Document:

exv10w8

Exhibit 10.8

CONSULTING AGREEMENT

          This Agreement dated this 30th day of June 2008, is executed by and between MiddleBrook
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), located at 20425 Seneca Meadows
Parkway, Germantown, MD 20876, and Robert C. Low (“Consultant”), located at PO Box 547, Vienna, VA
22183-0547 (the “Agreement”).

          WHEREAS, Consultant holds the position of Chief Financial Officer of the Company and, in
connection with an expected change in the Company’s management, Consultant’s employment with the
Company will terminate effective with the closing of the EGI transaction;

          WHEREAS, in the event of such termination of employment, the Company desires to obtain
consulting services from Consultant commencing on the day following the closing of the EGI
transaction (the “Effective Date”), pursuant to the terms and conditions set forth in this
Agreement;

          WHEREAS, Consultant possesses the requisite skills, training and experience to perform the
services called for under this Agreement, and wishes to perform the services based on the terms and
conditions herein; and

          WHEREAS, based on the nature of the relationship that the parties intend to establish, the
Company hereby engages the Consultant as an independent contractor.

          NOW, THEREFORE, in consideration of the mutual promises and covenants of the parties as herein
contained, the parties hereto agree and contract as follows:

	1)	 	This Agreement shall be effective on the Effective Date. Other than as contemplated by the
immediately following proviso, this Agreement shall be of no force or effect and neither party
shall have any rights or obligations hereunder until the Effective Date; provided, however,
that (i) no party may terminate, modify or amend this Agreement prior to the Effective Date
unless in a writing signed by the Company and Consultant, and (ii) the provisions of this
Paragraph 1, and any definitions in this Agreement, shall be effective upon execution of this
Agreement by the parties hereto. If the termination of Consultant’s employment with the
Company does not occur, this Agreement shall be null and void and of no force or effect.
	 
	2)	 	The original term of this Agreement shall be for 24-months commencing on the Effective Date.
This Agreement may be renewed for additional 12-month periods by mutual agreement of the
parties hereto.
	 
	3)	 	Commencing on the Effective Date, the Consultant shall be available to provide such
consulting services with respect to the business of the Company as the Company reasonably
requests. The consulting services that may be requested of Consultant shall be of a nature
that reflects and is consistent with Consultant’s skills, experience, expertise and services
provided by Consultant to the Company prior to the Effective Date. The Consultant shall

 

 

	 	 	perform such services in a thorough, efficient, and workmanlike manner, promptly and with due
diligence and care, and in accordance with that standard of care and skill ordinarily exercised
by members of the profession performing similar services. In addition, Consultant shall comply
with all applicable federal, state and local statutes, ordinances and regulations in the course
of performing such objectives.
	 
	4)	 	The Company enters in this Agreement based on Consultant’s experience with the business of
the Company and his demonstrated ability to accomplish the objectives of such business.
Consequently, the Company will not provide Consultant with any training or instructions with
respect to the services to be provided hereunder. Similarly, Consultant is responsible for
providing any equipment, materials or supplies that Consultant determines are necessary to
accomplish the objectives.
	 
	5)	 	Consistent with the parties’ intent that the relationship created by this Agreement be that
of service recipient and independent contractor, Consultant shall retain the exclusive right
to control and direct all details of the services that Consultant performs hereunder,
including where, when and how the services are to be performed. Consultant’s failure to
accomplish the services by the applicable deadline, however, shall constitute a material
breach of this Agreement, unless the Company agrees to an extended deadline.
	 
	6)	 	Other than with respect to the changes to the Prior Employment Options pursuant to Paragraph
10, Consultant shall not be eligible to participate in any benefit programs that the Company
now or hereafter maintains for its employees with respect to services performed hereunder, and
Consultant hereby waives any such right to participate in the programs. This waiver of any
right to participate in Company-sponsored employee benefit programs represents a material
component of the terms of compensation agreed to by these parties and is not in any way
conditioned on any representation or assumption concerning status of Consultant with respect
to the Company as an employee or independent contractor.
	 
	7)	 	For all purposes, including but not limited to the Federal Insurance Contributions Act
(“FICA”), the Social Security Act, the Federal Unemployment Tax Act (“FUTA”), income tax
withholding and any and all other federal, state and local laws, rules and regulations,
Consultant shall be treated as an independent contractor and not as an employee with respect
to the Company.
	 
	8)	 	Consultant acknowledges and agrees that Consultant shall be responsible (as a self-employed
individual) for filing all tax returns, tax declarations and tax schedules, and for the
payment of all taxes required, when due, with respect to any and all compensation earned by
Consultant under this Agreement. The Company will neither pay nor withhold any employment
taxes with respect to the compensation it pays Consultant. Rather, the Company will report
the amounts it pays Consultant on IRS Forms 1099, to the extent required to do so under
applicable Internal Revenue Code provisions.
	 
	9)	 	Consultant’s fees for services provided under this Agreement shall be Fifteen Hundred Dollars
($1,500) per day or Seven Hundred and Fifty Dollars ($750) per half-day, plus reasonable
travel expenses. The Company shall have no obligation to pay a fee prior to receipt of an
invoice from Consultant requesting payment of the same. The Company will not reimburse
Consultant for any other expenses incurred in connection with the performance

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	 	 	of services hereunder unless otherwise agreed by the Company. For purposes of satisfying
Section 409A of the Internal Revenue Code of 1986, as amended, the parties agree that any amount
reimbursed hereunder for one calendar year shall not affect the amounts reimbursed for other
calendar years, and all reimbursement payments, if any, shall in all events be made no later
than the end of the calendar year following the calendar year in which the applicable expense is
incurred.

	10)	 	With respect to stock options (other than the Option) relating to shares of the Company
common stock which are held by Consultant on the Effective Date (the “Prior Employment
Options”), (i) Consultant’s obligations to provide consulting services under this Agreement
shall constitute continued “Service” with the Company (as described in the Amended and
Restated Middlebrook Pharmaceuticals, Inc. Stock Incentive Plan and any applicable stock
option agreement) so that (i) such Prior Employment Options shall continue to vest during the
term of this Agreement (including any additional terms following the original term), and (ii)
the exercisability of such Prior Employment Options shall be determined as if such Service
continued until the expiration of the term of this Agreement (including any additional terms
following the original term). In addition, with respect to any Prior Employment Options that
are incentive stock options (as defined in Section 422 of the Internal Revenue Code, as
amended) and that are exercised more than three (3) months from the effective date of
termination of Consultant’s employment with the Company, such Prior Employment Options shall
not be incentive stock options and instead be nonqualified stock options.
	 
	11)	 	Subject to approval of the Company, Consultant shall have the right to engage others to
assist in the accomplishment of the services described herein. Consultant shall be solely
responsible for (a) complying with all applicable employment and labor laws with respect to
any assistants it engages, (b) paying all compensation owed to such assistants, and (b)
paying, and/or withholding and remitting to the appropriate government agency, any applicable
employment taxes that might be owed with respect to such compensation. Consultant also shall
indemnify and hold the Company harmless against any and all liabilities attributable to the
obligations imposed on Consultant under this Paragraph 11. This Paragraph 11 shall survive
the termination of this Agreement.
	 
	12)	 	The Consultant reserves the right to, and intends to, perform services for others, so long as
the performance of such services does not interfere with the performance of services
hereunder.
	 
	13)	 	Consultant acknowledges and agrees that in the course of the performance of services pursuant
to this Agreement, Consultant will be given access to, or come into possession of,
confidential information of the Company, which information includes trade secrets, proprietary
data or other confidential information. Consultant acknowledges and agrees that he will not
use, duplicate or divulge to others any such confidential information of the Company except in
connection with the performance of services under this Agreement. Consultant agrees and
covenants that Consultant shall not remove or copy any data, research, memoranda, reports,
records, documents, publications, journals, diaries, computer programs, files, information
contained in files, or other information or material pertaining to the business, research, or
technology of the Company without the express written consent of the Company, which in all
events shall be considered to be the owner and possessor of all such

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	 	 	data, research, memoranda, reports, records, documents, publications, journals,
diaries, computer programs, files, information contained in files, or other
information or material. Consultant covenants and agrees that Consultant shall
in no way utilize any such information in Consultant’s possession for the gain
or advantage of Consultant (other than in Consultant’s performances of services
hereunder) and/or to the detriment of the Company. Upon a termination of this
Agreement, or at such earlier date as the Company may request, Consultant shall
deliver forthwith to the Company all such data, research, memoranda, reports,
records, documents, publications, journals, diaries, computer programs, files,
information contained in files, or other information or material (including all
extracts, abstracts, copies, or portions thereof) which are then in
Consultant’s possession or control. The obligations of this Paragraph 13 shall
survive the termination of this Agreement.

	14)	 	(a) Consultant acknowledges and agrees that, as
part of his engagement with the Company, he
may be expected to make new contributions of
value to the Company and agrees to promptly
disclose to the Company any and all
inventions, discoveries, works of
authorship, writings, computer software
programs, processes, formulas, improvements
or revisions (collectively, “Works”),
whether subject to copyright, patent,
registration or other protection as
intellectual property or not, which he may
make, devise, conceive, create, design,
invent, develop or discover, either solely
or jointly with another or others, during
his engagement by the Company, whether at
the request or upon the suggestion of the
Company or otherwise, which (i) stem from
his work for the Company; (ii) were created
using the Company facilities, equipment, or
resources, the Company personnel, or during
any time he is performing services for the
Company; (iii) come about as a result of
Consultant’s access to confidential,
proprietary, or trade secret information
belonging to the Company; or (iv) relate to,
or are capable of use in connection with any
business of the Company, or any services,
programs or products offered, used, sold or
being developed by the Company at the time
he creates or develops such Works, of which
Consultant became aware through his
consulting relationship with the Company or
otherwise through Consultant’s provision of
services hereunder. Any and all of the
foregoing shall belong exclusively to the
Company and, to the extent it is
copyrightable material, shall be deemed to
be “Works Made for Hire,” and the Company
shall be deemed the author or creator
thereof.

(b) Consultant shall assign to the Company, and hereby does so assign, all Works disclosed,
or required to be disclosed, in accordance with this Section and assigns the right to obtain
patents or copyright registrations on any and all such Works in any or all countries in his
name or otherwise.

	15)	 	Upon the request of the Company, whether or not made during the period of his engagement with
the Company, Consultant shall assist the Company in any way necessary, including, but not
limited to executing documents, to accomplish the following, in any or all countries, with
respect to any and all Works disclosed, or required to be disclosed, in accordance with
Paragraph 14: (a) to perfect in the Company all right, title and interest in and to the Work;
(b) to file for and/or obtain a patent or patents, copyright registration or copyright
registrations, trademark, trade name, domain name or similar registration, or other means
established for the protection of intellectual property on the Work, in the United States or
any

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	 	 	other country; and (c) to protect and enforce the Company’s rights in the Work. The provisions
of Paragraphs 13, 14 and 15 shall survive the termination of this Agreement.
	 
	16)	 	In the case of a material breach of this Agreement by one party, the other party shall have
the right to terminate this Agreement immediately by providing the breaching party with a
notice of termination. The termination shall be effective at the time the notice is
received by the breaching party.
	 
