Exhibit 10.1

 

LOGO [g517884g12g78.jpg]

April 1, 2013

Mr. Scott Steffey

Dear Scott,

On behalf of Career Education Corporation (“CEC” or the “Company”), I am pleased
to confirm our offer of employment to you for the position of President and
Chief Executive Officer (“CEO”). Upon your acceptance of this offer as outlined
below, you will join the company as a full-time employee reporting to the
Company’s Board of Directors (the “Board”). You will be nominated for election
to the Board at the Company’s 2013 annual shareholders meeting.

Your employment with the Company will be subject to the terms and conditions set
forth in this letter (“Letter”). It is anticipated that you will commence
employment on or before April 8, 2013 (the actual date you commence employment,
the “Commencement Date”).

 

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

 

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

--------------------------------------------------------------------------------

  3. Board Membership.  You will be nominated for election to serve as a member
of the Board at the Company’s 2013 annual meeting of shareholders. Your
continued service as a member of the Board will be subject to any required
stockholder approval. Upon the termination of your employment for any reason and
unless otherwise requested by the Board, you will be deemed to have resigned
from the Board (and all other positions held at the Company and its affiliates)
voluntarily and without further action from the Board, effective as of the end
of your employment, and you, at the Board’s request, will execute the documents
necessary to reflect your resignation from the Board.

 

  4. Base Salary.  You will be paid an annual base salary of $750,000 (“Base
Salary”), payable in installments in accordance with the Company’s standard
payroll schedule.

 

  5. Annual Bonus.  You will be eligible to participate in the Company’s Annual
Incentive Award Program (or successor program) (“AIP”) and thereby earn an
annual target performance bonus equal to 100% of your Base Salary, with
threshold and maximum payment levels of 50% and 200% of your target bonus
amount, respectively, for fiscal year 2013 and a target bonus opportunity at not
less than such amount in subsequent fiscal years, payable in cash in an amount
determined by the Board, or the Compensation Committee of the Board (the
“Compensation Committee”), in its sole and absolute discretion, based upon
performance criteria determined by the Board or the Compensation Committee (the
“Annual Bonus”); provided that for fiscal year 2013, you will be eligible to
receive an Annual Bonus equal to not less than 50% of your target Annual Bonus,
pro-rated based on the number of days in fiscal year 2013 you are employed from
the Commencement Date through the last day of fiscal year 2013. The Annual Bonus
shall be paid within a reasonable amount of time after the amount of such Annual
Bonus is determined by the Company for the applicable fiscal year to which the
Annual Bonus relates, based on the achievement of the applicable performance
conditions. In any event, the Annual Bonus shall be paid no later than
seventy-five (75) days following the end of the Company’s fiscal year to which
such bonus relates.

 

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

 

  7. Long-Term Incentive Awards.  On the Commencement Date (the “Grant Date”),
you will receive the following long-term incentive awards having an aggregate
target value of not less than $2,600,000 (the “Long-Term Incentive Awards”):

      (a) a stock option award (the “Stock Options”) to purchase shares of the
common stock, par value $0.01 per share, of the Company (the “Common Stock”),
with the number of shares subject to the award determined by dividing
(i) $780,000 by (ii) the product of (x) .55 and (y) the closing price of the
Common Stock on the Grant Date, provided that the number of shares of Common
Stock underlying the Stock Options shall not exceed 450,000. In the event that
the number of shares of Common Stock underlying the Stock Options is limited to
450,000 in accordance with the immediately preceding sentence, you shall be
granted an additional number of cash-settled stock appreciation rights (the
“SARs”) with respect to that number of shares of Common Stock such that the
aggregate fair value of the Stock Options and the SARs, as determined in
accordance with the immediately preceding sentence, shall be equal to $780,000
(rounded down to the nearest whole share). The Stock Options and SARs, as
applicable, will have an exercise price equal to 100% of the closing price of
the Common Stock on the Grant Date and will otherwise be granted in accordance
with, and subject to the terms of, the Company’s 2008

 

