Document:

exv10w2

Exhibit 10.2

GRADE 18 LEVEL OR ABOVE

PERFORMANCE SHARE AWARD AGREEMENT

RECITALS

          A. The Corporation has implemented the Plan as an equity incentive program to encourage key
employees and officers of the Corporation and the non-employee members of the Board to remain in
the employ or service of the Corporation by providing them with an opportunity to acquire a
proprietary interest in the success of the Corporation.

          B. Participant is to render valuable services to the Corporation (or any Parent or
Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes
of, the Plan in connection with the Corporation’s issuance of shares of Class A Common Stock to
Participant under the Plan.

          C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix A.

NOW, THEREFORE, it is hereby agreed as follows:

          1. Grant of Performance Shares. The Corporation hereby awards to Participant, as of
the Award Date indicated below, an award (the “Award”) of Performance Shares under the Plan. Each
Performance Share which vests pursuant to the terms of this Agreement shall provide Participant
with the right to receive one or more shares of Class A Common Stock on the designated issuance
date. The number of shares of Class A Common Stock subject to the awarded Performance Shares, the
applicable performance vesting requirement for the Performance Shares, the rate at which the vested
Performance Shares are to convert into shares of Class A Common Stock, the date on which the
converted shares of Class A Common Stock shall become issuable and the remaining terms and
conditions governing the Award, including the applicable service vesting requirement, shall be as
set forth in this Agreement.

	 	 	 

	Participant

	 	                                                                           
	 
	 	 
	Award Date:

	 	                                        , 2010
	 
	 	 
	Designated Number of Performance Shares:

	 	The actual number of shares of Class
A Common Stock that may become
issuable pursuant to the Performance Shares awarded under this Agreement
shall be determined in accordance
with the Vesting Schedule below. For
purposes of such schedule, the
designated number of Performance Shares to be utilized is
                     shares and shall
constitute the “Target Number of
Performance Shares” for purposes of
this Agreement.

 

 

	 	 	 

	Vesting Schedule:

	 	The number of shares of Class A Common Stock which may
actually vest and become issuable pursuant to the Award
shall be determined pursuant to a two-step process: (i)
first the maximum number of shares of Class A Common
Stock in which Participant can vest under the
Performance Vesting section below shall be calculated on
the basis of the level at which the Performance Goal
specified on attached Schedule I is actually attained
and (ii) then the number of shares calculated under
clause (i) in which Participant may actually vest shall
be determined on the basis of the number of years of
Service the Participant completes during the Performance
Period in accordance with the Service vesting
requirements set forth in Paragraph 3 of this
Agreement.
	 
	 	 
	 

	 	Performance Vesting: Attached Schedule I specifies the
Performance Goal to be attained for the specified
Performance Period. Within seventy-five (75) days after
the completion of that Performance Period, the Plan
Administrator shall determine and certify the actual
level of attainment for the Performance Goal. On the
basis of that certified level of attainment, the number
of Performance Shares will be multiplied by the
applicable percentage (which may range from 0% to 200%)
determined in accordance with the schedule of
percentages set forth in attached Schedule I. The number
of shares resulting from such calculation shall
constitute the maximum number of shares of Class A
Common Stock in which Participant may vest under this
Award and shall be designated the “Performance-Qualified
Shares.” In no event may the number of such
Performance-Qualified Shares exceed 200% of the Target
Number of Performance Shares.
	 
	 	 
	 

	 	Should the Performance Goal be attained at a level below
the threshold level specified in attached Schedule I,
all of the Performance Shares subject to this Award
shall be immediately cancelled. Participant shall
thereupon cease to have any further right, title or
interest in the shares of Class A Common Stock
underlying those cancelled Performance Shares.
	 
	 	 
	 

	 	Service Vesting. The number of Performance-Qualified
Shares in which Participant actually vests shall be
determined in accordance with the Service-vesting
provisions set forth in Section 3 of this Agreement.
	 
	 	 
	 

	 	Change in Control Vesting. The shares of Class A Common
Stock underlying the Performance Shares subject to this
Award may also vest on an accelerated basis in
accordance with Paragraph 5 should a Change in Control
occur prior to the completion of the Performance Period.

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	Issuance Date:

	 	The shares of Class A Common Stock which actually vest
and become issuable pursuant to the terms of this
Agreement shall be issued in accordance with the
provisions of this Agreement applicable to the
particular circumstances under which such vesting
occurs.

          2. Limited Transferability. Prior to the actual issuance of the shares of Class A
Common Stock which vest hereunder, Participant may not transfer any interest in the performance
shares subject to the Award or the underlying shares of Class A Common Stock or pledge or otherwise
hedge the sale of those performance shares or the underlying shares of Class A Common Stock,
including (without limitation) any short sale or any acquisition or disposition of any put or call
option or other instrument tied to the value of the Class A Common Stock. However, any shares of
Class A Common Stock which vest hereunder but otherwise remain unissued at the time of
Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws
of inheritance or to Participant’s designated beneficiary or beneficiaries of this Award.
Participant may make such a beneficiary designation at any time by filing the appropriate form with
the Plan Administrator or its designate.

