UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April 30, 2016
Or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
ASPEN GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware |
| 000-55107 |
| 27-1933597 |
(State or Other Jurisdiction |
| (Commission |
| (I.R.S. Employer |
of Incorporation or Organization) |
| File Number) |
| Identification No.) |
1660 South Albion Road, Suite 525, Denver, CO 80222
(Address of Principal Executive Office) (Zip Code)
(303) 333-4224
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) þ Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer o Accelerated filer o Non-accelerated file o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes þ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price as of the last business day of the registrants most recently completed second fiscal quarter was approximately $18.3 million ($0.15 price).
The number of shares outstanding of the registrants classes of common stock, as of July 26, 2016 was 137,958,145 shares.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (the Amendment) amends our Annual Report on Form 10-K for the year ended April 30, 2016 (2016 Form 10-K), as filed with the Securities and Exchange Commission (the SEC) on July 27, 2016. We are filing this Amendment to amend Part III of the 2016 Form 10-K to include the information required by and not included in Part III of the 2016 Form 10-K because we do not intend to file our definitive proxy statement within 120 days of the end of our fiscal year ended April 30, 2016.
In addition, the Exhibit Index in Item 15 of Part IV of the 2016 Form 10-K is hereby amended and restated in its entirety and currently dated certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to this Amendment. Because no financial statements are contained within this Amendment, we are not filing currently dated certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Except as described above, no other changes have been made to the 2016 Form 10-K. The 2016 Form 10-K continues to speak as of the date of the 2016 Form 10-K, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the 2016 Form 10-K other than as expressly indicated in this Amendment.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following table represents our Board of Directors:
Name |
| Age |
| Position |
Michael Mathews |
| 54 |
| Chairman of the Board |
Michael DAnton |
| 59 |
| Director |
C. James Jensen |
| 75 |
| Director |
Andrew Kaplan |
| 50 |
| Director |
Sanford Rich |
| 58 |
| Director |
John Scheibelhoffer |
| 54 |
| Director |
Paul Schneier |
| 65 |
| Director |
Rick Solomon |
| 55 |
| Director |
There is one vacancy in the Board of Directors caused by the resignation of David Pasi on August 29, 2016.
Director Biographies
Michael Mathews has served as Aspen Groups Chief Executive Officer and a director since the Reverse Merger and as Chief Executive Officer of Aspen University since May 2011. He served as Chief Executive Officer of interclick, inc. (Nasdaq: ICLK) from August 28, 2007 until January 31, 2011. From June 2007 until it was acquired by Yahoo, Inc. (NASDAQ: YHOO) in December 2011, Mr. Mathews also served as a director of interclick. From May 15, 2008 until June 30, 2008, Mr. Mathews served as the interim Chief Financial Officer of interclick. From 2004 to 2007, Mr. Mathews served as the senior vice-president of marketing and publisher services for World Avenue U.S.A., LLC, an Internet promotional marketing company. From March 2011 until October 2012, Mr. Mathews served as the Chairman and a consultant (and from December 1, 2011 through March 19, 2012 as Executive Chairman) for Wizard World, Inc. (OTCQB: WIZD). Mr. Mathews was selected to serve as a director due to his track record of success in managing early stage and growing businesses, his extensive knowledge of the online education Internet marketing industries and his knowledge of running and serving on the boards of public companies.
Michael DAnton has served as a director of Aspen Group since the Reverse Merger and of Aspen University for approximately six years. Since 1988, Dr. DAnton has been an ENT physician and surgeon at ENT Allergy Associates. Dr. DAnton was selected as a director for his experience in growing and running a successful surgery center and his knowledge of Aspen University from serving as a director prior to the Reverse Merger.
C. James Jensen has served as a director of Aspen Group since the Reverse Merger and of Aspen University since May 2011. Since 1983, Mr. Jensen has been the managing partner of Mara Gateway Associates, L.P., a privately owned real estate investment company he co-founded. Today, Mr. Jensen provides executive coaching, consulting, and advisory services to emerging growth and mid-size companies. He is an active member of the World Presidents' Organization, serves on the board of directors of the Institute of Noetic Sciences, and is Vice Chairman of American Global Health Group. Mr. Jensen was selected a director due to his previous service on public company boards and his experience with entrepreneurial companies. Mr. Jensen is also the author of 7 KEYS To Unlock Your Full Potential. (www.unlock7keys.com).
Andrew Kaplan has served as a director of Aspen Group since June 5, 2014. From 2000 through March 2014, Mr. Kaplan was a partner in Quad Partners, or Quad, a private equity firm focused exclusively on the education industry. During his tenure with Quad, Mr. Kaplan also served as a Managing Director of Quad College Group, the operational team focused on Quads postsecondary portfolio. Since March 2014, Mr. Kaplan has been a consultant to the education industry. Mr. Kaplan was selected as a director for his extensive knowledge of the educational industry. From May 2014 until June 2015, Mr. Kaplan, through an entity he controls, served as a consultant to Aspen. Since June 1, 2015, Mr. Kaplan has been a Managing General Partner in Education Growth Partners, a private equity firm focused exclusively on the education and training industry. See Related Person Transactions.
1
Sanford Rich has served as a director of Aspen Group since March 13, 2012. Since January 2016 Mr. Rich has served as the Executive Director of the New York City Board of Education Retirement System. From September 2012 to January 2016, Mr. Rich has served as the Chief of Negotiations and Restructuring for the Pension Benefit Guaranty Corporation (US. Government Agency). From October 2011 to September 2012, Mr. Rich served as Chief Executive Officer of In The Car LLC. Mr. Rich served as a director of interclick. from August 28, 2007 until June 5, 2009 and as Audit Committee Chairman from August 2007 to June 2009 From February 2009 to December 2012 Mr. Rich was a Managing Director of Whitemarsh Capital Advisors, a broker-dealer. Since April 2006, Mr. Rich has served as a director and Audit Committee Chairman for InsPro Technologies (OTC Pink: ITCC). Mr. Rich was selected as a director for his 35 years of experience in the financial sector and his experience serving on the audit committees of public companies.
John Scheibelhoffer has served as a director of Aspen Group since the Reverse Merger and of Aspen University for approximately six years. Since 1996, Dr. Scheibelhoffer has been a physician and surgeon employed by ENT Allergy Associates. Dr. Scheibelhoffer was selected to serve as a director for his experience in running a successful surgery center and his knowledge of Aspen University from serving as an advisory board member prior to the Reverse Merger.
Paul Schneier has served as a director of Aspen Group since the Reverse Merger and of Aspen University for approximately five years. Since January 2013, Mr. Schneier has owned and operated a real estate development company based in New Jersey. Prior to that, Mr. Schneier was a Division President at PulteGroup, Inc. (NYSE: PHM), a homebuilding company, and before that, Mr. Schneier was a Division President at Beazer Homes USA, Inc. (NYSE: BZEH), a homebuilding company. Mr. Schneier was selected to serve as a director because of his management, educational and legal background.
Rick Solomon has served as a director of Aspen Group since March 10, 2014. From May 2009 until May 2014, Mr. Solomon served as a portfolio manager at Verition Fund, a multi-strategy, multi-manager investment platform. Mr. Solomon was selected as a director for his experience in the investment industry.
Executive Officers
Name |
| Age |
| Position |
Michael Mathews |
| 54 |
| Chief Executive Officer |
Janet Gill |
| 60 |
| Chief Financial Officer |
Dr. Cheri St. Arnauld |
| 59 |
| Chief Academic Officer |
Gerald Wendolowski |
| 31 |
| Chief Operating Officer |
See above for Mr. Michael Mathews biography.
Janet Gill has been Aspen Groups Chief Financial Officer since December 11, 2014 and served as the interim Chief Financial Officer since March 11, 2014. From September 2012 until March 11, 2014, Ms. Gill was the Companys Controller. From 2003 until August 2012, Ms. Gill was a consultant for Resources Global Professionals, a professional services firm that helps business leaders execute internal initiatives. Ms. Gill is a Certified Public Accountant (inactive) in New York.
Cheri St. Arnauld has been Aspen Groups Chief Academic Officer since March 6, 2014. From January 2012 until March 6, 2014, Dr. St. Arnauld was an educational consultant for the St. Arnauld Group. From August 2008 until January 2012, Dr. St. Arnauld was the Provost and Chief Academic Officer at Grand Canyon University.
Gerard Wendolowski has been Aspen Groups Chief Operating Officer since March 11, 2014. From May 2011 until March 11, 2014, Mr. Wendolowski served as Aspen Universitys Senior Vice President of Marketing and Business Development. From January 2008 until May 2011, Mr. Wendolowski served as the Vice President of Marketing at Atrinsic, Inc., a digital marketing firm.
Family Relationships
There are no family relationships among our directors and/or executive officers.
2
Board Responsibilities
The Board oversees, counsels, and directs management in the long-term interest of Aspen Group and its shareholders. The Boards responsibilities include establishing broad corporate policies and reviewing the overall performance of Aspen Group. The Board is not, however, involved in the operating details on a day-to-day basis.
Board Committees and Charters
The Board and its committees meet throughout the year and act by written consent from time to time as appropriate. The Board delegates various responsibilities and authority to its Board committees. Committees regularly report on their activities and actions to the Board. The Board currently has and appoints the members of: the Audit Committee and the Compensation Committee. The Audit Committee has a written charter approved by the Board which can be found on our corporate website at http://ir.aspen.edu/governance-documents.
