ASPU Aspen Group Inc

Item 1.01 Entry into a Material Definitive Agreement.

On May 12, 2023, Aspen Group, Inc. (the “Company”) entered into a Securities Purchase Agreement with JGB Management Inc., (“JGB") pursuant to which that day the Company sold to JGB a total of approximately $12.4 million in the aggregate principle amount of 15% Senior Secured Debentures (“Debentures”) and five-year warrants to purchase a total of 2,214,114 shares of its common stock at an exercise price of $0.01 per share (the “Warrants”), for total gross proceeds of approximately $11 million, representing an 11% original issue discount on the Debentures, before deducting offering fees and expenses. Approximately $5 million of the proceeds from the offering were used to repay the outstanding borrowings under the Company’s prior credit facility dated November 5, 2018, and after paying fees and expenses associated with this offering, the remaining proceeds will be used for working capital needs. The Company also reimbursed the investors for certain expenses incurred in connection with the offering totaling $90,000.

The 2023 Debentures bear cash interest from May 12, 2023 at an annual rate of 15% payable monthly. The Debentures will mature on May 12, 2026 unless earlier redeemed. The Debentures are subject to monthly redemptions beginning in November 2023. The Company may prepay the Debentures after one year, or any time after May 12, 2024 at a 105% premium. The interest rate on the Debentures is subject to increase to 20% upon the occurrence of an event of default.

The obligations under the Debentures are secured by the assets of the Company pursuant to a Security Agreement, and are guaranteed by the Company’s subsidiaries pursuant to a Subsidiary Guarantee.

The investors also received Warrants, which have a five-year term and contain anti-dilution protection. The warrants are subject to a 4.99% beneficial ownership limitation, subject to potential increase to up to 9.99% with 61 days’ notice.

The Debentures contain affirmative and negative covenants, including affirmative covenants which require the Company to maintain $2 million of restricted cash; maintain at least $20 million of accounts receivable, and maintain enumerated quarterly revenue and quarterly Adjusted EBITDA amounts, among other requirements.

In connection with the Debentures, the holders of Convertible Promissory Notes previously issued by the Company on March 14, 2022 agreed to subordinate their security interests therein to the security interests granted to the holders of the Debentures pursuant to a Subordination Agreement with each such holder.

The foregoing descriptions of the Securities Purchase Agreement, Debentures, Warrants, Security Agreement, Subsidiary Guarantee and Subordination Agreements do not purport to be complete and are qualified in their entirety by the full text of each such document, forms of which are filed as Exhibits 10.1 through 10.6, respectively, to this Current Report on Form 8-K.