Document:

Filed by Bowne Pure Compliance

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of March 24, 2008, (the
“Effective Date”), between Applied Digital Solutions, Inc. (the “Employer”) and Mr. Parke H. Hess,
Jr., an individual (the “Employee”).

Agreement

In consideration of the mutual promises, covenants and agreements set forth below, and
intending to be legally bound hereby, it is hereby agreed as follows:

1. Definitions. Capitalized terms shall have the meanings defined in this Agreement or on
Exhibits A and B attached hereto unless the context otherwise requires. Exhibits A and B are
incorporated herein by this reference.

2. Employment Term and Duties.

2.1 Employment Term. The Employer employs the Employee, and the Employee accepts
employment by the Employer, on the terms and conditions set forth in this Agreement and for the
period of time set forth in Exhibit B (the “Employment Period”), which Employment Period shall be
the term of this Agreement.

2.2 Duties.

(a) The Employee will serve in the position set forth on Exhibit B. The Employee will devote
his/her full business time, attention, skill, and energy exclusively to the business of the
Employer, will use his/her best efforts to promote the success of the Employer’s business.

(b) The Employee may engage in the following activities during the Employment Period so long
as such activities do not interfere or conflict with Employee’s duties to Employer as set forth in
Section 2.2(a) above: (i) serve on corporate, civic, religious, educational, and/or charitable
boards or committees; (ii) deliver lectures, fulfill speaking engagements, or teach at educational
institutions without receiving any compensation other than reimbursement of expenses, nominal
stipends, or similar forms of compensation; and (iii) manage his/her personal investments, provided
that such investments do not conflict with the Employee’s duties and responsibilities under this
Agreement. If the Employee is appointed or elected an officer or director of the Employer or any
Affiliate, the Employee will fulfill his/her duties as such officer or director without additional
compensation. Upon termination of this Agreement for any reason, the Employee automatically
resigns as of such date as an officer and director of the Employer and each Affiliate of which
he/she is an officer or director, if any.

(c) The Employee will report to the function indicated in Exhibit B.

 

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2.3 Location. The Employee’s primary place of employment hereunder shall be as set
forth in Exhibit B.

3. Compensation and Benefits. The compensation and benefits payable and provided to
the Employee under this Agreement shall constitute the full consideration to be paid to the
Employee for all services to be rendered by the Employee to the Employer and its Affiliates in all
capacities.

3.1 Base Salary. During the first year of this Agreement, the Employee will be paid
an annual salary as set forth in Exhibit B (“Base Salary”), payable in periodic installments
according to the Employer’s customary payroll practices. In subsequent years, Base Salary may be
increased taking into account Employee’s performance, company operating results, and industry
practices.

3.2 Annual Bonus. During the term of this Agreement, the Employee shall be eligible
to participate in an annual bonus plan. The bonus plan and any amounts payable thereunder may take
into consideration personal performance and contribution, operational and financial results, and
other achievements attributable to Employee’s accomplishments (“Bonus”). The bonus plan applicable
to Employee under this Agreement is as described in Exhibit B.

3.3 Signing Bonus. Employee shall be paid a one-time Signing Bonus as set forth in
Exhibit B (“Signing Bonus”) payable as set forth in Exhibit B.

3.4 Business Expenses. In accordance with the rules and policies that the Employer
may establish from time to time, the Employer shall reimburse the Employee for business expenses
reasonably incurred by him/her in the performance of his/her duties hereunder in accordance with
the Employer’s documentation guidelines as may be in effect from time to time, provided that in no
event will such reimbursement be made later than the calendar year following the calendar year in
which the expenses are incurred.

3.5 Vacation. The Employee shall be entitled to the vacation period per calendar year
as set forth on Exhibit B (prorated for less than a full year). Unused vacation time not to exceed
an aggregate of Two (2) weeks for all prior years may be accumulated or carried over from year to
year. The Employee shall not be entitled to any compensation for unused vacation time except as
provided in Section 4.

3.6 Office and Support Staff. During the Employment Period, the Employee shall be
entitled to an office, furnishings, other appointments, and secretarial or other assistants as
Employer shall determine are reasonably necessary to perform the Employee’s duties and obligations
as set forth herein and comparable to other similarly situated employees of the Employer and its
Affiliates.

3.7 Other. Additional compensation and benefits to be paid by Employer to the
Employee are set forth on Exhibit B.

 

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4. Termination.

4.1 Death; Disability. This Agreement will terminate automatically upon the death or
Disability of the Employee.

4.2 Termination Notice. Any termination of the Employee’s employment other than a
termination pursuant to Section 4.1 hereof shall be by written notice to the other party,
indicating the specific termination provision in this Agreement relied upon, if any, and setting
forth in reasonable detail the facts and circumstances claimed to provide a basis for the
termination of the Employee’s employment under the provision so indicated. The date of the
Employee’s termination of employment shall be specified in such notice; provided, however, that
such date may not be earlier than any applicable cure periods as set forth herein and, if a
termination is being effected by the Employee for any reason, such date shall in any event not be
less than thirty (30) days from the date the written notice is given to the Employer (the “Required
Notice”), during which period Employee shall continue to perform in accordance with this Agreement
unless such performance or notice period is waived by the Employer by written notice to the
Employee. Failure to provide the Required Notice or to perform in accordance with in this
Agreement during this period shall be deemed a material breach of this Agreement by the Employee.

4.3 Termination Pay. Upon termination of the Employee’s employment, the Employer will
be obligated to pay or provide the Employee or the Employee’s estate, as the case may be, only such
compensation and Benefits as are provided in this Section 4.3.

(a) Termination by the Employer for Cause; Resignation of the Employee without Good Reason
or Required Notice. If (i) the Employer terminates the Employee’s employment for Cause; (ii)
the Employee terminates his/her employment for any reason other than Good Reason; or (iii) the
Employee terminates his/her employment for any reason without the Required Notice, then: the
Employee shall be entitled to receive the Accrued Obligations from the Employer, payable to
Employee within thirty (30) Business Days after the date of termination. Except as specifically
provided herein, the Employee shall not be entitled to any other payments or Benefits pursuant to
this Agreement.

(b) Termination due to Disability or upon Death. If the Employee’s employment is
terminated due to Disability or upon the Employee’s death, the Employee or the Employee’s estate,
as the case may be, shall be entitled to receive from the Employer the sum of the Accrued
Obligations, payable to Employee or Employee’s legal representative within thirty (30) Business
Days after the date of termination, as more specifically described in Exhibit B.

(c) Termination by the Employee due to Good Reason or after a Change of Control or by the
Employer without Cause. If after the first annual anniversary of this
Agreement, a Change of Control occurs, and the Employee’s employment is terminated by the
Employer without Cause or by the Employee for Good Reason, in either case within six months
immediately following a Change of Control, the Employee shall be entitled to receive from the
Employer the Termination Payment. If at any time during the term of this Agreement the
Employee’s employment is terminated by the Employer without Cause, the Employee shall be entitled
to receive from the Employer a severance payment as set forth on Exhibit B (“Severance”).

 

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4.4 Payment. Any termination or severance payment to Employee pursuant to Section 4.3
shall be payable by Employer in accordance with its usual payroll practices, less standard
deductions and withholdings, all as if Employee remained active on Employer’s payroll, except for
any amounts representing bonus payments (which shall be payable over the same period), which
payment shall be payable to Employee in cash or stock at Employer’s discretion, subject to receipt
of the release and waiver required by Section 4.5 and to the provisions of Section 4.6.

4.5 Release and Waiver. Notwithstanding anything in Section 4.3 to the contrary, the
Employee shall not be entitled to any payment or Benefit pursuant to Section 4.3, except for
Accrued Obligations as required by law, unless the Employee has delivered to the Employer a general
release, signed and in a form reasonably acceptable to the Employer, that releases the Employer and
its Affiliates, and all their respective officers, directors, employees, and agents from any and
all claims of any kind that the Employee may have arising out of the Employee’s relationship with
the Employer or any of its Affiliates or the termination of employment, but excluding any claims
arising under this Agreement, and such release has become irrevocable by no later than the date
which is 60 days following the date of termination.

(a) 4.6 Six-Month Waiting Period for Distributions Upon Separation From Service. To
the extent required by Section 409A of the Internal Revenue Code of 1986 (as amended) (the “Code”),
amounts that would otherwise be payable under this Section 4 during the six-month period
immediately following the Employee’s termination, shall instead be paid on the first business day
after the expiration of such six-month period, plus interest thereon, at a rate equal to the
applicable Federal short-term rate (as defined in Section 1274(d) of the Code) for the month in
which such date of termination occurs from the respective dates on which such amounts would
otherwise have been paid until the actual date of payment. In no event will any severance payments
be made hereunder, unless the relevant termination of employment constitutes “separation from
service” under Section 409A.

5. Non-Competition and Non-Interference.

5.1 Acknowledgements. The Employee acknowledges that (a) the services to be performed
by him/her under this Agreement are of a special, unique, unusual, extraordinary, and intellectual
character and (b) the provisions of this Section 5 are reasonable and necessary to protect the
Confidential Information, goodwill, and other business interests of the Employer and its
Affiliates.

