Document:

exv10w3

Exhibit 10.3

JPMorgan Chase Bank, N.A.

Global Trade Services

300 South Riverside Plaza

Mail Code IL1-0236

Chicago, IL 60606-0236

JUN 9, 2010

OUR L/C NO.: L5LS-851519

APPLICANT REF. NO.: DOE

APPLICANT:

APOLLO GROUP, INC.

4025 SOUTH RIVERPOINT PARKWAY

MAIL STOP CF-KX01

PHOENIX, AZ 85040

IRREVOCABLE LETTER OF CREDIT

TO BENEFICIARY:

U.S. DEPARTMENT OF EDUCATION

PERFORMANCE IMPROVEMENT AND PROCEDURES

FEDERAL STUDENT AID/PROGRAM COMPLIANCE

830 FIRST STREET, NE, UCP3, MS 5435

WASHINGTON, DC 20002-8019

ATTN: VERONICA PICKETT, DIRECTOR

DATE: JUNE 09, 2010

AMOUNT: USD125,792,594.00

(U.S. DOLLARS ONE HUNDRED TWENTY FIVE MILLION SEVEN HUNDRED NINETY TWO
THOUSAND FIVE HUNDRED NINETY FOUR AND 00/100)

EXPIRATION DATE: JUNE 30, 2012

DEAR SIR/MADAM:

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER L5LS-851519 (“LETTER
OF CREDIT”) IN YOUR FAVOR FOR THE ACCOUNT OF:

THE UNIVERSITY OF PHOENIX, INC.

4025 SOUTH RIVERPOINT PARKWAY

MAIL STOP CF-KX01

PHOENIX, AZ 85040

REF: OPE-ID #: 02098800

HEREAFTER, THE UNIVERSITY OF PHOENIX, INC. (“INSTITUTION”), IN THE AMOUNT

 

			
	184459 Fernando, Jayasri
	 	Page 1 of 3

 

 

JPMorgan Chase Bank, N.A.

Global Trade Services

300 South Riverside Plaza

Mail Code IL1-0236

Chicago, IL 60606-0236

JUN 9, 2010

OUR L/C NO.: L5LS-851519

APPLICANT REF. NO.: DOE

OF USD125,792,594.00 (U.S. DOLLARS ONE HUNDRED TWENTY FIVE MILLION SEVEN HUNDRED NINETY TWO
THOUSAND FIVE HUNDRED NINETY FOUR AND 00/100)), AVAILABLE BY YOUR DRAFT (OR DRAFTS DRAWN ON US)
AT SIGHT ACCOMPANIED BY:

A) THE ORIGINAL OF THIS LETTER OF CREDIT INSTRUMENT (ALONG WITH ORIGINALS OF ALL AMENDMENTS), AND

B) A STATEMENT SIGNED BY THE SECRETARY (“SECRETARY”), U.S. DEPARTMENT OF EDUCATION
(“DEPARTMENT”), (SIGNING AS SUCH), OR THE SECRETARY’S REPRESENTATIVE, CERTIFYING THAT THE DRAFTED
FUNDS WILL BE USED FOR ONE OR MORE OF THE FOLLOWING PURPOSES, AS DETERMINED BY THE SECRETARY:

1) TO PAY REFUNDS OF INSTITUTIONAL OR NON-INSTITUTIONAL CHARGES
OWED TO OR ON BEHALF OF CURRENT OR FORMER STUDENTS OF THE
INSTITUTION, WHETHER THE INSTITUTION REMAINS OPEN OR HAS CLOSED; AND/OR

2) TO PROVIDE FOR THE “TEACH-OUT” OF STUDENTS ENROLLED AT THE TIME OF THE
CLOSURE OF THE INSTITUTION; AND/OR

3) TO PAY ANY LIABILITIES OWING TO THE SECRETARY ARISING FROM ACTS OR OMISSIONS BY THE
INSTITUTION, ON OR BEFORE THE EXPIRATION
OF THIS LETTER OF CREDIT, IN VIOLATION OF REQUIREMENTS SET FORTH IN THE HIGHER EDUCATION ACT OF
1965, AS AMENDED (“HEA”), INCLUDING THE VIOLATION OF ANY AGREEMENT ENTERED INTO BY THE
INSTITUTION WITH THE SECRETARY REGARDING THE ADMINISTRATION OF PROGRAMS UNDER TITLE IV OF THE HEA.