	17)	 	This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware. Any and all disputes arising out of, relating to the performance of
services contracted for under, this Agreement, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association, or any
successor thereto then prevailing. Such arbitration shall be final and binding upon the
parties, and shall be the sole and exclusive remedy of the parties with respect to any dispute
arising out of, relating to, or resulting from the interpretation of the terms of this
Agreement, or any breach thereof. The costs of such arbitration shall be borne equally by the
parties. Notwithstanding the foregoing provisions of this Paragraph 18 to the contrary,
matters in which an equitable remedy or injunctive relief is sought by a party, shall not be
required to be submitted to arbitration, if the party seeking such remedy or relief objects
thereto, but instead shall be submitted to a court of law having appropriate jurisdiction.
This Paragraph 17 shall survive the termination of this Agreement.
	 
	18)	 	This Agreement shall constitute the entire written agreement between the parties, and shall
supersede any and all agreements or understandings in effect between the parties hereto;
provided, however, that this Agreement shall not affect in any way the rights and obligations
of the Company and Consultant under the Employment Agreement between the Company and
Consultant dated April 8, 2008. This Agreement may not be modified except by written
agreement executed by the parties hereto.
	 
	19)	 	Each provision of this Agreement shall be treated as a separate and independent clause, and
the unenforceability of any one clause shall in no way impair the enforceability of any of the
other clauses herein. Moreover, if one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to scope, activity, subject or
otherwise so as to be unenforceable at law, such provision or provisions shall be construed by
the appropriate judicial body by limiting or reducing such provision or provisions, so as to
be enforceable to the maximum extent comparable with the applicable law as such law shall then
be.
	 
	20)	 	No breach of any provision hereof can be waived unless in writing. Waiver of any breach of
any provision hereof shall not be deemed to be a waiver of any other breach of the same, or
any other provision.
	 
	21)	 	Any notice required or permitted under this Agreement shall be in writing and shall be deemed
given upon the earlier of (a) when it is personally delivered, (b) three (3) days after having
been mailed by certified mail, postage prepaid, return receipt requested or (c) two (2) days
after having been sent by recognized overnight delivery service, in all cases sent to the
address first set forth above, or to such other address as the person to whom notice is to be
given may have previously furnished to the other in writing in the manner set forth herein.

[signatures on following page]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.

	 	 	 	 	 	 	 
	MIDDLEBROOK PHARMACEUTICALS, INC.	 	CONSULTANT
	 
	 	 	 	 	 	 
	By: 

Name: 

Title:

	 	/s/ Wayne T. Hockmeyer
 

Wayne T. Hockmeyer

Chairman, Compensation Committee
	 	/s/ Robert C. Low
 

Name: Robert C. Low

TIN: On FILEexv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

          THIS AGREEMENT is entered into, effective this 7th day of July 2008, by and between Apollo
Group, Inc. (the “Company”), and Charles B. Edelstein (the “Executive”) (hereinafter collectively
referred to as “the parties”).

          WHEREAS, the Company has determined that it is in the best interests of the Company and its
shareholders to employ the Executive as described herein;

          WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment; and

          WHEREAS, the Executive desires to enter into this Agreement and to accept such employment;

          NOW, THEREFORE, in consideration of the foregoing and the respective agreements of the parties
contained herein, the parties hereby agree as follows:

     1. Term. The initial term of employment under this Agreement will be for the period
commencing on August 26, 2008 (the “Commencement Date”) and ending on the fourth anniversary of the
Commencement Date (the “Initial Term”), unless sooner terminated in accordance with the provisions
of Section 7 of this Agreement. Should this Agreement continue in effect through the end of the
Initial Term, then this Agreement will be automatically renewed from year to year thereafter,
unless either the Company or the Executive will have given written notice to the other at least
sixty (60) calendar days prior thereto that the term of this Agreement will not be so renewed (a
"Notice of Non-Renewal”). The Initial Term, together with each one-year renewal thereof (if any),
shall constitute the term (the “Term”) of this Agreement.

     2. Employment.

     (a) Position. The Executive will be employed as, and hold the title of, the Company’s Chief
Executive Officer and shall in such capacity have primary responsibility for the implementation and
execution of the Company’s strategic business plans and objectives as approved from time to time by
the Company’s Board of Directors (the “Board”). The Executive shall report directly to the Board
and shall have all the authority needed to perform the duties and undertake the responsibilities of
his position. The Executive will be a member of the Chair’s Cabinet and shall be involved in all
the Company’s major strategic decisions. The Executive will have the authority to hire appropriate
personnel as may be needed to carry out his duties.

     (b) Board Membership. On the Commencement Date, the Executive shall be appointed to the
Board. The Company shall, during the remainder of the Term, use its best efforts to have the
Executive nominated for election and re-election as a Board member at all meetings of the Company’s
Class B shareholders held during the Term at which Board members are to be elected.

     (c) Obligations. The Executive shall devote his full business time and attention to the
business and affairs of the Company. During the term of this Agreement, the Executive shall not
engage in any other employment, service or consulting activity without the prior written approval
of the Board. The foregoing, however, shall not preclude the Executive from (i) serving on any
corporate, civic or charitable boards or committees on which the Executive is serving on the
Commencement Date, provided

 

 

those positions are listed in attached Schedule I, or on which he commences service following
the Commencement Date with the prior written approval of the Board or (ii) managing personal
investments, so long as such clause (i) and (ii) activities do not interfere with the performance
of the Executive’s responsibilities hereunder.

     3. Base Salary and Bonus.

     (a) Base Salary. The Company agrees to pay or cause to be paid to the Executive an annual
base salary at the rate of $600,000, less applicable withholding. This base salary will be subject
to annual review and may be increased from time to time by the Compensation Committee of the Board
of Directors (the “Compensation Committee”) upon consideration of such factors as the Executive’s
responsibilities, compensation of similar executives within the Company and in other companies,
performance of the Executive and other pertinent factors. The Executive’s annual rate of base
salary, as it may be increased from time to time, will be hereinafter referred to as the “Base
Salary”. Such Base Salary will be payable in accordance with the Company’s customary practices
applicable to its executives.

     (b) Bonus. For each fiscal year completed during the Term (other than the fiscal year ending
August 31, 2008), the Executive will be eligible to receive an annual cash bonus (“Annual Bonus”)
based upon individual and Company performance goals that are established in good faith by the
Compensation Committee and that are reasonable in comparison to the individual and Company
performance goals the Compensation Committee sets for the Company’s other executive officers,
provided that the Executive’s target Annual Bonus will be no less than 100% of his Base Salary (the
“Target Bonus”). The Annual Bonus earned for each fiscal year shall be paid in accordance with the
Company’s customary practices, but in no event more than seventy-five (75) days following the end
of such fiscal year. The Executive shall not be entitled to any Annual Bonus for the Company’s
fiscal year ending August 31, 2008. However, the Executive shall on the Commencement Date be paid
a sign-on bonus in the amount of $200,000 (the “Sign-On Bonus”), subject to the Company’s
collection of applicable federal, state and local income and employment withholding taxes. Should
the Executive’s employment be terminated by the Company for Cause (as defined below), or should the
Executive voluntarily terminate his employment other than for Good Reason (as defined below), at
any time prior to the first anniversary of the Commencement Date, then the Executive shall at the
time of such termination repay the Sign-On Bonus to the Company.

     4. Equity Compensation Awards. In addition to the grants below, the Executive will be
eligible during the Term for grants of equity compensation awards in accordance with the Company’s
policies, as in effect from time to time. The grants below will be issued pursuant and subject to
the terms of the Company’s 2000 Stock Incentive Plan, as amended and restated (the “Incentive
Plan”), and the award agreements evidencing those grants, except that in the event of any conflict
between the terms of the Incentive Plan or the award agreements and this Agreement, the terms of
this Agreement will control:

     (a) Initial Stock Option Grant. At the close of business on the Commencement Date, the
Executive will be granted stock options under the Incentive Plan for 1,000,000 shares of the
Company’s Class A common stock with an exercise price equal to the closing selling price per share
on such grant date and a maximum term of six (6) years (the “Initial Option Grant”).

     (b) Initial Restricted Stock Unit Award. Should the Executive forfeit all or a portion of the
99,298 unvested shares of Credit Suisse Group common stock subject to the outstanding stock-based
awards made to him by his former employer, Credit Suisse Group, in the form of units under the
Credit Suisse Group Performance Incentive Plan and Incentive Share Unit Plan (collectively, the “CS
Equity

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Award”), then the Executive will be granted restricted stock units under the Incentive Plan
covering that number of shares of the Company’s Class A common stock (rounded to next whole share)
determined pursuant to the following procedure:

     first, the dollar value of the unvested shares of Credit Suisse Group common
stock forfeited under the CS Equity Award will be determined by multiplying the
number of those forfeited shares by the closing selling price per share of Credit
Suisse Group common stock on the Commencement Date; and

     then, the dollar amount so determined will be divided by the closing selling
price per share of the Company’s Class A common stock on the Commencement Date to
determine the number of shares of Class A common stock subject to this particular
award.

          In addition, to the extent the Executive avoids the forfeiture of one or more of the 99,298
unvested shares of Credit Suisse Group common stock subject to the CS Equity Award, the Executive
will be granted a restricted stock unit award under the Incentive Plan covering the number of
shares of the Company’s Class A common stock (rounded to next whole share) determined pursuant to
the following procedure:

     first, the dollar value of the unvested shares of Credit Suisse Group common
stock not forfeited under the CS Equity Award will be determined by multiplying the
number of those non-forfeited shares by the closing selling price per share of
Credit Suisse Group common stock on the Commencement Date;

     then, the dollar amount so determined will be divided by the closing selling
price per share of the Company’s Class A common stock on the Commencement Date; and

     finally, the number of shares of Class A common stock so calculated will be
multiplied by 0.25 to determine the number of shares of Class A common stock
subject to this particular award.

          The restricted stock unit award or awards determined in accordance with the foregoing
provisions of this Section 4(b) shall be collectively referred to as the “Initial RSU Award” and
shall be granted on the third business day following the public release of the Company’s financial
results for the fiscal year ending August 31, 2008 (the “Public Release Award Date”); provided,
however, that in the event the Commencement Date is after August 31, 2008, the Initial RSU Award
shall be granted on the Commencement Date. Each restricted stock unit will represent the right to
receive one share of such Class A common stock upon the vesting of that unit, subject to the
Company’s collection of all applicable withholding taxes.

     (c) Supplemental Restricted Stock Unit Award. On the Public Release Award Date or (if the
Commencement Date is after August 31, 2008) the Commencement Date, the Executive shall also be
issued a supplemental restricted stock unit under the Incentive Plan covering an additional 8,000
shares of the Company’s Class A common stock (the “Supplemental RSU Award”). Each restricted stock
unit will represent the right to receive one share of such Class A common stock upon the vesting of
that unit, subject to the Company’s collection of all applicable withholding taxes.