          3. Service Requirement.

          (a) The number of Performance-Qualified Shares calculated in accordance with the
Performance-Vesting provisions of Paragraph 1 and attached Schedule I represent the maximum number
of shares of Class A Common Stock in which Participant can vest hereunder. The actual number of
shares of Class A Common Stock in which Participant shall vest shall be determined by multiplying
that number of Performance-Qualified Shares by a fraction, the numerator of which is the number of
full fiscal years of Service completed by the Participant within the Performance Period and the
denominator of which is the total number of fiscal years within that Performance Period.

          (b) Should the Participant cease Service prior to the completion of a particular fiscal year
included within the Performance Period by reason of an Involuntary Termination, then following the
completion of the Performance Period and the required certification of the number of
Performance-Qualified Shares subject to this Award, Participant shall, with respect to such partial
fiscal year of Service, vest in that additional number of shares of Class A Common Stock (if any)
determined by multiplying the certified number of Performance-Qualified Shares by a fraction, the
numerator of which is the number of months of Service actually completed by the Participant during
that particular fiscal year (rounded up to the next whole month), and the denominator of which is
the total number of months constituting the entire Performance Period.

          (c) Should the Participant’s Service cease for any reason other than an Involuntary
Termination prior to the completion of the Performance Period, then the Participant shall not vest
in any additional Performance-Qualified Shares following such cessation of Service, and all of
Participant’s right, title and interest to any unvested Performance-Qualified Shares subject to
this Award shall immediately terminate.

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          4. Stockholder Rights. The holder of this Award shall not have any stockholder rights,
including voting, dividend or liquidation rights, with respect to the shares of Class A Common
Stock underlying the Award until Participant becomes the record holder of those shares upon their
actual issuance following the Corporation’s collection of the applicable Withholding Taxes.

          5. Change in Control. The following provisions shall apply only to the extent a
Change in Control is consummated prior to the completion of the Performance Period and shall have
no force or effect in the event the effective date of the Change in Control occurs after the
completion of such Performance Period.

               (a) Should (i) the Change in Control occur during the first eighteen (18) months of the
Performance Period and (ii) the Participant continue in Service through the effective date of that
Change in Control, then the Participant shall immediately vest in that number of shares of Class A
Common Stock equal to the Target Number of Performance Shares set forth in Paragraph 1, without any
measurement of Performance Goal attainment to date.

               (b) Should (i) the Change in Control occur at any time on or after the completion of the first
eighteen (18) months of the Performance Period and (ii) the Participant continues in Service
through the effective date of that Change in Control, then the Participant shall immediately vest
in that number of shares of Class A Common Stock equal to the greater of:

               (i) the Target Number of Performance Shares set forth in Paragraph 1, or

               (ii) the number of Performance-Qualified Shares determined by multiplying (A)
the Target Number of Performance Shares set forth in Paragraph 1 by (B) the
applicable percentage (determined in accordance with attached Schedule I) for the
level at which the Performance Goal is attained and certified by the Plan
Administrator for an abbreviated Performance Period ending with the close of the
Corporation’s fiscal quarter coincident with or immediately preceding the effective
date of the Change in Control, with the applicable financial metric for the fiscal
year in which the Change in Control is effected to be calculated and measured as of
the close of the fiscal quarter coincident with or immediately preceding such
effective date and compared to the applicable financial metric for the immediately
preceding fiscal year calculated and measured over the same abbreviated time period
within that fiscal year.

               (c) The share calculation procedures set forth in subparagraphs (a) and (b) of this Paragraph
5 shall also apply for purposes of determining the number of shares to which the Service-vesting
provisions of Paragraph 3(a) and (if applicable) Paragraph 3(b) are to be applied in the event the
Participant ceases Service during the Performance Period and prior to the effective date of the
Change in Control, and the resulting number of shares shall be subject to the provisions of
Paragraph 5(d) below.

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               (d) The number of shares of Class A Common Stock in which Participant vests on the basis of
the Performance Shares or Performance-Qualified Shares determined in accordance with the foregoing
provisions of this Paragraph 5 shall be converted into the right to receive for each such share the
same consideration per share of Class A Common Stock payable to the other holders of such Class A
Common Stock in consummation of that Change in Control, and such consideration per share shall be
distributed to the Participant at the same time as such stockholder payments, but in no event shall
such distribution to the Participant be completed later than the later of (i) the end of the
calendar year in which such Change in Control is effected or (ii) the fifteenth (15th) day of the
third (3rd) calendar month following the effective date of that Change in Control. The
distribution shall be subject to the Corporation’s collection of the applicable Withholding Taxes.