The following table identifies the independent and non-independent current Board and committee members:
Name |
|
| Independent |
|
| Audit |
|
| Compensation |
Michael Mathews |
|
|
|
|
|
|
|
|
|
Michael DAnton |
|
| ü |
|
|
|
|
|
|
C. James Jensen |
|
| ü |
|
| ü |
|
| Chairman |
Andrew Kaplan |
|
|
|
|
|
|
|
|
|
Sanford Rich |
|
| ü |
|
| Chairman |
|
|
|
John Scheibelhoffer |
|
| ü |
|
|
|
|
| ü |
Paul Schneier |
|
| ü |
|
|
|
|
| ü |
Rick Solomon |
|
| ü |
|
|
|
|
|
|
Director Independence
With the exception of Messrs. Mathews and Kaplan, our Board determined that all of the directors are independent in accordance with standards under the Nasdaq Listing Rules.
Our Board determined that as a result of being employed as an executive officer, Mr. Mathews is not independent under the Nasdaq Listing Rules. Additionally, our Board considered the AEK Consulting Agreement, which was terminated in June 2015, in determining that Mr. Kaplan was not independent. See Certain Relationships and Related Transactions, and Director Independence.
Our Board has also determined that Sanford Rich and C. James Jensen are independent under the Nasdaq Listing Rules independence standards for Audit Committee members. Also, our Board has also determined that C. James Jensen, John Scheibelhoffer and Paul Schneier are independent under the Nasdaq Listing Rules independence standards for Compensation Committee members.
Committees of the Board of Directors
Audit Committee
The Audit Committee, which currently consists of Sanford Rich and C. James Jensen, reviews Aspen Groups financial reporting process on behalf of the Board and administers our engagement of the independent registered public accounting firm. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of its examinations, the evaluations of our internal controls, and the overall quality of our financial reporting. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls.
Audit Committee Financial Expert
Our Board has determined that Mr. Sanford Rich is qualified as an Audit Committee Financial Expert, as that term is defined by the rules of the SEC and in compliance with the Sarbanes-Oxley Act of 2002.
3
Compensation Committee
The function of the Committee is to determine the compensation of our executive officers. The Compensation Committee has the power to set performance targets for determining periodic bonuses payable to executive officers and may review and make recommendations with respect to shareholder proposals related to compensation matters. Additionally, the Compensation Committee is responsible for administering the 2012 Equity Incentive Plan (the Plan).
Nominating Committee
We do not have a Nominating Committee. Each director participates in the consideration of director nominees. Our Board does not have a policy, or procedures to follow, with regard to the consideration of any director candidates recommended by our shareholders. We have never received any recommendations from shareholders and for that reason have not considered adopting any policy.
Board Diversity
While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members as well as a particular nominees contributions to that mix. Our Board believes that diversity brings a variety of ideas, judgments and considerations that benefit Aspen and its shareholders. Although there are many other factors, the Board seeks individuals with experience on public company boards or the investment community, experience on operating growing businesses, and experience with online universities.
Board Leadership Structure
We have chosen to combine the Chief Executive Officer and Board Chairman positions. We believe that this Board leadership structure is the most appropriate for Aspen. Because we are a small company, it is more efficient to have the leadership of the Board in the same hands as the Chief Executive Officer. The challenges faced by us at this stage implementing our business and marketing plan and accelerating our growth are most efficiently dealt with by one person who is familiar with both the operational aspects as well as the strategic aspects of our business.
Board Risk Oversight
Our risk management function is overseen by our Board. Our management keeps its Board apprised of material risks and provides its directors access to all information necessary for them to understand and evaluate how these risks interrelate, how they affect us, and how management addresses those risks. Mr. Michael Mathews, as our Chief Executive Officer and Chairman of the Board, works closely together with the Board once material risks are identified on how to best address such risks. If the identified risk poses an actual or potential conflict with management, our independent directors may conduct the assessment. Presently, the primary risks affecting us are our ability to grow our business with our current cash balance, increase our enrollment and class starts, the dependence on the continued growth of our nursing school and manage our expected growth consistent with regulatory oversight.
Code of Ethics
Our Board has adopted a Code of Ethics that applies to all of our employees, including our Chief Executive Officer and Chief Financial Officer. Although not required, the Code of Ethics also applies to our directors. The Code of Ethics provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistle-blowing or the prompt reporting of illegal or unethical behavior. We will provide a copy, without charge, to anyone that requests one in writing to Aspen Group, Inc., 1660 South Albion Road, Suite 525, Denver, CO 80222, Attention: Corporate Secretary.
4
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and changes in ownership of our common stock and other equity securities with the SEC. These individuals are required by the regulations of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the forms furnished to us, and written representations from reporting persons that no Forms 5s were required to report delinquent filings, we believe that all filing requirements applicable to our officers, directors and 10% beneficial owners were complied with during fiscal year 2016.
Communication with our Board of Directors
Although we do not have a formal policy regarding communications with the Board, shareholders may communicate with the Board by writing to us at Aspen Group, Inc., 1660 South Albion Road, Suite 525, Denver, CO 80222, Attention: Corporate Secretary. Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.
Risk Assessment Regarding Compensation Policies and Practices as they Relate to Risk Management
Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on us. Our compensation has the following risk-limiting characteristics:
·
Our base pay programs consist of competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks;
·
A portion of executive incentive compensation opportunity is tied to long-term incentive compensation that emphasizes sustained performance over time. This reduces any incentive to take risks that might increase short-term compensation at the expense of longer term company results;
·
Awards are not tied to formulas that could focus executives on specific short-term outcomes;
·
Equity awards may be recovered by us should a restatement of earnings occur upon which incentive compensation awards were based, or in the event of other wrongdoing by the recipient; and
·
Equity awards, generally, have multi-year vesting which aligns the long-term interests of our executives with those of our shareholders and, again, discourages the taking of short-term risk at the expense of long-term performance.
5
Item 11. Executive Compensation
Fiscal 2016 Summary Compensation Table
The following information is related to the compensation paid, distributed or accrued by us for fiscal 2016 and 2015 to all Chief Executive Officers (principal executive officers) serving during the last fiscal year and the two other most highly compensated executive officers serving at the end of the last fiscal year whose compensation exceeded $100,000 (the Named Executive Officers).
Summary Compensation Table for Fiscal 2016
Name and |
|
| Year |
|
| Salary |
|
| Option |
|
| Total |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Michael Mathews |
|
| 2016 |
|
|
| 200,000 |
|
|
| 90,000 |
|
|
| 290,000 |
|
Chief Executive Officer (2) |
|
| 2015 |
|
|
| 100,000 |
|
|
| 97,500 |
|
|
| 197,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cheri St. Arnauld |
|
| 2016 |
|
|
| 240,000 |
|
|
| 60,000 |
|
|
| 300,000 |
|
Chief Academic Officer (3) |
|
| 2015 |
|
|
| 199,991 |
|
|
| |
|
|
| 199,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerard Wendolowski |
|
| 2016 |
|
|
| 200,000 |
|
|
| 42,000 |
|
|
| 242,000 |
|
Chief Operating Officer (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Option Awards. These amounts do not reflect the actual economic value realized by the Named Executive Officers. The amounts in this column represent the fair value of the award as of the grant date as computed in accordance with FASB ASC Topic 718 and the SEC disclosure rules. Pursuant to SEC rules, the amounts shown disregard the impact of estimated forfeitures related to service-based vesting conditions. For a further description of the Option Awards, see the disclosure following this Summary Compensation Table.
(2)
Mathews. The amount under 2016 Option Awards is comprised of a 1,500,000 option grant in December 2015. The options vest in three equal annual increments with the first vesting date being one year from the grant date, subject to continued service on each applicable vesting date.
(3)
St. Arnauld. The amount under 2016 Option Awards is comprised of a 1,000,000 option grant in June 2015. The options vest in three equal annual increments with the first vesting date being one year from the grant date, subject to continued service on each applicable vesting date. Does not include 700,000 stock options granted in June 2016, after the 2016 fiscal year end.
(4)
Wendolowski. Mr. Gerard Wendolowski was not a Named Executive officer in fiscal 2015. The amount under 2016 Option Awards is comprised of a 700,000 option grant in June 2015. The options vest in three equal annual increments with the first vesting date being one year from the grant date, subject to continued service on each applicable vesting date. Does not include 2,000,000 stock options granted in June 2016, after the 2016 fiscal year end.
Named Executive Officer Employment Agreements
Michael Mathews. Effective May 16, 2013, Aspen Group and Mr. Mathews entered into a three-year Employment Agreement. In accordance with the Employment Agreement, Mr. Mathews will receive a base salary of $250,000 per year; however, his base salary was $100,000 per year until the Compensation Committee determined that Aspen Groups cash position permitted an increase to $250,000 a year. As of September 2015, Mr. Mathews base salary was raised to $250,000 per year.
Cheri St. Arnauld. Effective March 1, 2014, Aspen Group and Dr. St. Arnauld entered into a three-year Employment Agreement. In accordance with the Employment Agreement, Dr. St. Arnauld received a base salary of $120,000 on an annualized basis for the first six months of the Employment Agreement. After this six month period, Dr. St. Arnauld began receiving a base salary of $240,000 per year.
