Agreement shall not evidence or
infer that the transaction or event constitutes a change of control for purposes of,
including but not limited to, any determination or definition of the Department of
Education, any licensing agency, or for determining the duties of the Company’s Board of
Directors under Delaware corporate law.
d. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
e. “Company Group” shall mean the entities listed on Schedule 1.
f. “Compete” shall mean to directly or indirectly own, operate, manage, join, control,
be employed by, be a consultant to, invest in, or become a director, officer, agent,
partner, member, independent contractor or shareholder of any Competitive Business, as
defined below. As used in this Agreement, “Compete” does not include purely passive
investments in any publicly traded company so long as Employee does not directly or
indirectly own, acquire or obtain options to acquire, 5% or more of any class of shares in
such company.
g. “Competitive Business” means any (i) post secondary educational institution or
entity which conducts educational programs in the areas of automotive, motorcycle, marine,
diesel or collision repair and refinishing technologies (or a combination of these
programs).
h. “Confidential Information” means any confidential information including, without
limitation, any study, data, calculations, software, storage media or other compilation of
information, patent, patent application, copyright, “know-how”, trade secrets, customer,
student or prospective student lists or information, details of client, consultant,
student, vendor, supplier or manufacturer contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business acquisition
plans or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source or object codes), processes,
procedures, formulae, improvements or other proprietary or intellectual property of any
company in the Company Group, whether or not in written or tangible form, and whether or not
registered, and including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. Notwithstanding
the foregoing, the term Confidential Information does not include, and there shall be no
obligation hereunder with respect to, information that is or becomes generally available to
the public other than as a result of a disclosure by the Employee not permissible hereunder.
i. “Disability” means Employee is either:
(i) determined to be totally disabled by the Social Security Administration; or
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(ii) determined to be disabled pursuant to the Company’s disability plans for a
period of at least three months.
j. “Good Reason,” when used with reference to a voluntary termination by Employee of
Employee’s employment with the Company, shall mean any of the following conditions, provided
that Employee (i) provides the Company with actual notice of the condition giving rise to
the termination within ninety (90) days of Employee’s knowledge of the initial existence of
the condition, (ii) provides the Company with the opportunity to cure within 30 days of the
notice, and (iii) terminates employment within two (2) years of the initial existence of the
condition:
(a) A material diminution in any of the following:
A. Employee’s base compensation;
B. Employee’s authority, duties or responsibilities; provided that, a
material diminution of Employee’s authority, duties or responsibilities shall
be deemed to have occurred if Employee ceases to have such authorities,
duties or responsibilities with respect to the entity which is the ultimate
parent entity of the Company Group following a Change of Control.
(b) A material change in the geographic location at which the Employee must
perform the services; or
(c) Any other action or inaction that constitutes a material breach by the
Company of this Agreement and such breach is not cured as set forth in 2.j. (ii)
above.
k. “Market” means anywhere in the United States or Puerto Rico. If an arbitrator or
arbitration panel finds that this definition of Market is unreasonable, then the Market will
be considered to mean all states in which the Company has a campus or other training center
and all states that are contiguous to a state in which the Company has a campus or other
training center. If an arbitrator or arbitration panel finds that definition of Market is
unreasonable, the Market shall mean all states in which the Company has a campus or other
training center.
l. “Position” means the particular position of Chairman of the Board.
m. “Regulations” means any laws, ordinances, regulations or rules of any governmental,
regulatory or administrative body, agent or authority, any court or judicial authority, or
any public, private or industry regulatory authority.
n. “Severance Period” means the period of time that the Company continues to pay
Employee as set forth in Section 9.a.
o. “Specified Employee” means any Company employee that the Company determines is a
Specified Employee within the meaning of Section 409A of the Code. The Company shall determine whether an employee is a Specified Employee by applying
reasonable, objectively determinable identification procedures set forth in a resolution of
the Board of Directors issued before December 31, 2007.
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p. “Term of Employment” means the period commencing on the Effective Date and
terminating three (3) years after the Effective Date. Employee acknowledges that the
Company has no obligation to continue Employee’s employment or this Agreement beyond the
Term of Employment. The Term of Employment may also be terminated with or without cause and
without notice subject to the provisions of Section 8.
q. “Termination Date” shall mean the last day of Employee’s employment with the
Company.
3. Nature of Employment. Subject to the terms of this Agreement, the Company hereby
agrees to continue to employ Employee in the Position, and Employee hereby agrees to accept the
continuation of such employment in the Position, for the Term of Employment under this Agreement.
