SEPARATION AGREEMENT, WAIVER AND RELEASE
Exhibit
10.1
WAIVER
AND RELEASE
This
Agreement is made and entered into freely and voluntarily by and between Xxxxx
X. Xxxxxx (hereinafter referred to as “Employee”) and Universal Technical
Institute, Inc. (hereinafter referred to as (“UTI” or “the
Company”).
WHEREAS,
Employee has been employed by UTI or its predecessors in interest for a period
of approximately twenty-eight (28) years; and
WHEREAS,
Employee has held various positions with UTI including serving as Senior Vice
President Sales and Senior Vice President Campus Sales, positions which have
responsibility and oversight on a nationwide basis for the recruiting of
students for all of UTI’s campuses; and
WHEREAS,
during his employment, Employee has gained access to confidential information
as
described more fully in this Agreement and acquired an extensive amount of
knowledge about UTI’s operations, strategies, and business;
WHEREAS,
as a result of a corporate restructuring of the Company, Employee’s employment
with the Company is ending;
NOW,
THEREFORE, for and in consideration of the acts, payments, covenants and mutual
agreements herein described and agreed to be performed, Employee and UTI agree
as follows:
1. Termination
Date.
Employee agrees, recognizes and accepts that Employee’s employment relationship
with UTI has been terminated as of September 16, 2007 and that UTI has no
obligation, contractual or otherwise, to re-employ or recall Employee in the
future.
2. Payment(s).
For and
in consideration of the promises and covenants set forth in Paragraphs 9 and
10
below, through the period ending 78 weeks after the date of this Agreement,
UTI
agrees to pay Employee separate bi-weekly payments pursuant to UTI’s normal
payroll practices in the gross amount of ten thousand three hundred eighty-four
dollars and sixty two cents ($10,384.62) less applicable local, state and
federal withholdings. The total amount payable under this Paragraph 2 shall
be
four hundred five thousand dollars and eighteen cents ($405,000.18), less
applicable local, state, and federal withholdings.
3. Bonus
Payments.
For
fiscal year ending September 30, 2007, Employee will be entitled to an annual
bonus if: (a) such a bonus is approved by UTI’s Board of Directors as payable to
all current employees, and (b) Employee signs, returns, and does not revoke
this
Separation Agreement, Waiver and Release. The 2007 annual bonus, if payable,
will be paid during December of 2007, and the bonus, if any, will be based
on
the performance metrics previously established by the Board of Directors.
Employee shall not be eligible or entitled to (a) any bonus for fiscal year
2008
or (b) any stock awards after the termination of employment.
All
stock
options and restricted stock held by Employee will expire according to the
applicable grant or plan, and Employee’s existing equity in UTI that has vested
shall remain vested.
4. Benefits.
Employee’s current medical, dental and vision benefits will continue pursuant to
UTI policy, until September 30, 2007. Beginning, on the first day that active
employee coverage is ineffective, Employee may elect to continue current
medical, dental and vision benefits for up to eighteen (18) months in accordance
with the plan provisions and the Consolidated Omnibus Budget Reconciliation
Action of 1985 (COBRA). If Employee signs, returns and does not revoke this
Agreement, UTI will continue to pay towards the Employee’s COBRA coverage a
monthly amount equal to the Company paid portion of the insurance premium for
the coverage held by Employee during active employment and any administrative
fee for a period of eighteen (18) months, provided the Employee makes a timely
election to receive COBRA benefits. Additionally, Employee shall be entitled,
for a eighteen (18) month period following the termination of employment, to
the
perquisites and benefits of the Execucare program or its successor
program.
UTI
will
provide to Employee professional outplacement services for a period of twelve
(12) months through the firm of Right Management, at a cost not to exceed a
total value of twelve thousand dollars ($12,000).
Employee
shall be responsible for any and all income taxes, if any, associated with
any
benefits provided to him under this Agreement.
5. Acknowledgement
of Consideration.
Employee acknowledges and agrees that the payments set forth in Paragraph 2
are
for and in consideration of the promises, covenants, and undertakings in
Paragraphs 9 and 10. Employee further acknowledges and agrees that the payments
and benefits set forth in Paragraphs 3 and 4 are made in consideration of and
are contingent on the fulfillment of all other promises, covenants, and
undertakings set forth in this Agreement including, but not limited to,
Paragraphs 6, 7, and 8 below. Employee acknowledges and agrees that all of
the
payment(s) and benefits referenced in this Agreement constitute special
consideration to Employee in exchange for the promises made herein by Employee
and that UTI is not otherwise obligated to provide to Employee any such payment,
benefits or portion thereof.
