UNIVERSAL TECHNICAL INSTITUTE,
INC.
2003 STOCK INCENTIVE PLAN
(as amended December 16, 2005)
1.1
GENERAL . The purpose of the Universal Technical
Institute, Inc. 2003 Stock Incentive Plan (the “Plan”)
is to promote the success and enhance the value of Universal
Technical Institute, Inc. (the “Company”) by linking
the personal interests of its Board members, employees, officers,
and executives of, and consultants and advisors to, the Company to
those of Company shareholders and by providing such individuals
with an incentive for outstanding performance to generate superior
returns to shareholders of the Company. The Plan is also intended
to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of Board members, employees,
officers, and executives of, and consultants and advisors to, the
Company upon whose judgment, interest, and special effort the
successful conduct of the Company’s operation is largely
dependent.
2.1
EFFECTIVE DATE . The Plan is effective as of the date
the Plan is approved by the Board (the “Effective
Date”). The Plan must be approved by the Company’s
shareholders within 12 months after the Effective Date. The Plan
will be considered approved by the Company’s shareholders if
it receives the affirmative vote of the holders of a majority of
the shares of Company’s stock present or represented and
entitled to vote at a meeting duly held in accordance with the
Company’s Bylaws or by written consent of a majority of the
Company’s shareholders in lieu of a meeting. Any Awards
granted under the Plan prior to shareholder approval are effective
when made (unless the Committee specifies otherwise at the time of
grant), but no Award may be exercised or settled and no
restrictions relating to any Award may lapse before the Plan is
approved by the Company’s shareholders. If the
Company’s shareholders do not approve the Plan within
12 months after the Effective Date, any Award previously made
is automatically canceled without any further act.
3.1
DEFINITIONS . When a word or phrase appears in this Plan
with the initial letter capitalized, and the word or phrase does
not begin a sentence, the word or phrase will be given the meaning
in this Section or in Sections 1.1 or 2.1 unless otherwise
indicated. The following words and phrases will have the following
meanings:
(a) “ Award ” means any Option,
Stock Appreciation Right, Restricted Stock Award, Performance Share
Award, Performance-Based Award, or IPO Award granted to a
Participant under the Plan.
(b) “ Award Agreement ” means any
written agreement, contract, or other instrument or document
evidencing an Award.
(c) “ Board ” means the Board of
Directors of the Company.
(d) “ Cause ” means (except as
otherwise provided in an Award Agreement) any of the following:
(i) Participant’s conviction of, or plea of guilty or
nolo contendere to, a felony or a crime involving
embezzlement, conversion of property or moral turpitude;
(ii) a finding by a majority of the Board of Directors of
Participant’s fraud, embezzlement or conversion of the
Company’s property; (iii) Participant’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 or the unlawful use, possession or sale of
illegal substances; (iv) an administrative or judicial
determination that Participant committed fraud or any other
violation of law involving federal, state or local government
funds; (v) a finding by a majority of the Board of Directors
of Participant’s knowing breach of any of Participant’s
fiduciary duties to the Company or the Company’s stockholders
or making of a misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of the Company;
(vi) Participant’s alcohol or substance abuse, which
materially interferes with Participant’s ability to discharge
the duties, responsibilities and obligations to or for the Company;
provided , that Participant has been given notice and
30 days from such notice fails to cure such abuse; and
(vii) Participant’s personal (as opposed to the
Company’s) material and knowing failure, to observe or comply
with applicable laws whether as an officer, stockholder or
otherwise, in any material respect or in any manner which would
reasonably be expected to have a material adverse effect in respect
of the Company’s ongoing business, operations, conditions,
other business relationship or properties.
Any
rights the Company or any of its Subsidiaries has to determine the
existence of events giving rise to Cause are in addition to the
rights the Company or any of its Subsidiaries may have under any
other agreement with the Participant or at law or in equity. If,
after a Participant’s termination of employment or services,
the Company discovers that the Participant’s employment or
services could have been terminated for Cause, the
Participant’s employment or services will, in the
Board’s sole discretion, be deemed to have been terminated
for Cause retroactively to the date the events giving rise to Cause
occurred.
(e) “ 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 the Company’s assets to any person or group
of related persons under Section 13(d) of the Exchange Act
(“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; or (v) the
completion of a merger or consolidation of the Company with another
entity in which holders of the 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 Stock.
(f) “ Code ” means the Internal
Revenue Code of 1986, as amended.
(g) “ Committee ” means the
committee of the Board described in Article 4.
