Bridgepoint Education Inc (Form: 10-Q, Received: 08/02/2016 16:25:37)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________________to________________

Commission File Number: 001-34272

___________________________________________________________________________

BRIDGEPOINT EDUCATION, INC.

(Exact name of registrant as specified in its charter)

____________________________________________________________________________



Delaware (State or other jurisdiction of incorporation or organization)	59-3551629 (I.R.S. Employer Identification No.)

13500 Evening Creek Drive North

San Diego, CA 92128

(Address, including zip code, of principal executive offices)

(858) 668-2586

(Registrant’s telephone number, including area code)

____________________________________________________________________________

None

(Former name, former address and former fiscal year, if changed since last report)

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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer x	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The total number of shares of common stock outstanding as of July 28, 2016 , was 46,310,817 .

BRIDGEPOINT EDUCATION, INC.

FORM 10-Q

INDEX




PART I—FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income (Loss)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		39
Item 4. Controls and Procedures		40
PART II—OTHER INFORMATION		42
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45
Item 3. Defaults Upon Senior Securities		45
Item 4. Mine Safety Disclosures		45
Item 5. Other Information		45
Item 6. Exhibits		46
SIGNATURES		47

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value)



	As of June 30, 2016			As of December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	265,366		$	282,145
Restricted cash	21,623			24,685
Investments	35,329			19,387
Accounts receivable, net	29,797			24,091
Student loans receivable, net	955			775
Prepaid expenses and other current assets	41,433			52,192
Total current assets	394,503			403,275
Property and equipment, net	17,429			21,742
Investments	45,000			47,770
Student loans receivable, net	6,589			7,394
Goodwill and intangibles, net	19,246			21,265
Other long-term assets	3,576			5,320
Total assets	$	486,343		$	506,766
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	74,643		$	79,196
Deferred revenue and student deposits	81,216			88,756
Total current liabilities	155,859			167,952
Rent liability	15,911			20,118
Other long-term liabilities	14,801			15,046
Total liabilities	186,571			203,116
Commitments and contingencies (see Note 14)
Stockholders' equity:
Preferred stock, $0.01 par value:
20,000 shares authorized; zero shares issued and outstanding at both June 30, 2016, and December 31, 2015	—			—
Common stock, $0.01 par value:
300,000 shares authorized; 63,868 issued and 46,311 outstanding at June 30, 2016; 63,407 issued and 45,850 outstanding at December 31, 2015	639			634
Additional paid-in capital	191,560			188,863
Retained earnings	444,547			451,321
Accumulated other comprehensive income (loss)	95			(99		)
Treasury stock, 17,557 shares at cost at both June 30, 2016, and December 31, 2015	(337,069		)	(337,069		)
Total stockholders' equity	299,772			303,650
Total liabilities and stockholders' equity	$	486,343		$	506,766

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share amounts)



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016			2015
Revenue	$	137,970	$	147,057		$	270,972		$	289,575
Costs and expenses:
Instructional costs and services	66,448		71,410			136,034			146,459
Admissions advisory and marketing	52,531		48,495			104,208			100,842
General and administrative	11,650		13,246			25,105			29,568
Legal accrual	2,292		—			16,166			—
Restructuring and impairment charges	1,692		14,418			2,401			14,418
Total costs and expenses	134,613		147,569			283,914			291,287
Operating income (loss)	3,357		(512		)	(12,942		)	(1,712		)
Other income, net	652		345			1,335			1,034
Income (loss) before income taxes	4,009		(167		)	(11,607		)	(678		)
Income tax expense (benefit)	671		483			(4,833		)	343
Net income (loss)	$	3,338	$	(650	)	$	(6,774	)	$	(1,021	)
Earnings (loss) per share:
Basic	$	0.07	$	(0.01	)	$	(0.15	)	$	(0.02	)
Diluted	$	0.07	$	(0.01	)	$	(0.15	)	$	(0.02	)
Weighted average number of common shares outstanding used in computing earnings (loss) per share:
Basic	46,289		45,674			46,111			45,552
Diluted	47,001		45,674			46,111			45,552

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016			2015
Net income (loss)	$	3,338	$	(650	)	$	(6,774	)	$	(1,021	)
Other comprehensive income, net of tax:
Unrealized gains (losses) on investments	29		(30		)	194			135
Comprehensive income (loss)	$	3,367	$	(680	)	$	(6,580	)	$	(886	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)



	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock
	Shares	Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total
Balance at December 31, 2014	62,957	$	630	$	180,720		$	521,775		$	(175	)	$	(337,069	)	$	365,881
Stock-based compensation	—	—		5,635			—			—			—			5,635
Exercise of stock options	109	1		226			—			—			—			227
Excess tax benefit of option exercises and restricted stock, net of tax shortfall	—	—		(622		)	—			—			—			(622		)
Stock issued under employee stock purchase plan	16	—		136			—			—			—			136
Stock issued under stock incentive plan, net of shares held for taxes	194	2		(1,260		)	—			—			—			(1,258		)
Net loss	—	—		—			(1,021		)	—			—			(1,021		)
Unrealized gains on investments, net of tax	—	—		—			—			135			—			135
Balance at June 30, 2015	63,276	$	633	$	184,835		$	520,754		$	(40	)	$	(337,069	)	$	369,113



	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock
	Shares	Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total
Balance at December 31, 2015	63,407	$	634	$	188,863		$	451,321		$	(99	)	$	(337,069	)	$	303,650
Stock-based compensation	—	—		4,256			—			—			—			4,256
Exercise of stock options	178	2		136			—			—			—			138
Stock issued under employee stock purchase plan	16	—		112			—			—			—			112
Stock issued under stock incentive plan, net of shares held for taxes	267	3		(1,807		)	—			—			—			(1,804		)
Net loss	—	—		—			(6,774		)	—			—			(6,774		)
Unrealized gains on investments, net of tax	—	—		—			—			194			—			194
Balance at June 30, 2016	63,868	$	639	$	191,560		$	444,547		$	95		$	(337,069	)	$	299,772

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(6,774	)	$	(1,021	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Provision for bad debts	15,977			15,364
Depreciation and amortization	6,913			10,629
Amortization of premium/discount	6			225
Stock-based compensation	4,256			5,635
Excess tax benefit of option exercises	—			(314		)
Loss on impairment of student loans receivable	242			923
Net (gain) loss on marketable securities	(48		)	38
Loss on termination of leased space	—			12,331
Loss on disposal or impairment of fixed assets	809			1,545
Changes in operating assets and liabilities:
Restricted cash	3,089			4,596
Accounts receivable	(21,575		)	(22,079		)
Prepaid expenses and other current assets	(4,944		)	(2,704		)
Student loans receivable	632			529
Other long-term assets	1,744			40
Accounts payable and accrued liabilities	10,966			595
Deferred revenue and student deposits	(7,530		)	(9,118		)
Other liabilities	(4,451		)	(2,446		)
Net cash (used in) provided by operating activities	(688		)	14,768
Cash flows from investing activities:
Capital expenditures	(944		)	(2,182		)
Purchases of investments	(20,205		)	(192		)
Non-operating restricted cash	(27		)	(6,796		)
Capitalized costs for intangible assets	(464		)	(1,191		)
Sales of investments	—			10,101
Maturities of investments	7,103			40,094
Net cash (used in) provided by investing activities	(14,537		)	39,834
Cash flows from financing activities:
Proceeds from exercise of stock options	138			226
Excess tax benefit of option exercises	—			314
Proceeds from the issuance of stock under employee stock purchase plan	112			136
Tax withholdings on issuance of stock awards	(1,804		)	(1,258		)
Net cash used in financing activities	(1,554		)	(582		)
Net (decrease) increase in cash and cash equivalents	(16,779		)	54,020
Cash and cash equivalents at beginning of period	282,145			207,003
Cash and cash equivalents at end of period	$	265,366		$	261,023

Supplemental disclosure of non-cash transactions:
Purchase of equipment included in accounts payable and accrued liabilities	$	—		$	29
Issuance of common stock for vested restricted stock units	$	4,605		$	3,071

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of Business

Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), incorporated in 1999, is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University ^® and University of the Rockies ^SM , are regionally accredited academic institutions that offer associate’s, bachelor’s, master’s and doctoral programs.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 , which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016 . In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.

Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The Company has combined the presentation of accounts payable and accrued liabilities on its condensed consolidated balance sheets. These reclassifications had no effect on previously reported results of operations or cash flows.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition . This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 can be adopted using one of two retrospective application methods. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, to fiscal years beginning after December 15, 2017. The Company continues to

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

evaluate which transition approach to use and the impacts the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update includes cloud computing arrangements, examples of which include: (i) software as a service; (ii) platform as a service; (iii) infrastructure as a service; and (iv) other similar hosting arrangements. The update adds guidance to Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software , that will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The guidance already exists within the FASB section 985-605-55, but it is included in a Subtopic applied by cloud service providers to determine whether an arrangement includes the sale or license of software. The amendments in this update were effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of ASU 2015-05 did not have a material impact to the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers . The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public companies and all nonpublic companies upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company continues to evaluate the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. ASC Topic 606, Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by another party (i.e., the entity is an agent). The amendments in ASU 2016-08 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company continues to evaluate the impact the adoption of ASU 2016-08 will have on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. ASU 2016-09 is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will adopt this update as of January 1, 2017 using the prospective method. The Company continues to evaluate the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The update clarifies Topic 606 with respect to (i) the identification of performance obligations and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public companies should apply the amendments in this update for fiscal years beginning after December 15,

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

2017, including interim periods within those fiscal year. The Company continues to evaluate the impact the adoption of ASU 2016-10 will have on the Company’s consolidated financial statements.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The update addresses narrow-scope improvements to the guidance on collectibility, noncash consideration and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which is not yet effective. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for ASC Topic 606. The Company continues to evaluate the impact the adoption of ASU 2016-12 will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The update requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The update requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The update is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the adoption of ASU 2016-13 will have a material impact on the Company’s consolidated financial statements.

3. Restructuring and Impairment Charges

The Company previously initiated various restructuring plans to better align its resources with its business strategy. The related restructuring charges are recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss). For the three and six months ended June 30, 2016 , these charges were $1.7 million and $2.4 million , respectively.

In July 2015, the Company committed to the implementation of a plan to close Ashford University’s campus in Clinton, Iowa (the “Clinton Campus”) following the 2015-2016 academic year, during the second quarter of 2016. With the closure of the Clinton Campus, ground-based Ashford University students were provided opportunities to continue to pursue their degrees as reflected in their respective student transfer agreements. During the year ended December 31, 2015, the Company originally recorded restructuring charges relating to future cash expenditures for student transfer agreements of approximately $3.3 million . This estimate was based upon several assumptions that are subject to change, including assumptions related to the number of students who elect to continue to pursue their degrees through Ashford University’s online programs. During the three and six months ended June 30, 2016 , the Company reassessed this estimate and reduced the restructuring charges by $17,000 and $33,000 , respectively, relating to future cash expenditures for student transfer agreement costs.

During the three and six months ended June 30, 2016 , the Company recognized $1.5 million and $2.2 million , respectively, as restructuring charges relating to severance costs for wages and benefits.

As part of its continued efforts to streamline operations, the Company vacated or consolidated properties in Denver and San Diego and reassessed its obligations on non-cancelable leases. During the three and six months ended June 30, 2016 , the Company recorded $162,000 and $188,000 , respectively, as restructuring charges relating to lease exit and other costs.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Asset impairment	$	—		$	1,312	$	—		$	1,312
Student transfer agreement costs	(17		)	—		(33		)	—
Severance costs	1,547			775		2,246			775
Lease exit and other costs	162			12,331		188			12,331
Total restructuring and impairment charges	$	1,692		$	14,418	$	2,401		$	14,418

The following table summarizes the changes in the Company's restructuring liability by type during the six months ended June 30, 2016 (in thousands):



	Student Transfer Agreement Costs			Severance Costs			Lease Exit and Other Costs			Total
Balance at December 31, 2015	$	3,224		$	1,744		$	13,921		$	18,889
Restructuring and impairment charges	(33		)	2,246			188			2,401
Payments	(104		)	(2,107		)	(4,554		)	(6,765		)
Balance at June 30, 2016	$	3,087		$	1,883		$	9,555		$	14,525

The restructuring liability amounts are recorded within the (i) accounts payable and accrued liabilities account, (ii) rent liability account and (iii) other long-term liabilities account on the condensed consolidated balance sheets.

4. Investments

The following tables summarize the fair value information of short-term and long-term investments as of June 30, 2016 and December 31, 2015 , respectively (in thousands):



	As of June 30, 2016
	Level 1		Level 2		Level 3		Total
Mutual funds	$	1,566	$	—	$	—	$	1,566
Corporate notes and bonds	—		33,763		—		33,763
U.S. government and agency securities	—		20,000		—		20,000
Certificates of deposit	—		25,000		—		25,000
Total	$	1,566	$	78,763	$	—	$	80,329



	As of December 31, 2015
	Level 1		Level 2		Level 3		Total
Mutual funds	$	1,314	$	—	$	—	$	1,314
Corporate notes and bonds	—		40,843		—		40,843
Certificates of deposit	—		25,000		—		25,000
Total	$	1,314	$	65,843	$	—	$	67,157

The tables above include mutual funds, which are considered to be Level 1 investments and consist of the investments relating to the Company’s deferred compensation plan. The tables above also include amounts related to investments classified

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance. The Company’s Level 2 investments are valued using readily available pricing sources that utilize market observable inputs, including the current interest rate for similar types of instruments. There were no transfers between level categories for our investments during the periods presented. The Company also holds money market securities within its cash and cash equivalents on the condensed consolidated balance sheets that are classified as Level 1 securities.

The following tables summarize the differences between amortized cost and fair value of short-term and long-term investments as of June 30, 2016 and December 31, 2015 , respectively (in thousands):



	June 30, 2016
				Gross unrealized
	Maturities	Amortized Cost		Gain		Loss		Fair Value
Short-term
Corporate notes and bonds	1 year or less	33,727		36		—		33,763
Long-term
U.S. government and agency securities	3 years or less	20,000		—		—		20,000
Certificates of deposit	3 years or less	25,000		—		—		25,000
Total		$	78,727	$	36	$	—	$	78,763

The above table does not include $1.6 million of mutual funds for June 30, 2016 , which are recorded as trading securities.



	December 31, 2015
				Gross unrealized
	Maturities	Amortized Cost		Gain		Loss			Fair Value
Short-term
Corporate notes and bonds	1 year or less	18,113		—		(40		)	18,073
Long-term
Corporate notes and bonds	3 years or less	22,887		—		(117		)	22,770
Certificates of deposit	3 years or less	25,000		—		—			25,000
Total		$	66,000	$	—	$	(157	)	$	65,843

The above table does not include $1.3 million of mutual funds for December 31, 2015 , which are recorded as trading securities.

The Company records changes in unrealized gains and losses on its investments during the period in the accumulated other comprehensive income line item on the Company’s condensed consolidated balance sheets. For the three months ended June 30, 2016 and 2015 , the Company recorded net unrealized gains of $29,000 and net unrealized losses of $30,000 , respectively, in accumulated other comprehensive income. There was no tax effect on net unrealized gains for the three months ended June 30, 2016 , and net unrealized losses for the three months ended June 30, 2015 was net of $77,000 of tax benefit. For the six months ended June 30, 2016 and 2015 , the Company recorded net unrealized gains of $194,000 and $135,000 , respectively, in other comprehensive income. There was no tax effect on net unrealized gains for the six months ended June 30, 2016 , and net unrealized gains for the six months ended June 30, 2015 was net of tax expense of $61,000 .

There were no reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2016 . During the six months ended June 30, 2015 , the Company reclassified $61,000 out of accumulated other comprehensive

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

income, which was recognized in the other income, net, line item on the Company’s condensed consolidated statements of income (loss).

5. Accounts Receivable, Net

Accounts receivable, net, consist of the following (in thousands):



	As of June 30, 2016			As of December 31, 2015
Accounts receivable	$	45,330		$	34,205
Less allowance for doubtful accounts	(15,533		)	(10,114		)
Accounts receivable, net	$	29,797		$	24,091

As of each of June 30, 2016 and December 31, 2015 , there was an immaterial amount of accounts receivable with a payment due date of greater than one year.

The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):



	Beginning Balance			Charged to Expense		Deductions(1)			Ending Balance
Allowance for doubtful accounts receivable:
For the six months ended June 30, 2016	$	(10,114	)	$	15,868	$	(10,449	)	$	(15,533	)
For the six months ended June 30, 2015	$	(27,567	)	$	15,418	$	(16,216	)	$	(26,769	)


(1)	Deductions represent accounts written off, net of recoveries.

