Form 8-K

(Signature of Grantee)

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0001193125-13-098530.txt : 20130308 0001193125-13-098530.hdr.sgml : 20130308 20130308160656 ACCESSION NUMBER: 0001193125-13-098530 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20130304 ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130308 DATE AS OF CHANGE: 20130308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAREER EDUCATION CORP CENTRAL INDEX KEY: 0001046568 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 363932190 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23245 FILM NUMBER: 13677528 BUSINESS ADDRESS: STREET 1: 231 N. MARTINGALE ROAD CITY: SCHAUMBURG STATE: IL ZIP: 60173 BUSINESS PHONE: 8477813600 MAIL ADDRESS: STREET 1: 231 N. MARTINGALE ROAD CITY: SCHAUMBURG STATE: IL ZIP: 60173 8-K 1 d499132d8k.htm FORM 8-K Form 8-K

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): March 4, 2013

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 North Martingale Road

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))

Item 5.02.

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

1. Adoption of Form Award Agreements under 2008 Incentive Compensation Plan

On March 4, 2013, the Compensation Committee (the “Committee”) of the Board of Directors of Career Education Corporation (the “Company”) approved the following under the Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”):

•

a form of cash-settled restricted stock unit agreement (the “Cash-Settled RSU Agreement”)

•

a form of performance unit agreement (the “Performance Unit Agreement”)

•

a revised form of stock option agreement (the “Revised Option Agreement”)

•

a revised form of restricted stock unit agreement (the “Revised RSU Agreement”)

On March 4, 2013, the Committee also granted cash-settled restricted stock units (“RSUs”), performance units and stock options in accordance with these forms to certain eligible employees, including executive officers of the Company.

The amount and terms of each award of cash-settled RSUs or performance units are determined by the Committee in its sole discretion and will be set forth in an individual’s Cash-Settled RSU Agreement or Performance Unit Agreement, as applicable. Each cash-settled RSU constitutes a right to receive in cash the value of one share of the Company’s common stock on the applicable vesting date. Each performance unit constitutes a right to receive an amount in cash which will be determined based on the target value determined by the Committee for a grantee and the Company’s relative total shareholder return over a three-year performance period as compared to a company peer group.

If a grantee’s employment is terminated because of death or disability, then the remaining unvested portion of the cash-settled RSUs will immediately vest as of the grantee’s termination date, and an unvested performance unit award will immediately vest pro rata at the target value based on the number of days which have elapsed over the performance period. If a grantee’s employment is terminated for any other reason, then any unvested RSUs or performance units will automatically terminate and be forfeited. Upon a change of control of the Company, the grantee will have such rights with respect to the cash-settled RSUs and performance units as are provided for in the 2008 Plan.

The forms of Revised Option Agreement and Revised RSU Agreement have been amended primarily to conform to the restrictive covenants contained in the Cash-Settled RSU Agreement and Performance Unit Agreement.

The foregoing descriptions of the form Cash-Settled RSU Agreement, Performance Unit Agreement, Revised Option Agreement and Revised RSU Agreement do not purport to be complete and are qualified in their entirety by reference to the form agreements, copies of which are attached to this Current Report on Form 8-K (this “Report”) as Exhibits 10.1, 10.2, 10.3 and 10.4 and are incorporated herein by reference.

2. Grants of Stock Options and Restricted Stock Units to Steven H. Lesnik

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company entered into a letter agreement with Steven H. Lesnik on February 26, 2013 (the “Letter Agreement”). On March 4, 2013, the Committee granted Mr. Lesnik the awards contemplated by the Letter Agreement. These awards are evidenced by the Non-Qualified Stock Option Agreement and Cash-Settled Restricted Stock Unit Agreement filed with this Report as Exhibits 10.5 and 10.6, respectively, which are incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits.


Exhibit Number		Description of Exhibits

10.1		Form of Cash-Settled Restricted Stock Unit Agreement under the Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”) (Time-Based)

10.2		Form of 2013 Performance Unit Agreement under the 2008 Plan

10.3		Form of Non-Qualified Stock Option Agreement under the 2008 Plan

10.4		Form of Restricted Stock Unit Agreement under the 2008 Plan (Time-Based)

10.5		Non-Qualified Stock Option Agreement dated March 4, 2013 between Career Education Corporation and Steven H. Lesnik (Time-Based)

10.6		Cash-Settled Restricted Stock Unit Agreement dated March 4, 2013 between Career Education Corporation and Steven H. Lesnik (Performance-Based)

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.