               (e) Except for the actual number of shares of Class A Common Stock in which the Participant
vests in accordance with this Paragraph 5, the Participant shall cease to have any further right or
entitlement to any additional shares of Class A Common Stock under this Agreement following the
effective date of the Change in Control.

               (f) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

          6. Adjustment in Shares. Should any change be made to the Class A Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should
the value of the outstanding shares of Common Stock be substantially reduced as a result of a
spin-off transaction or an extraordinary dividend or distribution, or should there occur any
merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan
Administrator to the total number and/or class of securities issuable pursuant to this Award in
order to reflect such change. The determination of the Plan Administrator shall be final, binding
and conclusive. In the event of any Change in Control transaction, the provisions of Paragraph 5
shall be controlling.

          7. Issuance or Distribution of Vested Shares or Other Amounts.

               (a) Except as otherwise provided in Paragraph 5, the shares of Class A Common Stock in which
Participant vests pursuant to the Performance and Service vesting provisions of Paragraphs 1 and 3
shall be issued following the completion of the Performance Period, in accordance with the
following provisions:

          (i) If the applicable Performance Period is coincidental with one or
more successive fiscal years of the Corporation, the issuance shall be
effected as soon as administratively practicable following the completion of
that Performance Period, but no later than the later of (A)

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the last day of the calendar year in which such Performance Period ends
or (B) the fifteenth (15th) day of third (3rd) calendar month following the
last day of such Performance Period.

          (ii) If the applicable Performance Period is coincidental with one or
more successive complete calendar years, the issuance shall be effected
during the period beginning with the first business day of the calendar year
immediately succeeding the end of the Performance Period and ending no later
than March 15 of that year.

               (b) The Corporation shall, on the applicable issuance date, issue to or on behalf of
Participant a certificate (which may be in electronic form) for the shares of Class A Common Stock
in which Participant vests pursuant to the Performance and Service vesting provisions of Paragraphs
1 and 3 or the special vesting provisions of Paragraph 5.

               (c) Except as otherwise provided in Paragraph 5, no shares of Class A Common Stock shall be
issued prior to the completion of the Performance Period. No fractional share of Class A Common
Stock shall be issued pursuant to this Award, and any fractional share resulting from any
calculation made in accordance with the terms of this Agreement shall be rounded down to the next
whole share of Class A Common Stock.

               (d) The Corporation shall collect the applicable Withholding Taxes with respect to all shares
of Class A Common Stock which vest and become issuable pursuant to the provisions of this Agreement
through the following automatic share withholding method:

               - On the applicable issuance date, the Corporation shall withhold, from the
vested shares of Class A Common Stock otherwise issuable to the Participant at that
time, a portion of those shares with a Fair Market Value (measured as of the
issuance date) equal to the applicable Withholding Taxes; provided, however, that
the number of shares of Class A Common Stock which the Corporation shall be required
to so withhold shall not exceed in Fair Market Value (other than by reason of the
rounding up of any fractional share to the next whole share) the amount necessary to
satisfy the Corporation’s required tax withholding obligations using the minimum
statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to supplemental taxable income. The Participant hereby
expressly authorizes the Corporation to withhold any such additional fractional
share that is needed to round up the share withholding to the next whole share of
Class A Common Stock, with the Fair Market Value of that additional fractional share
to be added to the amount of taxes withheld by the Corporation from his or her wages
for the calendar year in which the issuance date occurs, and to report that
additional tax withholding as part of his or her W-2 tax withholdings for such year.

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               (e) Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all
Performance or Performance-Qualified Shares which vest under the Award shall be made solely in
shares of Class A Common Stock.

          8. Code Section 409A

               (a) It is the intention of the parties that the provisions of this Agreement shall comply with
the requirements of the short-term deferral exception to Section 409A of the Code and Treasury
Regulations Section 1.409A-1(b)(4). Accordingly, to the extent there is any ambiguity as to
whether one or more provisions of this Agreement would otherwise contravene the requirements or
limitations of Code Section 409A applicable to such short-term deferral exception, then those
provisions shall be interpreted and applied in a manner that does not result in a violation of the
requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply
to such exception.

               (b) If and to the extent this Agreement may be deemed to create an arrangement subject to the
requirements of Code Section 409A, then the following provisions shall apply:

          - No shares of Class A Common Stock or other amounts which become issuable or
distributable under this Agreement by reason of Participant’s cessation of Service
shall actually be issued or distributed to Participant until the date of
Participant’s separation from service (as determined in accordance with the
applicable provisions of Code Section 409A and the Treasury Regulations thereunder)
or as soon thereafter as administratively practicable, but in no event later than
the later of (i) the close of the calendar year in which such separation from
service occurs or (ii) the fifteenth day of the third calendar month following the
date of such separation from service.