5.2 Covenants of the Employee. The Employee covenants that he/she will not, directly
or indirectly, and except as specifically provided on Exhibit B of this Agreement:

 

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(a) during the Non-Compete Period, without the express prior written consent of the Board of
Directors, as owner, officer, director, employee, stockholder, principal, consultant, agent,
lender, guarantor, cosigner, investor, or trustee of any corporation, partnership, proprietorship,
joint venture, association, or any other entity of any nature, engage, directly or indirectly, in
the Business in any state in the United States or in any country in which the Employer or any of
its Affiliates is conducting Business activities or has conducted Business activities in the twelve
(12) months prior to termination, provided however, that the Employee may purchase or otherwise
acquire for passive investment up to three percent (3%) of any class of securities of any such
enterprise under Section 12(g) of the Securities Exchange Act of 1934;

(b) whether for the Employee’s own account or for the account of any other person at any time
during his/her employment with the Employer or its Affiliates (except for the account of the
Employer and its Affiliates) and the Non-Compete Period, solicit from any person or entity that is
a customer of the Employer Business of the same or similar type being carried on by the Employer or
its Affiliates, whether or not the Employee had personal contact with such person or entity during
the Employee’s employment with the Employer;

(c) whether for the Employee’s own account or the account of any other person and at any time
during his/her employment with the Employer or its Affiliates and the Non-Compete Period, (i)
solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any
person who is an employee of the Employer or an Affiliate, or in any manner induce, or attempt to
induce, any employee of the Employer or its Affiliates to terminate his/her employment with the
Employer or its Affiliate; or (ii) interfere with the Employer’s or its Affiliate’s relationship
with any person or entity that, at any time during the Employment Period, was an employee,
contractor, supplier, or customer of the Employer or its Affiliate, provided however, that nothing
herein shall prevent the Employee from offering employment to, or employing or otherwise engaging,
any person who responds to an advertisement directed to the general public, or some segment
thereof, and not specifically to such person; or

(d) at any time after the termination of his/her employment, disparage the Employer or its
Affiliates or any shareholders, directors, officers, employees, or agents of the Employer or any of
its Affiliates, so long as the Employer does not disparage the Employee; provided, however, that
notwithstanding the foregoing, paragraphs (a) and (b) of this Section 5.2 shall not apply if the
Employee’s employment is terminated pursuant to Section 4.3(c) hereof. If any covenant in this
Section 5.2 is held to be unreasonable, arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and geographic area, and such lesser scope,
time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be
reasonable, not arbitrary, and not against public policy, will be effective, binding, and
enforceable against the Employee. The Employee hereby agrees that this covenant is a material and
substantial part of this Agreement and that: (i) the geographic limitations are reasonable; (ii)
the term of the covenant is reasonable; and (iii) the covenant is not made for the purpose of
limiting competition per se and is reasonably related to a protectable business interest of the
Employer. The period of time applicable to any covenant in this Section 5.2 will be extended by
the duration of any violation by the Employee of such covenant.

 

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6. Non-Disclosure Covenant

6.1 Acknowledgments by the Employee. The Employee acknowledges that (a) the Employee
will be afforded access to Confidential Information; (b) public disclosure of such Confidential
Information would have an adverse effect on the Employer and its Affiliates and its business; and
(c) the provisions of this Section 6 are reasonable and necessary to prevent the improper use or
disclosure of Confidential Information.

6.2 Covenants of the Employee. The Employee covenants as follows:

(a) Confidentiality. During and after his/her employment with the Employer and its
Affiliates, the Employee will hold in confidence the Confidential Information and will not disclose
such Confidential Information to any person other than in connection with the performance of
his/her duties and obligations hereunder, except with the specific prior written consent of the
Board of Directors; provided, however, that the parties agree that this Agreement does not prohibit
the disclosure of Confidential Information where applicable law requires in response to subpoenas
and/or orders of a governmental agency or court of competent jurisdiction. In the event that the
Employee is requested or becomes legally compelled under the terms of a subpoena or order issued by
a court of competent jurisdiction or by a governmental body to disclose Confidential Information,
the Employee agrees that he/she will (i) immediately provide the Employer with written notice of
the existence, terms, and circumstances, surrounding such request(s) so that the Employer may seek
an appropriate protective order or other appropriate remedy, (ii) cooperate with the Employer in
its efforts to decline, resist, or narrow such requests, and (iii) if disclosure of such
Confidential Information is required in the opinion of counsel, exercise reasonable efforts to
obtain an order or other reliable assurance that confidential treatment will be accorded to such
disclosed information.

(b) Trade Secrets. Any and all trade secrets of the Employer and its Affiliates will
be entitled to all the protections and benefits under the federal and state trade secret and
intellectual property laws and any other applicable law. If any information that the Employer or
any of its Affiliates deems to be a trade secret is found by a court of competent jurisdiction not
to be a trade secret for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for the purposes of this Agreement, so long as it otherwise
meets the definition of Confidential Information. The Employee hereby waives any requirement that
the Employer or any of its Affiliates submit proof of the economic value of any trade secret or
post a bond or other security.

(c) Removal. The Employee will not remove from the premises of the Employer or any of
its Affiliates (except to the extent such removal is for purposes of the performance of the
Employee’s duties at home or while traveling, or except otherwise specifically authorized by the
Employer or the applicable Affiliate) any document, record, notebook, plan, model, component,
device, or computer software or code, whether embodied in a disk or in any other form belonging to
the Employer or any of its Affiliates or used in the business of the Employer or of any of its
Affiliates (collectively, the “Proprietary Items”). All of the Proprietary Items, whether or not
developed by the Employee, are the exclusive property of the Employer or its applicable Affiliate.
Upon termination of his/her employment, or upon the request of the Employer during the Employment Period, the Employee will return to the Employer
all of the Proprietary Items and Confidential Information in the Employee’s possession or subject
to the Employee’s control, and the Employee shall not retain any copies, abstracts, sketches, or
other physical embodiments in electronic form or otherwise, of any such Proprietary Items or
Confidential Information.

 

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(d) Development of Intellectual Property. Any and all writings, inventions,
improvements, plans, designs, architectural work papers, drawings, processes, procedures, and/or
techniques (“Intellectual Property”) which the Employee (i) made, conceived, discovered, or
developed, either solely or jointly with any other person or persons, at any time when the Employee
was an employee of the Employer or any of its Affiliates whether pursuant to this Agreement or
otherwise, whether or not during working hours, and whether or not at the request or upon the
suggestion of the Employer or any of its Affiliates, which relate to or were useful in connection
with any business now or hereafter carried on or contemplated by the Employer or any of its
Affiliates, including developments or expansions of its fields of operations, or (ii) may make,
conceive, discover, or develop, either solely or jointly with any other person or persons, at any
time when the Employee is an employee of the Employer or its Affiliates, whether or not during
working hours and whether or not at the request or upon the suggestion of the Employer or any of
its Affiliates, which relate to or are useful in connection with any business now or hereafter
carried on or contemplated by the Employer or any of its Affiliates, including developments or
expansions of its present fields of operations, shall be the sole and exclusive property of the
Employer and its Affiliates. The Employee shall make full disclosure to the Employer of all such
Intellectual Property and shall do everything necessary or desirable to vest the absolute title
thereto in the Employer. The Employee shall write and prepare all specifications and procedures
regarding such Intellectual Property and otherwise aid and assist the Employer so that the Employer
can prepare and present applications for copyright, patent, or trademark protection therefor and
can secure such copyright, patent, or trademark wherever possible, as well as reissues, renewals,
and extensions thereof, and can obtain the record title to such copyrights, patents, or trademarks
so that the Employer or its designated Affiliate shall be the sole and absolute owner thereof in
all countries in which it may desire to have copyright, patent, or trademark protection. The
Employee shall not be entitled to any additional or special compensation or reimbursement regarding
any and all such Intellectual Property.

7. General Provisions of Sections 5 and 6.

7.1 Injunctive Relief and Additional Remedy. The Employee acknowledges that the
injury that would be suffered by the Employer and its Affiliates as a result of a breach of the
provisions of Sections 5 and 6 of this Agreement would be irreparable and that an award of monetary
damages to the Employer for such a breach may be an inadequate remedy. Consequently, the Employer
will have the right, in addition to all other rights, to seek injunctive relief to restrain any
breach or threatened breach or otherwise to specifically enforce any provision of this Agreement.
The Employee further agrees to and hereby does submit to in personam jurisdiction before each and
every court for that purpose. Without limiting the rights of the Employer or of any of its
Affiliates under this Section 7 or any other remedies available to the Employer or its Affiliates,
if the Employee breaches any other provisions of Sections 5 and 6 and such breach is proven in a
court of competent jurisdiction, the Employer will have the right to cease making any payments or providing Benefits otherwise due to the Employee under this
Agreement.

 

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7.2 Covenants of Sections 5 and 6 are Essential and Independent Covenants. The
covenants of the Employee in Sections 5 and 6 hereof are essential elements of this Agreement, and
without the Employee’s agreement to comply with such covenants, the Employer would not have entered
into this Agreement or continued the employment of the Employee. The Employer and the Employee
have independently consulted their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific regard to the nature
of the business conducted by the Employer and its Affiliates. In addition, the Employee’s
covenants in Sections 5 and 6 are independent covenants and the existence of any claim by the
Employee against the Employer under this Agreement or otherwise will not excuse the Employee’s
breach of any covenant in Sections 5 or 6. Notwithstanding anything in the Agreement to the
contrary, the covenants and agreements of the Employee in Sections 5 and 6 shall survive the
termination of the Agreement, except as provided below.

8. General Provisions.

8.1 Indemnification. The Employer shall indemnify and hold harmless the Employee to
the fullest extent permitted by applicable law against all costs (including reasonable attorneys’
fees and costs), judgments, penalties, fines, amounts paid in settlements, interest, and all other
liabilities incurred or paid by the Employee in connection with the investigation, defense,
prosecution, settlement, or appeal of any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative and to which the Employee was
or is a party or is threatened to be made a party by reason of the fact that the Employee is or was
an officer, employee, director or agent of the Employer or its Affiliates, including any property
owner or condominium association that the Employee has been asked to serve on by the Employer, or
by reason of anything done or not done by the Employee in any such capacity or capacities, provided
that the Employee acted in good faith and in a manner the Employee reasonably believed to be in or
not opposed to the best interests of the Employer or any of its Affiliates, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his/her conduct was unlawful.
The Employer also shall pay any and all expenses (including reasonable attorney’s fees) incurred
by the Employee as a result of the Employee being called as a witness in connection with any matter
involving the Employer and/or any of its officers or directors. Nothing herein shall limit or
reduce any rights of indemnification to which the Employee might be entitled under the
organizational documents of the Employer or as allowed by applicable law.