SHOULD THE INSTITUTION FAIL TO RENEW THE LETTER OF CREDIT WITHIN TEN (10) DAYS PRIOR TO ITS
EXPIRATION, AS DIRECTED BY THE DEPARTMENT, THE DEPARTMENT MAY CALL THE LETTER OF CREDIT AND PLACE
THE FUNDS IN AN ESCROW ACCOUNT AT THE DEPARTMENT PENDING A PROMPT DETERMINATION OF THE EXTENT TO
WHICH THOSE FUNDS WILL BE USED IN ACCORDANCE WITH SUBPARAGRAPHS 1) THROUGH 3), ABOVE.

WE HEREBY AGREE WITH YOU THAT PARTIAL DRAWINGS ARE PERMITTED AND THAT

 

			
	184459 Fernando, Jayasri
	 	Page 2 of 3

 

 

JPMorgan Chase Bank, N.A.

Global Trade Services

300 South Riverside Plaza

Mail Code IL1-0236

Chicago, IL 60606-0236

JUN 9, 2010

OUR L/C NO.: L5LS-851519

APPLICANT REF. NO.: DOE

DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED
UPON DUE PRESENTATION AT OUR OFFICES ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP 98), INTERNATIONAL
CHAMBER OF COMMERCE PUBLICATION NUMBER 590.

PLEASE ADDRESS ALL CORRESPONDENCE REGARDING THIS LETTER OF CREDIT TO: JPMORGAN CHASE BANK, N.A.,
C/O JPMORGAN TREASURY SERVICES, GLOBAL TRADE SERVICES, 333 SOUTH GRAND AVENUE, SUITE 3600,
LOS ANGELES, CA 90071, ATTN.: STANDBY LETTERS OF CREDIT. SHOULD YOU HAVE ANY QUESTIONS
CONCERNING THIS LETTER OF CREDIT PLEASE REFER YOU INQUIRY TO OUR CUSTOMER SERVICES AREA AT THE
FOLLOWING TELEPHONE NUMBER: 1-800-634-1969 AND HAVE THIS LETTER OF CREDIT NUMBER AVAILABLE.

PRINTED LEGAL NAME:
 AGNES
MARTINEZ

DATE SIGNED:
JUNE
09, 2010

PRINTED OFFICIAL TITLE OF AUTHORIZED SIGNER:

ASST. VICE PRESIDENT

	 	 	 	 	 
	 	 	 
	 	/s/ Agnes Martinez
 	 
	 	AUTHORIZED SIGNATURE 	 
	 	Agnes Martinez

Assistant Vice President 	 
	 

 

			
	184714 Fernando, Jayasri
	 	Page 3 of 3exv10w1

Exhibit 10.1

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

 

 

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	2	 
	 
	ARTICLE II PLAN BENEFITS
	 	 	6	 
	 
	ARTICLE III DELAYED COMMENCEMENT DATE FOR SEVERANCE BENEFITS
	 	 	12	 
	 
	ARTICLE IV NON-ALIENATION OF PLAN BENEFITS
	 	 	14	 
	 
	ARTICLE V FUNDS FROM WHICH PLAN BENEFITS ARE PAYABLE
	 	 	15	 
	 
	ARTICLE VI CLAIM PROCEDURE
	 	 	16	 
	 
	ARTICLE VII THE ADMINISTRATOR
	 	 	17	 
	 
	ARTICLE VIII ACCOUNTS AND RECORDS
	 	 	18	 
	 
	ARTICLE IX INTERPRETATION OF PROVISIONS
	 	 	19	 
	 
	ARTICLE X AMENDMENT OF PLAN
	 	 	20	 
	 
	ARTICLE XI DISCONTINUANCE OF PLAN
	 	 	21	 
	 
	ARTICLE XII NO CONTRACT OF EMPLOYMENT
	 	 	22	 
	 
	ARTICLE XIII FORMS; COMMUNICATIONS
	 	 	23	 
	 
	ARTICLE XIV GOVERNING LAW
	 	 	24	 

i

 

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

     The Apollo Group, Inc. Senior Executive Severance Pay Plan as hereinafter set forth shall be
effective with respect to Eligible Employees who incur an Involuntary Termination on or after June
24, 2010 (the “Effective Date”). The right of any former Eligible Employee whose employment was
terminated prior to the Effective Date to receive any severance pay or similar benefit was governed
by the provisions of the severance pay, policy, program or arrangement applicable to such former
Eligible Employee on the date of his termination of employment, and such former Eligible Employee
shall not be entitled to any severance benefits under this Plan.

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ARTICLE I

DEFINITIONS

     The following terms as used herein shall have the meanings set forth below:

     (a) “Administrator” or “Plan Administrator” shall mean Apollo Group, Inc.

     (b) “Average Annual Bonus” shall mean the average of the actual incentive bonuses earned by
the Participant for the three (3) fiscal years (or fewer number of fiscal years of employment with
the Company) immediately preceding the fiscal year in which his or her Involuntary Termination
occurs.