     (d) Vesting. The Initial Option Grant will vest and become exercisable in a series of four
successive equal annual installments upon the Executive’s completion of each year of employment
with the Company over the four-year period measured from the Commencement Date (regardless of the
actual

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grant date). The shares of the Company’s Class A common stock underlying the Supplemental
RSU Award will vest and become issuable in a series of annual installments as follows: (a) forty
percent (40%) of the shares subject to the Supplemental RSU Award will vest and become issuable
upon the Executive’s completion of one year of employment with the Company measured from the
Commencement Date, (b) an additional forty percent (40%) of the award will vest and become issuable
upon the Executive’s completion of two years of employment with the Company measured from the
Commencement Date and (c) the remaining twenty percent (20%) of the Supplemental RSU Award will
vest and become issuable upon the Executive’s completion of three years of employment with the
Company measured from the Commencement Date. In addition, the Initial Option Grant and the
Supplemental RSU Award will each be subject to the vesting acceleration provisions set forth in
Sections 8 and 11 of this Agreement. The Initial RSU Award will be subject to the following
performance and service vesting requirements:

          (i) The vesting of the Initial RSU Award will be tied to the Company’s attainment of net book
income, after tax expense, of $250 million for the 2009 fiscal year. Net book income, after tax
expense, will be calculated on a consolidated basis with the Company’s consolidated subsidiaries
for financial reporting purposes and in accordance with generally accepted accounting principles
and shall be determined on the basis of the Company’s audited financial statements, subject to the
following modifications:

          - There shall be excluded: (i) all stock-based compensation accrued for such fiscal year
pursuant to Statement of Financial Accounting Standards 123R and any other GAAP expense for such
fiscal year relating to equity compensation awards, (ii) any extraordinary, nonrecurring items as
determined in accordance with Accounting Principles Board Opinion No. 30, and (iii) all amounts
(including settlement payments, judgment or verdict amounts, legal fees, costs and other
litigation/settlement expenses) expensed during the 2009 fiscal year in connection with the
settlement or disposition of the litigation matters identified in Item 3 of the Company’s Form
10-K for the fiscal year ending August 31, 2008.

          (ii) None of the Initial Restricted Stock Unit Award will vest unless such performance goal
is attained. However, if such performance goal is attained, then the shares of Class A common
stock underlying the Initial RSU Award will vest and become issuable in installments over the
Executive’s period of continued employment with the Company as follows: (a) forty percent (40%)
of the shares subject to the Initial RSU Award will vest upon the Executive’s completion of one
year of employment with the Company measured from the Commencement Date and will be issued
immediately upon the Compensation Committee’s certification of the attainment of the performance
goal, (b) an additional forty percent (40%) of the award will vest and become issuable upon the
Executive’s completion of two years of employment with the Company measured from the Commencement
Date and (c) the remaining twenty percent (20%) of the Initial RSU Award will vest and become
issuable upon the Executive’s completion of three years of employment with the Company measured
from the Commencement Date. In addition, the Initial RSU Award will be subject to the vesting
acceleration provisions of Sections 8 and 11 of this Agreement. All issuances under the Initial
RSU Award will be subject to the Company’s collection of the applicable withholding taxes.

     (e) Shares to Be Registered; Stock Certificates. All shares issued to the Executive pursuant
to his exercise of the Initial Option Grant and the vesting of the Initial RSU Award and
Supplemental RSU Award will be registered under an appropriate and effective registration statement
under the Securities Act of 1933, as amended (the “1933 Act”).

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     (f) The Company represents and warrants that this Agreement, the grants described in subsections
(a), (b) and (c) above and the terms of those grants have been authorized and approved by the
Compensation Committee and that any requisite amendments to the Incentive Plan will be adopted by
the Board and approved by the Company’s Class B shareholders prior to the applicable grant date.

     5. Employee Benefits. Provided he otherwise satisfies any applicable eligibility
requirements for participation, the Executive will be entitled to participate in the welfare,
retirement, perquisite, and fringe benefit plans, practices, and programs maintained by the Company
and made available to senior executives generally, as in effect from time to time. The Executive’s
participation in any such plans, practices and programs for which he satisfies the applicable
eligibility requirements will be on the same basis and terms as are applicable to senior executives
of the Company generally.

     6. Other Benefits.

     (a) Expenses. Subject to applicable Company policies, including (without limitation) the
timely submission of appropriate documentation and expense reports, the Executive will be entitled
to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the
performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business
or interests of the Company. Accordingly, the Executive shall submit appropriate evidence of each
such expense within sixty (60) days after the later or (i) his incurrence of that expense or (ii)
his receipt of the invoice or billing statement for such expense, and the Company shall provide the
Executive with the requisite reimbursement within ten (10) business days thereafter; provided,
however, that no expense shall be reimbursed later than the close of the calendar year following
the calendar year in which that expense is incurred.

     (b) Offices and Facilities. The Executive will be provided with appropriate offices at the
Company’s corporate headquarters in Phoenix, Arizona and at the Company’s office location in
Chicago, Illinois and with such secretarial and other support facilities at such locations as are
commensurate with the Executive’s status with the Company and adequate for the performance of his
duties hereunder. The Executive shall not be required to spend any specific amount of time at the
Company’s corporate headquarters in Phoenix, Arizona location (or any successor location), but
shall be present at such location to the extent necessary to fulfill his duties and
responsibilities as Chief Executive Officer. Executive shall also be required to travel to other
locations from time to time in the performance of his duties as Chief Executive Officer.

     (c) Vacation. During the Term, the Executive will be eligible for paid vacation in accordance
with the Company’s policies, as may be in effect from time to time, for its senior executives
generally; provided, however, that the Executive will be eligible for no less than four weeks of
paid vacation per year

     (d) Living Expenses. Until such time as the Company makes available Company-owned or leased
housing to the Executive in the geographic location of the Company’s corporate headquarters in
Phoenix, Arizona, the Company shall pay the Executive a monthly living allowance in the dollar
amount of $3,000, less applicable withholdings, to cover his housing, food and other living costs
while he is in the Phoenix Metropolitan Area. The payment for each month shall be made on the
first regular pay day in that month.

     (e) Commuting Expenses. The Company will reimburse the Executive for reasonable expenses
incurred in commuting to the Company’s corporate headquarters in Phoenix, Arizona. Accordingly, the
Executive shall submit appropriate evidence of each such commuting expense within sixty (60) days
after the later of (i) his incurrence of that expense or (ii) his receipt of the invoice or

5

 

billing statement for such expense, and the Company shall provide the Executive with the
requisite reimbursement within ten (10) business days thereafter; provided, however, that the
amount of round-trip air travel to be so reimbursed shall in no event exceed the cost of a first
class round-trip ticket between Phoenix, Arizona and Chicago, Illinois on a commercial airline.

     (f) Conditions to Reimbursement. Any amounts to which the Executive becomes entitled pursuant
to the foregoing provisions of this Section 6 (whether by way of reimbursement or in-kind benefits)
in each calendar year within the Term of this Agreement shall not reduce the amounts (or in-kind
benefits) to which the Executive may become entitled hereunder in any other calendar year within
such Term. In no event will any expense otherwise reimbursable hereunder be reimbursed later than
the close of the calendar year following the calendar year in which that expense is incurred. In
addition, none of the Executive’s rights to reimbursement or in-kind benefits hereunder may be
liquidated or exchanged for any other benefit.

     7. Termination. Except for a Notice of Non-Renewal, as described in Section 1, the
Executive’s employment hereunder may only be terminated in accordance with the following terms and
conditions:

     (a) Termination by the Company without Cause. The Company will be entitled to terminate the
Executive’s employment at any time by delivering a Notice of Termination to the Executive pursuant
to Section 7(e); provided, however, that (i) any termination of the Executive’s employment for
Cause shall be governed by the provisions of Section 7(b) and (ii) the Company shall have no right
to terminate the Executive’s employment without Cause on or before the Commencement Date.

     (b) Termination by the Company for Cause.

          (i) The Company may terminate the Executive’s employment hereunder for “Cause” (as defined
below) by delivering to him a Notice of Termination. For purposes of the foregoing, any of the
following shall constitute grounds for terminating the Executive’s employment for Cause: (A) the
Executive’s pleading “guilty” or “no contest” to, or his conviction of, a felony or any crime
involving moral turpitude, (B) his commission of any act of fraud or any act of personal dishonesty
involving the property or assets of the Company intended to result in substantial financial
enrichment to the Executive, (C) a material breach by the Executive of one or more of his
obligations under Section 9 of this Agreement or his Proprietary Information and Inventions
Agreement with the Company, (D) a material breach by the Executive of any of his other obligations
under this Agreement or any other agreement with the Company, (E) the Executive’s commission of a
material violation of Company policy which would result in an employment termination if committed
by any other employee of the Company or his gross misconduct, (F) the Executive’s material
dereliction of the major duties, functions and responsibilities of his executive position (other
than a failure resulting from the Executive’s incapacity due to physical or mental illness), (G) a
material breach by the Executive of any of the Executive’s fiduciary obligations as an officer of
the Company or (H) the Executive’s willful and knowing participation in the preparation or release
of false or materially misleading financial statements relating to the Company’s operations and
financial condition or his willful and knowing submission of any false or erroneous certification
required of him under the Sarbanes-Oxley Act of 2002 or any securities exchange on which shares of
the Company’s Class A common stock are at the time listed for trading. However, prior to any
termination of the Executive’s employment for Cause based on any of the reasons specified in
clauses (C) through (F) and the delivery of a Notice of Termination in connection therewith, the
Company shall give written notice to the Executive of the actions or omissions deemed to constitute
the grounds for such a termination for Cause, and the Executive shall have a period of not less
than sixty (60) calendar days after the receipt of such notice in which to cure the specified
default in his performance and thereby avoid a Notice of Termination under this subsection (b)(i).

6

 

          (ii) In the event the Executive is provided with a Notice of Termination under subsection
(b)(i), the Notice of Termination shall specify a Termination Date that is no earlier than the
third business day following the date of the Notice of Termination, and the Executive will have
three (3) business days following the date of such Notice of Termination to submit a written
request to the Board for a meeting to review the circumstances of his termination. If the
Executive timely submits such a written request to the Board, the Board or a committee of the Board
shall set a meeting whereby the Executive, together with his counsel, shall be permitted to present
any mitigating circumstances or other information as to why he should not be terminated for Cause,
and the Executive’s Termination Date shall be delayed until such meeting has occurred. Such
meeting will be held, at the Executive’s option, either on a mutually agreeable date prior to the
Termination Date specified in the Notice of Termination or on a mutually agreeable date within
fifteen (15) calendar days after his timely written notice to the Company requesting such a
meeting. Within five (5) business days after such meeting, the Board or committee of the Board, as
applicable, shall deliver written notice to the Executive of its final determination and, if the
termination decision is upheld, the final actual Termination Date. During the period following the
date of the Notice of Termination until the Termination Date or other resolution of the matter, the
Company shall have the option to place the Executive on an unpaid leave of absence. The rights
under this subsection will not be deemed to prejudice the Executive’s other rights and remedies in
any way or give rise to any waiver, estoppel, or other defense or bar. Without limiting the
foregoing sentence and for purposes of clarification, the failure by the Executive to request a
meeting under this subsection, to participate in a meeting that has been requested, or to present
any evidence or argument will not prevent the Executive from making any claim against the Company,
from seeking any legal or equitable remedy, or from putting forward any evidence or argument at any
judicial or arbitral hearing.

