2000 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED JUNE 25, 2009)
1.1 GENERAL. The
Apollo Group, Inc. 2000 Stock Incentive Plan (the
“Plan”) was previously approved by the Board and the
Company’s shareholders. The Plan’s purpose is to
promote the success and enhance the value of Apollo Group, Inc.
(the “Company”) by linking the personal interests of
its directors, 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 in order to generate superior returns
to shareholders of the Company. The Plan is further intended to
provide flexibility to the Company in its ability to motivate,
attract, and retain the services of directors, 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 was originally effective as of August 29, 2000
(the “Effective Date”). The Plan has been amended and
restated on several occasions since the Effective Date. The
effective date of this amended and restated Plan is June 25,
2009.
DEFINITIONS AND
CONSTRUCTION
3.1 DEFINITIONS.
When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Sections 1.1 or 2.1 unless a clearly
different meaning is required by the context. The following words
and phrases shall have the following meanings:
(a)
“Award” means any Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Performance
Share Award, or Performance-Based 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) if the Committee, in its reasonable and good faith
discretion, determines that the employee, consultant, or advisor
(i) fails to substantially perform his duties (other than as a
result of Disability), after the Board or the executive to which
the Participant reports delivers to the Participant a written
demand for substantial performance that specifically identifies the
manner in which the Participant has not substantially performed his
duties; (ii) engages in willful misconduct or gross negligence
that is materially injurious to the Company or a Subsidiary;
(iii) breaches his duty of loyalty to the Company or a
Subsidiary; (iv) unauthorized removal from the premises of the
Company or a Subsidiary of a document (of any media or form)
relating to the Company or a Subsidiary or the customers of the
Company or a Subsidiary; or (v) has committed a felony or a
serious crime involving moral turpitude.
(e)
“Change of Control” means and includes each of the
following (except as otherwise provided in an Award
Agreement):
(1) there
shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving entity, or
pursuant to which Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the
holders of the Company’s Stock immediately prior to the
merger have the same proportionate ownership of beneficial interest
of common stock or interests of the surviving entity immediately
after the merger;
(2) there
shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of assets
aggregating more than 80% of the assets of the Company;
(3) the
holders of the Company’s outstanding voting stock shall
approve any plan or proposal for liquidation or dissolution of the
Company;
(4) any
person (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act), other than (A) an employee benefit plan of the
Company or any Subsidiary or any entity holding shares of capital
stock of the Company for or pursuant to the terms of any such
employee benefit plan in its role as an agent or trustee for such
plan, or (B) any affiliate of the Company as of the Effective
Date becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 50% or more of the
Stock; or
(5) during
any two-year period, individuals who at the beginning of the period
do not constitute a majority of the Board at the end of such
period, unless the appointment or the nomination for election by
the holders of the Company’s outstanding voting stock of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of the period.
(f)
“Code” means the Internal Revenue Code of 1986, as
amended.
(g)
“Committee” means the committee of the Board described
in Article 4.
(h)
“Covered Employee” means an Employee who is a
“covered employee” within the meaning of Section 162(m)
of the Code.
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(i)
“Disability” shall mean any illness or other physical
or mental condition of a Participant which renders the Participant
incapable of performing his customary and usual duties for the
Company, or any medically determinable illness or other physical or
mental condition resulting from a bodily injury, disease, or mental
disorder that in the judgment of the Committee 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 relevant date, the
closing price of the Stock on that date as reported on the Nasdaq
Global Market (or on any other national securities exchange on
which the Stock is at the time listed for trading) or, if no
closing price is reported for that date, the closing price per
share of Stock on the next preceding date for which a closing price
was reported.
(l)
“Incentive Stock Option” means an Option that is
intended to meet the requirements of Section 422 of the Code
or any successor provision thereto.
(m)
“Non-Employee Director” means a member of the Board who
qualifies as a “NonEmployee Director” as defined in
Rule 16b-3 (b)(3) of the Exchange Act, or any successor
definition adopted by the Board.
(n)
“Non-Qualified Stock Option” means an Option that is
not intended to be an Incentive Stock Option.
(o)
“Option” means a right granted to a Participant under
Article 7 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.
(p)
“Participant” means a person who, as a director,
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.
(q)
“Performance-Based Awards” means the Performance Share
Awards, Restricted Stock Awards and Restricted Stock Unit Awards
granted to selected Covered Employees or other individuals pursuant
to Articles 9, 10 and 11, but which are subject to the terms and
conditions set forth in Article 12. All Performance-Based
Awards are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.
(r)
“Performance Criteria” means the criteria that the
Committee selects for purposes of establishing the Performance
Goals for a Participant for a Performance Period. The Performance
Criteria that will be used to establish Performance Goals are
limited to the following: pre-tax or after-tax net earnings or net
income, sales or revenue growth, operating earnings or income,
operating cash flows, 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, market share,
operating income, net operating income or net operating income
after tax, operating profit or net operating profit,
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operating
margin, earnings or income before interest and taxes, earnings or
income before taxes, earnings or income before interest, taxes,
depreciation, amortization and charges for stock-based
compensation, earnings or income before interest, taxes,
depreciation and amortization, operating income before
depreciation, amortization and/or charges for stock-based
compensation, economic value-added models, cash flow objectives,
cost reductions or budget objectives, 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 shall,
within the time prescribed by Section 162(m) of the Code, define in
an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such
Participant.
