CECO CECO Environmental Corporation

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 30, 2015

 

 

Career Education Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware		0-23245		36-3932190
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

231 N. Martingale Rd., Schaumburg, IL		60173
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (847) 781-3600

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 31, 2015, Career Education Corporation (the “Company”) issued a press release announcing the selection of Todd S. Nelson, age 56, as the Company’s President and Chief Executive Officer. Mr. Nelson is expected to assume his position on August 12, 2015, and will also be appointed to the Company’s board of directors effective on that date. Mr. Nelson will succeed Ronald D. McCray, who is currently serving as Chairman of the Board and Interim President and Chief Executive Officer. Mr. McCray will maintain his role as Chairman of the Board upon the relinquishment of his President and Chief Executive Officer responsibilities when Mr. Nelson’s employment with the Company commences.

Mr. Nelson served as a director of Education Management Corporation from February 2007 through November 2013, including serving as Chairman of the Board of Directors from August 2012 until November 2013. He was also Education Management Corporation’s Chief Executive Officer from February 2007 to August 2012, and its President from February 2007 to December 2008. Mr. Nelson worked as an independent consultant after departing Education Management Corporation and from January 2006 through January 2007. Mr. Nelson worked for Apollo Group, Inc. (now known as Apollo Education Group, Inc.) from 1987 through January 2006. Mr. Nelson served in various roles with Apollo Group, Inc., including serving as President from February 1998 until January 2006, Chief Executive Officer from August 2001 until January 2006, and Chairman of the Board from June 2004 until January 2006. Mr. Nelson was a member of the faculty at the University of Nevada at Las Vegas from 1983 to 1984.

There are no arrangements between Mr. Nelson and any other person pursuant to which he was selected to become Chief Executive Officer of the Company. Mr. Nelson does not have any family relationship with any executive officer or director of the Company, or with any person selected to become an officer or director of the Company. Other than the Letter Agreement (described below), neither Mr. Nelson nor any member of his immediate family is a party to any transactions or proposed transactions with the Company.

A copy of the Company’s press release is furnished herewith and attached as Exhibit 99.1.

In connection with Mr. Nelson’s appointment as President and Chief Executive Officer, the Company and Mr. Nelson have entered into a letter agreement dated July 30, 2015 (the “Letter Agreement”), pursuant to which, upon commencement of his employment with the Company (the “Commencement Date”), Mr. Nelson will be paid an annual base salary of $770,000 and will be eligible to receive an annual bonus (“Annual Bonus”) under the Company’s Annual Incentive Award Program targeted at 100% of his base salary (with a maximum payout level of 200% of target). For 2015, Mr. Nelson’s Annual Bonus will be at least equal to 100% of his target Annual Bonus, pro-rated based on the portion of year he is employed with the Company. Additionally, on or about the Commencement Date, Mr. Nelson will receive a sign-on award comprised of:

 

•

A lump sum cash payment in the amount of $1,000,000. The after tax amount of the cash sign-on award is subject to repayment by Mr. Nelson if his employment is terminated by the Company for Cause or he terminates his employment other than for Good Reason (as such terms are defined in the Letter Agreement) during the first year of his employment with the Company.

 

•

An award of cash-settled restricted stock units (“RSUs”) with a value at grant of $1,750,000, which will vest 50% on September 14, 2016 and 50% on September 14, 2017. Although issued outside of the Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”), these RSUs will contain other terms and conditions generally consistent with RSUs granted to other executive officers under the 2008 Plan.

As a result of the sign-on award, Mr. Nelson will not be entitled to reimbursement of any commuting, living or relocation expenses from the Company.

The Letter Agreement further provides that on the Commencement Date (or later if the Commencement Date is during a trading blackout period), Mr. Nelson will receive the following long-term incentive awards under the 2008 Plan:

 

•

A stock option award with a value at grant of $600,000, which will have an exercise price equal to the closing price of the Company’s common stock on the grant date, and will vest in four equal annual installments commencing on September 14, 2016.

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•

An award of RSUs with a value at grant of $400,000, half of which will be cash-settled and half of which will be stock-settled. These RSUs will vest in four equal annual installments commencing on September 14, 2016. The cash-settled portion of these RSUs will include a payment cap to ensure compliance with certain limits set forth in the 2008 Plan.

 

•

A cash-settled performance unit award with a target value of $1,000,000 (with a maximum payout of 200% of such amount) that will vest on December 31, 2017, based on the Company’s total shareholder return relative to a peer group of companies over the three-year period ending December 31, 2017.

Except as set forth below, the other terms of the above long-term incentive awards are materially consistent with similar awards the Company granted to other executives and employees in March, 2015. Upon termination of Mr. Nelson’s employment by the Company without Cause, or if he terminates his employment for Good Reason and not as a result of his death or Disability (as such terms are defined in the Letter Agreement), (a) the stock options and RSUs granted as part of the long-term incentive awards shall become fully vested, the RSUs shall be paid or settled, as applicable, within 30 days, and the stock options shall remain outstanding for three years after such termination, but not beyond the ten-year term of the options, (b) the performance units shall become vested and a prorated amount shall be paid to Mr. Nelson following the end of the performance period based on actual performance, and (c) if such termination occurs within 18 months following a Change in Control (as defined in the 2008 Plan), the performance units shall become vested and promptly paid based on the greater of target performance or actual performance as of the date of the Change in Control. If Mr. Nelson’s employment is terminated due to his death or Disability (as defined in the Letter Agreement), then (i) the stock options and RSUs granted as part of the long-term incentive awards shall become fully vested, the RSUs shall be paid or settled, as applicable, within 30 days, and the stock options shall remain outstanding for one year after such termination, but not beyond the ten-year term of the options, and (b) the performance units shall become vested and paid at target performance levels. In the event of Mr. Nelson’s retirement (as defined in the 2008 Plan), the stock options granted as part of the long-term incentive awards shall remain outstanding for three years following the date of his termination, but not but not beyond the ten-year term of the options.

In addition, in the event Mr. Nelson’s employment is terminated by the Company without Cause or by Mr. Nelson for Good Reason, the Letter Agreement provides for Mr. Nelson’s participation in the Company’s Executive Severance Plan with eligibility for payments thereunder based on the sum of two times Mr. Nelson’s annual base salary and two times his target Annual Bonus, subject to satisfaction of such plan’s relevant requirements. In addition, subject to the satisfaction of the requirements of the Executive Severance Plan, in the event Mr. Nelson’s employment is terminated by the Company without Cause or by Mr. Nelson for Good Reason, the Letter Agreement provides that Mr. Nelson will receive a prorated bonus for the year of termination, paid at the time when such bonus are paid to other executive employees of the Company and based on actual performance.

Under the Letter Agreement, Mr. Nelson is subject to confidentiality and non-disparagement covenants during and after his employment with the Company terminates. Mr. Nelson is also subject to non-competition and employee and customer non-solicitation covenants both during and for a period of two years following termination of his employment.

The description of the Letter Agreement contained herein does not purport to be complete and is qualified in its entirety by reference the Letter Agreement, a copy of which is attached as Exhibit 10.1 and incorporated herein by reference.

The description of the Cash-Settled Restricted Stock Unit Agreements, Stock-Settled Restricted Stock Unit Agreements, Non-Qualified Stock Option Agreement and the Performance Unit Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the award agreements, which are attached hereto as Exhibits 10.2 to 10.6 and are incorporated herein by reference.

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Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit Number		Description of Exhibits
10.1		Letter Agreement between the Company and Todd Nelson dated July 30, 2015
10.2		Form of Cash-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.3		Form of Cash-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson
10.4		Form of Stock-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.5		Form of Non-Qualified Stock Option Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.6		Form of Performance Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
99.1		Press release of the Company dated July 31, 2015

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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Exhibit Index

 

Exhibit Number		Description of Exhibits
10.1		Letter Agreement between the Company and Todd Nelson dated July 30, 2015
10.2		Form of Cash-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.3		Form of Cash-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson
10.4		Form of Stock-Settled Restricted Stock Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.5		Form of Non-Qualified Stock Option Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
10.6		Form of Performance Unit Agreement between the Company and Todd Nelson pursuant to the 2008 Plan
99.1		Press release of the Company dated July 31, 2015

Exhibit 10.1

 

July 30, 2015

Via Electronic Mail

Mr. Todd S. Nelson

Dear Todd,

On behalf of Career Education Corporation (the “Company”), I am pleased to confirm our offer of employment to you for the position of President and Chief Executive Officer. Upon your acceptance of this offer as outlined below, you will join the Company effective as of the Commencement Date (as defined below) as a full-time employee reporting to the Company’s Board of Directors (the “Board”).

Your employment with the Company will be subject to the terms and conditions set forth in this letter (“Letter”). It is anticipated that you will commence employment on August 12, 2015 (the actual date you commence employment, the “Commencement Date”).

 

1.

Positions and Duties. You will serve as the Company’s President and Chief Executive Officer, and shall report directly to the Board. You will render such business and professional services in the performance of your duties, consistent with your position in the Company, as are reasonably assigned to you by the Board. The period you are employed by the Company under this Letter is referred to herein as the “Employment Term.” During the Employment Term, you will devote your full business time and efforts to the Company and will use good faith efforts to discharge your obligations under this Letter to the best of your ability and in accordance with applicable law and each of the Company’s ethics guidelines, conflict of interest policies and any code of business conduct policies as may be in effect from time to time. During the Employment Term, you agree not to actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration without the prior approval of the Board; provided, you may engage in charitable and civic activities and, upon prior approval of the Board, may serve on one for-profit board of directors, provided such activities and service are not competitive with the Company and do not interfere with your duties. It is expected that you will perform a majority of your duties for the Company at its headquarters, which is currently located in Schaumburg, Illinois.

 

2.

At-will Employment. You and the Company agree that your employment with the Company constitutes “at-will” employment and either you or the Company may terminate your employment at any time for any reason, subject to the terms of this Letter below. Without limiting the foregoing, you may be entitled to severance and other benefits in connection with termination of your employment depending upon the circumstances of the termination of your employment, as set forth in this Letter.

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July 30, 2015

Page 2

 

3.

Board Membership. It is expected that you will be appointed to serve as a member of the Board upon or shortly following the Commencement Date. Your continued service as a member of the Board will be subject to the Board’s ongoing nomination process and any required stockholder approval. Upon the termination of your employment for any reason and unless otherwise requested by the Board, you will be deemed to have resigned from the Board (and all other positions held at the Company and its affiliates) voluntarily and without further action from the Board, effective as of the end of your employment, and you, at the Board’s request, will execute the documents necessary to reflect your resignation from the Board.

 

4.

Base Salary. You will be paid an annual base salary of $770,000 (“Base Salary”), payable in installments in accordance with the Company’s standard payroll schedule.

 

5.

Annual Bonus. You will be eligible to participate in the Company’s Annual Incentive Award Program (or successor program) (“AIP”) and thereby earn an annual target performance bonus equal to 100% of your Base Salary (prorated for the portion of the year that you are employed by the Company), with a maximum payment level of 200% of your target bonus amount for fiscal year 2015 payable in cash in an amount determined by the Board, or the Compensation Committee of the Board (the “Compensation Committee”), in its sole and absolute discretion, based upon performance criteria determined by the Board or the Compensation Committee (the “Annual Bonus”); provided that for fiscal year 2015, you will be eligible to receive an Annual Bonus equal to not less than 100% of your target Annual Bonus, pro-rated based on the number of days in fiscal year 2015 you are employed from the Commencement Date through the last day of fiscal year 2015. For years after 2015, subject to any change that may be implemented by the Compensation Committee and similarly effects all executive officers of the Company, your target bonus opportunity for each year’s Annual Bonus (expressed as a percentage of your Base Salary) will not be less than the target bonus opportunity for fiscal year 2015. The Annual Bonus for each year shall be paid within a reasonable amount of time after the amount of such Annual Bonus is determined by the Compensation Committee for the applicable fiscal year to which the Annual Bonus relates, based on the achievement of the applicable performance conditions. In any event, the Annual Bonus shall be paid no later than seventy-five (75) days following the end of the Company’s fiscal year to which such bonus relates.

 

6.

Benefits. During the Employment Term, you will be eligible to participate in the benefit programs generally available to senior executive employees of the Company.

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July 30, 2015

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7.