          - No shares of Class A Common Stock or other amounts which become issuable or
distributable under this Agreement by reason of Participant’s cessation of Service
shall actually be issued or distributed to Participant prior to the earlier of (i)
the first day of the seventh (7th) month following the date of the Participant’s
separation from service or (ii) the date of Participant’s death, if Participant is
deemed at the time of such separation from service to be a specified employee under
Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as
determined by the Plan Administrator in accordance with consistent and uniform
standards applied to all other Code Section 409A arrangements of the Corporation,
and such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). The deferred shares or other
distributable amount shall be issued or distributed in a lump sum on the first day
of the seventh (7th) month following the date of Participant’s separation from
service or, if earlier, the first day of the month immediately following the date
the Corporation receives proof of Participant’s death.

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          - No amounts that vest and become payable under Paragraph 5 of this Agreement
by reason of a Change in Control shall be distributed to the Participant at the time
of such Change in Control, unless that transaction also qualifies as a change in
control event under Code Section 409A and the Treasury Regulations thereunder. In
the absence of such a qualifying change in control, the distribution shall not be
made until the specified completion date of the three (3)-year Performance Period or
as soon as administratively practicable following thereafter, but in no event later
than the fifteenth (15th) day of the third (3rd) calendar month
following that date.

          9. Compliance with Laws and Regulations. The issuance of shares of Class A Common
Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with
all applicable requirements of law relating thereto and with all applicable regulations of any
Stock Exchange on which the Class A Common Stock may be listed for trading at the time of such
issuance.

          10. Notices. Any notice required to be given or delivered to the Corporation under
the terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices or shall be effected by properly addressed electronic mail delivery. Any notice
required to be given or delivered to the Participant shall be in writing and addressed to the
Participant at the most recent address then on file for the Participant in the Corporation’s Human
Resources Department. All notices shall be deemed effective upon personal delivery or upon deposit
in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

          11. Successors and Assigns. Except to the extent otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and the Participant and the legal representatives, heirs
and legatees of the Participant’s estate and any beneficiaries of the Award designated by the
Participant.

          12. Construction. This Agreement and the Award evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in the Award.

          13. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Arizona without resort to that State’s
conflict-of-laws rules.

          14. Employment at Will. Nothing in this Agreement or in the Plan shall confer upon
the Participant any right to remain in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation or of then Participant, which
rights are hereby expressly reserved by each, to terminate Participant’s Service at any time for
any reason, with or without cause.

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          15. Participant Acceptance. The Participant must accept the terms and conditions of
this Agreement either electronically through the electronic acceptance procedure established by the
Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to
the Corporation. In no event shall any shares of Class A Common Stock be issued under this
Agreement in the absence of such acceptance.

          IN WITNESS WHEREOF, Apollo Group, Inc. has caused this Agreement to be executed on its behalf
by its duly-authorized officer on the day and year first indicated above.

	 	 	 	 	 

	 	 	APOLLO GROUP, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	PARTICIPANT
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 

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APPENDIX A

DEFINITIONS

          The following definitions shall be in effect under the Agreement:

          A. Agreement shall mean this Performance Share Award Agreement.

          B. Award shall mean the award of Performance Shares made to the Participant pursuant
to the terms of this Agreement.

          C. Award Date shall mean the date the award of Performance Shares is made to the
Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the
Agreement.

          D. Board shall mean the Corporation’s Board of Directors.

          E. Change in Control shall have the meaning assigned to such term in Section 3.1(e) of
the Plan.

          F. Code shall mean the Internal Revenue Code of 1986, as amended.

          G. Class A Common Stock shall mean shares of the Corporation’s Class A common stock.

          H. Corporation shall mean Apollo Group, Inc., an Arizona corporation, and any
successor corporation to Apollo Group, Inc. which shall by appropriate action adopt the Plan.

          I. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.

          J. Fair Market Value per share of Class A Common Stock on any relevant date shall be
the closing price per share of such Class A Common Stock on the date in question on the Stock Exchange
serving as the primary market for the Class A Common Stock, as such price is reported by the
National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global
Select Market) or as officially quoted in the composite tape of transactions on any other Stock
Exchange on which the Class A Common Stock is then primarily traded. If there is no closing
selling price for the Class A Common Stock on the date in question, then the Fair Market Value
shall be the closing price on the last preceding date for which such quotation exists.

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          K. Involuntary Termination shall mean the unilateral termination of the Participant’s
Service by the Corporation (or any Parent or Subsidiary employing Participant) for any reason other
than a Termination for Cause; provided, however, in no event shall an Involuntary Termination be
deemed to incur in the event the Participant’s Service terminates by reason of his or her death or
disability.

          L. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.

          M. Participant shall mean the person to whom the Award is made pursuant to the
Agreement.

          N. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

          O. Performance Goal shall mean the performance goal specified in Schedule I to this
Agreement.

          P. Performance Period shall mean the period specified on attached Schedule I to this
Agreement over which the attainment of the Performance Goal is to be measured.