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(h) “ Covered Employee ” means an
Employee who is a “covered employee” within the meaning
of Section 162(m) of the Code.
(i) “ Disability ” means (unless
otherwise defined in an employment agreement between the Company or
any of its Subsidiaries and the Participant or in the
Participant’s Award Agreement) any illness or other physical
or mental condition of a Participant that renders the Participant
incapable of performing his customary and usual duties for the
Company or Subsidiary, or any medically determinable illness or
other physical or mental condition resulting from a bodily injury,
disease or mental disorder, which in the Committee’s sole
judgment is permanent and continuous in nature. The Committee may
require such medical or other evidence as it deems necessary to
judge the nature and permanency of the Participant’s
condition.
(j) “ Exchange Act ” means the
Securities Exchange Act of 1934, as amended.
(k) “ Fair Market Value ” means,
as of any given date, the fair market value of Stock on a
particular date determined by such methods or procedures
established by the Committee. Unless otherwise determined by the
Committee the Fair Market Value of Stock as of any date is the
closing price for the Stock as reported on the New York Stock
Exchange (or on any national securities exchange on which the Stock
is then listed) for that date or, if no closing price is reported
for that date, the closing price on the next preceding date for
which a closing price was reported. For purposes of IPO Awards and
Awards effective as of the effective date of the Company’s
initial public offering, fair market value of Stock shall be the
price at which the Company’s Stock is offered to the public
in its initial public offering.
(l) “ Good Reason ” means when
used with reference to a voluntary termination by Participant of
Participant’s employment or service with the Company, shall
mean (i) a material reduction in Participant’s
authority, perquisites, position or responsibilities (other than
such a reduction which affects all of the Company’s senior
executives on a substantially equal or proportionate basis), or
(ii) a requirement that Participant relocate greater than 50
miles from Participant’s primary work location.
(m) “ Incentive Stock Option ”
means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision.
(n) “ IPO Award ” means the Option
granted to each eligible Participant pursuant to
Article 12.
(o) “ Non-Employee Director ”
means a member of the Board who qualifies as a “Non-Employee
Director” as defined in Rule 16b-3(b)(3) of the Exchange
Act, or any successor provision.
(p) “ Non-Qualified Stock Option ”
means an Option that is not intended to be an Incentive Stock
Option.
(q) “ Option ” means a right
granted to a Participant under Article 7 or Article 12 of
the Plan to purchase Stock at a specified price during specified
time periods. An Option may be either an Incentive Stock Option or
a Non-Qualified Stock Option.
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(r) “ Participant ” means a person
who, as a Board member, employee, officer, or executive of, or
consultant or advisor providing services to, the Company or any
Subsidiary, has been granted an Award under the Plan.
(s) “ Performance-Based Awards ”
means the Performance Share Awards and Restricted Stock Awards
granted to select Covered Employees pursuant to Articles 9 and 10,
and are subject to the terms and conditions in Article 11. All
Performance-Based Awards are intended to qualify as
“performance-based compensation” under Section 162(m)
of the Code.
(t) “ Performance Criteria ” means
the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria used
to establish Performance Goals are limited to: pre- or after-tax
net earnings, sales growth, operating earnings, operating cash
flow, return on net assets, return on stockholders’ equity,
return on assets, return on capital, Stock price growth,
stockholder returns, gross or net profit margin, earnings per
share, price per share of Stock, and market share, any of which may
be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group. The
Committee will, within the time prescribed by Section 162(m) of the
Code, objectively define the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such
Participant.
(u) “ Performance Goals ” means,
for a Performance Period, the written goals established by the
Committee for the Performance Period based upon the Performance
Criteria. Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a
division, business unit, Subsidiary, or an individual. The
Committee, in its discretion, may, within the time prescribed by
Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period to prevent the
dilution or enlargement of the rights of Participants (i) in
the event of, or in anticipation of, any unusual or extraordinary
corporate item, transaction, event, or development, or (ii) in
recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles,
or business conditions.
(v) “ Performance Period ” means
the one or more periods of time, which may be of varying and
overlapping durations, selected by the Committee, over which the
attainment of one or more Performance Goals will be measured for
purposes of determining a Participant’s right to, and the
payment of, a Performance-Based Award.
(w) “ Performance Share ” means a
right granted to a Participant under Article 9, to receive
cash, Stock, or other Awards, the payment of which is contingent on
achieving certain Performance Goals established by the
Committee.
(x) “ Plan ” means the Universal
Technical Institute, Inc. 2003 Stock Incentive Plan, as
amended.