Long-Term Incentive Awards. On the later of the Commencement Date and the first date thereafter upon which the granting of equity-based awards are permitted under the Company’s Amended and Restated Guidelines for Equity Awards (such later date, the “Grant Date”), you will receive the following long-term incentive awards (the “Long-Term Incentive Awards”):

 

(a)

a stock option award (the “Stock Options”) to purchase shares of the common stock, par value $0.01 per share, of the Company (the “Common Stock”), with the number of shares subject to the award determined by dividing (i) $600,000 by (ii) the product of (x) the Black-Scholes value determined as of the date which is two trading days prior to the Grant Date, and (y) the 30-day average price of the Common Stock on the date that is one calendar week prior to the Grant Date. The Stock Options will have a per share exercise price equal to 100% of the closing price per share of the Common Stock on the Grant Date and, except as otherwise provided herein, will otherwise be granted in accordance with, and subject to the terms of, the Company’s 2008 Incentive Compensation Plan, as amended (or successor plan) (the “Plan”) and an applicable award agreement thereunder. The Stock Options, will vest and become exercisable in four equal annual installments on each of September 14, 2016, 2017, 2018 and 2019, provided that you remain employed by the Company on each applicable vesting date, except as set forth in the Plan, the applicable award agreement or this Letter.

 

(b)

an award of restricted stock units (the “RSUs”), half of which will be cash-settled and the other half of which will be stock-settled, with the number of shares of Common Stock underlying the RSUs subject to the award determined by dividing $400,000 by the 30-day average price of the Common Stock on the date that is one calendar week prior to the Grant Date. The RSUs will vest in equal annual installments on each of September 14, 2016, 2017, 2018 and 2019, provided that you remain employed by the Company through each applicable vesting date, except as set forth in the Plan, the applicable award agreement or this Letter. The RSUs will be granted in accordance with, and subject to the terms of, the Plan and an applicable award agreement thereunder, provided that, all or a portion of the cash-settled RSUs, may be granted outside of the Plan but subject to terms consistent with the terms of the Plan, an applicable award agreement thereunder or this Letter.

 

(c)

an award of cash-settled performance units (the “Performance Units”), with a target amount of $1,000,000 and a maximum payment level of 200%. The performance condition related to the Performance Units will be based on the total shareholder return of the Common Stock as compared to the total shareholder return of the Company’s peer group during the period beginning on January 1, 2015 and ending on December 31, 2017. The Performance Units will vest on December 31, 2017, provided that you remain employed by the Company through each applicable vesting date, except as set forth in the Plan, the applicable award agreement or this Letter. The payment due in connection with the Performance Units will be determined pursuant to the applicable award agreement based on the Company’s comparative total shareholder return, and paid no later than March 15, 2018. The Performance Units will otherwise be granted in accordance with, and subject to the terms of, the Plan, an applicable award agreement and this Letter.

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July 30, 2015

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Except as set forth below, or otherwise provided in an applicable award agreement, upon termination of your employment, the Long-Term Incentive Awards shall cease to vest or be exercisable (as applicable) and, to the extent not then vested, shall be cancelled and forfeited.

 

(i)

In the event your employment is terminated by the Company without “Cause” or you resign for “Good Reason,” as such terms are defined in Exhibit A to this Letter, (A) the Stock Options shall vest in full on your date of termination and remain exercisable for three years following your termination date, but in no case beyond the expiration of the 10-year option term, (B) the RSUs shall vest in full on the termination date and shall be payable within 30 days following such termination date, and (C) the Performance Units shall vest and become payable based on the actual performance results applicable to the Performance Units and payable at such time as the Performance Units would otherwise be paid, but in no event will such amount be paid after March 15, 2018; provided that the amount paid to you shall be multiplied by a fraction, the numerator of which is the number of days on or after the Commencement Date through the date of your termination of employment and the denominator of which is 873.

 

(ii)

In the event your employment is terminated due to death or “Disability,” as defined in Exhibit A to this Letter, (A) the Stock Options shall vest in full on the date of your termination and remain exercisable for one year following your termination date, but in no case beyond the expiration of the 10-year option, (B) the RSUs shall vest in full on the date of your termination and shall be payable within 30 days following such termination date, and (C) the Performance Units shall vest and become payable at target on the date of termination.

 

(iii)

If your employment is terminated by the Company without Cause or you resign for Good Reason on or within 18 months following a “Change in Control” (as defined in the Plan), with respect to the Performance Units, such award will become vested and payable as of the date of your termination based on the greater of (A) target performance or (B) actual performance measured as of the date of the Change in Control, taking into account any price of the Common Stock applicable in connection with the Change in Control, with future performance extrapolated accordingly on the same basis.

 

(iv)

If your employment terminates by reason of your “Retirement” (as defined in the Plan), the Stock Options shall remain exercisable for three years following the date of your termination, but in no case beyond the expiration of the 10-year option term.

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July 30, 2015

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Commencing with the Company’s 2016 fiscal year, you will be eligible for annual long-term incentive awards under the Plan, commensurate with the eligibility of other senior executives for such awards, the actual awards to be determined in the sole discretion of the Board or the Compensation Committee, as applicable.

 

8.

Sign-on Award. On the Commencement Date or within 10 days thereafter, you shall receive a lump-sum cash payment in the amount of $1,000,000 (the “Sign-on Cash Award”), as well as an award of cash-settled restricted stock units (the “Sign-on RSUs,” and together with the “Sign-on Cash Award, the “Sign-on Award”) with the number of shares of Common Stock underlying the Sign-on RSUs determined by dividing $1,750,000 by the 30-day average price of the Common Stock on the date that is one calendar week prior to the Grant Date. The Sign-on RSUs will be granted outside of the Plan but subject to terms consistent with the terms of the Plan and an applicable award agreement thereunder. You agree that as a result of the Sign-on Award, you will neither be entitled to any reimbursement for any commuting, living or relocation expenses you may incur in connection with your employment by the Company, nor will you be eligible for any other provision of commuting, housing or relocation assistance benefits from the Company.

If your employment is terminated by the Company for Cause or you resign without Good Reason (and not due to Disability), as to the after-tax amount of the of the Sign-on Cash Award (the “After-Tax Cash Amount”), you shall repay to the Company 100% of the After-Tax Cash Amount if such termination occurs prior to the first anniversary of the Commencement Date. The Sign-on RSUs shall become vested as follows: (i) fifty percent (50%) of the Sign-on RSUs shall become vested on September 14, 2016, and (ii) the remaining fifty percent (50%) of the Sign-on RSUs shall become vested September 14, 2017, provided that you remain employed by the Company through each applicable vesting date, except as set forth in the Plan or the applicable award agreement.

 

9.

Severance. To the extent your employment is terminated by the Company without Cause or by you for Good Reason (not including death or Disability) at any time, you will be eligible for benefits under the Company’s Executive Severance Plan (as most recently amended and restated as of January 1, 2015), as such plan may be further amended, restated or replaced from time to time (the “Severance Plan”), subject to satisfaction of the Severance Plan’s relevant requirements (e.g., incurring a qualifying termination and execution of release). Notwithstanding the foregoing, for purposes of determining the benefits due to you pursuant to the Severance Plan,

 

(a)

the following shall be deemed to be added to the end of Section I.C of the Severance Plan: “For purposes of this Plan, the Eligible Employee shall be deemed to have been involuntarily terminated by action of the Company if the Eligible Employee terminated his employment with the Company for “Good Reason” (as defined in Exhibit A to that certain Letter Agreement between the Company and the Eligible Individual dated as of July 30, 2015 (the “Letter Agreement”));”

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(b)

the definition of “Pay” in Section II.A.1 of the Severance Plan, shall be deemed to be “the sum of (a) two times his or her annual base salary as shown on the Company’s records at the time of termination, and (b) two times the target value of his or her annual incentive under the Company’s applicable annual incentive program (or program of similar effect) for the year in which termination occurs;” and

 

(c)

a new Section II.A.4 shall be deemed to have been added to the Severance Plan, which Section II.A.4 shall be deemed to read as follows: “Prorated Bonus. Subject to compliance with Plan requirements, an Eligible Employee shall receive payment of a pro rata portion of his Annual Bonus (as defined in the Letter Agreement) for the fiscal year of the Company in his termination occurs, based on the number of days of such fiscal year that elapsed through the date his employment terminated and calculated based on the actual performance results applicable to such fiscal year (with any exercise of negative discretion to be based only on achievement (or lack thereof) of previously-established performance goals and not subjective personal performance), payable at such time as bonuses are paid by the Company to senior executives pursuant to the terms of the AIP (as defined in the Letter Agreement), but in no event will such amount be paid after the 75th day following the end of the fiscal year to which the Annual Bonus relates.”

The treatment of your Long-Term Incentive Awards and Sign-on Award in the event of such termination is as provided in Sections 7 and 8 above, respectively.

 

10.

Golden Parachute Excise Tax. If the payments and benefits provided for in this Letter or otherwise payable to you from the Company constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and would be subject to the excise tax imposed by Section 4999 of the Code, then such payments and benefits shall be subject to reduction to the extent necessary to assure that the payments and benefits provided to you under this Letter will be limited to the greater of (a) the amount of payments and benefits that can be provided without triggering a parachute payment under Section 280G or (b) the maximum dollar amount of payments and benefits that can be provided so as to provide you with the greatest after-tax amount of such payments and benefits after taking into account any excise tax you may incur under Section 4999 with respect to those payments and benefits and any other benefits or payments to which you may be entitled in connection with any change in control or ownership of the Company under Section 280G or the subsequent termination of your employment. To the extent reduction of any payments and benefits is required by this Section 10 such that no portion of your severance benefits will be subject to the excise tax imposed by Section 4999, the severance benefits shall be reduced in the

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July 30, 2015

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following order: (i) cash severance pay, (ii) cash payments based on the awards granted under Section 7 of this Letter, and (iii) the Stock Options, RSUs, Performance Units and any other equity awards granted to you.

 

11.

Indemnification. On the Commencement Date, the Company and you will enter into the Company’s then current form of Indemnification Agreement applicable to executive officers and members of the Board of the Company and will cover you as an insured (including coverage after a termination of your employment and service as a director respecting your acts and omissions occurring during your employment or as a director) under any contract of directors and officers liability insurance that covers directors as insureds.

 

12.

Prerequisite. As a prerequisite to commencing employment with the Company, you will be expected to satisfactorily pass (in the reasonable discretion of the Board) a background check conducted at the request of the Company.

 

13.

Professional Fees. The Company agrees to reimburse you for any reasonable attorneys’ fees incurred in connection with the negotiation and preparation of documents relating to your commencement of employment with the Company, including this Letter, provided that such reimbursed amounts shall not exceed $20,000.

 

14.

Employment Representation. You hereby represent to the Company that your execution and delivery of this Letter and the performance by you of your duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which you are a party or are otherwise bound.

 

15.

Section 409A. It is intended that the payments provided under this Letter shall be exempt from or comply with the requirements of Section 409A of the Code. This Letter shall be construed, administered and governed in a manner that effects such intent. It is further acknowledged and agreed that to the extent required to avoid accelerated taxation or tax penalties under Section 409A of the Code, (i) you will not be considered to have terminated employment or service for purposes of this Letter, and no payments will be due under this Letter that are payable upon termination of your employment or service until you would be considered to have incurred a “separation from service” with the Company within the meaning of Section 409A of the Code, and (ii) if at the time of your termination of employment or service with the Company, you are a “specified employee” as defined under Section 409A of the Code, then to the extent required by Section 409A(a)(ii)(B)(i) of the Code, amounts due under this Letter that are provided as a result of your separation from service, within the meaning of Section 409A of the Code, and that would otherwise be paid or provided during the first six months following such separation from service, shall be delayed until the earlier to occur of (A) the first day of the seventh month following your separation from service or (B) the date of your death. Subject to the foregoing, in the event any payment or benefit becomes due under Section 9 conditioned upon your entering into a Release, and as a result of the date of

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July 30, 2015

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such Release the payment or benefit could be made in either of two of your taxable years, such payment or benefit shall be made on the later of January 15 of the later such taxable year or within 10 days after the date such Release becomes effective. No reimbursement payable to you pursuant to any provision of this Letter or otherwise pursuant to any plan or arrangement of the of the Company shall be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred, and no such reimbursement during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, except, in each case, to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Section 409A of the Code. In addition, your right to reimbursement (or in-kind benefits) cannot be liquidated or exchanged for any other benefit or payment.

 

16.

Restrictive Covenants.