CAREER EDUCATION CORPORATION

By:		/s/ Colleen M. O’Sullivan
		Colleen M. O’Sullivan
		Senior Vice President and Chief Financial Officer

Date: March 8, 2013

Exhibit Index


Exhibit Number		Description of Exhibits

10.1		Form of Cash-Settled Restricted Stock Unit Agreement under the Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”) (Time-Based)

10.2		Form of 2013 Performance Unit Agreement under the 2008 Plan

10.3		Form of Non-Qualified Stock Option Agreement under the 2008 Plan

10.4		Form of Restricted Stock Unit Agreement under the 2008 Plan (Time-Based)

10.5		Non-Qualified Stock Option Agreement dated March 4, 2013 between Career Education Corporation and Steven H. Lesnik (Time-Based)

10.6		Cash-Settled Restricted Stock Unit Agreement dated March 4, 2013 between Career Education Corporation and Steven H. Lesnik (Performance-Based)

EX-10.1 2 d499132dex101.htm EX-10.1 EX-10.1

Exhibit 10.1

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 (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and (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 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.

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 or her 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(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. Notwithstanding the foregoing, in no case will the amount due to the Grantee in respect of an RSU exceed an amount equal to five times (5x) the Fair Market Value of a Share on the Grant Date.

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 or her 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 or her 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 his or her death or Disability, 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 or her without regard to the effect which such treatment might have upon him or her 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).

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.

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 effect 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. [The following shall be applicable to Non-California and Non-Attorney Grantees] 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:

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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute 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 and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. For the avoidance of doubt, in the event the Grantee is involuntarily terminated from employment with the Company other than for Cause, the Grantee will not be subject to any post-termination noncompete restriction under this Section 26(a).

(b) For months following Grantee’s termination of employment with the Company for any reason, 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.

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.

[The following shall be applicable to California and Attorney Grantees] 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.

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

[Signature Page Follows]

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

CAREER EDUCATION CORPORATION

By:

Name:

Title:

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.

Please sign and return your signed copy of this Restricted Stock Unit Agreement by , to at CEC corporate via pdf, fax or inter-office mail ([insert email address] or [insert fax #] (fax)). 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.

EX-10.2 3 d499132dex102.htm EX-10.2 EX-10.2

Exhibit 10.2

2013 Performance Unit Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

PERFORMANCE UNIT AGREEMENT

This PERFORMANCE UNIT AGREEMENT (this “Agreement”) dated (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and (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) “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.

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

(d) “Payment Date” means a date selected by the Company which shall occur any time between the period beginning January 1, 2016 and ending on March 15, 2016.

(e) “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.

(f) “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).

(g) “Performance Period” means the period beginning on January 1, 2013 and ending on December 31, 2015.

(h) “Target Value” means [INSERT TARGET VALUE FOR GRANTEE].

(i) “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, 2016, 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 because of his or her death or Disability, the Grantee (or his or her Beneficiary, if applicable) shall receive a payment in respect of the Performance Unit equal to the result of the following formula: A x (B/1095); where “A” equals the Target Value and “B” equals the number of days elapsing between the beginning of the Performance Period and the

applicable Termination of Service. The amount payable pursuant to this Section 5(a) (i) will be 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.

(b) If the Grantee incurs a Termination of Service prior to the end of the Performance Period for any reason other than his or her death or Disability, 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 or she 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.

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

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 or her without regard to the effect which such treatment might have upon him or her 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.

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.

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.

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.

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. [The following shall be applicable to Non-California and Non-Attorney Grantees] 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 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.

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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute 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 and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. For avoidance of doubt, in the event the Grantee is involuntarily terminated from employment with the Company other than for Cause, the Grantee will not be subject to any post-termination noncompete restriction under this Section 26(a).

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.

[The following shall be applicable to California and Attorney Grantees] 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 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.

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.

27. 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.

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

[Signature Page Follows]

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


CAREER EDUCATION CORPORATION

By:
Name:
Title:

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.