8.2 Waiver. The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by either party in exercising any right or
privilege under this Agreement will operate as a waiver of such right or privilege, and no single
or partial exercise of any such right or privilege will preclude any other or further exercise of
any right or privilege. To the maximum extent permitted by applicable law, any claim or right
arising out of this Agreement may only be discharged by a waiver or renunciation of the claim or
right in writing signed by the other party.

 

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8.3 Successors.

(a) This Agreement is personal to the Employee and shall not be assignable by the Employee,
other than economic rights that may be assigned by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal
representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Employer and its
successors and assigns. Any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or assets of the
Employer shall perform this Agreement in the same manner and to the same extent that the Employer
would be required to perform it if no such succession had taken place. The Employer agrees to fully
disclose this Agreement and its binding effect to any successor or potential successor and will
require any successor to expressly acknowledge its assumption of this Agreement and such
successor’s obligation to perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place.

(c) As used in this Agreement, “Employer” shall mean the Employer as defined above and any
successor to its business and/or assets by operation of law or otherwise.

8.4 Notices. All notices, consents, waivers and other communication required under
this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of
delivery), provided that a copy is mailed by certified mail, return receipt requested, the same day
or the next Business Day, or (c) when received by the addressee, if sent by a nationally recognized
overnight delivery service, in each case to the appropriate addresses and facsimile numbers set
forth below (or to such other addresses and facsimile numbers as a party may designate by notice to
the other parties):

If to the Employer:

Applied Digital Solutions, Inc., Digital Angel

Attention: President & CEO

Corporate Headquarters

1690 South Congress Avenue, Suite 201

Delray Beach, FL 33445

Facsimile: 561-276-0977

C.C. General Counsel (as same address above)

If to the Employee:

Parke Hess

 

 

 

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8.5 Entire Agreement; Supersedure. This Agreement, together with the Exhibits
attached hereto, contains the entire agreement between the parties with respect to the subject
matter hereof, and expressly terminates, rescinds, replaces, and supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the parties with respect to
the subject matter hereof.

8.6 Governing Law; Submission to Jurisdiction; Mediation.

(a) THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL COURT, FOR THE PURPOSES OF ANY PROCEEDINGS ARISING OUT OF THIS AGREEMENT, AND HEREBY
WAIVES ALL RIGHTS TO TRIAL BY JURY AND AGREES THAT ANY PROCEEDING SHALL INSTEAD BE DECIDED BY A
JUDGE SITTING WITHOUT A JURY.

(b) Prior to commencement of any legal proceeding or at any time after commencement of any
legal proceeding, Employee agrees that, upon request of Employer, and at the expense of the
Employer, any dispute between Employee and Employer shall be presented for non-binding mediation by
a third party mediator. In the event that Employee fails to comply with his/her obligation to
participate in mediation as required herein, such failure shall constitute a breach of this
Agreement by Employee entitling Employer to damages.

8.7 Severability. If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement will remain in full
force and effect, unless the absence of such invalid or unenforceable provision materially alters
the rights or obligations of either party hereto. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable, unless the absence of such invalid or unenforceable portion of such
provision materially alters the rights or obligations of either party hereto.

8.8 Tax Withholding and Reporting. The Employer shall withhold from all payments
hereunder all applicable taxes that it is required to withhold with respect to payments

and Benefits provided under this Agreement and shall report all such payments and withholdings
to the appropriate taxing authorities as required by applicable law. Employer will review all tax
withholding payments and reporting procedures with Employee before any withholding and reporting
activities are performed by Employer.

8.9 Amendments and Waivers. This Agreement may not be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and signed by the Employee
and subject to authorization of the Board of Directors. Any waiver by either party hereto shall be
specific to the event and shall not be deemed a waiver of any other event.

 

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8.10 Survival. The provision of provisions of Sections 4, 5, 6, 7, and 8 shall
survive the termination of this Agreement.

8.11 Counterparts. This Agreement may be executed in any number of counterparts, by
original or facsimile signatures, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective for all
purposes as of the Effective Date.

	 	 	 	 	 
	Applied Digital Solutions, Inc.	 	Parke Hess
	 
	 	 	 	 
	By:

	 	/s/ Joseph J. Grillo
	 	/s/ Parke H. Hess, Jr.
	 

	 	 
	 	 
	Its:

	 	President and Chief Executive
Officer	 	 
	 
	 	 	 	 
	Date:

	 	 
	 	Date: March 20, 2008
	 

	 	 	 	 

 

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Exhibit A

Definitions

“Accrued Obligations” means, at the relevant date, the sum of the following: (i) the
Employee’s earned or accrued, but unpaid, Base Salary through the date of termination of the
Employee’s employment; (ii) any Bonus earned or accrued and vested, but unpaid; (iii) the economic
value of any of the Employee’s accrued, but unused, vacation time; and (iv) any unreimbursed
business expenses incurred by the Employee.

“Affiliate” means a person or entity who or which, (i) with respect to an entity, directly
or indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such entity; or (ii) with respect to the Employee, is a parent, spouse, or issue of
the Employee, including persons in an adopted or step relationship.

“Board of Directors” means the board of directors of Applied Digital Solutions, Inc.

“Business” means the business in which Applied Digital Solutions, Inc. or any of its
subsidiaries is engaged in at any time during the term of this Agreement.

“Business Day” shall mean any day other than a Saturday, Sunday or bank holiday recognized
at the Employer’s corporate headquarters.

“Cause” means:

(a) an act of fraud, misappropriation, or personal dishonesty taken by the Employee at the
expense of the Employer or an Affiliate, including, but not limited to, the willful engaging by the
Employee in illegal conduct or gross misconduct, which act in any such case is or reasonably could
be injurious to the Employer;

(b) the material violation by the Employee of a material obligation of the Employee under this
Agreement, including but not limited to, the willful or continued failure of the Employee to
perform substantially the Employee’s duties with the Employer or its Affiliates (other than such
failure resulting from Disability) which violation or failure is not remedied within ten (10)
Business Days after receipt of written notice or demand for substantial performance or corrective
action is delivered to the Employee by Employer which identifies the manner in which Employer
believes that the Employee has not substantially performed the Employee’s duties or has violated an
obligation under this Agreement;

(c) the conviction, or plea of nolo contendere, of the Employee for any felony or any
misdemeanor involving moral turpitude;

(d) a material violation of any express direction of the Board of Directors or a material
violation of any rule, regulation, policy or plan established or approved by the Board of Directors
from time to time regarding the conduct of the Employer’s employees and/or its business which, in
any such case, is or reasonably could be injurious to the Employer; or

 

12

 

(e) failure of the Employee to provide the Required Notice to Employer and to substantially
comply with all requirements of Section 4.2 of this Agreement.

“Change of Control” means any bona fide, third-party change of control as follows:

	 	(a)	 	any person or entity (or persons or entities acting as a group) other than
one of its Affiliates acquires stock of Employer that, together with stock then held
by such person, entity or group, results in such person, entity or group holding more
than fifty percent (50%) of the total combined voting power of all classes of the then
issued and outstanding securities of the Employer; or
	 
	 	(b)	 	the sale of all or substantially all of the properties and assets of the
Employer to any person or entity which is not a subsidiary, parent or Affiliate of the
Employer.

“Confidential Information” means any and all intellectual property of the Employer (or any
of its Affiliates), including but not limited to:

(a) trade secrets concerning the business and affairs of the Employer (or any of its
Affiliates), product specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned
research development, current and planned manufacturing or distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source code), computer
software and database technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however documented, that is a trade
secret under federal, state or other applicable law; and

(b) information concerning the business and affairs of the Employer (or any of its Affiliates)
(which includes historical financial statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented; and notes, analysis,
compilations, studies, summaries, and other material prepared by or for the Employer (or any of its
Affiliates) containing or based, in whole or in part, on any information included in the foregoing.

Notwithstanding the foregoing, Confidential Information shall not include information otherwise
lawfully known generally by or readily accessible to the trade or general public other than by the
improper disclosure, directly or indirectly, by the Employee or an Affiliate of the Employee.

 

13

 

“Disability” means the inability of the Employee, due to the injury, illness, disease, or
bodily or mental infirmity, to engage in the performance of substantially all of the usual duties
of employment with the Employer as contemplated by Section 2.2 herein, such Disability to be
determined by the Board of Directors upon receipt and in reliance on competent medical advice from
one or more individuals, selected by the Board of Directors, who are qualified to give such
professional medical advice. The Employee must submit to a reasonable number of examinations by
the medical doctor making the determination of Disability, and the Employee hereby authorizes the
disclosure and release to the Employer of such determination and all supporting medical records.
If the Employee is not legally competent, the Employee’s legal guardian or duly authorized
attorney-in-fact will act in the Employee’s stead for the purposes of submitting the Employee to
the examinations, and providing the authorization of disclosure required hereunder.

It is expressly understood that the Disability of the Employee for a period of one hundred twenty
(120) calendar days or less in the aggregate during any period of twelve (12) consecutive months,
in the absence of any reasonable expectation that his/her Disability will exist for more than such
a period of time, shall not constitute a failure by him/her to perform his/her duties hereunder and
shall not be deemed a breach or default and the Employee shall receive full compensation for any
such period of Disability or for any other temporary illness or incapacity during the term of this
Agreement.

“Employment Period” means the term of the Employee’s employment under this Agreement.

“Fiscal Year” means the fiscal year of Employer.