 

(a)

Return of Company Property. You represent, warrant and covenant that upon termination of your employment, you will return to the Company all Company property in the your possession or control, including, without limitation, all telephones, keys, access cards, security badges, credit cards, phone cards, equipment, computer hardware and encryption devices (including, but not limited to, all computers, smartphones, and personal data assistants), all contents of all such hardware, all passwords and codes needed to obtain access to or operate all or part of any such hardware, all electronic storage devices (including but not limited to all hard drives, disk drives, diskettes, CDs, CD-ROMs, DVDs, and DVD-ROMs), all contents of all such electronic storage devices, all passwords and codes needed to obtain access to or use all or part of any such electronic storage device, all computer software and programs, financial information, accounting records, computer printouts, manuals, data, materials, papers, books, files, documents, records, policies, student information and lists, customer information and lists, marketing information, specifications and plans, data base information and lists, mailing lists, and notes, including but not limited to any property describing or containing any Confidential Information (as defined below), and you agree that you will not retain any copies, duplicates, reproductions or excerpts thereof in any form whatsoever.

 

(b)

Confidential Information and Protection of Confidential Information. You acknowledge that, throughout and as an incident to your employment with the Company, you will become acquainted with and receive confidential information relating to the Company, including trade secrets, processes, methods of operation, business models and plans, advertising and marketing plans and strategies, Company records, research techniques and results, academic programs, academic course development, methods of instruction, training programs, computer programs, databases, software codes, systems and models, marketing, promotional and sales programs, and financial information concerning the

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July 30, 2015

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business of the Company, which information is not readily available to the public and gives the Company an opportunity to gain an advantage over competitors who do not know or use this information in the same manner as the Company, and which the Company regards as confidential and proprietary (collectively “Confidential Information”). Such Confidential Information includes, but is not limited to: (i) information relating to the Company’s past and existing students and vendors and the development of prospective students and vendors, including, but not limited to, specific student service and product requirements, pricing, arrangements, payment terms, student lists and other similar information; (ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company; (iii) advertising and marketing plans and strategies; (iv) the Company’s proprietary programs, processes or software; (v) the subject matter of any patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property; and (vi) other confidential and proprietary information or documents relating to the Company or its students or vendors which the Company reasonably regards as being confidential. Confidential Information does not include: (a) information known in general to your profession, or that becomes known thereafter, other than by an unauthorized act by you; (b) information that was lawfully in your possession before your employment with the Company; or (c) information obtained lawfully and in good faith from another party after such disclosure emanating from an original source other than the Company. You acknowledge that the Confidential Information is of incalculable value to the Company and is the exclusive property of the Company, and that the Company would suffer irreparable damage if any of the Confidential Information is improperly disclosed or used. Accordingly, you will not, at any time during your employment with (except as you reasonably determine is required to discharge your duties as an officer of the Company hereunder), or after the your separation from employment with, the Company, reveal, divulge, or make known to any person, firm or corporation any Confidential Information made known to you or of which you have become aware, regardless of whether developed, prepared, devised, or otherwise created in whole or in part by your efforts. You further agree that you will retain all Confidential Information in trust for the sole benefit of the Company, and will not (except, as provided above, to perform your duties) divulge or deliver any Confidential Information to any unauthorized person including, without limitation, any other employer of yours except as required by the order of any court or similar tribunal or any other governmental body or agency of appropriate jurisdiction; provided, that the you will, to the extent practicable, give the Company prior written notice of any such disclosure and will cooperate with the Company in obtaining a protective order or such similar protection as the Company may deem appropriate to preserve the confidential nature of such information. The foregoing obligations to maintain the Confidential Information shall not apply to any Confidential Information that is, or without any action by you becomes, generally available to the public

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(c)

Nondisparagement. You agree that, during your employment with the Company and at any time thereafter, regardless of the reason for your termination (whether voluntary or involuntary), you will not, directly or indirectly, through any agent or affiliate, make any comments or criticisms (whether of a professional or personal nature) to any individual or entity regarding the Company (or the terms of any agreement or arrangement of the Company) or any of its respective affiliates, stockholders or employees, that disparage the Company, its business or reputation, or any of its affiliates, stockholders or employees. The Company agrees that, during your employment with the Company and at any time thereafter, regardless of the reason for your termination (whether voluntary or involuntary), the Company will instruct its officers to not, directly or indirectly, through any agent or affiliate, make any comments or criticisms (whether of a professional or personal nature) to any individual or entity regarding you that disparage you or your reputation. Nothing herein shall preclude you or the Company from testifying, providing documents or otherwise responding to the extent required by lawful subpoena or other legal process, making appropriate reports to regulatory (or quasi-regulatory) bodies or authorities, completing internal investigations (whether requested by a regulatory (or quasi-regulatory) body or otherwise), completing any required or recommended securities filings or disclosures, or communicating within the Company to the extent consistent with legitimate business purposes.

 

(d)

Non-Solicitation/Non-hire. Commencing on the date of termination of your employment with the Company and for a period of two years thereafter, you will not, directly or indirectly, individually or on behalf of any Person (as defined below) (i) hire, solicit, aid or induce any individual employed by the Company or any affiliate of the Company, in either case during the 6-month period immediately preceding such hiring, solicitation, aid or inducement, to leave the Company or any affiliate of the Company to accept employment with or render services for you or such Person, or (ii) solicit, aid or induce any then-current student, customer, client, vendor, lender, supplier or sales representative of the Company or any of its affiliates or similar persons engaged in business with the Company or any of its affiliates to discontinue the relationship or reduce the amount of business done with the Company or any of its affiliates. “Person” means any individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity, or any department, agency or political subdivision thereof, or an accrediting body.

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(e)

Non-Competition. During your employment with the Company and/or any of its subsidiaries and continuing for twenty-four (24) months thereafter, you shall not, in any way, directly or indirectly, either for yourself or any other person or entity, whether paid or unpaid, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. You hereby acknowledge that the following organizations, among others, provide Competing Educational Services and, should you accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of Confidential Information and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. You further acknowledge that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Section 16(e). Nothing herein shall prevent you from owning less than two percent (2%) of the capital stock of a company whose stock is publicly traded and that is engaged in Competing Educational Services.

 

(f)

You acknowledge and agree that the Company will suffer irreparable injury in the event of a breach by you of the terms of this Section 16. In the event of a breach of the terms of this Section 16, the Company shall be entitled, in addition to any other remedies and damages available and without proof of monetary or immediate damage, to a temporary and/or permanent injunction, without bond, to restrain the violation of this Section 16 by you or any persons acting for or in concert with you. Such remedy, however, shall be cumulative and nonexclusive and shall be in addition to any other remedy that the parties may have.

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(g)

To the extent inconsistent, the provisions of this Section 16 will control over any restrictive covenant provided in any other agreement (including the duration of any covenant following termination of employment), including any award agreement granted under the Plan, entered into from time to time unless such other agreement specifically provides that it controls over this Section 16.

 

(h)

The provisions of this Section 16 shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision in this Section 16 is found by a court of competent jurisdiction to be unenforceable or unreasonable as written, you and the Company hereby specifically and irrevocably authorize and request said court to revise the unenforceable or unreasonable provisions in a manner that shall result in the provision being enforceable while remaining as similar as legally possible to the purpose and intent of the original.

 

17.

Arbitration.

 

(a)

Arbitrable Claims. You and the Company mutually consent to the resolution by final and binding arbitration of any and all disputes, controversies or claims related in any way to your employment with the Company, including, but not limited to, any dispute, controversy or claim of alleged discrimination, harassment or retaliation (including, but not limited to, claims based on race, sex, sexual orientation, gender identity, gender expression, religion, national origin, age, marital or family status, medical condition, military status, handicap or disability, or any other legally-protected status), any claim arising out of or relating to this Letter, any awards granted hereunder, or the breach thereof, and any dispute as to the arbitrability of a matter under this provision (collectively, “Claims”); provided, however, that nothing herein shall require arbitration of any claim or charge which, by law, cannot be the subject of a compulsory arbitration agreement. You and the Company expressly acknowledge that you waive the right to litigate Claims in a judicial forum before a judge or jury.

 

(b)

Claim Initiation/Time Limits. A party must notify the other party in writing of a request to arbitrate Claims within the same statute of limitations applicable to the legal claim asserted. The written request for arbitration must specify: (i) the factual basis on which the Claims are made; (ii) the statutory provision or legal theory under which Claims are made; and (iii) the nature and extent of any relief or remedy sought.

 

(c)

Procedures. The arbitration will be administered in Chicago, Illinois, in accordance with the Employment Arbitration Rules and Mediation Procedures then in effect (“Rules”) of the American Arbitration Association (“AAA”), a copy of which is available upon request to the Company. The arbitration shall be conducted by a tribunal of three arbitrators, of whom you shall appoint one and

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July 30, 2015

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the Company shall appoint one. The two arbitrators so appointed shall select the chairman of the tribunal within thirty days of the appointment of the second arbitrator. If any arbitrator is not appointed within the time limits provided herein or in the Rules, such arbitrator shall be appointed by the American Arbitration Association. You and the Company may be represented by counsel of your choosing. You and the Company shall pay your own legal fees (including counsel fees), and other fees and expenses incurred by you in obtaining or defending any right or benefit under such Claims; provided, however, that, irrespective of the outcome of any arbitration under this Section 17, the Company will pay any fees of the AAA, filing costs, arbitrator fees or expenses and any reasonable travel expenses incurred by you in connection with your travel to Chicago, Illinois for any arbitration proceeding.

 

(d)

Responsibilities of Tribunal; Award; Judgment. The tribunal will act as the impartial decision maker of any Claims that come within the scope of this arbitration provision. The tribunal will have the powers and authorities provided by the Rules and the state or common law under which the claim is made. For example, the tribunal will have the power and authority to include all remedies in the award available under the statute or common law under which the claim is made including, without limitation, the issuance of an injunction. The tribunal will apply the elements and burdens of proof, mitigation duty, interim earnings offsets and other legal rules or requirements under the statutory provision or common law under which such claim is made. The tribunal will permit reasonable pre-hearing discovery. The tribunal will have the power to issue subpoenas. The tribunal will have the authority to issue a summary disposition if there are no material factual issues in dispute requiring a hearing and you or the Company is clearly entitled to an award in its or your favor. The tribunal will not have the power or authority to add to, detract from or modify any provision of this Letter, or any related agreements or plans, including but not limited to any equity awards. The tribunal, in rendering an award in any arbitration conducted pursuant to this provision, shall issue a reasoned award in a signed written opinion stating the findings of fact and conclusions of law on which it is based. The tribunal shall be required to follow the law of the state designated by the parties herein. Any judgment on or enforcement of any award, including an award providing for interim or permanent injunctive relief, rendered by the tribunal may be entered, enforced or appealed in any court having jurisdiction thereof. Any arbitration proceedings, decision or award rendered hereunder, and the validity, effect and interpretation of this arbitration provision, shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

 

18.

Survival; Successors. Sections 9, 11, and 16 through 23 of this Letter shall survive and remain in effect following the date you terminate employment with the Company, as provided for therein.

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This Letter shall inure to the benefit of and be enforceable by your legal representatives, including payment or provision of any unpaid amount or benefit due you immediately prior to your death. This Letter shall inure to the benefit of and be binding upon the Company and its successors.

 

19.

Entire Agreement. This Letter constitutes the entire agreement between the parties hereto with respect to the matters referred to herein and supersedes any and all prior agreements, whether written or oral. No other agreement relating to the terms of your employment by the Company, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. You acknowledge that you are entering into this Letter of your own free will and accord, and with no duress, that you have read this Letter and that you understand it and its legal consequences.

 

20.

Withholding Taxes. The Company may withhold from any amounts payable under this Letter such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

21.

Governing Law. The rights and obligations of you and the Company pursuant to this Letter shall be governed by the laws of the State of Illinois, and you and the Company specifically consent to the jurisdiction of the courts of the State of Illinois located in Cook County, Illinois over any action arising out of or related to this letter.

 

22.

Amendments and Waivers. Any term of this Letter may be amended or terminated and the observance of any term of this Letter may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and you. No waivers of or exceptions to any term, condition or provisions of this Letter, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

 

23.

Construction. You agree that we have participated jointly in the negotiation and drafting of this Letter. In the event any ambiguity or question of intent arises, this Letter shall be construed as having been drafted jointly by us and no presumption or burden of proof shall arise favoring or disfavoring either of us by virtue of the authorship of any of the provisions of this letter.

 

24.

Counterparts. This Letter may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same instrument. Signatures delivered by facsimile or electronically (e.g., via .pdf file) shall be effective for all purposes.