Gerard Wendolowski. Effective November 11, 2014, Aspen Group and Mr. Wendolowski entered into a three-year Employment Agreement. Under the Employment Agreement, Mr. Wendolowski received a base salary of $200,000 per year. Effective July 1, 2016, the Company increased Mr. Wendolowskis annual salary from $200,000 to $240,000.
6
Bonuses
For each fiscal year during the term of the Named Executive Officers Employment Agreements beginning May 1st and ending April 30th of the applicable fiscal year, the Named Executive Officers shall have the opportunity to earn a bonus up to 30%, 66% or 100% of his or her then base salary (the Target Bonus) as follows:
When the Company achieves annual Adjusted EBITDA (as defined in their Employment Agreements) at certain threshold levels (each, an EBITDA Threshold), the Named Executive Officers shall receive an automatic cash bonus (the Automatic Cash Bonus) equal to a percentage of his then base salary, and shall receive a grant of fully vested shares of the Companys common stock having an aggregate Fair Market Value (as such term is defined in Plan) equal to a percentage of the Named Executive Officers then base salary (the Automatic Equity Bonus). In addition, the Named Executive Officers shall be eligible to receive an additional percentage of his then Base Salary as a cash bonus (the Discretionary Cash Bonus) and an additional grant of fully vested shares of the Companys common stock having an aggregate Fair Market Value equal to a percentage of the Named Executive Officers then base salary (the Discretionary Equity Bonus) based on the Boards determination that the Named Executive Officer has achieved certain annual performance objectives established at the beginning of each fiscal year. There were no performance objectives set for 2016, but there will be objectives set for fiscal year 2017.
The EBITDA Thresholds and corresponding bonus levels are set forth in the table below. For the avoidance of doubt, the Named Executive Officer shall only be eligible to receive the bonuses associated with a single EBITDA Threshold; i.e. in the event the Company attains EBITDA Threshold (2), only the bonuses associated with EBITDA Threshold (2) below (and not the bonuses associated with EBITDA Threshold (1)) shall be applicable.
EBITDA Threshold | Automatic Cash Bonus | Automatic Equity Bonus | Discretionary Cash Bonus | Discretionary Equity Bonus |
$1,000,000 -$1,999,999 | 7.5% | 7.5% | Up to 7.5% | Up to 7.5% |
$2,000,000 -$3,999,999 | 16.5% | 16.5% | Up to 16.5% | Up to 16.5% |
$4,000,000 and over | 25% | 25% | Up to 25% | Up to 25% |
Provided, however, that the earning of the Automatic Cash Bonus is subject to the Company having at least $2,000,000 in available cash after deducting the Target Bonuses paid to all the Named Executive Officers of the Company or its subsidiaries under the same Target Bonus formula pursuant to such executives employment agreements (the Cash Threshold) and the Named Executive Officer continuing to provide services under their Employment Agreement on the applicable Target Bonus determination date. If the Company is unable to pay the Automatic Cash Bonus as a result of not meeting the Cash Threshold, no Automatic Cash Bonus will be earned for that fiscal year. Provided, however, the Company will issue Mr. Mathews common stock having a Fair Market Value equal to the Automatic Cash Bonus which he is not paid.
Each of the Named Executive Officers are entitled to receive discretionary bonuses under their Employment Agreements at the discretion of the Board.
Termination Provisions
Under their Employment Agreements, the Named Executive Officers are entitled to severance payments. All of the termination provisions are intended to comply with Section 409A of the Internal Revenue Code of 1986, or the Code, and the Regulations thereunder. In the event of dismissal without cause or resignation for Good Reason, Mr. Mathews will receive six months base salary and immediate vesting of unvested equity, Dr. St. Arnauld will receive three months base salary and Mr. Wendolowski will receive six months base salary. Immediately upon a change of control event, Mr. Mathews will receive 18 months base salary and immediate vesting of unvested equity and Dr. St. Arnauld and Mr. Wendolowski will each receive three months base salary. Change of control is defined in their Employment Agreements as Change of Control is defined under 409A of the Code. Generally, Good Reason is defined as a material diminution in the executives authority, duties or responsibilities due to no fault of his own (unless he has agreed to such diminution); or (ii) any other action or inaction that constitutes a material breach by Aspen Group under the Employment Agreement; or (iii) generally a relocation of the principal place of employment to a location outside of New York.
7
Outstanding Equity Awards at Fiscal Year-End
Listed below is information with respect to unexercised options that have not vested, and equity incentive plan awards for each Named Executive Officer outstanding as of April 30, 2016:
Outstanding Equity Awards At Fiscal Year-End
Name (a) |
| Number of Securities |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable (c) |
|
| Equity Incentive |
|
| Option |
|
| Option |
|
| Number of Shares or Units of Stock That Have Not Vested (#) (g) |
|
| Market Value of Shares or Units of Stock That Have Not Vested ($)(h) |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) |
|
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) (j) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Michael Mathews |
|
| 300,000 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 3/15/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 500,000 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 3/22/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 288,911 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 10/23/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 166,666 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 10/23/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 2,175,000 |
|
|
| 725,000 | (1) |
|
|
|
|
|
| 0.19 |
|
| 9/4/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 650,000 |
|
|
| 1,300,000 | (2) |
|
|
|
|
|
| 0.19 |
|
| 9/4/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| 1,500,000 | (3) |
|
|
|
|
|
| 0.175 |
|
| 12/11/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cheri St. Arnauld |
|
| 333,333 |
|
|
| 166,667 | (4) |
|
|
|
|
|
| 0.19 |
|
| 3/1/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| 1,000,000 | (5) |
|
|
|
|
|
| 0.1691 |
|
| 6/8/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gerard Wendolowski |
|
| 100,000 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 3/15/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 50,000 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 12/17/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 150,000 |
|
|
| |
|
|
|
|
|
|
| 0.19 |
|
| 2/28/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| 333,333 |
|
|
| 166,667 | (4) |
|
|
|
|
|
| 0.19 |
|
| 3/1/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| 700,000 | (5) |
|
|
|
|
|
| 0.1691 |
|
| 6/8/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Vests on September 4, 2016.
(2)
Vest in two equal increments on September 4, 2016 and September 4, 2017.
(3)
Vest in three equal increments on December 11, 2016, December 11, 2017, and December 11, 2018.
(4)
Vests on March 1, 2017.
(5)
Vests on June 8, 2016, June 8, 2017 and June 8, 2018.
In addition, on June 23, 2016, the Company granted 2,000,000 stock options to Gerard Wendolowski, Chief Operating Officer and 700,000 stock options to Dr. Cheri St. Arnauld, Chief Academic Officer. The options are exercisable for a period of five years at a price per share of $0.166. The options vest in three equal annual increments with the first vesting date being one year from the grant date, subject to continued service on each applicable vesting date and accelerated vesting under certain conditions.
8
Director Compensation
We do not pay cash compensation to our directors for service on our Board and our employees do not receive compensation for serving as members of our Board. Directors are reimbursed for reasonable expenses incurred in attending meetings and carrying out duties as board and committee members. Under the Plan, our non-employee directors receive grants of stock options as compensation for their services on our Board, as described above. Because we do not pay compensation to employee directors, Mr. Michael Mathews was not compensated for his service as a director and is omitted from the following table.
Fiscal 2016 Director Compensation
Name |
|
| Option Awards ($)(d)(1) |
|
| Total ($)(j) |
| ||
|
|
|
|
|
|
|
| ||
Michael DAnton |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. James Jensen |
|
|
| 12,500 |
|
|
| 12,500 |
|
|
|
|
|
|
|
|
|
|
|
Andrew Kaplan |
|
|
| 12,500 |
|
|
| 12,500 |
|
|
|
|
|
|
|
|
|
|
|
David Pasi (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanford Rich |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Scheibelhoffer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Schneier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rick Solomon |
|
|
| 12,500 |
|
|
| 12,500 |
|
(1)
Amounts reported represent the aggregate grant date fair value of awards granted without regards to forfeitures granted to the independent members of our Board during fiscal 2016, computed in accordance with ASC 718. This amount does not reflect the actual economic value realized by the director. In November 2015, the Company granted to Messrs. Solomon, Kaplan and Jensen 250,000 stock options exercisable at $0.165 per share. The securities vest in three equal annual increments with the first vesting date being one year from the grant date, subject to continued service as a director on each applicable vesting date.
(2)
Mr. Pasi resigned as a director effective August 29, 2016.
On May 19, 2016, the Company granted to each of its non-employee directors 150,000 five-year stock options. The Company granted an additional 50,000 five-year stock options to C. James Jensen, the Chairman of the Compensation Committee and to Sanford Rich, the Chairman of the Audit Committee. The options are exercisable at $0.16 and vest in three equal annual increments, with the first vesting date being one year from the grant date, subject to continued service as a director or committee chairman on each applicable vesting date and accelerated vesting under certain conditions.
9
Equity Compensation Plan Information
The following chart reflects the number of securities granted and the weighted average exercise price for our compensation plans as of April 30, 2016.