     (c) Termination by the Executive. The Executive may terminate his employment hereunder for
“Good Reason” by delivering to the Company (1) a Preliminary Notice of Good Reason (as defined
below) no later than one hundred and twenty (120) calendar days following the act or omission which
the Executive sets forth in such notice as grounds for a Good Reason termination, and (2) a Notice
of Termination not earlier than fourteen (14) calendar days after the delivery of such Preliminary
Notice or (if later) the third business day following the Company’s failure to take appropriate
remedial action within the applicable sixty (60)-day cure period provided below to the Company
following the receipt of such Preliminary Notice, but in no event later than sixty (60) days after
the expiration of such cure period. For purposes of this Agreement, “Good Reason” means:

          (i) a material reduction in the scope of the Executive’s duties, responsibilities or
authority;

          (ii) the repeated assignment to the Executive of duties materially inconsistent with the
Executive’s positions, duties, authority or responsibilities, or a materially adverse change in
Executive’s reporting requirements as set forth in Section 2(a) hereof or an adverse change to his
title set forth in Section 2(a) hereof: provided, however, that neither of the following shall
constitute Good Reason: (A) the occasional assignment of duties that are inconsistent with Section
2(a) hereof or (B) a ten percent (10%) or less aggregate reduction in the Executive’s Base Salary
and Target Bonus if substantially all of the other executive officers of the Company are subject to
the same aggregate reduction to their base salary and target bonuses;

          (iii) a requirement that the Executive relocate his principal residence from Chicago, Illinois
to the geographic location of the Company’s principal corporate headquarters in Phoenix, Arizona or
any successor location; provided, however, that travel to the Company’s principal corporate
headquarters in Phoenix, Arizona (or any successor location) or to other locations as reasonably
required to carry out the Executive’s duties and responsibilities hereunder shall not be a basis
for a termination for Good Reason; or

7

 

          (iv) a material breach by the Company of any of its obligations under this Agreement.

     In no event will any acts or omissions of the Company which are not the result of bad faith
and which are cured within sixty (60) days after receipt of written notice from the Executive
identifying in reasonable detail the acts or omissions constituting “Good Reason” (a “Preliminary
Notice of Good Reason”) be deemed to constitute grounds for a Good Reason resignation. A
Preliminary Notice of Good Reason will not, by itself, constitute a Notice of Termination.

     (d) Termination due to the Executive’s Death or Disability. This Agreement will terminate
upon the death of the Executive. The Company may terminate the Executive’s employment hereunder if
he is unable to perform, with or without reasonable accommodation, the principal duties and
responsibilities of his position with the Company for a period of six (6) consecutive months or
more by reason of any physical or mental injury or impairment; provided, however, that in the event
the Executive is at the time covered under any long-term disability benefit program in effect for
the Company’s executive officers or employees, such termination of the Executive’s employment shall
not occur prior to the date he first becomes eligible to receive benefits under such program. The
termination of the Executive’s employment under such circumstances shall, for purposes of this
Agreement, constitute a termination for “Disability.”

     (e) Notice of Termination. Any purported termination for Cause by the Company or for Good
Reason by the Executive will be communicated by a written Notice of Termination to the other at
least three (3) business days prior to the Termination Date (as defined below). For purposes of
this Agreement, a “Notice of Termination” will mean a notice which indicates the specific
termination provision in this Agreement relied upon and will, with respect to a termination for
Cause or Good Reason, set forth in reasonable detail the facts and circumstances claimed to provide
a basis for such termination of the Executive’s employment under the provision so indicated. Any
termination by the Company under this Section 7 other than for Cause or by the Executive without
Good Reason will be communicated by a written Notice of Termination to the other party fourteen
(14) calendar days prior to the Termination Date. However, the Company may elect to pay the
Executive in lieu of fourteen (14) calendar days’ written notice. For purposes of this Agreement,
no such purported termination of employment pursuant to this Section 7 will be effective without
such Notice of Termination.

     (f) Termination Date. “Termination Date” will mean in the case of the Executive’s death, the
date of death; in the case of non-renewal of the Agreement pursuant to Section 1, the date the Term
of the Agreement expires; and in all other cases, the date specified in the Notice of Termination.

     8. Compensation Upon Termination.

     (a) If the Executive’s employment is terminated by the Company for Cause or by reason of the
Executive’s death or Disability, or if the Executive provides a Notice of Non-Renewal or gives a
written notice of resignation without Good Reason, the Company’s sole obligations hereunder will be
to pay the Executive or his estate the following amounts earned hereunder but not paid as of the
Termination Date: (i) Base Salary, (ii) reimbursement for any and all monies advanced or expenses
incurred pursuant to Section 6(a) through the Termination Date, provided the Executive has
submitted timely and appropriate documentation for such expenses, and (iii) the amount of the
Executive’s accrued but unpaid vacation time (together, these amounts will be referred to as the
“Accrued Obligations”). In addition to the Accrued Obligations, in the event the Executive’s
employment terminates by reason of death or Disability, the Executive or his estate will be paid at
that time a special separation payment in a dollar amount determined by multiplying (x) the average
of his actual Annual Bonuses for the three fiscal years (or fewer number of fiscal years of
employment with the Company) immediately preceding the fiscal year in which such termination of
employment occurs (or, solely with respect to a triggering event occurring

8

 

during the Company’s 2009 fiscal year, the Executive’s target bonus for such year) by (y) a
fraction, the numerator of which is the number of months (rounded to the next whole month) during
which the Executive is employed by the Company in the fiscal year in which such termination of
employment occurs and the denominator of which is twelve (12). Furthermore, if the Executive’s
employment terminates as a result of his death, then any unvested stock options, restricted stock,
restricted stock units, or other equity granted to the Executive that would otherwise vest solely
on the basis of his continued service with the Company will immediately vest as to the number of
shares in which the Executive would have otherwise been vested on the date of his death had the
service vesting schedule for each of those grants been in the form of successive equal monthly
installments over the applicable service vesting period. Should any such unvested equity awards
also have a performance-vesting component at the time of the Executive’s death, then upon the
attainment of the applicable performance goals, the service vesting component of each such award
shall be applied as if that service vesting component had been in the form of successive equal
monthly installments over the applicable service vesting period. The Executive’s entitlement to any
other benefits will be determined in accordance with the Company’s employee benefit plans then in
effect.

     (b) If the Executive’s employment is terminated by the Company for any reason other than for
Cause, death or Disability or by the Executive for Good Reason, or if the Company provides a Notice
of Non-Renewal, the Executive will, in addition to the Accrued Obligations, be entitled to the
following compensation and benefits from the Company, provided and only if (i) the Executive
executes and delivers to the Company a general release substantially in the form of attached
Exhibit A (the “Required Release”) within twenty-one (21) days (or forty-five (45) days if such
longer period is required under applicable law) after the date of such termination of employment,
(ii) the Required Release becomes effective and enforceable in accordance with applicable law after
the expiration of any applicable revocation period and (iii) the Executive complies with the
restrictive covenants set forth in Section 10:

     (i) an amount equal to (A) two times the Executive’s Base Salary and (B) two
times the average of his actual Annual Bonuses for the three fiscal years (or fewer
number of fiscal years of employment with the Company) immediately preceding the
fiscal year in which such termination of employment occurs (or, solely with respect
to a triggering event occurring during the Company’s 2009 fiscal year, the
Executive’s target bonus for such year), with such payment to be made in
successive equal increments, in accordance with the Company’s normal payroll
practices, over the one-year period measured from the date of the Executive’s
Separation from Service, beginning with the first pay day within the ninety
(90)-day period following the date of such Separation from Service on which the
Required Release is effective following the expiration of any applicable revocation
period, but in no event later than the end of such ninety (90)-day period on which
the Required Release is so effective;

     (ii) one hundred percent vesting of the Initial RSU Award and the Supplemental
RSU Award and accelerated vesting of the Initial Option Grant to the extent of the
greater of (A) fifty percent of the then unvested portion of such grant or (B) the
portion of such grant which would have vested had the Executive completed an
additional twelve (12) months of employment with the Company prior to the
Termination Date. In the event the Initial RSU Award and Supplemental RSU Award
have not been made prior to the Termination Date, then in lieu of the foregoing
accelerated vesting of those awards, the Company shall, concurrently with the
initial payment made under Section 8(b)(i), pay the Executive a cash amount equal
to the closing selling price on the Termination Date of the shares of the Company’s
Class A common stock that would have

9

 

been subject to the Initial RSU Award and Supplemental RSU Award on such
Termination Date pursuant to the applicable provisions of Section 4 had those
awards in fact been made prior to the Termination Date. Such cash payment shall be
subject to the Company’s collection of all applicable federal, state and local
income and employment withholding taxes;

     (iii) provided the Executive and/or his dependents are eligible and timely
elect to continue their healthcare coverage under the Company’s group health plan
pursuant to their rights under COBRA, the Company will reimburse the Executive for
the costs he incurs to obtain such continued coverage for himself and his eligible
dependents (collectively, the “Coverage Costs”) until the earliest of (A) the end
of the eighteen (18)-month period measured from the Termination Date, (B) the date
that the Executive and/or his eligible dependents are no longer eligible for COBRA
coverage and (C) the date that the Executive becomes eligible for such coverage
under the health plan of any new employer (the Executive agrees to provide the
Company with written notice of such eligibility within ten calendar days). In order
to obtain reimbursement for such Coverage Costs, Executive must submit appropriate
evidence to the Company of each periodic payment within sixty (60) days after the
payment date, and the Company shall within thirty (30) days after such submission
reimburse the Executive for that payment. During the period such medical care
coverage remains in effect hereunder, the following provisions shall govern the
arrangement: (a) the amount of Coverage Costs eligible for reimbursement in any one
calendar year of such coverage shall not affect the amount of Coverage Costs
eligible for reimbursement in any other calendar year for which such reimbursement
is to be provided hereunder; (ii) no Coverage Costs shall be reimbursed after the
close of the calendar year following the calendar year in which those Coverage
Costs were incurred; and (iii) the Executive’s right to the reimbursement of such
Coverage Costs cannot be liquidated or exchanged for any other benefit. To the
extent the reimbursed Coverage Costs constitute taxable income to the Executive,
the Company shall report the reimbursement as taxable W-2 wages and collect the
applicable withholding taxes, and any remaining tax liability shall be the
Executive’s sole responsibility; and

     (iv) the Executive’s entitlement to any other benefits will be determined in
accordance with the Company’s employee benefit plans then in effect.

     (c) The Executive shall have the right to resign, for any reason or no reason, at any time
within the thirty (30) day period beginning six (6) months after the closing of a Change in Control
(as defined in Section 11) and to receive, in connection with such resignation, the same severance
benefits to which he would be entitled under Section 8(b) above had such resignation been for Good
Reason; provided, however, that the Executive’s entitlement to severance benefits under this
Section 8(c) shall be conditioned upon the satisfaction of each of the following: (i) the Executive
executes and delivers to the Company the Required Release, within twenty-one (21) days (or
forty-five (45) days if such longer period is required under applicable law) after the date of such
resignation, (ii) the Required Release becomes effective and enforceable in accordance with
applicable law after the expiration of any applicable revocation period and (iii) the Executive
complies with the restrictive covenants set forth in Section 10 of this Agreement.

     (d) All payments and benefits under this Section 8 (other than the reimbursement of Coverage
Costs during the applicable period of COBRA coverage) shall be subject to the applicable holdback
provisions of Section 14(b).

10

 

     (e) The Executive will not be required to mitigate the amount of any payment provided for in
this Section 8 by seeking other employment or otherwise, and no such payment or benefit will be
eliminated, offset or reduced by the amount of any compensation provided to the Executive in any
subsequent employment.