[Signature Page to Letter Follows]

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[Signature Page to Letter]

We are enthusiastic about you joining the Company and look forward to working with you. Please return a signed copy of this letter to either of us at your earliest convenience

Sincerely,

CAREER EDUCATION CORPORATION

 

By:		/s/ Thomas B. Lally
Name:		Thomas B. Lally
Title:		Lead Director of the Board of Directors
By:		/s/ Patrick W. Gross
Name:		Patrick W. Gross
Title:		Chairman of the Compensation Committee of the Board of Directors

Accepted and Agreed to:

 

/s/ Todd S. Nelson				7-30-15
Todd S. Nelson				Date

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Exhibit A

“Cause” means, as reasonably determined by the Board, the occurrence of any one of the following by you: (a) any willful misconduct, gross negligence, willful abandonment of duty or material act of dishonesty; (b) a violation of the Company’s Code of Ethics for the Executive Officers and Senior Financial Officers or the Company Code of Business Conduct & Ethics, each as amended, restated or superseded; (c) commission of a felony or any other crime involving fraud or embezzlement; (d) a failure to reasonably cooperate in any investigation or proceeding concerning the Company; or (e) any violation of any non-compete, non-solicit or non-disclosure restrictive covenant applicable to you. For all purposes, no act or omission to act by you shall be “willful” if such act or omission was conducted in good faith or with a reasonable belief such conduct was in the best interests of the Company.

“Disability” has the meaning set forth in treasury regulation section 1.409A-3(i)(4).

“Good Reason” means the occurrence of any one of the following, without your prior written consent: (a) any material diminution in your title, duties or responsibilities (including reporting requirements); for which purpose, “Good Reason” will be deemed to occur upon any Change in Control in which occurs either (i) you are not the most-senior officer of the top-most parent company following such Change in Control or (ii) the Company stock ceases to be publicly-traded upon such Change in Control; (b) any material reduction in Base Salary, other than a proportional across-the-board reduction of applicable to all senior executives not exceeding 20% of Base Salary, or any material reduction in target Annual Bonus opportunity; (c) any material failure to pay any compensation when otherwise payable; or (d) any failure of a successor to the Company’s assets or business to assume the Company’s obligations to you under all applicable agreements. Notwithstanding the foregoing, your employment shall not be deemed to terminate for Good Reason unless you have given notice to the Company within 30 days of your knowledge of the first occurrence of one or more events alleged to give rise to Good Reason, the Company has failed to cure such event or events within 30 days following such notice, and your employment has terminated within two years following the occurrence of such events.

 

A-1

Exhibit 10.2

Cash-Settled RSU Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT

This CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated [INSERT DATE HERE] (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Todd Nelson (the “Grantee”).

To evidence such award and to set forth its terms, the Company and the Grantee agree as follows. All capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Career Education Corporation 2008 Incentive Compensation Plan, as amended (the “Plan”).

1. Grant of Restricted Stock Units. Subject to and upon the terms and conditions set forth in this Agreement and the Plan, the Committee granted to the Grantee [INSERT NUMBER OF RSUs] Restricted Stock Units (the “RSUs”) on the Grant Date, and the Grantee hereby accepts the grant of the RSUs as set forth herein.

2. Limitations on Transferability. Except in the event of the death of the Grantee, at any time prior to the Settlement Date, the RSUs, or any interest therein, cannot be directly or indirectly transferred, sold, assigned, pledged, hypothecated, encumbered or otherwise disposed.

3. Dates of Vesting. Subject to the provisions of Sections 5 and 6 of this Agreement, the RSUs shall cease to be restricted and shall become non-forfeitable (thereafter being referred to as “Vested RSUs”) in four equal installments on each of September 14, 2016, 2017, 2018 and 2019 (each a “Vesting Date”).

Notwithstanding the foregoing, and subject to Sections 5 and 6 below, in the event that the Grantee incurs a Termination of Service prior to any Vesting Date, any RSUs that were unvested at the date of such Termination of Service shall be immediately forfeited to the Company.

4. Crediting and Settling RSUs.

(a) RSU Accounts. The Company shall establish an account on its books for each grantee who receives a grant of RSUs (the “RSU Account”). The RSUs granted hereby shall be credited to the RSU Account as of the Grant Date. The RSU Account shall be maintained for record keeping purposes only and the Company shall not be obligated to segregate or set aside assets representing amounts credited to the RSU Account. The obligation to make distributions of amounts credited to the RSU Account shall be an unfunded, unsecured obligation of the Company.

(b) Settlement of RSU Accounts. The Company shall settle the RSU Account by delivering to the holder thereof (who may be the Grantee or his Beneficiary, as applicable) an amount in cash equal to the product of (i) the number of Vested RSUs in the RSU Account as of the applicable Settlement Date, multiplied by (ii) the Fair Market Value of a Share on the applicable Vesting Date (subject to applicable tax withholding obligations set forth in Section 24 of this Agreement or otherwise required by any taxing authority). The Settlement Date for all RSUs credited to the RSU Account shall be as soon as administratively practical following each Vesting Date (or the relevant vesting date set forth in Section 5 hereof), but in no

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event shall such Settlement Date be later than March 15 of the calendar year following the calendar year in which a Vesting Date (or the relevant vesting date set forth in Section 5 hereof) occurs. Notwithstanding the foregoing, in no case will the amount due to the Grantee in respect of an RSU exceed an amount which would result in a violation of Section 4.3 of the Plan.

5. Termination of Service. Subject to Section 6, the provisions of this Section 5 shall apply in the event the Grantee incurs a Termination of Service at any time prior to an applicable Vesting Date set forth in Section 3:

(a) If the Grantee incurs a Termination of Service either (i) by the Company without Cause, or (ii) by the Grantee for Good Reason (as defined in the that certain Letter Agreement between the Grantee and the Company dated as of July 30, 2015), then any RSUs that had not become Vested RSUs prior to the date of the Termination of Service shall become Vested RSUs, and, as of the applicable Settlement Date, the Grantee shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(b) If the Grantee incurs a Termination of Service because of his death or Disability, any RSUs that had not become Vested RSUs prior to the date of the Termination of Service shall become Vested RSUs, and, as of the applicable Settlement Date, the Grantee (or his Beneficiary, as applicable) shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(c) If the Grantee incurs a Termination of Service for any reason other than those reasons described in the forgoing Sections 5(a) and 5(b), then any RSUs that had not become Vested RSUs prior to the date of the Termination of Service shall be immediately forfeited to the Company.

6. Change in Control. Upon a Change in Control, the Grantee will have such rights with respect to the RSUs as are provided for in the Plan.

7. Adjustment in RSUs. The Committee may make or provide for such adjustments as provided for in Section 4.2 of the Plan.

8. Plan Amendment. No discontinuation, modification, or amendment of the Plan may, without the written consent of the Grantee, adversely affect the rights of the Grantee under this Agreement, except as otherwise provided under the Plan.

9. No Stockholder Rights. The RSUs represent only the right to receive cash pursuant to the terms hereof and shall not represent an equity security of the Company and shall not carry any voting or dividend rights.

10. Employment Rights. This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company shall not be affected in any way by this Agreement except as specifically provided herein. The Grantee’s execution or acceptance of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company, nor shall it interfere with the right of the Company to discharge the Grantee and to treat him without regard to the effect which such treatment might have upon him as a Grantee.

 

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11. Disclosure Rights. Except as required by applicable law, the Company (or any of its affiliates) shall not have any duty or obligation to disclose any information to a record or beneficial holder of RSUs or Vested RSUs.

12. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by and enforced in accordance with the laws of the State of Delaware (other than its laws respecting choice of law).

13. Compliance with Laws and Regulations. Notwithstanding anything herein to the contrary, the Company shall not be obligated to pay amounts due hereunder unless and until the Company is advised by its counsel that such payment is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company may require, as a condition of such payment, and in order to ensure compliance with such laws, regulations and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

14. Successors and Assigns. Except as otherwise expressly set forth in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the succeeding administrators, heirs and legal representatives of the Grantee and the successors and assigns of the Company.

15. No Limitation on Rights of the Company. This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

16. Notices. Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by electronic means, including by electronic mail to the Company-maintained electronic mailbox of the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail.

17. Construction. Notwithstanding any other provision of this Agreement, this Agreement is made, and the RSUs are granted, pursuant to the Plan and are in all respects limited by and subject to the express provisions of the Plan, as amended from time to time. To the extent any provision of this Agreement is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. The interpretation and construction by the Committee of the Plan, this Agreement and any such rules and regulations adopted by the Committee for purposes of administering the Plan, shall be final and binding upon the Grantee and all other persons.

18. Entire Agreement. This Agreement, together with the Plan, constitute the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

 

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19. Amendment. This Agreement may be amended as provided under the Plan, but except as provided in the Plan no such amendment shall adversely affect the Grantee’s rights under the Agreement without the Grantee’s written consent, unless otherwise permitted by the Plan.

20. Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

21. Counterparts. This Agreement may be signed in two counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

22. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

23. Severability. If any provision of this Agreement shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

24. Tax Consequences. Payments made pursuant hereto shall be subject to all required tax withholding obligations.

25. Receipt of Plan. The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts the RSUs subject to all the terms and provisions of this Agreement and of the Plan. The Committee shall interpret and construe the Plan and this Agreement, and its interpretation and determination shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

26. Restrictive Covenants. In consideration of receiving the RSUs hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee agrees to adhere to, and be bound by, the following restrictions. The Grantee hereby acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. The Grantee further acknowledges that the following restrictions will not cause the Grantee undue hardship. Consequently, the Grantee agrees that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During the Grantee’s employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, the Grantee will not, in any way, directly or indirectly, either for the Grantee or any other person or entity, whether paid or unpaid:

(a) For 24 months following Grantee’s Termination of Service, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves

 

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any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. The Grantee hereby acknowledges that the following organizations, among others, provide Competing Educational Services and, should the Grantee accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant.

(b) For 24 months following the Grantee’s Termination of Service, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

(c) At all times following the Grantee’s Termination of Service, reveal, divulge, or make known to any person, firm or corporation any confidential information, or take any other action, in violation of the Confidential Information Policy in the Company’s Code of Business Conduct & Ethics

Should the Grantee breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and the Grantee agrees to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should the Grantee breach the terms of these Restrictive Covenants, the Grantee will forfeit any right to the RSUs or payments made or remaining due hereunder, subject to the terms and conditions of the Plan, and the Grantee agrees to pay the Company’s attorneys’ fees and costs incurred in recovering such RSUs or payments made pursuant hereto.

It is the intention of the Grantee and the Company that in the event any of the covenants contained in these Restrictive Covenants are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

 

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27. Cooperation. In the event of any pending or threatened investigation, proceeding, lawsuit, claim or legal action against or involving the Company, the Grantee acknowledges and agrees to cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s case, including, but not limited to, the execution of affidavits or documents, providing of information requested by the Company or the Company’s counsel, and meeting with Company representatives or the Company’s counsel. Nothing in this paragraph shall be construed as suggesting or implying that the Grantee should testify in any way other than truthfully or provide anything other than accurate, truthful information.

28. Condition to Accept Agreement. This Agreement will be null and void unless the Grantee indicates his acceptance of the award of the RSUs provided for hereunder by signing, dating and returning this Agreement to the Company on or before [INSERT DATE HERE].

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

 

ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE

 

The undersigned, the Grantee, hereby:		(select one of the options below)

 

		ACCEPTS the award of RSUs as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the Plan.
		REJECTS the award of RSUs contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no impact on any other award of options, restricted stock or restricted stock units you have previously received, including any restrictive covenants you are subject to pursuant to the agreement(s) governing your previous awards.

 

Date:
						(Signature of Grantee)
						Print Name:		Todd Nelson

Please sign and return a fully executed .pdf of this Cash-Settled Restricted Stock Unit Agreement by [INSERT DATE HERE], to                     . Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Cash-Settled Restricted Stock Unit Agreement for your records.

 

7

Exhibit 10.3

2015 Cash-Settled RSU Agreement (Non-Plan)

CAREER EDUCATION CORPORATION

CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT

This CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated [INSERT DATE HERE] (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Todd Nelson (the “Grantee”).

The Company hereby grants such award to the Grantee. Notwithstanding that the award is not, and shall not be deemed to be, granted under the Company’s 2008 Incentive Compensation Plan, as amended (the “Plan”), except for the grant limitations set forth in the Plan, this award shall be subject to all of the terms of the Plan as if it had been granted thereunder, provided, however, that the terms of this Agreement shall control with respect to such matters expressly addressed herein, and all capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in Plan. To evidence such award and to set forth its terms, the Company and the Grantee agree as follows:

1. Grant of Restricted Stock Units. Subject to and upon the terms and conditions set forth in this Agreement and the Plan, the Committee granted to the Grantee [INSERT NUMBER OF RSUs] Restricted Stock Units (the “RSUs”) on the Grant Date, and the Grantee hereby accepts the grant of the RSUs as set forth herein.