6. Student Loans Receivable, Net

Student loans receivable, net, consist of the following (in thousands):



Short-term:	As of June 30, 2016			As of December 31, 2015
Student loans receivable (non-tuition related)	$	436		$	310
Student loans receivable (tuition related)	592			555
Current student loans receivable	1,028			865
Less allowance for doubtful accounts	(73		)	(90		)
Student loans receivable, net	$	955		$	775



Long-term:	As of June 30, 2016			As of December 31, 2015
Student loans receivable (non-tuition related)	$	2,749		$	3,314
Student loans receivable (tuition related)	4,769			4,943
Non-current student loans receivable	7,518			8,257
Less allowance for doubtful accounts	(929		)	(863		)
Student loans receivable, net	$	6,589		$	7,394

Student loans receivable is presented net of any related discount, and the balances approximated fair value at each balance sheet date. The Company estimates the fair value of the student loans receivable by discounting the future cash flows using an

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

interest rate of 4.5% , which approximates the interest rates used in similar arrangements. The assumptions used in this estimate are considered unobservable inputs and are therefore categorized as Level 3 measurements under the accounting guidance.

Revenue recognized related to student loans was immaterial during each of the six months ended June 30, 2016 and 2015 . The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):



	Beginning Balance			Charged to Expense			Deductions(1)		Ending Balance
Allowance for doubtful student loans receivable (tuition related):
For the six months ended June 30, 2016	$	(953	)	$	109		$	60	$	(1,002	)
For the six months ended June 30, 2015	$	(1,495	)	$	(54	)	$	—	$	(1,441	)


(1)	Deductions represent accounts written off, net of recoveries.

For the non-tuition related student loans receivable, the Company monitors the credit quality of the borrower using credit scores, aging history of the loan and delinquency trending. The loan reserve methodology is reviewed on a quarterly basis. Delinquency is the main factor in determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For the six months ended June 30, 2016 , approximately $0.2 million of student loans were impaired. As of June 30, 2016 , approximately $0.8 million of student loans had been placed on non-accrual status.

As of June 30, 2016 , the repayment status of gross student loans receivable was as follows (in thousands):



120 days and less	$	9,579
From 121 - 270 days	788
Greater than 270 days	963
Total gross student loans receivable	11,330
Less: Amounts reserved or impaired	(1,766		)
Less: Discount on student loans receivable	(2,020		)
Total student loans receivable, net	$	7,544

7. Other Significant Balance Sheet Accounts

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consists of the following (in thousands):



	As of June 30, 2016		As of December 31, 2015
Prepaid expenses	$	6,844	$	7,005
Prepaid licenses	5,592		5,221
Income tax receivable	25,089		20,169
Prepaid insurance	1,875		1,619
Interest receivable	341		299
Insurance recoverable	1,109		16,659
Other current assets	583		1,220
Total prepaid expenses and other current assets	$	41,433	$	52,192

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):



	As of June 30, 2016			As of December 31, 2015
Furniture and office equipment	$	54,467		$	63,354
Software	11,990			12,605
Leasehold improvements	11,050			11,136
Vehicles	22			22
Total property and equipment	77,529			87,117
Less accumulated depreciation	(60,100		)	(65,375		)
Total property and equipment, net	$	17,429		$	21,742

For the three months ended June 30, 2016 and 2015 , depreciation expense was $2.0 million and $3.8 million , respectively. For the six months ended June 30, 2016 and June 30, 2015 , depreciation expense was $4.4 million and $7.7 million , respectively.

Goodwill and Intangibles, Net

Goodwill and intangibles, net, consists of the following (in thousands):



	June 30, 2016
Definite-lived intangible assets:	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Capitalized curriculum costs	$	20,787	$	(15,820	)	$	4,967
Purchased intangible assets	15,850		(4,138		)	11,712
Total definite-lived intangible assets	$	36,637	$	(19,958	)	$	16,679
Goodwill and indefinite-lived intangibles						2,567
Total goodwill and intangibles, net						$	19,246

	December 31, 2015
Definite-lived intangible assets:	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Capitalized curriculum costs	$	20,323	$	(13,954	)	$	6,369
Purchased intangible assets	15,850		(3,521		)	12,329
Total definite-lived intangible assets	$	36,173	$	(17,475	)	$	18,698
Goodwill and indefinite-lived intangibles						2,567
Total goodwill and intangibles, net						$	21,265

For the three months ended June 30, 2016 and 2015 , amortization expense was $1.2 million and $1.5 million , respectively. For the six months ended June 30, 2016 and June 30, 2015 , amortization expense was $2.5 million and $2.9 million , respectively.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):



Year Ended December 31,
2016	$	2,194
2017	3,324
2018	2,258
2019	1,490
2020	1,245
Thereafter	6,168
Total future amortization expense	$	16,679

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consists of the following (in thousands):



	As of June 30, 2016		As of December 31, 2015
Accounts payable	$	135	$	4,762
Accrued salaries and wages	10,894		10,476
Accrued bonus	3,577		4,295
Accrued vacation	9,895		9,628
Accrued litigation and fees	12,528		720
Accrued expenses	23,091		17,243
Rent liability	11,336		13,406
Accrued insurance liability	3,187		18,666
Total accounts payable and accrued liabilities	$	74,643	$	79,196

Deferred Revenue and Student Deposits

Deferred revenue and student deposits consists of the following (in thousands):



	As of June 30, 2016		As of December 31, 2015
Deferred revenue	$	29,948	$	23,311
Student deposits	51,268		65,445
Total deferred revenue and student deposits	$	81,216	$	88,756

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Other Long-Term Liabilities

Other long-term liabilities consists of the following (in thousands):



	As of June 30, 2016		As of December 31, 2015
Uncertain tax positions	$	7,860	$	7,870
Legal settlements	100		178
Student transfer agreement costs	1,636		—
Other long-term liabilities	5,205		6,998
Total other long-term liabilities	$	14,801	$	15,046

8 . Credit Facilities

The Company has issued letters of credit that are collateralized with cash in the aggregate amount of $6.7 million , which is included as restricted cash as of June 30, 2016 .

As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. The Company has entered into a surety bond facility with an insurance company to provide such bonds when required. As of June 30, 2016 , the Company’s total available surety bond facility was $12.0 million and the surety had issued bonds totaling $3.4 million on the Company’s behalf under such facility.

9. Lease Obligations

Operating leases

The Company leases certain office facilities and office equipment under non-cancelable lease arrangements that expire at various dates through 2023, subject to certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on a straight-line basis and totaled $11.6 million and $27.3 million for the six months ended June 30, 2016 and 2015 , respectively.

The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at June 30, 2016 (in thousands):



Year Ended December 31,
2016	$	18,341
2017	36,208
2018	31,445
2019	20,876
2020	9,546
Thereafter	7,148
Total minimum payments	$	123,564

10. Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding for the period.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Diluted earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the sum of (i) the weighted average number of common shares outstanding for the period, plus (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive securities for the periods presented include incremental stock options, unvested restricted stock units (“RSUs”) and unvested performance stock units (“PSUs”).

The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in thousands, except per share data):



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016			2015
Numerator:
Net income (loss)	$	3,338	$	(650	)	$	(6,774	)	$	(1,021	)
Denominator:
Weighted average number of common shares outstanding	46,289		45,674			46,111			45,552
Effect of dilutive options and stock units	712		—			—			—
Diluted weighted average number of common shares outstanding	47,001		45,674			46,111			45,552
Earnings (loss) per share:
Basic earnings (loss) per share	$	0.07	$	(0.01	)	$	(0.15	)	$	(0.02	)
Diluted earnings (loss) per share	$	0.07	$	(0.01	)	$	(0.15	)	$	(0.02	)

During periods in which the Company reported a net loss, basic and diluted loss per share were the same. The following table sets forth the number of stock options, RSUs and PSUs, as applicable, excluded from the computation of diluted earnings (loss) per share for the periods indicated below because their effect was anti-dilutive (in thousands):



	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Stock options	4,477	5,246	4,573	5,110
RSUs and PSUs	406	605	989	631

11. Stock-Based Compensation

The Company recorded $2.0 million and $3.4 million of stock-based compensation expense for the three months ended June 30, 2016 and 2015 , respectively, and $4.3 million and $5.6 million of stock-based compensation expense for the six months ended June 30, 2016 and 2015 , respectively.

The related income tax benefit was $0.7 million and $1.3 million for the three months ended June 30, 2016 and 2015 , respectively, and $1.6 million and $2.1 million for the six months ended June 30, 2016 and 2015 , respectively.

During the six months ended June 30, 2016 , the Company granted 0.4 million RSUs at a grant date fair value of $10.52 and 0.4 million RSUs vested. During the six months ended June 30, 2015 , the Company granted 0.9 million RSUs at a grant date fair value of $9.44 and 0.3 million RSUs vested.

During the six months ended June 30, 2016 , the Company did not grant any performance-based or market-based PSUs and no performance-based or market-based PSUs vested. During the six months ended June 30, 2015 , the Company granted 0.5 million performance-based PSUs at a weighted average grant date fair value of $9.86 and no performance-based PSUs vested. During the six months ended June 30, 2015 , the Company granted 0.2 million market-based PSUs at a weighted average grant date fair value of $4.04 and no market-based PSUs vested.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

During the six months ended June 30, 2016 , the Company granted 0.4 million stock options at a grant date fair value of $4.99 and 0.2 million stock options were exercised. During the six months ended June 30, 2015 , the Company granted 0.5 million stock options at a grant date fair value of $4.57 and 0.1 million stock options were exercised.

As of June 30, 2016 , there was unrecognized compensation cost of $12.5 million related to unvested stock options, RSUs and PSUs.

12. Income Taxes

The Company recognizes deferred tax assets if realization of such assets is more likely than not. In order to make this determination, the Company evaluates a number of factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended June 30, 2016 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation certain subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more likely than not to be realized and that a full valuation allowance against its deferred tax assets should continue to be maintained as of June 30, 2016 .

The Company determines the interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to income before income taxes for the period. In determining the full year estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes.

The Company’s current estimated annual effective income tax rate that has been applied to normal, recurring operations for the six months ended June 30, 2016 was 22.5% . The Company’s actual effective income tax rate was 41.6% for the six months ended June 30, 2016 , which included $6.1 million of a discrete tax benefit associated with a legal accrual. The actual effective income tax rate for the six months ended June 30, 2016 differed from the Company’s estimated annual effective income tax rate due to a legal accrual and an additional interest accrual on unrecognized tax benefits for the six months ended June 30, 2016.

At each of June 30, 2016 and December 31, 2015 , the Company had $20.6 million of gross unrecognized tax benefits, of which $13.4 million would impact the effective income tax rate if recognized. The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions in the income tax expense line item on the Company’s condensed consolidated statements of income (loss). Accrued interest and penalties related to uncertain tax positions was $2.3 million and $2.0 million as of June 30, 2016 and December 31, 2015, respectively.

It is reasonably possible that the total amount of the unrecognized tax benefit will change during the next 12 months. However, the Company does not expect any potential change to have a material effect on the Company’s results of operations or financial position in the next year.

The tax years 2008 through 2015 are open to examination by major taxing jurisdictions to which the Company is subject. The Company is currently under audit by the California Franchise Tax Board for the years 2008 through 2012. In connection with the California Franchise Tax Board audit, the Company filed a refund claim for years 2008 through 2010 for approximately $12.6 million in 2014. However, the Company will not recognize benefit in its financial statements related to the refund claim until the final resolution of the audit examination.

The Company is also subject to various other state audits. With respect to all open audits, the Company does not expect any significant adjustments to amounts already reserved.

13. Regulatory

The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

thereunder by the U.S. Department of Education (the “Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act.

Ashford University is regionally accredited by WASC Senior College and University Commission (“WSCUC”) and University of the Rockies is regionally accredited by the Higher Learning Commission (“HLC”).

Department of Education Program Reviews of Ashford University

On July 31, 2014, the Company and Ashford University received notification from the Department that it intended to conduct a program review of Ashford University’s administration of federal student financial aid programs (“Title IV programs”) in which the university participates. The review commenced on August 25, 2014, and covers federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”), the Drug-Free Schools and Communities Act and related regulations. Ashford University was provided with the Department’s program review report and has responded to such initial report. Following consideration of the university’s response, the Department will issue a Final Program Review Determination letter.

On July 7, 2016, Ashford University was notified by the Department that an off-site program review had been scheduled to assess Ashford’s administration of the Title IV programs in which it participates. The program review commenced on July 25, 2016 and initially will cover students identified in the 2009-2012 calendar year data previously provided by Ashford to the Department in response to a request for information received from the Multi-Regional and Foreign School Participation Division of the Department’s Office of Federal Student Aid (the “FSA”) on December 10, 2015, but the program review may be expanded if appropriate.

WSCUC Accreditation of Ashford University

In July 2013, WSCUC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford University effected its transition to WSCUC accreditation and designated its San Diego, California facilities as its main campus and its Clinton, Iowa campus as an additional location. As part of a continuing monitoring process, Ashford University hosted a visiting team from WSCUC in a special visit in April 2015. In July 2015, Ashford University received an Action Letter from WSCUC outlining the findings arising out of its visiting team’s special visit. The Action Letter stated that the WSCUC visiting team found substantial evidence that Ashford University continues to make sustained progress in all six areas recommended by WSCUC in 2013. As part of its institutional review process, WSCUC will conduct a comprehensive review of Ashford University scheduled to commence with an off-site review in fall 2017, followed by an on-site review in spring 2018.

Licensure by California BPPE

To be eligible to participate in Title IV programs, an institution must be legally authorized to offer its educational programs by the states in which it is physically located. In connection with its transition to WSCUC accreditation, Ashford University designated its San Diego, California facilities as its main campus for Title IV purposes and submitted an Application for Approval to Operate an Accredited Institution to the State of California, Department of Consumer Affairs, Bureau for Private Postsecondary Education (“BPPE”) on September 10, 2013.

In April 2014, the application was granted, and Ashford University was approved by BPPE to operate in California until July 15, 2018. As a result, the university is subject to laws and regulations applicable to private, post-secondary educational institutions located in California, including reporting requirements related to graduation, employment and licensing data, certain changes of ownership and control, faculty and programs, and student refund policies. Ashford also remains subject to other state and federal student employment data reporting and disclosure requirements.

Negotiated Rulemaking and Other Executive Action

On June 8, 2015, the Department held a press conference and released a document entitled “Fact Sheet: Protecting Students from Abusive Career Colleges” in which the Department announced processes that would be established to assist students who may have been the victims of fraud in gaining relief under the “defense to repayment” provisions of the William

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

D. Ford Federal Direct Loan Program (the “Direct Loan Program”) regulations. Rarely used in the past, the defense to repayment provisions allow a student to assert as a defense against repayment of federal direct loans any commission of fraud or other violation of applicable state law by the school related to such loans or the educational services paid for. On June 16, 2016, the Department published proposed regulations regarding borrower defense to repayment and related matters. The regulations establish a 45-day notice and comment period, and the Department plans to publish its final regulations by November 1, 2016 with an effective date of July 1, 2017. The Department proposes to amend the regulations governing the Direct Loan Program to, among other things, establish a new federal standard and process for determining whether a borrower has a defense to repayment of a student loan based on an act or omission of a school, and amend the Student Assistance General Provisions by revising the financial responsibility standards and adding disclosure requirements for schools.

On July 9, 2015, the Department published a Notice of Proposed Rulemaking proposing to amend the regulations governing the Direct Loan Program. On October 30, 2015, the regulations were amended to create a new income-contingent repayment plan in accordance with President Obama’s initiative to allow more Direct Loan Program borrowers to cap their loan payments at 10% of their monthly income. Changes were also made to the Federal Family Education Loan Program and Direct Loan Program regulations to streamline and enhance existing processes and provide additional support to struggling borrowers. The amended regulations also expand the circumstances in which an institution may challenge or appeal a draft or final cohort default rate based on the institution’s participation rate index.

On February 8, 2016, the Department announced the creation of a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by higher education institutions. In April 2016, the Department drafted a set of standards clarifying the information accreditors must submit, including the format in which information should be submitted, when notifying federal officials about actions taken against schools they accredit. The Department accepted public comments on the proposed standards through June 6, 2016, and plans to publish a final rule by November 1, 2016 to be effective in July 2017.

On April 22, 2016, the Department issued a Dear Colleague Letter to federally recognized accrediting agencies regarding the flexibility those agencies have in differentiating their reviews of institutions and programs. The Department’s letter encourages accrediting agencies to use that flexibility to focus monitoring and resources on student achievement and problematic institutions or programs. The Department also encourages regional accreditors, such as WSCUC and HLC, to consider adding the use of quantitative measures, in addition to the qualitative measures of student achievement already utilized, in reviewing institutions’ processes for evaluating and validating student learning, and to consider licensing and placement rates in its accreditation of institutions that offer applied, professional and occupational programs.