EXHIBIT A

PEER GROUP

1.	American Public Education, Inc.

2.	Apollo Group, Inc.

3.	Bridgepoint Education, Inc.

4.	Capella Education Company

5.	Corinthian Colleges, Inc.

6.	DeVry, Inc.

7.	ITT Educational Services Inc.

8.	Education Management Corporation

9.	Grand Canyon Education Inc.

10.	Learning Tree International Inc.

11.	Lincoln Education Services Corporation

12.	National American University Holdings Inc.

13.	Strayer Education Inc.

14.	Universal Technical Institute Inc.

EX-10.3 4 d499132dex103.htm EX-10.3 EX-10.3

Exhibit 10.3

Employee Stock Option Agreement

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

This STOCK OPTION AGREEMENT (this “Agreement”) dated (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and (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 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 $ 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. The Option Term shall expire on the tenth anniversary of the Grant Date. The Option shall vest and become exercisable ([each such anniversary, 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.

Notwithstanding the foregoing provisions of this Section 3, and except as otherwise determined by the Committee, as provided in the Plan or as provided herein, 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.

Employee Stock Option Agreement

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 or her 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 or her 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 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.

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Employee Stock Option Agreement

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.

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 or her without regard to the effect that such treatment might have upon him or her 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 or she is responsible for the tax consequences associated with the grant and exercise of the Option.

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Employee Stock Option Agreement

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. [The following shall be applicable to Non-California and Non-Attorney Grantees] 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 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.

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Employee Stock Option Agreement

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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute 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 and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. If the Grantee is involuntarily terminated from employment with the Company for other than Cause, the Grantee will not be subject to any post-termination non-compete restriction under this Section 18(a).

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.

[The following shall be applicable to California and Attorney Grantees] 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 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,

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Employee Stock Option Agreement

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.

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.

19. Condition to Return Signed Agreement. This Agreement shall be null and void unless the Grantee indicates his or her acceptance of the Option and this Agreement by signing, dating, and returning this Agreement to the Company on or before .

20. 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.

CAREER EDUCATION CORPORATION

By:

Name:

Title:

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.

Please sign and return your signed copy of this Stock Option Agreement by [ ], to [ ] at CEC corporate via pdf, fax or inter-office mail ([insert email address] or [insert fax #] (fax)). 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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EX-10.4 5 d499132dex104.htm EX-10.4 EX-10.4

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 (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and (the “Grantee”).

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] (the “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 ([each such anniversary, 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.

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 or her 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

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.

(a) If the Grantee incurs a Termination of Service because of his or her 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 relevant Settlement Date, the Grantee shall own a number of Shares equal to the whole number of Vested Shares underlying the RSUs free of all restrictions otherwise imposed by this Agreement except for Shares used to satisfy the tax withholding obligations set forth in Section 26 of this Agreement or otherwise required by any taxing authority.

(b) If the Grantee incurs a Termination of Service for any reason other than his or her death or Disability, 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.

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.

Restricted Stock Unit Agreement

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 or her without regard to the effect which such treatment might have upon him or her 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.

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

Restricted Stock Unit Agreement

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 effect 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 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.

Restricted Stock Unit Agreement

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. [The following shall be applicable to Non-California and Non-Attorney Grantees] 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.

(a) For months following Grantee’s voluntary resignation from Grantee’s employment with the Company or Grantee’s termination from employment by the Company for Cause, 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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute Inc. and each of their respective subsidiaries, affiliates and successors. The Grantee further

Restricted Stock Unit Agreement

acknowledges that the Company and/or its subsidiaries provide career-oriented education through physical and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. For the avoidance of doubt, in the event the Grantee is involuntarily terminated from employment with the Company other than for Cause, the Grantee will not be subject to any post-termination noncompete restriction under this Section 28(a).

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.

Restricted Stock Unit 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 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.

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

[Signature Page Follows]

Restricted Stock Unit Agreement

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

CAREER EDUCATION CORPORATION

By:

Name:

Title:

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.

Please sign and return your signed copy of this Restricted Stock Unit Agreement by [ ], to [ ] at CEC corporate via pdf, fax or inter-office mail ([insert email address] or [insert fax #] (fax)). Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Restricted Stock Unit Agreement for your records.

EX-10.5 6 d499132dex105.htm EX-10.5 EX-10.5

Exhibit 10.5

2013 Employee Stock Option Agreement

Mr. Lesnik

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

This STOCK OPTION AGREEMENT (this “Agreement”) dated March 4, 2013 (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Steven H. Lesnik (the “Grantee”).

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 450,000 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 $2.72 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. The Option Term shall expire on the tenth anniversary of the Grant Date. To the extent any portion of the Option is not exercised by the expiration of the Option Term, such portion of the Option shall be immediately cancelled and forfeited to the Company. Except as provided in Section 4, the Option shall vest and become exercisable in twelve (12) equal installments on the fourteenth (14^th) day of each calendar month beginning on April 14, 2013, and ending on March 14, 2014 (each a “Vesting Date”), such that the Option shall become fully vested on March 14, 2014; 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.