“Good Reason” means:

(a) that without the Employee’s prior written consent and in the absence of Cause, one or more
of the following events occurs:

(i) any material and adverse change in the Employee’s authority, duties, or responsibilities
as set forth in Section 2, including loss of the position and/or title provided for in this
Agreement of the Employer or no longer reporting directly to the function indicated in Exhibit B;

(ii) failure by the Employer to comply with and satisfy Section 8.3(b) of this Agreement; or

(iii) the material violation by the Employer of a material obligation of the Employer under
this Agreement, which violation or failure is not remedied within ten (10) Business Days (or such
additional reasonable period of time if additional time is necessary to remedy) after receipt of
written notice or demand for substantial performance or corrective action is delivered to the
Employer by the Employee, delivered as required by this Agreement, which specifically identifies
the manner in which Employee believes that the Employer has not substantially performed the
Employer’s duties or violated an obligation under this Agreement; and

 

14

 

(b) within sixty (60) Business Days of learning of the occurrence of any such event, and in
the absence of any circumstances that constitutes Cause, the Employee terminates employment with
the Employer by written notice to the Employer in the manner required by this Agreement; the date
of termination set forth in such notice shall not be less than thirty (30) days from the date
notice is given to Employer as required by Section 4.2 of this Agreement.

“Non-Compete Period” means the period beginning on the Effective Date and ending as set
forth in Exhibit B.

“Termination Payment” shall mean a severance payment as defined in Exhibit B.

 

15

 

Exhibit B

Employment Agreement Terms

	1.	 	Employment Period. The Employment Period referenced in Section 2.1 of the Agreement
shall not be for a fixed period of time and can be terminated in accordance with the
provisions of Section 4.

	2.	 	Position. The Employee will serve as Chief Operating Officer of Applied Digital
Solutions, Inc. and will report to the President & CEO of Applied Digital Solutions, Inc. or
its successors. In this capacity, Employee will have such duties and responsibilities as are
reasonably consistent with such position.

	3.	 	Location. The Employee will operate from various locations and offices of Employer
as necessary and as assigned. Employer acknowledges that Employee will also work from time to
time from his home office in Colorado. Employee shall travel to other locations as necessary
to perform his/her obligations and duties to the Employer. Usual and customary expenses of
travel shall be borne by Employer.

	4.	 	Base Salary. Employee will be paid an annual salary of $200,000, which Base Salary
will be reviewed annually during the Employment Period as set forth in Section 3.1 of the
Agreement.

	 	•	 	Employee will receive approximately 100% of the prorated 2008 salary in a
lump sum on the first day of his employment, of which the net pay will be in
the form of Company stock, the value of such stock being determined by the
closing market price of the stock as quoted on Nasdaq as of the trading day
immediately preceding the first day of employment.

	 	•	 	The lump sum payment will be calculated by reducing the pro-rated gross
salary by an estimated amount to cover required taxes and withholdings,
Employee insurance payments (if any), 401K contributions (if any), and other
benefit programs that Employee informs Employer that he will participate in.

	 	•	 	The gross lump sum payment will be increased by a 30% premium for Employee
accepting stock and a compounded 12% premium for holding such stock for at
least 12 months. The aforementioned premiums shall be included within the lump
sum payment on the Employee’s first day of employment, also calculated as set
forth above.

	 	•	 	Employee agrees to repay Employer all amounts not earned in case of any type
of separation from Employer. The repayment will be calculated by Employer and
will be based on all lump sum or prepayment amounts minus the amount earned as
normal unadjusted Base Salary during the time worked.

	5.	 	Signing Bonus. Employee will be paid a one-time Signing Bonus in the amount of
$50,000, payable upon the first day of employment.

	 	•	 	Employee will receive 100% of the net pay associated with this Signing Bonus
in the form of company stock, the value of such stock being determined by the
closing market price of the stock as quoted on Nasdaq as of the trading day
immediately preceding the first day of employment.

 

16

 

	 	•	 	The gross lump sum payment will be increased by a 30% premium for Employee
accepting stock and a compounded 12% for holding such stock for at least 12
months. The aforementioned premiums shall be included within the lump sum
payment on the Employee’s first day of employment, also calculated as set forth
above.

	6.	 	Annual Bonus. Employee is eligible to receive an annual bonus, subject to approval
of the Board of Directors or relevant Board Committee, ranging from 0% to 120% of earned base
salary based on performance metrics and goals as determined by Employer. The Employee is
considered to have a ‘Target Bonus’ of 60% of base salary for the purposes of calculating
‘Termination Pay’, severance, total cash compensation, etc. During 2008, company will
guarantee the “Target Bonus” of 60% of earned Base Salary adjusted proportionally for the
amount of time employed during the year.

	7.	 	Severance. Employee will be entitled to a Severance payment equal to one (1) times
his/her Base Salary plus Target Bonus upon termination as defined in Section 4.3(c) and
payable to the employee as defined in Sections 4.4 through 4.6 of the Agreement.

	8.	 	Termination Payment. In case of a Change of Control resulting in the termination of
Employee as outlined in Section 4.3(c) and as defined in this Agreement, Employee will be
entitled to a Severance payment equal to one (1) times his/her Base Salary plus Target Bonus
at the time of termination. This payment is inclusive of any other severance payments made to
Employee, the total of which may not exceed the maximum of any such payment.

	9.	 	Payment of Accrued Obligations in Case of Death. Section 4.3(b) of the Agreement
shall be amended by the addition of the following at the end of such provision: “The Employer
shall pay the sum of the Accrued Obligations to the Parke H. Hess, Jr. Revocable Living Trust.
Upon the death of Parke H. Hess, Jr., the trustee of the Parke H. Hess, Jr. Revocable Living
Trust shall be Vicky A. Hess.”

	10.	 	Equity Grant. Employee will be eligible to participate in the company’s Stock Option
Plan and will receive a stock option grant, valid for 10 years, to purchase 300,000 shares of
Applied Digital Solutions, Inc. stock with a strike price equal to the market value of the
stock as of the close of the trading day immediately preceding the Employee’s first date of
employment. The option will vest ratably, 20% per year, over the next five years. Other
terms of such option are set forth in the plan.

The CEO will review Employee’s performance on at least an annual basis and based upon such
review will consider making the Employee additional stock option grants, which, if granted,
will have a strike price equal to the market value of the stock as of the close of the date
such option is approved by the Board. In the event that stock options may not be available
or advisable for issuance as contemplated by this provision, Employer may grant instead restricted stock, stock
appreciation rights, or other forms of equity incentive compensation as agreed to by the
Employee and Company and having the economically equivalent value to the grant of options
as contemplated herein.

 

17

 

All options held by Employee shall become fully vested and exercisable upon any termination
of employment described in Sections 4.3(b) and (c) of the Agreement which occurs at least
six months after the Effective Date, and shall remain exercisable for a period of three
years following any such termination (subject to earlier expiration of the original option
term). All options will become vested and exercisable upon a Change of Control. Upon any
termination of employment described in Section 4.3(a) of the Agreement, and upon any
termination of employment within six months following the Effective Date, all unvested
options shall terminate and all vested options shall remain exercisable for a period of 90
days and thereafter terminate.

	11.	 	Non-Compete Exclusion. The non-competition provisions of this Agreement, Section
5.2, shall include Employee’s activities in all areas, technologies, product lines and market
segments in which the Employer is involved at the time this agreement is terminated.

Non-Compete Period. The non-competition provisions of this Agreement, Section 5.2, shall
specifically prohibit Employee’s activities from the Effective Date through that date one year from
the date this agreement is terminated.

	12.	 	Vacation. Employee shall be entitled to four (4) weeks of vacation per calendar year
in accordance with Section 3.5 of the Agreement.

	13.	 	Notices. Any notices to be given to Employee as set forth in Section 8.4 of the
Agreement shall be to the address and facsimile number set forth in Section 8.4 of the
Agreement.

	 	 	 
	Initials:

	 	
  /s/ PHH 

Employee
	 

	 	    /s/ JG   

Employer

 

18Filed by Bowne Pure Compliance

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement” or “Employment Agreement”) dated July 8, 2008
(“Effective Date”) between Kimberly J. McWaters (“Employee”) and Universal Technical Institute,
Inc., a Delaware corporation (the “Company”) provides:

WHEREAS, the Company wishes to obtain the future services of Employee and Employee is willing
to continue to provide services to the Company; and

WHEREAS, the parties wish to revise and update the existing Employment and Non-Interference
Agreement between them to reflect the current status of Employee’s employment and to ensure
compliance with applicable laws and regulations; and

WHEREAS, Employee wishes to have the protection provided for in this Agreement and, in
exchange for such protection, is willing to give to the Company, under certain circumstances, a
covenant not to compete and a release of all liability.

NOW, THEREFORE, the parties hereto agree as follows:

1. Previous Agreement Superseded. The previous Employment and Non-Interference
Agreement between the parties dated April 1, 2002 (the “Previous Employment Agreement”) is hereby
superseded, replaced in its entirety and considered null and void.