On July 22, 2016, the Department issued proposed regulations to ensure that institutions offering distance education are legally authorized and monitored by states, as required by the Higher Education Act. The proposed regulations clarify state authorization requirements for institutions to participate in the Department’s Title IV programs by, among other things, (i) requiring institutions offering distance education or correspondence courses to be authorized by each state in which they enroll students, if such authorization is required by the state, (ii) requiring institutions to document the state process for resolving student complaints regarding distance education programs and (iii) requiring public and individualized disclosures to enrolled and prospective students in distance education programs, including disclosures regarding adverse actions taken against the institution, the institution’s refund policies and whether each of the institution’s programs meet applicable state licensure or certification requirements. The proposed regulations recognize authorization through participation in a state authorization reciprocity agreement, as long as the agreement does not prevent a state from enforcing its own consumer laws. The proposed regulations were published in the Federal Register on July 25, 2016, and the public comment period will end August 24, 2016. The Department expects to publish a final regulation before the end of 2016.

Substantial misrepresentation

The Higher Education Act prohibits an institution participating in Title IV programs from engaging in substantial misrepresentation regarding the nature of its educational programs, its financial charges or the employability of its graduates. Under the Department’s rules, a “misrepresentation” is any false, erroneous or misleading statement an institution, one of its representatives or any ineligible institution, organization or person with whom the institution has an agreement to provide educational programs or marketing, advertising, recruiting, or admissions services makes directly or indirectly to a student, prospective student or any member of the public, or to an accrediting agency, a state agency or the Department. The

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Department’s rules define a “substantial misrepresentation” as any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.

On December 10, 2015, Ashford University received a request for information from the Multi-Regional and Foreign School Participation Division of the FSA for (i) advertising and marketing materials provided to prospective students regarding the transferability of certain credit, (ii) documents produced in response to the August 10, 2015 Civil Investigative Demand from the Consumer Financial Protection Bureau (the “CFPB”) related to the CFPB’s investigation to determine whether for-profit post-secondary education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans, (iii) certain documents produced in response to subpoenas and interrogatories issued by the Attorney General of the State of California (the “CA Attorney General”) and (iv) records created between 2009 and 2012 related to the disbursement of certain Title IV funds. The FSA is investigating representations made by Ashford University to potential and enrolled students, and has asked the Company and Ashford University to assist in its assessment of Ashford University’s compliance with the prohibition on substantial misrepresentations. The Company and Ashford University intend to provide the FSA with their full cooperation with a view toward demonstrating the compliant nature of their practices. As discussed above, the Department is currently conducting an off-site program review to assess Ashford’s administration of the Title IV programs in which it participates, which initially will cover students identified in the 2009-2012 calendar year data provided by Ashford to the Department in response to the FSA’s December 10, 2015 request for information.

If the Department determines that one of the Company’s institutions has engaged in substantial misrepresentation, the Department may (i) revoke the institution’s program participation agreement, if the institution is provisionally certified, (ii) impose limitations on the institution’s participation in Title IV programs, if the institution is provisionally certified, (iii) deny participation applications made on behalf of the institution or (iv) initiate proceedings to fine the institution or to limit, suspend or terminate the participation of the institution in Title IV programs. Because Ashford University is provisionally certified, if the Department determined that Ashford University has engaged in substantial misrepresentation, the Department may take the actions set forth in clauses (i) and (ii) above in addition to any other actions taken by the Department.

Administrative capability

The Department specifies extensive criteria by which an institution must establish that it has the requisite administrative capability to participate in Title IV programs. To meet the administrative capability standards, an institution must, among other things, (i) administer Title IV program in accordance with all applicable statutes and regulations, and all related special arrangements and agreements, (ii) have an adequate number of qualified personnel to administer Title IV programs, (iii) administer Title IV programs with adequate checks and balances in its system of internal control over financial reporting, (iv) establish and maintain required records, (v) establish, publish and apply acceptable standards for measuring the satisfactory academic progress of its students, (vi) have adequate procedures in place for properly awarding, disbursing and safeguarding Title IV program funds, (vii) refer to the Department’s Office of Inspector General (the “OIG”) any credible information indicating that an applicant for Title IV program funds or any employee, third-party servicer or other agent of the institution may have engaged in fraud or other illegal conduct involving Title IV programs, (viii) provide adequate financial aid counseling to its students who apply for Title IV program funds, (ix) timely submit all required reports and financial statements, (x) not be, and not have any principal or affiliate who is, debarred or suspended from programs and activities involving federal financial and nonfinancial assistance and benefits or engaging in activity that is cause for such debarment or suspension, (xi) not otherwise appear to lack the ability to administer Title IV programs competently.

Ashford University and University of the Rockies were notified by the Department that it did not believe the institutions fully responded to the disclosures of data required by the Gainful Employment regulations, that this was an indication of a serious lack of administrative capability, and that as a result the Department would not make any decisions regarding the addition of any new programs or additional locations until the reporting requirements were met. The Department informed the Company that failure to fully comply in all Gainful Employment data reporting requirements could result in the referral of the errant institution to the Department’s Administrative Actions and Appeals Service Group for consideration of an administrative action against that institution, including a fine, the limitation, suspension or termination of institutional eligibility to participate in Title IV programs, or revocation of the institution’s program participation agreement (if provisional). The Company worked with the Department to address their concerns with respect to the reporting of the Company’s institutions under the Gainful

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Employment regulations. The Department has since approved new programs for Ashford University, and the Company does not anticipate any actions against its institutions related to this notification.

GI Bill Benefits

On May 20, 2016, the Company received a letter from the Iowa Department of Education (the “Iowa DOE”) indicating that, as a result of the planned closure of the Clinton Campus, the Iowa State Approving Agency (the “ISAA”) would no longer continue to approve Ashford’s programs for GI Bill benefits after June 30, 2016, and recommending Ashford seek approval through the State Approving Agency of jurisdiction for any location that meets the definition of a “main campus” or “branch campus”. Ashford University began the process of applying for approval through the State Approving Agency in California (“CSAAVE”), while also working with representatives from the U.S. Department of Veterans Affairs (the “VA”), the ISAA and CSAAVE in order to prevent any disruption of educational benefits to Ashford’s veteran students.

On June 20, 2016, the Company received a second letter from the Iowa DOE indicating that the Iowa DOE had issued a stay of the ISAA’s withdrawal of approval of Ashford’s programs for GI Bill benefits effective immediately until the earlier of (i) 90 days from June 20, 2016 or (ii) the date on which CSAAVE completed its review and issued a decision regarding the approval of Ashford in California. Ashford received communication from CSAAVE indicating that additional information and documentation would be required before Ashford’s application could be considered for CSAAVE approval. Ashford subsequently withdrew the CSAAVE application and is currently working with the VA, the Iowa DOE and the ISAA to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students.

14 . Commitments and Contingencies

Litigation

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party.

Compliance Audit by the Department’s Office of the Inspector General

In January 2011, Ashford University received a final audit report from the OIG regarding the compliance audit commenced in May 2008 and covering the period July 1, 2006 through June 30, 2007. The audit covered Ashford University’s administration of Title IV program funds, including compliance with regulations governing institutional and student eligibility, awards and disbursements of Title IV program funds, verification of awards and returns of unearned funds during that period, and compensation of financial aid and recruiting personnel during the period May 10, 2005 through June 30, 2009.

The final audit report contained audit findings, in each case for the period July 1, 2006 through June 30, 2007, which are applicable to award year 2006-2007. Each finding was accompanied by one or more recommendations to the FSA. Ashford University provided the FSA a detailed response to the OIG’s final audit report in February 2011. In June 2011, in connection with two of the six findings, the FSA requested that Ashford University conduct a file review of the return to Title IV fund calculations for all Title IV recipients who withdrew from distance education programs during the 2006-2007 award year. The institution cooperated with the request and supplied the information within the time frame required. If the FSA were to determine to assess a monetary liability or commence other administrative action, Ashford University would have an opportunity to contest the assessment or proposed action through administrative proceedings, with the right to seek review of any final administrative action in the federal courts.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The outcome of this audit is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this matter.

Iowa Attorney General Civil Investigation of Ashford University

In February 2011, Ashford University received from the Attorney General of the State of Iowa (the “Iowa Attorney General”) a Civil Investigative Demand and Notice of Intent to Proceed (the “Iowa CID”) relating to the Iowa Attorney General’s investigation of whether certain of the university’s business practices comply with Iowa consumer laws. Pursuant to the Iowa CID, the Iowa Attorney General requested documents and detailed information for the time period January 1, 2008 to present. On numerous occasions, representatives from the Company and Ashford University met with the Iowa Attorney General to discuss the status of the investigation and the Iowa Attorney General’s allegations against the Company that had been communicated to the Company in June 2013. As a result of these meetings, on May 15, 2014, the Iowa Attorney General, the Company and Ashford University entered into an Assurance of Voluntary Compliance (the “AVC”) in full resolution of the Iowa CID and the Iowa Attorney General’s allegations. The AVC, in which the Company and Ashford University do not admit any liability, contains several components including injunctive relief, nonmonetary remedies and a payment to the Iowa Attorney General to be used for restitution to Iowa consumers, costs and fees. The AVC also provides for the appointment of a settlement administrator for a period of three years to review the Company’s and Ashford University’s compliance with the terms of the AVC. The Company had originally accrued $9.0 million in 2013 related to this matter, which represented its best estimate of the total restitution, cost of non-monetary remedies and future legal costs. The remaining accrual is $0.6 million as of June 30, 2016 .

New York Attorney General Investigation of Bridgepoint Education, Inc.

In May 2011, the Company received from the Attorney General of the State of New York (the “NY Attorney General”) a subpoena relating to the NY Attorney General’s investigation of whether the Company and its academic institutions have complied with certain New York state consumer protection, securities and finance laws. Pursuant to the subpoena, the NY Attorney General has requested from the Company and its academic institutions documents and detailed information for the time period March 17, 2005 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.

North Carolina Attorney General Investigation of Ashford University

In September 2011, Ashford University received from the Attorney General of the State of North Carolina (the “NC Attorney General”) an Investigative Demand relating to the NC Attorney General’s investigation of whether the university’s business practices complied with North Carolina consumer protection laws. Pursuant to the Investigative Demand, the NC Attorney General has requested from Ashford University documents and detailed information for the time period January 1, 2008 to present. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.

California Attorney General Investigation of For-Profit Educational Institutions and Consumer Financial Protection Bureau Subpoena of Bridgepoint Education, Inc. and Ashford University

In January 2013, the Company received from the CA Attorney General an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General requested documents and detailed information for the time period March 1, 2009 to present. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Investigative Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, the Company reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General each requesting additional documents and information for the time period March 1, 2009 through the current date.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

On August 10, 2015, the Company and Ashford University received from the CFPB Civil Investigative Demands related to the CFPB’s investigation to determine whether for-profit post-secondary-education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans. The Company and Ashford University provided documents and other information to the CFPB and the CFPB attended several meetings with representatives from the Company and the CA Attorney General’s office to discuss the status of both investigations, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices.

All of the parties met again in the spring of 2016 to discuss the status of the investigations and explore a potential joint resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and the CFPB. The Company currently estimates that a reasonable range of loss for this matter is between $16.2 million and $30.0 million . The Company has recorded an expense of $16.2 million related to this matter, which represents its current best estimate of the cost of resolution of this matter.

Massachusetts Attorney General Investigation of Bridgepoint Education, Inc. and Ashford University

On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (the “MA Attorney General”) a Civil Investigative Demand (the “MA CID”) relating to the MA Attorney General’s investigation of for-profit educational institutions and whether the university’s business practices complied with Massachusetts consumer protection laws. Pursuant to the MA CID, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.

Securities & Exchange Commission Subpoena of Bridgepoint Education, Inc.

On July 22, 2014, the Company received from the SEC a subpoena relating to certain of the Company’s accounting practices, including revenue recognition, receivables and other matters relating to the Company’s previously disclosed intention to restate its financial statements for fiscal year ended December 31, 2013 and revise its financial statements for the years ended December 31, 2011 and 2012, and the prior revision of the Company’s financial statements for the fiscal year ended December 31, 2012. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for the time period January 1, 2009 to present.

On May 18, 2016, the Company received a second subpoena from the SEC seeking additional information from the Company, including information with respect to the accrual disclosed by the Company in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 with respect to the potential joint resolution of investigations by the CA Attorney General and the CFPB (the “CA AG/CFPB Investigations”), the Company’s scholarship and institutional loan programs and any other extensions of credit made by the Company to students, and student enrollment and retention at the Company’s academic institutions. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for, in the case of the CA AG/CFPB Investigations, the periods at issue in such investigations, in the case of the Company’s scholarship and institutional loan programs and related matters, the period from January 1, 2011 to the present, and for all other matters, the period from January 1, 2014 to the present.

The Company is cooperating with the SEC and cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Department of Justice Civil Investigative Demand

On July 7, 2016, the Company received from the U.S. Department of Justice (the “DOJ”) a Civil Investigative Demand (the “DOJ CID”) related to the DOJ's investigation concerning allegations that the Company may have misstated Title IV refund revenue or overstated revenue associated with private secondary loan programs and thereby misrepresented its compliance with the 90/10 rule of the Higher Education Act. Pursuant to the DOJ CID, the DOJ has requested from the Company documents and information for fiscal years 2011-2014. The Company is evaluating the DOJ CID and intends to fully cooperate with the DOJ on this matter.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Securities Class Actions

Consolidated Securities Class Action

On July 13, 2012, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Donald K. Franke naming the Company, Andrew Clark, Daniel Devine and Jane McAuliffe as defendants for allegedly making false and materially misleading statements regarding the Company’s business and financial results, specifically the concealment of accreditation problems at Ashford University. The complaint asserted a putative class period stemming from May 3, 2011 to July 6, 2012. A substantially similar complaint was also filed in the same court by Luke Sacharczyk on July 17, 2012 making similar allegations against the Company, Andrew Clark and Daniel Devine. The Sacharczyk complaint asserted a putative class period stemming from May 3, 2011 to July 12, 2012. On July 26, 2012, another purported securities class action complaint was filed in the same court by David Stein against the same defendants based upon the same general set of allegations and class period. The complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder and sought unspecified monetary relief, interest and attorneys’ fees.

On October 22, 2012, the Sacharczyk and Stein actions were consolidated with the Franke action and the Court appointed the City of Atlanta General Employees’ Pension Fund and the Teamsters Local 677 Health Services & Insurance Plan as lead plaintiffs. A consolidated complaint was filed on December 21, 2012 and the Company filed a motion to dismiss on February 19, 2013. On September 13, 2013, the Court granted the motion to dismiss with leave to amend for alleged misrepresentations relating to Ashford University’s quality of education, the WSCUC accreditation process and the Company’s financial forecasts. The Court denied the motion to dismiss for alleged misrepresentations concerning Ashford University’s persistence rates.

Following the conclusion of discovery, the parties entered into an agreement to settle the litigation for $15.5 million , which was recorded by the Company during the third quarter of 2015 and funded by the Company’s insurance carriers in the first quarter of 2016. The settlement was granted preliminary approval by the Court on December 14, 2015, proceeded through the shareholder claims administration process, and was granted final approval by the Court on April 25, 2016.

Zamir v. Bridgepoint Education, Inc., et al.

On February 24, 2015, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Nelda Zamir naming the Company, Andrew Clark and Daniel Devine as defendants. The complaint asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts regarding the Company’s business, operations and prospects, specifically regarding the Company’s improper application of revenue recognition methodology to assess collectability of funds owed by students. The complaint asserts a putative class period stemming from August 7, 2012 to May 30, 2014 and seeks unspecified monetary relief, interest and attorneys’ fees. On July 15, 2015, the Court granted plaintiff’s motion for appointment as lead plaintiff and for appointment of lead counsel.

On September 18, 2015, the plaintiff filed a substantially similar amended complaint that asserts a putative class period stemming from March 12, 2013 to May 30, 2014. The amended complaint also names Patrick Hackett, Adarsh Sarma, Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. as additional defendants. On November 24, 2015, all defendants filed motions to dismiss. On July 25, 2016, the Court granted the motions to dismiss and granted plaintiff leave to file an amended complaint within 30 days. The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. Based on information available to the Company at present, it cannot reasonably estimate a range of loss for this action. Accordingly, the Company has not accrued any liability associated with this action.

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Shareholder Derivative Actions

In re Bridgepoint, Inc. Shareholder Derivative Action

On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Martinez v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys’ fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Adolph-Laroche v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched.

On October 11, 2012, the Adolph-Laroche action was consolidated with the Martinez action and the case is now captioned In re Bridgepoint, Inc. Shareholder Derivative Action . A consolidated complaint was filed on December 18, 2012 and the defendants filed a motion to stay the case while the underlying securities class action is pending. The motion was granted by the Court on April 11, 2013. A status conference was held on October 10, 2013, during which the Court ordered the stay continued for the duration of discovery in the securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action.