     (c) “Base Pay” shall mean a Participant’s gross weekly base salary calculated on the basis of
the annual rate of base salary in effect for him or her at the time of his or her Involuntary
Termination. “Base Pay” shall not include any forms of extra compensation, such as bonuses,
cost-of-living and other allowances, any award paid to the Participant under any incentive
compensation plan of the Company, any compensation attributable to stock options, restricted stock
units or other equity or equity-based awards and any other contribution or payment by the Company
pursuant to any retirement, profit-sharing, disability or survivor income plan, health or welfare
plan, life insurance plan, fringe benefits plan or similar plan.

     (d) “COBRA Coverage Costs” shall mean the lump sum amount calculated and payable pursuant to
Article II, Section C of the Plan to a Participant.

     (e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

     (f) “Company” shall mean Apollo Group, Inc. and its subsidiaries, including (without
limitation) The University of Phoenix, Inc., The College for
Financial Planning Institutes Corporation, Insight Schools, Inc.,
Institute for Professional Development and Western International
University, Inc.

     (g) “Effective Date” shall mean June 24, 2010, the date on which the Plan becomes effective.

     (h) “Employee” shall mean an individual who is in the employ of at least one member of the
Employer Group, 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.

     (i) “Employer Group” shall mean the Company and each member of the group of commonly
controlled corporations or other businesses that include the Company, as determined in accordance
with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in
applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group
of corporations under Section 414(b) of the Code, the phrase “at least 50 percent” shall be used
instead of “at least 80 percent” each place the latter phrase appears in such sections, and in
applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or
businesses that are under common control for purposes of Section 414(c) of the Code, the phrase “at
least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase
appears in Section 1.4.14(c)-2 of the Treasury Regulations.

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     (j) “Eligible Employee” shall mean an Employee who is: (a) a Chief Executive or Chief
Operating Officer of Apollo Group, Inc., (b) a Grade 18-22 Employee who reports directly to a Chief
Executive Officer or Chief Operating Officer of Apollo Group, Inc., (c) a Grade 18-22 Employee who
is an officer of a Company,

     (k) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.

     (l) “Involuntary Termination” shall mean the unilateral termination of the Participant’s
employment by the Company 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
employment terminates by reason of his or her death or disability.

     (m) “Participant” shall mean an individual who at the time of his or her Involuntary
Termination is an Eligible Employee. An Eligible Employee whose employment with the Company
terminates for any reason other than an Involuntary Termination, including (without limitation) any
of the following reasons, shall not be a Participant in the Plan and shall not be entitled to any
severance benefits hereunder: (1) transfer to employment with another member of the Employer
Group, (2) a voluntary resignation, (3) a Termination for Cause, (4) death or disability, (5)
retirement (other than a retirement which is a direct result of an Involuntary Termination) or (6)
temporary layoff or a military leave of absence, except that if (during such absence from work) an
Involuntary Termination of his or her Eligible Employee status occurs, then the Eligible Employee
shall be eligible for Severance Pay as a result of such Involuntary Termination. A Participant
ceases to be such on the date he or she ceases to be eligible for any further Severance Pay
pursuant to the provisions of Article II hereof.

     (n) “Plan” shall mean the Apollo Group, Inc. Senior Executive Severance Pay Plan, as amended
from time to time.

     (o) “Plan Year” shall mean the calendar year or such other period as the Company shall from
time to time determine.

     (p) “Separation from Service” shall mean the Participant’s cessation of Employee status and
shall be deemed to occur for purposes of the Plan at such time as the level of his or her bona fide
services to be performed as an Employee (or non-employee consultant) permanently decreases to a
level that is not more than twenty percent (20%) of the average level of services he or she
rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter
period for which he or she may have rendered such service). Any such determination as to Separation
from Service, however, shall be made in accordance with the applicable standards of the Treasury
Regulations issued under Code Section 409A. In addition to the foregoing, a Separation from
Service will not be deemed to have occurred while an Employee is on military leave, sick leave or
other bona fide leave of absence if the period of such leave does not exceed six (6) months or any
longer period for which such Employee is, either by statute or contract, provided with a right to
reemployment with one or more members of the Employer Group; provided, however, that in the event
of an Employee’s leave of absence due to any medically determinable physical or mental impairment
that can be expected to result in death or to last for a continuous period of not less than six (6)
months and that causes such

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individual to be unable to perform his or her duties as an Employee, no Separation from
Service shall be deemed to occur during the first twenty-nine (29) months of such leave. If the
period of leave exceeds six (6) months (or twenty-nine (29) months in the event of disability as
indicated above) and the Employee is not provided with a right to reemployment either by statute or
contract, then such Employee will be deemed to have a Separation from Service on the first day
immediately following the expiration of such six (6)-month or twenty-nine (29)-month period.