2. Definitions.

a. “Board of Directors” means the Board of Directors of the
Company.

b. “Cause” means any one or more of the following:

(i) Employee’s conviction of, or plea of guilty or nolo contendere to, any
felony or a crime involving embezzlement, conversion of property or moral turpitude

(ii) A finding by a majority of the Board of Directors of Employee’s fraud,
embezzlement or conversion of the Company’s property;

(iii) Employee’s conviction of, or plea of guilty or nolo contendere to, a
crime involving the acquisition, use or expenditure of federal, state or local
government funds relating to the business and affairs of the Company;

(iv) A final, nonappealable administrative or judicial determination that
Employee committed fraud or any other violation of law involving federal, state or
local government funds relating to the business and affairs of the Company;

(v) A finding by a majority of the Board of Directors of Employee’s knowing
breach of any of Employee’s fiduciary duties to any company in the Company Group or
the Company’s stockholders or making of an intentional
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to have a material adverse effect on the business
relationship, the business, properties, assets, operations, condition (financial or
other) or prospects of any company in the Company Group;

 

 

 

(vi) Employee’s alcohol or substance abuse, which materially interferes with
Employee’s ability to discharge the duties, responsibilities and obligations
prescribed by this Agreement as determined by a majority of the Board of Directors;

(vii) Employee’s material and knowing failure to observe or comply with law
applicable to the business of the Company as an officer or employee of the Company
which would reasonably be expected to have a material adverse effect on the business
relationship, the business, properties, assets, operations, condition (financial or
other), or prospects of any company in the Company Group as determined by a majority
of the Board of Directors;

(viii) Employee’s willful gross misconduct relating to the business of the
Company that results in significant harm to the Company or its operation,
properties, reputation, goodwill or business relationships as determined by a
majority of the Board of Directors,

provided that (i) any finding or determination made by the Board of Directors concerning the
existence of Cause must be made in good faith and not for purposes of evading the Company’s
obligations hereunder; and (ii) a finding or determination of Cause by the Board of
Directors may not be made unless, prior to determining that Cause exists, the Employee shall
be given written notice stating in reasonable detail the facts and circumstances deemed by
the Company to constitute Cause, and thirty (30) days from receipt of such notice Employee
has failed to cure the facts and circumstances set forth in such notice.

c. “Change of Control” means: (i) any sale, lease, exchange, or other transfer (in one
transaction or series of related transactions) of all or substantially all of the Company’s
assets to any person or group of related persons under Section 13(d) of the Securities and
Exchange Act of 1934 (“Group”); (ii) the Company’s shareholders approve and complete any
plan or proposal for the liquidation or dissolution of the Company; (iii) any person or
Group becomes the beneficial owner, directly or indirectly, of shares representing more than
50% of the aggregate voting power of the issued and outstanding stock entitled to vote in
the election of directors of the Company (“Voting Stock”) and such person or Group has the
power and authority to vote such shares; (iv) any person or Group acquires sufficient shares
of Voting Stock to elect a majority of the members of the Board of Directors; or (v) the
completion of a merger or consolidation of the Company with another entity in which holders
of the Company’s stock immediately before the completion of the transaction hold, directly
or indirectly, immediately after the transaction, 50% or less of the common equity interest
in the surviving corporation in the transaction. Notwithstanding the foregoing, in no event
will a Change of Control be deemed to have occurred as a result of an initial public
offering of the Company’s stock.

 

2

 

Also, notwithstanding anything to the contrary herein, the fact that a transaction or
event is defined as a Change of Control for purposes of this Agreement shall not evidence or
infer that the transaction or event constitutes a change of control for purposes of,
including but not limited to, any determination or definition of the Department of
Education, any licensing agency, or for determining the duties of the Company’s Board of
Directors under Delaware corporate law.

d. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

e. “Company Group” shall mean the entities listed on Schedule 1.

f. “Compete” shall mean to directly or indirectly own, operate, manage, join, control,
be employed by, be a consultant to, invest in, or become a director, officer, agent,
partner, member, independent contractor or shareholder of any Competitive Business, as
defined below. As used in this Agreement, “Compete” does not include purely passive
investments in any publicly traded company so long as Employee does not directly or
indirectly own, acquire or obtain options to acquire, 5% or more of any class of shares in
such company.

g. “Competitive Business” means any post secondary educational institution or entity
which conducts educational programs in the areas of automotive, motorcycle, marine, diesel
or collision repair and refinishing technologies (or a combination of these programs).

h. “Confidential Information” means any confidential information including, without
limitation, any study, data, calculations, software, storage media or other compilation of
information, patent, patent application, copyright, “know-how”, trade secrets, customer,
student or prospective student lists or information, details of client, consultant,
student, vendor, supplier or manufacturer contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business acquisition
plans or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source or object codes), processes,
procedures, formulae, improvements or other proprietary or intellectual property of any
company in the Company Group, whether or not in written or tangible form, and whether or not
registered, and including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. Notwithstanding
the foregoing, the term Confidential Information does not include, and there shall be no
obligation hereunder with respect to, information that is or becomes generally available to
the public other than as a result of a disclosure by the Employee not permissible hereunder.

i. “Disability” means Employee is either:

(i) determined to be totally disabled by the Social Security Administration; or

 

3

 

(ii) determined to be disabled pursuant to the Company’s disability plans for a
period of at least three months.

j. “Good Reason,” when used with reference to a voluntary termination by Employee of
Employee’s employment with the Company, shall mean any of the following conditions, provided
that Employee (i) provides the Company with actual notice of the condition giving rise to
the termination within ninety (90) days of Employee’s knowledge of the initial existence of
the condition, (ii) provides the Company with the opportunity to cure within 30 days of the
notice, and (iii) terminates employment within two (2) years of the initial existence of the
condition:

(a) A material diminution in any of the following:

A. Employee’s base compensation;

B. Employee’s authority, duties or responsibilities; provided that, a
material diminution of Employee’s authority, duties or responsibilities shall
be deemed to have occurred if Employee ceases to have such authorities,
duties or responsibilities with respect to the entity which is the ultimate
parent entity of the Company Group following a Change of Control.

(b) A material change in the geographic location at which the Employee must
perform the services; or

(c) Any other action or inaction that constitutes a material breach by the
Company of this Agreement and such breach is not cured as set forth in 2.j.(ii)
above.

k. “Market” means anywhere in the United States or Puerto Rico. If an arbitrator or
arbitration panel finds that this definition of Market is unreasonable, then the Market will
be considered to mean all states in which the Company has a campus or other training center
and all states that are contiguous to a state in which the Company has a campus or other
training center. If an arbitrator or arbitration panel finds that definition of Market is
unreasonable, the Market shall mean all states in which the Company has a campus or other
training center.

l. “Position” means the particular position of President and Chief Executive Officer.

m. “Regulations” means any laws, ordinances, regulations or rules of any governmental,
regulatory or administrative body, agent or authority, any court or judicial authority, or
any public, private or industry regulatory authority.

n. “Severance Period” means the period of time that the Company continues to pay
Employee as set forth in Section 9.a.

 

4

 

o. “Specified Employee” means any Company employee that the Company determines is a
Specified Employee within the meaning of Section 409A of the Code. The Company shall
determine whether an employee is a Specified Employee by applying reasonable, objectively
determinable identification procedures set forth in a resolution of the Board of Directors
issued before December 31, 2007.

p. “Term of Employment” means the period commencing on the Effective Date and
terminating three (3) years after the Effective Date. Employee acknowledges that the
Company has no obligation to continue Employee’s employment or this Agreement beyond the
Term of Employment. The Term of Employment may also be terminated with or without cause and
without notice subject to the provisions of Section 8.

q. “Termination Date” shall mean the last day of Employee’s employment with the
Company.

3. Nature of Employment. Subject to the terms of this Agreement, the Company hereby
agrees to continue to employ Employee in the Position, and Employee hereby agrees to accept the
continuation of such employment in the Position, for the Term of Employment under this Agreement.

4. Extent of Employment.

While employed:

a. Employee agrees to perform the duties of the Position faithfully and to the best of
Employee’s ability at the principal offices of the Company or in locations as may be
designated temporarily from time to time by the Company or as necessary to fulfill the
duties of the Position. Employee shall report to the Board of Directors, or as otherwise
directed by the Board of Directors.

b. Employee shall abide by the policies, rules, customs, and usages as established by
or existing at the Company.

c. Employee shall devote all of her business time, energy and skill as may be
reasonably necessary for the performance of the duties, responsibilities, and obligations of
the Position.

d. Employee shall not knowingly breach or violate any Regulations or rules of any
governmental or regulatory body in any material respect and shall not act in any manner
which might reasonably be expected to have a material adverse effect on the ongoing
business, properties, assets, operations, condition (financial or other), business
relationships or prospects of any company in the Company Group.

e. Employee shall not commit or engage in any conduct, through action or omission,
which would constitute any of the offenses set forth in the definition of “Cause” under this
Agreement.

 

5

 

f. Employee agrees to live in the Phoenix, Arizona metropolitan area.

5. Compensation. While Employee is employed by the Company, the Company shall pay
Employee as follows:

a. A base salary, paid in twenty six (26) equal installments, at a rate of Five Hundred
Seventy Five Thousand Dollars ($575,000) per annum. The Board of Directors shall annually,
and in its sole discretion, determine whether the base salary should be increased and, if
so, in what amount.

b. An annual bonus based on Employee’s performance as determined and approved by the
Board of Directors based on performance parameters set by the Board of Directors. Such bonus
will be determined at the sole discretion of the Board of Directors, and may not be paid at
all. Employee acknowledges that no bonus will be paid if performance parameters are not met.
If the Board of Directors determines that such bonus shall be paid, such bonus shall be paid
by the fifteenth (15th) day of the third (3rd) month of the Employee’s taxable year
following the year in which the Employee becomes entitled to such bonus.

6. Reimbursement of Expenses. While Employee is employed, the Company shall reimburse
Employee for reasonably documented travel expenses, entertainment and other expenses reasonably
incurred by Employee in connection with the performance of the duties of the Position and, in each
case, according to the reasonable rules, policies, customs and usage promulgated by the Company
from time to time. All reimbursements shall be made within thirty (30) days of Employee’s
submission of any reasonably documented expense reimbursement claim. The amount of expenses
eligible for reimbursement provided during one taxable year shall not affect the amount of expenses
eligible for reimbursement or in-kind benefits provided during any other taxable year. Employee may
not elect to receive cash or any other benefit in lieu of the reimbursements provided by this
Section.

7. Benefits. While Employee is employed, the Employee shall be entitled to perquisites
and benefits established from time to time, at the sole discretion of the Board of Directors for
the Position, including without limitation, health, short and long term disability, pension and
life insurance benefits consistent with past practice, or as increased from time to time; provided
that the perquisites and benefits provided to Employee shall be at least substantially equal to
those provided to any other officer of the Company.