2

--------------------------------------------------------------------------------

Incentive Compensation Plan, as amended (or successor plan) (the “Plan”) and an
applicable award agreement thereunder, provided that, all or a portion of the
Stock Options may be granted to you as an inducement award pursuant to NASDAQ
Listing Rule 5635(c)(4) and, provided further that, all or a portion of any
grant of SARs, if applicable, may be granted outside of the Plan but subject to
terms consistent with the terms of the Plan and an applicable award agreement
thereunder. The Stock Options and SARs, as applicable, will vest and become
exercisable in four equal annual installments on each of March 14,
2014, March 14, 2015, March 14, 2016 and March 14, 2017, provided that you
remain employed by the Company on each applicable vesting date, except as set
forth below;

      (b) an award of cash-settled restricted stock units (the “RSUs”), with the
number of shares underlying the RSUs subject to the award determined by dividing
$780,000 by the closing price of the Common Stock on the date upon which the
RSUs are granted. The RSUs will vest in equal annual installments on each of the
first anniversary of the Commencement Date, March 14, 2015, March 14, 2016 and
March 14, 2017, provided that you remain employed by the Company through each
applicable vesting date, except as set forth below, and subject to aggregate
Company revenue for the four consecutive fiscal quarters, commencing with the
Company’s second quarter for fiscal year 2013, equaling or exceeding $500
million in the aggregate (the “RSU Revenue Target”) and will otherwise be
granted in accordance with, and subject to the terms of, the Plan and an
applicable award agreement thereunder, provided that, all or a portion of the
RSUs, may be granted outside of the Plan but subject to terms consistent with
the terms of the Plan and an applicable award agreement thereunder; and

      (c) a performance-based cash award in the target amount of $1,040,000,
with threshold and maximum payment levels of 50% and 200% of the target amount,
respectively (the “Cash Award”), which will vest on April 1, 2016 based on the
Company’s total shareholder return relative to a peer group of 14 publicly
traded proprietary education companies over the three-year period ending
April 1, 2016, consistent with the terms of similar grants made to other senior
executives of the Company, and provided that you remain employed by the Company
through the vesting date, except as set forth below. Except as set forth below,
the Cash Award, if any, shall be paid following the date it becomes vested and
in any event no later than May 15, 2016.

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

      (i) In the event your employment is terminated by the Company without
“Cause” or you resign for “Good Reason,” as such terms are defined in Exhibit A
to this Letter, (A) the RSUs shall service-vest in full on the termination date,
subject to achievement of the RSU Revenue Target, and shall be payable within 30
days following the later of the such termination date and the date of
achievement of the RSU Revenue Target, (B) the Stock Options and SARs, as
applicable, shall vest in full on your date of termination and remain
exercisable for three years following your termination date, but in no case
beyond the expiration of the 10-year option term, and (C) the Cash Award shall
vest and become payable based on the actual performance results applicable to
the Cash Award and payable at such time as the Cash Award would otherwise be
paid, but in no event will such amount be paid after May 15, 2016.

 

3

--------------------------------------------------------------------------------

      (ii) In the event your employment is terminated due to death or
“Disability,” as defined in Exhibit A to this Letter, (A) the RSUs shall vest in
full on the date of your termination, (B) the Stock Options and SARs, as
applicable, shall vest in full on the date of your termination and remain
exercisable for one year following your termination date, but in no case beyond
the expiration of the 10-year option and/or SAR term, and (C) the Cash Award
shall vest and become payable at target on the date of termination.

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

      (iv) If your employment terminates by reason of your “Retirement” (as
defined under the Plan and is hereby determined by the Committee), the Stock
Options and SARs, as applicable, shall remain exercisable for three years
following the date of your termination.

Commencing with the Company’s 2014 fiscal year, you will be eligible for annual
long-term incentive awards under the Plan, commensurate with the eligibility of
other senior executives for such awards, the actual awards to be determined in
the sole discretion of the Board or the Compensation Committee, as applicable.