     (q) “Severance Pay” shall mean the amount payable pursuant to Article II, Section A of the
Plan to a Participant. Severance Pay shall be paid to a Participant in installments in accordance
with the provisions of Article II, Section F.

     (r) “Specified Employee” shall mean a Participant who is, pursuant to procedures established
by the Plan Administrator in accordance with the applicable standards of Code Section 409A and the
Treasury Regulations thereunder and applied on a consistent basis for all non-qualified deferred
compensation plans of the Employer Group subject to Code Section 409A, deemed at the time of his or
her Separation from Service to be a “specified employee” under Code Section 409A. The Specified
Employees shall be identified on December 31 of each calendar year and shall include each
Participant who is a “key employee” (within the meaning of that term under Code Section 416(i)) at
any time during the twelve (12)-month period ending with such date. A Participant who is so
identified as a Specified Employee will have that status for the twelve (12)-month period beginning
on April 1 of the following calendar year.

     (s) “Termination for Cause” shall mean the termination of an Eligible Employee’s service or
employment with the Company for one or more of the following reasons:

          (i) repeated dereliction of the material duties and responsibilities of his or
her position with the Company;

          (ii) misconduct, insubordination or failure to comply with Company policies
governing employee conduct and procedures;

          (iii) excessive lateness or absenteeism;

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

          (v) commission of any act of fraud against, or the misappropriation of property
belonging to, the Company;

          (vi) 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;

          (vii) any other misconduct adversely affecting the business or affairs of the
Company; or

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          (viii) a material breach of any agreement he or she may have at the time with
the Company, including (without limitation) any proprietary information,
non-disclosure or confidentiality agreement.

     (t) “Pro-Rata Vesting of Equity Awards” shall mean the process set forth in Article II,
Section C of the Plan pursuant to which a Participant may be eligible to vest on a limited pro-rata
basis in Company stock or stock-based awards that are made to him or her with an effective grant
date on or after the Effective Date of the Plan and at a time when he or she is employed in a
position with the Company at Grade 18 level or above, including (without limitation) stock option
grants, restricted stock unit awards, performance share awards and
any other equity or equity-based
awards.

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ARTICLE II

PLAN BENEFITS

	 	A.	 	Severance Pay. Severance Pay shall be payable under
this Plan as follows:

	 	(1)	 	Grade 18 Eligible Employee. A Grade 18
Eligible Employee shall be eligible to receive Severance Pay equal to
nine (9) months of his/her Base Pay.
	 
	 	(2)	 	Grade 19 Eligible Employee. A Grade 19
Eligible Employee shall be eligible to receive Severance Pay equal to
(i) twelve (12) months of his/her Base Pay plus (ii) fifty percent
(50%) of his or her Average Annual Bonus.
	 
	 	(3)	 	Grade 20-21 Eligible Employees. A
Grade 20-21 Eligible Employee shall be eligible to receive Severance
Pay equal to (i) eighteen (18) months of his/her Base Pay plus (ii) one
times his or her Average Annual Bonus.
	 
	 	(4)	 	Grade 22 Eligible Employee. A Grade 22
Eligible Employee shall be eligible to receive Severance Pay equal to
(i) twenty-four (24) months of his/her Base Pay plus (ii) one times his
or her Average Annual Bonus, unless he or she is entitled to a greater
dollar amount of severance pay under the terms of any employment
agreement between such individual and the Company that is in effect at
the time of his or her Involuntary Termination, in which event he or
she shall not be entitled to any Severance Pay under this subparagraph
(4).
	 
	 	(5)	 	Installment Payments. The Severance Pay
to which a Participant becomes entitled under this Section A of Article
II shall be paid in successive equal installments in accordance with
the provisions of Article II, Section F below. Each such payment shall
be subject to the Company’s collection of all applicable withholding
taxes, and the Participant shall receive only the portion of such
payment remaining after such withholding taxes have been collected.
	 
	 	(6)	 	Severance Offsets. The amount of
Severance Pay payable to a Participant under Article II, Section
A(1)-(4) hereof shall be reduced, to the extent permitted by applicable
law and not otherwise in contravention of any applicable acceleration
prohibition imposed under Code Section 409A, by (i) any monies a
Participant owes to the Company, (ii) by the amount of any statutory
benefit payable to the Participant by reason of his or her termination
of employment, and (iii) by the amount of severance pay or other
severance benefits payable to the Participant pursuant

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	 	 	 	to any other plan of the Company or any agreement in effect between
the Company and the Participant at the time of his or her Involuntary
Termination, and any such severance pay or benefits shall accordingly
reduce dollar-for-dollar any Severance Pay otherwise payable to the
Participant under the Plan so that there shall be no duplication of
such benefits.
	 