8. Termination of Employment for Cause or without Good Reason. At any time during the
Term of Employment, Company may terminate Employee for Cause effective upon the giving to Employee
a written notice of termination. If Employee’s employment is terminated for Cause or Employee
voluntarily terminates without Good Reason, Employee shall be entitled to:

a. Payment of accrued and unpaid base salary and unused vacation through the
Termination Date;

 

6

 

b. Reimbursement for expenses incurred through the Termination Date as set forth in
Section 6.

9. Termination of Employment without Cause, for Good Reason, upon Change of Control, or
due to the Death or Disability of Employee. During the Term of Employment, the Company may
terminate Employee without Cause and without providing notice to Employee, and Employee may
terminate employment with the Company for Good Reason. Employee’s death or Disability shall cause
a termination of Employee’s employment.

a. During the Term of Employment, if Employee is terminated without Cause or if
Employee terminates for Good Reason, either of which occurs without a Change of Control,
Employee shall be entitled to the following items so long as Employee has signed the release
described in Section 11 below and not revoked it:

(i) The Company shall provide the items set forth in Section 8.a. and 8.b.
above.

(ii) The Company shall pay to Employee, an amount equal to Employee’s base
salary at the highest rate in effect at any time during the twelve (12) months
immediately preceding the Termination Date, payable for a period of twenty four (24)
months (the “Severance Period”). Employee will be paid this amount in equal
bi-weekly installments according to the Company’s regular payroll periods and
practices. The first payment to which Employee is entitled shall be paid on the
first day of the month following the revocation period, if any, as set forth in
Exhibit A. At all times, the right to each monthly payment made under this
Section 9 shall be treated as the right to a series of separate payments within the
meaning of 26 CFR Section 1.409A-2(b) (2) (iii).

(iii) Employee will be eligible for the fiscal year bonus if such bonus is
approved by the Board of Directors based upon parameters set by the Board of
Directors. The amount of any such bonus will be pro-rated based on the Termination
Date and shall be paid at the time other employees are paid the bonus, but in no
event will such bonus be paid after the fifteenth (15th) day of the third
(3rd) month of the Employee’s taxable year following the year in which
the Employee becomes entitled to such bonus.

(iv) Employee’s then current medical and dental benefits will continue pursuant
to Company policy and the provisions of any applicable benefit plan. Beginning on
the first day that active employee coverage is ineffective, Employee may elect to
continue current medical and dental benefits for up to eighteen (18) months in
accordance with any applicable plan provisions and the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). In addition, the Company will continue to pay a
monthly amount equal to the Company paid portion of the insurance premium for the
coverage held by Employee as of the Termination Date, and any administrative fee,
for a period of eighteen (18) months. In addition, for a period of six (6) months
following the expiration of COBRA coverage the Company shall maintain, at Company
expense, health care insurance benefits comparable to that provided to Employee under COBRA. Upon Employee’s
employment with another employer, to the extent Employee and her dependants are
eligible for substantially equivalent benefits under the new employer’s plan, the
Company will no longer be obligated to pay for the continuation coverage.

 

7

 

(v) All stock Awards (as defined by any applicable Plan), including stock
options and restricted stock, shall be governed by the terms and provisions of the
Plan and the grant Agreement under which such Award was granted.

(vi) Employee’s participation in and/or coverage under all other employee
benefit plans, programs or arrangements sponsored or maintained by the Company shall
cease to be effective as of the Termination Date, unless such benefit, program or
plan is inalienable under the law.

(vii) The Company shall pay for twelve (12) months of outplacement services
through a provider selected by the Company for the twelve (12) month period
immediately following the Termination Date.

(viii) The children of Employee shall be eligible to attend any Company
location or program without paying tuition.

b. During the Term of Employment, if Employee is terminated without Cause or if
Employee terminates for Good Reason, either of which occurs within 12 months of a Change of
Control, Employee shall be entitled to the following items so long as Employee has signed
the release described in Section 11 below and not revoked it:

(i) Except for the bonus set forth in Section 9.a.(iii), all of the payments
and benefits as set forth in Section 9.a. above; and

(ii) The Company shall also pay to Employee Employee’s maximum targeted bonus
for the fiscal year in which the Termination Date occurs prorated to the Termination
Date. Employee will be paid this bonus amount over the Severance Period in equal
bi-weekly installments according to the Company’s regular payroll periods and
practices.

c. During the Term of Employment if Employee suffers a Disability, Employee shall be
entitled to the following items so long as Employee has signed the release described in
Section 11 below and not revoked it:

(i) Severance payments as provided under Section 9.a.(ii). All the payments and
benefits set forth in Section 9.a.(i), (iii), (iv), (v), (vi), (vii), and (viii);
and

(iii) Disability benefits under the applicable plan or practice.

d. During the Term of Employment if Employee dies, Employee’s estate shall be entitled
to the following items:

 

8

 

(i) Severance payments as provided under Section 9.a.(ii);

(ii) All the payments and benefits set forth in Section 9.a.(i), (iii), (v),
and (vi), (viii); and

(iii) Employee’s dependents, if any, who are covered by Employee’s health or
dental insurance at the time of death shall be eligible for the benefits provided
under Section 9.a.(iv).

e. To the extent Employee’s Termination Date is prior to the date on which the Company
has paid any bonus to which the Employee may be entitled for the fiscal year immediately
preceding the Termination Date, (i.e. between the end of the fiscal year and the bonus
payout), Employee will receive such bonus in a lump sum on the same date as Employee would
have received such bonus had Employee remained continuously employed by the Company.

f. If any payment or benefit Employee would receive under this Agreement, when combined
with any other payment or benefit Employee receives pursuant to the termination of
Employee’s employment with the Company (“Payment”), would:

(i) constitute a “parachute payment” within the meaning of Section 280G of the
Code, and

(ii) but for this sentence, be subject to the excise tax imposed by Section
4999 of the Code (the “Excise Tax”), then such Payment shall be whichever of the
following amounts, taking into account the applicable federal, state and local
employment taxes, income taxes, and the Excise Tax, results in Employee’s receipt,
on an after-tax basis, of the greater amount of the Payment notwithstanding that all
or some portion of the Payment may be subject to the Excise Tax:

	 	(a)	 	the full amount of such Payment; or

	 	(b)	 	such lesser amount (with cash
payments being reduced) as would result in no portion of the
Payment being subject to the Excise Tax.

(iii) All determinations required to be made under this Section 9(f), including
whether and to what extent the Payments shall be reduced and the assumptions to be
utilized in arriving at such determination, shall be made by a national independent
accounting firm registered with the Public Company Accounting Oversight Board as
will be designated by the Company (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to Employee and the Company at such
time as is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. For purposes of making the calculations
required by this Section 9(f), the Accounting Firm may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good-faith
interpretations concerning the application of Sections 280G and 4999 of the Code.

 

9

 

g. Notwithstanding any other provision of this Agreement to the contrary, neither the
time nor the schedule of any payment under this Agreement may be accelerated or subject to a
further deferral except as provided in 26 C.F.R. § 1.409A-3 (j) (4).

h. The Employee does not have any right to make any election regarding the time or form
of any payment due under this Agreement.

i. If the Company fails to make any payment under this Agreement, either intentionally
or unintentionally, within the time period specified in this Agreement, but the payment is
made within the same calendar year, such payment will be treated as made within the time
period specified in the Agreement pursuant to 26 C.F.R. § 1.409A-3(d). In addition, if a
payment is not made due to a dispute with respect to such payment, the payment may be
delayed in accordance with 26 C.F.R. § 1.409A-3(g).

j. For purposes of this Agreement, the determination of whether Employee has terminated
employment will be made in accordance with 26 C.F.R. Section 1.409A-1(h) (1) (m). This
Agreement shall be administered in compliance with Section 409A of the Code and each
provision shall be interpreted, to the extent possible, to comply with Section 409A.

Notwithstanding any of the foregoing, if the Employee is a Specified Employee on the
Termination Date, all monthly payments, if any, that are to be made following the fifteenth
(15th) day of the third (3rd) month of the Employee’s taxable year following
the Employee’s taxable year in which Termination Date occurred, but before the date which is six
(6) months following the Termination Date, that are, in the aggregate, in excess of the Excludable
Compensation shall be paid in a lump-sum on the first (1st) day of the seventh
(7th) month following the Employee’s Termination Date or, if earlier, the date the
Employee dies following the Termination Date. For purposes of this Section 9, “Excludable
Compensation” shall equal the lesser of two times (i) the Employee’s annualized base compensation
for the Employee’s taxable year prior to the Employee’s taxable year in which the Termination Date
occurred or (ii) the applicable limit set forth in Section§ 401(a) (17) of the Code for the year in
which the Termination Date occurred.

10. Mitigation or Reduction of Benefits. In the event of termination of employment as set forth in Section 9 above, Employee shall not
be required to mitigate the amount of any payment provided for in that Section by seeking other
employment or otherwise. Except as otherwise specifically set forth herein, the amount of any
payment or benefits provided in Section 9 shall not be reduced by any compensation or benefits or
other amounts paid to or earned by Employee as the result of employment by another employer after
the Termination Date.

11. Release. In order to receive payments and benefits described in Section 9, other than those provided in
Sections 8 and those provided in the event of Employee’s death, Employee must execute a Release in
the form attached as Exhibit A, and that Release must become effective by Employee not revoking it. If Employee fails to sign the Release within the
period provided in the Release, or if Employee revokes the Release within the seven (7) day
revocation period provided therein, Employee will forfeit any right to the payments and benefits
described in Section 9. As a general rule, Employee shall receive the Release from the Company on
or before Employee’s Termination Date, but in no event will Employee receive the Release more than
ten (10) days following Employee’s Termination Date.