2. Limitations on Transferability. Except in the event of the death of the Grantee, at any time prior to the Settlement Date, the RSUs, or any interest therein, cannot be directly or indirectly transferred, sold, assigned, pledged, hypothecated, encumbered or otherwise disposed.

3. Dates of Vesting. Subject to the provisions of Sections 5 and 6 of this Agreement, the RSUs shall cease to be restricted and shall become non-forfeitable (thereafter being referred to as “Vested RSUs”) in two equal installments on each of September 14, 2016 and September 14, 2017 (each, a “Vesting Date”).

Notwithstanding the foregoing, and subject to Sections 5 and 6 below, in the event that the Grantee incurs a Termination of Service prior to any Vesting Date, any RSUs that were unvested at the date of such Termination of Service shall be immediately forfeited to the Company.

4. Crediting and Settling RSUs.

(a) RSU Accounts. The Company shall establish an account on its books for each grantee who receives a grant of RSUs (the “RSU Account”). The RSUs granted hereby shall be credited to the RSU Account as of the Grant Date. The RSU Account shall be maintained for record keeping purposes only and the Company shall not be obligated to segregate or set aside assets representing amounts credited to the RSU Account. The obligation to make distributions of amounts credited to the RSU Account shall be an unfunded, unsecured obligation of the Company.

(b) Settlement of RSU Accounts. The Company shall settle the RSU Account by delivering to the holder thereof (who may be the Grantee or his Beneficiary, as applicable) an amount in cash equal to the product of (i) the number of Vested RSUs in the RSU Account as of the applicable Settlement Date, multiplied by (ii) the Fair Market Value of a Share on the applicable Vesting Date (subject to applicable tax withholding obligations set forth in

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

Section 24 of this Agreement or otherwise required by any taxing authority). The Settlement Date for all RSUs credited to the RSU Account shall be as soon as administratively practical following each Vesting Date (or the relevant vesting date set forth in Section 5(a) hereof), but in no event shall such Settlement Date be later than March 15 of the calendar year following the calendar year in which a Vesting Date (or the relevant vesting date set forth in Section 5(a) hereof) occurs.

5. Termination of Service. Subject to Section 6, the provisions of this Section 5 shall apply in the event the Grantee incurs a Termination of Service at any time prior to an applicable Vesting Date set forth in Section 3:

(a) If the Grantee incurs a Termination of Service because of his death or Disability, any RSUs that had not become Vested RSUs prior to the date of the Termination of Service shall become Vested RSUs, and, as of the applicable Settlement Date, the Grantee (or his Beneficiary, as applicable) shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(b) If the Grantee incurs a Termination of Service for any reason other than as set forth in 5(a) above, then any RSUs that had not become Vested RSUs prior to the date of the Termination of Service shall be immediately forfeited to the Company.

6. Change in Control. Upon a Change in Control, the Grantee will have such rights with respect to the RSUs as are provided for in the Plan.

7. Adjustment in RSUs. The Committee may make or provide for such adjustments as provided for in Section 4.2 of the Plan.

8. Plan Amendment. No discontinuation, modification, or amendment of the Plan may, without the written consent of the Grantee, adversely affect the rights of the Grantee under this Agreement, except as otherwise provided under the Plan.

9. No Stockholder Rights. The RSUs represent only the right to receive cash pursuant to the terms hereof and shall not represent an equity security of the Company and shall not carry any voting or dividend rights.

10. Employment Rights. This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company shall not be affected in any way by this Agreement except as specifically provided herein. The Grantee’s execution or acceptance of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company, nor shall it interfere with the right of the Company to discharge the Grantee and to treat him without regard to the effect which such treatment might have upon him as a Grantee.

11. Disclosure Rights. Except as required by applicable law, the Company (or any of its affiliates) shall not have any duty or obligation to disclose any information to a record or beneficial holder of RSUs or Vested RSUs.

12. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by and enforced in accordance with the laws of the State of Delaware (other than its laws respecting choice of law).

 

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

13. Compliance with Laws and Regulations. Notwithstanding anything herein to the contrary, the Company shall not be obligated to pay amounts due hereunder unless and until the Company is advised by its counsel that such payment is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company may require, as a condition of such payment, and in order to ensure compliance with such laws, regulations and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

14. Successors and Assigns. Except as otherwise expressly set forth in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the succeeding administrators, heirs and legal representatives of the Grantee and the successors and assigns of the Company.

15. No Limitation on Rights of the Company. This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

16. Notices. Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by electronic means, including by electronic mail to the Company-maintained electronic mailbox of the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail.

17. Construction. Except as set forth herein, it is the intent of the parties that this Agreement is made and the RSUs are granted consistent with the terms of the Plan and shall be deemed in all respects limited by and subject to the express provisions of the Plan as such provisions would apply to awards granted under the Plan. Notwithstanding the terms of the Plan, this Agreement shall control with respect to such matters expressly addressed herein. The interpretation and construction by the Committee of the Plan, this Agreement and any such rules and regulations adopted by the Committee for purposes of administering this Agreement consistent herewith, shall be final and binding upon the Grantee and all other persons.

18. Entire Agreement. This Agreement, together with the terms of the Plan as if the RSUs had been granted under the Plan, constitute the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

19. Amendment. This Agreement may be amended as provided under the Plan, but except as provided in the Plan no such amendment shall adversely affect the Grantee’s rights under the Agreement without the Grantee’s written consent, unless otherwise permitted by the Plan with respect to awards granted under the Plan.

 

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

20. Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

21. Counterparts. This Agreement may be signed in two counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

22. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

23. Severability. If any provision of this Agreement shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

24. Tax Consequences. Payments made pursuant hereto shall be subject to all required tax withholding obligations.

25. Receipt of Plan. The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts the RSUs subject to all the terms and provisions of this Agreement and acknowledges and agrees that the terms of the Plan shall apply to the RSUs as if the RSUs had been granted under the Plan; provided, however, this Agreement shall control with respect to such matters expressly addressed herein. The Committee shall interpret and construe the Plan and this Agreement, and its interpretation and determination shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

26. Restrictive Covenants. In consideration of receiving the RSUs hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee agrees to adhere to, and be bound by, the following restrictions. The Grantee hereby acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. The Grantee further acknowledges that the following restrictions will not cause the Grantee undue hardship. Consequently, the Grantee agrees that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During the Grantee’s employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, the Grantee will not, in any way, directly or indirectly, either for the Grantee or any other person or entity, whether paid or unpaid:

(a) For 24 months following Grantee’s Termination of Service, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as

 

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. The Grantee hereby acknowledges that the following organizations, among others, provide Competing Educational Services and, should the Grantee accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant.

(b) For 24 months following the Grantee’s Termination of Service, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

(c) At all times following the Grantee’s Termination of Service, reveal, divulge, or make known to any person, firm or corporation any confidential information, or take any other action, in violation of the Confidential Information Policy in the Company’s Code of Business Conduct & Ethics

Should the Grantee breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and the Grantee agrees to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should the Grantee breach the terms of these Restrictive Covenants, the Grantee will forfeit any right to the RSUs or payments made or remaining due hereunder, subject to the terms and conditions of the Plan, and the Grantee agrees to pay the Company’s attorneys’ fees and costs incurred in recovering such RSUs or payments made pursuant hereto.

It is the intention of the Grantee and the Company that in the event any of the covenants contained in these Restrictive Covenants are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

27. Cooperation. In the event of any pending or threatened investigation, proceeding, lawsuit, claim or legal action against or involving the Company, the Grantee acknowledges and agrees to cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s case, including, but not limited to, the execution of affidavits or documents, providing of information requested by the Company or the Company’s counsel, and meeting with

 

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

Company representatives or the Company’s counsel. Nothing in this paragraph shall be construed as suggesting or implying that the Grantee should testify in any way other than truthfully or provide anything other than accurate, truthful information.

28. Condition to Accept Agreement. This Agreement will be null and void unless the Grantee indicates his acceptance of the award of the RSUs provided for hereunder by signing, dating and returning this Agreement to the Company on or before [INSERT DATE HERE].

[Signature Page Follows]

 

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2015 Cash-Settled RSU Agreement (Non-Plan)

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

 

ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE

 

The undersigned, the Grantee, hereby:		(select one of the options below)

 

		ACCEPTS the award of RSUs as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the terms of the Plan as if the RSUs had been granted under the Plan.
		REJECTS the award of RSUs contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no impact on any other award of options, restricted stock or restricted stock units you have previously received, including any restrictive covenants you are subject to pursuant to the agreement(s) governing your previous awards.

 

Date:
						(Signature of Grantee)
						Print Name:		Todd Nelson

Please sign and return a fully executed .pdf of this Cash-Settled Restricted Stock Unit Agreement by [INSERT DATE HERE], to                     . Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Cash-Settled Restricted Stock Unit Agreement for your records.

 

7

Exhibit 10.4

Restricted Stock Unit Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

RESTRICTED STOCK UNIT AGREEMENT

This RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated [INSERT DATE HERE] (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Todd Nelson (the “Grantee”).

To evidence such award and to set forth its terms, the Company and the Grantee agree as follows. All capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Career Education Corporation 2008 Incentive Compensation Plan, as amended (the “Plan”).

1. Grant of Restricted Stock Units. Subject to and upon the terms and conditions set forth in this Agreement and the Plan, the Committee granted to the Grantee the following number of Restricted Stock Units (the “RSUs”) on the Grant Date, and the Grantee hereby accepts the grant of the RSUs as set forth herein:

 

Total Number of Restricted Stock Units Granted and Available for Vesting under this Agreement:		[INSERT NUMBER OF RSUs]

2. Limitations on Transferability. At any time prior to the Settlement Date, the RSUs, or any interest therein, cannot be directly or indirectly transferred, sold, assigned, pledged, hypothecated, encumbered or otherwise disposed.

3. Dates of Vesting. Subject to the provisions of Sections 5 and 6 of this Agreement, the RSUs shall cease to be restricted and shall become non-forfeitable (thereafter being referred to as “Vested Shares”) in four equal installments on each of September 14, 2016, 2017, 2018 and 2019 (each a “Vesting Date”); provided, however, that a whole number of RSUs shall vest on each Vesting Date and the Company shall accordingly allocate such RSUs across the Vesting Dates as evenly as possible.

Notwithstanding the foregoing, and subject to Sections 5 and 6 below, in the event that the Grantee incurs a Termination of Service prior to any Vesting Date, any RSUs that were unvested at the date of such Termination of Service shall be immediately forfeited to the Company.

4. Crediting and Settling RSUs.

(a) RSU Accounts. The Company shall establish an account on its books for each grantee who receives a grant of RSUs (the “RSU Account”). The RSUs granted hereby shall be credited to the Grantee’s RSU Account as of the Grant Date. The RSU Account shall be maintained for record keeping purposes only and the Company shall not be obligated to segregate or set aside assets representing securities or other amounts credited to the RSU Account. The obligation to make distributions of securities or other amounts credited to the RSU Account shall be an unfunded, unsecured obligation of the Company.

(b) Settlement of RSU Accounts. The Company shall settle the RSU Account by delivering to the holder thereof (who may be the Grantee or his Beneficiary, as applicable) a number of Shares equal to the whole number of Vested Shares underlying the RSUs then credited to the Grantee’s RSU Account (or a specified portion in the event of any

 

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Restricted Stock Unit Agreement

 

partial settlement). The Settlement Date for all RSUs credited to a Grantee’s RSU Account shall be as soon as administratively practical following when the Restrictions applicable to any portion of the RSUs granted hereby have lapsed, but in no event shall such Settlement Date be later than March 15 of the calendar year following the calendar year in which the Restrictions applicable to an the RSUs have lapsed.

5. Termination of Service. Subject to Section 6, the provisions of this Section 5 shall apply in the event the Grantee incurs a Termination of Service at any time prior to an applicable Vesting Date set forth in Section 3:

(a) If the Grantee incurs a Termination of Service either (i) by the Company without Cause, or (ii) by the Grantee for Good Reason (as defined in the that certain Letter Agreement between the Grantee and the Company dated as of July 30, 2015), then any RSUs that had not become Vested Shares prior to the date of the Termination of Service shall become Vested Shares, and, as of the applicable Settlement Date, the Grantee shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(b) If the Grantee incurs a Termination of Service because of his death or Disability, any RSUs that had not become Vested Shares prior to the date of the Termination of Service shall become Vested Shares, and, as of the applicable Settlement Date, the Grantee (or his Beneficiary, as applicable) shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(c) If the Grantee incurs a Termination of Service for any reason other than those reasons described in the forgoing Sections 5(a) and 5(b), then any RSUs that had not become Vested Shares prior to the date of the Termination of Service shall be immediately forfeited to the Company.