Cannon v. Clark, et al.

On November 1, 2013, a shareholder derivative complaint was filed in the U.S. District Court for the Southern District of California by James Cannon. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current officers and directors. The complaint is captioned Cannon v. Clark, et al . and is substantially similar to the previously filed California State Court derivative action now captioned In re Bridgepoint, Inc. Shareholder Derivative Action . In the complaint, plaintiff generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on January 6, 2014, the Court ordered the case stayed during discovery in the underlying securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action.

Di Giovanni v. Clark, et al. , and Craig-Johnston v. Clark, et al .

On December 9, 2013, two nearly identical shareholder derivative complaints were filed in the United States District Court for the Southern District of California. The complaints assert derivative claims on the Company’s behalf against the members of the Company’s board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The two complaints are captioned Di Giovanni v. Clark, et al. and Craig-Johnston v. Clark, et al . The complaints generally allege that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuits seek unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On February 28, 2014, the defendants filed motions to dismiss, which were granted by the Court on October 17, 2014. The plaintiffs filed a notice of appeal on December 8, 2014 and the case is currently under appeal with the United States Court of Appeals for the Ninth Circuit.

Klein v. Clark, et al.

On January 9, 2014, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against the members of the Company’s board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The complaint is captioned Klein v. Clark, et al. and generally alleges that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in

BRIDGEPOINT EDUCATION, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

connection with the tender offer commenced by the Company on November 13, 2013. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On March 21, 2014, the Court granted the parties’ stipulation to stay the case until the motions to dismiss in the related federal derivative action were decided. On November 14, 2014, the Court dismissed the case but retained jurisdiction in the event the dismissal in the federal case is reversed on appeal by the United States Court of Appeals for the Ninth Circuit.

Reardon v. Clark, et al.

On March 18, 2015, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Reardon v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on May 27, 2015, the Court ordered the case stayed during discovery in the underlying Zamir securities class action, but permitted the plaintiff to receive copies of any discovery conducted in the underlying Zamir securities class action.

Qui Tam Complaints

In December 2012, the Company received notice that the DOJ had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by Ryan Ferguson and Mark T. Pacheco under the federal False Claims Act on March 10, 2011 and unsealed on December 26, 2012. The complaint was captioned United States of America, ex rel., Ryan Ferguson and Mark T. Pacheco v. Bridgepoint Education, Inc., Ashford University and University of the Rockies . The qui tam complaint alleged, among other things, that since March 10, 2005, the Company caused its institutions, Ashford University and University of the Rockies, to violate the federal False Claims Act by falsely certifying to the Department that the institutions were in compliance with various regulations governing Title IV programs, including those that require compliance with federal rules regarding the payment of incentive compensation to enrollment personnel, student disclosures, and misrepresentation in connection with the institutions’ participation in Title IV programs. The complaint sought significant damages, penalties and other relief. On April 30, 2013, the relators petitioned the Court for voluntary dismissal of the complaint without prejudice. The DOJ filed a notice stipulating to the dismissal and the Court granted the dismissal on June 12, 2013.

In January 2013, the Company received notice that the DOJ had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by James Carter and Roger Lengyel under the federal False Claims Act on July 2, 2010 and unsealed on January 2, 2013. The complaint is captioned United States of America, ex rel., James Carter and Roger Lengyel v. Bridgepoint Education, Inc., Ashford University . The qui tam complaint alleged, among other things, that since March 2005, the Company and Ashford University had violated the federal False Claims Act by falsely certifying to the Department that Ashford University was in compliance with federal rules regarding the payment of incentive compensation to enrollment personnel in connection with the institution’s participation in Title IV programs. Pursuant to a stipulation between the parties, the relators filed an amended complaint on May 10, 2013. The amended complaint was substantially similar to the original complaint and sought significant damages, penalties and other relief.

In March 2015, the Company filed a motion to dismiss the case pursuant to the public disclosure bar, which was granted without leave to amend by the Court on August 17, 2015. The relators filed a notice of appeal on September 15, 2015 and the case was under appeal with the United States Court of Appeals for the Ninth Circuit. During the pendency of the appeal, the parties agreed to settle the case for an immaterial amount and the appeal was subsequently dismissed on July 22, 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussions and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this report. For additional information regarding our financial condition and results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016 (the “Form 10-K”), as well as our consolidated financial statements and related notes thereto included in Part II, Item 8 of the Form 10-K.

Unless the context indicates otherwise, in this report the terms “Bridgepoint,” “the Company,” “we,” “us” and “our” refer to Bridgepoint Education, Inc., a Delaware corporation, and its wholly owned and indirect subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements may include, among others, statements regarding future events, our future financial and operating results, strategies, expectations, the competitive environment, regulation and the availability of financial resources, including, without limitation, statements regarding:


•	our ability to successfully remediate the control deficiencies that gave rise to the material weaknesses in our internal control over financial reporting discussed in Part I, Item 4, “Controls and Procedures”;


•	Ashford University’s ability to continue to operate an accredited institution subject to the requirements of the California Bureau for Private Postsecondary Education;


•	our ability to comply with the extensive and continually evolving regulatory framework applicable to us and our institutions, including Title IV of the Higher Education Act of 1965, as amended (the “Higher Education Act”), and its implementing regulations, the Gainful Employment rules and regulations, state laws and regulatory requirements, and accrediting agency requirements;


•	expectations regarding financial position, results of operations, liquidity and enrollment trends at our institutions;


•	projections, predictions, expectations, estimates or forecasts as to our business, financial and operating results and future economic performance;


•	expectations regarding the timing and effect of the closure of Ashford University’s campus in Clinton, Iowa (the “Clinton Campus”) after the 2015-2016 academic year;


•	our ability to work with the U.S. Department of Veterans Affairs (the “VA”), the Iowa Department of Education (the “Iowa DOE”) and the Iowa State Approving Agency (the “ISAA”) to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students;


•	new initiatives focused on student success and academic quality;


•	changes in our student fee structure;


•	expectations regarding the adequacy of our cash and cash equivalents and other sources of liquidity for ongoing operations;


•	expectations regarding investment in online and other advertising and capital expenditures;


•	our anticipated seasonal fluctuations in results of operations;


•	management’s goals and objectives; and


•	other similar matters that are not historical facts.

Forward-looking statements may generally be identified by the use of words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in the future tense.

Forward-looking statements should not be interpreted as a guarantee of future performance or results and will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking statements are based on information available at the time such statements are made and the current good faith beliefs, expectations and assumptions of management regarding future events. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. For a discussion of some of these risks and uncertainties, see Part II, Item 1A, “Risk Factors” as well as the discussion of such risks and uncertainties contained in our other filings with the SEC, including the Form 10-K.

All forward-looking statements in this report are qualified in their entirety by the cautionary statements included in this report, and you should not place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this report. We assume no obligation to update or revise any forward-looking statements contained herein to reflect actual results or any changes in our assumptions or expectations or any other factors affecting such forward-looking statements, except to the extent required by applicable securities laws. If we do update or revise one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Overview

We are a provider of postsecondary education services. Our academic institutions, Ashford University ^® and University of the Rockies ^SM , offer associate’s, bachelor’s, master’s and doctoral programs.

As of June 30, 2016 , our combined institutions offered approximately 1,160 courses and 80 degree programs. We are also focused on developing innovative new technologies to improve the way students learn, such as Constellation ^® , our proprietary learning platform, and the mobile learning applications offered by our institutions.

Key operating data

In evaluating our operating performance, our management focuses in large part on our revenue and operating income or loss and period-end enrollment at our academic institutions. The following table, which should be read in conjunction with our condensed consolidated financial statements included elsewhere in this report, presents our key operating data for the three and six months ended June 30, 2016 and 2015 (in thousands, except for enrollment data):



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016			2015
Consolidated Statement of Income (Loss) Data:
Revenue	$	137,970	$	147,057		$	270,972		$	289,575
Operating income (loss)	$	3,357	$	(512	)	$	(12,942	)	$	(1,712	)

Consolidated Other Data:
Period-end enrollment (1)
Online	48,799		50,516			48,799			50,516
Campus	96		533			96			533
Total	48,895		51,049			48,895			51,049


(1)	We define period-end enrollment as the number of active students on the last day of the financial reporting period. A student is considered active if the student has attended a class within the prior 15 days or is on an institutionally-approved break not to exceed 45 days, unless the student has graduated or provided notice of withdrawal.

Key enrollment trends

Enrollment at our combined academic institutions decreased 4.2% to 48,895 students at June 30, 2016 as compared to 51,049 students at June 30, 2015 . Enrollment decreased by 0.5% since the end of the preceding fiscal year, from 49,159 students at December 31, 2015 to 48,895 students at June 30, 2016 .

We believe the decline in enrollment over the past few years is a result of a general weakening in the overall industry due to regulatory scrutiny, as well as the initiatives our institutions have put in place to help raise academic quality and improve student outcomes.

We continue to focus our efforts on stabilizing and restarting enrollment growth. One area in which we are experiencing positive enrollment trends is within our corporate partnership program. This corporate partnership program provides companies with the opportunity to allow their employees to pursue and complete a college degree without incurring any student debt. While this program is still relatively small compared to our total enrollment, it continues to expand. We have launched new program offerings in 2016 and plan to launch additional new program offerings in the remainder of 2016 and 2017 to help achieve the goal of stabilizing and restarting enrollment growth.

Trends and uncertainties regarding revenue and continuing operations

Beginning in 2012, Ashford University made many changes to its operations and business initiatives as part of its reapplication for initial accreditation from WASC Senior College and University Commission (“WSCUC”). These initiatives included hiring new leadership, implementing smaller class sizes, expanding minimum age-levels for students, implementing the Ashford Promise (an initiative that allows online students a full refund for all tuition and fees through the third week of their first class), hiring additional full-time faculty and implementing new program review models. Many of these initiatives have resulted in higher expense to the organization, primarily in the areas of instructional costs and services, and have contributed to the decline in new enrollment and the resulting decline in revenue.

Restructuring and impairment charges

We had previously initiated various restructuring plans to better align our resources with our business strategy. The related restructuring charges have been primarily comprised of (i) charges related to the write off of certain fixed assets and assets abandoned, (ii) student transfer agreement costs, (iii) severance costs related to headcount reductions made in connection with restructuring plans and (iv) estimated lease losses related to facilities vacated or consolidated under restructuring plans. These charges have been recorded in the restructuring and impairment charges line item on our condensed consolidated statements of income (loss).

In July 2015, we committed to the implementation of a plan to close the Clinton Campus following the 2015-2016 academic year, during the second quarter of 2016. With the closure of the Clinton Campus, ground-based Ashford University students were provided opportunities to continue to pursue their degrees as reflected in their respective student transfer agreements. During the year ended December 31, 2015, we recorded restructuring charges relating to future cash expenditures for student transfer agreements of approximately $3.3 million . This estimate was based upon several assumptions that are subject to change, including assumptions related to the number of students who elect to continue to pursue their degrees through Ashford University’s online programs.

For information regarding the related charges recorded in the three and six months ended June 30, 2016 , refer to Note 3, “Restructuring and Impairment Charges” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Valuation allowance

The Company recognizes deferred tax assets if realization of such assets is more likely than not. In order to make this determination, the Company evaluates factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended June 30, 2016 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation other subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more likely than not to be realized and that a full valuation allowance against its deferred tax assets should continue to be maintained as of June 30, 2016.

Liquidity and capital resources and anticipated capital expenditures

We finance our operating activities and capital expenditures primarily through cash on hand and cash provided by operating activities. At June 30, 2016 , we had cash, cash equivalents, restricted cash and investments totaling $367.3 million and no long-term debt. For the year ending December 31, 2016 , we expect capital expenditures to be approximately $3.5 million . Based on our current level of operations, we believe that our cash flows from operating activities and our existing cash and cash equivalents will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months. However, changes could occur that would consume our available capital resources before that time. Our capital requirements depend on numerous factors, including our ability to continue to generate revenue. There can be no assurance that additional funding, if necessary, will be available to us on favorable terms, if at all.

Recent Regulatory Developments

Negotiated Rulemaking and Other Executive Action

On June 8, 2015, the U.S. Department of Education (the “Department”) held a press conference and released a document entitled “Fact Sheet: Protecting Students from Abusive Career Colleges” in which the Department announced processes that will be established to assist students who may have been the victims of fraud in gaining relief under the “defense to repayment” provisions of the William D. Ford Federal Direct Loan Program (the “Direct Loan Program”) regulations. Rarely used in the past, the defense to repayment provisions allow a student to assert as a defense against repayment of federal direct loans any commission of fraud or other violation of applicable state law by the school related to such loans or the educational services paid for. On June 16, 2016, the Department published proposed regulations regarding borrower defense to repayment and related matters. The regulations establish a 45-day notice and comment period, and the Department plans to publish its final regulations by November 1, 2016 with an effective date of July 1, 2017. The Department proposes to amend the regulations governing the Direct Loan Program to, among other things, establish a new federal standard and process for determining whether a borrower has a defense to repayment of a student loan based on an act or omission of a school, and amend the Student Assistance General Provisions by revising the financial responsibility standards and adding disclosure requirements for schools.

On July 9, 2015, the Department published a Notice of Proposed Rulemaking proposing to amend the regulations governing the Direct Loan Program. On October 30, 2015, the regulations were amended to create a new income-contingent repayment plan in accordance with President Obama’s initiative to allow more Direct Loan Program borrowers to cap their loan payments at 10% of their monthly income. Changes were also made to the Federal Family Education Loan Program (the “FFEL Program”) and Direct Loan Program regulations to streamline and enhance existing processes and provide additional support to struggling borrowers. The amended regulations also expand the circumstances in which an institution may challenge or appeal a draft or final cohort default rate based on the institution’s participation rate index.

student complaints regarding distance education programs and (iii) requiring public and individualized disclosures to enrolled and prospective students in distance education programs, including disclosures regarding adverse actions taken against the institution, the institution’s refund policies and whether each of the institution’s programs meet applicable state licensure or certification requirements. The proposed regulations recognize authorization through participation in a state authorization reciprocity agreement, as long as the agreement does not prevent a state from enforcing its own consumer laws. The proposed regulations were published in the Federal Register on July 25, 2016, and the public comment period will end August 24, 2016. The Department expects to publish a final regulation before the end of 2016.

Gainful Employment

On October 31, 2014, the Department published Gainful Employment regulations impacting programs required to prepare graduates for gainful employment in a recognized occupation. Almost all academic programs offered by Title IV-participating private sector institutions of higher education must prepare students for gainful employment in a recognized occupation. The Gainful Employment regulations became effective July 1, 2015, with certain disclosure requirements that are expected to be effective in early 2017.

The Gainful Employment regulations have a framework with three components:


•	Certification: Institutions must certify that each of their gainful employment programs meet state and federal licensure, certification and accreditation requirements.


•	Accountability Measures: To maintain Title IV eligibility, gainful employment programs will be required to meet minimum standards for the debt burden versus the earnings of their graduates.


◦	Pass: Programs whose graduates have annual loan payments less than 8% of total earnings or less than 20% of discretionary earnings.


◦	Zone: Programs whose graduates have annual loan payments between 8% and 12% of total earnings or between 20% and 30% of discretionary earnings.


◦	Fail: Programs whose graduates have annual loan payments greater than 12% of total earnings and greater than 30% of discretionary earnings.

Programs that fail in two out of any three consecutive years or are in the Zone for four consecutive years will be disqualified from participation in the Title IV programs.


•	Transparency: Institutions will be required to make public disclosures regarding the performance and outcomes of their gainful employment programs. The disclosures will include information such as costs, earnings, debt and completion rates.

The accountability measures will typically weigh a calculated debt burden from graduates who completed their studies three and four years prior to the measuring academic year and earnings from the most recent calendar year prior to the conclusion of the measuring academic year. Thus for the 2014-2015 academic year, the two-year cohort will include graduates from the 2010-2011 and 2011-2012 academic years and earnings for these graduates from calendar year 2014.

The regulations contemplate a transition period in the first several years to afford institutions the opportunity to make changes to their programs and retain Title IV eligibility. Because definitive information necessary to determine how our programs will fare under the accountability measures is not available at this time, we are unable to reliably predict the impact of the Gainful Employment regulations. However, we are currently using available data to evaluate which programs are at risk of failing under the requirements.

For additional information regarding the regulatory environment and related risks, see Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors” of the Form 10-K.

Seasonality

Our operations are generally subject to seasonal trends. While we enroll students throughout the year, our fourth quarter revenue generally is lower than other quarters due to the holiday break in December. We generally experience a seasonal increase in new enrollments in August and September of each year when most other colleges and universities begin their fall semesters.

