Exhibit 10.1

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September 28, 2017

 

Via Hand Delivery

 

Karan H. Powell

c/o American Public University System, Inc.

111 West Congress Street

Charles Town, West Virginia 25414

 

Dear Karan:

 

Thank you for your distinguished service to American Public University System,
Inc. (“APUS”), a wholly owned subsidiary of American Public Education, Inc.
(“Parent”). This retirement letter agreement between you, APUS and Parent (this
“Letter Agreement”) sets forth the terms and conditions of your retirement as
the President of APUS. This Letter Agreement amends and supplements the Amended
and Restated Executive Employment Agreement by and among you, APUS and Parent,
dated as of May 31, 2016 (the “Employment Agreement”). Please acknowledge your
agreement and acceptance of the terms of this Letter Agreement by countersigning
and returning a copy of this letter to me.

 

Any capitalized terms that are not otherwise defined herein shall have the
meanings assigned thereto in the Employment Agreement.

 

In consideration of the mutual promises contained in this Letter Agreement,
APUS, Parent and you agree, effective as of the date of this letter, as follows:

 

1.       Retirement from Service.

 

(a)       Effective October 15, 2017 (the “Retirement Date”), you hereby resign
from your positions as the President of APUS and any other positions you may
have with APUS, Parent, or their respective affiliates, and will promptly
execute such documents and take such actions as may be necessary or reasonably
requested by APUS or Parent to effectuate or memorialize your resignation from
such positions. The parties agree that your resignation will be treated as a
termination by APUS pursuant to Section 9(b)(iii) of the Employment Agreement,
and that the Retirement Date shall constitute the Date of Termination for
purposes of the Employment Agreement. You and APUS agree that, because your
retirement is being treated as a termination pursuant to Section 9(b)(iii) of
the Employment Agreement, you shall receive the benefits pursuant to Section
10(d) of the Employment Agreement, as they are modified pursuant to the terms of
this Letter Agreement.

 

(b)       Effective as of the Retirement Date, your employment under the
Employment Agreement will end and you will no longer be employed by APUS, Parent
or any of their affiliates. From and after the Retirement Date and through June
30, 2018 (the “Term”) you agree to be available and willing to provide
consulting services (the “Consulting Services”) to APUS and Parent from time to
time as reasonably directed by the President (or Acting President) of APUS or
the Chief Executive Officer of APEI, which services shall include transition
services to support the transition to an Acting President and then to a new
President, continuing to represent APUS in the higher education community as its
advocate, continuing your President’s blog (as President Retired), and providing
guidance as requested on accreditation related matters.

 

(c)        On the first regular payroll date of the Company following the
Retirement, you shall be paid an amount equal to the sum of (i) your Base Salary
through the Retirement Date to the extent not theretofore paid, and (ii) any
accrued vacation pay, in each case, to the extent not theretofore paid (the
“Accrued Benefits”). You acknowledge and agree that upon your acceptance and
receipt of the Accrued Benefits APUS and Parent shall have satisfied all
obligations pursuant to Section 10(d)(i) of the Employment Agreement.

 

 

September 28, 2017

Page 2

 

2.       Release. On or before the 21st day following the Retirement Date, you
shall execute a Release of Claims in the form provided to you by the Company
(the “Release”). Other than the Accrued Benefits, no payments that are scheduled
to be paid prior to June 30, 2018 shall be made to you pursuant to this Letter
Agreement and no benefits to which you are entitled pursuant to this Letter
Agreement that are scheduled to be provided prior to June 30, 2018 shall accrue
or otherwise take effect unless and until you have executed the Release and all
revocation periods applicable thereto have expired on or before the 21st] day
following the Retirement Date without the Release being revoked. On or before
the 21st day following the expiration of the Term, you shall re-execute the
Release. No payments that are scheduled to be paid on or after the expiration of
the Term shall be made to you pursuant to this Letter Agreement and no benefits
to which you are entitled pursuant to this Letter Agreement that are scheduled
to be provided on or after the expiration of the Term shall accrue or otherwise
take effect unless and until you have re-executed the Release and all revocation
periods applicable thereto have expired on or before the 30th day following the
expiration of the Term without the Release being revoked.