	 	(7)	 	Nonduplication. No Participant shall
be entitled to benefits under more than one subsection of Article II,
Section A.

	 	B.	 	COBRA Coverage Costs. The Company shall make a lump
sum cash payment to each Participant at Grade Level 20 or above who becomes
entitled to Severance Pay under the Plan. The lump sum cash payment will be in
an amount determined by multiplying (X) the amount by which (i) the monthly
cost that would be payable by the Participant, as measured as of the date of
his or her Involuntary Termination, to obtain continued medical care coverage
for the Participant and his or her spouse and eligible dependents under the
Company’s employee group health plan, pursuant to their COBRA rights, at the
level in effect for each of them on the date of such Involuntary Termination
exceeds (ii) the monthly amount payable at such time by a similarly-situated
executive whose employment with the Company has not terminated to obtain group
health care coverage at the same level by (Y) the number of months of Base Pay
for which such Participant will receive Severance Pay under the Plan. The
Company shall pay such lump sum amount to the Participant on the same date the
first installment of his or her Severance Pay is paid in accordance with
Article II, Section F below. Notwithstanding the foregoing, such lump sum
payment shall be subject to the delayed commencement date provisions of Article
III, Section A of the Plan, to the extent applicable. Such lump sum shall
constitute taxable income to the Participant and shall be subject to the
Company’s collection of all applicable withholding taxes, and the Participant
shall receive only the portion of such payment remaining after such withholding
taxes have been collected. It shall be the sole responsibility of the
Participant and his or her spouse and eligible dependents to obtain actual
COBRA coverage under the Company’s group health care plan.
	 
	 	C.	 	Pro-Rata Vesting of Equity Awards. An Eligible
Employee who becomes entitled to Severance Pay under Article III, Section A
shall also be entitled to pro-rata vesting of a portion of the equity awards
that are made to him or her with an effective grant date on or after the
Effective Date of the Plan and at a time when he or she is employed in a
position with the Company at Grade 18 level or above, as follows:

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	 	(1)	 	For each such eligible equity award with a service-vesting
requirement, the Participant shall vest in a pro-rated portion of the
number of shares in which he or she would have otherwise vested in
the twelve (12)-month service-vesting installment period in effect
under that award at the time of his or her Involuntary Termination
had he or she continued in the Company’s employ through the end of
that installment period, with the pro-rated portion to be determined
by multiplying that number of shares by a fraction, the numerator of
which is the number of months of employment with the Company
completed by the Participant during that installment period (rounded
up to the next whole month) and the denominator of which is twelve
(12).
	 
	 	(2)	 	For each such equity award with a
performance-vesting component, the pro-rated service credit calculated
in accordance with Section II C(1) will only be applied to the number
of shares (if any) that would otherwise vest in that twelve
(12)-month installment period based upon the attained level of the applicable
performance goal(s). The Company shall have sole discretion to
determine the level at which such performance goals have been attained
or satisfied. No shares that vest on such a pro-rata basis under this
Section II (C)(2) shall be issued until such determination is made
following the end of the applicable performance measurement period.
	 
	 	(3)	 	Such pro-rata vesting of equity awards applies
only to equity awards that are made to the Participant with an
effective grant date on or after the Effective Date of the Plan and at
a time when he or she is employed in a position with the Company at
Grade 18 level or above. Such pro-rata vesting provisions of the Plan
shall also be incorporated into the terms and provisions of the award
agreements evidencing those qualifying equity awards
	 
	 	(4)	 	The shares of stock underlying any such equity
award subject to Section 409A of the Code that vests on such a
pro-rated basis in accordance with this Section II C shall be issued in
accordance with the terms of the applicable award agreement and the
applicable provisions of Article III of the Plan. All other shares of
stock that vest on such a pro-rated basis hereunder in connection with
the Participant’s Involuntary Termination shall be issued no later than
the fifteenth day of the third calendar month following the date of
such Involuntary Termination; provided, however, that such issuance
shall be subject to the applicable provisions of Section II. C(2) above
and any shares subject to stock option grants shall not be issued until
the exercise date.

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	 	D.	 	Outplacement. Outplacement shall be provided under
this Plan as follows:

	 	(1)	 	Outplacement Service. A Participant
shall be eligible to receive six (6) months of professional
outplacement (dedicated consultant, resume creation, personal and
career assessment, training in job search skills, office space,
professional telephone and administrative support) under this Plan.
	 