4. Extent of Employment.
While employed:
a. Employee agrees to perform the duties of the Position faithfully and to the best of
Employee’s ability at the principal offices of the Company or in locations as may be
designated temporarily from time to time by the Company or as necessary to fulfill the
duties of the Position. Employee shall report to the Board of Directors, or as otherwise
directed by the Board of Directors.
b. Employee shall abide by the policies, rules, customs, and usages as established by
or existing at the Company.
c. Employee shall devote all of his business time, energy and skill as may be
reasonably necessary for the performance of the duties, responsibilities, and obligations of
the Position.
d. Employee shall not knowingly breach or violate any Regulations or rules of any
governmental or regulatory body in any material respect and shall not act in any manner
which might reasonably be expected to have a material adverse effect on the ongoing
business, properties, assets, operations, condition (financial or other), business
relationships or prospects of any company in the Company Group.
e. Employee shall not commit or engage in any conduct, through action or omission,
which would constitute any of the offenses set forth in the definition of “Cause” under this
Agreement.
f. Employee agrees to live in the Phoenix, Arizona metropolitan area.
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5. Compensation. While Employee is employed by the Company, the Company shall pay
Employee as follows:
a. A base salary, paid in twenty six (26) equal installments, at a rate of Five Hundred
Thousand Dollars ($500,000) per annum. The Board of Directors shall annually, and in its
sole discretion, determine whether the base salary should be increased, and, if so, in what
amount.
b. An annual bonus based on Employee’s performance as determined and approved by the
Board of Directors based on performance parameters set by the Board of Directors. Such bonus
will be determined at the sole discretion of the Board of Directors, and may not be paid at
all. Employee acknowledges that no bonus will be paid if performance parameters are not met.
If the Board of Directors determines that such bonus shall be paid, such bonus shall be paid
by the fifteenth (15th) day of the third (3rd) month of the Employee’s taxable year
following the year in which the Employee becomes entitled to such bonus.
6. Reimbursement of Expenses. While Employee is employed, the Company shall reimburse
Employee for reasonably documented travel expenses, entertainment and other expenses reasonably
incurred by Employee in connection with the performance of the duties of the Position and, in each
case, according to the reasonable rules, policies, customs and usage promulgated by the Company
from time to time. All reimbursements shall be made within thirty (30) days of Employee’s
submission of any reasonably documented expense reimbursement claim. The amount of expenses
eligible for reimbursement provided during one taxable year shall not affect the amount of expenses
eligible for reimbursement or in-kind benefits provided during any other taxable year. Employee may
not elect to receive cash or any other benefit in lieu of the reimbursements provided by this
Section.
7. Benefits. While Employee is employed, the Employee shall be entitled to perquisites
and benefits established from time to time, at the sole discretion of the Board of Directors for
the Position, including without limitation, health, short and long term disability, pension and
life insurance benefits consistent with past practice, or as increased from time to time; provided
that the perquisites and benefits provided to Employee shall be at least substantially equal to
those provided to any other officer of the Company.
Following the Term of Employment the Company shall maintain, at Company expense, health care
insurance benefits and a supplemental executive reimbursement medical plan comparable to that
provided to the Executives of the Company on the Termination Date for Employee and Employee’s
spouse. These benefits will be provided until and including age sixty five (65). This obligation
shall survive the Term of Employment and the termination of this Agreement. The provision of such
benefits after the expiration of the Severance Period below is subject to the requirements of
Section 409A. To ensure compliance with Section 409A, the Company will assure that such benefits
are payable at a specified time or pursuant to a fixed schedule within the meaning of 26 C.F.R. §
1-409A-3 (i) (1) (IV). In order to ensure compliance with this provision of the regulations, the
benefits eligible for reimbursement in one taxable year will not affect the benefits eligible for
reimbursement by the Company in a different taxable year. All reimbursements of benefits must be
made no later than December 31st of the taxable year following the taxable year in which the expense was incurred. The Employee may not elect
to receive cash or any other benefit in lieu of the benefits provided by this Section.
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8. Termination of Employment for Cause or without Good Reason. At any time during the
Term of Employment, Company may terminate Employee for Cause effective upon the giving to Employee
a written notice of termination. If Employee’s employment is terminated for Cause or Employee
voluntarily terminates without Good Reason, Employee shall be entitled to:
a. Payment of accrued and unpaid base salary and unused vacation through the
Termination Date;
b. Reimbursement for expenses incurred through the Termination Date as set forth in
Section 6.
c. The benefits under Section 7 of this Agreement unless Employee and Employee’s spouse
have reached the age of 66.
9. Termination of Employment without Cause, for Good Reason, upon Change of Control, or
due to the Death or Disability of Employee. During the Term of Employment, the Company may
terminate Employee without Cause and without providing notice to Employee, and Employee may
terminate employment with the Company for Good Reason. Employee’s death or Disability shall cause a
termination of Employee’s employment.
a. During the Term of Employment, if Employee is terminated without Cause or if
Employee terminates for Good Reason, either of which occurs without a Change of Control,
Employee shall be entitled to the following items so long as Employee has signed the release
described in Section 11 below and not revoked it:
(i) The Company shall provide the items set forth in Section 8.a., 8.b., and
8.c. above.