 

3.       Consulting Services and Termination Benefits.

 

(a)       In recognition of, and as consideration for, your availability and
willingness to provide the Consulting Services you will provide to APUS and
Parent during the Term and subject to your compliance with the terms of this
Letter Agreement and the terms of the Employment Agreement, including those
referred to in Section 4 below, during the Term (i) all of your outstanding
restricted stock units and restricted stock awards shall continue to vest and be
settled in accordance with the respective vesting schedules and performance
conditions applicable thereto; at the expiration of the Term any outstanding
restricted stock units and restricted stock awards that have not vested as a
result of continued service through the Term or APUS’s retirement policy as set
forth in an award agreement shall terminate for no consideration, (ii) you will
be compensated during the Term a bi-weekly fee, pro-rated for any partial weeks
of service during the Term, equal to $14,875.70, (iii) subject to your timely
COBRA election, you will continue to participate in APUS’s medical, dental and
vision benefit plans at the same level of coverage and on the same terms as in
effect immediately prior to the Resignation Date, subject to such changes in the
plans as apply to all employees of APUS generally (including any upward
adjustment reflect premium increases), and (iv) you shall be eligible to receive
a bonus pursuant to the bonus plans that have been communicated to you for
calendar year 2017, subject to achievement of the performance metrics applicable
to you for 2017, provided, however, that, the portion of such bonus attributable
to metric four shall be deemed to have been satisfied at the target level, which
bonus, if earned, shall be paid at the same time as bonuses are paid to
employees of APUS generally, but in no event later than March 15, 2018. The
Parties agree that the bonus payment in respect of calendar year 2017 set forth
in this Section 3(a) represents the entirety of the bonus for calendar year 2017
to which you are entitled pursuant to the Employment Agreement. In addition,
subject to your continued provision of Consulting Services during the Term, you
shall be reimbursed for all reasonable, documented expenses in accordance with
APUS policies and procedures for (i) conference fees and travel to approved
conferences and speaking events through December 31, 2017, and (ii) conference
fees and travel to approved conventions/conferences through June 30, 2018.

 

(b)       The parties agree that, in consideration of your years of service to
APUS and Parent ,your promises in this Letter Agreement, your execution of the
Release and subject to your compliance with the terms of this Letter Agreement
and the terms of the Employment Agreement, following the expiration of the Term
(i) at each regularly scheduled bi-weekly payroll you will be compensated a fee
equal to $14,875.70 until December 31, 2019, (ii) subject to your timely COBRA
election, you will continue to participate in APUS’s medical, dental and vision
benefit plans until March 31, 2019 at the same level of coverage and on the same
terms as in effect immediately prior to the Resignation Date (provided that if
you become reemployed with another employer and are eligible to receive medical
or other welfare benefits under another employer provided plan, APUS will no
longer make any premium payment on your behalf), (iii) for the period from April
1, 2019 through December 31, 2019, you shall be paid a supplemental monthly
payment equal to the premium amount paid by APUS on a monthly basis to allow you
to continue to participate in APUS’s benefit plans under Section 3(b)(ii) above
(provided that if you become reemployed with another employer and are eligible
to receive medical or other welfare benefits under another employer provided
plan, you will cease to receive such supplemental payment), and (iv) you shall
be eligible to receive a bonus for calendar year 2018 of $190,000 if (A) net
income for 2018 has increased from the calendar year 2017 level and if the
performance targets for the replacement President of APUS are satisfied for
calendar year 2018 (with the bonus subject to a pro rata downward adjustment to
reflect the relative level of achievement), (B) the Higher Learning Commission
both approves the University’s Change in Structure Application without requiring
any material modification to the shared services model proposed in the initial
application by December 31, 2018 and has completed by December 31, 2018 the HLC
Standard Pathway mid-cycle review and all subsequent reporting and has not taken
any action to limit or modify APUS’s institutional accreditation, or otherwise
changed APUS status from being subject to the HLC Standard Pathway Schedules and
requirements, or (C) there is a change of control of APUS or Parent. Any bonus
payable pursuant to clause (iv) of the prior sentence, if earned, shall be paid
at the same time as bonuses are paid to employees of APUS generally, but in no
event later than March 15, 2019. You acknowledge and agree that upon your
acceptance and receipt of the amounts in this Section 3(b) APUS and Parent shall
have satisfied its obligations pursuant to Sections 10(d)(ii), (iii), and (iv)
of the Employment Agreement.