6. Employee’s
Full Release and Waiver of All Claims.
Employee hereby releases, acquits, and forever discharges UTI, its subsidiaries,
and related and affiliated entities and the current and former officers,
directors, agents, assigns, representatives and employees of each of the
foregoing, from any and all actions, claims, damages, lawsuits, expenses, or
costs of whatever nature arising out of Employee’s employment, the termination
of employment with UTI, and any claims Employee may have by virtue of his being
a shareholder of UTI, whether known or not, by either party at the time of
execution of this Agreement.
This
Release and Waiver includes, but is not limited to, any rights or claims which
may be brought under Title VII of the Civil Rights Act of 1964, the Fair Labor
Standards Act (FLSA), the Americans with Disabilities Act (ADA), the Employee
Retirement Income Security Act (ERISA), the Equal Pay Act (EPA), the
Rehabilitation Act of 1973, the Family and Medical Leave Act (FMLA), the
National Labor Relations Act (NLRA), Occupational Safety and Health Act,
Xxxxxxxx-Xxxxx Act, the Securities Act of 1933, Securities Exchange Act of
1934,
COBRA, the Labor Management Relations Act (LMRA), the Arizona Civil Rights
Act,
the Arizona Employment Protection Act or any other action or claim under any
federal, state or local statute, or regulation or under common law. Employee’s
release also includes all claims for constructive discharge, negligent
supervision, breach of contract, fraud, breach of express or implied covenant,
defamation, libel, slander, intentional or negligent infliction of emotional
distress, tortious interference with contract, retaliation, failure to pay
wages, bonuses, commissions or other benefits, attorneys’ fees and any other
claim that could be raised by Employee as a result of Employee’s employment, the
termination of employment with UTI, or by virtue of Employee being a shareholder
of UTI.
This
Release and Waiver does not affect Employee’s right to file a charge or
participate in any federal, state or local investigation by any governmental
agency or to challenge the validity of this Agreement, or Employee’s right to
any governmental benefits payable under any Social Security or Worker’s
Compensation law now or in the future. Notwithstanding the foregoing, Employee
acknowledges and agrees that he (1) is not entitled to any monetary or personal
relief with respect to any charge filed by any person or entity with any
federal, state or local government agency; and (2) specifically assigns any
such
recovery to UTI. Further, this Agreement is not intended to and does not waive
or release any claim under the Arizona Minimum Wage Act.
7. Employee’s
Release of Any Age Claims.
Also in
consideration of the promises and understandings contained in this Agreement,
Employee hereby waives, releases, discharges, and agrees that Employee will
not
institute, prosecute or pursue any, claims, causes of action, or suits for
claims, if any, that have arisen as of the date of this Agreement under the
Age
Discrimination in Employment Act (“ADEA”), as amended, or under the age
provisions of any other applicable state or federal law. Employee acknowledges
that he is knowingly and voluntarily waiving and releasing any rights he may
have under the ADEA, as amended. Employee also acknowledges that the
consideration given for the waiver and release in the preceding paragraph is
in
addition to anything of value to which he is or may have been entitled. Employee
further acknowledges having been 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)
he
has been advised hereby of having had the right to consult with an attorney
prior to executing this Agreement;
(c)
he
has forty-five (45) days to consider this Agreement (although he may choose
to
voluntarily execute this Agreement earlier);
(d)
Employee has seven (7) days following the execution 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 undersigned; and
(f)
he
has received information about the job titles and ages of those in his job
classification or organizational unit who are and are not affected by a
reduction in force that is occurring at approximately the same time as Employee
is entering this Agreement although Employee recognizes and agrees that this
Agreement arises from a restructuring and not from the reduction in
force.
8. Covenant
Not to Xxx.
Employee further covenants and agrees never to commence any action, suit or
proceeding, in law or in equity against UTI, in any way pertaining to or arising
out of Employee’s employment by and with UTI, the termination of Employee’s
employment, or by virtue of his status as a shareholder of UTI. Employee also
stipulates that the consideration received and to be received by Employee under
this Agreement is in full and complete satisfaction of any claims Employee
may
have, or may have had, whether known by the parties at the time of execution
of
this Agreement or not.
9. Confidential
Information.
(a) Following
the termination 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 his own benefit or for the benefit of anyone other than UTI, any
Confidential Information, whether prepared by Employee or not; provided,
however, that any Confidential Information may be disclosed to officers,
representatives, employees and agents of UTI who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them. Employee shall have no obligation hereunder to keep
confidential any Confidential Information if, and to the extent, disclosure
of
such information is specifically required by law; provided, however, that in
the
event disclosure is required by applicable law, Employee shall provide UTI
with
prompt notice of such requirement, prior to making any disclosure, so that
UTI
may seek an appropriate protective order.