          Q. Performance-Qualified Shares shall mean the maximum number of shares of Class A
Common Stock in which Participant can vest based on the level at which the Performance Goal for the
Performance Period is attained and shall be calculated in accordance with the provisions of this
Agreement. In no event shall the number of such Performance-Qualified Shares exceed two hundred
percent (200%) of the Target Number of Performance Shares set forth in Paragraph 1 of this
Agreement.

          R. Performance Share shall mean the phantom shares of Class A Common Stock awarded
under this Agreement which will entitle Participant to receive one or more actual shares of Class A
Common Stock pursuant to this Award upon the satisfaction of the performance and Service vesting
requirements applicable to such Award.

          S. Plan shall mean the Corporation’s 2000 Stock Incentive Plan, as amended or restated
from time to time.

          T. Plan Administrator shall mean the Compensation Committee of the Board acting in its
capacity as administrator of the Plan.

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          U. Service shall mean Participant’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee. For purposes of this Agreement, Participant
shall be deemed to cease Service immediately upon the occurrence of the either of the following
events: (i) Participant no longer performs services in an Employee capacity for the Corporation (or
any Parent or Subsidiary) or (ii) the entity for which Participant performs services in an Employee
capacity ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may
subsequently continue to perform services for that entity. Service as an Employee shall not be
deemed to cease during a period of military leave, sick leave or other personal leave approved by
the Corporation; provided, however, that except to the extent otherwise required by law or
expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of
absence, no Service credit shall be given for vesting purposes for any period Participant is on a
leave of absence.

          V. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global
Select Market or the New York Stock Exchange.

          W. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

          X. Target Number of Performance Shares shall mean the number of Performance Shares
that will be converted into actual shares of Class A Common Stock on a one-for-one basis if the
Performance Goal is attained at the Target Level specified in attached Schedule I.

          Y. Termination for Cause shall mean the termination of the Participant’s Service by
the Corporation (or any Parent or Subsidiary employing Participant) for one or more of the
following reasons:

          (ii) repeated dereliction of the material duties and responsibilities of his or
her position with the Corporation (or any Parent or Subsidiary);

          (iii) misconduct, insubordination or failure to comply with the policies of
the Corporation (or any Parent or Subsidiary employing the Participant) governing
employee conduct and procedures;

          (iv) excessive lateness or absenteeism;

          (v) conviction of or pleading guilty or nolo contendere to any felony involving
theft, embezzlement, dishonesty or moral turpitude;

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          (vi) commission of any act of fraud against, or the misappropriation of
property belonging to, the Corporation (or any Parent or Subsidiary);

          (vii) commission of any act of dishonesty in connection with his or her
responsibilities as an Employee that is intended to result in his or her personal
enrichment or the personal enrichment of his or her family or others;

          (viii) any other misconduct adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary); or

          (ix) a material breach of any agreement the Participant may have at the time
with the Corporation (or any Parent or Subsidiary employing the Participant),
including (without limitation) any proprietary information, non-disclosure or
confidentiality agreement.

          DD. Withholding Taxes shall mean the federal, state and local income taxes and
the employee portion of the federal, state and local employment taxes required to be
withheld by the Corporation in connection with the vesting and issuance of the shares of
Common Stock which vest under of the Award and any phantom dividend equivalents distributed
with respect to those shares.

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SCHEDULE I

PERFORMANCE GOAL AND PERFORMANCE PERIOD

PERFORMANCE PERIOD

The measurement period for the Performance Shares awarded to Participant shall be the three (3)
fiscal-year period beginning September 1, 2010 and ending August 31, 2013 (the “Performance
Period”).

PERFORMANCE GOAL FOR PERFORMANCE VESTING

Performance Goal — Adjusted Free Cash Flow: The Performance Goal shall be tied to the average of
the actual annual growth rates of Adjusted Free Cash Flow (as defined and adjusted in accordance
with the provisions set forth below) for each of the three (3) fiscal years comprising the
Performance Period. In determining the average of those annual growth rates, the growth rate of
defined Adjusted Free Cash Flow for the 2011 fiscal year will be determined by comparing the
defined Adjusted Free Cash Flow for that year against the defined Adjusted Free Cash Flow for the
2010 fiscal year ending August 31, 2010. The growth in defined Adjusted Free Cash Flow for each of
the two (2) remaining fiscal years in the Performance Period shall be calculated in comparison to
the defined Adjusted Free Cash Flow realized for the immediately preceding fiscal year in that
Performance Period. Once the growth rate in defined Adjusted Free Cash for each of the three (3)
fiscal years in the Performance Period is calculated, the simple average of those three (3) annual
growth rates will be determined, and that average (rounded up to the next whole one-tenth decimal
point) will represent the actual level at which the Performance Goal has been attained.