 

  8. Sign-on Award.  On the Commencement Date or within 10 days thereafter, you
shall receive a lump-sum cash payment in the amount of $2,500,000 (the “Sign-on
Award”). You agree that as a result of the Sign-on Award, you will not be
entitled to any reimbursement for any commuting or relocation expenses you may
incur in connection with your employment by the Company or be eligible for any
other provision of commuting or relocation assistance benefits from the Company.
In the event your employment is terminated by the Company for Cause or you
resign without Good Reason (and not due to Disability):

      (a) As to the after-tax amount of $1,250,000 of the Sign-on Award
(“Tranche I”):

      (i) you shall repay to the Company 100% of Tranche I if such termination
occurs prior to the first anniversary of the Commencement Date; and

      (ii) you shall repay to the Company a pro rata portion of Tranche I if
such termination occurs on or after the first anniversary, but prior to the
second anniversary, of the Commencement Date, with such repayment amount to be
determined by dividing the number of days from the date of termination until the
second anniversary of your Commencement Date by 730.

      (b) As to the after-tax amount of the other $1,250,000 of the Sign-on
Award (“Tranche II”):

 

4

--------------------------------------------------------------------------------

      (i) you shall repay to the Company 100% of Tranche II if such termination
occurs prior to the first anniversary of the Commencement Date;

      (ii) you shall repay to the Company 75% of Tranche II if such termination
occurs on or after the first anniversary, but prior to the second anniversary,
of the Commencement Date; and

      (iii) you shall repay to the Company 25% of Tranche II or such lesser pro
rata amount, if such termination occurs on or after the second anniversary, but
prior to the fourth anniversary, of the Commencement Date, as determined by
prorating such 25% amount by dividing the number of days from the date of
termination until the fourth anniversary of your Commencement Date by 730.

Any required repayment of the Sign-on Award by you shall be made no later than
30 days following the date your employment with the Company terminates.

 

  9. Severance.  In the event your employment is terminated by the Company
without Cause or by you for Good Reason (not including death or Disability) at
any time, you will be entitled to receive the following payments and benefits,
provided that you have executed and not revoked the Company’s standard form of
release agreement (that does not impose any further covenants on you than apply
under this Letter) (a “Release”), and such Release has become effective, within
30 days following the date of your termination of employment (or 10 days
following the date the Release becomes effective, if later):

 

  a) A lump sum amount equal to two times the sum of your Base Salary and target
Annual Bonus;

 

  b) Payment of a pro rata portion of your Annual Bonus for the fiscal year of
the Company in which termination occurs, based on the number of days of such
fiscal year that elapsed through the date your employment terminates and
calculated based on the actual performance results applicable to such fiscal
year (with any exercise of negative discretion to be based only on achievement
(or lack thereof) of previously-established performance goals and not subjective
personal performance), payable at such time as bonuses are paid by the Company
to senior executives pursuant to the terms of the AIP, but in no event will such
amount be paid after the 75th day following the end of the fiscal year to which
the Annual Bonus related; and

 

  c) A lump sum payment, payable within 60 days following termination of your
employment, equal to the premium cost of 18 months of continued insurance
coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”),
reduced by the contribution amounts required to be paid for such insurance
coverage by similarly situated active employees of the Company.

Notwithstanding anything in this Letter to the contrary, you shall not be
eligible to receive any payments or benefits in connection with the termination
of your employment for any reason pursuant to the terms of any severance or
separation plan, program or policy maintained by the Company.

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

 

5

--------------------------------------------------------------------------------

  10. Golden Parachute Excise Tax.  If the payments and benefits provided for in
this Letter or otherwise payable to you constitute “parachute payments” within
the meaning of Section 280G of the Code and would be subject to the excise tax
imposed by Section 4999 of the Code, then such payments and benefits shall be
subject to reduction to the extent necessary to assure that the payments and
benefits provided to you under this Letter will be limited to the greater of
(i) the amount of payments and benefits that can be provided without triggering
a parachute payment under Section 280G or (ii) the maximum dollar amount of
payments and benefits that can be provided so as to provide you with the
greatest after-tax amount of such payments and benefits after taking into
account any excise tax you may incur under Section 4999 with respect to those
payments and benefits and any other benefits or payments to which you may be
entitled in connection with any change in control or ownership of the Company
under Section 280G or the subsequent termination of your employment. To the
extent reduction of any payments and benefits is required by this Section 10
such that no portion of your severance benefits will be subject to the excise
tax imposed by Section 4999, the severance benefits shall be reduced in the
following order: (i) cash severance pay, (ii) cash payments based on the awards
granted under Section 7 of this Letter, and (iii) the Stock Options, SARs and
any other equity awards granted to you.