(y) “ Restricted Stock Award ”
means Stock granted to a Participant under Article 10 that is
subject to certain restrictions and to risk of
forfeiture.
(z) “ Stock ” means the common
stock of the Company and such other securities of the Company that
may be substituted for Stock pursuant to
Article 14.
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(aa) “ Stock Appreciation Right ”
or “ SAR ” means a right granted to a
Participant under Article 8 to receive a cash, Stock, or other
Awards, , all as determined pursuant to Article 8.
(bb) “ Subsidiary ” means any
corporation or other entity of which the Company owns, directly or
indirectly, a majority of the outstanding voting stock or voting
power.
4.1
COMMITTEE . The Plan will be administered by the Board
or a Committee appointed by, and which serves at the discretion of,
the Board. If the Board appoints a Committee, the Committee will
consist of at least two individuals, each of whom qualifies as
(i) a Non-Employee Director, and (ii) an “outside
director” under Code Section 162(m) and the regulations
issued thereunder. Reference to the Committee in this Plan will
refer to the Board if the Board does not appoint a
Committee.
4.2 ACTION
BY THE COMMITTEE . A majority of the Committee will
constitute a quorum. The acts of a majority of the members present
at any meeting at which a quorum is present, and acts approved in
writing by a majority of the Committee in lieu of a meeting, will
be deemed the acts of the Committee. Each member of the Committee
is entitled to, in good faith, rely or act upon any report or other
information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company’s
independent certified public accountants, any executive
compensation consultant or other professional retained by the
Company to assist in the Plan’s administration.
4.3
AUTHORITY OF COMMITTEE . Subject to any specific
designation in the Plan, the Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type of Awards granted to each
Participant;
(c) Determine the number of Awards granted and the number of
shares of Stock to which an Award will relate;
(d) Except as otherwise provided in the Plan, determine the
terms and conditions of any Award granted under the Plan including
but not limited to, the exercise price, grant price, or purchase
price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof,
based in each case on such considerations as the Committee in its
sole discretion determines; provided, however, that the Committee
will not have the authority to accelerate the vesting or waive the
forfeiture of any Performance-Based Awards;
(e) Amend, modify, or terminate any outstanding Award, with
the Participant’s consent unless the Committee has the
authority to amend, modify, or terminate an Award without the
Participant’s consent under any other provision of the
Plan;
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(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of
an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or
surrendered;
(g) Prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt, or revise any rules and regulations as
it may deem necessary or advisable to administer the
Plan;
(j) Interpret the terms of, and any matter arising under,
the Plan or any Award Agreement; and
(k) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan.
4.4
DECISIONS BINDING . The Committee’s interpretation
of the Plan, any Awards granted under the Plan, any Award Agreement
and all decisions and determinations by the Committee with respect
to the Plan are final, binding, and conclusive on all
parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 NUMBER
OF SHARES . Subject to adjustment provided in
Section 14.1, the aggregate number of shares of Stock reserved
and available for grant under the Plan will be
4,430,972.
5.2 LAPSED
AWARDS . To the extent that an Award terminates, expires,
or lapses for any reason, any shares of Stock subject to the Award
will again be available to the Committee to grant Awards under the
Plan.
5.3 STOCK
DISTRIBUTED . Any Stock distributed pursuant to an Award
may consist, in whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.
5.4
LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS .
Notwithstanding any provision in the Plan to the contrary, and
subject to the adjustment in Section 14.1, the maximum number
of shares of Stock with respect to one or more Awards that may be
granted to any one Participant during any fiscal year of the
Company is 1,000,000.
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ARTICLE 6
ELIGIBILITY AND PARTICIPATION
(a) GENERAL . Persons eligible to participate in this
Plan include all Board members, employees, officers, and executives
of, and consultants and advisors to, the Company or a Subsidiary,
as determined by the Committee.
(b) FOREIGN PARTICIPANTS . To assure the viability of
Awards granted to Participants employed in foreign countries, the
Committee is authorized to provide for any special terms it
considers necessary or appropriate to accommodate differences in
local law, tax policy, or custom. Moreover, the Committee may
approve any supplements to, or amendments, restatements, or
alternative versions of the Plan as it considers necessary or
appropriate for such purposes without affecting the terms of the
Plan as in effect for any other purpose; provided, however, that no
such supplements, amendments, restatements, or alternative versions
may increase the share limitations contained in Section 5.1 of
the Plan.
6.2 ACTUAL
PARTICIPATION . Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all
elig
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