     The threshold (40% conversion factor), target (100% conversion factor) and maximum (200%
conversion factor) levels of the average of the annual growth rates of Adjusted Free Cash Flow for
the Performance Period shall be as follows:

	 	 	 	 	 	 

	     THRESHOLD:
	 	 	5	%	 
	 
	 	 	 	 	 
	     TARGET:
	 	 	12	%	 
	 
	 	 	 	 	 
	     MAXIMUM:
	 	 	19	%	 

     Adjusted Free Cash Flow for each applicable fiscal year (whether the 2010 fiscal year or any
fiscal year in the Performance Period) shall be calculated in accordance with the following
parameters:

          First, the cash flow from operations for such fiscal year shall be determined on a
consolidated basis with the Corporation’s consolidated subsidiaries for financial reporting
purposes and in accordance with current United States Generally Accepted Accounting Principles
(“U.S. GAAP”) and shall be confirmed on the basis of the Corporation’s audited

 

 

financial statements for that fiscal year. To the extent there are any other changes in U.S.
GAAP during the Performance Period, the U.S. GAAP rules in effect on the Award Date shall continue
to be utilized throughout the entire Performance Period.

          Then, the cash flow from operations as so determined for the relevant fiscal year shall be
reduced by the following amounts:

          (i) cash amounts expended during that fiscal year in the acquisition of
property, plant and equipment; and

          (ii) cash amounts paid during that fiscal year in the acquisition of businesses
or assets whose primary function is other than the education of an enrolled student
population.

          Next, the cash flow from operations for such fiscal year as so reduced shall be adjusted as
follows: any increases during that fiscal year in restricted cash attributable to Title IV student
funding shall be deducted from such cash flow, and any decreases during that fiscal year in such
restricted cash shall added to that cash flow.

          The amount of cash flow resulting from the foregoing reductions and adjustments shall
constitute the Adjusted Free Cash Flow for such fiscal year. However, in measuring the applicable
growth rate in Adjusted Cash Flow for each of the fiscal years within the Performance Period for
purposes of determining the level at which the Performance Goal is attained, such Adjusted Free
Cash Flow shall, with respect to each fiscal year within the Performance Period, be subject to
further adjustment by excluding each of the following amounts in the calculation of the defined
Adjusted Free Cash Flow for that fiscal year:

          (i) cash amounts paid during that fiscal year for any costs related to an
acquisition of businesses or assets within the Performance Period whose primary
function is the education of an enrolled student population;

          (ii) cash amounts paid during that fiscal year as interest expense;

          (iii) cash amounts received during that fiscal year as interest income;

          (iv) cash amounts paid during that fiscal year in connection with judgments,
verdicts and settlements with respect to the following litigation matters listed in
the Commitments and Contingencies footnote of the Corporation’s Consolidated
Financial Statements for the fiscal year ended August 31, 2009, as set forth in the
Form 10-K for that fiscal year filed with the Securities and Exchange Commission:

Litigation Matter

 

 

     Incentive Compensation False Claims Act Lawsuit filed March 7, 2003 in the
U.S. District Court for the Eastern District of California

     In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT

     Equal Employment Opportunity Commission v. University of Phoenix, No.
CV-06-2303-PHX-MHM

     Barnett v. John Blair et al., Case No. CV2006-051558

     Bamboo Partners v. Nelson et al., Case No. CIV-06-1973-PHX-SRB

     Teamsters Local 617 Pension & Welfare Funds v. Apollo Group, Inc. et. al., Case
Number 06-CV-02674-RCB; and

          (v) adjusted free cash flows (as calculated above) for that fiscal year
attributable to any businesses or assets acquired within the Performance Period
whose primary function is the education of an enrolled student population.

     Performance-Qualified Shares: The actual number of Performance-Qualified Shares may range from
0% to 200% of the Target Number of Performance Shares designated in Paragraph 1 of this Agreement,
with the actual percentage to be determined on the basis of the simple average of the annual growth
rates of Adjusted Free Cash Flow realized for each of the three (3) fiscal years included within
the Performance Period, as certified by the Plan Administrator. Accordingly, the Performance Shares
subject to this Award shall convert into a number of Performance-Qualified Shares determined by
multiplying the Target Number of Performance Shares set forth in Paragraph 1 of this Agreement by
the percentage in the schedule below that corresponds to the average of the actual annual growth
rates of Adjusted Free Cash Flow certified by the Plan Administrator for each of the three (3)
fiscal years comprising the Performance Period. In no event, however, shall the maximum number of
the shares of the Corporation’s Class A Common Stock that may qualify as Performance-Qualified
Shares exceed 200% of the Target Number of Performance Shares set forth in Paragraph 1 of this
Agreement.