6. Change in Control. Upon a Change in Control, the Grantee will have such rights with respect to the RSUs as are provided for in the Plan.

7. Stock Certificates and Escrow. On each Settlement Date, the Company, at its election, shall either (a) credit any Shares issued to the Grantee pursuant hereto through a book entry on the records kept by the Company’s stockholder record keeper, or (b) issue certificates for such Shares.

8. Liability of the Company. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and transfer of any Shares pursuant to this Agreement shall relieve the Company of any liability with respect to the non-issuance or transfer of the Shares as to which such approval shall not have been obtained. However, the Company shall use its best efforts to obtain all such approvals.

9. Adjustment in RSUs. The Committee may make or provide for such adjustments as provided for in Section 4.2 of the Plan.

10. Plan Amendment. No discontinuation, modification, or amendment of the Plan may, without the written consent of the Grantee, adversely affect the rights of the Grantee under this Agreement, except as otherwise provided under the Plan.

 

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Restricted Stock Unit Agreement

 

11. Stockholder Rights. The RSUs shall not represent an equity security of the Company and shall not carry any voting or dividend rights. The Grantee shall have no rights of a stockholder of the Company with respect to any Vested Shares to be issued pursuant to a RSU until certificates for the Shares underlying the RSUs granted hereby are issued to the Grantee or such Shares are otherwise reflected in a book entry on the records kept by the Company’s stockholder record keeper. Notwithstanding the foregoing, on the relevant Settlement Date, the Grantee shall be entitled to receive an amount in cash equal to the dividends, if any, that would have become payable on or after the Vesting Date, but prior to the Settlement Date, with respect to the Shares issued on the Settlement Date.

12. Employment Rights. This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company shall not be affected in any way by this Agreement except as specifically provided herein. Grantee’s execution or acceptance of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company, nor shall it interfere with the right of the Company to discharge the Grantee and to treat him without regard to the effect which such treatment might have upon as a Grantee.

13. Disclosure Rights. Except as required by applicable law, the Company (or any of its affiliates) shall not have any duty or obligation to disclose affirmatively to a record or beneficial holder of Common Stock, RSUs or Vested Shares, and such holder shall have no right to be advised of, any material information regarding the Company at any time prior to, upon or in connection with receipt of the Shares.

14. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by and enforced in accordance with the laws of the State of Delaware (other than its laws respecting choice of law).

15. Compliance with Laws and Regulations. Notwithstanding anything herein to the contrary, the Company shall not be obligated to either (a) cause to be issued or delivered any certificates for Shares, or (b) credit a book entry related to the Shares to be entered on the records of the Company’s stockholder record keeper, unless and until the Company is advised by its counsel that such issuance and delivery of such certificates or entry on the records, as applicable, is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company may require, as a condition of such issuance and delivery of such certificates or entry on the records, as applicable, and in order to ensure compliance with such laws, regulations and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

16. Successors and Assigns. Except as otherwise expressly set forth in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the succeeding administrators, heirs and legal representatives of the Grantee and the successors and assigns of the Company.

17. No Limitation on Rights of the Company. This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

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Restricted Stock Unit Agreement

 

18. Notices. Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by electronic means, including by electronic mail to the Company-maintained electronic mailbox of the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail.

19. Construction. Notwithstanding any other provision of this Agreement, this Agreement is made, and the RSUs and Shares are granted, pursuant to the Plan and are in all respects limited by and subject to the express provisions of the Plan, as amended from time to time. To the extent any provision of this Agreement is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. The interpretation and construction by the Committee of the Plan, this Agreement and any such rules and regulations adopted by the Committee for purposes of administering the Plan, shall be final and binding upon the Grantee and all other persons.

20. Entire Agreement. This Agreement, together with the Plan, constitute the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

21. Amendment. This Agreement may be amended as provided under the Plan, but except as provided in the Plan no such amendment shall adversely affect the Grantee’s rights under the Agreement without the Grantee’s written consent, unless otherwise permitted by the Plan.

22. Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

23. Counterparts. This Agreement may be signed in two counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

24. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

25. Severability. If any provision of this Agreement shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

26. Tax Consequences. The Grantee acknowledges and agrees that the Grantee is responsible for all taxes and tax consequences with respect to the grant of RSUs, the lapse of restrictions otherwise imposed by this Agreement and the issuance of Shares pursuant hereto. The Grantee further acknowledges that it is the Grantee’s responsibility to obtain any advice that the Grantee deems necessary or appropriate with respect to any and all tax matters that

 

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Restricted Stock Unit Agreement

 

may exist as a result of the grant of the RSUs, the lapse of restrictions otherwise imposed by this Agreement and the issuance of Shares pursuant hereto. Notwithstanding any other provision of this Agreement, Shares shall not be issued to the Grantee pursuant hereto unless, as provided in Section 17 of the Plan, the Grantee shall have paid to the Company, or made arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to the grant of the RSUs, the lapse of restrictions otherwise imposed by this Agreement and the issuance of Shares pursuant hereto.

27. Receipt of Plan. The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts the RSUs subject to all the terms and provisions of this Agreement and of the Plan. The Shares issued pursuant hereto are granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the RSUs and such Shares shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this Agreement, and its interpretation and determination shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

28. Restrictive Covenants. In consideration of receiving the RSUs hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee agrees to adhere to, and be bound by, the following restrictions. The Grantee hereby acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. The Grantee further acknowledges that the following restrictions will not cause the Grantee undue hardship. Consequently, the Grantee agrees that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During the Grantee’s employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, the Grantee will not, in any way, directly or indirectly, either for the Grantee or any other person or entity, whether paid or unpaid:

(a) For 24 months following Grantee’s Termination of Service, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. The Grantee hereby acknowledges that the following organizations, among others, provide Competing Educational Services and, should the Grantee accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo

 

5

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Restricted Stock Unit Agreement

 

Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant.

(b) For 24 months following Grantee’s Termination of Service, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

(c) At all times following the Grantee’s Termination of Service, reveal, divulge, or make known to any person, firm or corporation any confidential information, or take any other action, in violation of the Confidential Information Policy in the Company’s Code of Business Conduct & Ethics

Should the Grantee breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and the Grantee agrees to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should the Grantee breach the terms of these Restrictive Covenants, the Grantee will forfeit any right to the RSUs or Shares issued hereunder, subject to the terms and conditions of the Plan, and the Grantee agrees to pay the Company’s attorneys’ fees and costs incurred in recovering such RSUs or Shares issued pursuant hereto.

It is the intention of the Grantee and the Company that in the event any of the covenants contained in these Restrictive Covenants are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

These Restrictive Covenants shall supersede the terms of the restrictive covenants regarding competition and solicitation of Company employees that are contained in all prior agreements entered into by the Grantee and the Company to evidence an award under the Plan and to set forth the terms of such award. All of the other terms of such prior agreements shall remain as is and shall not be affected by this Agreement.

29. Cooperation. In the event of any pending or threatened investigation, proceeding, lawsuit, claim or legal action against or involving the Company, the Grantee acknowledges and agrees to cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s case, including, but not limited to, the execution of affidavits or documents, providing of information requested by the Company or the Company’s counsel, and meeting with Company representatives or the Company’s counsel. Nothing in this paragraph shall be construed as suggesting or implying that the Grantee should testify in any way other than truthfully or provide anything other than accurate, truthful information.

 

6

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Restricted Stock Unit Agreement

 

30. Condition to Accept Agreement. This Agreement will be null and void unless the Grantee indicates his acceptance of the award of RSUs provided for hereunder by signing, dating and returning this Agreement to the Company on or before [INSERT DATE HERE].

[Signature Page Follows]

 

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Restricted Stock Unit Agreement

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

 

ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE

 

The undersigned, the Grantee, hereby:		(select one of the options below)

 

		ACCEPTS the award of RSUs as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the Plan.
		REJECTS the award of RSUs contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no impact on any other award of options, restricted stock or restricted stock units you have previously received, including any restrictive covenants you are subject to pursuant to the agreement(s) governing your previous awards.

 

Date:
						(Signature of Grantee)
						Print Name: Todd Nelson

Please sign and return a fully executed .pdf of this Restricted Stock Unit Agreement by [INSERT DATE HERE], to                     . Failure to do so will result in forfeiture of the award. Please retain a copy of this Restricted Stock Unit Agreement for your records.

 

8

Exhibit 10.5

Employee Stock Option Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

This STOCK OPTION AGREEMENT (this “Agreement”) dated [INSERT DATE HERE] (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Todd Nelson (the “Grantee”).

In accordance with Section 6 of the Career Education Corporation 2008 Incentive Compensation Plan, as amended (the “Plan”), and subject to the terms of the Plan and this Agreement, the Company hereby grants to the Grantee an option to purchase shares of common stock, par value $0.01 per share, of the Company (“Shares”) on the terms and conditions as set forth below (“Option”). The Option granted hereby is not intended to constitute an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Plan.

To evidence the Option and to set forth its terms, the Company and the Grantee agree as follows:

1. Grant. The Committee hereby grants the Option to the Grantee on the Grant Date for the purchase from the Company of all or any part of an aggregate of [INSERT NUMBER OF SHARES] Shares (subject to adjustment as provided in Section 4.2 of the Plan).

2. Option Price. The purchase price per Share purchasable under the Option shall be $[INSERT OPTION PRICE] per Share (the “Option Price”) (subject to adjustment as provided in Section 4.2 of the Plan). The Option Price is equal to 100% of the Fair Market Value of one share of Common Stock on the Grant Date, as calculated under the Plan.

3. Term and Vesting of the Option; Termination of Service.

(a) The Option Term shall expire on the tenth anniversary of the Grant Date. The Option shall vest and become exercisable in four equal installments on each of September 14, 2016, 2017, 2018 and 2019 (each a “Vesting Date”); provided, however, that the Option shall only vest and become exercisable with respect to a whole number of Shares on each Vesting Date and the Company shall accordingly allocate such vesting across the Vesting Dates as evenly as possible. Except as otherwise provided herein, the Option may be exercised on or following the applicable Vesting Dates with respect to the vested portion, as long as such exercise occurs prior to the expiration of the Option as provided in this Agreement and the Plan.

(b) If the Grantee incurs a Termination of Service either (i) by the Company without Cause, or (ii) by the Grantee for Good Reason (as defined in the that certain Letter Agreement between the Grantee and the Company dated as of July 30, 2015), then any portion of the Option that had not become vested prior to the date of the Termination of Service shall become vested as of the date of such Termination of Service, and shall remain outstanding and exercisable until the earlier of (A) the third anniversary of the applicable Termination of Service, and (B) the tenth anniversary of the Grant Date.

(c) If the Grantee incurs a Termination of Service because of his death or Disability, then any portion of the Option that had not become vested prior to the date of the Termination of Service shall become vested as of the date of such Termination of Service, and shall remain outstanding and exercisable until the earlier of (i) the first anniversary of the applicable Termination of Service, and (ii) the tenth anniversary of the Grant Date.

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Employee Stock Option Agreement

 

(d) If the Grantee incurs a Termination of Service because of his Retirement, then the portion of the Option that was vested as of the date of such Termination of Service shall shall remain outstanding and exercisable until the earlier of (i) the third anniversary of the applicable Termination of Service, and (ii) the tenth anniversary of the Grant Date.

(e) Except as otherwise provided in this Section 3, any portion of the Option which is not vested (or otherwise not exercisable) at the time of the Grantee’s Termination of Service shall not become exercisable after such termination and shall be immediately cancelled and forfeited to the Company.

4. Exercisability. In the event the Grantee incurs a Termination of Service for any reason, the Grantee will have such rights with respect to the Option as are provided for in the Plan.

5. Exercise of Option. On or after the date any portion of the Option becomes exercisable, but prior to the expiration of the Option in accordance with Sections 3 and 4 above, the portion of the Option that has become exercisable may be exercised in whole or in part by the Grantee (or, pursuant to Section 6, by his permitted successor) upon delivery of the following to the Company (or any Person designated by the Company):

(a) a written notice of exercise (which may include a notice made through any electronic system designated by the Company) which identifies this Agreement and states the number of whole Shares then being purchased; and

(b) any combination of cash (or by certified or personal check or wire transfer), and/or (i) with the approval of the Committee, Shares or Shares of Restricted Stock then owned by the Grantee in an amount having a combined Fair Market Value on the exercise date equal to the aggregate Option Price of the Shares then being purchased, or (ii) unless otherwise prohibited by law for either the Company or the Grantee, an irrevocable authorization of a third party to sell Shares acquired upon the exercise of the Option and promptly remit to the Company a sufficient portion of the sale proceeds to pay the entire Option Price and any tax withholdings resulting from such exercise.