(ii) The Company shall pay to Employee, an amount equal to Employee’s base
salary at the highest rate in effect at any time during the twelve (12) months
immediately preceding the Termination Date, payable for a period of twenty four (24)
months (the “Severance Period”). Employee will be paid this amount in equal
bi-weekly installments according to the Company’s regular payroll periods and
practices. The first payment to which Employee is entitled shall be paid on the
first day of the month following the revocation period, if any, as set forth in
Exhibit A. At all times, the right to each monthly payment made under this
Section 9 shall be treated as the right to a series of separate payments within the
meaning of 26 CFR Section 1.409A-2(b) (2) (iii).
(iii) Employee will be eligible for the fiscal year bonus if such bonus is
approved by the Board of Directors based upon parameters set by the Board of
Directors. The amount of any such bonus will be pro-rated based on the Termination
Date and shall be paid at the time other employees are paid the bonus, but in no event will such bonus be paid after the fifteenth
(15th) day of the third (3rd) month of the Employee’s taxable
year following the year in which the Employee becomes entitled to such bonus.
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(iv) Employee’s then current medical and dental benefits will continue pursuant
to Company policy and the terms of any applicable benefit plan. Beginning on the
first day that active employee coverage is ineffective, Employee shall elect to
continue current medical and dental benefits for eighteen (18) months in accordance
with any applicable plan provisions and the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). The Company shall continue to pay a monthly
amount equal to the Company-paid portion of the insurance premium for the coverage
held by Employee as of the Termination Date, and any administrative fee, for a
period of eighteen (18) months. Those payments shall be deemed to satisfy the
Company’s obligation to provide benefits under Section 7 of this Agreement, but the
completion of those payments after eighteen (18) months shall not discharge the
Company’s obligation to provide benefits under Section 7 if Employee and his spouse
have not yet reached the age of 66.
(v) All stock Awards (as defined by any applicable Plan), including stock
options and restricted stock, shall be governed by the terms and provisions of the
Plan and the grant Agreement under which such Award was granted.
(vi) Employee’s participation in and/or coverage under all other employee
benefit plans, programs or arrangements sponsored or maintained by the Company shall
cease to be effective as of the Termination Date, unless such benefit, program or
plan is inalienable under the law.
(vii) The Company shall pay for twelve (12) months of outplacement services
through a provider selected by the Company for the twelve (12) month period
immediately following the Termination Date.
b. During the Term of Employment, if Employee is terminated without Cause or if
Employee terminates for Good Reason, either of which occur within 12 months of a Change of
Control, Employee shall be entitled to the following items so long as Employee has signed
the release described in Section 11 below and not revoked it:
(i) Except for the bonus set forth in Section 9.a.(iii), all of the payments
and benefits as set forth in Section 9.a. above; and
(ii) The Company shall also pay to Employee Employee’s maximum targeted bonus
for the fiscal year in which the Termination Date occurs prorated to the Termination
Date. Employee will be paid this bonus amount over the Severance Period in equal
bi-weekly installments according to the Company’s regular payroll periods and
practices.
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c. During the Term of Employment if Employee suffers a Disability, Employee
shall be entitled to the following items so long as Employee has signed the release
described in Section 11 below and not revoked it:
(i) Severance payments as provided under Section 9.a.(ii); and
(ii) All the payments and benefits set forth in Section 9.a.(i), (iv),
(v), (vi), and (vii); and,
(iii) Disability benefits under the applicable plan or practice.
d. During the Term of Employment if Employee dies, Employee’s estate shall be
entitled to the following items:
(i) Severance payments as provided under Section 9.a. (ii); and
(ii) All the payments and benefits set forth in Section 9.a.(i), (v),
and (vi); and
(iii) Employee’s dependents, if any, who are covered by Employee’s
health or dental insurance at the time of death shall be eligible for the
benefits provided under Section 9.a.(iv).
e. To the extent Employee’s Termination Date is prior to the date on which the
Company has paid any bonus to which the Employee may be entitled for the fiscal year
immediately preceding the Termination Date, (i.e. between the end of the fiscal year
and the bonus payout), Employee will receive such bonus in a lump sum on the same
date as Employee would have received such bonus had the Employee remained
continuously employed by the Company.