Name Of Plan |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
|
| Weighted-average exercise price of outstanding options, warrants and rights (b)($) |
|
| Number of securities remaining available for future issuance under compensation plans (excluding securities reflected in column (a)) (c) |
|
Equity compensation plans approved by security holders |
|
|
|
|
|
|
|
|
|
2012 Equity Incentive Plan (1) |
| 18,126,102 |
|
| 0.19 |
|
| 2,173,898 |
|
Equity compensation plans not approved by security holders |
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Total |
| 18,126,102 |
|
| 0.19 |
|
| 2,173,898 |
|
(1) | Represents options issued under the Plan. Includes 15,468,434 options granted to directors and executive officers. |
On June 23, 2016, the Company amended the Plan to increase the number of authorized shares under the Plan by five million shares to a total of 25.3 million shares.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the number of shares of Aspen Groups common stock beneficially owned as of August 29, 2016 by (i) those persons known by Aspen Group to be owners of more than 5% of its common stock, (ii) each director and director nominee, (iii) the Named Executive Officers (as disclosed in the Summary Compensation Table), and (iv) Aspen Groups executive officers and directors as a group. Unless otherwise specified in the notes to this table, the address for each person is: c/o Aspen Group, Inc. 1660 South Albion Road, Suite 525, Denver, CO 80222.
Title of Class |
| Beneficial Owner |
| Amount of Beneficial Ownership (1) |
|
| Percent Beneficially Owned (1) |
| ||
|
|
|
|
|
|
|
|
| ||
Named Executive Officers: |
|
|
|
|
|
|
|
| ||
Common Stock |
| Michael Mathews (2) |
|
| 13,434,985 |
|
|
| 9.2 | % |
Common Stock |
| Cheri St. Arnauld (3) |
|
| 666,667 |
|
|
| * |
|
Common Stock |
| Gerard Wendolowski (4) |
|
| 866,667 |
|
|
| * |
|
|
|
|
|
|
|
|
|
|
|
|
Directors: |
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Michael DAnton (5) |
|
| 2,956,907 |
|
|
| 2.1 | % |
Common Stock |
| C. James Jensen (6) |
|
| 1,573,293 |
|
|
| 1.1 | % |
Common Stock |
| Andrew Kaplan (7) |
|
| 137,500 |
|
|
| * |
|
Common Stock |
| Sanford Rich (8) |
|
| 363,750 |
|
|
| * |
|
Common Stock |
| John Scheibelhoffer (9) |
|
| 2,875,480 |
|
|
| 2.1 | % |
Common Stock |
| Paul Schneier (10) |
|
| 1,661,317 |
|
|
| 1.2 | % |
Common Stock |
| Rick Solomon (11) |
|
| 2,819,080 |
|
|
| 2.1 | % |
Common Stock |
| All directors and executive officers as a group (11 persons) (12) |
|
| 28,893,978 |
|
|
| 19.0 | % |
|
|
|
|
|
|
|
|
|
|
|
5% Shareholders: |
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Leon G. Cooperman (13) |
|
| 12,000,000 |
|
|
| 8.7 | % |
Common Stock |
| George Melas-Kyriazi (14) |
|
| 8,411,698 |
|
|
| 6.2 | % |
* Less than 1%.
10
(1) | Beneficial Ownership Note. Applicable percentages are based on 137,958,145 shares outstanding as of August 28, 2016. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options, warrants or conversion of notes. Unless otherwise indicated in the footnotes to this table, Aspen Group believes that each of the shareholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them. This table does not include any unvested stock options except for those vesting within 60 days. |
(2) | Mathews. Mr. Mathews is our Chairman and Chief Executive Officer. Includes: (i) 1,035,654 shares underlying warrants, (ii) 857,143 shares issuable upon the conversion of a convertible note, and (iii) 5,455,577 vested stock options. |
(3) | St. Arnauld. Dr. St. Arnauld is our Chief Academic Officer. Represents vested stock options. |
(4) | Wendolowski. Mr. Wendolowski is our Chief Operating Officer. Represents vested stock options. |
(5) | DAnton. Dr. DAnton is a director. Includes 177,645 shares of common stock held as custodian for the benefit of Dr. DAntons children. Also includes (i) 2,215,747 shares of common stock, (ii) 263,158 shares underlying warrants and (iii) 300,357 vested stock options held directly by Dr. DAnton. |
(6) | Jenson. Mr. Jenson is a director. Includes 263,158 shares underlying warrants and 337,500 vested stock options. |
(7) | Kaplan. Mr. Kaplan is a director. Represents vested stock options. |
(8) | Rich. Mr. Rich is a director. Includes 337,500 vested stock options. |
(9) | Scheibelhoffer. Dr. Scheibelhoffer is a director. Includes 192,408 shares of common stock held as custodian for the benefit of Dr. Scheibelhoffers children. Also includes (i) 2,408,155 shares of common stock, (ii) 263,158 shares underlying warrants and (iii) 204,167 vested stock options held directly by Dr. Scheibelhoffer. |
(10) | Schneier. Mr. Schneier is a director. Includes 263,158 shares underlying warrants and 237,500 vested stock options. |
(11) | Solomon. Mr. Solomon is a director. Includes 1,315,790 shares underlying warrants and 137,500 vested stock options. |
(12) | Directors and Executive Officers as a group. This amount includes ownership by executive officers who are not Named Executive Officers under the SECs disclosure rules. |
(13) | Cooperman. Address is 810 7th Ave., 33rd floor, New York, NY 10019. |
(14) | Melas-Kyriazi. Includes 5,976,211 shares held by Alvin Fund LLC in which Mr. Melas-Kyriazi is the manager. Address is 215 W 98th New York, NY 10025. |
Item 13. Certain Relationships and Related Transactions, and Director Independence
Since May 1, 2014, aside from the executive officer and director compensation arrangements discussed above, the following are transactions to which we have been a participant, in which the amount involved in the transaction exceeds or will exceed the lesser of $120,000 or 1% of the average of our total assets at the end of the last two fiscal years (or approximately $52,000) and in which any of our directors, executive officers or holders of more than 5% of our stock, or any immediate family member of or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
In the fiscal year ended April 30, 2015, four of the directors and executive officers, including the CEO and CFO, purchased $423,500 of securities in Aspen Groups private placement offerings. The investments were on the same terms as other investors and the total raised in the private placement in that fiscal year was approximately $5.7 million.
On August 14, 2012, Mr. Mathews loaned Aspen Group $300,000 in exchange for a convertible demand note bearing interest at 5% per annum. The note is convertible at $0.35 per share, and the due date was extended to May 31, 2017. In March 2012, Mr. Mathews loaned Aspen $300,000 in exchange for a convertible note bearing interest at 0.19% per annum. The note was convertible at $1.00 per share. As a condition of certain warrant holders exercising their warrants, Mr. Mathews converted the March 2012 note and the related accrued interest on the note after the conversion price was reduced from $1.00 to $0.19 per share.
In June 2013, Mr. Mathews loaned Aspen Group $1 million and was issued a $1 million Promissory Note due December 31, 2013 (which has been extended to May 31, 2017). The Promissory Note bears 10% interest per annum, payable monthly in arrears.
Mr. Mathews son is employed by Aspen Group as its Product Manager and is paid a salary of $75,000 per year. In addition, Mr. Mathews brother is employed by Aspen Group as Director of Academic Support and is paid a salary of $70,000 per year.
11
Effective May 29, 2014, Aspen Group entered into a consulting agreement with AEK Consulting LLC, or AEK, a company controlled by Mr. Andrew Kaplan, a director, pursuant to which AEK acts as a strategic advisor providing educational, business and financial advice services to Aspen Group. In exchange for its services, AEK was to be paid $120,000, provided that Aspen Group achieves certain business objectives. In addition, AEK was issued 800,000 restricted stock units, vesting quarterly over 18 months subject to Aspen Groups achievement of certain business objectives and other conditions. None of the business objectives or conditions were met. In June 2015, the Company and AEK agreed to terminate the consulting agreement in consideration for the issuance of 300,000 restricted stock units. The 800,000 restricted stock units were cancelled.
In July 2014, Aspen Group issued 1,750,000 shares of common stock to Alpha Capital Anstalt, or Alpha, a then 5% shareholder, in consideration for its waiving certain price protection rights held by it and for providing legal counsel of Aspen Group with a proxy to vote Alphas shares in favor increasing Aspen Groups authorized capital at the fiscal 2015 annual shareholders meeting. Additionally, on July 29, 2014 and September 4, 2014, Sophrosyne Capital LLC, then a 5% shareholder, invested $380,000 and $375,000, respectively, in Aspen Groups private placement on terms identical to other investors in the offering.
In September 2014, Leon G. Cooperman, a 5% shareholder of the Company, invested $1,240,000 in a private placement on terms identical to others investors in the offering. Mr. Cooperman purchased 8,000,000 shares of common stock and 4,000,000 warrants. The warrants were exercisable at $0.19 per share. In April 2015, the Company closed on an offering with its outstanding warrant holders whereby it agreed to reduce the exercise price of the outstanding warrants to $0.155 if the warrant holder exercised early. Mr. Cooperman agreed and exercised 4,000,000 warrants.
On April 22, 2016, the Company issued 4,855,487 shares of common stock to two of its warrant holders, including George Melas-Kyriazi, a 5% shareholder, in exchange for their early exercise of warrants at a reduced exercise price of $0.155 (originally $0.19) per share. George Melas-Kyriazi exercised all of his warrants for 2,435,487 shares of common stock.
