Document:

EX-10.1

 Exhibit 10.1 

 
 

 
 April 1, 2013 

Mr. Scott Steffey 
 Dear Scott, 

On behalf of Career Education Corporation (“CEC” or the “Company”), I am pleased to confirm our offer of employment to you
for the position of President and Chief Executive Officer (“CEO”). Upon your acceptance of this offer as outlined below, you will join the company as a full-time employee reporting to the Company’s Board of Directors (the
“Board”). You will be nominated for election to the Board at the Company’s 2013 annual shareholders meeting. 
 Your
employment with the Company will be subject to the terms and conditions set forth in this letter (“Letter”). It is anticipated that you will commence employment on or before April 8, 2013 (the actual date you commence employment, the
“Commencement Date”). 
  

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

  

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

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

 

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

 

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

  

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

 

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

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

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

      (b) an award of cash-settled restricted stock units (the “RSUs”), with the
number of shares underlying the RSUs subject to the award determined by dividing $780,000 by the closing price of the Common Stock on the date upon which the RSUs are granted. The RSUs will vest in equal annual installments on each of the first
anniversary of the Commencement Date, March 14, 2015, March 14, 2016 and March 14, 2017, provided that you remain employed by the Company through each applicable vesting date, except as set forth below, and subject to aggregate
Company revenue for the four consecutive fiscal quarters, commencing with the Company’s second quarter for fiscal year 2013, equaling or exceeding $500 million in the aggregate (the “RSU Revenue Target”) and will otherwise be granted
in accordance with, and subject to the terms of, the Plan and an applicable award agreement thereunder, provided that, all or a portion of the RSUs, may be granted outside of the Plan but subject to terms consistent with the terms of the Plan and an
applicable award agreement thereunder; and 
       (c) a performance-based cash award in the
target amount of $1,040,000, with threshold and maximum payment levels of 50% and 200% of the target amount, respectively (the “Cash Award”), which will vest on April 1, 2016 based on the Company’s total shareholder return
relative to a peer group of 14 publicly traded proprietary education companies over the three-year period ending April 1, 2016, consistent with the terms of similar grants made to other senior executives of the Company, and provided that you
remain employed by the Company through the vesting date, except as set forth below. Except as set forth below, the Cash Award, if any, shall be paid following the date it becomes vested and in any event no later than May 15, 2016. 

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

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

  
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       (ii) In the event your employment is
terminated due to death or “Disability,” as defined in Exhibit A to this Letter, (A) the RSUs shall vest in full on the date of your termination, (B) the Stock Options and SARs, as applicable, shall vest in full on the date of
your termination and remain exercisable for one year following your termination date, but in no case beyond the expiration of the 10-year option and/or SAR term, and (C) the Cash Award shall vest and become payable at target on the date of
termination. 
       (iii) If your employment is terminated by the Company without Cause or
you resign for Good Reason on or within 18 months following a Change in Control, as defined in the Plan, with respect to the RSUs and the Cash Award, such awards will become vested and payable, as applicable, as of the date of your termination based
on the greater of (x) target performance or (y) actual performance measured as of the date of the Change in Control, taking into account any price of the Common Stock applicable in connection with the Change in Control, with future
performance extrapolated accordingly on the same basis. 
       (iv) If your employment
terminates by reason of your “Retirement” (as defined under the Plan and is hereby determined by the Committee), the Stock Options and SARs, as applicable, shall remain exercisable for three years following the date of your termination.

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

 

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

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

       (i) you shall repay to the Company 100% of Tranche I if such termination occurs
prior to the first anniversary of the Commencement Date; and 
       (ii) you shall repay to
the Company a pro rata portion of Tranche I if such termination occurs on or after the first anniversary, but prior to the second anniversary, of the Commencement Date, with such repayment amount to be determined by dividing the number of days
from the date of termination until the second anniversary of your Commencement Date by 730. 

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

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

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

      (iii) you shall repay to the Company 25% of Tranche II or such lesser pro rata amount, if
such termination occurs on or after the second anniversary, but prior to the fourth anniversary, of the Commencement Date, as determined by prorating such 25% amount by dividing the number of days from the date of termination until the fourth
anniversary of your Commencement Date by 730. 
 Any required repayment of the Sign-on Award by you shall be made no later than 30 days
following the date your employment with the Company terminates. 
  

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

 

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

  

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

  

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

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

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

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

  

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

  

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

  

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

  

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

  

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

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

  

	 	16.	Restrictive Covenants. 

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

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

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

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

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

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

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

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

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

	 	17.	Arbitration. 

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

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

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

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

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

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

 

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

  

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

 [Signature Page to Letter Follows] 

  
 11 

 [Signature Page to Letter] 

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

CAREER EDUCATION CORPORATION 
  

 

			
	 By:
	 	 /s/ Leslie T. Thornton

	 Name:
	 	Leslie T. Thornton
	 Title:
	 	Lead Director of the Board of Directors
		
	 By:
	 	 /s/ Patrick W. Gross

	 Name:
	 	Patrick W. Gross
	 Title:
	 	Chairman of the Compensation Committee of the Board of Directors

 Accepted and Agreed to: 
  

							
	 /s/ Scott Steffey
	  		  	 April 1, 2013
	  	
	 Scott Steffey
	  		  	Date	  	

  
 12 

 Exhibit A 

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

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

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

  
 13EX-10.2

 Exhibit 10.2 

2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
 CAREER EDUCATION CORPORATION

 2008 INCENTIVE COMPENSATION PLAN 

STOCK APPRECIATION RIGHTS AGREEMENT 

This STOCK APPRECIATION RIGHTS AGREEMENT (this “Agreement”) dated April 8, 2013 (the “Grant
Date”) is by and between Career Education Corporation, a Delaware corporation (the “Company”), and Scott Steffey (the “Grantee”). 