Notwithstanding the foregoing provisions of this Section 3, and except as otherwise determined by the Committee, as provided in the Plan or as provided herein, any portion of the Option which is not vested (or otherwise not exercisable) at the time of the Grantee’s Termination of Service (as defined in Section 4 below) shall not become exercisable after such termination and shall be immediately cancelled and forfeited to the Company.

2013 Employee Stock Option Agreement

Mr. Lesnik

4. Vesting and Exercisability Following Termination of Service.

(a) Except as provided in Section 7, in the event the Grantee incurs a Termination of Service for any reason other than by the Company for Cause, or as a result of his death or Disability, then the portion of the Option that was vested immediately prior to such Termination of Service, plus an additional portion of the Option equal to the Termination Vesting Portion which shall become vested and exercisable as a result of such Termination of Service, shall remain exercisable until the third anniversary of the date of such Termination of Service, but not beyond the expiration of the Option Term. To the extent any of the remaining portion of the Option is not exercised by the third anniversary of such Termination of Service, such portion of the Option shall be immediately cancelled and forfeited to the Company. For purposes of this Section 4(a), the “Termination Vesting Portion” shall be a portion of the Option relating to a number of Shares equal the result of the following formula (rounded to the nearest whole Share): (A/12) x (B/C), where “A” equals the aggregate number of Shares purchasable pursuant to the Option (as set forth in Section 1 above); “B” equals the number of days elapsing after the Vesting Date which immediately precedes the Termination of Service through and including the date of such Termination of Service; and “C” equals the number of days following the Vesting Date which immediately precedes the Termination of Service through and including the Vesting Date which coincides with or immediately succeeds the Termination of Service. For purposes of the preceding sentence, to the extent the relevant termination occurs on or prior to April 14, 2013, the Grant Date shall be deemed to be a Vesting Date.

(b) In the event the Grantee incurs a Termination of Service as a result of his death or Disability, then the Option shall become fully vested and exercisable, and shall remain exercisable until the third anniversary of the date of such Termination of Service, but not beyond the expiration of the Option Term. To the extent any portion of the Option is not exercised by the third anniversary of such Termination of Service, such portion of the Option shall be immediately cancelled and forfeited to the Company.

(c) Except as provided in Section 7, in the event the Grantee incurs a Termination of Service by the Company for Cause, any portion of the Option that remains outstanding as of the date of such Termination of Service shall be immediately cancelled and forfeited to the Company.

(d) Solely for purposes of this Agreement, “Termination of Service” shall have the meaning set forth in the Plan, except that no Termination of Service shall be deemed to have occurred so long as, until March 14, 2014, either (i) the Grantee retains the position of chief executive officer of the Company, or (ii) the Grantee remains available to provide executive consulting agent services to the Company at reasonable times and upon the reasonable notice from, and request of, any successor chief executive officer of the Company (as described in that certain letter agreement between the Grantee and the Company dated as of February 26, 2013).

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):

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2013 Employee Stock Option Agreement

Mr. Lesnik

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 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.

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. In addition, in the event of a Termination of Service for any reason following the occurrence of a Change in Control, the Option shall become fully vested and exercisable, and shall remain exercisable until the third anniversary of the date of such Termination of Service, but not beyond the expiration of the Option Term. To the extent any portion of the Option is not exercised by the third anniversary of such Termination of Service, such portion of the Option shall be immediately cancelled and forfeited to the Company.

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2013 Employee Stock Option Agreement

Mr. Lesnik

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.

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

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.

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2013 Employee Stock Option Agreement

Mr. Lesnik

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 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.

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2013 Employee Stock Option Agreement

Mr. Lesnik

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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute 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 and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. If the Grantee is involuntarily terminated from employment with the Company for other than Cause, the Grantee will not be subject to any post-termination non-compete restriction under this Section 18(a).

(b) For twelve (12) months following Grantee’s termination of employment with the Company for any reason, 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.

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.

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2013 Employee Stock Option Agreement

Mr. Lesnik

19. 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 March 15, 2013.

[Signature Page Follows]

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2013 Employee Stock Option Agreement

Mr. Lesnik

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


CAREER EDUCATION CORPORATION

By:
Name:
Title:

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.