Item 14. Principal Accounting Fees and Services
All of the services provided and fees charged by Salberg & Company, P.A., our principal accountant, were approved by our Audit Committee. The following table shows the fees paid to Salberg for the fiscal years ended April 30, 2016 and 2015.
|
| Year Ended April 30, 2016 ($) |
|
| Year Ended April 30, 2015 ($) |
| ||
Audit Fees (1) |
|
| 83,000 |
|
|
| 83,500 |
|
Audit Related Fees (2) |
|
| 5,000 |
|
|
| 3,200 |
|
Tax Fees |
|
| 0 |
|
|
| 0 |
|
All Other Fees |
|
| 0 |
|
|
| 2,700 |
|
Total |
|
| 88,000 |
|
|
| 89,400 |
|
(1) | Audit fees these fees relate to the audit of our annual financial statements, the review of our interim quarterly financial statements. |
(2) | Audit related fees these fees relate to audit related consulting. |
Audit Committees Pre-Approval Policy
The Audit Committee pre-approves all audit and permissible non-audit services on a case-by-case basis. In its review of non-audit services, the Audit Committee considers whether the engagement could compromise the independence of our independent registered public accounting firm, and whether the reasons of efficiency or convenience is in our best interest to engage our independent registered public accounting firm to perform the services. All of the services provided and fees charged by Salberg were approved by our Audit Committee.
12
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) | Documents filed as part of the report. |
(1)
Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.
(2)
Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the consolidated financial statements or notes included in this report.
(3)
Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Aspen Group, Inc. |
| |
|
|
|
|
Date: August 29, 2016 | By: | /s/ Michael Mathews |
|
|
| Michael Mathews |
|
|
| Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
Date: August 29, 2016 | By: | /s/ Janet Gill |
|
|
| Janet Gill |
|
|
| Chief Financial Officer |
|
|
| (Principal Financial Officer) |
|
14
EXHIBIT INDEX
|
|
|
|
| Incorporated by Reference |
| Filed or Furnished | |||||
Exhibit # |
| Exhibit Description |
|
| Form |
| Date |
|
| Number |
| Herewith |
3.1 |
| Certificate of Incorporation, as amended |
|
| S-1 |
| 10/18/14 |
|
| 3.1 |
|
|
3.2 |
| Bylaws |
|
| 8-K |
| 3/19/12 |
|
| 2.7 |
|
|
3.2(a) |
| Amendment No. 1 to Bylaws |
|
| 8-K |
| 3/12/14 |
|
| 3.1 |
|
|
10.1 |
| Form of Convertible Note Mathews - $1.00 |
|
| 10-Q |
| 3/11/15 |
|
| 10.4 |
|
|
10.2 |
| Form of Convertible Note Mathews - $0.35 |
|
| 10-Q |
| 3/11/15 |
|
| 10.5 |
|
|
10.3 |
| Promissory Note dated March 4, 2015 - Mathews |
|
| 10-Q |
| 3/11/15 |
|
| 10.6 |
|
|
10.4 |
| Note Conversion Agreement Matthews |
|
|
|
|
|
|
|
|
| Filed^ |
10.5 |
| 2012 Equity Incentive Plan, as amended* |
|
|
|
|
|
|
|
|
| Filed^ |
10.6 |
| Form of Employee Stock Option Agreement* |
|
| 10-K |
| 7/29/14 |
|
| 10.17 |
|
|
10.7 |
| Form of Director Stock Option Agreement |
|
| 10-Q |
| 3/11/15 |
|
| 10.7 |
|
|
10.8 |
| Form of Mathews Stock Option Agreement* |
|
| 8-K |
| 12/17/15 |
|
| 10.10 |
|
|
10.9 |
| Consulting Agreement AEK Consulting |
|
| 10-K |
| 7/29/14 |
|
| 10.24 |
|
|
10.9(a) |
| Termination of Consulting Agreement AEK Consulting |
|
| 10-K |
| 7/28/15 |
|
| 10.12 |
|
|
10.10 |
| Employment Agreement dated as of May 16, 2013 Mathews* |
|
| S-1 |
| 7/3/13 |
|
| 10.6 |
|
|
10.10(a) |
| Amendment to Employment Agreement dated November 24, 2014 Mathews* |
|
| 10-K |
| 7/28/15 |
|
| 10.17 |
|
|
10.11 |
| Employment Agreement dated November 24, 2014 Wendolowski* |
|
| 10.K |
| 7/28/15 |
|
| 10.19 |
|
|
10.12 |
| Employment Agreement Dated March 1, 2014 St. Arnauld* |
|
|
|
|
|
|
|
|
| Filed |
10.12(a) |
| Amendment to Employment Agreement dated November 24, 2014 St. Arnauld* |
|
|
|
|
|
|
|
|
| Filed |
10.13 |
| Employment Agreement dated November 24, 2014 Gill* |
|
| 10-K |
| 7/28/15 |
|
| 10.18 |
|
|
10.14 |
| Form of Directors Indemnification Agreement |
|
| 8-K/A |
| 5/7/14 |
|
| 10.21 |
|
|
10.15 |
| Form of Securities Purchase Agreement July/September 2014 Private Placement |
|
| 8-K |
| 7/30/14 |
|
| 10.1 |
|
|
10.16 |
| Form of Registration Rights Agreement July/September 2014 Private Placement |
|
| 8-K |
| 7/30/14 |
|
| 10.2 |
|
|
10.17 |
| Form of Warrant July/September 2014 Private Placement |
|
| 8-K |
| 7/30/14 |
|
| 10.3 |
|
|
10.18 |
| Letter Agreement with Warrant Holders for Reduced Exercise Price and Early Exercise 2015 |
|
| 10-K |
| 7/28/15 |
|
| 10.20 |
|
|
10.19 |
| Letter Agreement with Warrant Holders for Reduced Exercise Price and Early Exercise 2016 |
|
|
|
|
|
|
|
|
| Filed^ |
21.1 |
| Subsidiaries |
|
| S-1 |
| 2/11/13 |
|
| 21.1 |
|
|
31.1 |
| Certification of Principal Executive Officer (302) |
|
|
|
|
|
|
|
|
| Filed |
31.2 |
| Certification of Principal Financial Officer (302) |
|
|
|
|
|
|
|
|
| Filed |
32.1 |
| Certification of Principal Executive and Principal Financial Officer (906) |
|
|
|
|
|
|
|
|
| Furnished**^ |
101.INS |
| XBRL Instance Document |
|
|
|
|
|
|
|
|
| Filed^ |
101.SCH |
| XBRL Taxonomy Extension Schema Document |
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101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
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*
Represents compensatory plan of management.
**
This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
^
Previously filed (or, with respect to Exhibit 32.1, furnished) with our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, originally filed with the SEC on July 27, 2016, which is being amended hereby.
Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the Agreement) entered into as of March 1, 2014 (the Effective Date), between Aspen University Inc., a Delaware corporation (the Company), and Cheri St. Arnauld, Ed. D (the Executive).
WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including, but not limited to, proprietary processes, sales methods and techniques, and other like confidential business and technical information, including but not limited to, technical information, design systems, pricing methods, pricing rates or discounts, processes, procedures, formulas, designs of computer software, or improvements, or any portion or phase thereof, whether patented, or not, or unpatentable, that is of any value whatsoever to the Company, as well as information relating to the Companys Services (as defined), information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other person or entity for the Company), other Confidential Information, as defined in Section 9(a), and information about the Companys executives, officers, and directors, which necessarily will be communicated to the Executive by reason of her employment by the Company; and
WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Executive, its trade secrets and Confidential Information, and its substantial, significant, or key, relationships with vendors, and Students, as defined below, whether actual or prospective; and
WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Executive during the term of this Agreement and for a reasonable time following the termination of this Agreement; and
WHEREAS, the Executive has a substantial employment, educational and experience background in the areas of expertise desired by the Company and will retain ownership and the right to use all prior-gained skills, insights, techniques and abilities which the Executive brings to this employment and nothing in this agreement will obligate the Executive to forfeit that or the right to make a living by use of these pre-developed abilities; and
WHEREAS, the Company desires to employ the Executive and to ensure the continued availability to the Company of the Executives services, and the Executive is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement; and
WHEREAS, the Company represents to the Executive that it is and expects to be sufficiently financially solvent to meet the payment promises and obligations made to the Executive as set forth in this Agreement and understands that the Executive is relying on this representation in entering into this Agreement and her promises to the Company:
NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:
1.
Representations and Warranties. The Executive hereby represents and warrants to the Company that she (i) is not subject to any non-solicitation or non-competition agreement affecting her employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any confidentiality or nonuse/nondisclosure agreement affecting her employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer. The recitals above are incorporated in this agreement as representations and covenants. Each party covenants to act in good faith in the discharge of this Agreement.
2.
Term of Employment.
(a)
Term. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of three years commencing as of the Effective Date (such period, as it may be extended or renewed, the Term), unless sooner terminated in accordance with the provisions of Section 6. The Term shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.