     Schedule for Determining Number of Performance-Qualified Shares Based on Attained Average of
the Annual Growth Rates of Adjusted Free Cash Flow: The number of shares of the Corporation’s Class
A Common Stock that may qualify as Performance-Qualified Shares on the basis of the certified
simple average of the annual growth rates of Adjusted Free Cash Flow for each of the three fiscal
years in the Performance Period shall be calculated by multiplying the Target Number of Performance
Shares designated in Paragraph 1 of this Agreement by the applicable percentage for that average
annual growth rate determined in accordance with the following schedule:

 

 

	 	 	 	 	 
	Average of the Annual Adjusted	 	Percentage of Target Number of
	Free Cash Flow Growth Rates	 	Shares to Qualify as
	 	 	Performance-Qualified Shares
	< 5%

	 	 	0	%
	5.0-5.9%

	 	 	40	%
	6.0-7.1%

	 	 	55	%
	7.2-8.3%

	 	 	70	%
	8.4-9.5%

	 	 	80	%
	9.6-10.7%

	 	 	90	%
	10.8-11.9%

	 	 	95	%
	12.0-12.9%

	 	 	100	%
	13.0-14.1%

	 	 	105	%
	14.2-15.3%

	 	 	115	%
	15.4-16.5%

	 	 	130	%
	16.6-17.7%

	 	 	150	%
	17.8-18.9%

	 	 	175	%
	> 19.0%

	 	 	200	%exv10w3

Exhibit 10.3

APOLLO GROUP, INC.

2000 STOCK INCENTIVE PLAN

PLAN AMENDMENT

     The Apollo Group, Inc. 2000 Stock Incentive Plan, as previously amended and restated (the
“Plan”), is hereby further amended, effective June 24, 2010, as follows:

     1. Section 3.1(r) of the Plan is hereby amended in its entirety to read as follows:

     (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, cash flow objectives, operating cash flows,
free cash flow (operating cash flow less capital expenditures and adjusted for
increases or decreases in restricted cash), return on net assets, return on
stockholders’ equity, return on assets, return on capital or invested 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, operating
margin, earnings before interest and taxes, earnings before taxes, earnings before
interest, taxes, depreciation, amortization and charges for stock-based
compensation, earnings before interest, taxes, depreciation and amortization,
economic value-added models, cost reductions, budget objectives, litigation and
regulatory resolution goals, expense control goals, 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 or as measured in terms of one or more business units or
Subsidiaries of the Company. 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.

     2. Section 3.1(s) of the Plan is hereby amended in its entirety to read as follows:

     (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, at the time the Performance Goal or Goals for the
Performance Period are established, provide for one or more adjustments or
modifications to the calculation of such Performance Goal or Goals 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.

     In addition, should the Performance Goal be tied to operating cash flow or free
cash flow objectives, then the Committee may, in establishing the applicable
targets, authorize adjustments, deductions and/or exclusions with respect to one or
more of the following items to the extent those items are to be utilized in the
calculation of operating cash flow or free cash flow for any or all of the fiscal
years within the applicable Performance Period and/or any other fiscal year that
serves as a base or comparative measurement year:

          (i) cash amounts expended in the acquisition of property, plant and equipment,

          (ii) cash amounts paid in connection with actual or proposed acquisitions of
one or more businesses or the assets of one or more businesses,

          (iii) cash flows or adjusted cash flows attributable to any businesses or
assets acquired during the Performance Period (or other relevant measurement
period),

          (iv) cash amounts paid as interest expense,

          (v) cash amounts received as interest income,

          (vi) cash amounts paid in connection with judgments, verdicts and settlements
with respect to specified litigation matters, and

          (vii) increases or decreases in restricted cash attributable to Title IV
student funding.

     In further clarification of the various adjustments that may be made to one or more
Performance Goals in accordance with this Section 3.1(s) and without limiting the scope or
generality of those permissible adjustments, should the Performance Goal be tied to any net
income or operating profit objectives, then the Committee may, in establishing the
applicable net income or operating profit target, authorize one or more of the following
adjustments to net income or operating profit for any fiscal year within the applicable
Performance Period:

     (i) the exclusion of all acquisition costs expensed for the applicable
fiscal year, whether relating to acquisitions effected during that year or
any prior fiscal year,

     (ii) the exclusion of all income or loss attributable to companies or
other entities acquired during the applicable fiscal year,

 

 

     (iii) the exclusion of impairment charges related to goodwill,
intangible assets or other long-lived assets,

     (iv) the exclusion of amounts expensed in connection with judgments,
verdicts and settlements with respect to specified litigation matters,

     (v) the exclusion of stock-based compensation expense or costs, as
computed in accordance with applicable accounting principles, and

     (vi) any other applicable adjustments authorized in accordance with the
foregoing provisions of this Section 3.1(s).”

     3. Article 9 of the Plan is hereby amended in its entirety to read as follows:

ARTICLE 9

PERFORMANCE SHARE AWARDS

     “9.1 GRANT OF PERFORMANCE SHARE AWARDS. The Committee is authorized to grant
Performance Share Awards to Participants on such terms and conditions as may be selected by
the Committee. The Committee shall have the complete discretion to determine the number of
shares of Stock that may be issued under each such Award of Performance Shares upon the
attainment of the applicable performance objectives. All Performance Share Awards shall be
evidenced by an Award Agreement.