 

 

September 28, 2017

Page 3

 

(c)       You acknowledge and agree that you have no further right to receive
any compensation, payments or benefits from APUS, Parent or their affiliates,
other than as set forth in the Employment Agreement, as amended by this Letter
Agreement.

 

4.       Restrictive Covenants. You acknowledge and agree that any and all
restrictive covenants to which you are subject, including, but not limited to,
those described in Section 7 (Confidential Information) and Section 8
(Non-Competition) of the Employment Agreement will continue in full force and
effect in accordance with the terms and conditions thereof. Notwithstanding
anything to the contrary in Section 8 of the Employment Agreement, the
Restricted Period and the accompanying restrictions on competing activity will
run through October 31, 2018, and the non-solicitation period will apply until
June 30, 2019. You also acknowledge and agree that any and all terms and
conditions of the Employment Agreement that survive your separation from APUS
and Parent to which you are subject will continue in full force and effect in
accordance with the terms and conditions thereof.

 

5.       Taxes. APUS may withhold from any amounts payable under this Letter
Agreement all federal, state, city, foreign or other taxes as APUS is required
to withhold pursuant to any applicable law, regulation or ruling.
Notwithstanding any other provision of this Letter Agreement, APUS shall not be
obligated to guarantee any particular tax result for you with respect to any
payment provided hereunder, and you shall be responsible for any taxes imposed
on you with respect to any such payment.

 

6.       Section 409A. This Letter Agreement and the payments to be made
hereunder are intended to comply with, or be exempt from, Section 409A of the
Internal Revenue Code of 1986, as amended and the regulations promulgated
thereunder (“Section 409A”), and this Letter Agreement will be interpreted, and
all tax filings with the Internal Revenue Service relating to the payments will
be made, in a manner consistent with that intent. Your retirement as the
President of APUS is intended to constitute a “separation from service” for
purposes of Section 409A. In furtherance of the preceding sentence, you, APUS
and Parent anticipate and agree that the level of consulting services that you
shall perform during the Term shall not exceed the maximum level that is
presumed to result in a “separation from service” in accordance with Treasury
Regulation Section1.409A-1(h)(1)(ii).

 

7.       Consultation with Attorney; Voluntary Agreement. You acknowledge that
(a) APUS and APEI have advised you to consult with an attorney of your own
choosing prior to executing this Letter Agreement, (b) you have carefully read
and fully understand all of the provisions of this Letter Agreement, and (c) you
are entering into this Letter Agreement knowingly, freely and voluntarily in
exchange for good and valuable consideration.

 

8.       Governing Law. Letter Agreement shall be governed by and construed in
accordance with the laws of the State of West Virginia (but not including the
choice of law rules thereof).

 

9.       Entire Agreement. This Letter Agreement, taken together with the
Release and the Employment Agreement, as modified by this Letter Agreement,
constitute and contain the entire agreement and understanding concerning your
employment, cessation of employment and the other subject matters addressed
herein between the parties, and supersedes and replaces all prior negotiations
and all agreements proposed or otherwise, whether written or oral, concerning
the subject matters hereof. Except as expressly amended by this Letter
Agreement, the terms of the Employment Agreement remain in full force and
effect.

 

10.       Amendments. This Letter Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.

 

11.       Counterparts. This Letter Agreement may be executed in two or more
counterparts, each of which shall be an original, and all of which shall be
deemed to constitute one and the same instrument.

 

 

September 28, 2017

Page 4

 

If the foregoing accurately reflects our agreement, please sign and return to us
the enclosed duplicate copy of this Letter Agreement.

 

 

  AMERICAN PUBLIC UNIVERSITY SYSTEM, INC.               By: /s/ Richard W.
Sunderland, Jr.   Name:   Richard W. Sunderland, Jr.   Title: CFO              
AMERICAN PUBLIC EDUCATION, INC.               By: /s/ Wallace E. Boston   Name:
Wallace E. Boston   Title: CEO       Accepted and Agreed to:                 /s/
Karan H. Powell     Karan H. Powell, President of APUS (Retired)