(b)
Continuing Effect. Notwithstanding any termination of this Agreement, at the end of the Term or otherwise, the provisions of Sections 6(e), 7, 8, 9, 10, 12 15, 18, 19, and 22 shall remain in full force and effect and the provisions of Section 9 shall be binding upon the legal representatives, successors and assigns of the Executive.
3.
Duties.
(a)
General Duties. The Executive shall serve as the Chief Academic Officer of the Company and its parent, Aspen Group, Inc. (the Parent), with duties and responsibilities that are customary for such an executive. The Executive shall report to the Companys Chief Executive Officer. The Executive shall also perform services for such subsidiaries of the Company as may be necessary. The Executive shall use her best efforts to perform her duties and discharge her responsibilities pursuant to this Agreement competently, carefully and faithfully. In determining whether or not the Executive has used her best efforts hereunder, the Executives and the Companys delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Companys earnings or other results of the Executives performance, except as specifically provided to the contrary by this Agreement, and the determination shall in any event be reasonable and shall not be made arbitrarily or capriciously by Company.
(b)
Devotion of Time. Subject to the last sentence of this Section 3(b), the Executive shall devote her full-time, attention and energies to the affairs of the Company and its subsidiaries and affiliates as are necessary to perform her duties and responsibilities pursuant to this Agreement. The Executive shall have reasonable off-hours and off-duty times for personal
2
use. The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services like those for which she is engaged here with or without compensation to, any other persons, business, or organization, without the prior consent of the Board of Directors of the Company (the Board). Notwithstanding the above, the Executive shall be permitted to devote a reasonable amount of her time, to rest and to Executives personal, professional, charitable or similar pursuits and interests and to organizations, including serving as a non-executive director or an advisor to a board of directors, committee of any company or organization and the Executive shall have the right to continue the following personal pursuits to complete currently contracted work with students as well as agreements around her newly published book.
(c)
Location of Office. The Executives principal business office shall be in Scottsdale, Arizona. However, the Executives job responsibilities shall include all business travel necessary for the performance of her job including Company-paid travel to and lodging near the Companys Denver, Colorado (or other) office locations.
(d)
Adherence to Inside Information Policies. The Executive acknowledges that the Companys parent, Aspen Group, Inc. (the Parent), is publicly-held and, as a result, has implemented inside information policies designed to preclude its executives and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party. The Executive shall promptly execute any agreements generally distributed by the Parent to its employees requiring such employees to abide by its inside information policies.
4.
Compensation and Expenses.
(a)
Salary. For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $240,000 (the Base Salary), less such deductions as shall be required to be withheld by applicable law and regulations payable in accordance with the Companys customary payroll practices. Provided, however, that the Base Salary shall be payable at the rate of $120,000 per year until the earlier of (i) such time as the Parent generates positive adjusted earnings before income taxes, depreciation and amortization (Adjusted EBITDA) for any three month period beginning with the Effective Date or (ii) six months from the Effective Date, whichever first in time occurs. In the event (ii) is the first to occur and the Executive shall remain employed by the Company, she shall be paid at the annual rate of $240,000 per year. The method the Parent last uses in a Form 10-Q (or the Form 10-K for the year ending April 30, 2014) shall be used in determining Adjusted EBITDA.
(b)
Bonus. During the Term, the Executive shall be eligible to receive discretionary bonuses at such times and such amounts as may be reasonably determined by the Board upon application by the Executive.
(c)
Equity Incentive Compensation. The Parent has granted the Executive the following, subject to commencing employment: 500,000 stock options (exercisable at $0.19 per share) which shall vest in three equal increments (with fractional shares first rounded up) on one, two and three-years from the Effective Date, subject to continued service as an employee of the Company on each applicable vesting date
3
All of the options shall be subject to the terms of the Parents 2012 Equity Incentive Plan (the Incentive Plan) and will be exercisable for a period of five years from the date of this Agreement provided that they are vested at time of exercise. The exercisability of the options shall be subject to the execution of the Parents standard option agreement which is attached as Exhibit A.
(d)
Expenses. In addition to any compensation received pursuant to this Section 4, the Company will reimburse or advance funds to the Executive for all reasonable documented travel, meals and lodging (including travel expenses incurred by the Executive related to her travel to the Companys other offices and on business missions for the Company), entertainment and miscellaneous expenses incurred in connection with the performance of her duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Companys practices. Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, its executive officers, except that no policy shall change the terms of this Agreement.
5.
Benefits.
(a)
Paid Time Off. For each 12-month period during the Term, the Executive shall be entitled to three weeks of Paid Time Off without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Executive may select and the affairs of the Company may permit. Any unused days will be carried over to the next 12 month period.
(b)
Employee Benefit Programs. The Executive is entitled to participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its executives, including programs of life insurance and reimbursement of membership fees in professional organizations. The Company will also provide health insurance covering the Executive and family dependents. The benefits provided to the Executive may not be less than the Company or the Parent entity provides to any of its executive employees.
6.
Termination.
(a)
Death or Disability. Except as otherwise provided in this Agreement, this Agreement shall automatically terminate upon the death or disability of the Executive. For purposes of this Section 6(a), disability shall mean (i) the Executive is unable to engage in her customary duties by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. Any question as to the existence of a disability shall be determined by the written opinion of the Executives regularly attending physician (or her guardian) (or the Social Security Administration, where applicable). In the event that the Executives employment is terminated by reason of Executives death or
4
disability, the Company shall pay the following to the Executive or her personal representative: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) any accrued but unpaid expenses required to be reimbursed under this Agreement, (iii) any earned but unpaid bonuses, and (iv) all equity awards previously granted to the Executive under the Incentive Plan or similar plan shall thereupon become fully vested, and the Executive or her legally appointed guardian, as the case may be, shall have up to three months from the date of termination (or one year from the date of death) to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term.
(b)
Termination by the Company for Cause or by the Executive Without Good Reason. The Company may terminate the Executives employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination. Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates her employment with the Company without Good Reason (as defined in Section 6(c)), then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except for payments and benefits accrued up to the time of the termination and except as may otherwise be provided for by law, for any period subsequent to the effective date of termination. For purposes of this Agreement, Cause shall mean: (i) the Executive is convicted of, or pleads guilty or nolo contendere to, a felony related to the business of the Company; (ii) the Executive, in carrying out her duties hereunder, has acted with gross negligence or intentional misconduct resulting, in any case, in harm to the Company; (iii) the Executive misappropriates Company funds or otherwise defrauds the Company; (iv) the Executive breaches her fiduciary duty to the Company resulting in profit to him, directly or indirectly; (v) the Executive materially breaches any written agreement with the Company; (vi) the Executive breaches any provision of Section 8 or Section 9; (vii) the Executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining the Executive from violating any securities law administered or regulated by the Securities and Exchange Commission, unless caused by the acts or omissions of the Company; (viii) the Executive becomes subject to a cease and desist order or other order issued by the Securities and Exchange Commission after an opportunity for a hearing, unless caused by the acts or omissions of the Company; (ix) the Executive refuses to carry out a resolution adopted by the Companys Board at a meeting in which the Executive was offered a reasonable opportunity to argue that the resolution should not be adopted, provided that the resolution did not direct the Executive to act or refrain from acting in a manner which is contrary to this Agreement, is unlawful or would expose the Executive to regulatory, civil or criminal liability; or (x) the Executive abuses alcohol or drugs in a manner that interferes with the successful performance of her duties.
(c)
Other Termination.
(1)
This Agreement may be terminated: (i) by the Executive for Good Reason (as defined below), (ii) by the Company without Cause, (iii) automatically upon any Change of Control event as defined in Treasury Regulation Section 1.409A-3(i)(5) or (iv) at the end of a Term after the Company provides the Executive with notice of non-renewal.
5
(2)
In the event this Agreement is terminated by the Executive for Good Reason or by the Company without Cause, the Executive shall be entitled to the following:
(A)
any accrued but unpaid Base Salary for services rendered to the date of termination;
(B)
any accrued but unpaid expenses required to be reimbursed under this Agreement;
(C)
a payment equal to three months of the then Base Salary (Severance Amount);
(D)
the Executive or her legally appointed guardian, as the case may be, shall have up to three months from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its Term;
(E)
any benefits (except perquisites) to which the Executive was entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for three months, subject to the terms of any applicable plan or insurance contract and applicable law provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the applicable 2 ½ month period (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
(3)
In the event of a Change of Control during the Term, the Executive shall be entitled to receive each of the provisions of Section 6(c)(2)(A) (F) above except the Severance Amount shall equal to three months of the then Base Salary and the benefits under Section 6(c)(2)(F) shall continue for a three month period provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits under Section 6(c)(2)(F) are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the applicable 2 ½ month period (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
(4)
In the event this Agreement is terminated at the end of a Term after the Company provides the Executive with notice of non-renewal and the Executive remains employed until the end of the Term, the Executive shall be entitled to the following:
(A)
any accrued but unpaid Base Salary for services rendered to the date of termination;
6
(B)
any accrued but unpaid expenses required to be reimbursed under this Agreement;
(C)
the Executive or her legally appointed guardian, as the case may be, shall have up to three months from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its Term; and
(5)
In the event of a termination for Good Reason or without Cause, the payment of the Severance Amount shall be made at the same times as the Company pays compensation to its employees over the applicable monthly period and any other payments owed under Section 6(c) shall be promptly paid. Provided, however, that any balance of the Severance Amount remaining due on the applicable 2 ½ month period (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)) after the end of the tax year in which the Executives employment is terminated or the Term ends shall be paid on the last day of the applicable 2 ½ month period. The payment of the Severance Amount shall be conditioned on the Executive signing an Agreement and General Release (in the form which is attached as Exhibit B) which releases the Company or any of its affiliates (including its officers, directors and their affiliates) from any liability under this Agreement or related to the Executives employment with the Company provided that (x) the payment of the Severance Amount is made on or before the 90th day following the Executives termination of employment; (y) such Agreement and General Release is executed by the Executive, submitted to the Company, and the statutory period during which the Executive is entitled to revoke the Agreement and General Release under applicable law has expired on or before that 90th day; and (z) in the event that the 90 day period begins in one taxable year and ends in a second taxable year, then the payment of the Severance Amount shall be made in the second taxable year. Upon any Change of Control event, all payments owed under Section 6(c)(3) shall be paid immediately.