f. If any payment or benefit Employee would receive under this Agreement, when
combined with any other payment or benefit Employee receives pursuant to the
termination of Employee’s employment with the Company (“Payment”), would:
(i) constitute a “parachute payment” within the meaning of Section 280G
of the Code, and
(ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be
whichever of the following amounts, taking into account the applicable
federal, state and local employment taxes, income taxes, and the Excise Tax,
results in Employee’s receipt, on an after-tax basis, of the greater amount
of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax:
| (a) | the full amount of such Payment; or |
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| (b) | such lesser amount (with cash
payments being reduced) as would result in no portion of the
Payment being subject to the Excise Tax. |
(iii) All determinations required to be made under this Section 9(f), including
whether and to what extent the Payments shall be reduced and the assumptions to be
utilized in arriving at such determination, shall be made by a national independent
accounting firm registered with the Public Company Accounting Oversight Board as
will be designated by the Company (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to Employee and the Company at such
time as is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. For purposes of making the calculations
required by this Section 9(f), the Accounting Firm may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable,
good-faith interpretations concerning the application of Sections 280G and 4999 of
the Code.
g. Notwithstanding any other provision of this Agreement to the contrary, neither the
time nor the schedule of any payment under this Agreement may be accelerated or subject to a
further deferral except as provided in 26 C.F.R. § 1.409A-3(j)(4).
h. The Employee does not have any right to make any election regarding the time or form
of any payment due under this Agreement.
i. If the Company fails to make any payment under this Agreement, either intentionally
or unintentionally, within the time period specified in this Agreement, but the payment is
made within the same calendar year, such payment will be treated as made within the time
period specified in the Agreement pursuant to 26 C.F.R. § 1.409A-3(d). In addition, if a
payment is not made due to a dispute with respect to such payment, the payment may be
delayed in accordance with 26 C.F.R. § 1.409A-3(g).
j. For purposes of this Agreement, the determination of whether Employee has terminated
employment will be made in accordance with 26 C.F.R. Section 1.409A-1(h) (1) (m). This
Agreement shall be administered in compliance with Section 409A of the Code and each
provision shall be interpreted, to the extent possible, to comply with Section 409A.
Notwithstanding any of the foregoing, if the Employee is a Specified Employee on the
Termination Date, all monthly payments, if any, that are to be made following the fifteenth
(15th) day of the third (3rd) month of the Employee’s taxable year following
the Employee’s taxable year in which Termination Date occurred, but before the date which is six
(6) months following the Termination Date, that are, in the aggregate, in excess of the Excludable
Compensation shall be paid in a lump-sum on the first (1st) day of the seventh
(7th) month following the Employee’s Termination Date or, if earlier, the date the
Employee dies following the Termination Date. For purposes of this Section 9, “Excludable
Compensation” shall equal the lesser of two times (i) the
Employee’s annualized base compensation for the Employee’s taxable year prior to the Employee’s
taxable year in which the Termination Date occurred or (ii) the applicable limit set forth in
Section§ 401(a) (17) of the Code for the year in which the Termination Date occurred.
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10. Mitigation or Reduction of Benefits. In the event of termination of employment as set forth in Section 9 above, Employee shall not
be required to mitigate the amount of any payment provided for in that Section by seeking other
employment or otherwise. Except as otherwise specifically set forth herein, the amount of any
payment or benefits provided in Section 9 shall not be reduced by any compensation or benefits or
other amounts paid to or earned by Employee as the result of employment by another employer after
the Termination Date.
11. Release. In order to receive payments and benefits described in Section 9, other than those provided in
Sections 8 and those provided in the event of Employee’s death, Employee must execute a Release in
the form attached as Exhibit A, and that Release must become effective by Employee not
revoking it. If Employee fails to sign the Release within the period provided in the Release, or if
Employee revokes the Release within the seven (7) day revocation period provided therein, Employee
will forfeit any right to the payments and benefits described in Section 9. As a general rule,
Employee shall receive the Release from the Company on or before Employee’s Termination Date, but
in no event will Employee receive the Release more than ten (10) days following Employee’s
Termination Date.
12. Covenant Not to Compete. In consideration of this Agreement, and the employment under it, the parties have agreed to
the following Covenant Not to Compete:
a. Post Termination Restrictions. Employee acknowledges that the services provided
under this Agreement give Employee the opportunity to have special knowledge of the
Company, its Confidential Information, and the capabilities of individuals employed by or
affiliated with the Company. Employee further acknowledges that interference with those
business or employment relationships with the Company would cause irreparable injury to
the Company. Consequently, Employee covenants and agrees that:
(i) From the Effective Date hereof until twenty four (24) months (or for
eighteen (18) months if an arbitrator or arbitration panel finds that twenty four
(24) months are unreasonable) after the Termination Date, Employee will not, without
the express written approval of a majority of the Board of Directors, directly or
indirectly, anywhere in the Market, in one or a series of transactions, Compete
against Company, as defined in Section 2 above, without regard to (a) whether the
Competitive Business has its office or other business facilities within or outside
the Market, (b) whether any of the activities of the Employee referred to above
occur or are performed within or outside the Market, or (c) whether the Employee
resides, or reports to an office, within or outside the Market.