Notwithstanding the foregoing, the Grantee (or any permitted successor) shall take whatever additional actions, including, without limitation, the furnishing of an opinion of counsel, and execute whatever additional documents the Company may, in its sole discretion, deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed by the Plan, this Agreement or applicable law.

No Shares shall be issued upon exercise of the Option until full payment has been made. Upon satisfaction of the conditions and requirements of this Section 5 and the Plan, the Company, in its sole discretion, shall either (a) credit the number of Shares for which the Option was exercised in a book entry on the records kept by the Company’s stockholder record keeper or (b) shall deliver to the Grantee (or his permitted successor) a certificate or certificates for the number of Shares in respect of which the Option shall have been exercised. Upon exercise of the Option (or a portion thereof), the Company shall have a reasonable time to issue shares or credit a book entry for the Common Stock for which the Option has been exercised, and the Grantee shall not be treated as a stockholder for any purpose whatsoever prior to such issuance or book entry. No

 

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Employee Stock Option Agreement

 

adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Common Stock is recorded as issued and transferred in the Company’s official stockholder records, except as otherwise provided in the Plan or this Agreement.

6. Limitation Upon Transfer. The Option and all rights granted hereunder shall not (a) be transferred by the Grantee, other than by will, by the laws of descent and distribution, or to a Permitted Transferee; (b) be otherwise assigned, pledged or hypothecated in any way; and (c) be subject to execution, attachment or similar process. Any attempt to transfer the Option, other than by will or by the laws of descent and distribution or to a Permitted Transferee, or to assign, pledge or hypothecate or otherwise dispose of the Option or of any rights granted hereunder contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the Option or such rights, shall be void and unenforceable against the Company or any Subsidiary; provided, however, that the Grantee may designate a Beneficiary to receive benefits in the event of the Grantee’s death. The Option shall be exercised during the Grantee’s lifetime only by the Grantee, the Grantee’s guardian, the Grantee’s legal representative or a Permitted Transferee.

7. Change in Control. Upon a Change in Control, the Grantee will have such rights with respect to the Option as are provided for in the Plan.

8. Effect of Amendment of Plan. No discontinuation, modification, or amendment of the Plan may, without the written consent of the Grantee, adversely affect the rights of the Grantee under the Option, except as otherwise provided under the Plan.

This Agreement may be amended as provided under the Plan, but no such amendment shall adversely affect the Grantee’s rights under the Agreement without the Grantee’s written consent, unless otherwise permitted by the Plan.

9. No Limitation on Rights of the Company. The grant of the Option shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

10. Rights as a Stockholder. The Grantee shall have the rights of a stockholder with respect to the Shares subject to the Option only upon becoming the holder of record of such Shares.

11. Compliance with Applicable Law. Notwithstanding anything herein to the contrary, the Company shall not be obligated to either (a) cause to be issued or delivered any certificates for Shares pursuant to the exercise of the Option, or (b) credit a book entry related to the shares issued pursuant to the exercise of the Option to be entered on the records of the Company’s stockholder record keeper, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates or entry on the records, as applicable, is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company may require, as a condition of the issuance and delivery of such certificates or entry on the records, as applicable, and in order to ensure compliance with such laws, regulations and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

 

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Employee Stock Option Agreement

 

12. No Obligation to Exercise Option. The granting of the Option shall impose no obligation upon the Grantee to exercise the Option.

13. Agreement Not a Contract of Employment or Other Relationship. This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company or its Subsidiaries shall not be affected in any way by this Agreement except as specifically provided herein. The execution of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company or its Subsidiaries, nor shall it interfere with the right of the Company or its Subsidiaries to discharge the Grantee and to treat him without regard to the effect that such treatment might have upon him as a Grantee.

14. Withholding. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the Option, the Grantee shall be required to pay such amount to the Company, or make arrangements satisfactory to the Company regarding the payment of such amount, as provided in Section 17 of the Plan. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee. The Grantee acknowledges and agrees that he is responsible for the tax consequences associated with the grant and exercise of the Option.

15. Notices. Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by electronic means, including by electronic mail to the Company-maintained electronic mailbox of the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail.

16. Governing Law. Except to the extent preempted by federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware without regard to the principles thereof relating to the conflicts of laws.

17. Receipt of Plan. The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all the terms and provisions of this Agreement and of the Plan. The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this Agreement, and its interpretation and determination shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

18. Restrictive Covenants. In consideration of receiving the Option hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee agrees to adhere to, and be bound by, the following restrictions. The Grantee hereby

 

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Employee Stock Option Agreement

 

acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. The Grantee further acknowledges that the following restrictions will not cause the Grantee undue hardship. Consequently, the Grantee agrees that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During the Grantee’s employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, the Grantee will not, in any way, directly or indirectly, either for the Grantee or any other person or entity, whether paid or unpaid:

(a) For 24 months following Grantee’s Termination of Service, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. The Grantee hereby acknowledges that the following organizations, among others, provide Competing Educational Services and, should the Grantee accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant.

(b) For 24 months following Grantee’s Termination of Service, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

(c) At all times following the Grantee’s Termination of Service, reveal, divulge, or make known to any person, firm or corporation any confidential information, or take any other action, in violation of the Confidential Information Policy in the Company’s Code of Business Conduct & Ethics

 

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Employee Stock Option Agreement

 

Should the Grantee breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and the Grantee agrees to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should the Grantee breach the terms of these Restrictive Covenants, the Grantee will forfeit any right to the Option or Shares issued hereunder, subject to the terms and conditions of the Plan, and the Grantee agrees to pay the Company’s attorneys’ fees and costs incurred in recovering the Option or Shares issued pursuant hereto.

It is the intention of the Grantee and the Company that in the event any of the covenants contained in these Restrictive Covenants are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

19. Cooperation. In the event of any pending or threatened investigation, proceeding, lawsuit, claim or legal action against or involving the Company, the Grantee acknowledges and agrees to cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s case, including, but not limited to, the execution of affidavits or documents, providing of information requested by the Company or the Company’s counsel, and meeting with Company representatives or the Company’s counsel. Nothing in this paragraph shall be construed as suggesting or implying that the Grantee should testify in any way other than truthfully or provide anything other than accurate, truthful information.

20. Condition to Return Signed Agreement. This Agreement shall be null and void unless the Grantee indicates his acceptance of the Option and this Agreement by signing, dating, and returning this Agreement to the Company on or before [INSERT DATE HERE].

21. Other Terms and Conditions. The foregoing does not modify or amend any terms of the Plan. To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.

[Signature Page Follows]

 

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Employee Stock Option Agreement

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

 

ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE

 

The undersigned, the Grantee, hereby:		(select one of the options below)

 

		ACCEPTS the award of the Option as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the Plan.
		REJECTS the award of the Option contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no impact on any other award of options, restricted stock or restricted stock units you have previously received, including any restrictive covenants you are subject to pursuant to the agreement(s) governing your previous awards.

 

Date:
						(Signature of Grantee)
						Print Name:		Todd Nelson

Please sign and return a fully executed .pdf of this Stock Option Agreement by [INSERT DATE HERE], to                     . Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Stock Option Agreement for your records.

 

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Exhibit 10.6

2015 Performance Unit Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

PERFORMANCE UNIT AGREEMENT

This PERFORMANCE UNIT AGREEMENT (this “Agreement”) dated [INSERT DATE HERE] (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Todd Nelson (the “Grantee”).

To evidence such award and to set forth its terms, the Company and the Grantee agree as follows:

1. Definitions. All capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Career Education Corporation 2008 Incentive Compensation Plan, as amended (the “Plan”). When used herein, the following terms shall have the meaning set forth in this Section 1.

(a) “Award Percentage” means a percentage determined pursuant to the table set forth below based on the Company’s Performance Percentile.

 

Performance Percentile		Award Percentage
75 or higher			200	%
70			180	%
60			140	%
50			100	%
40			80	%
30			60	%
25			50	%
Lower than 25			0	%

Note: To the extent the Performance Percentile is in between the percentiles listed in the table above, the applicable Award Percentage will be interpolated. For example, if the Performance Percentile is 55, then the Award Percentage would be 120%.

Notwithstanding the foregoing table, if the Company’s Total Shareholder Return is less than zero (0), then the Award Percentage will be determined pursuant to the table set forth above, but in such case, the Award Percentage shall not exceed 100%.

(b) “CIC Award Percentage” means the Award Percentage determined as of the date of the first Change in Control to occur following the Grant Date, but taking into account the price of a Share in connection with the Change in Control, with future performance extrapolated accordingly on the same basis.

(c) “Closing Stock Price” means the average closing stock price for the 90-day period immediately preceding the end of the Performance Period. The Closing Stock Price shall be adjusted so that such price represents the amount it would have been had all dividends paid during the Performance Period been reinvested in stock of the Company or the Peer Group member, as applicable, on the dividend date.

(d) “Opening Stock Price” means the average closing stock price for the 90-day period immediately preceding the beginning of the Performance Period.

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(e) “Payment Date” means a date selected by the Company which shall occur any time between the period beginning January 1, 2018 and ending on March 15, 2018.

(f) “Peer Group” means the entities listed on Exhibit A, but in each case only to the extent the stock of such entity remains publicly traded on a national securities exchange as of the last day of the Performance Period.

(g) “Performance Percentile” means the rank, expressed as a percentile, of the Company’s Total Shareholder Return for the Performance Period when compared against the Total Shareholder Return of each of the members of the Peer Group. For purposes of this ranking, the Total Shareholder Return for each member of the Peer Group shall first be determined and ranked and then the Total Shareholder Return of the Company shall be compared to the ranking of the Peer Group members. The Committee retains the discretion to adjust the Performance Percentile if it believes that the Performance Percentile is adversely impacted due to fewer companies remaining part of the Peer Group (e.g., due to the stock not being publicly traded at the end of the Performance Period as a result of bankruptcy or acquisition by another company).

(h) “Performance Period” means the period beginning on January 1, 2015 and ending on December 31, 2017.

(i) “Target Value” means $1,000,000.00.

(j) “Total Shareholder Return” means the result (positive or negative) of the following formula (expressed as a percentage): (A – B)/B; where “A” equals the Closing Stock Price, and “B” equals the Opening Stock Price.

2. Grant of Performance Unit. Subject to and upon the terms and conditions set forth in this Agreement and the Plan, the Committee granted to the Grantee a performance unit (the “Performance Unit”) on the Grant Date, and the Grantee hereby accepts the grant of the Performance Unit as set forth herein. Except as otherwise provided herein, the Performance Unit granted hereby shall have no value until the Payment Date.

3. Limitations on Transferability. Except in the event of the death of the Grantee, at any time prior to the Payment Date, the Performance Unit, or any interest therein, cannot be directly or indirectly transferred, sold, assigned, pledged, hypothecated, encumbered or otherwise disposed.

4. Payment for Performance Unit. Following the end of the Performance Period, but not later than March 15, 2018, the Company will pay the Grantee an amount in respect of the Performance Unit (which amount may not be less than zero dollars ($0)) determined pursuant to this Section 4. The amount due to the Grantee in respect of the Performance Unit shall equal the product of (a) the Target Value, multiplied by (b) the Award Percentage. The amount payable to the Grantee hereunder shall be subject to tax withholding as required by Section 24.

5. Termination of Service. Subject to Section 6, the provisions of this Section 5 shall apply in the event the Grantee incurs a Termination of Service at any time prior to the end of the Performance Period.

(a) If the Grantee incurs a Termination of Service prior to the end of the Performance Period either (i) by the Company without Cause, or (ii) by the Grantee for Good

 

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Reason (as defined in the that certain Letter Agreement between the Grantee and the Company dated as of July 30, 2015), then, except as provided in Section 6, the Grantee shall receive a payment in respect of the Performance Unit equal to the result of the following formula: (A x B) x (C/873); where “A” equals the Target Value, “B” equals the Award Percentage, and “C” equals the number of days elapsing between the Grant Date and the date of the applicable Termination of Service. The amount payable pursuant to this Section 5(a) will be (A) paid during the period beginning on January 1, 2018 and ending on March 15, 2018, and (B) subject to tax withholding as required by Section 24.