The term Good Reason shall mean: (i) a material diminution in the Executives authority, duties or responsibilities due to no fault of the Executive (unless the Executive has agreed to such diminution); or (ii) any other action or inaction that constitutes a material breach by the Company under this Agreement. Prior to the Executive terminating her employment with the Company for Good Reason, the Executive must provide written notice to the Company, within 30 days following the Executives initial awareness of the existence of such condition, that such Good Reason exists and setting forth in detail the grounds the Executive believes constitutes Good Reason. If the Company does not cure the condition(s) constituting Good Reason within 30 days following receipt of such notice, then the Executives employment shall be deemed terminated for Good Reason. Any termination made by the Company under this Agreement shall be approved by the Board.
(d)
Upon (1) voluntary or involuntary termination of the Executives employment or (2) at the Companys request at any time during the Executive's employment, the Executive shall (i) provide or return to the Company any and all Company property, including keys, key cards, access cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, manuals, work product, thumb drives or other removable information storage devices, and hard drives, and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that
7
constitute or contain any Confidential Information or work product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with her employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executives possession or control, including those stored on any non-Company devices, networks, storage locations and media in the Executives possession or control.
7.
Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law against all costs, charges and expenses incurred or sustained by him in connection with any action, suit or proceeding to which he may be made a party by reason of her being an officer, director or employee of the Company or of any subsidiary or affiliate of the Company. This indemnification shall be pursuant an Indemnification Agreement, a copy of which is annexed as Exhibit C.
8.
Non-Competition Agreement.
(a)
Competition with the Company. Until termination of her employment, unless she is terminated by by the Company without Cause or if the Company breaches this Agreement and the Company fails to cure the breach within 10 days after receipt of notice, and for a period of one year commencing on the date of any other termination, the Executive (individually or in association with, or as a shareholder, director, officer, consultant, employee, partner, joint venturer, member, or otherwise, of or through any person, firm, corporation, partnership, association or other entity) shall not, directly or indirectly, compete with the Company (which for the purpose of this Agreement also includes any of its subsidiaries or affiliates) by acting as an employee or officer (or comparable position) of, owning an interest in, or providing services substantially similar to those services the Executive provided to the Company to any entity within any metropolitan area in the United States or other country in which the Company was actually engaged in business as of the time of termination of employment or where the Company reasonably expected to engage in business within three months of the date of termination of employment. For purposes of this Agreement, the term compete with the Company shall refer to any business activity in which the Company was engaged as of the termination of the Executives employment or reasonably expected to engage in within three months of termination of employment; provided, however, the foregoing shall not prevent the Executive from (i) accepting employment with an enterprise engaged in two or more lines of business, one of which is the same or similar to the Companys business (the Prohibited Business) if the Executives employment is totally unrelated to the Prohibited Business, (ii) competing in a country where as of the time of the alleged violation the Company has ceased engaging in business, or (iii) competing in a line of business which as of the time of the alleged violation the Company has either ceased engaging in or publicly announced or disclosed that it intends to cease engaging in; provided, further, the foregoing shall not prohibit the Executive from owning up to 5% of the securities of any publicly-traded enterprise provided that the Executive is not a director, officer, consultant, employee, partner, joint venturer, manager, or member of, or to such enterprise, or otherwise compensated for services rendered thereby.
(b)
Solicitation of Students. During the periods in which the provisions of Section 8(a) shall be in effect, the Executive, directly or indirectly, will not seek nor accept
8
Prohibited Business from any Students (as defined below) on behalf of himself or any enterprise or business other than the Company, refer Prohibited Business from any Student to any enterprise or business other than the Company or receive commissions based on sales or otherwise relating to the Prohibited Business from any Student, or any enterprise or business other than the Company. For purposes of this Agreement, the term Student means any person who enrolled in the Company as a student during the 24-month period prior to the time at which any determination is required to be made as to whether any such person is a Student.
(c)
Solicitation of Employees. During the period in which the provisions of Section 8(a) and (b) shall be in effect, the Executive agrees that he shall not, directly or indirectly, request, recommend or advise any employee of the Company to terminate his or her employment with the Company, for the purposes of providing services for a Prohibited Business, or solicit for employment or recommend to any third party the solicitation for employment of any individual who was employed by the Company or any of its subsidiaries and affiliates at any time during the one year period preceding the Executives termination of employment.
(d)
Non-disparagement. The Executive agrees that, after the end of her employment, he will refrain from making, in writing or orally, any unfavorable comments about the Company, its operations, policies, or procedures that would be likely to injure the Companys reputation or business prospects; provided, however, that nothing herein shall preclude the Executive from responding truthfully to a lawful subpoena or other compulsory legal process or from providing truthful information otherwise required by law.
(e)
No Payment. The Executive acknowledges and agrees that no separate or additional payment will be required to be made to him in consideration of her undertakings in this Section 8, and confirms he has received adequate consideration for such undertakings, provided Company has not breached this agreement.
(f)
References. References to the Company in this Section 8 shall include the Companys Parent, subsidiaries and affiliates.
9.
Non-Disclosure of Confidential Information.
(a)
For purposes of this Agreement, Confidential Information excludes the skills, experience, education and abilities the Executive brings to this employment with her, but includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing, and uses of the Services (as defined herein), the Companys budgets and strategic plans, and the identity and special needs of Students, vendors, and suppliers, subjects and databases, data, and all technology relating to the Companys businesses, systems, methods of operation, and Student lists, Student information, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and e-mail addresses of the Companys directors, employees, officers, executives, former executives, Students and former Students. Confidential Information also includes, without limitation, Confidential Information received from the Companys subsidiaries and affiliates. For purposes of this Agreement, the following
9
will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who lawfully acquired the confidential information and who did not acquire such confidential information or trade secret, directly or indirectly, from the Executive or the Company or its subsidiaries or affiliates and who has not breached any duty of confidentiality. As used herein, the term Services shall include all services offered for sale and marketed by the Company during the Term, which as of the Effective Date consist of operating an online university in compliance with all applicable regulatory requirements.
(b)
Legitimate Business Interests. The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Companys legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business, technical, and/or professional information that otherwise may not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key relationships with specific prospective or existing Students, vendors or suppliers; (iv) Student goodwill associated with the Companys business; and (v) specialized training relating to the Companys technology, Services, methods, operations and procedures. Notwithstanding the foregoing, nothing in this Section 9(b) shall be construed to impose restrictions greater than those imposed by other provisions of this Agreement.
(c)
Confidentiality. During the Term of this Agreement and following termination of employment, for any reason, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executives employment by the Company. The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its subsidiaries or affiliates is a special, valuable and unique asset. The Executive shall exercise all due and diligent precautions to protect the integrity of the Companys Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise. The Executive shall not copy any Confidential Information except to the extent necessary to her employment nor remove any Confidential Information or copies thereof from the Companys premises except to the extent necessary to her employment. All records, files, materials and other Confidential Information obtained by the Executive in the course of her employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company, its Students, or subjects, as the case may be. The Executive shall not, except in connection with and as required by her performance of her duties under this Agreement, for any reason use for her own benefit or the benefit of any person or entity other than the Company or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).
10
(d)
References. References to the Company in this Section 9 shall include the Companys Parent, subsidiaries and affiliates.
10.
Equitable Relief.
(a)
The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express consent of the Board, shall leave her employment for any reason and/or take any action in violation of Section 8 and/or Section 9, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 10(b) below, to enjoin the Executive from breaching the provisions of Section 8 and/or Section 9.
(b)
Any action must be commenced only in the appropriate state or federal court located in Phoenix, Arizona. The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Executive and the Company irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.
11.
Conflicts of Interest. While employed by the Company, the Executive shall not, unless approved by the Compensation Committee, directly or indirectly:
(a)
participate as an individual in any way in the benefits of transactions with any of the Companys suppliers, vendors, Students, or subjects, including, without limitation, having a financial interest in the Companys suppliers, vendors, Students, or subjects, or making loans to, or receiving loans, from, the Companys suppliers, vendors, Students, or subjects;
(b)
realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executives employment with the Company for the Executives personal advantage or gain; or
(c)
accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.
12.