(b) “Confidential
Information” means any confidential information including, without limitation,
any study, data, calculations, software storage media or other compilation
of
information, brand, marketing, advertising/media, product and channel
strategies, market data, competitor and student research, internet marketing
strategy and tactics, predictive modeling insights, product designs, employee
compensation packages and strategies, pricing and training manuals, campus
operations design and strategy, copyright, “know-how,” trade secrets, customer
lists, details of vendor, supplier, manufacturer, client or consultant
contracts, pricing policies, operational methods, product development techniques
or plans, business acquisition plans or any portion of 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 UTI, 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
Employee that is not permissible hereunder.
10. Covenant
Not to Compete and Not to Solicit.
Employee agrees that during the course of his employment, he has received
Confidential Information and training, designed to give him special skills
and
to provide UTI with a competitive advantage and which has commercial value.
Employee acknowledges that UTI has a legitimate interest in protecting its
Confidential Information and in taking reasonable steps to protect its goodwill,
its relationships with students, employees, consultants, vendors, suppliers,
manufacturers, and to protect itself against unfair competition.
Employee
therefore agrees:
(a) As
used
in this Agreement, to “Compete” shall mean directly or indirectly to own,
manage, operate, join, control, be employed by, or become a director, officer,
shareholder (holding 5% or more of shares) of, or consultant to, any entity
or
person that (i) owns or operates a post-secondary educational institution which
teaches or trains individuals in motorcycle, marine, automotive, diesel, and
collision repair and refinishing technologies, or any one or more of these
programs; (ii) is considering or contemplating a program that teaches or trains
individuals in motorcycle, marine, automotive, diesel, and collision repair
and
refinishing technologies, or any one or more of these programs; (iii) any entity
engaged in any similar or incidental business conducted, or engaged in, by
UTI
prior to the date hereof or at any time during the Employee’s
employment.
(b) For
a
period of eighteen (18) months (or for fifteen (15) months if a court finds
that
eighteen (18) months are unreasonable, or for twelve (12) months if a court
finds that fifteen (15) months are unreasonable, or for nine (9) months if
a
court finds that twelve (12) months are unreasonable) after the termination
of
employment Employee agrees that he shall not Compete with UTI anywhere within
UTI’s sales territory. Employee agrees that in light of UTI’s business style and
character, its marketing methods, the location of its campuses and its sales
strategy; it is reasonable to consider that UTI’s sales territory extends
throughout the United States and Puerto Rico. (If a court of competent
jurisdiction finds that this territory is unreasonable, then the sales territory
shall be considered all states in which UTI has a campus and all states which
are contiguous to a state with a UTI campus. If a court of competent
jurisdiction finds that this territory is unreasonable, then the sales territory
will be considered to be all states in which UTI has a campus.)
(c) Employee
agrees that for a period of eighteen (18) months (or for fifteen (15) months
if
a court finds that eighteen (18) months are unreasonable, or for twelve (12)
months if a court finds that fifteen (15) months are unreasonable, or for nine
(9) months if a court finds that twelve (12) months are unreasonable) following
the termination of employment that he will not, either directly, indirectly
or
through others, solicit or attempt to solicit any Company employee, consultant,
independent contractor, vendor, supplier, manufacturer, or any person or entity
with a business relationship with UTI or its subsidiaries or affiliates, to
terminate or limit its relationship with UTI or its subsidiaries or affiliates
in order to become an employee, consultant, or independent contractor to or
for
any other person or entity.
(d) Employee
agrees to disclose, during the eighteen (18) month period following the
termination of employment, the terms of this Paragraph 10 to any potential
future employer.
11. Internal
Revenue Code Section 409A Compliance Strategy.
UTI
believes that the severance and other payments and benefits provided pursuant
to
Paragraphs 2, 3 and 4 of this Agreement comply with either the short-term
deferral exception or the separation pay exception to the requirements of
Section 409A of the Internal Revenue Code (“Section 409A”) as described in
Treas. Reg. § 1.409A-1(b)(4) and § 1.409A-1(b)(9)(iii) and (v), respectively.
Nevertheless, under no circumstances may the time or schedule of any payment
made or benefit provided pursuant to this Agreement be accelerated or subject
to
a further deferral except as otherwise permitted or required pursuant to
regulations and other guidance issued pursuant to Section 409A of the Code.