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(ii) From the effective date hereof until twenty four (24) months after the
Termination Date (which shall not be reduced by (a) any period of violation of this
Agreement by Employee or (b) if the Company is the prevailing party in any litigation to enforce its rights under this Section 12, the period which is
required for such litigation), Employee will not, without the express prior written
approval of a majority of the Board of Directors, directly or indirectly, in one or
a series of transactions: (i) recruit, solicit or otherwise induce or influence any
proprietor, partner, stockholder, lender, director, officer, employee, sales agent,
joint venturer, investor, lessor, customer, agent, representative or any other
person which has a business relationship with any company in the Company Group or
had a business relationship with any company in the Company Group within the
twenty-four (24) month period preceding the date of the incident in question, to
discontinue, reduce or modify such employment, agency or business relationship with
any company in the Company Group; or (ii) employ or seek to employ or cause any
Competitive Business to employ or seek to employ any person or agent who is then (or
was at any time within twenty-four (24) months prior to the date the Employee or the
Competitive Business employs or seeks to employ such person) employed or retained by
any company in the Company Group. Notwithstanding the foregoing, nothing herein
shall prevent the Employee from providing a personal letter of recommendation to an
employee of the Company with respect to a future or any other employment
opportunity.
(iii) The scope and term of this Section 12 would not preclude Employee from
earning a living in an occupation or position with an entity that is not a
Competitive Business.
b. Acknowledgment Regarding Restrictions. Employee recognizes and agrees that the
restraints contained in Section 12 (both separately and in total) are reasonable and should
be fully enforceable in view of the high level positions Employee has had with the Company,
and the Company’s legitimate interests in protecting its Confidential Information and its
goodwill and relationships. Employee specifically hereby acknowledges and confirms that
Employee is willing and intends to, and will, abide fully by the terms of Section 12 of this
Agreement. Employee further agrees that the Company would not have adequate protection if
Employee were permitted to work in a Competitive Business in violation of the terms of this
Agreement since the disclosure of such Confidential Information is inevitable and the
Company would be unable to verify whether its Confidential Information was being disclosed
and/or misused.
c. Company’s Right to Cease and Recoup Payments and Obtain Injunctive Relief. In the
event of a breach or imminent breach of any of Employee’s duties or obligations under this
Agreement, the Company shall be entitled to immediately cease all payments and benefits to
Employee under Section 9 and, in the event of an actual breach, require Employee to disgorge
and repay to Company all payments and benefits previously paid to or conferred upon Employee
under Section 9 of this Agreement. Employee agrees that if Employee breaches any duties or
obligations Employee has under this Agreement, that, except for sums set forth in sections
8, Employee has no right to any money or benefits under Section 9 of this Agreement and that
Employee must return any money paid to Employee under that section. In addition to any other
legal or equitable remedies the Company may have (including any right to damages that it may
suffer), the Company shall be entitled to temporary, preliminary and permanent injunctive
relief restraining such breach or imminent breach. Employee hereby expressly acknowledges that the harm
which might result to Company’s business as a result of noncompliance by Employee with any
of the provisions of this Agreement would be largely irreparable. Employee undertakes and
agrees that if Employee breaches or threatens to breach the Agreement, Employee shall be
liable for any attorneys’ fees and costs incurred by Company in enforcing its rights
hereunder.
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d. Employee Agreement to Disclose this Agreement. Employee agrees to disclose, during
the Severance Period, the terms of this Section 12 to any potential future employer.
e. Survival. The terms of this entire Section 12 shall survive the termination of
Employee’s employment under this Agreement regardless of who terminates employment or the
reasons therefore.
13. Confidential Information.
a. During and after the Term of Employment, Employee will not, directly or indirectly,
in one or a series of transactions, disclose to any person, or use or otherwise exploit for
the Employee’s own benefit or for the benefit of anyone other than the Company, any
Confidential Information, whether prepared by Employee or not; provided, however, that any
Confidential Information may be disclosed (i) to officers, representatives, employees and
agents of the Company who need to know such Confidential Information in order to perform the
services or conduct the operations required or expected of them in the business, and (ii) in
good faith by the Employee in connection with the performance of Employee’s duties hereunder
to persons who are authorized to receive such information by the Company. Employee shall
use Employee’s best efforts to prevent the removal of any Confidential Information from the
premises of the Company, except as required in Employee’s normal course of employment by the
Company. Employee shall use Employee’s best efforts to cause all persons or entities to
whom any Confidential Information shall be disclosed by Employee hereunder to observe the
terms and conditions set forth herein as though each such person or entity was bound hereby.