     9. Confidentiality.

     (a) The Executive hereby acknowledges that the Company may, from time to time during the Term,
disclose to the Executive confidential information pertaining to the Company’s business, strategic
plans, technology or financial affairs. All information, data and know-how, whether or not in
writing, of a private or confidential nature concerning the Company’s trade secrets, processes,
systems, marketing strategies and future marketing plans, student enrollment lists, prospective
course offerings, finances and financial reports, employee and faculty member information and other
organizational information (collectively, “Proprietary Information”) is and shall remain the sole
and exclusive property of the Company and shall not be used or disclosed by the Executive except to
the extent necessary to perform his duties and responsibilities under this Agreement. All tangible
manifestations of such Proprietary Information (whether written, printed or otherwise reproduced)
shall be returned by the Executive upon the termination of his employment hereunder, and the
Executive shall not retain any copies or excerpts of the returned items. The foregoing restrictions
on the use, disclosure and disposition of the Company’s Proprietary Information shall also apply to
the Executive’s use, disclosure and disposition of any confidential information relating to the
business or affairs of the Company’s faculty, students and employees.

     (b) The Executive shall on the Commencement Date execute and deliver to the Company the
standard form Proprietary Information and Inventions Agreement, as attached as Exhibit B to this
Agreement. The Executive shall, throughout the term of this Agreement and thereafter, remain
subject to the terms and conditions of such Proprietary Information and Inventions Agreement.

     (c) The Executive shall not, in connection with his duties and responsibilities hereunder,
improperly use or disclose any trade secrets or proprietary and confidential information of any
former employer or other person or entity.

     10. Restrictive Covenants. At all times during the Executive’s employment with the
Company, and for a period of one (1) year after the termination of his employment with the Company
(the “Restriction Period”), regardless of the reason or cause for such termination, the Executive
shall comply with the following restrictions:

     (a) The Executive shall not directly or indirectly encourage or solicit any employee, faculty
member, consultant or independent contractor to leave the employment or service of the Company (or
any affiliated company) for any reason or interfere in any other manner with any employment or
service relationships at the time existing between the Company (or any affiliated company) and its
employees, faculty members, consultants and independent contractors.

     (b) The Executive shall not directly or indirectly solicit any vendor, supplier, licensor,
licensee or other business affiliate of the Company (or any affiliated company) or directly or
indirectly induce any such person to terminate its existing business relationship with the Company
(or affiliated company) or interfere in any other manner with any existing business relationship
between the Company (or any affiliated company) and any such vendor, supplier, licensor, licensee
or other business affiliate.

     (c) The Executive shall not, on his own or as an employee, agent, promoter, consultant,
advisor, independent contractor, general partner, officer, director, investor, lender or guarantor
or in any other capacity, directly or indirectly:

11

 

          (i) conduct, engage in, be connected with, have any interest in, or assist any person or
entity engaged in, any business, whether in the United States, any possession of the United States
or any foreign country or territory, that competes with any of the businesses or programs conducted
by the Company in the education industry during the period of his employment with the Company
(hereafter collectively referred to as the “Businesses”); or

          (ii) permit his name to be used in connection with a business which is competitive or
substantially similar to the Businesses.

     Notwithstanding the foregoing: (i) the Executive may own, directly or indirectly, solely as an
investment, up to one percent (1%) of any class of publicly traded securities of any business that
is competitive or substantially similar to the Business, (ii) the restrictions of this Section
10(c) shall not apply to any securities in which the Executive may now or hereafter have an
indirect ownership interest as a result of his holdings, as measured as of the Commencement Date,
of interests in investment funds or limited partnerships formed or established by Credit Suisse
Group (“CS”) or its affiliates that may invest in one or more such Businesses, and (iii) the
Executive’s employment with any investment banking firm, private equity fund, hedge fund or similar
investment fund following the termination of his employment with the Company shall not be deemed a
breach of his restrictive covenant under this Section 10(c), even though the Executive may be
engaged in investment decisions pertaining to the education industry.

     11. Change in Control. For purposes of this Agreement, “Change in Control” shall have
the same meaning assigned to such term under the Incentive Plan, and upon the occurrence of such
Change in Control, any unvested stock options, restricted stock, restricted stock units, or other
equity granted to the Executive and outstanding at that time shall vest on an accelerated basis to
the same extent as all other outstanding awards under the Incentive Plan held by individuals who
are executive officers of the Company at that time.

     12. Gross-Up Payment. The provisions of this Section 12 shall only be in force and
effect if a Change in Control Event (as defined below) is effected within the twenty-four
(24)-month period measured from the Commencement Date and shall automatically become null and void
should such a Change in Control Event not be effected prior to the expiration of that twenty-four
(24)-month period:

     (a) In the event it is determined that any payment or distribution of any type to or for the
benefit of the Executive, by the Company, any of its affiliates, any Person who acquires ownership
or effective control of the Company or ownership of a substantial portion of the Company’s assets
(within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations thereunder—a “Change in Control Event”) or any affiliate of such Person,
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the “Total Payments”), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise tax, together with
any such interest and penalties, are collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments.

     (b) All determinations as to whether any of the Total Payments are “parachute payments”
(within the meaning of Section 280G of the Code), whether a Gross-Up Payment is required, the
amount of such Gross-Up Payment, and any amounts relevant to the last sentence of the paragraph
above, will be made by an independent registered public accounting firm selected by the Company
from among the largest four accounting firms in the United States (the “Accounting Firm”). The
Accounting Firm will

12

 

provide all applicable determinations with respect to any of the Total Payments that become
due and payable at the time of the Change in Control Event (the “Change in Control Determination”),
together with detailed supporting calculations regarding the amount of the Excise Tax, any required
Gross-Up Payment and any other relevant matter, both to the Company and the Executive within ten
(10) business days after the effective date of the Change in Control Event or such earlier time as
is requested by the Company or the Executive (if the Executive reasonably believes that any of the
Total Payments may be subject to the Excise Tax). In addition, the Accounting Firm will provide
all applicable determinations with respect to any of the Total Payments that become due and payable
at the time of the Executive’s Separation from Service (the “Separation from Service
Determination”), together with detailed supporting calculations regarding the amount of the Excise
Tax, any required Gross-Up Payment and any other relevant matter, both to the Company and the
Executive within ten (10) business days after the date of the Executive’s Separation from Service.
The Change in Control and Separation from Service Determinations made by the Accounting Firm will
be binding upon the Company and the Executive. The Gross-Up Payment (if any) determined on the
basis of the Change in Control Determination shall be paid to or on behalf of Executive within five
(5) business days after the completion of such Determination or (if later) at the time the related
Excise Tax is remitted to the appropriate tax authorities. The Gross-Up Payment (if any) determined
on the basis of the Separation from Service Determination shall be paid to or on behalf of
Executive within five (5) business days after the completion of such Determination or (if later) at
the time the related Excise Tax is remitted to the appropriate tax authorities.

     (c) In the event that the Executive’s actual Excise Tax liability is determined by a Final
Determination to be greater than the Excise Tax liability taken into account for purposes of any
Gross-Up Payment or Payments initially made to the Executive pursuant to the provisions of Section
12(b), then within forty-five (45) days following that Final Determination, the Executive shall
notify the Company of such determination, and the Accounting Firm shall, within thirty (30) days
thereafter, make a new Excise Tax calculation based upon that Final Determination and provide the
Company and the Executive with the supporting calculations for any supplemental Gross-Up Payment
attributable to that excess Excise Tax liability. The Company shall make the supplemental Gross-Up
payment to the Executive within five (5) business days following the completion of the applicable
calculations or (if later) at the time such excess tax liability is remitted to the appropriate tax
authorities. In the event that the Executive’s actual Excise Tax liability is determined by a Final
Determination to be less than the Excise Tax liability taken into account for purposes of any
Gross-Up Payment or Payments initially made to the Executive pursuant to the provisions of Section
12(b), then the Executive shall refund to the Company, promptly upon receipt, any federal or state
tax refund attributable to the Excise Tax overpayment. For purposes of this Section 12(c), a “Final
Determination” means an audit adjustment by the Internal Revenue Service that is either (i) agreed
to by both the Executive and the Company (such agreement by the Company to be not unreasonably
withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the
Executive and the Company concur or with respect to which the period within which an appeal may be
filed has lapsed without a notice of appeal being filed.

     (d) Should the Accounting Firm determine that any Gross-Up Payment made to the Executive was
in fact more than the amount actually required to be paid to him in accordance with the provisions
of Section 12(b) or 12(c), then the Executive will, at the direction and expense of the Company,
take such steps as are reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such overpayment. Furthermore, should
the Company decide to contest any assessment by the Internal Revenue Service of an Excise Tax on
one or more items comprising the Total Payments, the Executive will comply with all reasonable
actions requested by the Company in connection with such proceedings, but shall not be required to
incur any out-of-pocket costs in so doing.

13

 

     (e) Notwithstanding anything to the contrary in the foregoing, any Gross-Up Payments due the
Executive under this Section 12 shall be subject to the hold-back provisions of Section 14(b), to
the extent those payments relate to any amounts and benefits provided to the Executive that
constitute parachute payments attributable to his Separation from Service. In addition, no
Gross-Up Payment shall be made later than the end of the calendar year following the calendar year
in which the related taxes are remitted to the appropriate tax authorities or such other specified
time or schedule that may be permitted under Section 409A of the Code. To the extent the Executive
may become entitled to any reimbursement of expenses incurred by him at the direction of the
Company in connection with any tax audit or litigation addressing the existence or amount of the
Excise Tax, such reimbursement shall be paid to the Executive no later than the later of (i) the
close of the calendar year in which the Excise Tax that is the subject of such audit or litigation
is paid by or on behalf of the Executive or (ii) the end of the sixty (60)-day period measured from
such payment date. If no Excise Tax liability is found to be due as a result of such audit or
litigation, the reimbursement shall be paid to the Executive no later than the later of (i) the
close of the calendar year in which the audit is completed or there is a final and non-appealable
settlement or other resolution of the litigation or (ii) the end of the sixty (60)-day period
measured from the date the audit is completed or the date the litigation is so settled or resolved.

     13. Benefit Limitation. The provisions of this Section 13 shall automatically come
into force and effect if a Change in Control Event is not effected prior to the expiration of the
twenty-four (24)-month period measured from the Commencement Date:

     (a) In the event it is determined that the Total Payments would otherwise exceed the amount
that could be received by the Executive without the imposition of an excise tax under Section 4999
of the Code (the “Safe Harbor Amount”), then the Total Payments shall be reduced to the extent, and
only to the extent, necessary to assure that their aggregate present value, as determined in
accordance the applicable provisions of Code Section 280G and the regulations thereunder, does not
exceed the greater of the following dollar amounts (the “Benefit Limit”):

(A) The Safe Harbor Amount, or

(B) the greatest after-tax amount payable to the Executive after taking into
account any excise tax imposed under Code Section 4999 on the Total
Payments.

     (b) All determinations under this Section 13 shall be made by the Accounting Firm. However,
in determining whether such Benefit Limit is exceeded, the Accounting Firm shall make a reasonable
determination of the value to be assigned to the restrictive covenants in effect for the Executive
pursuant to Section 10 of the Agreement, and the amount of his potential parachute payment under
Code Section 280G shall reduced by the value of those restrictive covenants to the extent
consistent with Code Section 280G and the regulations thereunder.