Inventions, Ideas, Processes, and Designs. Except for the scope of pre-existing knowledge which the Executive has prior to commencement of employment, above, all inventions, ideas, processes, programs, software, and designs (including all improvements) (i) conceived or made by the Executive during the course of her employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months
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subsequent to the termination (whether by expiration of the Term or otherwise) of such employment with the Company, and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company, and the Executive hereby assigns any such inventions to the Company. An invention, idea, process, program, software, or design (including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Companys funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision. The Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executives entire right, title and interest in and to all work product and intellectual property rights, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company's rights, title or interest in any work product or intellectual property rights so as to be less in any respect than the Company would have had in the absence of this Agreement. If applicable, the Executive shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to her employment with the Company and which therefore are excluded from the scope of this Agreement. References to the Company in this Section 12 shall include the Company, its subsidiaries and affiliates.
13.
Indebtedness. If, during the course of the Executives employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, and if permitted by applicable law, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.
14.
Assignability. With written notice to the Executive, the rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company. The Executives obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.
15.
Severability.
(a)
The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement
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of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Executives conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.
(b)
If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.
16.
Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or next business day delivery to the addresses detailed below (or to such other address, as either of them, by notice to the other may designate from time to time), or by e-mail delivery (in which event a copy shall immediately be sent by FedEx or similar receipted delivery), as follows:
To the Company:
Michael Mathews
Chief Executive Officer
Aspen Group, Inc.
224 West 30th Street, Suite 604
New York, NY 10001
Email: mike@aspen.com
With a copy to:
Nason, Yeager, Gerson White & Lioce, P.A.
Attn: Michael D. Harris, Esq.
1645 Palm Beach Lakes Blvd., Suite 1200
West Palm Beach, Florida 33410
Email: mharris@nasonyeager.com
To the Executive:
Cheri St. Arnauld
Email: carnauld@cox.net
17.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
18.
Attorneys Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing
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party shall be entitled to reasonable attorneys fees, costs and expenses (including such fees and costs on appeal).
19.
Governing Law. This Agreement shall be governed or interpreted according to the internal laws of the State of Arizona without regard to choice of law considerations and all claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort, or otherwise, shall also be governed by the laws of the State of Arizona without regard to choice of law considerations.
20.
Entire Agreement. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.
21.
Section and Paragraph Headings. The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
22.
Section 409A Compliance.
(a)
This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a separation from service under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.
(b)
Notwithstanding any other provision of this Agreement, if at the time of the Executive's termination of employment, the Executive is a "specified employee", determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute "nonqualified deferred compensation" subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executives separation from service shall not be paid
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until the first payroll date to occur following the six-month anniversary of the Executive's termination date ("Specified Employee Payment Date"). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive's estate in a lump sum upon the Executive's death.
(c)
To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:
(i)
the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;
(ii)
any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and
(iii)
any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.
(d)
In the event the Company determines that the Executive is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the Code at the time of the Executives separation from service, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executives separation from service would be considered deferred compensation subject to Section 409A as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (i) six months and one day after the Executives separation from service, or (ii) the Executives death (the Six Month Delay Rule).
(i)
For purposes of this subparagraph, amounts payable under the Agreement should not provide for a deferral of compensation subject to Section 409A to the extent provided in Treasury Regulation Section 1.409A-1(b)(4) (e.g., short-term deferrals), Treasury Regulation Section 1.409A-1(b)(9) (e.g., separation pay plans, including the exception under subparagraph (iii)), and other applicable provisions of the Treasury Regulations.
(ii)
To the extent that the Six Month Delay Rule applies to payments otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of the Six Month Delay Rule, and the balance of the installments shall be payable in accordance with their original schedule.
(iii)
To the extent that the Six Month Delay Rule applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months
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following her separation from service (the Six Month Period), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth month anniversary of the Executives separation from service. For purposes of this subparagraph, Monthly Cost means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six Month Period.
(e)
The parties intend that this Agreement will be administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(f)
The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A but do not satisfy an exemption from, or the conditions of, such Section.
[Signature Page To Follow]
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IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.
| Aspen Group, Inc. | |
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| By: | /s/ Michael Mathews |
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| Michael Mathews |
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| Executive: | |
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| /s/ Cheri St. Arnauld | |
| Cheri St. Arnauld |
Exhibit 10.12(a)
AMENDMENT TO NO. 1 TO
This AMENDMENT TO EMPLOYMENT AGREEMENT (the Amendment), dated November 24, 2014, is by and between Aspen University Inc. (the Company), and Cheri St. Arnauld, Ed. D (the Executive).
WHEREAS, the Company and the Executive entered into an employment agreement as of March 1, 2014 (the Agreement); and
WHEREAS, the parties desire to amend the Agreement to revise the requirements and rights with respect to obtaining a bonus under the Agreement.
NOW, THEREFORE, the Company and the Executive, each intending to be legally bound hereby, do mutually covenant and agree as follows:
I.
The Agreement is hereby amended as follows:
A.
Section 4(b) shall be replaced with the following:
(b)
Target Bonus. For each fiscal year during the Term beginning May 1st and ending April 30th of the applicable fiscal year, the Executive shall have the opportunity to earn a bonus up to 30%, 66% or 100% of her then Base Salary (the Target Bonus) as follows:
When the Company achieves annual Adjusted EBITDA (as defined below) at certain threshold levels (each, an EBITDA Threshold), the Executive shall receive an automatic cash bonus (the Automatic Cash Bonus) equal to a percentage of her then Base Salary, and shall receive a grant of fully vested shares of the Companys common stock having an aggregate Fair Market Value (as such term is defined in the Companys 2012 Equity Incentive Plan, as amended) equal to a percentage of the Executives then Base Salary (the Automatic Equity Bonus). In addition, the Executive shall be eligible to receive an additional percentage of her then Base Salary as a cash bonus (the Discretionary Cash Bonus) and an additional grant of fully vested shares of the Companys common stock having an aggregate Fair Market Value equal to a percentage of the Executives then Base Salary (the Discretionary Equity Bonus) based on the Boards determination that the Executive has achieved certain annual performance objectives established by the Board, based on the mutual agreement of the Chief Executive Officer and the Executive, at the beginning of each fiscal year.
The EBITDA Thresholds and corresponding bonus levels are set forth in the table below. For the avoidance of doubt, the Executive shall only be eligible to receive the bonuses associated with a single EBITDA Threshold; i.e. in the event the Company attains EBITDA Threshold (2), only the bonuses associated with EBITDA Threshold (2) below (and not the bonuses associated with EBITDA Threshold (1)) shall be applicable.
EBITDA Threshold | Automatic Cash Bonus | Automatic Equity Bonus | Discretionary Cash Bonus | Discretionary Equity Bonus |
(1) $1,000,000 -$1,999,999 | 7.5% | 7.5% | Up to 7.5% | Up to 7.5% |
(2) $2,000,000 -$3,999,999 | 16.5% | 16.5% | Up to 16.5% | Up to 16.5% |
(3) $4,000,000 and over | 25% | 25% | Up to 25% | Up to 25% |
Provided, however, that the earning of the Automatic Cash Bonus is subject to the Company having at least $2,000,000 in available cash after deducting the Target Bonus paid to all executive officers of the Company or its subsidiaries under the same Target Bonus formula pursuant to such executives employment agreements (the Cash Threshold) and the Executive continuing to provide services under this Agreement on the applicable Target Bonus determination date. If the Company is unable to pay the Automatic Cash Bonus as a result of not meeting the Cash Threshold, no Automatic Cash Bonus will be earned for that fiscal year. As used in this Agreement, Adjusted EBITDA is calculated as earnings (or loss) from continuing operations before preferred dividends, interest expense, income taxes, collateral valuation adjustment, bad debt expense, depreciation and amortization, and amortization of stock-based compensation; however, if Adjusted EBITDA shall be defined differently in any filing of the Company with the Securities and Exchange Commission subsequent to the date of this Agreement, then Adjusted EBITDA shall thereafter be defined in accordance with the definition most recently set forth in any such filing at each Target Bonus determination date.
B.
The following shall be added to the Agreement as Section 4(e):
(e)
Discretionary Bonus. During the term of the Agreement, the Compensation Committee shall have the discretion to award the Executive a bonus, in cash or the Companys common stock, based upon the Executives job performance, the Companys revenue growth or any other factors as determined by the Compensation Committee.
II.
Capitalized terms used but not otherwise defined in this Amendment shall have the meanings assigned thereto in the Agreement.
III.
In the event of any conflict between the Agreement and this Amendment, the terms as contained in this Amendment shall control. In all other respects the Agreement is hereby ratified and confirmed.
IV.
This Amendment may be executed in one or more counterparts, each of which shall be deemed to be one and the same agreement. Facsimile signatures shall be treated in all respects and for all purposes as originals.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.
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| ASPEN UNIVERSITY INC. | |
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| By: | /s/ Michael Mathews |
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| Cheri St. Arnauld |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Michael Mathews, certify that:
1.
I have reviewed this annual report on Form 10-K/A of Aspen Group, Inc.; and
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Date: August 29, 2016
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/s/ Michael Mathews |
Michael Mathews Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Janet Gill, certify that:
1.
I have reviewed this annual report on Form 10-K/A of Aspen Group, Inc.; and
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Date: August 29, 2016
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/s/ Janet Gill |
Janet Gill Chief Financial Officer (Principal Financial Officer) |