(s)
“Performance Goals” means, for a Performance Period,
the goals established in writing 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, or an individual. The Committee, in its discretion, may,
within the time prescribed by Section 162(m) of the Code for
establishing the Performance Goals, specify certain adjustments or
modifications to be made in the calculation of the Performance
Goals for such Performance Period in order 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,
with such adjustments or modifications to take into account
(without limitation) one or more of the following: stock-based
compensation charged for the Performance Period pursuant to
Statement of Financial Accounting Standards 123R and any other GAAP
expense for such Performance Period relating to equity compensation
awards, any extraordinary, nonrecurring items as determined in
accordance with Accounting Principles Board Opinion No. 30,
amounts (including settlement payments, judgment or verdict
amounts, legal fees, costs and other litigation/settlement
expenses) expensed during the Performance Period in connection with
the settlement or disposition of one or more designated litigation
matters, the results of operations of any business acquired by the
Company or any subsidiary or of any joint venture in which the
Company or any subsidiary participates, the divestiture of one or
more business operations or the assets thereof and the costs
incurred in connection with such acquisitions or
divestitures.
(t)
“Performance Period” means the one or more periods of
time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant’s right to, and the payment of, a
Performance-Based Award.
(u)
“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 upon achieving certain
Performance Goals established by the Committee.
(v)
“Plan” means the Apollo Group, Inc. 2000 Stock
Incentive Plan, as amended and restated.
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(w)
“Restricted Stock Award” means Stock granted to a
Participant under Article 10 that is subject to certain
restrictions and to risk of forfeiture.
(x)
“Restricted Stock Unit Award” means restricted stock
units awarded to a Participant under Article 11 which will
entitle the Participant to receive the shares of Stock underlying
such Award upon the attainment of designated performance objectives
(which may, but need not, include one or more Performance Goals) or
the satisfaction of specified employment or service requirements or
upon the expiration of a designated time period following the
vesting of such Award.
(y)
“Stock” means Apollo Education Group Class A
common stock and such other securities of the Company that may be
substituted for such stock, pursuant to Article 14.
(z)
“Stock Appreciation Right” or “SAR” means a
right granted to a Participant under Article 8 to receive a
payment equal to the difference between the Fair Market Value of a
share of Stock as of the date of exercise of the SAR over the grant
price of the SAR, all as determined pursuant to
Article 8.
(aa)
“Subsidiary” means any corporation or other entity of
which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the
Company.
4.1 COMMITTEE. The
Plan shall be administered solely and exclusively by a Committee
appointed by, and serving at the discretion of, the Board. The
Committee shall consist of at least three (3) members, each of whom
shall qualify as (i) a Non-Employee Director) and (ii) an
“outside director” under Code Section 162(m) and the
regulations issued thereunder.
4.2 ACTION BY THE
COMMITTEE. A majority of the Committee shall 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, shall 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, or any executive compensation
consultant or other professional retained by the Company to assist
in the administration of the Plan.
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 or types of Awards to be granted to each
Participant;
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(c) Determine
the number of Awards to be granted and the number of shares of
Stock to which an Award will relate;
(d) 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 shall 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.
(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; and
(j) 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.
SHARES SUBJECT TO THE
PLAN
5.1 NUMBER OF
SHARES. Subject to adjustment as provided in Section 14.1, the
aggregate number of shares of Stock reserved and available for
grant under the Plan shall be 25,054,709 shares (which number takes
into account all splits of the Class A common stock effected
since the Effective Date and after the conversion of the University
of Phoenix Online common stock into the Stock). Such share reserve
includes (i) the 5,000,000-share increase authorized by the
Board in May 2007 and subsequently approved by the holders of the
Company’s outstanding voting stock, (ii) an additional
5,000,000-share increase authorized by the Board in
January 2008 and subsequently approved by the holders of the
Company’s outstanding voting stock, and (iii) the
975,481 shares to be transferred from the
Company’s
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Long-Term
Incentive Plan, effective June 25, 2009, subject, however, to
the approval of such transfer by the holders of the Company’s
outstanding voting stock. Shares of Stock subject to any Awards
made on the basis of such 975,481-share transfer shall not become
issuable or exercisable unless and until such stockholder approval
is obtained, and such Awards shall become null and void, and no
shares of Stock based on such share transfer shall become issuable
or exercisable under those Awards, in the event such stockholder
approval is not obtained by June 23, 2010.
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 for the grant of an Award 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 adjustment as provided
in Section 14.1, the maximum number of shares of Stock for
which one or more Awards may be granted to any one Participant
during a fiscal year of the Company shall be limited to one million
(1,000,000) shares in the aggregate; provided,
however, that such limit shall be increased to one million
five hundred thousand (1,500,000) shares of Stock in the aggregate
for any Awards made to the Participant during the fiscal year of
the Company in which such Participant first commences employment or
service with the Company.
ELIGIBILITY AND
PARTICIPATION
(a) GENERAL.
Persons eligible to participate in this Plan include all directors,
employees, officers, and executives of, and consultants and
advisors to, the Company or a Subsidiary, as determined by the
Committee.
(b) FOREIGN
PARTICIPANTS. In order to assure the viability of Awards granted to
Participants employed in foreign countries, the Committee may
provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy, or
custom. Moreover, the Committee may approve such supplements to, or
amendments, restatements, or alternative versions of the Plan as it
may consider necessary or appropriat
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