Critical Accounting Policies and Use of Estimates

The critical accounting policies and estimates used in the preparation of our consolidated financial statements are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Use of Estimates” included in Part II, Item 7 of the Form 10-K. There were no material changes to these critical accounting policies and estimates during the six months ended June 30, 2016 .

The Iran Threat Reduction and Syria Human Rights Act of 2012

During the three months ended June 30, 2016 , Santander Asset Management Investment Holdings Limited (“SAMIH”) engaged in certain activities that are subject to disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. These activities are disclosed in Exhibit 99.1 to this report. Affiliates of Warburg Pincus, LLC (i) beneficially own more than 10% of our outstanding common stock and are members of our board of directors and (ii) beneficially own more than 10% of the equity interests of and have the right to designate members of the board of directors of SAMIH. We will be required to separately file with the SEC, concurrently with this report, a notice that such activities have been disclosed in this report, which notice must also contain the information required by Section 13(r) of the Exchange Act.

Results of Operations

The following table sets forth our condensed consolidated statements of income (loss) data as a percentage of revenue for each of the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Instructional costs and services	48.2		48.6		50.2		50.6
Admissions advisory and marketing	38.1		33.0		38.5		34.8
General and administrative	8.4		9.0		9.3		10.2
Legal accrual	1.7		—		6.0		—
Restructuring and impairment charges	1.2		9.8		0.9		5.0
Total costs and expenses	97.6		100.4		104.9		100.6
Operating income (loss)	2.4		(0.4	)	(4.9	)	(0.6	)
Other income, net	0.5		0.2		0.5		0.4
Income (loss) before income taxes	2.9		(0.2	)	(4.4	)	(0.2	)
Income tax expense (benefit)	0.5		0.3		(1.8	)	0.1
Net income (loss)	2.4	%	(0.5	)%	(2.6	)%	(0.3	)%

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

Revenue. Our revenue for the three months ended June 30, 2016 was $138.0 million , representing a decrease of $9.1 million , or 6.2% , as compared to revenue of $147.1 million for the three months ended June 30, 2015 . The decrease between periods was primarily due to the 4.2% decrease in ending student enrollment at our academic institutions, from 51,049 students at June 30, 2015 to 48,895 students at June 30, 2016 . The average weekly enrollment during the three months ended June 30,

2016 decreased to 49,676 students from 53,161 students during the three months ended June 30, 2015 , or by 6.6%. This resulted in a decrease in tuition revenue of approximately $7.9 million, which is net of a $3.5 million increase in revenue as a result of a 3.0% tuition increase effective April 1, 2016. The decrease in revenue between periods was also due to a decrease in net revenue generated from course digital materials of approximately $0.2 million and higher scholarships between periods of approximately $0.8 million.

Instructional costs and services. Our instructional costs and services for the three months ended June 30, 2016 were $66.4 million , representing a decrease of $5.0 million , or 6.9% , as compared to instructional costs and services of $71.4 million for the three months ended June 30, 2015 . Specific decreases between periods include facilities costs of $1.5 million, information technology costs of $1.4 million, direct compensation of $1.0 million (in the areas of academic management, financial aid support and student services), bad debt of $0.6 million and corporate support services of $0.4 million. Instructional costs and services decrease d as a percentage of revenue to 48.2% for the three months ended June 30, 2016 , as compared to 48.6% for the three months ended June 30, 2015 . The decrease of 0.4% as a percentage of revenue included decreases in information technology costs of 0.7% and facilities costs of 0.4%, partially offset by an increase in instructor fees of 0.7%. As a percentage of revenue, bad debt expense was 4.6% for the three months ended June 30, 2016 , compared to 4.7% for three months ended June 30, 2015 . We continue to focus on enhancing our processes and procedures around bad debt and accounts receivable, including improvements and efficiencies in financial aid processing in order to reduce the processing timeline, improved collection efforts on accounts receivable, and improved counseling to students about the financial aid process and related eligibility and amounts due from the student.

Admissions advisory and marketing. Our admissions advisory and marketing expenses for the three months ended June 30, 2016 were $52.5 million , representing an increase of $4.0 million , or 8.3% , as compared to admissions advisory and marketing expenses of $48.5 million for the three months ended June 30, 2015 . Specific factors contributing to the overall increase between periods were increase s in advertising costs of $5.5 million and marketing compensation of $0.9 million, partially offset by decreases in support services of $1.2 million and facilities costs of $0.8 million. As a percentage of revenue, our admissions advisory and marketing expenses increase d to 38.1% for the three months ended June 30, 2016 , as compared to 33.0% for the three months ended June 30, 2015 . The increase of 5.1% as a percentage of revenue was primarily due to increase s in advertising costs of 4.7% and marketing compensation of 1.7%, partially offset by a decrease in support services of 1.0%.

General and administrative. Our general and administrative expenses for the three months ended June 30, 2016 were $11.7 million , representing a decrease of $1.5 million , or 12.0% , as compared to general and administrative expenses of $13.2 million for the three months ended June 30, 2015 . The decrease between periods was primarily due to decreases in depreciation of $1.8 million, facilities costs of $1.3 million, administrative compensation of $1.1 million and other administrative costs of $1.1 million, partially offset by increases in technology costs of $2.6 million and support services of $1.5 million. Our general and administrative expenses decreased as a percentage of revenue to 8.4% for the three months ended June 30, 2016 , as compared to 9.0% for the three months ended June 30, 2015 . The decrease of 0.6% as a percentage of revenue was primarily due to decreases in depreciation of 1.2%, other administrative costs of 1.2% and administrative compensation of 0.8%, partially offset by increases in support services of 0.7% and technology costs of 0.6%.

Legal accrual. For the three months ended June 30, 2016 , we recorded an additional accrual of $2.3 million for the cost of a joint resolution of previously disclosed investigative subpoenas from the Attorney General of the State of California and civil investigative demands from the Consumer Financial Protection Bureau. There were no such charges for the three months ended June 30, 2015 .

Restructuring and impairment charges. Our restructuring and impairment charges for the three months ended June 30, 2016 were $1.7 million , comprised of $1.5 million of severance charges and $0.2 million of lease exit and other costs. For the three months ended June 30, 2015 , restructuring and impairment charges were $14.4 million, comprised of $12.3 million of lease exit costs, $1.3 million for asset write offs and $0.8 million relating to severance costs for wages and benefits resulting from a reduction in force to help better align personnel resources with the decline in enrollment.

Other income, net. Our other income, net, was $0.7 million for the three months ended June 30, 2016 and $0.3 million for the three months ended June 30, 2015 . Any fluctuations in this account are primarily a result of changes in interest income due to the levels of average cash and cash equivalents and investment balances.

Income tax expense. We recognized income tax expense of $0.7 million for the three months ended June 30, 2016 and income tax expense of $0.5 million for the three months ended June 30, 2015 , at effective tax rates of 16.7% and (289.2)% , respectively.

Net income (loss). Our net income was $3.3 million for the three months ended June 30, 2016 compared to net loss of $0.7 million for the three months ended June 30, 2015 , a $4.0 million increase in net income as a result of the factors discussed above.

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

Revenue. Our revenue for the six months ended June 30, 2016 was $271.0 million , representing a decrease of $18.6 million , or 6.4% , as compared to revenue of $289.6 million for the six months ended June 30, 2015 . The decrease between periods was primarily due to the 4.2% decrease in ending student enrollment at our academic institutions, from 51,049 students at June 30, 2015 to 48,895 students at June 30, 2016 . The average weekly enrollment during the six months ended June 30, 2016 decreased to 49,978 students from 54,651 students during the six months ended June 30, 2015 , or by 8.6%. This resulted in a decrease in tuition revenue of approximately $18.3 million, which is net of a $6.9 million increase in revenue as a result of tuition increases. The decrease in revenue between periods was also due to a decrease in net revenue generated from course digital materials of approximately $0.6 million, partially offset by lower scholarships between periods of approximately $1.0 million.

Instructional costs and services. Our instructional costs and services for the six months ended June 30, 2016 were $136.0 million , representing a decrease of $10.5 million , or 7.1% , as compared to instructional costs and services of $146.5 million for the six months ended June 30, 2015 . Specific decrease s between periods include facilities costs of $3.4 million, direct compensation of $3.2 million (in the areas of academic management, financial aid support and student services) and information technology costs of $2.8 million. Instructional costs and services decreased as a percentage of revenue to 50.2% for the six months ended June 30, 2016 , as compared to 50.6% for the six months ended June 30, 2015 . The decrease of 0.4% as a percentage of revenue included decreases in facilities costs of 1.0% and information technology costs of 0.7%, partially offset by increases in bad debt of 0.6% and corporate support services of 0.5%. As a percentage of revenue, bad debt expense was 5.9% for the six months ended June 30, 2016 , compared to 5.3% for six months ended June 30, 2015 . We continue to focus on enhancing our processes and procedures around bad debt and accounts receivable, including improvements and efficiencies in financial aid processing in order to reduce the processing timeline, improved collection efforts on accounts receivable, and improved counseling to students about the financial aid process and related eligibility and amounts due from the student.

Admissions advisory and marketing. Our admissions advisory and marketing expenses for the six months ended June 30, 2016 were $104.2 million , representing an increase of $3.4 million , or 3.3% , as compared to admissions advisory and marketing expenses of $100.8 million for the six months ended June 30, 2015 . Specific factors contributing to the overall increase between periods were increases in advertising costs of $7.2 million and selling compensation of $0.8 million, partially offset by decreases in facilities costs of $1.8 million, support services of $1.5 million and consulting fees of of $1.0 million. As a percentage of revenue, our admissions advisory and marketing expenses increase d to 38.5% for the six months ended June 30, 2016 as compared to 34.8% for the six months ended June 30, 2015 . The increase of 3.7% as a percentage of revenue was primarily due to increases in advertising costs of 3.5% and selling compensation of 1.5%, partially offset by decreases in support services of 0.7%, facilities costs of 0.4% and consulting fees of 0.3%.

General and administrative. Our general and administrative expenses for the six months ended June 30, 2016 were $25.1 million , representing a decrease of $4.5 million , or 15.1% , as compared to general and administrative expenses of $29.6 million for the six months ended June 30, 2015 . The decrease between periods was primarily due to decreases in other administrative costs of $3.9 million, depreciation of $3.2 million, facilities costs of $2.1 million and administrative compensation of $1.2 million. These decreases were partially offset by an increase in information technology costs of $4.9 million. Our general and administrative expenses decreased as a percentage of revenue to 9.3% for the six months ended June 30, 2016 , compared to 10.2% for the six months ended June 30, 2015 . The decrease of 0.9% as a percentage of revenue included decreases in other administrative costs of 1.2%, facilities costs of 0.7% and depreciation of 1.0%, partially offset by an increase in information technology costs of 0.6%.

Legal accrual. For the six months ended June 30, 2016 , we recorded an accrual of $16.2 million for the cost of a joint resolution of previously disclosed investigative subpoenas from the Attorney General of the State of California and civil investigative demands from the Consumer Financial Protection Bureau. There were no such charges for the six months ended June 30, 2015 .

Restructuring and impairment charges. Our restructuring and impairment charges for the six months ended June 30, 2016 were $2.4 million , comprised of $2.2 million of severance charges and $0.2 million of lease exit and other costs. Our restructuring and impairment charges for the six months ended June 30, 2015 were $14.4 million , comprised of $12.3 million of lease exit costs, $1.3 million for asset write offs and $0.8 million relating to severance costs for wages and benefits resulting from a reduction in force to help better align personnel resources with the decline in enrollment.

Other income, net. Our other income, net, was $1.3 million for the six months ended June 30, 2016 , as compared to $1.0 million for the six months ended June 30, 2015 , representing an increase of $0.3 million . The increase between periods was primarily due to increase d interest income on average cash balances.

Income tax expense (benefit). We recognized an income tax benefit of $4.8 million for the six months ended June 30, 2016 and income tax expense of $0.3 million for the six months ended June 30, 2015 , at effective tax rates of 41.6% and (50.5)% , respectively. The Company’s actual effective income tax rate for the six months ended June 30, 2016 included $6.1 million of a discrete tax benefit associated with the above legal accrual.

Net loss. Our net loss was $6.8 million for the six months ended June 30, 2016 compared to net loss of $1.0 million for the six months ended June 30, 2015 , a $5.8 million increase in net loss as a result of the factors discussed above.

Liquidity and Capital Resources

We finance our operating activities and capital expenditures primarily through cash on hand and cash provided by operating activities. Our cash and cash equivalents were $265.4 million at June 30, 2016 , and $282.1 million at December 31, 2015 . At June 30, 2016 and December 31, 2015 , we had restricted cash of $21.6 million and $24.7 million , respectively, and investments of $80.3 million and $67.2 million , respectively.

We manage our excess cash pursuant to the quantitative and qualitative operational guidelines of our cash investment policy. Our cash investment policy, which is managed by our Chief Financial Officer, has the following primary objectives: (i) preserving principal, (ii) meeting our liquidity needs, (iii) minimizing market and credit risk, and (iv) providing after-tax returns. Under the policy’s guidelines, we invest our excess cash exclusively in high-quality, U.S. dollar-denominated financial instruments. For a discussion of the measures we use to mitigate the exposure of our cash investments to market risk, credit risk and interest rate risk, see Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk.”

There was an immaterial increase in the fair value of our investments at June 30, 2016 as compared to December 31, 2015 . We believe that any fluctuations we have recently experienced are temporary in nature and that while some of our securities are classified as available-for-sale, we have the ability and intent to hold them until maturity, if necessary, to recover their full value.

Title IV funding

Our institutions derive the substantial majority of their respective revenues from students who enroll and are eligible for various federal student financial assistance programs authorized under Title IV of the Higher Education Act. Our institutions are subject to significant regulatory scrutiny as a result of numerous standards that must be satisfied in order to participate in Title IV programs. For additional information regarding Title IV programs and the regulation thereof, see “Business—Regulation” included in Part I, Item 1 of the Form 10-K. The balance of revenues derived by our institutions is from government tuition assistance programs for military personnel, including veterans, payments made in cash by individuals, reimbursement from corporate affiliates, private loans and internal loan programs.

If we were to become ineligible to receive Title IV funding, our liquidity would be significantly impacted. The timing of disbursements under Title IV programs is based on federal regulations and our ability to successfully and timely arrange financial aid for our institutions’ students. Title IV funds are generally provided in multiple disbursements before we earn a significant portion of tuition and fees and incur related expenses over the period of instruction. Students must apply for new loans and grants each academic year. These factors, together with the timing at which our institutions’ students begin their programs, affect our revenues and operating cash flow.

Operating activities

Net cash used in operating activities was $0.7 million for the six months ended June 30, 2016 , as compared to net cash provided by operating activities of $14.8 million for the six months ended June 30, 2015 , an overall decrease in net cash

provided by operating activities of $15.5 million between periods. This decrease was primarily due to the change in accounts payable and accrued liabilities as a result of the timing of payments and timing of lease terminations. This decrease was also partially attributable to the $5.8 million increase in net loss between periods. We expect to generate cash from our operating activities for the foreseeable future.

Investing activities

Net cash used in investing activities was $14.5 million for the six months ended June 30, 2016 , as compared to net cash provided by investing activities of $39.8 million for the six months ended June 30, 2015 . During the six months ended June 30, 2016 , we had purchases of investments of $20.2 million , no sales of investments and maturities of investments of $7.1 million . This is compared to purchases of investments of $0.2 million , sales of investments of $10.1 million and maturities of investments of $40.1 million for the six months ended June 30, 2015 . Capital expenditures for the six months ended June 30, 2016 were $0.9 million , compared to $2.2 million for the six months ended June 30, 2015 . We expect our capital expenditures to be approximately $3.5 million for the year ending December 31, 2016 .

Financing activities

Net cash used in financing activities was $1.6 million for the six months ended June 30, 2016 , as compared to net cash used in financing activities of $0.6 million for the six months ended June 30, 2015 . During each of the six months ended June 30, 2016 and 2015 , net cash used in financing activities primarily included tax withholdings related to the issuance of shares upon the vesting of restricted stock units, partially offset by the cash provided by stock option exercises and the related tax benefit of those stock option exercises.

Based on our current level of operations, we believe that our future cash flows from operating activities and our existing cash and cash equivalents will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months.