Employee shall have no obligation hereunder to keep confidential any Confidential
Information, if and to the extent disclosure of any such information is specifically
required by law or requested by a governmental agency; provided, however, that in the event
disclosure is required by applicable law or requested by a governmental agency, the Employee
shall provide the Company with prompt notice of such requirement or request, prior to making
any disclosure, so that the Company may seek an appropriate protective order. At the
request of the Company, Employee agrees to deliver to the Company, at any time during the
Term of Employment, or thereafter, all Confidential Information which Employee may possess
or control. Employee agrees that all Confidential Information of the Company (whether now or
hereafter existing) conceived, discovered or made by Employee during the Term of Employment
exclusively belongs to the Company (and not to Employee). Employee will promptly disclose
such Confidential Information to the Company and perform all actions reasonably requested by
the Company to establish and confirm such exclusive ownership.
13
b. The terms of this entire Section 13 shall survive the termination of Employee’s
employment under this Agreement regardless of who terminates employment or the reasons
therefore.
14. Notice. All notices hereunder shall be in writing and shall be deemed to have been duly given (a) when
delivered personally or by courier, or (b) on the third business day following the mailing thereof
by registered or certified mail, postage prepaid, or (c) on the first business day following the
mailing thereof by overnight delivery service, in each case addressed as set forth below:
If to the Company:
Universal Technical Institute, Inc.
00000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
00000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
With a copy to:
Chairman of the Compensation Committee
of the Board of Directors
00000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
of the Board of Directors
00000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
If to Employee:
Xxxx X. Xxxxx
00000 X. Xxxxx Xx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
00000 X. Xxxxx Xx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Any party may change the address to which notices are to be addressed by giving the other party
written notice in the manner herein set forth.
15. Employee Expenses in the Event of Dispute. If Employee’s employment is terminated by the Company within the Term of Employment and there
is a dispute with respect to this Agreement, then all of Employee’s reasonable legal expenses
incurred by Employee (a) to defend the validity of this Agreement, (b) if Employee’s employment has
been terminated for Cause, to contest such termination, (c) to contest any determinations by the
Company concerning the amounts payable by the Company under this Agreement, or (d) to otherwise
obtain or enforce any right or benefit provided to Employee by this Agreement, shall be paid by the
Company if Employee is the prevailing party. Such expenses shall be paid, if at all, within thirty
(30) days of the date of the determination that Employee is the prevailing party, but in no event
later than December 31st of the taxable year following the year in which the Employee incurred the
expenses. The expenses reimbursed in one taxable year will not affect the expenses eligible for
reimbursement by the Company in a different taxable year. All reimbursements of the expenses must
be made no later than December 31st of the taxable year following the taxable year in which the expenses were incurred. The Employee may not elect to receive cash or any other
benefit in lieu of the benefits provided by this Section.
14
16. Agreement to Arbitrate. All disputes or claims regarding this Agreement shall be
submitted for resolution exclusively to binding arbitration under the Commercial Rules of
Arbitration of the American Arbitration Association in Phoenix, Arizona. The arbitrator or
arbitration panel shall have the authority to award temporary or permanent injunctive relief and to
award attorneys’ fees and costs to the prevailing party. Any temporary or permanent injunctive
relief ordered by the arbitrator or the arbitration panel may be enforced in court by either party
by seeking judicial confirmation of such award.
17. Successors; Binding Agreement.
a. The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, upon or prior to such succession, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such succession had taken place. A copy of such
assumption and agreement shall be delivered to Employee promptly after its execution by the
successor. Failure of the Company to obtain such agreement upon, or prior to, the
effectiveness of any such succession shall be a breach of this Agreement and shall entitle
Employee to benefits from the Company in the same amounts and on the same terms as Employee
would be entitled hereunder if Employee terminated Employee’s employment for Good Reason.
For purposes of the preceding sentence, the date on which any such succession becomes
effective shall be deemed the Termination Date. As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section 17 or
which otherwise becomes bound by the terms and provisions of this Agreement by operation of
law.
b. This Agreement is personal to Employee and Employee may not assign or delegate any
part of Employee’s rights or duties hereunder to any other person, except that this
Agreement shall inure to the benefit of, and be enforceable by, Employee’s legal
representatives, executors, administrators, heirs and beneficiaries.
18. Severability. If any provision of this Agreement or the application thereof to any person or circumstance
shall to any extent be held to be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law. An arbitrator or arbitration
panel can reasonably modify this Agreement by rewriting it and/or it can “blue-pencil” this
Agreement by striking things out.