	 	(2)	 	Limitation. No outplacement services
will be provided beyond the close of the calendar year following the
calendar year in which the Participant’s Involuntary Termination
occurs.

	 	E.	 	Requirement of Complete And Permanent Release and
Restrictive Covenants. Notwithstanding any provision of the Plan to the
contrary, a Participant’s entitlement to Severance Pay, COBRA Coverage Costs,
Pro-Rata Vesting of Equity Awards and Outplacement is contingent upon the
Participant’s timely signing, delivery and non-revocation of a complete and
permanent general release of all claims against the Company and its affiliates
and related parties (the “Release”). The Release will also subject the
Participant to certain confidentiality, non-solicitation, non-disparagement and
non-compete covenants in such form and substance as the Company deems appropriate.

On the date of the Participant’s Involuntary Termination or within fifteen
(15) days thereafter, the Company shall furnish such Participant with a
letter which describes the benefits of the Plan as applicable to the
Participant (the “Severance Letter”). With the Severance Letter the Company
shall also forward the appropriate form of Release to be executed by the
Participant.

If age 40 or older, the Participant shall have twenty-one (21) calendar days
from the date the Participant is provided with the form Release to review,
sign and return that Release to the Company. However, if the Severance Pay
is provided under this Plan in connection with an event which the Company in
its discretion determines is a program affecting a group or class of
Eligible Employees within the meaning of 29 USC Section 626(f)(1)(F)(ii),
the Participant shall have forty-five (45) calendar days from the date the
Participant is provided with the form Release to review, sign and return
that Release to the Company. In either case, the Participant will have
seven (7) days from the date the Participant returns the signed Release to
revoke and void the Release by giving written notice of his or her intent to
do so to the Company. The Release does not become effective or enforceable
until the seven (7)-day revocation period has expired.

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If under age 40,
the Participant shall have fourteen (14) calendar days from
the date the Participant is provided with the form Release to review,
sign and return that Release to the Company, and such Release shall be
effective and enforceable immediately upon delivery of the signed Release to
the Company without any applicable revocation period.

F. Terms of Payment. Provided the Participant returns, within the
applicable time period provided under Article II, Section E, the Release
required to receive benefits under the Plan and does not revoke that
release, the Severance Pay will be paid in successive equal installments
over a period of months equal to the total number of months taken into
account in calculating the Base Pay component of the Severance Pay to which
such Participant is entitled. Such installments shall be payable over the
applicable period on the regularly scheduled pay dates in effect for the
Company’s salaried employees, with the first such installment to be paid on
the first such pay date within the seventy-five (75)-day period measured
from the date of the Participant’s Separation from Service due to his or her
Involuntary Termination on which the Release delivered by the Participant in
accordance with Article II, Section E is effective following the expiration
of the applicable maximum review/delivery/return and revocation periods to
which the Participant is entitled under the Plan and any applicable law with
respect to such Release, or to begin on such subsequent date thereafter as
the Company may determine in its sole discretion, but in no event shall the
first such installment be paid later than the last day of the seventy-five
(75)-day period measured from the date of the Participant’s Separation from
Service. For purposes of Section 409A of the Code, the Severance Pay payable
pursuant to this Section II F shall be deemed to be a series of separate
payments, with each installment of the Severance Pay to be treated as a
separate payment, and any such separate payments made during the period
commencing with date of the Participant’s Involuntary Termination and ending
with March 15 of the calendar year immediately following the calendar year
in which such Involuntary Termination occurs shall constitute the
Participant’s “Short-Term Deferral Payments” for purposes of Article III of
the Plan.

G. Confidentiality, Non-Competition, Non-Solicitation and
Non-Disparagement. In the event that the Participant violates any
confidentiality, non-compete, non-solicitation or non-disparagement
provisions in the Release or any other agreement between the Company and the
Participant, the Participant shall not be entitled to Severance Pay, COBRA
Coverage Costs, Pro-Rata Vesting of Equity Awards or Outplacement. If the
Participant violates any Confidentiality, Non-Competition, Non-Solicitation
or Non-Disparagement provisions in the Release or other agreement between
the Company and the Participant, the Participant shall repay or return all
Severance Pay, COBRA Coverage

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Costs and the number of shares of the Company’s common stock attributable to
the Pro-Rata Vesting of Equity Awards (or the gain realized from the sale of
such shares) paid or issued to the Participant, along with the value of any
Outplacement provided to the Participant.