 

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

 

  12. Physical Exam.  The Company agrees to pay for any reasonable medical fees
incurred in connection with your attainment of an initial physical examination.
Thereafter, you shall be eligible for executive physical examination benefits on
the same terms as the Company’s other senior executives.

 

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

 

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

 

  15.

Section 409A.  It is intended that the payments provided under this Letter shall
be exempt from or comply with the requirements of Section 409A of the Code. This
Letter shall be construed, administered and governed in a manner that effects
such intent. It is further acknowledged and agreed that to the extent required
to avoid accelerated taxation or tax penalties under Section 409A of the Code,
(i) you will not be considered to have terminated employment or service for
purposes of this Letter, and no payments will be due under this Letter that are
payable upon termination of your employment or service until you would be
considered to have incurred a “separation from service” from the Company within
the meaning of Section 409A of the Code and (ii) if at the time of your

 

6

--------------------------------------------------------------------------------

  termination of employment or service with the Company, you are a “specified
employee” as defined under Section 409A of the Code, to the extent required by
Section 409A(a)(ii)(B)(i) of the Code, amounts due under this Letter that are
provided as a result of a separation from service, within the meaning of
Section 409A of the Code, and that would otherwise be paid or provided during
the first six months following such separation from service, shall be delayed
until the earlier to occur of (A) the six-month anniversary of the separation
from service or (B) the date of your death. Subject to the foregoing, in the
event any payment or benefit becomes due under Section 9 conditioned upon your
entering into a Release, and as a result of the date of such Release the payment
or benefit could be made in either of two of your taxable years, such payment or
benefit shall be made on the later of January 15 of the later such taxable year
or within 10 days after the date such Release becomes effective. No
reimbursement payable to you pursuant to any provision of this Letter or
otherwise pursuant to any plan or arrangement of the of the Company shall be
paid later than the last day of the calendar year following the calendar year in
which the related expense was incurred, and no such reimbursement during any
calendar year shall affect the amounts eligible for reimbursement in any other
calendar year, except, in each case, to the extent that the right to
reimbursement does not provide for a “deferral of compensation” within the
meaning of Section 409A of the Code. In addition, your right to reimbursement
(or in-kind benefits) cannot be liquidated or exchanged for any other benefit or
payment.

 

  16. Restrictive Covenants.

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

(b)      Confidential Information and Protection of Confidential
Information.  You acknowledge that, throughout and as an incident to your
employment with the Company, you will become acquainted with and receive
Confidential Information relating to the Company, including trade secrets,
processes, methods of operation, business models and plans, advertising and
marketing plans and strategies, Company records, research techniques and
results, academic programs, academic course development, methods of instruction,
training programs, computer programs, databases, software codes, systems and
models, marketing, promotional and sales programs, and financial information
concerning the business of the Company, which information is not readily
available to the public and gives the Company an opportunity to gain an
advantage over

 

7

--------------------------------------------------------------------------------

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

(c)      Nondisparagement.  You agree that you will not, nor will you cause
anyone else to, make any statement or issue any communication, written or
otherwise, that disparages, criticizes or otherwise reflects adversely on or
encourages any adverse action against the Company or any affiliate, to either
the press, the media or any other third party, except if testifying truthfully
under oath pursuant to any lawful court order or subpoena or otherwise
responding to or providing disclosures required by law. The Company will not,
nor will it cause anyone else to, make any statement or issue any communication,
written or otherwise, that disparages, criticizes or otherwise reflects
adversely on or encourages any adverse action against you, to either the press,
the media or any other third party, except if testifying truthfully under oath
pursuant to any lawful court order or subpoena or otherwise responding to or
providing disclosures required by law; provided, for purposes of this
Section 16(c), “the Company” shall mean only its officers and members of the
Board.