     (c) To the extent a reduction to the Total Payments is required to be made in accordance with
this Section 13, the Total Payments attributable to any cash severance payments otherwise due the
Executive under Section 8 of this Agreement shall be reduced first, with such reduction to be
effected pro-rata as to each such payment, then the accelerated vesting of his Initial RSU Award
shall be reduced, then the accelerated vesting of his Supplemental RSU Award and any other
restricted stock unit awards made to him by the Company shall be reduced, and finally the
accelerated vesting of the Executive’s stock options shall be reduced, with such reduction to
occur in the same chronological order in which those options were granted. The amount of the
reduction to each restricted stock unit award and stock option shall be based on the amount of the
parachute payment calculated for each such award or option in accordance with the Treasury
Regulations under Code Section 280G,

14

 

     14. Section 409A. Certain payments contemplated by this Agreement may be “deferred
compensation” for purposes of Section 409A of the Code. Accordingly, the following provisions
shall be in effect for purposes of avoiding or mitigating any adverse tax consequences to the
Executive under Code Section 409A.

     (a) It is the intent of the parties that the provisions of this Agreement comply with all
applicable requirements of Code Section 409A. Accordingly, to the extent there is any ambiguity as
to whether any provisions of this Agreement would otherwise contravene one or more requirements or
limitations of Code Section 409A, then such provisions shall be interpreted and applied in a manner
that does not result in a violation of the applicable requirements or limitations of Code Section
409A and the applicable Treasury Regulations thereunder. In addition, should any provisions of
this Agreement otherwise contravene one or more requirements or limitations of Code Section 409A,
then the Company and the Executive shall, within the remedial amendment period provided under the
regulations issued under Code Section 409A, effect through mutual agreement the appropriate
amendments to those provisions which are necessary in order to bring the provisions of this
Agreement into compliance with Section 409A: provided such amendments shall not reduce the dollar
amount of any such item of deferred compensation or adversely affect the vesting provisions
applicable to such item or otherwise reduce the present value of that item. If any federal
legislation is enacted during the term of this Agreement which imposes a dollar limit on deferred
compensation, then the Executive will co-operate with the Company in restructuring any items of
compensation under this Agreement that are deemed to be deferred compensation subject to such
limitation; provided such restructuring shall not reduce the dollar amount of any such item or
adversely affect the vesting provisions applicable to such item or otherwise reduce the present
value of that item.

     (b) Notwithstanding any provision to the contrary in this Agreement, no payments or benefits
to which the Executive becomes entitled under this Agreement in connection with the termination of
his employment with the Company (other than the reimbursement of Coverage Costs during the
applicable period of COBRA coverage) shall be made or paid to the Executive prior to the earlier of
(i) the first day of the seventh (7th) month following the date of his Separation from Service due
to such termination of employment or (ii) the date of his death, if the Executive is deemed,
pursuant to the procedures established by the Compensation Committee in accordance with the
applicable standards of Code Section 409A and the Treasury Regulations thereunder and applied on a
consistent basis for all for all non-qualified deferred compensation plans of the Employer Group
subject to Code Section 409A, to be a “specified employee” at the time of such Separation from
Service and such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon the expiration of the applicable Code Section
409A(a)(2) deferral period, all payments deferred pursuant to this subsection 14(b) shall be paid
in a lump sum to the Executive, and any remaining payments due under this Agreement shall be paid
in accordance with the normal payment dates specified for them herein. The specified employees
subject to such a delayed commencement date shall be identified on December 31 of each calendar
year. If the Executive is so identified on any such December 31, he shall have specified employee
status for the twelve (12)-month period beginning on April 1 of the following calendar year. For
purposes of this Agreement, including (without limitation) this Section 14(b), the following
definitions shall be in effect:

          (i) “Separation from Service” shall mean the date on which the level of the
Executive’s bona fide services as an Employee (or non-employee consultant)
permanently decreases to a level that is not more than twenty percent (20%) of the
average level of services the Executive rendered as an Employee during the
immediately preceding thirty-six (36) months (or any shorter period of such Employee
service). Any such determination, however, shall be made in accordance with the
applicable standards of the Treasury Regulations issued under Code Section 409A. In
addition to the

15

 

foregoing, a Separation from Service will not be deemed to have occurred while
the Executive is on a sick leave or other bona fide leave of absence if the period
of such leave does not exceed six (6) months or any longer period for which the
Executive’s right to reemployment with the Company is provided by either statute or
contract; provided, however, that in the event of a leave of absence due to any
medically determinable physical or mental impairment that can be expected to result
in death or to last for a continuous period of not less than six (6) months and that
causes the Executive to be unable to perform his duties as an Employee, no
Separation from Service shall be deemed to occur during the first twenty-nine (29)
months of such leave. If the period of the leave exceeds six (6) months (or
twenty-nine (29) months in the event of disability as indicated above) and the
Executive is not provided with a right to reemployment by either statute or
contract, then the Executive will be deemed to have Separated from Service on the
first day immediately following the expiration of the applicable six (6)-month or
twenty-nine (29)-month period.

          (ii) The Executive shall be deemed to remain an “Employee” for so long he
remains in the employ of at least one member of the Employer Group, subject to the
control and direction of the employer entity as to both the work to be performed and
the manner and method of performance.

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

     (c) Should the Executive comply with the provisions of subsections 14(a) and 14(b) above but
nevertheless incur the 20% penalty tax imposed under Section 409A (the “Section 409A Penalty Tax”)
with respect to one or more payments or benefits provided to him under this Agreement, then the
Executive will be entitled to receive an additional payment (the “409A Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any tax imposed upon the 409A Gross-Up Payment, the
Executive retains an amount of the 409A Gross-Up Payment equal to the Section 409A Penalty Tax
imposed upon the Executive’s deferred compensation. The amount of the 409A Gross-Up Payment shall
be calculated, by an Accounting Firm mutually agreeable to the Company and the Executive, within
ten (10) business days after it is first determined that the Executive is subject to the Section
409A Penalty Tax, and the 409A Gross-Up Payment so calculated shall be paid to or on behalf of the
Executive within five (5) business days after the completion of such determination or (if later) at
the time the related Section 409A Penalty Tax is remitted to the appropriate tax authorities. In
the event that the Executive’s actual Section 409A Penalty Tax liability is determined by a Final
Determination to be greater than the Section 409A Penalty Tax liability taken into account for
purposes of the 409A Gross-Up Payment initially made to the Executive pursuant to the provisions of
this Section 14(c), then within forty-five (45) days following that Final Determination, the
Executive shall notify the Company of such determination, and the Accounting Firm shall, within
thirty (30) days thereafter, make a new calculation of the 409A Gross-Up Payment

16

 

based upon that Final Determination and provide the Company and the Executive with the
supporting calculations for any supplemental 409A Gross-Up Payment attributable to that excess
Section 409A Penalty Tax liability. The Company shall make the supplemental 409A Gross-Up payment
to the Executive within five (5) business days following the completion of the applicable
calculations or (if later) at the time such excess Section 409A Penalty Tax liability is remitted
to the appropriate tax authorities. In the event that the Executive’s actual Section 409A Penalty
Tax liability is determined by a Final Determination to be less than the Section 409A Penalty Tax
liability taken into account for purposes of the 409A Gross-Up Payment initially made to the
Executive pursuant to the provisions of this Section 14(c), then the Executive shall refund to the
Company, promptly upon receipt, any federal or state tax refund attributable to the overpayment of
his Section 409A Penalty Tax.

     15. Legal Fees. Within fourteen (14) calendar days after the date this Agreement
becomes effective, the Company will reimburse the Executive for his legal fees incurred in
connection with the Agreement’s preparation and negotiation, up to a maximum dollar amount of
$40,000.00.

     16. Indemnification. The Executive shall be covered by any policy of liability
insurance which the Company maintains during the Term for its officers and directors (“D&O
Insurance”), to the maximum extent of such coverage provided any other executive officer of the
Company. The Company agrees to provide the Executive with information about all D&O Insurance
maintained during the Term, including proof that such insurance is in place and the terms of
coverage, upon the Executive’s reasonable request. In addition to any rights the Executive may
have under such D&O Insurance, applicable law, or the articles of incorporation and bylaws of the
Company and except as may be prohibited by applicable law, the Company agrees to indemnify, defend,
and hold the Executive harmless from and against any and all claims and/or liability arising from,
as a result of, or in connection with the Executive’s employment by the Company or any outside
appointments and offices held at the Company’s request, except to the extent such claims or
liability are fully and finally adjudged by a court, after the expiration or exhaustion of
permitted appeals, to be attributable to the Executive’s gross negligence or willful misconduct.

     17. Injunctive Relief. The Executive expressly agrees that the covenants set forth in
Sections 9 and 10 of this Agreement are reasonable and necessary to protect the Company and its
legitimate business interests, and to prevent the unauthorized dissemination of Proprietary
Information to competitors of the Company. The Executive also agrees that the Company will be
irreparably harmed and that damages alone cannot adequately compensate the Company if there is a
violation of Section 9 or 10 of this Agreement by the Executive, and that injunctive relief against
the Executive is essential for the protection of the Company. Therefore, in the event of any such
breach, it is agreed that, in addition to any other remedies available, the Company shall be
entitled as a matter of right to injunctive relief in any court of competent jurisdiction, plus
attorneys’ fees actually incurred for the securing of such relief.

     18. Survival of Certain Provisions. The provisions of Sections 8, 9, 10, 12, 13, 14,
16, 17, 19, 21, 22, 25 and 26 will survive any termination of this Agreement.

     19. Withholdings. Any compensation and/or benefits provided to the Executive by the
Company shall be subject to the Company’s collection of all applicable payroll deductions and
applicable withholding and payroll taxes.

     20. Successors and Assigns. This Agreement will be binding upon and will inure to the
benefit of the Company, its successors and assigns, and the Company will require any successor or
assign to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or assignment had
taken place. The

17

 

term “the Company” as used herein will include any such successors and assigns to the
Company’s business and/or assets. The term “successors and assigns” as used herein will mean a
corporation or other entity acquiring or otherwise succeeding to, directly or indirectly, all or
substantially all the assets and business of the Company (including this Agreement) whether by
operation of law or otherwise. This Agreement will inure to the benefit of and be enforceable by
the Executive’s legal personal representative.

     21. Arbitration. Except as otherwise provided in Section 17, any controversy or claim
between the Company or any of its affiliates and the Executive arising out of or relating to this
Agreement or its termination or any other dispute between the parties, whether arising in tort,
contract, or pursuant to a statute, regulation, or ordinance now in existence or which may in the
future be enacted or recognized will be settled and determined by a single arbitrator whose award
will be accepted as final and binding upon the parties. The arbitration shall be conducted in
Chicago, Illinois and in accordance with the American Arbitration Association (“AAA”) Employment
Arbitration Rules in effect at the time such arbitration is properly initiated. To the extent that
any of the AAA rules or anything in the Agreement conflicts with any arbitration procedures
required by applicable law, the arbitration procedures required by applicable law shall govern.
The costs of the arbitration, including administrative fees and fees charged by the arbitrator,
will be borne by the Company. Each party will bear its or his own travel expenses and attorneys’
fees: provided, however that the arbitrator (i) shall award attorneys’ fees to the Executive with
respect to any claim for breach of this Agreement on which he is the prevailing party and may award
attorneys’ fees to the Executive as otherwise allowed by law and (ii) shall award attorneys’ fees
to the Company with respect to any claim brought under Section 17 on which it is the prevailing
party and may award attorneys’ fees to the Company with respect to any other claim on which it is
the prevailing party and it is determined by the arbitrator that such claim by the Executive was
frivolous in that it presented no colorable arguments for recovery; but the maximum amount of
attorneys’ fees that may be awarded to the Company other than with respect to any claim brought
under Section 17 shall not exceed one hundred thousand dollars ($100,000). The arbitration shall
be instead of any civil litigation; and the Executive hereby waives any right to a jury trial. The
arbitrator’s decision shall be final and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof. In any situation in which emergency
injunctive relief may be necessary, either party may seek such relief from a court until such time
as the arbitrator is able to address the matter covered by this Section 21. Both parties agree that
the state and federal courts located in Chicago, Illinois, will be the sole venue for any such
action involving emergency injunctive relief, and the parties submit to personal jurisdiction in
these courts for this purpose. Judgment upon any award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.