Significant Cash and Contractual Obligations

The following table sets forth, as of June 30, 2016 , certain significant cash and contractual obligations that will affect our future liquidity:



	Payments Due by Period
	Total		2016		2017		2018		2019		2020		Thereafter
	(In thousands)
Operating lease obligations	$	123,564	$	18,341	$	36,208	$	31,445	$	20,876	$	9,546	$	7,148
Other contractual obligations	63,123		5,821		13,373		11,387		10,801		8,716		13,025
Uncertain tax positions	7,860		—		7,860		—		—		—		—
Total	$	194,547	$	24,162	$	57,441	$	42,832	$	31,677	$	18,262	$	20,173

Off-Balance Sheet Arrangements

As part of our normal business operations, we are required to provide surety bonds in certain states where we do business. In May 2009, we entered into a surety bond facility with an insurance company to provide such bonds when required. As of June 30, 2016 , our total available surety bond facility was $12.0 million and the surety had issued bonds totaling $3.4 million on our behalf under such facility.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, refer to Note 2, “Summary of Significant Accounting Policies” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market and Credit Risk

Pursuant to our cash investment policy, we attempt to mitigate the exposure of our cash and investments to market and credit risk by (i) diversifying concentration to ensure that we are not overly concentrated in a limited number of financial institutions, (ii) monitoring and managing the risks associated with the national banking and credit markets, (iii) investing in U.S. dollar-denominated assets and instruments only, (iv) diversifying account structures so that we maintain a decentralized account portfolio with numerous stable, highly-rated and liquid financial institutions and (v) ensuring that our investment procedures maintain a defined and specific scope such that we will not invest in higher-risk investment accounts, including financial swaps or derivative and corporate equities. Accordingly, pursuant to the guidelines established by our cash investment policy, we invest our excess cash exclusively in high-quality, U.S. dollar-denominated financial instruments.

Despite the investment risk mitigation strategies we employ, we may incur investment losses as a result of unusual and unpredictable market developments, and we may experience reduced investment earnings if the yields on investments that are deemed to be low risk remain low or decline further in this time of economic uncertainty. Unusual and unpredictable market developments may also create liquidity challenges for certain of the assets in our investment portfolio.

We have no derivative financial instruments or derivative commodity instruments.

Interest Rate Risk

To the extent we borrow funds, we would be subject to fluctuations in interest rates. As of June 30, 2016 , we had no outstanding borrowings.

Our future investment income may fall short of expectations due to changes in interest rates. At June 30, 2016 , a hypothetical 10% increase or decrease in interest rates would not have a material impact on our future earnings, fair value or cash flows related to interest earned on our cash, cash equivalents or investments.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of any possible controls and procedures.

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) and Rule 15d-15(b) of the Exchange Act. Based on this evaluation, our chief executive officer and our chief financial officer concluded that, as of June 30, 2016 , our disclosure controls and procedures were not effective at the reasonable assurance levels because of the material weaknesses in our internal control over financial reporting described below. Notwithstanding the material weaknesses described below, based on the performance of additional procedures by management designed to ensure the reliability of our financial reporting, management has concluded that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with GAAP for interim financial information for each of the periods presented herein.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We disclosed in Part II, Item 9A, “Controls and Procedures” of the Form 10-K that there were matters that constituted material weaknesses in our internal control over financial reporting, as we did not maintain effective controls over the accounting for revenue recognition. Specifically, we did not maintain effective controls surrounding the selection and application of GAAP related to revenue recognition. Additionally, we did not maintain effective controls to assess the reliability of system-generated data used in the operation of certain revenue recognition controls.

The control deficiencies that gave rise to the material weaknesses did not result in a material misstatement of our condensed consolidated financial statements for the six months ended June 30, 2016 . However, these control deficiencies could result in material misstatements of revenue, bad debt expense, accounts receivable, deferred revenue and the related financial disclosures that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis. Accordingly, our management has determined that these control deficiencies constituted material weaknesses that continue to exist as of June 30, 2016 .

Management’s Remediation Efforts

We are committed to remediating the control deficiencies that gave rise to the material weaknesses by implementing changes to our internal control over financial reporting. Management is responsible for implementing changes and improvements in our internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses.

Throughout 2014 and 2015, and during the six months ended June 30, 2016 , we have implemented measures to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses. These measures include the hiring of new accounting personnel, as well as providing additional training for existing personnel. These measures also include the implementation of financial reporting risk assessments and review processes to ensure the related significant accounting policies are implemented and applied properly under GAAP on a consistent basis throughout the Company. We continue to perform a review of all key reports utilized in the revenue and receivable cycle to ensure appropriate controls are in place over the completeness and accuracy of the underlying data used in these key reports. We have also established enhanced procedures

to ensure appropriate review of accounting policies by the members of our management team with the requisite level of accounting knowledge, experience and training.

We believe the above measures will help remediate the control deficiencies that gave rise to the material weaknesses. However, we have not completed all of the corrective processes and procedures and the related evaluation or remediation that we believe are necessary. As we continue to evaluate and work to remediate the material weaknesses, we may determine to implement additional measures to address the underlying control deficiencies. The actions we are taking to remediate the material weaknesses are subject to ongoing senior management review, as well as oversight by the audit committee of our board of directors.

Changes in Internal Control Over Financial Reporting

As discussed above, during the three months ended June 30, 2016 , management continued to implement certain remediation measures to improve our internal control over financial reporting and to remediate the previously identified material weaknesses. However, there were no changes to our internal control over financial reporting during the three months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For information regarding our legal proceedings, refer to Note 14 , “Commitments and Contingencies” to our condensed consolidated financial statements included in Part I, Item 1 of this report, which note is incorporated by reference into this Part II, Item 1.

Item 1A. Risk Factors.

Investing in our common stock involves risk. Before making an investment in our common stock, you should carefully consider the risk factors set forth below, as well as the risk factors discussed in Part I, Item 1A, “Risk Factors” of the Form 10-K. The risks described below and in the Form 10-K are those which we believe are the material risks we face, and such risks could materially adversely affect our business, prospects, financial condition, cash flows and results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may impact us. Except as set forth below, there have been no material changes in our risk factors from those previously disclosed in the Form 10-K.

Risks Related to Material Weaknesses In Internal Control Over Financial Reporting

We have identified material weaknesses in our internal control over financial reporting. If our remedial measures are insufficient to address the material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to further restate our financial results, which could adversely affect our stock price and result in our inability to maintain compliance with applicable stock exchange listing requirements.

During 2015, we concluded that there were material weaknesses in our internal control over financial reporting, as we did not maintain effective controls over the accounting for revenue recognition. Specifically, we did not maintain effective controls surrounding the selection and application of GAAP related to revenue recognition. Additionally, we did not maintain effective controls to assess the reliability of system-generated data used in the operation of certain revenue recognition controls. Management evaluated our disclosure controls and procedures and internal control over financial reporting as of December 31, 2015 and concluded each was ineffective as of December 31, 2015. The Form 10-K reflects management’s conclusion regarding the effectiveness of our disclosure controls and procedures and internal control over financial reporting. The material weaknesses have not yet been remediated as of June 30, 2016 and as a result, management has determined that our disclosure controls and procedures continue to be ineffective as of June 30, 2016 .

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. See Part I, Item 4, “Controls and Procedures.” The existence of this issue could adversely affect us, our reputation and investors’ perceptions of us.

We have begun to implement measures to remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses. These measures include the hiring of new accounting personnel, as well as providing additional training for existing personnel. These measures also include implementation of financial reporting risk assessments and review processes to ensure the related significant accounting policies are implemented and applied properly under GAAP on a consistent basis throughout the Company. We continue to perform a review of all key reports utilized in the revenue and receivable cycle to ensure appropriate controls are in place over the completeness and accuracy of the underlying data used in these key reports. We have also established enhanced procedures to ensure appropriate review of accounting policies by the members of our management team with the requisite level of accounting knowledge, experience and training.

If our remedial measures are insufficient to address the material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to further restate our financial results, which could adversely affect our stock price and result in our inability to maintain compliance with applicable stock exchange listing requirements.

Our institutions could lose eligibility to participate in Title IV programs or face other sanctions if they derive more than 90% of their respective revenues from these programs.

Under the Higher Education Act, a proprietary institution loses eligibility to participate in Title IV programs if the institution derives more than 90% of its revenues (calculated in accordance with applicable Department regulations) from Title IV program funds for two consecutive fiscal years. This rule is commonly referred to as the “90/10 rule.” Any institution that violates the 90/10 rule for two consecutive fiscal years becomes ineligible to participate in Title IV programs for at least two fiscal years. In addition, an institution whose rate exceeds 90% for any single year will be placed on provisional certification and may be subject to other enforcement measures. In the years ended December 31, 2015 , 2014 and 2013 , Ashford University derived 80.9% , 83.4% and 85.6% , respectively, and University of the Rockies derived 86.6% , 88.3% and 87.6% , respectively, of their respective revenues (calculated in accordance with applicable Department regulations) from Title IV program funds. Both Ashford University and University of the Rockies continue to monitor these calculations.

Revenue derived from government tuition assistance for military personnel, including veterans, is not considered federal student aid for purposes of the 90/10 calculation, and accordingly helps our institutions satisfy the 90/10 rule. As of December 31, 2015 , approximately 28.0% of our institutions' students were affiliated with the military, some of whom are eligible to receive government tuition assistance that may be used to pursue postsecondary degrees. If there were a reduction in funding of government tuition assistance for military personnel, including veterans, or if our revenue derived from such funding were otherwise to decrease, it could be significantly more difficult for our institutions to satisfy the 90/10 rule. On May 20, 2016, the Company received a letter from the Iowa DOE indicating that, as a result of the planned closure of the Clinton Campus, the ISAA would no longer continue to approve Ashford’s programs for GI Bill benefits after June 30, 2016. The Iowa DOE subsequently issued a stay of the ISAA’s withdrawal of approval of Ashford’s programs for GI Bill benefits until 90 days from June 20, 2016. Ashford is currently working with the VA, the Iowa DOE and the ISAA to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students.

Recent changes in federal law that increased Title IV grant and loan limits, and any such additional increases in the future, may result in an increase in the revenues we receive from Title IV programs and make it more difficult for our institutions to satisfy the 90/10 rule. In addition, the U.S. Congress could propose and adopt legislation that amends the 90/10 rule in ways that make it more difficult for our institutions to satisfy the 90/10 rule. For example, in late 2011, the Ensuring Quality Education for Veterans Act was introduced, which proposed to treat government tuition assistance for military personnel, including veterans, as federal student aid for purposes of calculations under the 90/10 rule. Similarly, in January 2012, Senator Richard Durbin introduced the Protecting Our Students and Taxpayers Act, which proposed to have a proprietary institution lose eligibility to participate in Title IV programs if the institution derives more than 85% its revenues (calculated in accordance with applicable Department regulations) from federal funds (including Title IV programs, government tuition assistance for military personnel, including veterans, and other sources of federal funds) for one fiscal year. The bill would also make it harder for institutions to use institutional loans (i.e., loans the institutions make to students) to help satisfy the 90/10 rule. On November 6, 2013, Senators Richard Durbin and Tom Harkin re-introduced the Protecting Students and Taxpayers Act of 2013, which proposed to have a for-profit institution lose eligibility to participate in Title IV funds if the institution derives more than 85% of its revenues from federal funds, including Title IV programs, revenue from the GI Bill and Department of Defense Tuition Assistance funds. If one or more of these or similar bills were to be enacted and signed into law, it could be significantly more difficult for our institutions to satisfy the 90/10 rule (or, potentially, the new 85/15 rule).

Failure to satisfy the 90/10 rule could result in our institutions losing eligibility to participate in Title IV programs, which would have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations.

The failure of our institutions to demonstrate compliance with state laws may result in liability to, or remedial action against, our institutions, including recoupment by the Department of discharged student loan funds under the “defense to repayment” provisions of the Direct Loan Program regulations.

students who may have been the victims of fraud in gaining relief under the “defense to repayment” provisions of the Direct Loan Program regulations. Rarely used in the past, the defense to repayment provisions allow a student to assert as a defense against repayment of federal direct loans any commission of fraud or other violation of applicable state law by the school related to such loans or the educational services paid for. The processes outlined by the Department on June 8 include (i) extending debt relief eligibility to groups of students where possible, (ii) providing loan forbearance and pausing payments while claims are being resolved, (iii) appointing a Special Master dedicated to borrower defense issues for students who believe they have a defense to repayment, (iv) establishing a streamlined process and (v) building a better system for debt relief for the future. The Department noted that building a better system for debt relief would involve developing new regulations to clarify and streamline loan forgiveness under the defense to repayment provisions, while maintaining or enhancing current consumer protection standards and strengthening provisions that hold schools accountable for actions that result in loan discharges. As part of its efforts to hold schools accountable, the Department could seek recoupment of any discharged federal Direct Loan funds from the school. The Department stated that they will continue to take aggressive action to ensure defrauded borrowers get the debt relief they are entitled to, step up oversight and enforcement to identify schools that present the greatest risk to students and taxpayers, and hold schools accountable for their actions.

On June 16, 2016, the Department published proposed regulations regarding borrower defense to repayment and related matters. The regulations establish a 45-day notice and comment period, and the Department plans to publish its final regulations by November 1, 2016 with an effective date of July 1, 2017. The Department proposes to amend the regulations governing the Direct Loan Program to, among other things, establish a new federal standard and process for determining whether a borrower has a defense to repayment of a student loan based on an act or omission of a school, and amend the Student Assistance General Provisions by revising the financial responsibility standards and adding disclosure requirements for schools.

In addition to relief under the defense to repayment provisions, students may qualify for a closed school discharge pursuant to which they receive forgiveness of the federal direct loans, FFEL Program loans or federal Perkins Loans they took out to attend a school if the school closes either while they are attending or within 120 days after they withdraw from the school.

The failure of our institutions to comply with state laws may result in liability to, or remedial action against, our institutions, including recoupment by the Department of discharged student loan funds under the “defense to repayment” provisions. The assertion of any claims by our institutions' students under the defense to repayment provisions and any resulting remedial action, or any recoupment by the Department of discharged student loan funds pursuant to either the defense to repayment provisions or a closed school discharge, could damage our reputation in the industry and have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations.

The Department’s proposed regulations regarding borrower defense to repayment expand the circumstances in which students may assert a defense to repayment against an institution and also provide that certain conditions or events could trigger, automatically or in some cases at the Department’s discretion, a requirement that an institution post letters of credit or other security that could result in the imposition of significant restrictions on us and our ability to operate.

The current standard for determining whether a borrower has a defense to repayment on a student loan allows borrowers to assert a defense to repayment if a cause of action would have arisen under applicable state law. The proposed regulations would allow a borrower to assert a defense to repayment on the basis of a substantial misrepresentation, a breach of contract or a favorable nondefault contested judgment against a school for its act or omission relating to the making of the borrower’s loan or the provision of educational services for which the loan was provided. The new standard would apply to student loans made after the effective date of the proposed regulations. In addition, the financial responsibility standards contained in the proposed regulations would establish the conditions or events that trigger the requirement for an institution to provide the Department with financial protection in the form of a letter of credit or other security against potential institutional liabilities. Triggering conditions or events include, among others, certain state, federal or accrediting agency actions or investigations, including program reviews, and in the case of publicly traded companies, receipt of certain warnings from the SEC or the applicable stock exchange, disclosure in a report filed with the SEC of a judicial or administrative proceeding stemming from a complaint filed by a person or entity that is not part of a state or federal action, or the failure to timely file a required annual or quarterly report with the SEC.

If the proposed regulations regarding borrower defense to repayment are ultimately adopted by the Department, our institutions could face claims by students based on the expanded circumstances in which students may assert a defense to

repayment of their student loans. The Department’s Office of Federal Student Aid is currently investigating representations made by Ashford University to potential and enrolled students, and has asked the Company and Ashford to assist in its assessment of Ashford’s compliance with the prohibition on substantial misrepresentations. In addition, our institutions are from time to time subject to certain actions or investigations by various state, federal or accrediting agencies, and as a public company, we would be subject to the additional triggering events outlined by the Department in the proposed regulations, and we may be required to post letters of credit or provide some other form of security to the Department, which could result in the imposition of significant restrictions on us and our ability to operate. Any assertion by our institutions’ students of defenses to repayment, including any resulting liability to, or remedial action against, our institutions, and any significant restrictions imposed on us or our ability to operate resulting from a requirement to post letters of credit or other security, could damage our reputation in the industry and have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

On July 25, 2016, the Company received from Xerox Business Services, LLC (“Xerox”) a notice pursuant to the General Services Agreement, dated January 1, 2009, between Xerox (formerly Affiliated Computer Services, Inc.) and Ashford University (the “Xerox Agreement”) indicating that the Xerox Agreement will be terminated effective December 31, 2016. On April 22, 2016, the Company entered into a Master SAAS Agreement (the “Regent Agreement”) with Regent Education, Inc. (“Regent”), pursuant to which Regent will assist the Company in Title IV financial aid processing by means of access to Regent’s software platform. A copy of the Regent Agreement is attached to this report as Exhibit 10.3. The Company is working to ensure an efficient transition of Title IV financial aid processing services.

Item 6. Exhibits.