 

8

--------------------------------------------------------------------------------

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

(e)      Non-Competition.  Commencing on the date of termination of your
employment with the Company and for a period of two years thereafter, you shall
not, in any way, directly or indirectly, either for you or any other person or
entity, whether paid or unpaid, accept employment with, own, manage, operate,
consult or provide expert services to any person or entity that competes with
the Company or any of its subsidiaries in any capacity that involves any
responsibilities or activities involving or relating to any Competing
Educational Service. “Competing Educational Service” means any educational
service that competes with the educational services provided by the Company
and/or any of its subsidiaries, including, but not limited to, coursework in the
areas of visual communication and design technologies; information technology;
business studies; culinary arts; and health education, or any education service.
You hereby acknowledge that the following organizations, among others, provide
Competing Educational Services, and should you accept employment with, own,
manage, operate, consult or provide expert services to any of these
organizations within said two-year period, 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. You 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 Section 16(e). Nothing
herein shall prevent you from owning less than two percent (2%) of the capital
stock of a company whose stock is publicly traded and that is engaged in
Competing Educational Services.

(f)      You acknowledge and agree that the Company will suffer irreparable
injury in the event of a breach by you of the terms of this Section 16. In the
event of a breach of the terms of this Section 16, the Company shall be
entitled, in addition to any

 

9

--------------------------------------------------------------------------------

other remedies and damages available and without proof of monetary or immediate
damage, to a temporary and/or permanent injunction, without bond, to restrain
the violation of this Section 16 by you or any persons acting for or in concert
with you. Such remedy, however, shall be cumulative and nonexclusive and shall
be in addition to any other remedy that the parties may have.

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

 

  17. Arbitration.

(a)      Arbitrable Claims. You and the Company mutually consent to the
resolution by final and binding arbitration of any and all disputes,
controversies or claims related in any way to your employment with the Company,
including, but not limited to, any dispute, controversy or claim of alleged
discrimination, harassment or retaliation (including, but not limited to, claims
based on race, sex, sexual preference, religion, national origin, age, marital
or family status, medical condition, handicap or disability), any claim arising
out of or relating to this Letter, any awards granted hereunder, or the breach
thereof, and any dispute as to the arbitrability of a matter under this
provision (collectively, “Claims”); provided, however, that nothing herein shall
require arbitration of any claim or charge which, by law, cannot be the subject
of a compulsory arbitration agreement and except as provided in Section 17(e)
below. You and the Company expressly acknowledge that you waive the right to
litigate Claims in a judicial forum before a judge or jury, except as provided
in Section 17(e) below.

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

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

 

10

--------------------------------------------------------------------------------

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

 

  18. Survival; Successors.  Sections 9, 11, 16 and 17 of this Letter shall
survive and remain in effect following the date you terminate employment with
the Company, as provided for therein.

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

 

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

 

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

[Signature Page to Letter Follows]

 

11

--------------------------------------------------------------------------------

[Signature Page to Letter]

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

Sincerely,

 

CAREER EDUCATION CORPORATION

 

 

By:

 

/s/ Leslie T. Thornton

Name:

  Leslie T. Thornton

Title:

  Lead Director of the Board of Directors

By:

 

/s/ Patrick W. Gross

Name:

  Patrick W. Gross

Title:

  Chairman of the Compensation Committee of the Board of Directors

Accepted and Agreed to:

 

/s/ Scott Steffey

     

April 1, 2013

  

Scott Steffey

      Date   

 

12

--------------------------------------------------------------------------------

Exhibit A

“Cause” means the occurrence of any one of the following: (i) any material act
of dishonesty, willful misconduct, gross negligence, willful abandonment of
duty; (ii) a material violation of the Company’s Code of Conduct or Code of
Ethics, as applicable; (iii) willful commission of a felony or commission of any
crime involving fraud or embezzlement; (iv) a willful failure to reasonably
cooperate in any investigation or proceeding concerning the Company; or (vi) any
material violation of non-compete, non-solicit or non-disclosure restrictive
covenant. For all purposes, no act or omission to act by you shall be “willful”
if such act or omission was conducted in good faith or with a reasonable belief
such conduct was in the best interests of the Company.

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

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

 

13