In
addition, the Employee shall not have any right to make any election regarding
the time or form of any payment due under the terms of this Agreement. If UTI
concludes at a later date, in the exercise of its discretion, that neither
the
short-term deferral exception, the separation pay exception nor any other
exception to the requirements of Section 409A is available, Employee
understands and agrees that UTI may unilaterally amend the applicable terms
of
this Agreement in order to assure compliance with Section 409A. Each
provision of this Agreement shall be interpreted, to the extent possible, to
comply with Section 409A.
12. Company’s
Right to Cease Payments and Obtain Injunctive Relief.
Employee understands and agrees that the payments in Paragraph 2 of this
Agreement are made in exchange for Employee’s promises, covenants, and
undertakings in Paragraphs 9 and 10 of this Agreement. In the event of a breach
or imminent breach of any of Employee’s duties or obligations under the terms
and provisions of Paragraph 9 or 10 of this Agreement, UTI shall be entitled
to
immediately cease all payments to Employee under Paragraph 2. In the event
of an
actual breach, such breach will require Employee to disgorge and repay to
Company all payments and benefits paid to or conferred upon Employee under
Paragraph 2 of this Agreement since the time of the first breach.
Employee
understands and agrees that if Employee breaches any duties or obligations
Employee has under Paragraphs 9 or 10 of this Agreement, Employee has no right
to any money under Paragraph 2 of this Agreement, and that Employee forfeits
any
right to receive money under Paragraph 2 of this Agreement, regardless of
whether the non-compete or non-solicit provisions are upheld in a court of
competent jurisdiction. Employee further understands and agrees that if Employee
successfully challenges, by seeking judicial relief, the enforceability of
either Paragraph 9 or 10, or both of them, UTI shall be entitled to immediately
cease all payments and benefits under paragraph 2 of this
Agreement.
In
addition to any other legal or equitable remedies UTI may have (including any
right to damages that it may suffer), UTI 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 Paragraphs 9 or 10 would be largely irreparable. Employee
undertakes and agrees that if Employee breaches or threatens to breach the
terms
of Paragraphs 9 or 10, Employee shall be liable for any attorneys’ fees and
costs incurred by Company in enforcing its rights hereunder.
13. Non-Disparagement.
In
order to avoid unnecessary and unfair damage to UTI’s business reputation,
Employee agrees to make no statements to any persons including, but not limited
to, any employees, customers, vendors, the media, or other parties, whether
oral, written or electronic that would tend to disparage, criticize, or ridicule
UTI, its officers or directors. In order to avoid unnecessary and unfair damage
to Employee’s reputation, UTI agrees to instruct its officers and directors not
to make any statements to any persons whether oral, written, or electronic
that
would tend to disparage, criticize, or ridicule Employee.
14. Company
Property and Documents.
Employee agrees to return all UTI property and equipment, including keys and
all
files and documents pertaining to UTI, including all copies thereof, on or
before the date of Employee’s termination.
15. Reliance.
Employee warrants and represents that: (i) Employee has relied on Employee’s own
judgment regarding the consideration for and language of this Agreement; (ii)
Employee has been given a reasonable period of time to consider said Agreement;
(iii) no statements made by UTI have in any way coerced or unduly influenced
Employee to execute this Agreement; (iv) this Agreement is written in a manner
that is understandable to Employee and Employee has read and understood all
paragraphs of this Agreement; and (v) Employee has been advised to consult
with
legal counsel of Employee’s choice regarding this Agreement.
16. Nature
of the Agreement.
This
Agreement and all provisions thereof, including all representations and promises
contained herein, are contractual and not a mere recital and shall continue
in
permanent force and effect. The rights and obligations of the parties under
this
Agreement shall survive a merger, consolidation or transfer of ownership or
sale
of whole or parts of UTI and shall bind any successors or assigns of either
party. This Agreement constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof, superseding all prior agreements
and
understandings between the parties, and there are no agreements of any nature
whatsoever between the parties hereto except as expressly stated herein. This
Agreement may not be modified or changed unless done so in writing, signed
by
both parties. In the event that any portion of this Agreement is found to be
unenforceable for any reason whatsoever, the enforceable provision shall
continue to be in full force and effect. This Agreement shall be governed
by and construed in accordance with the laws of the State of Arizona, and the
parties agree that the state and federal courts located in Maricopa County,
Arizona shall have jurisdiction over any dispute pertaining to this Agreement
and shall be the proper venue for the resolution of any dispute.
DATED
this 24th day of September, 2007.
/s/
Xxxxx X.
Xxxxxx
Xxxxx
X.
Xxxxxx
By: /s/
Xxx Xxxxx, SVP, People
Services
Universal
Technical Institute, Inc.
Return
Original To:
Xxx
Xxxxx
SVP,
People Services
00000
X. 00xx
Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000