Exhibit		Description
10.1	#	Form of Performance Cash Award Agreement (with Performance Component)
10.2	#	Form of Performance Cash Award Agreement (General)
10.3	†	Master SAAS Agreement, dated April 22, 2016, with Regent Education, Inc.
10.4	†	Campusnet Infrastructure as a Service (IaaS) Agreement, dated June 30, 2016, with Campus Management Corp.
10.5	†	CampusCare Maintenance and Support Renewal, dated June 30, 2016, with Campus Management Corp.
10.6	†	Addendum to CampusCare Support Agreement, date June 30, 2016, with Campus Management Corp.
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew S. Clark, President and Chief Executive Officer, and Kevin Royal, Chief Financial Officer.
99.1		Disclosure required pursuant to Section 13(r) of the Securities Exchange Act of 1934.
101		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August 2, 2016, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015; (ii) the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2016 and 2015; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015; (iv) the Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2016 and 2015; (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015; and (vi) the Notes to Condensed Consolidated Financial Statements.


#	Indicates management contract or compensatory plan or arrangement.


†	Portions of this exhibit have been omitted pursuant to a request for confidential treatment and the non-public information has been filed separately with the SEC.

SIGNATURES

Pursuant to the requirements 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.



	BRIDGEPOINT EDUCATION, INC.

August 2, 2016	/s/ KEVIN ROYAL
	Kevin Royal Chief Financial Officer (Principal financial officer and duly authorized to sign on behalf of the registrant)

Exhibit 10.1

BRIDGEPOINT EDUCATION, INC.

2009 STOCK INCENTIVE PLAN

(AS AMENDED AND RESTATED EFFECTIVE MAY 13, 2013)

PERFORMANCE CASH AGREEMENT

Unless otherwise defined herein, the terms defined in the Bridgepoint Education, Inc. 2009 Stock Incentive Plan (as amended and restated effective May 13, 2013 and as further amended by the First Amendment thereto) (the “Plan”) will have the same defined meanings in this Performance Cash Agreement. This Performance Cash Agreement, along with the Terms and Conditions of Performance Cash Grant, attached hereto as Exhibit A (the “Terms and Conditions”), shall be referred to herein as the “Award Agreement.” If the Participant is a Covered Employee, this Award is intended to qualify as performance-based compensation under Code Section 162(m) and, as a result, is subject to the requirements of Section 4(f) of the Plan.

I. NOTICE OF GRANT OF PERFORMANCE CASH

Participant Name: [Name]

Address: [Address]

You have been granted the right to receive an Award of Performance Cash, subject to the terms and conditions of the Plan and this Award Agreement as follows:

Grant Number: [Number]

Date of Grant: [March 29, 2016]

Amount of Performance Cash: $ [Amount]

Performance Period: January 1, 2016 – December 31, 2016

II. EARNING OF PERFORMANCE CASH

Subject to the Participant’s continued Service and the possible vesting of any unvested Performance Cash upon a corporate transaction in accordance with Section 12 of the Plan and Section 3 of the Terms and Conditions, the amount of Performance Cash that will be earned is a function of the extent to which the EBITDA Performance Goal ¹ and/or the Revenue Performance Goal ² for the Performance Period, as described in the table below, are achieved:

¹ “ EBITDA Performance Goal ” shall be defined in the Terms and Conditions.

² “ Revenue Performance Goal” shall be defined in the Terms and Conditions.

PERFORMANCE GOALS



Performance Goal	Amount of Performance Cash Eligible for Earning	Threshold Performance Level (Payment at 50%)	Target Performance Level (Payment at 100%)	Range
EBITDA ³	$ [Amount x (1/2)]	Threshold EBITDA Goal Established for BPI Short Term Incentive Plan	Target EBITDA Goal Established for BPI Short Term Incentive Plan	80%-100%
Revenue ⁴	$ [Amount x (1/2)]	Threshold Revenue Goal Established for BPI Short Term Incentive Plan	Target Revenue Goal Established for BPI Short Term Incentive Plan	95%-100%

If the Company’s EBITDA or Revenue, as applicable, for the Performance Period is less than the applicable Threshold Performance Level, no Performance Cash attributable to the EBITDA Performance Goal or the Revenue Performance Goal, as applicable, will be earned as of the end of the Performance Period. If the Company’s EBITDA or Revenue, as applicable, for the Performance Period is equal to the applicable Threshold Performance Level, fifty percent (50%) of the Performance Cash attributable to the EBITDA Performance Goal or the Revenue Performance Goal, as applicable, will be earned as of the end of the Performance Period. If the Company’s EBITDA or Revenue, as applicable, for the Performance Period exceeds the applicable Threshold Performance Level but is less than the applicable Target Performance Level, the amount of Performance Cash earned as of the end of the Performance Period with respect to the EBITDA Performance Goal or the Revenue Performance Goal, as applicable, will be determined by applying straight line interpolation between the applicable Threshold Performance Level and Target Performance Level based on the applicable Range. If the Company’s EBITDA or Revenue, as applicable, for the Performance Period equals or exceeds the Target Performance Level, one hundred percent (100%) of the Performance Cash attributable to the EBITDA Performance Goal or the Revenue Performance Goal, as applicable, will be earned as of the end of the Performance Period. Subject to the Participant’s continued Service, the Performance Cash, if any, earned pursuant to this Award Agreement shall vest and be paid in equal annual installments pursuant to Section III below. For the avoidance of doubt, any portion of the Performance Cash that remains unearned as of the end of the Performance Period may not be earned during any subsequent period, and the Award shall lapse with respect to that portion of the Performance Cash. For example, if the Company’s EBITDA for the Performance Period is equal to the applicable Threshold Performance Level and the Company’s Revenue for the Performance Period equals or exceeds the applicable Target Performance Level, seventy-five percent (75%) of the Performance Cash will be earned pursuant to this Award Agreement (fifty percent (50%) of the Performance Cash attributable to the EBITDA Performance Goal and one hundred percent (100%) of the Performance Cash attributable to the Revenue Performance Goal). The remaining twenty-five percent (25%) of the Performance Cash will not be earned as of the end of the Performance Period and the Award shall lapse with respect to that twenty-five percent (25%) of the Performance Cash. Whether and to what extent the

³ “ EBITDA ” shall be defined in the terms and Conditions.

⁴ “ Revenue” shall be defined in the Terms and Conditions.

Performance Goals have been achieved shall be determined by the Committee pursuant to Section 4 of the Terms and Conditions.

III. VESTING AND PAYMENT OF PERFORMANCE CASH

Subject to the Participant’s continued Service and the possible vesting of any unvested Performance Cash upon a corporate transaction in accordance with Section 12 of the Plan and Section 3 of the Terms and Conditions, the Performance Cash that is earned pursuant to Section II will vest in four equal annual installments as follows: (i) 25% of the earned Performance Cash will vest on the first anniversary of the Date of Grant; and (ii) 25% of the earned Performance Cash will vest on each subsequent anniversary of the Date of Grant up to and including the fourth anniversary of the Date of Grant (each such anniversary date a “Vesting Date”). Unless otherwise provided pursuant to the terms of the Participant’s employment or severance agreement, if applicable, in the event the Participant ceases to provide Service for any or no reason before any Vesting Date, the unvested portion of the Performance Cash shall immediately be forfeited without consideration. Subject to the terms and conditions of the Plan and this Award Agreement, the portion of the Performance Cash that vests on each Vesting Date will be paid to the Participant in a single lump sum payment on the first payroll date following the applicable Vesting Date. For example, the Performance Cash, if any, that vests on March 29, 2017, will be paid in a single lump sum payment on the first payroll date following March 29, 2017.

IV. GENERAL

By the Participant’s signature and the signature of the representative of the Company below, the Participant and the Company agree that this Award of Performance Cash is granted under and governed by the terms and conditions of the Plan and this Award Agreement, including the Terms and Conditions, all of which are made a part of this document. The Participant has reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully understands all provisions of the Plan and this Award Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Company upon any questions relating to the Plan and this Award Agreement. The Participant further agrees to notify the Company upon any change in the residence address indicated below. Finally, pursuant to Section 13(e) of the Plan, the Participant acknowledges and agrees that this Award is subject to potential cancellation or recoupment to the fullest extent called for by applicable federal or state law or any policy of the Company. By accepting this Award, the Participant agrees to be bound by, and comply with, the terms of any Clawback Policy adopted by the Company.

[Signature page follows]

The Company and the Participant have duly executed this Performance Cash Agreement as of the Date of Grant set forth above.



PARTICIPANT:		BRIDGEPOINT EDUCATION, INC.


Signature		By


Print Name		Title

Residence Address :

EXHIBIT A

TERMS AND CONDITIONS OF PERFORMANCE CASH GRANT

1. Grant . The Company hereby grants to the individual named in Section I of the Performance Cash Agreement attached hereto (the “Participant”), as compensation for his or her services, an Award of Performance Cash, subject to all of the terms and conditions of these Terms and Conditions, the Performance Cash Agreement, and the Plan, which is incorporated herein by reference. These Terms and Conditions, along with the Performance Cash Agreement attached hereto, shall be referred to herein as the “Award Agreement.”

2. Company’s Obligation to Pay; Time of Payment . The Performance Cash Agreement grants the Participant the right to receive a specified amount of cash payable upon the achievement of any one or more Performance Goals and/or other conditions including, without limitation, continued Service through the applicable Vesting Dates (as defined in the Performance Cash Agreement). Unless and until the Performance Cash is earned and vests in accordance with Section 3, the Participant will have no right to payment with respect to the Performance Cash. As provided in Section III of the Performance Cash Agreement, earned and vested Performance Cash will be paid in a single lump sum payment on the first payroll date following the applicable Vesting Date.

3. Earning and Vesting of Performance Cash .

a. Earning of Performance Cash . As provided in Section II of the Performance Cash Agreement, the Performance Cash will be earned if, and only if, any one or more of the Performance Goals (as defined in the Performance Cash Agreement) for the Performance Period (as defined in the Performance Cash Agreement) are achieved or exceeded. In determining whether the Performance Goals have been achieved or exceeded, the following terms will have the following meanings:

i. The term “EBITDA” means the Company’s earnings before interest, taxes, depreciation and amortization for the Performance Period, adjusted to exclude the occurrence during the Performance Period of any of the events listed in clauses (i) through (v) of Section 4(f) of the Plan.

ii. The term “EBITDA Performance Goal” means the Performance Goal based on the Company’s EBITDA for the Performance Period.

iii. The term “Range” means the applicable percentage range set forth in the Range column of the Performance Goals table set forth in Section II of the Performance Cash Agreement.

iv. The term “Revenue” means the Company’s total revenue for the Performance Period, as calculated in accordance with generally accepted accounting principles in the U.S.

v. The term “Revenue Performance Goal” means the Performance Goal based on the Company’s Revenue for the Performance Period.

vi. The term “Target Performance Level” means the applicable dollar

A-1

amount described in the Target Performance Level column of the Performance Goals table set forth in Section II of the Performance Cash Agreement

vii. The term “Threshold Performance Level” means the applicable dollar amount described in the Threshold Performance Level column of the Performance Goals table set forth in Section II of the Performance Cash Agreement.

b. Vesting of Performance Cash . The Performance Cash, if any, earned pursuant to Section 3.a. shall vest in accordance with Section III of the Performance Cash Agreement.

c. Effect of a Change in Control . In accordance with Section 12 of the Plan, in the event of a corporate transaction described in Section 12 of the Plan, the Compensation Committee of the Board (the “Committee”) may call for the accelerated vesting of some or all of the Award. If permitted by Section 409A of the Code, any Performance Cash that becomes vested as a result of the Committee’s actions will be paid in a single lump sum cash payment in connection with the closing of such corporate transaction.

4. Compensation Committee Certification . The Committee shall be responsible for determining in good faith whether, and to what extent, the Performance Goals set forth in the Performance Cash Agreement have been achieved. The Committee may reasonably rely on information from, and representations by, individuals within the Company in making such determination and when made such determination shall be final and binding on the Participant.

5. Lapse upon Termination of Service . In accordance with Section III of the Performance Cash Agreement, any portion of the Performance Cash that is unearned or unvested shall lapse and be immediately cancelled as of the date of the Participant’s termination of Service for any or no reason.

6. Death of Participant . Any payment to be made to the Participant under this Award Agreement will, if the Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary survives the Participant, the administrator or executor of the Participant’s estate. Any such transferee must furnish the Company with: (a) written notice of his or her status as transferee; and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

7. Withholding of Taxes . The Performance Cash, if any, payable pursuant to this Award Agreement shall be reduced in order to comply with applicable federal, state and local tax withholding requirements.

8. No Guarantee of Continued Service . THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE EARNING AND VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT IN SERVICE TO THE COMPANY FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH THE PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING THE PARTICIPANT) TO TERMINATE THE PARTICIPANT’S SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE.

A-2

9. Address for Notices . Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company, in care of Stock Administration at Bridgepoint Education, Inc., at 13500 Evening Creek Drive North, San Diego, CA 92128, or at such other address as the Company may hereafter designate in writing.

10. Grant is Not Transferable . Except to the limited extent provided in Section 6, this Award and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Award, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this Award and the rights and privileges conferred hereby immediately will become null and void.

11. Binding Agreement . Subject to the limitation on the transferability of this Award contained herein, this Award Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

12. Plan Governs . This Award Agreement is subject to all the terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Award Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized terms used and not defined in this Award Agreement will have the meanings set forth in the Plan.

13. Authority . The Committee will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Performance Cash has vested; provided, however, that if the Participant is a Covered Employee any such action taken by the Committee shall not increase the amount payable pursuant to the Award). All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon the Participant, the Company and all other interested persons. No member of the Committee, nor any employee of the Company, will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Award Agreement.

14. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to the Performance Cash awarded under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company.

15. Captions . Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.

16. Agreement Severable . In the event that any provision in this Award Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Award Agreement.

A-3

17. Modifications to the Agreement . This Award Agreement constitutes the entire understanding of the parties on the subjects covered. The Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Award Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company.

18. Amendment, Suspension or Termination of the Plan . By accepting this Award, the Participant expressly warrants that he or she has received an Award of Performance Cash, and has received, read and understood a description of the Plan. The Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

19. Governing Law . This Award Agreement will be governed by the laws of the State of California, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute related to this Award of Performance Cash or arising under this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of San Diego County, California, or the federal courts for the United States for the Southern District of California, and no other courts where this Award of Performance Cash is made and/or this Award Agreement is to be performed.

20. Section 409A Compliance . The Company believes, but does not and cannot warrant or guaranty, that the payments due pursuant to this Award Agreement qualify for the short-term deferral exception to Section 409A of the Code as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Award Agreement, if the Company determines that neither the short-term deferral exception nor any other exception to Section 409A applies to the payments due pursuant to this Award Agreement, the provisions of Section 4(i) of the Plan shall apply. This Award Agreement shall be operated in compliance with Section 409A or an exception thereto and each provision of this Award Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. The Participant remains solely responsible for any adverse tax consequences imposed upon the Participant by Section 409A.

A-4

Exhibit 10.2

BRIDGEPOINT EDUCATION, INC.

2009 STOCK INCENTIVE PLAN

(AS AMENDED AND RESTATED EFFECTIVE MAY 13, 2013)

PERFORMANCE CASH AGREEMENT

I. NOTICE OF GRANT OF PERFORMANCE CASH

Participant Name: [Name]

Address: [Address]

You have been granted the right to receive an Award of Performance Cash, subject to the terms and conditions of the Plan and this Award Agreement as follows:

Grant Number: [Number]

Date of Grant: [March 29, 2016]

Amount of Performance Cash: $ [Number]

II. VESTING AND PAYMENT OF PERFORMANCE CASH

Subject to the Participant’s continued Service and the possible vesting of any unvested Performance Cash upon a corporate transaction in accordance with Section 12 of the Plan and Section 3 of the Terms and Conditions, the Performance Cash will vest in four equal annual installments as follows: (i) 25% of the Performance Cash will vest on the first anniversary of the Date of Grant; and (ii) 25% of the Performance Cash will vest on each subsequent anniversary of the Date of Grant up to and including the fourth anniversary of the Date of Grant (each such anniversary date a “Vesting Date”). Unless otherwise provided pursuant to the terms of the Participant’s employment or severance agreement, if applicable, in the event the Participant ceases to provide Service for any or no reason before any Vesting Date, the unvested portion of the Performance Cash shall immediately be forfeited without consideration. Subject to the terms and conditions of the Plan and this Award Agreement, the portion of the Performance Cash that vests on each Vesting Date will be paid to the Participant in a single lump sum payment on the first payroll date following the applicable Vesting Date. For example, the Performance Cash, if any, that vests on March 29, 2017, will be paid in a single lump sum payment on the first payroll date following March 29, 2017.