19. Headings. The headings in this Agreement are inserted for convenience of reference only and shall not in
any way affect the meaning or interpretation of this Agreement.
15
20. Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.
21. Waiver. Neither any course of dealing nor any failure or neglect of either party hereto in any
instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver
of such right, power or privilege or of any other right, power or privilege or of the same right,
power or privilege in any other instance. Without limiting the generality of the foregoing,
Employee’s continued employment without objection shall not constitute Employee’s consent to, or a
waiver of, Employee’s rights with respect to any circumstances constituting Good Reason. All
waivers by either party hereto must be contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by a resolution adopted by a majority of the
Board of Directors.
22. Entire Agreement. This instrument constitutes the entire agreement of the parties in this matter and shall
supersede any other agreement between the parties, oral or written, concerning the same subject
matter.
23. Amendment. This Agreement may be amended only by a writing which makes express reference to this
Agreement as the subject of such amendment and which is signed by Employee and by the Chairman of
the Compensation Committee of the Board of Directors or the Chairman’s designee.
24. Governing Law. In light of Company’s and Employee’s substantial contacts with the State of Arizona, the facts
that the Company is headquartered in Arizona and Employee resides in and provides services to the
Company in Arizona, the parties’ interests in ensuring that disputes regarding the interpretation,
validity and enforceability of this Agreement are resolved on a uniform basis, and Company’s
execution of, and the making of, this Agreement in Arizona, the parties agree that: (a) any
arbitration or litigation involving any noncompliance with or breach of the Agreement, or regarding
the interpretation, validity and/or enforceability of the Agreement, shall be filed and conducted
exclusively in the state of Arizona; and (b) the Agreement shall be interpreted in accordance with
and governed by the laws of the State of Arizona, without regard for any conflict/choice of law
principles.
[Remainder of Page Intentionally Left Blank]
16
IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the day and
year first above written.
| UNIVERSAL TECHNICAL INSTITUTE, INC. |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Xxxx X. Xxxxx |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
17
SCHEDULE 1
Companies in the Company Group consist of:
| n. | Universal Technical Institute, Inc. |
||
| o. | UTI Holdings, Inc. |
||
| p. | U.T.I. of Illinois, Inc. |
||
| q. | Universal Technical Institute of Texas, Inc. |
||
| r. | Universal Technical Institute of California, Inc. |
||
| s. | Custom Training Group, Inc. |
||
| t. | The Xxxxxxx Xxxxxx Corporation |
||
| u. | Universal Technical Institute of Arizona, Inc. |
||
| v. | Universal Technical Institute of North Carolina, Inc. |
||
| w. | Universal Technical Institute of Northern California, Inc. |
||
| x. | Universal Technical Institute of Massachusetts, Inc. |
||
| y. | Universal Technical Institute of Pennsylvania, Inc. |
||
| z. | Universal Technical Institute of Phoenix, Inc. |
Exhibit A
RELEASE
RELEASE
This RELEASE (the “Release”) dated
_____
,
_____
is by and between Xxxx X. Xxxxx
(“Employee”) and Universal Technical Institute, Inc., a Delaware corporation (“Company”);
WHEREAS, the Company and Employee are parties to an Employment Agreement dated
_____
,
2008 (the “Employment Agreement”), which provides certain protection to Employee during employment
and upon termination of employment; and
WHEREAS, the execution of this Release is a condition precedent to, and material inducement
to, the Company’s provision of certain benefits under the Employment Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Mutual Promises. The Company undertakes the obligations contained in the Employment
Agreement, which are in addition to any compensation to which Employee might otherwise be entitled,
in exchange for Employee’s promises and obligations contained herein. The Company’s obligations
are undertaken in lieu of any other employment benefits.
2. Release of Claims; Agreement Not to File Suit.
a. Employee, for and on behalf of him or herself and his/her heirs, beneficiaries,
executors, administrators, successors, assigns and anyone claiming through or under any of
the foregoing, agrees to, and does, release and forever discharge the Company and its
subsidiaries and affiliates, each of their shareholders, directors, officers, employees,
agents and representatives, and its successors and assigns (collectively, the “Company
Released Persons”), from any and all matters, claims, demands, damages, causes of action,
debts, liabilities, controversies, judgments and suits of every kind and nature whatsoever,
foreseen or unforeseen, known or unknown, which have arisen or could arise from matters
which occurred prior to the date of this Release, which matters include without limitation:
(i) the matters covered by the Employment Agreement and this Release, and (ii) Employee’s
employment, and/or termination from employment with the Company.