H. Other Benefits. Except as provided in this Plan or to the extent
required by law or the applicable provisions of an employee benefit program,
coverage under all employee benefit programs maintained by Company will
cease on the date of the Participant’s termination of employment. The
Participant shall, however, have such rights as are required by law or the
applicable provision of an employee benefit program with respect to the
Company’s employee benefit programs, including the right to elect “COBRA”
coverage under the Company health benefit programs.

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ARTICLE III

DELAYED COMMENCEMENT DATE FOR SEVERANCE BENEFITS

     A. Notwithstanding any provision to the contrary in Article II or any other Article of
the Plan, other than Sections III B and III C below, no severance benefit payable under the
Plan (or component thereof) that is deemed to constitute an item of “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and that is otherwise payable
in connection with a Participant’s Separation from Service shall be paid to the Participant
until the earlier of (i) the first day of the seventh (7th) month following the date of such
Participant’s Separation from Service or (ii) the date of his or her death, if the
Participant is deemed at the time of such Separation from Service to be a Specified Employee
and such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon the expiration of the applicable delay
period, all payments delayed pursuant to this Section III A, whether they were otherwise
payable in installments or a lump sum, shall be paid in a lump sum to the Participant, and
any remaining severance benefits shall be paid in accordance with the applicable provisions
of Article II.

     B. Notwithstanding Section A of this Article III, the delayed commencement date
provisions of such Section III A shall not be applicable to (i) any severance payments under
Article II that qualify as Short-Term Deferral Payments exempt from Code Section 409A or any
other severance benefits hereunder that qualify for such exemption and (ii) the portion of a
Participant’s Severance Pay, COBRA Coverage Costs and the Pro-Vesting of Equity Awards
otherwise subject to Code Section 409A that does not exceed the dollar limit described below
and that is otherwise scheduled to be paid in connection with such Participant’s Separation
from Service but not later than the last day of the second calendar year following the
calendar year in which such Separation from Service occurs. Accordingly, the foregoing
clause (i) and (ii) payments shall be paid to the Participant as they become due and
payable in accordance with the payment provisions of Article II. For purposes of clause (ii)
of this Section III B, the applicable dollar limitation will be equal to two (2) times the
lesser of (A) the Participant’s annualized compensation (based on his or her annual rate of
pay for the taxable year preceding the taxable year of his or her Separation from Service,
adjusted to reflect any increase during that taxable year which was expected to continue
indefinitely had such Separation from Service not occurred) or (B) the compensation limit
under Section 401(a)(17) of the Code as in effect in the year of the Separation from
Service.

     C. Section A of this Article III shall not apply to the lump sum payment of COBRA
Coverage Costs to the extent the dollar amount of that payment does not exceed the
applicable dollar amount in effect under Section 402(g)(1)(B) of the Code for the calendar
year in which the Participant’s Separation form Service occurs.

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     D. Notwithstanding any other provision of the Plan to the contrary, no distribution
shall be made from the Plan that would constitute an impermissible acceleration of payment
as defined in Section 409A(3) of the Code and the Treasury Regulations thereunder.

     E. No interest shall be paid on any Severance Pay or COBRA Coverage Costs for which a
delayed commencement date is required in accordance with the foregoing provisions of this
Article III.

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ARTICLE IV

NON-ALIENATION OF PLAN BENEFITS

     Except as provided by applicable law, no Severance Pay, COBRA Coverage Costs or Pro-Rata
Vesting of Equity Awards payable to any Participant under the provisions of the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void, nor shall any such Severance Pay, COBRA Coverage Costs or Pro-Rata
Vesting of Equity Awards be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any Participant.

     If any Participant is, in the judgment of the Administrator, unable to take care of his or her
affairs for any reason whatsoever, including mental condition, illness or accident, any Severance
Pay, COBRA Coverage Costs or Pro-Rata Vesting of Equity Awards payable under the Plan may be paid
to the guardian or other legal representative of such Participant or to such other person or
institution who, in the opinion of the Administrator, is then maintaining or has custody of such
Participant. Such payment shall constitute a full discharge with respect thereto and the
Administrator shall have sole discretion in determining to whom such payment shall be made and in
changing the payee from time to time.

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ARTICLE V

FUNDS FROM WHICH PLAN BENEFITS ARE PAYABLE

     The Plan shall be unfunded. All Severance Pay and COBRA Coverage Costs intended to be
provided under the Plan shall be paid from time to time from the general assets of the Company and
paid in accordance with the provisions of the Plan.

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ARTICLE VI

CLAIM PROCEDURE

     The plan administrator shall establish a claims procedure which satisfies the requirements of
29 CFR Section 2560.503-1 as applicable to a severance pay plan subject to ERISA. The Plan
Administrator has full and complete discretionary authority to decide any matter presented through
the claims procedure and the final decision by the Plan Administrator shall be binding on all
parties to the maximum extent allowed by law.