In accordance with Section 7 of the Career Education Corporation 2008 Incentive Compensation Plan, as amended (the
“Plan”), and subject to the terms of the Plan and this Agreement, the Company hereby grants to the Grantee a number of stock appreciation rights in respect of shares of common stock, par value $0.01 per share, of the Company
(“Shares”) on the terms and conditions as set forth below (“SAR”). All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Plan. 

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

1.        Grant.  The Committee hereby grants to the Grantee on the Grant Date
SARs covering             _ Shares (subject to adjustment as provided in Section 4.2 of the Plan). 

2.        SAR Price.  The Strike Price per Share covered by the SAR shall be
$[            ] (subject to adjustment as provided in Section 4.2 of the Plan). The Strike Price is equal to 100% of the Fair Market Value of the Shares on the Grant Date, as
calculated under the Plan. 
 3.        Term and Vesting of the SAR.  The SAR
shall expire on the tenth anniversary of the Grant Date (the “SAR Term”). To the extent any portion of the SAR is not exercised by the expiration of the SAR Term, such portion of the SAR shall be immediately cancelled and forfeited to the
Company. Except as provided in Section 4, the SAR shall vest and become exercisable in four equal installments on each of March 14, 2014, March 14, 2015, March 14, 2016 and March 14, 2017 (each a “Vesting
Date”), provided that the Grantee remains employed by the Company on each applicable vesting date, except as set forth in this Agreement, such that the SAR shall become fully vested on March 14, 2017; provided, however, that the SAR
shall only vest and become exercisable with respect to a whole number of Shares on each Vesting Date and the Company shall accordingly allocate such vesting across the Vesting Dates as evenly as possible. Except as otherwise provided herein, the SAR
may be exercised on or following the applicable Vesting Dates with respect to the vested portion, as long as such exercise occurs prior to the expiration of the SAR as provided in this Agreement and the Plan. 

Notwithstanding the foregoing provisions of this Section 3, and except as otherwise determined by the Committee, as provided in the
Plan or as provided herein, any portion of the SAR which is not vested (or otherwise not exercisable) at the time of the Grantee’s Termination of Service shall not become exercisable after such termination and shall be immediately cancelled and
forfeited to the Company. 
 4.        Vesting and Exercisability Following Termination of
Service. 
 (a)       In the event the Grantee incurs a Termination of Service by the Grantee
for Good Reason or by the Company other than for Cause, death or Disability (as such terms are defined in the employment letter agreement between the Grantee and the Company, dated April 1, 2013 (the “Employment Letter Agreement”),
then the SAR shall become fully vested and 

 2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
  

 
exercisable on the date of Termination of Service, and shall remain exercisable until the third anniversary of the date of such Termination of Service, but not beyond the expiration of the SAR
Term. To the extent any portion of the SAR is not exercised by the third anniversary of such Termination of Service, such portion of the SAR shall be immediately cancelled and forfeited to the Company. 

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

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

(d)        In the event the Grantee incurs a Termination of Service by the Company for Cause or
by the Grantee for any reason other than as set forth in this Section 4, any portion of the SAR that remains outstanding as of the date of such Termination of Service shall be immediately cancelled and forfeited to the Company. 

5.        Exercise of SAR.  On or after the date any portion of the SAR becomes
exercisable, but prior to the expiration of the SAR in accordance with Sections 3 and 4 above, the portion of the SAR that has become exercisable may be exercised in whole or in part by the Grantee (or, pursuant to Section 7, by his permitted
successor) upon delivery to the Company (or any Person designated by the Company) of a written notice of exercise (which may include a notice made through any electronic system designated by the Company) which identifies this Agreement and states
the number of whole Shares for which the SAR is being exercised. 
 6.        Payment upon
Exercise.  Upon exercise of all or a specified portion of the SAR, Grantee shall be entitled to receive from the Company an amount, in cash in a lump sum payment, determined by multiplying (a) the difference (if any) obtained by
subtracting (i) the Strike Price as set forth in this Agreement from (ii) the Fair Market Value of a Share on the date of exercise of the SAR, by (b) the number of Shares exercised, subject to Section 13 relating to tax
withholding and subject to any limitations the Administrator may impose. Such cash payment shall be made as soon as practicable, but in no event later than thirty (30) days following the date of exercise. 