     22. Notice. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement (including the Notice of Termination) will be in writing and will be
deemed to have been given when personally delivered or on the third business day following mailing
if sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt
if overnight delivery service is used, addressed as follows:

To the Executive:

Charles Edelstein

219 East Lake Shore Drive

No. 8D

Chicago, IL 60611

18

 

With a copy to:

Russell Shapiro

Peter Donati

Levenfeld Pearlstein, LLC

2 N. LaSalle, Suite 1300

Chicago, Illinois 60602

To the Company:

Apollo Group, Inc

4025 S. Riverpoint Parkway

Phoenix, AZ 85040

Attention: General Counsel

     23. Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representation, oral or otherwise,
express or implied, with respect to the subject matter hereof has been made by either party which
is not expressly set forth in this Agreement.

     24. Counterparts. This Agreement may be executed in several counterparts, each of
which will be deemed an original and all of which will constitute but one and the same instrument.
An electronic facsimile of a signature, when delivered by the signing party to the non-signing
party, will have the same force and effect as an original.

     25. Governing Law. This Agreement will be governed by and construed and enforced in
accordance with the laws of the State of Arizona without giving effect to the conflict of law
principles thereof.

     26. Severability. If any provision of this Agreement as applied to any party or to
any circumstance should be adjudged by a court of competent jurisdiction (or determined by the
arbitrator) to be void or unenforceable for any reason, the invalidity of that provision shall in
no way affect (to the maximum extent permissible by law) the application of such provision under
circumstances different from those adjudicated by the court or determined by the arbitrator, the
application of any other provision of this Agreement, or the enforceability or invalidity of this
Agreement as a whole. Should any provision of this Agreement become or be deemed invalid, illegal
or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage,
then such provision shall be deemed amended to the extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision will be stricken, and the remainder of
this Agreement shall continue in full force and effect.

19

 

     27. Entire Agreement. This Agreement, together with the Proprietary Information and
Inventions Agreement referred to in Section 9 and the documentation for the equity grants referred
to in Section 4, shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof and shall supersede all prior agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the subject matter
hereof.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	CHARLES B. EDELSTEIN	 	 	 	APOLLO GROUP, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Charles B. Edelstein

	 	 	 	By:
	 	/s/ Joseph L. D’Amico	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	President	 	 

20

 

EXHIBIT A

FORM OF GENERAL RELEASE

 

 

GENERAL RELEASE

          This AGREEMENT is made as of                     , 200___, by and between Charles B. Edelstein
(“Executive”), and Apollo Group, Inc. (the “Company”).

     In consideration for the severance benefits offered by the Company to Executive pursuant to
Section 8 of his Employment Agreement with the Company dated July 7, 2008 (the “Employment
Agreement”), Executive agree as follows:

     1. Termination of Employment. Executive acknowledges that his employment with the
Company is terminated effective
                     (the “Termination Date”), and he agrees that he will
not apply for or seek re-employment with the Company, its parent companies, subsidiaries and
affiliates after that date. Executive agrees that he has received and reviewed his final paycheck
and he has received all wages and accrued but unpaid vacation pay earned by him through the
Termination Date.

     2. Waiver and Release.

          (a) Except as set forth in Section 2(b), which identifies claims expressly excluded from this
release, Executive hereby releases the Company, all affiliated companies, and their respective
officers, directors, agents, employees, stockholders, successors and assigns from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorney fees, damages,
indemnities and obligations of every kind and nature, in law, equity or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising from or relating to
Executive’s employment with the Company and the termination of that employment, including (without
limitation): claims of wrongful discharge, emotional distress, defamation, fraud, breach of
contract, breach of the covenant of good faith and fair dealing, discrimination claims based on
sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights
Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended (“ADEA”),
the Americans with Disability Act, the Employee Retirement Income Security Act, as amended, the
Equal Pay Act of 1963, as amended, and any similar law of any state or governmental entity, any
contract claims, tort claims and wage or benefit claims, including (without limitation) claims for
salary, bonuses, commissions, equity awards (including stock grants, stock options and restricted
stock units), vesting acceleration, vacation pay, fringe benefits, severance pay or any other form
of compensation.

          (b) The only claims that Executive is not waiving and releasing under this Agreement are
claims he may have for (1) unemployment, state disability, worker’s compensation, and/or paid
family leave insurance benefits pursuant to the terms of applicable state law; (2) continuation of
existing participation in Company-sponsored group health benefit plans under the federal law known
as “COBRA” and/or under an applicable state law counterpart(s); (3) any benefits entitlements that
are vested and unpaid as of his termination date pursuant to the terms of a Company-sponsored
benefit plan; (4) any benefits to which he is entitled pursuant to Section 8 of the Employment
Agreement or his rights to indemnification pursuant to Section 16 of the Employment Agreement, (5)
violation of any federal state or local statutory and/or public policy right or entitlement that,
by applicable law, is not waivable; and (6) any wrongful act or omission occurring after the date
he executes this Agreement. In addition, nothing in this Agreement prevents or prohibits Executive
from filing a claim with the Equal Employment Opportunity Commission (EEOC) or any other government
agency that is responsible for enforcing a law on behalf of the government and deems such claims
not waivable. However, because Executive is

 

 

hereby waiving and releasing all claims “for monetary damages and any other form of personal
relief” (per Section 3(a) above), he may only seek and receive non-personal forms of relief from
the EEOC and similar government agencies.

          (c) Executive represents that he has not filed any complaints, charges, claims, grievances, or
lawsuits against the Company and/or any related persons with any local, state or federal agency or
court, or with any other forum.

          (d) Executive acknowledges that he may discover facts different from or in addition to those
he now knows or believes to be true with respect to the claims, demands, causes of action,
obligations, damages, and liabilities of any nature whatsoever that are the subject of this
Agreement, and he expressly agrees to assume the risk of the possible discovery of additional or
different facts, and agrees that this Agreement shall be and remain in effect in all respects
regardless of such additional or different facts. Executive expressly acknowledges that this
Agreement is intended to include, and does include in its effect, without limitation, all claims
which Executive does not know or suspect to exist in his favor against the Company and/or any
related persons at the moment of execution thereof, and that this Agreement expressly contemplates
extinguishing all such claims.

          (e) Executive understands and agrees that the Company has no obligation to provide him with
any severance benefits under the Employment Agreement unless he executes this Agreement. Executive
also understands that he has received or will receive, regardless of the execution of this
Agreement, all wages owed to him, together with any accrued but unpaid vacation pay, less
applicable withholdings and deductions, earned through the Termination Date.

          (f) This Agreement is binding on Executive, his heirs, legal representatives and assigns.

     3. Entire Agreement. This Agreement and the Employment Agreement constitute the
entire understanding and agreement between Executive and the Company in connection with the matters
described, and replaces and cancels all previous agreements and commitments, whether spoken or
written, with respect to such matters. Nothing in this Agreement supersedes or replaces any of
Executive’s obligations under his Employment Agreement that survive termination, including, but not
limited to (i) his (and the Company’s) agreement to arbitrate disputes, (ii) his restrictive
covenants under Section 10 of the Employment Agreement and (iii) his obligations under Section 9 of
the Employment Agreement, his existing Proprietary Information Inventions Agreement with the
Company and any other obligations not to use or disclose Company confidential and/or proprietary
information.

     4. Modification in Writing. No oral agreement, statement, promise, commitment or
representation shall alter or terminate the provisions of this Agreement. This Agreement cannot be
changed or modified except by written agreement signed by Executive and authorized representatives
of the Company.

     5. Governing Law; Jurisdiction. This Agreement shall be governed by and enforced in
accordance with the laws of the State of Arizona.

     6. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.

23

 

     7. No Admission of Liability. This Agreement does not constitute an admission of any
unlawful discriminatory acts or liability of any kind by the Company or anyone acting under their
supervision or on their behalf. This Agreement may not be used or introduced as evidence in any
legal proceeding, except to enforce or challenge its terms.

     8. Acknowledgements. Executive is advised to consult with an attorney of his choice
prior to executing this Agreement. By signing below, Executive acknowledges and certifies that he:

          (a) has read and understands all of the terms of this Agreement and is not relying on any
representations or statements, written or oral, not set forth in this Agreement;

          (b) has been provided a consideration period of twenty-one calendar days within which to
decide whether he will execute this Agreement and that no one hurried him into executing this
Agreement;

          (c) is signing this Agreement knowingly and voluntarily; and

          (d) has the right to revoke this Agreement within seven (7) days after signing it, by
providing written notice of revocation via certified mail to the Company to the address specified
in the Employment Agreement. Executive’s written notice of revocation must be postmarked on or
before the end of the eighth (8th) calendar day after he has timely signed this Agreement. This
deadline will be extended to the next business day should it fall on a Saturday, Sunday or holiday
recognized by the U.S. Postal Service.

     Because of the revocation period, the Company’s obligations under this Agreement shall not
become effective or enforceable until the eighth (8th) calendar day after the date Executive
signs this Agreement provided he has delivered it to the Company without modification and not
revoked it (the “Effective Date”).

I HAVE READ, UNDERSTAND AND VOLUNTARILY ACCEPT AND AGREE TO THE ABOVE TERMS

CHARLES B. EDELSTEIN

	 	 	 
	                                                                      
          

	 	Date:                                                                                , 20___
	 
	 	 
	Signature
	 	 

24

 

EXHIBIT B

FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

 

PROPRIETARY INFORMATION AND INVENTIONS

AGREEMENT

This Proprietary Information and Inventions Agreement (“PIIA”) confirms certain terms of my
employment with Apollo Group, Inc., is a condition of my employment, and is a material part of the
consideration for my employment by Apollo Group, Inc. The headings contained in this PIIA are for
convenience only, have no legal significance, and are not intended to change or limit this PIIA in
any matter whatsoever.

     A. Definitions

          1. The “Company”

          As used in this PIIA, the term “Company” refers to Apollo Group, Inc., each of its
subsidiaries, affiliated and parent companies, and successors and assigns. I recognize and agree
that my obligations under this PIIA and all terms of this PIIA apply to me regardless of whether I
am employed by or provide services to Apollo Group, Inc., any subsidiary, affiliate or parent
companies of Apollo Group, Inc.