(b) If the Grantee incurs a Termination of Service prior to the end of the Performance Period because of his death or Disability, the Grantee (or his Beneficiary, if applicable) shall receive a payment in respect of the Performance Unit equal to the Target Value. The amount payable pursuant to this Section 5(b) will be (A) paid as soon as reasonably possible following the date of such Termination of Service, but in no case later than March 15 of the year following the year in which such Termination of Service occurs, and (B) subject to tax withholding as required by Section 24.

(c) If the Grantee incurs a Termination of Service prior to the end of the Performance Period for any reason other than those set forth in Sections 5(a) and 5(b), then the Performance Unit shall be immediately forfeited to the Company and no amount will become due or owing to the Grantee under this Agreement.

For the avoidance of doubt, (i) if the Grantee incurs a Termination of Service for any reason other than Cause after the end of the Performance Period but prior to the Payment Date, he shall remain eligible for the payment described in Section 4 hereof, and (ii) in the event the Grantee incurs a Termination of Service for Cause at any time prior to the Payment Date, no amount shall be payable to the Grantee hereunder and the Performance Unit shall be forfeited by the Grantee as of the date of such Termination of Service.

6. Change in Control. Upon a Change in Control, the Grantee will have such rights with respect to the Performance Unit as are provided for in the Plan. Notwithstanding the foregoing, if the Grantee incurs a Termination of Service prior to the end of the Performance Period either (i) by the Company without Cause, or (ii) by the Grantee for Good Reason (as defined in the that certain Letter Agreement between the Grantee and the Company dated as of July 30, 2015), and such Termination of Service occurs subsequent to a Change in Control, then the Grantee shall receive a payment in respect of the Performance Unit equal to the greater of (A) the Target Value, and (B) the product of the Target Value multiplied by the CIC Award Percentage. The amount payable pursuant to this Section 6 will be (I) paid as soon as reasonably possible following the date of such Termination of Service, but in no case later than March 15 of the year following the year in which such Termination of Service occurs, and (II) will be subject to tax withholding as required by Section 24.

7. Adjustment. The Committee may make or provide for such adjustments as provided for in Section 4.2 of the Plan.

8. Plan Amendment. No discontinuation, modification, or amendment of the Plan may, without the written consent of the Grantee, adversely affect the rights of the Grantee under this Agreement, except as otherwise provided under the Plan.

 

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9. No Stockholder Rights. The Performance Unit represents only the right to receive cash pursuant to the terms hereof and shall not represent an equity security of the Company and shall not carry any voting or dividend rights.

10. Employment Rights. This Agreement is not a contract of employment and the terms of employment of the Grantee or other relationship of the Grantee with the Company shall not be affected in any way by this Agreement except as specifically provided herein. The Grantee’s execution or acceptance of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company, nor shall it interfere with the right of the Company to discharge the Grantee and to treat him without regard to the effect which such treatment might have upon him as a Grantee.

11. Disclosure Rights. Except as required by applicable law, the Company (or any of its affiliates) shall not have any duty or obligation to disclose any information to the holder of the Performance Unit.

12. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by and enforced in accordance with the laws of the State of Delaware (other than its laws respecting choice of law).

13. Compliance with Laws and Regulations. Notwithstanding anything herein to the contrary, the Company shall not be obligated to pay amounts due hereunder unless and until the Company is advised by its counsel that such payment is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company may require, as a condition of such payment, and in order to ensure compliance with such laws, regulations and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable. In addition, to the extent that all or any portion of any payment otherwise due hereunder would not be deductible by the Company for federal tax purposes (irrespective of whether the Company would, in fact, have the ability to take advantage of such deduction), then the Company reserves the right to reduce or eliminate such payment to an amount that would be deductible by the Company for federal tax purposes.

14. Successors and Assigns. Except as otherwise expressly set forth in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the succeeding administrators, heirs and legal representatives of the Grantee and the successors and assigns of the Company.

15. No Limitation on Rights of the Company. This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

16. Notices. Any communication or notice required or permitted to be given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by electronic means, including by electronic mail to the Company-maintained electronic mailbox of

 

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the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail.

17. Construction. Notwithstanding any other provision of this Agreement, this Agreement is made, and the Performance Unit is granted, pursuant to the Plan and are in all respects limited by and subject to the express provisions of the Plan, as amended from time to time. To the extent any provision of this Agreement is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. The interpretation and construction by the Committee of the Plan, this Agreement and any such rules and regulations adopted by the Committee for purposes of administering the Plan shall be final and binding upon the Grantee and all other persons.

18. Entire Agreement. This Agreement, together with the Plan, constitute the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

19. Amendment. This Agreement may be amended as provided under the Plan, but except as provided in the Plan no such amendment shall adversely affect the Grantee’s rights under the Agreement without the Grantee’s written consent, unless otherwise permitted by the Plan.

20. Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

21. Counterparts. This Agreement may be signed in two counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

22. Headings. The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

23. Severability. If any provision of this Agreement shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

24. Tax Consequences. Payments made pursuant hereto shall be subject to all required tax withholding obligations.

25. Receipt of Plan. The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts the Performance Unit subject to all the terms and provisions of this Agreement and of the Plan. The Committee shall interpret and construe the Plan and this Agreement, and its interpretation and determination shall be conclusive and binding upon the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder.

26. Restrictive Covenants. In consideration of receiving the Performance Unit hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee agrees to adhere to, and be bound by, the following restrictions. The Grantee hereby

 

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acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. The Grantee further acknowledges that the following restrictions will not cause the Grantee undue hardship. Consequently, the Grantee agrees that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During the Grantee’s employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, the Grantee will not, in any way, directly or indirectly, either for the Grantee or any other person or entity, whether paid or unpaid:

(a) For 24 months following Grantee’s Termination of Service, accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. The Grantee hereby acknowledges that the following organizations, among others, provide Competing Educational Services and, should the Grantee accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc.; Anthem Education; Apollo Education Group, Inc.; Bridgepoint Education, Inc.; Capella Education Company; Career Step, LLC; Delta Career Education Corporation; DeVry Education Group Inc.; Education Management Corporation; Grand Canyon Education Inc.; ITT Educational Services Inc.; Kaplan, Inc.; Laureate Education, Inc.; Learning Tree International Inc.; Lincoln Educational Services, Inc.; National American University Holdings Inc.; Pearson Embanet; Ross Education, LLC; Strayer Education Inc.; Universal Technical Institute Inc.; Zenith Education Group, Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical campuses throughout the United States and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant.

(b) For 24 months following Grantee’s Termination of Service, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

(c) At all times following the Grantee’s Termination of Service, reveal, divulge, or make known to any person, firm or corporation any confidential information, or take any other action, in violation of the Confidential Information Policy in the Company’s Code of Business Conduct & Ethics

 

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Should the Grantee breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and the Grantee agrees to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should the Grantee breach the terms of these Restrictive Covenants, the Grantee will forfeit any right to the payments made or remaining due hereunder, subject to the terms and conditions of the Plan, and the Grantee agrees to pay the Company’s attorneys’ fees and costs incurred in recovering such payments made pursuant hereto.

It is the intention of the Grantee and the Company that in the event any of the covenants contained in these Restrictive Covenants are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

27. Cooperation. In the event of any pending or threatened investigation, proceeding, lawsuit, claim or legal action against or involving the Company, the Grantee acknowledges and agrees to cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s case, including, but not limited to, the execution of affidavits or documents, providing of information requested by the Company or the Company’s counsel, and meeting with Company representatives or the Company’s counsel. Nothing in this paragraph shall be construed as suggesting or implying that the Grantee should testify in any way other than truthfully or provide anything other than accurate, truthful information.

28. Clawback Policy. By accepting the grant of the Performance Unit pursuant to this Agreement, the Grantee hereby acknowledges that the Board has adopted a policy pursuant to which the Grantee may be required to repay amounts otherwise paid pursuant to this Agreement to the extent (a) such amounts were predicated upon achieving certain financial results that were subsequently the subject of a material restatement of Company financial statements filed with the Securities and Exchange Commission; (b) the Board determines the Grantee engaged in intentional misconduct that caused or substantially caused the need for the material restatement; and (c) a lower payment would have been made to the Grantee based upon the restated financial results (collectively, the “Policy”). By accepting the grant of the Performance Unit pursuant to this Agreement, the Grantee hereby agrees to be bound by the Policy and to repay amounts that Grantee may be required to be repay thereunder.

29. Condition to Accept Agreement. This Agreement will be null and void unless the Grantee indicates his acceptance of the award of the Performance Unit provided for hereunder by signing, dating and returning this Agreement to the Company on or before [INSERT DATE HERE].

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

 

ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE

 

The undersigned, the Grantee, hereby:		(select one of the options below)

 

		ACCEPTS the award of the Performance Unit as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the Plan.
		REJECTS the award of the Performance Unit contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no impact on any other award of options, restricted stock or restricted stock units you have previously received, including any restrictive covenants you are subject to pursuant to the agreement(s) governing your previous awards.

 

Date:
						(Signature of Grantee)
						Print Name: Todd Nelson

Please sign and return a fully executed .pdf of this Performance Unit Agreement by [INSERT DATE HERE], to                     . Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Performance Unit Agreement for your records.

 

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EXHIBIT A

PEER GROUP

 

1.	American Public Education, Inc.

 

2.	Apollo Group, Inc.

 

3.	Bridgepoint Education, Inc.

 

4.	Capella Education Company

 

5.	DeVry, Inc.

 

6.	ITT Educational Services Inc.

 

7.	Grand Canyon Education Inc.

 

8.	Graham Holdings Company

 

9.	Learning Tree International Inc.

 

10.	Lincoln Education Services Corporation

 

11.	National American University Holdings Inc.

 

12.	Strayer Education Inc.

 

13.	Universal Technical Institute Inc.

 

9

Exhibit 99.1

 

Career Education Names Experienced Education Industry

Executive Todd Nelson as President & CEO

Schaumburg, Ill., July 31, 2015 – Career Education Corporation (NASDAQ: CECO), a provider of postsecondary education programs and services, today announced that Todd Nelson has been selected to become its President and Chief Executive Officer. Mr. Nelson is expected to join the Company on August 12, 2015 and will also be appointed to the Career Education Board of Directors.

“Todd has deep industry experience which will help continue and enhance our focus on improving student outcomes as we drive our University business forward,” said Ron McCray, Chairman and Interim CEO of Career Education. “We look forward to his contributions to the Company’s restructuring efforts aimed at supporting educational excellence and accelerating our path to profitability and sustainable growth, led by our adaptive learning technology.”

Mr. Nelson’s career includes leadership of several of the largest education companies in the US. He served as Chief Executive Officer and a director of Education Management Corporation, where he ultimately served as Chairman of the Board. Prior to his service at Education Management Corporation, Mr. Nelson held several roles of increasing responsibility at the University of Phoenix and Apollo Group Inc. (now known as Apollo Education Group, Inc.), including serving as the Chairman, President and Chief Executive Officer of Apollo. While under his leadership, both companies experienced enrollment and financial growth, development and implementation of new programs and acquisitions of additional schools and programs.

Mr. Nelson said: “Career Education stands at an exciting inflection point in the Company’s history. I look forward to joining the experienced management team at Career Education and working with them to improve student outcomes at both American InterContinental University and Colorado Technical University. I am very excited to lead the Company through its transformation given its highly respected online University platform and well-formed path to cash generation and profitability.”

Ron McCray, Chairman and Interim CEO, will maintain his role as Chairman of the Board upon the relinquishment of his Interim CEO responsibilities when Mr. Nelson’s employment with the Company commences.

“Ron led the Company through its strategic decision to exit its Career Colleges business, to right-size its corporate overhead and to streamline its operations in order to focus its resources and attention on its University business,” said Thomas Lally, Career Education’s Lead Independent Director. “The Board appreciates Ron’s service to the Company and thanks him for his efforts in creating a path forward for the Company’s strategic transformation.”

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About Career Education Corporation

Career Education’s academic institutions offer a high-quality education to a diverse student population in a variety of disciplines through online, on-ground and hybrid learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath™ adaptive learning platform that allow students to more efficiently move toward earning a degree by receiving course credit for knowledge they can already demonstrate. Career Education is committed to providing high-quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

A listing of individual campus locations and web links to Career Education’s institutions can be found at www.careered.com.

CONTACT

Investors:

Alpha IR Group

Chris Hodges or Sam Gibbons

(312) 445-2870

CECO@alpha-ir.com

or

Media:

Career Education Corporation

(847) 585-2600

media@careered.com

Source: Career Education Corporation