          9.2 VESTING AND ISSUANCE PROVISIONS.

          (a) Performance Shares awarded under the Plan shall be structured and implemented in
accordance with the following guidelines:

          (1) The Committee shall, at the time of the Award, establish (i) the applicable
performance objectives that must be attained in order for the Performance Share Award to
vest, (ii) the applicable performance period (which is to be of at least one year but not
more than five (5) years in duration) over which those performance objectives are to be
attained, (iii) the additional service vesting requirements to be completed during the
performance period and (iv) the issuance date or dates on which the shares of Stock subject
to a vested Performance Share Award are to be issued. The vesting and issuance provisions
applicable to each Performance Share Award, including the additional service vesting
requirements set by the Committee for completion during the applicable performance period,
shall be set forth in the Award Agreement.

 

 

          (2) At the end of the performance period, the Committee shall determine the actual
level of attainment for each performance objective and the extent to which the Performance
Shares awarded for that period are to vest and become payable based on the attained
performance levels and the satisfaction of the applicable service vesting requirements.

          (3) The Performance Shares which so vest shall be paid as soon as practicable following
the end of the performance period, unless such payment is to be deferred for the period
specified by the Committee at the time the Performance Shares are awarded or the period
selected by the Participant in accordance with the applicable requirements of Code Section
409A. The Committee, in its discretion, may also at the time of the Award structure one or
more Performance Shares Awards so that an additional period of employment or service with
the Company following the completion of the performance period is required in order for the
Participant to vest in the Performance Shares.

          (4) Performance Shares shall be paid and settled shares of Stock, except to the extent
(if any) otherwise set forth in the Award Agreement.

          (5) Performance Shares may also be structured so that such shares shall be converted
into actual shares of Stock based on a conversion rate that varies with the level at which
each applicable performance objective is actually attained.

          (b) The Committee shall also have the discretionary authority, consistent with Code Section
162(m), to structure one or more Performance Share Awards so that the shares of Stock subject to
those Awards shall vest upon the achievement of pre-established corporate performance objectives
based on one or more Performance Goals and measured over the performance period specified by the
Committee at the time of the Award.

          (c) The Participant shall not have any stockholder rights with respect to the shares of Stock
subject to a Performance Share Award until that Award vests and the shares of Stock are actually
issued thereunder. However, the Committee may structure one or more Performance Share Awards so
that the applicable Award Agreement provides that dividend-equivalent units shall be credited on
outstanding Performance Share Awards and subsequently paid, either in cash or in actual shares of
Stock, subject to such terms and conditions as the Committee may deem appropriate, but in no event
shall any such dividend-equivalent units vest or otherwise become payable prior to the time the
underlying Performance Share Award vests, and any such credited dividend equivalents shall
accordingly be subject to cancellation and forfeiture to the same extent as the underlying
Performance Share Award in the event the applicable performance objectives are not attained.

          (d) Except as otherwise set forth in Section 9(e), outstanding Performance Share Awards shall
terminate, and no shares of Stock shall actually be issued in settlement of those Awards, if the
performance goals established for those Awards are not attained. In no event may any vesting
requirements tied to the attainment of Performance Goals be waived with

 

 

respect to Performance
Share Awards that were intended, at the time those Awards were made, to qualify as
performance-based compensation under Code Section 162(m), except as otherwise provided in Section
9.2(e) or Section 13.8.

          (e) Each Performance Share Award outstanding at the time of a Change in Control shall vest at that
time, and the number of shares of Stock that would otherwise be issuable under such Award at target
level attainment of the applicable performance objectives (or such other level of attainment as is
specified in the Award Agreement) shall be issued as soon as administratively practicable following
the closing of the Change in Control transaction, subject to the Company’s collection of all
applicable withholding taxes. Alternatively, the number of shares of Stock otherwise issuable
under that Performance Share Award at such target or other specified level shall be converted at
that applicable level into the right to receive the same consideration per share of Stock payable
to the actual holders of the Stock in consummation of the Change in Control and distributed at
the same time as those stockholder payments, subject to the Company’s collection of the applicable
withholding taxes. Such automatic vesting of the Performance Share Awards at target or other
specified level attainment shall occur pursuant to this Section 9.2(e), even though such
acceleration may result in their loss of performance-based status under Code Section 162(m).”

     4. Except as modified by this Plan Amendment, all the terms and provisions of the Plan as in
effect immediately prior to such amendment shall continue in full force and effect.

          IN WITNESS WHEREOF, APOLLO GROUP, INC. has caused this Plan Amendment to be executed on its
behalf by its duly-authorized officers on this 24th day of June 2010.

	 	 	 	 	 
	 	APOLLO GROUP, INC.

 	 
	 	By:  	/s/ Brian L. Swartz
 	 
	 
	 	 	TITLE: 	SVP & Chief Financial Officer

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