          2. “Proprietary Information”

          I understand that the Company possesses and will possess Proprietary Information which is
important to its business. For purposes of this PIIA, “Proprietary Information” is information
that was or will be developed, created, or discovered by or on behalf of the Company, or which
became or will become known by, or was or is conveyed to the Company, which has commercial value in
the Company’s business. Such Proprietary Information includes information concerning the
organization, business and finances of the Company or of any third party which the Company is under
an obligation to keep confidential that is maintained by the Company as confidential, including
(without limitation):

          a. the Company’s Lead List which is comprised of prospective students who meet the admission
requirements of the Company;

          b. data and information on current and prospective corporate accounts, including, but not
limited to, the identity of the corporate accounts, the decision makers or decision influencers,
the buying criteria of the accounts and programs for those accounts;

          c. the management process, training materials, scripts, programs and preferred responses to
features and benefits provided to Admission Counselors;

          d. the certification training materials and processes for the certification of the Company’s
Student Advisors (known as the ACU online learning system program), including, but not limited to,
the tests taken, materials provided and course work;

          e. the information and data contained in the Company’s enrollment data system, all monthly
enrollment reports;

Page 1 of 8

 

          f. salary, terms of employment, tenure and performance review information on the faculty
members and other employees of the Company, all business models and financial information, data and
materials of the Company not otherwise available to the general public through the Company’s Annual
Report or otherwise;

          g. all market research or works for hire materials, including, but not limited to, industry
data, demographics, company profiles and/or specific consumer behavior information, all monthly
financial, statistical and operational information and reports including but not limited to the
“Yellow Book”, and all other information concerning enrollment by campus, profit and loss per
campus and the terms of any lease;

          h. all monthly financial statements, including, but not limited to, the “Board Book”;

          i. all internally developed source code, including, but not limited to, modifications to
existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and
eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary
modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and
all future internally developed source code.

          I understand and agree that my employment creates a relationship of confidence and trust
between the Company and me with respect to Proprietary Information.

          3. “Company Documents and Materials”

          I understand that the Company possesses or will possess “Company Documents and Materials”
which are important to its business. For purposes of this PIIA, “Company Documents and Materials”
are documents or other media or tangible items that contain or embody Proprietary Information or
any other information concerning the business, operations or plans of the Company, whether such
documents, media or items have been prepared by me or by others.

          Such Company Documents and Materials include (without limitation) blueprints, drawings,
photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard
drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or
handwritten documents, sample products, prototypes and models and any information recorded in any
other form whatsoever. Such Company Documents and Materials also include copies of any of the
foregoing.

     B. Assignment of Rights

          All Proprietary Information and all patents, patent rights, copyrights, trade secret rights,
trademark rights and other rights (including, without limitation, intellectual property rights)
anywhere in the world in connection therewith is and shall be the sole property of the Company. I
hereby assign to the Company any and all rights, title and interest I may have or acquire in such
Proprietary Information.

Page 2 of 8

 

          At all times, both during my employment by the Company and after its termination, I will keep
in confidence and trust and will not use or disclose any Proprietary Information or anything
relating to it without the prior written consent of an officer of the Company, except as may be
necessary in the ordinary course of performing my duties to the Company.

     C. Maintenance and Return of Company Documents and Materials

          I agree to make and maintain adequate and current written records, in a form specified by the
Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the
Company pursuant to this PIIA. All Company Documents and Materials are and shall be the sole
property of the Company.

          I agree that during my employment by the Company, I will not remove any Company Documents and
Materials from the business premises of the Company or deliver any Company Documents and Materials
to any person or entity outside the Company, except in connection with performing the duties of my
employment. I further agree that, immediately upon the termination of my employment by me or by
the Company for any reason, or during my employment if so requested by the Company, I will return
all Company Documents and Materials, apparatus, equipment and other physical property, or any
reproduction of such property, excepting only (i) my personal copies of records relating to my
compensation; (ii) my personal copies of any materials previously distributed generally to
stockholders of the Company; and (iii) my copy of this PIIA.

     D. Disclosure of Inventions to the Company

          I will promptly disclose in writing to the Chair of the Company’s Board of Directors or to
such other person designated by the Board all “Inventions,” which includes (without limitation)
all software programs or subroutines, source or object code, algorithms, improvements, inventions,
works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques,
know-how and data, whether or not patentable, made or discovered or conceived or reduced to
practice or developed by me, either alone or jointly with others, during the term of my employment.

          I will also disclose to the Chair of the Company’s Board of Directors or to such other person
designated by the Board all Inventions made, discovered, conceived, reduced to practice, or
developed by me within six (6) months after the termination of my employment with the Company which
resulted, in whole or in part, from my prior employment by the Company. Such disclosures shall be
received by the Company in confidence (to the extent such Inventions are not assigned to the
Company pursuant to Section (E) below) and do not extend the assignment made in Section (E) below.

          Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not
obligate me to assign to the Company any of my rights in an invention for which no equipment,
supplies, facility, or trade secret information of the Company was used and

Page 3 of 8

 

which was developed entirely on my own time, unless (a) the invention relates (i) directly to
the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research
or development, or (b) the invention results from any work performed by me for the Company.

     E. Right to New Ideas

          1. Assignment of Inventions to the Company

          I agree that all Inventions that I make, discover, conceive, reduce to practice or develop (in
whole or in part, either alone or jointly with others) during my employment shall be the sole
property of the Company to the maximum extent permitted by applicable law. However, any inventions
that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone
or jointly with others) during my employment shall not be the sole property of the Company so long
as such inventions have been developed entirely on my own time without using any of the Company’s
equipment, supplies, facilities or Proprietary Information, unless such inventions constitute
Inventions for purposes of this Agreement because:

a. they relate at the time of conception or reduction to practice of the invention
to the Company’s business, or actual or demonstrably anticipated research or
development of the Company, or

b. they result from any work I performed for the Company.

          2. Works Made for Hire

          The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret
rights, trademark rights and all other intellectual property or other rights in connection with
Inventions. I further acknowledge and agree that such Inventions, including (without limitation)
any computer programs, programming documentation, and other works of authorship, are “works made
for hire” for purposes of the Company’s rights under copyright laws. I hereby assign to the
Company any and all rights, title and interest I may have or acquire in such Inventions. If in the
course of my employment with the Company, I incorporate into a Company product, service or process
a prior Invention owned by me or in which I have interest, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to
make, have made, modify, use, market, sell and distribute such prior Invention as part of or in
connection with such product, service or process.

          3. Cooperation

          I agree to perform, during and after my employment, all acts deemed necessary or desirable by
the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting
the assignments made to the Company under this PIIA and in obtaining, maintaining, defending and
enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other
rights in connection with such Inventions and improvements thereto in any and all countries. Such
acts may include (without limitation) execution of documents and assistance or cooperation in legal
proceedings. I hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents, as my agents and attorney-in-fact to act for and on my behalf and instead of
me, to execute and file any

Page 4 of 8

 

documents, applications or related findings and to do all other lawfully permitted acts to
further the purposes set forth above in this Subsection 3, including (without limitation) the
perfection of assignment and the prosecution and issuance of patents, patent applications,
copyright applications and registrations, trademark applications and registrations or other rights
in connection with such Inventions and improvements thereto with the same legal force and effect as
if executed by me.

          4. Assignment or Waiver of Moral Rights

          Any assignment of copyright hereunder (and any ownership of a copyright as a work made for
hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent
such Moral Rights cannot be assigned under applicable law and to the extent the following is
allowed by the laws in the various countries where Moral Rights exist, I hereby waive such Moral
Rights and consent to any action of the Company that would violate such Moral Rights in the absence
of such consent.

          5. List of Inventions

          I have attached hereto as Appendix A a complete list of all inventions or improvements to
which I claim ownership and that I desire to remove from the operation of this PIIA (except for the
license granted in Section (E)(2) above), and I acknowledge and agree that such list is complete.
If no such list is attached to this PIIA, I represent that I have no such inventions or
improvements at the time of signing this PIIA.

     F. Company Authorization for Publication

          Prior to my submitting or disclosing for possible publication or dissemination outside the
Company any material prepared by me that incorporates information that concerns the Company’s
business or anticipated research, I agree to deliver a copy of such material to an officer of the
Company for his or her review. Within twenty (20) days following such submission, the Company
agrees to notify me in writing whether the Company believes such material contains any Proprietary
Information or Inventions, and I agree to make such deletions and revisions as are reasonably
requested by the Company to protect its Proprietary Information and Inventions. I further agree to
obtain the written consent of the Company prior to any review of such material by persons outside
the Company.

     G. Restrictive Covenants

          At all times during my employment with the Company, and for a period of one (1) year
thereafter, I shall not directly or indirectly encourage or solicit any employee, faculty member,
consultant or independent contractor to leave the employment or service of the Company for any
reason or interfere in any other manner with such relationships at the time existing between the
Company and its employees, faculty members, consultants and independent contractors. As part of
this restriction, I will not interview or provide any input to any third party

Page 5 of 8

 

regarding any such employee, faculty member, consultant or independent contractor of the
Company. However, this obligation shall not affect any responsibility I may have as an employee of
the Company with respect to the bona fide hiring and firing of Company personnel.

     H. Former Employer’s and Others’ Information

          I represent that my performance of all the terms of this PIIA does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data acquired or developed by
me in confidence or in trust prior to my employment by the Company.

          I agree that I will not disclose to the Company, or use in the performance of my duties and
responsibilities as an employee of the Company, any trade secrets or confidential or proprietary
information or material belonging to any previous employers or other person or entity.

     I. Reformation and Severability

          I agree that if any provision, or portion of a provision, of this Agreement is deemed
unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall
be deemed amended to the extent necessary to conform to applicable law so as to be valid and
enforceable. Should any provision, or portion of a provision, of this Agreement be deemed
unenforceable for any other reason, such unenforceability will not affect any other provision, or
portion of a provision, of this Agreement and this Agreement shall be construed as if such
unenforceable provision, or portion of provision, had never been contained herein.

     J. Authorization for Post-Termination Notification of Obligations Under PIIA

          I hereby authorize the Company to notify any person or entity with whom I become employed, or
to whom I provide services, following the termination of my employment with the Company of my
ongoing obligations under this PIIA.

     K. Entire Agreement

          This PIIA, together with my Employment Agreement with Apollo Group, Inc. dated July 7, 2008
(the “Employment Agreement”), sets forth the entire agreement and understanding between the Company
and me relating to the subject matters covered therein, and this PIIA, together with the Employment
Agreement, merges, cancels, supersedes and replaces all prior discussions between us, including
(without limitation) any and all statements, representations, negotiations, promises or agreements
relating to the subject matters covered by this PIIA that may have been made by any officer,
employee or representative of the Company.

Page 6 of 8

 

I HAVE READ THIS PIIA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON
ME WITHOUT RESERVATION.

I SIGN THIS PIIA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	Employee Signature
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Employee Name [Please Print]	 	 

Page 7 of 8

 

APPENDIX A

	1.	 	The following is a complete list of all Inventions or improvements relevant to the subject
matter of my employment by the Company that have been made or discovered or conceived or first
reduced to practice by me or jointly with others prior to my employment by the Company that I
desire to remove from the operation of the Company’s Proprietary Information and Inventions
Agreement (“PIIA”), except for the license granted in Section (E)(2) of the PIIA:
	 
	 	 	___    No inventions or improvements.
	 
	 	 	___    See below:
	 
	 	 	___    See ___(#) additional sheets attached.
	 
	2.	 	I propose to bring to my employment the following materials and documents of a former
employer or other person/entity:
	 
	 	 	___    No materials or documents
	 
	 	 	___    See below:
	 
	 	 	___    See ___(#) additional sheet(s) attached:

	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	Employee Signature
	 	 

Page 8 of 8

 

SCHEDULE I

LIST OF EXISTING BOARD MEMBERSHIPS

Junior Achievement of Chicago

Teach for America of Chicago

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