Notwithstanding the foregoing,  the Grantee (or any permitted successor) shall take whatever additional actions, including,
without limitation, the furnishing of an opinion of counsel, and execute whatever additional documents the Company may, in its sole discretion, deem necessary or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed by the Plan, this Agreement or applicable law. 
 7.        Limitation
Upon Transfer.  The SAR and all rights granted hereunder shall not (a) be transferred by the Grantee, other than by will, by the laws of descent and distribution, or to a Permitted Transferee; (b) be otherwise assigned,
pledged or hypothecated in any way; and (c) be subject to execution, attachment or similar process. Any attempt to transfer the SAR, other 

  
 -2- 

 2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
  

 
than by will or by the laws of descent and distribution or to a Permitted Transferee, or to assign, pledge or hypothecate or otherwise dispose of the SAR or of any rights granted hereunder
contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the SAR or such rights, shall be void and unenforceable against the Company or any Subsidiary; provided, however, that the Grantee may designate a
Beneficiary to receive benefits in the event of the Grantee’s death. The SAR shall be exercised during the Grantee’s lifetime only by the Grantee, the Grantee’s guardian, the Grantee’s legal representative or a Permitted
Transferee. 
 8.         Change in Control.  Upon a Change in Control,
the Grantee will have such rights with respect to the SAR as are provided for in the Plan. 

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

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

10.        No Limitation on Rights of the Company.  The grant of the SAR shall
not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or
assets. 
 11.        No Obligation to Exercise SAR.  The granting of the SAR
shall impose no obligation upon the Grantee to exercise the SAR. 
 12.        Agreement
Not a Contract of Employment or Other Relationship.  This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company or its Subsidiaries shall not be
affected in any way by this Agreement except as specifically provided herein. The execution of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the
Company or its Subsidiaries, nor shall it interfere with the right of the Company or its Subsidiaries to discharge the Grantee and to treat him or her without regard to the effect that such treatment might have upon him or her as a Grantee. 

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

14.        Notices.  Any communication or notice required or permitted to be
given hereunder shall be in writing, and, if to the Company, to its principal place of business, attention: Secretary, and, if to the Grantee, to the address appearing on the records of the Company. Such communication or notice shall be delivered
personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any 

  
 -3- 

 2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
  

 
such notice shall be deemed given when received by the intended recipient. Notwithstanding the foregoing, any notice required or permitted hereunder from the Company to the Grantee may be made by
electronic means, including by electronic mail to the Company-maintained electronic mailbox of the Grantee, and the Grantee hereby consents to receive such notice by electronic delivery. To the extent permitted in an electronically delivered notice
described in the previous sentence, the Grantee shall be permitted to respond to such notice or communication by way of a responsive electronic communication, including by electronic mail. 

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

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

17.        Restrictive Covenants.  In consideration of receiving the SAR
hereunder, and as a term and condition of the Grantee’s employment with the Company, the Grantee acknowledges and agrees to adhere to, and be bound by, the restrictive covenants set forth in the Employment Letter Agreement. The Grantee hereby
further acknowledges that the Grantee’s job responsibilities give the Grantee access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which the
Grantee has access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education
classes or otherwise conducts business. The Grantee further acknowledges that the restrictive covenants set forth in the Employment Letter Agreement will not cause the Grantee undue hardship and are reasonable and necessary to protect the
Company’s and/or its subsidiaries’ legitimate business interests. Furthermore, it is the intention of the Grantee and the Company that in the event any of the restrictive covenants set forth in the Employment Letter Agreement are
determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, the Grantee and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable
protection of the Company’s and any of its subsidiaries’ interests. 

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

  
 -4- 

 2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
  

 19.        Condition to Return Signed
Agreement.  This Agreement shall be null and void unless the Grantee indicates his acceptance of the SAR and this Agreement by signing, dating, and returning this Agreement to the Company on or before April
    , 2013. 
 20.        Other Terms and
Conditions.  The foregoing does not modify or amend any terms of the Plan. To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern. 

[Signature Page Follows] 

  
 -5- 

 2013 Employee Stock Appreciation Rights Agreement 

Mr. Steffey 
  

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

					
	 CAREER EDUCATION CORPORATION

 
	 	
	 By:
	 	 	 	
			
	 Name:
	 	 	 	
			
	 Title:
	 	 	 	

 ACCEPTANCE (OR REJECTION) OF AWARD BY GRANTEE 

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

 

	        	 ACCEPTS the award of the SAR as set forth in this Agreement and agrees to be bound by the terms and conditions of this Agreement and the Plan.

  

	        	 REJECTS the award of the SAR contemplated by this Agreement and forfeits all rights relating thereto. Please note that a rejection of this award has no
impact on any other award of options, restricted stock or restricted stock units you have or will receive, including any restrictive covenants to you are subject pursuant to the agreement(s) governing your previous awards. 

 

									
	 Date:
	 	  
	 		 	  

		 		 		 	 (Signature of Grantee)

					
		 		 		 	 Print Name:
	 	  

 Please sign and return your signed copy of this Stock Appreciation Rights Agreement by April
    , 2013, to                                 .
Failure to do so will result in forfeiture of the award. Please retain a copy of this signed Stock Appreciation Rights Agreement for your records. 

  
 -6-

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