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ARTICLE VII

THE ADMINISTRATOR

     The general administration of the Plan shall be vested in the Administrator who shall be the
Plan Administrator for purposes of ERISA.

     The Administrator may employ counsel, actuaries and agents and engage such clerical, medical
and actuarial services as the Administrator deems expedient.

     All expenses incurred by the Administrator in the administration of the Plan, including
compensation of the counsel, agents and agencies as the Administrator may appoint or employ, shall
be paid by the Company.

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ARTICLE VIII

ACCOUNTS AND RECORDS

     The Administrator shall keep such accounts and records as it may deem necessary or proper in
the performance of its duties as administrator of the Plan.

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ARTICLE IX

INTERPRETATION OF PROVISIONS

     The Administrator shall have full and complete discretionary power and authority to determine
the amount of any Severance Pay, COBRA Coverage Costs and Pro-Rata Vesting of Equity Awards, if
any, payable under the Plan and all other matters arising in the administration, interpretation and
application of the Plan.

     The Plan is intended to comply with the applicable requirements of Code Section 409A and the
Treasury Regulations thereunder. Payments to Plan Participants are also intended, where possible,
to comply with the “short term deferral exception” and the “involuntary separation pay exception”
to Code Section 409A. Accordingly, the provisions of the Plan applicable to Severance Pay, COBRA
Coverage Costs and Pro-Rata Vesting of Equity Awards and the determination of the Participant’s
Separation form Service due to his or her Involuntary Termination shall be applied, construed and
administered so that those benefits qualify for one or both of those exceptions, to the maximum
extent allowable. However, to the extent any payment or benefit under the Plan is deemed to
constitute an item of deferred compensation subject to the requirements of Code Section 409A, the
provisions of the Plan applicable to that payment or benefit shall be applied, construed and
administered so that such payment or benefit is made or provided in compliance with the applicable
requirements of Code Section 409A. In addition, should there arise any ambiguity as to whether any
other provisions of the Plan would contravene one or more applicable requirements or limitations of
Code Section 409A and the Treasury Regulations thereunder, such provisions shall be interpreted,
administered and applied in a manner that complies with the applicable requirements of Code Section
409A and the Treasury Regulations thereunder.

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ARTICLE X

AMENDMENT OF PLAN

     The Company’s Board of Directors or an authorized Board committee may, from time to time and
at any time, amend the Plan and any of the benefits set forth in the Plan.

     Any amendment to the Plan may effect a substantial change in the Plan and may include (but
shall not be limited to) (1) a reduction to the level of Severance Pay, COBRA Coverage Costs,
Pro-Rata Vesting of Equity Awards and/or other benefits payable under the Plan, (2) a provision for
the participation in the Plan by any subsidiary of the Company, (3) a change in the class or classes
of persons to whom any Severance Pay, COBRA Coverage Costs and/or Pro-Rata Vesting of Equity Awards
may be or become payable, and (4) any change deemed by the Company to be necessary or desirable to
make the Plan conform to, or to enable Participants to obtain tax benefits under, any existing or
future laws or rules or regulations thereunder.

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ARTICLE XI

DISCONTINUANCE OF PLAN

     The Plan may be terminated at any time and for any reason by action of the Company’s Board of
Directors or an authorized Board committee.

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ARTICLE XII

NO CONTRACT OF EMPLOYMENT

     The adoption and maintenance of the Plan shall not be deemed to constitute a contract between
the Company and any Eligible Employee or to be a consideration for, or an inducement or condition
of, the employment of any person. Nothing herein contained shall be deemed to give any Eligible
Employee the right to be retained in the service of the Company or to interfere with the rights of
the Company to discharge any Eligible Employee at any time. No Eligible Employee shall, because of
the Plan, become entitled to any offer of relocation, lateral transfer, downgrade with pay
protection, or any other term of employment.

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ARTICLE XIII

FORMS; COMMUNICATIONS

     A. The Administrator shall provide such appropriate forms as it may deem expedient in the
administration of the Plan.

     B. All communications concerning the Plan shall be in writing addressed to the Administrator
at such address as the Administrator may from time to time designate, and no such communication
shall be effective for any purpose unless received by the Administrator.

     C. The Administrator shall issue a summary plan description to the Eligible Employees
describing the Plan. In the event of any conflict between the terms of the Plan, as set forth in
the Plan and as set forth in the summary plan description, the Plan shall control.

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ARTICLE XIV

GOVERNING LAW

     The Plan shall be governed by and construed in accordance with the laws of the State of
Arizona, except to the extent that the laws of the United States (including ERISA) take precedence
and preempt state laws.

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