b. Employee, for and on behalf of him or herself and his/her heirs, beneficiaries,
executors, administrators, successors, assigns, and anyone claiming through or under any of
the foregoing, agrees that Employee will not file or otherwise submit any arbitration
demand, claim, complaint, or action to any court, organization, or judicial forum (nor will
Employee permit any person, group of persons, or organization to take such action on
Employee’s behalf) against any Company Released Person arising out of any actions or
non-actions on the part of any Company Released Person arising out of the parties employment
relationship before the date of this Release or any action taken after the date of this
Release pursuant to the Employment Agreement. Employee further agrees that in the event that
any person or entity should bring such a charge, claim, complaint, or action on Employee’s
behalf, Employee hereby waives and forfeits any right to recovery under said claim and will
exercise every good faith effort to have such claim dismissed.
c. The charges, claims, complaints, matters, demands, damages, and causes of action
referenced in Sections 2(a) and 2(b) include, but are not limited to: (i) any breach of an
actual or implied contract of employment between Employee and any Company Released Person,
(ii) any claim of unjust, wrongful, or tortious discharge (including, but not limited to,
any claim of fraud, negligence, retaliation for whistle blowing, or intentional infliction
of emotional distress), (iii) any claim of defamation or other common law action, or (iv)
any claims of violations arising under the Civil Rights Act of 1964, as amended, 42 U.S.C.
§2000e et seq., the Age Discrimination in Xxxxxxxxxx Xxx, 00 X.X.X. §000 et
seq., the Americans with Disabilities Act of 1990, 00 X.X.X. §00000 et seq., the Fair
Labor Standards Act of 1938, as amended, 29 U.S.C. §201 et seq., the Rehabilitation
Act of 1973, as amended, 29 U.S.C. §701 et seq., the Family and Medical Leave Act,
or any other relevant federal, state, or local statutes or ordinances, or any claims for
pay, vacation pay, insurance, or welfare benefits or any other benefits of employment with
any Company Released Person arising from events occurring prior to the date of this Release
other than those payments and benefits specifically provided herein.
d. This Release shall not affect Employee’s right to any governmental benefits payable
under any Social Security or Worker’s Compensation law now or in the future.
e. This Release does not affect Employee’s right to participate in any federal, state
or local investigation by any governmental agency or to challenge the validity of this
Agreement. Further, this Release is not intended to be a release of any claims under the
Arizona Minimum Wage Act, effective January 1, 2007.
3. Release of Benefit Claims. Employee, for and on behalf of him or herself and his/her
heirs, beneficiaries, executors, administrators, successors, assigns and anyone claiming through or
under any of the foregoing, further releases and waives any claims for pay, vacation pay, insurance
or welfare benefits or any other benefits of employment with any Company Released Person arising
from events occurring prior to the date of this Release other than claims to the payments and
benefits specifically provided for in the Employment Agreement and claims for benefits which are
not subject to waiver under the law.
4. Revocation Period; Knowing and Voluntary Agreement. Employee acknowledges that he/she is
knowingly and voluntarily waiving and releasing any rights he/she may have under the Age
Discrimination in Employment Act, as amended, (“ADEA”). Employee also acknowledges that the
consideration given for the waiver and release in the preceding Section is in addition to anything
of value to which he/she would be entitled to without this Agreement. Employee further acknowledges
that Employee is advised by this writing, as required by the ADEA, that: (a) this waiver and
release do not apply to any rights or claims that may arise after execution date of this Agreement;
(b) Employee has been advised of having had the right to consult with an attorney prior to signing
this Agreement; (c) Employee has twenty-one (21) days to consider this Agreement (although Employee
may choose to voluntarily execute this Agreement earlier); (d) Employee has seven (7) days
following the signing of this Agreement by the parties to revoke the Agreement; and (e) this
Agreement shall not be effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by the Employee.
2
5. Severability. If any provision of this Release or the application thereof to any person or
circumstance shall to any extent be held to be invalid or unenforceable, the remainder of this
Release and the application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and each provision of this
Release shall be valid and enforceable to the fullest extent permitted by law.
6. Headings. The headings in this Release are inserted for convenience of reference only and
shall not in any way affect the meaning or interpretation of this Release.
7. Counterparts. This Release may be executed in one or more identical counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.
8. Entire Agreement. This Release and related Employment Agreement constitutes the entire
agreement of the parties in this matter and shall supersede any other agreement between the
parties, oral or written, concerning the same subject matter.
9. Governing Law. This Release shall be governed by, and construed and enforced in accordance
with, the laws of the State of Arizona, without reference to the conflict of laws rules of such
State.
IN WITNESS WHEREOF, Employee and the Company have executed this Release as of the day and year
first above written.
| UNIVERSAL TECHNICAL INSTITUTE, INC. |
||||
| By: | ||||
| XXXX X. XXXXX |
||||
| By: | ||||
3