 

10

 

12. Covenant Not to Compete. In consideration of this Agreement, and the employment under it, the parties have agreed to
the following Covenant Not to Compete.

a. Post Termination Restrictions. Employee acknowledges that the services provided
under this Agreement give Employee the opportunity to have special knowledge of the Company,
its Confidential Information, and the capabilities of individuals employed by or affiliated
with the Company. Employee further acknowledges that interference with those business or
employment relationships with the Company would cause irreparable injury to the Company.
Consequently, Employee covenants and agrees that:

(i) From the Effective Date hereof until twenty four (24) months (or for
eighteen (18) months if an arbitrator or arbitration panel finds that twenty four
(24) months are unreasonable) after the Termination Date, Employee will not, without
the express written approval of a majority of the Board of Directors, directly or
indirectly, anywhere in the Market, in one or a series of transactions, Compete
against Company, as defined in Section 2 above, without regard to (a) whether the
Competitive Business has its office or other business facilities within or outside
the Market, (b) whether any of the activities of the Employee referred to above
occur or are performed within or outside the Market, or (c) whether the Employee
resides, or reports to an office, within or outside the Market.

(ii) From the effective date hereof until twenty four (24) months after the
Termination Date (which shall not be reduced by (a) any period of violation of this
Agreement by Employee or (b) if the Company is the prevailing party in any
litigation to enforce its rights under this Section 12, the period which is required
for such litigation), Employee will not, without the express prior written approval
of a majority of the Board of Directors, directly or indirectly, in one or a series
of transactions: (i) recruit, solicit or otherwise induce or influence any
proprietor, partner, stockholder, lender, director, officer, employee, sales agent,
joint venturer, investor, lessor, customer, agent, representative or any other
person which has a business relationship with the Company or had a business
relationship with the Company within the twelve (12) month period preceding the date
of the incident in question, to discontinue, reduce or modify such employment,
agency or business relationship with the Company; or (ii) employ or seek to employ
or cause any Competitive Business to employ or seek to employ any person or agent
who is then (or was at any time within twelve (12) months prior to the date the
Employee or the Competitive Business employs or seeks to employ such person)
employed or retained by the Company. Notwithstanding the foregoing, nothing herein
shall prevent the Employee from providing a personal letter of recommendation to an employee of the Company with respect to a future or any
other employment opportunity.

 

11

 

(iii) The scope and term of this Section 12 would not preclude Employee from
earning a living in an occupation or position with an entity that is not a
Competitive Business.

b. Acknowledgment Regarding Restrictions. Employee recognizes and agrees that the
restraints contained in Section 12 (both separately and in total) are reasonable and should
be fully enforceable in view of the high level positions Employee has had with the Company,
and the Company’s legitimate interests in protecting its Confidential Information and its
goodwill and relationships. Employee specifically hereby acknowledges and confirms that
Employee is willing and intends to, and will, abide fully by the terms of Section 12 of this
Agreement. Employee further agrees that the Company would not have adequate protection if
Employee were permitted to work in a Competitive Business in violation of the terms of this
Agreement since the disclosure of Confidential Information is inevitable and the Company
would be unable to verify whether its Confidential Information was being disclosed and/or
misused.

c. Company’s Right to Cease and Recoup Payments and Obtain Injunctive Relief. In the
event of a breach or imminent breach of any of Employee’s duties or obligations under this
Agreement, the Company shall be entitled to immediately cease all payments and benefits to
Employee under Section 9 and, in the event of an actual breach, require Employee to disgorge
and repay to Company all payments and benefits previously paid to or conferred upon Employee
under Section 9 of this Agreement after the commencement of Employee’s breach. Employee
agrees that if Employee breaches any duties or obligations Employee has under this
Agreement, that, except for sums set forth in Section 8, Employee has no right to any money
or benefits under Section 9 of this Agreement and that Employee must return any money paid
to Employee under that section. In addition to any other legal or equitable remedies the
Company may have (including any right to damages that it may suffer), the Company shall be
entitled to temporary, preliminary and permanent injunctive relief restraining such breach
or imminent breach. Employee hereby expressly acknowledges that the harm which might result
to Company’s business as a result of noncompliance by Employee with any of the provisions of
this Agreement would be largely irreparable. Each party undertakes and agrees that if she/it
breaches or threatens to breach the Agreement, she/it shall be liable for any attorneys’
fees and costs incurred by the other party in enforcing its rights hereunder.

d. Employee Agreement to Disclose this Agreement. Employee agrees to disclose, during
the Severance Period, the terms of this Section 12 to any potential future employer.

e. Survival. The terms of this entire Section 12 shall survive the termination of
Employee’s employment under this Agreement regardless of who terminates employment or the
reasons therefore.

 

12

 

13. Confidential Information.

a. During and after the Term of Employment, Employee will not, directly or indirectly,
in one or a series of transactions, disclose to any person, or use or otherwise exploit for
the Employee’s own benefit or for the benefit of anyone other than the Company, any
Confidential Information, whether prepared by Employee or not; provided, however, that any
Confidential Information may be disclosed (i) to officers, representatives, employees and
agents of the Company who need to know such Confidential Information in order to perform the
services or conduct the operations required or expected of them in the business, and (ii) in
good faith by the Employee in connection with the performance of Employee’s duties hereunder
to persons who are authorized to receive such information by the Company. Employee shall
use Employee’s best efforts to prevent the removal of any Confidential Information from the
premises of the Company, except as required in Employee’s normal course of employment by the
Company. Employee shall use Employee’s best efforts to cause all persons or entities to
whom any Confidential Information shall be disclosed by Employee hereunder to observe the
terms and conditions set forth herein as though each such person or entity was bound hereby.
Employee shall have no obligation hereunder to keep confidential any Confidential
Information, if and to the extent disclosure of any such information is specifically
required by law or requested by a governmental agency; provided, however, that in the event
disclosure is required by applicable law or requested by a governmental agency, the Employee
shall provide the Company with prompt notice of such requirement or request, prior to making
any disclosure, so that the Company may seek an appropriate protective order. At the
request of the Company, Employee agrees to deliver to the Company, at any time during the
Term of Employment, or thereafter, all Confidential Information which Employee may possess
or control. Employee agrees that all Confidential Information of the Company (whether now or
hereafter existing) conceived, discovered or made by Employee during the Term of Employment
exclusively belongs to the Company (and not to Employee). Employee will promptly disclose
such Confidential Information to the Company and perform all actions reasonably requested by
the Company to establish and confirm such exclusive ownership.

b. The terms of this entire Section 13 shall survive the termination of Employee’s
employment under this Agreement regardless of who terminates employment or the reasons
therefore.

14. Notice. All notices hereunder shall be in writing and shall be deemed to have been duly given (a) when
delivered personally or by courier, or (b) on the third business day following the mailing thereof
by registered or certified mail, postage prepaid, or (c) on the first business day following the
mailing thereof by overnight delivery service, in each case addressed as set forth below:

If to the Company:

Universal Technical Institute, Inc.

20410 North 19th Avenue, Suite 200

Phoenix, Arizona 85027

Facsimile No.: (623) 445-9501

Attn: General Counsel

 

13

 

With a copy to:

Chairman of the Compensation Committee

of the Board of Directors

20410 North 19th Avenue, Suite 200

Phoenix, Arizona 85027

If to Employee:

Kimberly J. McWaters

5761 W. Pinnacle Hill Drive

Glendale, Arizona 85310

Any party may change the address to which notices are to be addressed by giving the other party
written notice in the manner herein set forth.

15. Employee Expenses in the Event of Dispute. If Employee’s employment is terminated by the Company within the Term of Employment and there
is a dispute with respect to this Agreement, then all of Employee’s reasonable legal expenses
incurred by Employee (a) to defend the validity of this Agreement, (b) if Employee’s employment has
been terminated for Cause, to contest such termination, (c) to contest any determinations by the
Company concerning the amounts payable by the Company under this Agreement, or (d) to otherwise
obtain or enforce any right or benefit provided to Employee by this Agreement, shall be paid by the
Company if Employee is the prevailing party. Such expenses shall be paid, if at all, within thirty
(30) days of the date of the determination that Employee is the prevailing party, but in no event
later than December 31st of the taxable year following the year in which the Employee incurred the
expenses. The expenses reimbursed in one taxable year will not affect the expenses eligible for
reimbursement by the Company in a different taxable year. All reimbursements of the expenses must
be made no later than December 31st of the taxable year following the taxable year in which the
expenses were incurred. The Employee may not elect to receive cash or any other benefit in lieu of
the benefits provided by this Section.

16. Agreement to Arbitrate. All disputes or claims regarding this Agreement shall be
submitted for resolution exclusively to binding arbitration under the Commercial Rules of
Arbitration of the American Arbitration Association in Phoenix, Arizona. The arbitrator or
arbitration panel shall have the authority to award temporary or permanent injunctive relief and to
award attorneys’ fees and costs to the prevailing party. Any temporary or permanent injunctive
relief ordered by the arbitrator or the arbitration panel may be enforced in court by either party
by seeking judicial confirmation of such award.

 

14

 

17. Successors; Binding Agreement.

a. The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, upon or prior to such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken place. A copy
of such assumption and agreement shall be delivered to Employee promptly after its execution
by the successor. Failure of the Company to obtain such agreement upon, or prior to, the
effectiveness of any such succession shall be a breach of this Agreement and shall entitle
Employee to benefits from the Company in the same amounts and on the same terms as Employee
would be entitled hereunder if Employee terminated Employee’s employment for Good Reason.
For purposes of the preceding sentence, the date on which any such succession becomes
effective shall be deemed the Termination Date. As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section 17 or which
otherwise becomes bound by the terms and provisions of this Agreement by operation of law.

b. This Agreement is personal to Employee and Employee may not assign or delegate any
part of Employee’s rights or duties hereunder to any other person, except that this
Agreement shall inure to the benefit of, and be enforceable by, Employee’s legal
representatives, executors, administrators, heirs and beneficiaries.