Please sign and return your signed copy of this Stock Option Agreement by March 15, 2013, 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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EX-10.6 7 d499132dex106.htm EX-10.6 EX-10.6

Exhibit 10.6

2013 Cash-Settled RSU Agreement

Performance-Based

Mr. Lesnik

CAREER EDUCATION CORPORATION

2008 INCENTIVE COMPENSATION PLAN

CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT

This CASH-SETTLED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated March 4, 2013 (the “Grant Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Steven H. Lesnik (the “Grantee”).

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 299,401 Restricted Stock Units (the “RSUs”) on the Grant Date, and the Grantee hereby accepts the grant of the RSUs as set forth herein.

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, subject to achievement of the Performance Goal set forth below, become non-forfeitable (thereafter being referred to as “Vested RSUs”) on March 14, 2014 (the “Vesting Date”). Notwithstanding the foregoing, if during the Year of 2013, the Company fails to achieve the Performance Goal set forth in the Career Education Corporation 2013 Annual Incentive Award Program for Key Executives (which is maintained under the Plan), then except as set forth in Sections 5 and 6 of this Agreement, none of the RSUs shall become Vested RSUs on the Vesting Date.

Notwithstanding the foregoing, and subject to Sections 5 and 6 below, in the event that (a) the Grantee incurs a Termination of Service (as defined in Section 5 below) prior to the Vesting Date, or (b) the Performance Goal set forth above is not achieved, then in either case the RSUs shall be immediately forfeited to the Company.

4. Crediting and Settling RSUs.

(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 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 the Vesting Date, but in no event shall such Settlement Date be later than March 15, 2014. Notwithstanding the foregoing, in no case will the amount due to the Grantee in respect of an RSU exceed an amount equal to five times (5x) the Fair Market Value of a Share on the Grant Date.

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 Vesting Date:

(a) Except as provided in Section 6, in the event the Grantee incurs a Termination of Service for any reason other than by the Company for Cause, or as a result of his death or Disability, as of the Vesting Date, and subject to achievement of the Performance Goal set forth in Section 3, a portion of the RSUs equal to the Termination Vesting Portion shall become Vested RSUs and, as of the Settlement Date, the Grantee shall be entitled to receive an amount determined pursuant to Section 4 hereof in respect of such Vested RSUs. For purposes of this Section 5(a), the “Termination Vesting Portion” shall be a number of RSUs equal the result of the following formula: (A) x (B/375), where “A” equals the aggregate number of RSUs granted pursuant to this Agreement (as set forth in Section 1 above); and “B” equals the number of days elapsing between the Grant Date and the date of such Termination of Service.

(b) In the event the Grantee incurs a Termination of Service because of his death or Disability, all RSUs shall become Vested RSUs as of the date of such Termination of Service, and, as of the Settlement Date, the Grantee (or his Beneficiary, as applicable) shall be entitled to receive an amount determined pursuant to Section 4 hereof.

(c) In the event the Grantee incurs a Termination of Service by the Company for Cause, the RSUs shall be immediately cancelled and 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. In addition, in the event of a Termination of Service for any reason prior to the Vesting Date but following the occurrence of a Change in Control, the RSUs shall become Vested RSUs, and, as of the Settlement Date, the Grantee shall be entitled to receive an amount determined pursuant to Section 4 hereof in respect of such Vested RSUs.

7. Adjustment in RSUs. The Committee may make or provide for such adjustments as provided for in Section 4.2 of the 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. The RSUs are intended to comply with the Performance-Based Exception and shall, to the greatest extent reasonably possible, be administered in a manner that complies with the requirements of the Performance-Based Exception. This Agreement shall be interpreted as reserving to the Committee all powers necessary to ensure that amounts payable hereunder satisfy the requirements of the Performance-Based Exception.

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.

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.

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

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.

(a) For twelve (12) months following Grantee’s voluntary resignation from Grantee’s employment with the Company or Grantee’s termination from employment by the Company for Cause, 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., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute 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 and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. For the avoidance of doubt, in the event the Grantee is involuntarily terminated from employment with the Company other than for Cause, the Grantee will not be subject to any post-termination noncompete restriction under this Section 26(a).

27. 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 March 15, 2013.

[Signature Page Follows]

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


CAREER EDUCATION CORPORATION

By:
Name:
Title:

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.

Please sign and return your signed copy of this Restricted Stock Unit Agreement by March 15, 2013, 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.