18. Severability. If any provision of this Agreement or the application thereof to any person or circumstance
shall to any extent be held to be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law. An arbitrator or arbitration
panel can reasonably modify this Agreement by rewriting it and/or it can “blue-pencil” this
Agreement by striking things out.

19. Headings. The headings in this Agreement are inserted for convenience of reference only and shall not in
any way affect the meaning or interpretation of this Agreement.

20. Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.

21. Waiver. Neither any course of dealing nor any failure or neglect of either party hereto in any
instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver
of such right, power or privilege or of any other right, power or privilege or of the same right,
power or privilege in any other instance. Without limiting the generality of the foregoing,
Employee’s continued employment without objection shall not constitute Employee’s consent to, or a
waiver of, Employee’s rights with respect to any circumstances constituting Good Reason. All
waivers by either party hereto must be contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by a resolution adopted by a majority of the
Board of Directors.

22. Entire Agreement. This instrument constitutes the entire agreement of the parties in this matter and shall
supersede any other agreement between the parties, oral or written, concerning the same subject
matter.

 

15

 

23. Amendment. This Agreement may be amended only by a writing which makes express reference to this
Agreement as the subject of such amendment and which is signed by Employee and by the Chairman of
the Compensation Committee of the Board of Directors or the Chairman’s designee.

24. Governing Law. In light of Company’s and Employee’s substantial contacts with the State of Arizona, the facts
that the Company is headquartered in Arizona and Employee resides in and provides services to the
Company in Arizona, the parties’ interests in ensuring that disputes regarding the interpretation,
validity and enforceability of this Agreement are resolved on a uniform basis, and Company’s
execution of, and the making of, this Agreement in Arizona, the parties agree that: (a) any
arbitration or litigation involving any noncompliance with or breach of the Agreement, or regarding
the interpretation, validity and/or enforceability of the Agreement, shall be filed and conducted
exclusively in the state of Arizona; and (b) the Agreement shall be interpreted in accordance with
and governed by the laws of the State of Arizona, without regard for any conflict/choice of law
principles.

IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 
	 	UNIVERSAL TECHNICAL INSTITUTE, INC.

 	 
	 	By:  	/s/ Chad A. Freed
 	 
	 	 	 	 
	 	 	 	 
	 
	 	Kimberly J. McWaters

 	 
	 	By:  	/s/ Kimberly J. McWaters
 	 
	 	 	 	 
	 	 	 	 
	 

 

16

 

SCHEDULE 1

Companies in the Company Group consist of:

	 	a.	 	Universal Technical Institute, Inc.

	 
	 	b.	 	UTI Holdings, Inc.

	 
	 	c.	 	U.T.I. of Illinois, Inc.

	 
	 	d.	 	Universal Technical Institute of Texas, Inc.

	 
	 	e.	 	Universal Technical Institute of California, Inc.

	 
	 	f.	 	Custom Training Group, Inc.

	 
	 	g.	 	The Clinton Harley Corporation

	 
	 	h.	 	Universal Technical Institute of Arizona, Inc.

	 
	 	i.	 	Universal Technical Institute of North Carolina, Inc.

	 
	 	j.	 	Universal Technical Institute of Northern California, Inc.

	 
	 	k.	 	Universal Technical Institute of Massachusetts, Inc.

	 
	 	l.	 	Universal Technical Institute of Pennsylvania, Inc.

	 
	 	m.	 	Universal Technical Institute of Phoenix, Inc.

 

 

 

Exhibit A

RELEASE

This RELEASE (the “Release”) dated
 _____ 
,
 _____ 
is by and between Kimberly J. McWaters
(“Employee”) and Universal Technical Institute, Inc., a Delaware corporation (“Company”);

WHEREAS, the Company and Employee are parties to an Employment Agreement dated
 _____ 
,
2008 (the “Employment Agreement”), which provides certain protection to Employee during employment
and upon termination of employment; and

WHEREAS, the execution of this Release is a condition precedent to, and material inducement
to, the Company’s provision of certain benefits under the Employment Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

1. Mutual Promises. The Company undertakes the obligations contained in the Employment
Agreement, which are in addition to any compensation to which Employee might otherwise be entitled,
in exchange for Employee’s promises and obligations contained herein. The Company’s obligations
are undertaken in lieu of any other employment benefits.

2. Release of Claims; Agreement Not to File Suit.

a. Employee, for and on behalf of him or herself and his/her heirs, beneficiaries,
executors, administrators, successors, assigns and anyone claiming through or under any of
the foregoing, agrees to, and does, release and forever discharge the Company and its
subsidiaries and affiliates, each of their shareholders, directors, officers, employees,
agents and representatives, and its successors and assigns (collectively, the “Company
Released Persons”), from any and all matters, claims, demands, damages, causes of action,
debts, liabilities, controversies, judgments and suits of every kind and nature whatsoever,
foreseen or unforeseen, known or unknown, which have arisen or could arise from matters
which occurred prior to the date of this Release, which matters include without limitation:
(i) the matters covered by the Employment Agreement and this Release, and (ii) Employee’s
employment, and/or termination from employment with the Company.

b. Employee, for and on behalf of him or herself and his/her heirs, beneficiaries,
executors, administrators, successors, assigns, and anyone claiming through or under any of
the foregoing, agrees that Employee will not file or otherwise submit any arbitration
demand, claim, complaint, or action to any court, organization, or judicial forum (nor will
Employee permit any person, group of persons, or organization to take such action on
Employee’s behalf) against any Company Released Person arising out of any actions or
non-actions on the part of any Company Released Person arising out of the parties’
employment relationship before the date of this Release or any action taken after the date
of this Release pursuant to the Employment Agreement. Employee further agrees that in the
event that any person or entity should bring such a charge, claim, complaint, or
action on Employee’s behalf, Employee hereby waives and forfeits any right to recovery
under said claim and will exercise every good faith effort to have such claim dismissed.

 

 

 

c. The charges, claims, complaints, matters, demands, damages, and causes of action
referenced in Sections 2(a) and 2(b) include, but are not limited to: (i) any breach of an
actual or implied contract of employment between Employee and any Company Released Person,
(ii) any claim of unjust, wrongful, or tortious discharge (including, but not limited to,
any claim of fraud, negligence, retaliation for whistle blowing, or intentional infliction
of emotional distress), (iii) any claim of defamation or other common law action, or (iv)
any claims of violations arising under the Civil Rights Act of 1964, as amended, 42 U.S.C.
§2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. §621 et
seq., the Americans with Disabilities Act of 1990, 42 U.S.C. §12101 et seq., the Fair
Labor Standards Act of 1938, as amended, 29 U.S.C. §201 et seq., the Rehabilitation
Act of 1973, as amended, 29 U.S.C. §701 et seq., the Family and Medical Leave Act,
or any other relevant federal, state, or local statutes or ordinances, or any claims for
pay, vacation pay, insurance, or welfare benefits or any other benefits of employment with
any Company Released Person arising from events occurring prior to the date of this Release
other than those payments and benefits specifically provided herein.

d. This Release shall not affect Employee’s right to any governmental benefits payable
under any Social Security or Worker’s Compensation law now or in the future.

e. This Release does not affect Employee’s right to participate in any federal, state
or local investigation by any governmental agency or to challenge the validity of this
Agreement. Further, this Release is not intended to be a release of any claims under the
Arizona Minimum Wage Act, effective January 1, 2007.

3. Release of Benefit Claims. Employee, for and on behalf of him or herself and his/her
heirs, beneficiaries, executors, administrators, successors, assigns and anyone claiming through or
under any of the foregoing, further releases and waives any claims for pay, vacation pay, insurance
or welfare benefits or any other benefits of employment with any Company Released Person arising
from events occurring prior to the date of this Release other than claims to the payments and
benefits specifically provided for in the Employment Agreement and claims for benefits which are
not subject to waiver under the law.

4. Revocation Period; Knowing and Voluntary Agreement. Employee acknowledges that he/she is
knowingly and voluntarily waiving and releasing any rights he/she may have under the Age
Discrimination in Employment Act, as amended, (“ADEA”). Employee also acknowledges that the
consideration given for the waiver and release in the preceding Section is in addition to anything
of value to which he/she would be entitled to without this Agreement. Employee further acknowledges
that Employee is advised by this writing, as required by the ADEA, that: (a) this waiver and
release do not apply to any rights or claims that may arise after execution date of this Agreement;
(b) Employee has been advised of having had the right to consult with an attorney prior to signing
this Agreement; (c) Employee has twenty-one (21) days to consider this Agreement (although Employee
may choose to voluntarily execute this Agreement earlier); (d) Employee has seven (7) days following the signing of this
Agreement by the parties to revoke the Agreement; and (e) this Agreement shall not be effective
until the date upon which the revocation period has expired, which shall be the eighth day after
this Agreement is executed by the Employee.

 

2

 

5. Severability. If any provision of this Release or the application thereof to any person or
circumstance shall to any extent be held to be invalid or unenforceable, the remainder of this
Release and the application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and each provision of this
Release shall be valid and enforceable to the fullest extent permitted by law.

6. Headings. The headings in this Release are inserted for convenience of reference only and
shall not in any way affect the meaning or interpretation of this Release.

7. Counterparts. This Release may be executed in one or more identical counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

8. Entire Agreement. This Release and related Employment Agreement constitutes the entire
agreement of the parties in this matter and shall supersede any other agreement between the
parties, oral or written, concerning the same subject matter.

9. Governing Law. This Release shall be governed by, and construed and enforced in accordance
with, the laws of the State of Arizona, without reference to the conflict of laws rules of such
State.

IN WITNESS WHEREOF, Employee and the Company have executed this Release as of the day and year
first above written.

	 	 	 	 	 
	 	UNIVERSAL TECHNICAL INSTITUTE, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 
	 	KIMBERLY J. MCWATERS

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

 

3

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