III. GENERAL

[Signature page follows]

The Company and the Participant have duly executed this Performance Cash Agreement as of the Date of Grant set forth above.



PARTICIPANT:		BRIDGEPOINT EDUCATION, INC.


Signature		By


Print Name		Title

Residence Address :

EXHIBIT A

TERMS AND CONDITIONS OF PERFORMANCE CASH GRANT

2. Company’s Obligation to Pay; Time of Payment . The Performance Cash Agreement grants the Participant the right to receive a specified amount of cash if, and only if, the Participant continues to provide Service through the applicable Vesting Dates (as defined in the Performance Cash Agreement). Unless and until the Performance Cash vests in accordance with Section 3, the Participant will have no right to payment with respect to the Performance Cash. As provided in Section II of the Performance Cash Agreement, vested Performance Cash will be paid in a single lump sum payment on the first payroll date following the applicable Vesting Date.

3. Vesting of Performance Cash .

a. General . The Performance Cash shall vest in accordance with Section II of the Performance Cash Agreement.

b. Effect of a Change in Control . In accordance with Section 12 of the Plan, in the event of a corporate transaction described in Section 12 of the Plan, the Compensation Committee of the Board (the “Committee”) may call for the accelerated vesting of some or all of the Award. If permitted by Section 409A of the Code, any Performance Cash that becomes vested as a result of the Committee’s actions will be paid in a single lump sum cash payment in connection with the closing of such corporate transaction.

4. Lapse upon Termination of Service . In accordance with Section II of the Performance Cash Agreement, any portion of the Performance Cash that is unvested shall lapse and be immediately cancelled as of the date of the Participant’s termination of Service for any or no reason.

5. Death of Participant . Any payment to be made to the Participant under this Award Agreement will, if the Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary survives the Participant, the administrator or executor of the Participant’s estate. Any such transferee must furnish the Company with: (a) written notice of his or her status as transferee; and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

6. Withholding of Taxes . The Performance Cash, if any, payable pursuant to this Award Agreement shall be reduced in order to comply with applicable federal, state and local tax withholding requirements.

7. No Guarantee of Continued Service . THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS

A-1

CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT IN SERVICE TO THE COMPANY FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH THE PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING THE PARTICIPANT) TO TERMINATE THE PARTICIPANT’S SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE.

8. Address for Notices . Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company, in care of Stock Administration at Bridgepoint Education, Inc., at 13500 Evening Creek Drive North, San Diego, CA 92128, or at such other address as the Company may hereafter designate in writing.

9. Grant is Not Transferable . Except to the limited extent provided in Section 5, this Award and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Award, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this Award and the rights and privileges conferred hereby immediately will become null and void.

10. Binding Agreement . Subject to the limitation on the transferability of this Award contained herein, this Award Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

11. Plan Governs . This Award Agreement is subject to all the terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Award Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized terms used and not defined in this Award Agreement will have the meanings set forth in the Plan.

12. Authority . The Committee will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Performance Cash has vested. All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon the Participant, the Company and all other interested persons. No member of the Committee, nor any employee of the Company, will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Award Agreement.

13. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to the Performance Cash awarded under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company.

14. Captions . Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.

A-2

15. Agreement Severable . In the event that any provision in this Award Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Award Agreement.

16. Modifications to the Agreement . This Award Agreement constitutes the entire understanding of the parties on the subjects covered. The Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Award Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company.

17. Amendment, Suspension or Termination of the Plan . By accepting this Award, the Participant expressly warrants that he or she has received an Award of Performance Cash, and has received, read and understood a description of the Plan. The Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

18. Governing Law . This Award Agreement will be governed by the laws of the State of California, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute related to this Award of Performance Cash or arising under this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of San Diego County, California, or the federal courts for the United States for the Southern District of California, and no other courts where this Award of Performance Cash is made and/or this Award Agreement is to be performed.

19. Section 409A Compliance . The Company believes, but does not and cannot warrant or guaranty, that the payments due pursuant to this Award Agreement qualify for the short-term deferral exception to Section 409A of the Code as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Award Agreement, if the Company determines that neither the short-term deferral exception nor any other exception to Section 409A applies to the payments due pursuant to this Award Agreement, the provisions of Section 4(i) of the Plan shall apply. This Award Agreement shall be operated in compliance with Section 409A or an exception thereto and each provision of this Award Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. The Participant remains solely responsible for any adverse tax consequences imposed upon the Participant by Section 409A.

A-3

Exhibit 10.3

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under C.F.R. § 200.84(b)(4) and 17 C.F.R. 24b-2

MASTER SAAS AGREEMENT

COVER PAGE

The attached documents describe the relationship between Regent Education, Inc., (" Regent ") and the customer identified below (" Customer ") (each of Regent and Customer, a " Party "). The documents attached to this Cover Page will consist of the document entitled “ Terms and Conditions ” (the “ Access Terms ” ) and any Order Forms for services, which describe and set forth the general legal terms governing the relationship between the Parties (collectively, the “ Agreement ” ). This Agreement, including the attached Access Terms, will become effective when this cover page is executed by authorized representatives of both Parties (the “ Effective Date ” ).

CUSTOMER INFORMATION:

Name/Customer: Bridgepoint Education, Inc. Principal Contact Person: Bridget McGuire

Address: 13500 Evening Creek Dr. North, Ste 600 Title: VP of Financial Aid

San Diego, CA 92128 Phone: 800.798.0584 Ext. 6417

Fax: 888.445.9721

Email Address: bridget.mcguire@bpiedu.com

Billing Contact: Matthew Covington

Title: Associate Director of Accounting, Finance

Phone: 866-475-0317

Fax: N/A

Email Address: [ accountspayable@bpiedu.com]

Copy of all Notices to:

Bridgepoint Education, Inc.

13500 Evening Creek Drive North, Suite 600

San Diego, CA 92128

Attention: Legal Services

FOR INTERNAL REGENT USE ONLY:

Contract #:

The Parties have caused their duly authorized representatives to execute this Agreement (incorporating the Access Terms and any Order Forms) as of the dates set forth below.



CUSTOMER: BRIDGEPOINT EDUCATION, INC.	REGENT EDUCATION, INC.
By (Signature): /s/ Andrew Clark	By (Signature): Randolph W Jones III
Name (Printed): Andrew Clark	Name (Printed): Randy Jones
Title: President and CEO	Title: CEO
Date: Apr 22, 2016	Date: Apr 22, 2016

REV 110713-1 CONFIDENTIAL

TERMS AND CONDITIONS

1. DEFINITIONS. Certain capitalized terms, not defined above, have the meanings set forth below.

1.1 “Access Protocols” will mean the passwords, access codes, technical specifications, connectivity standards or protocols, or other relevant procedures, as may be necessary to allow Customer or any Authorized Users to access the Regent Services.

1.2 “Authorized User” will mean any individual who is an employee of Customer, Ashford University or University of the Rockies or a student of Customer, Ashford University or University of the Rockies or such other person or entity as may be authorized by an Order Form, authorized, by virtue of such individual’s relationship to, or permissions from, Customer, to access the Regent Service pursuant to Customer’s rights under this Agreement.

1.3 “Confidential Information” shall mean all written or oral information, disclosed by either Party to the other, related to the operations of either Party or a third party that has been identified as confidential or that by the nature of the circumstances surrounding disclosure ought reasonably to be treated as confidential.

1.4 “Customer Content” will mean the data, media and content provided by Customer through the Regent Service and includes all End User information.

1.5 “End User” shall mean a unique student processed in the Regent Service over a 12-month period.

1.6 “ FERPA ” shall mean the Family Educational Rights and Privacy Act, 20 U.S.C. § 1232g, as it relates to the Customer Content.

1.7 “ FERPA Records ” shall mean any FERPA information about any End User of Customer made available to Regent.

1.8 “ HEA ” shall mean the Title IV of the Higher Education Act of 1965 as it relates to the Regent Services.

1.9 “Order Form” shall mean a document signed by both Parties identifying a given type of Regent Service to be made available by Regent pursuant to this Agreement. Each Order Form shall be agreed upon by the Parties as set forth in Section 2.1.

1.10 “ Regent Laws ” shall mean l aws applicable to Regent and its business, laws applicable to the performance and delivery of the Regent Services, including without limitation HEA, FERPA laws and applicable Third Party Servicer regulations.

1.11 “ Regent Services ” shall mean the services ordered by Customer through an Order Form and provided by Regent by means of access to certain content and use of the features and functionality of software applications available and accessible within the Regent Web Applications, solely to the extent set forth and further described in, and as limited by, the Order Forms executed by the Parties and as described in the documentation provided with the Regent Services.

1.12 “ Regent Web Applications ” shall mean the web-based software applications managed and maintained by Regent.

1.13 “ Third-party Servicer ” shall mean any entity meeting the requirements of a Third-party servicer as defined in 34 C.F.R. § 668.2 34.

2. ORDERS, ACCESS AND USE

2.1 Orders. The Regent Services to be provided by Regent under this Agreement will be set forth in one or more Order Forms executed by the Parties from time to time during the Term. The Parties shall negotiate and sign each Order Form separately. Each Order Form shall set out a description of the applicable Regent Services to be provided by Regent and the costs associated with such Regent Services. Each Order Form shall be attached to this Agreement and incorporated in this Agreement by reference. In the event of a conflict between any Order Form and this Agreement, the terms and conditions set forth in the Agreement shall govern unless the Parties specifically and expressly state otherwise in such Order Form.

2.2 Provision of Access. Subject to the terms and conditions contained in this Agreement, Regent hereby grants to Customer and its Authorized Users a non-exclusive, non-transferable, non-sublicenseable right to access the features and functions of the applicable Regent Service ordered pursuant to an Order Form during the Term set forth on that Order Form for use by the number of Authorized Users enabled, and solely for Customer’s internal business purposes to process the number of End Users paid for by Customer in accordance with the applicable Order Form. On or as soon as reasonably practicable after the Effective Date, Regent shall provide to Customer the necessary passwords, security protocols and policies and network links or connections and Access Protocols to allow Customer and its Authorized Users to access the Regent Services. Customer and any Authorized User may only use the Regent Services in accordance with the Access Protocols.

2.3 Responsibility for Application and Content Hosting. Data Security. Regent shall, at its own expense, provide for the hosting of the Regent Services which is accessible as part of the Regent Services, provided that nothing herein shall be construed to require Regent to provide for, or bear any responsibility with respect to any telecommunications or computer network hardware required by Customer or any Authorized User to provide access from the Internet to the Regent Services. See Attachment A for service level specifications. Regent shall develop, implement, maintain and use appropriate administrative, technical and physical security measures in accordance with Regent’s established data security policies and practices which have been reviewed by Client, and which shall prevent unauthorized access to the Customer Content stored on the system and will require any subcontractors of Regent to do the same. In the event of any breach of security relating to Customer Content, Regent shall: (a) notify Customer of any security breach as soon as practicable, but no later than twenty-four (24) hours after Regent becomes aware of it; and (b) notify Customer of any security breaches by e-mailing Customer contact at [IT Risk email address]. Immediately following Regent's notification to Customer of a security breach, the parties shall coordinate with each other to investigate the security breach in accordance with Regent's standard policies and procedures, a copy of which has been provided to Customer. Regent represents and warrants to Customer that its collection, access, use, storage, disposal and disclosure of personal information does and will comply with all applicable federal and state privacy and data protection laws, as well as all other applicable regulations and directives.

2.4 Usage Restrictions. Customer will not use the Regent Services for any purposes beyond the scope of rights granted to Customer under this Agreement. Without limiting the generality of the foregoing, Customer will not (a) decompile, disassemble, reverse engineer or otherwise attempt to obtain or perceive the source code from which any software component of the Regent Services are compiled or interpreted, and Customer acknowledges that nothing in this Agreement will be construed to grant Customer any right to obtain or use such code; (b) allow third parties other than Authorized Users to gain access to or use the Regent Services; (c) use the Regent Services in any time-sharing or services bureau arrangement, including, without limitation, any use to provide services or process data for the benefit of, or on behalf of, any third party other than Ashford University or University of the Rockies; (c) modify or create any derivative works of the Regent Services (or any components thereof), except with the prior written consent of Regent; or (d) combine

REV 110713-1 CONFIDENTIAL

or integrate the Regent Services with hardware, software or other technology not provided to Customer by Regent hereunder (other than by means of interfaces provided or enabled by Regent during the Term). Customer shall notify Regent promptly of any unauthorized access or use of the Regent Services known to Customer. Customer will ensure that its use of the Regent Service complies with all applicable laws, statutes, regulations or rules.

2.5 Retained Rights; Ownership.

(a) Ownership and use of Customer Content. Customer retains all right, title and interest in and to the Customer Content, and Regent acknowledges that it neither owns nor acquires any additional rights in and to the Customer Content not expressly granted by this Agreement. Regent further acknowledges that Customer retains the right to use the Customer Content for any purpose in Customer’s sole discretion. Subject to the foregoing, Customer hereby grants to Regent a non-exclusive, non-transferable right and license to use the Customer Content during the Term for the limited purposes of performing Regent’s obligations under this Agreement.

(b) Ownership of Regent Services. Subject to the rights granted in this Agreement, Regent retains all right, title and interest in and to the Regent Service, and Customer acknowledges that it neither owns nor acquires any additional rights in and to the foregoing not expressly granted by this Agreement or any licenses to the software used to provide the Regent Services. Customer further acknowledges that Regent retains the right to use the foregoing for any purpose in Regent’s sole discretion.

3. CUSTOMER RESPONSIBILITIES.

3.1 Authorized Users Access to Services. Customer may permit any Authorized Users to access and use the features and functions of the Regent Service as contemplated by this Agreement. Customer will ensure that any such Authorized Users will be bound by a contractual, enforceable agreement, which agreement, will, by its terms, provide substantially the same or greater protections for Regent’s Confidential Information and the Regent Service as are provided by the terms hereof; and provided that Customer shall remain primarily liable to Regent for any violations of such terms by its Authorized Users. User IDs cannot be shared or used by more than one Authorized User at a time. If Customer wishes to add additional User IDs, Customer may order such additional User IDs at any time by executing a new Order Form detailing the number of additional User IDs. Upon written acceptance by Regent of the Order Form, Regent shall make the Regent Service available to the additional Authorized Users.

3.2 Customer Responsibility for Data and Security. Customer and its Authorized Users shall have access to the Customer Content and shall be responsible for all changes to and/or deletions of Customer Content and the security of all passwords and other access protocols required in order to access the Regent Services.

3.3 Service Rules and Guidelines. Customer and all Authorized Users shall use the Regent Services solely for its internal purposes as contemplated by this Agreement and shall not use the Service to: (a) send any form of duplicative and unsolicited messages; (b) harvest, collect, gather or assemble information or data regarding other users without their consent; (c) transmit through or post on the Regent Service unlawful, immoral, libelous, tortuous, infringing, defamatory, threatening, vulgar, or obscene material or material harmful to minors; (d) transmit material containing software viruses or other harmful or deleterious computer code, files, scripts, agents, or programs; (e) interfere with or disrupt the integrity or performance of the Regent Service or the data contained therein; (f) attempt to gain unauthorized access to the Regent Service, computer systems or networks related to the Regent Service; or (g) interfere with another user’s use and enjoyment of the Regent Service.

4. FEES AND EXPENSES; PAYMENTS.

4.1 Fees. In consideration for the access rights granted to Customer and the services performed by Regent under this Agreement, Customer will pay to Regent, without offset or deduction, all fees required by a particular Order Form. All fees will be billed and paid in U.S. dollars in accordance with the timing set forth in the Order Form or, if not expressly set forth therein, within thirty (30) days following receipt of the applicable invoice. All late payments of undisputed fees will accrue interest at the rate of 2% per month. Notwithstanding anything to the contrary in this Agreement, all fees paid by Customer to Regent pursuant to this Agreement and any Order Form are non-refundable.

4.2 Disputed Fees. If Customer disputes any fees, taxes, or other charges billed by Regent, Customer shall notify Regent, in writing, of the disputed amount and any relevant information regarding the circumstances of the dispute and shall pay the undisputed amounts. Regent shall acknowledge receipt of the dispute information in writing to Customer. All parties agree to work cooperatively to resolve any such disputed amounts.

4.3 Taxes. Customer will be responsible for payment of any applicable sales, use and other taxes and all applicable export and import fees, customs duties and similar charges (other than taxes based on Regent’s income), and any related penalties and interest for the grant of access rights hereunder, or the delivery of related services, if any. If Customer is tax exempt, it shall furnish Regent with evidence of its tax exempt status prior to placing an order for the Regent Services. Customer will make all required payments to Regent free and clear of, and without reduction for, any withholding taxes. Any such taxes imposed on payments to Regent will be Customer ’ s sole responsibility, and Customer will, upon Regent ’ s request, provide Regent with official receipts issued by appropriate taxing authorities, or such other evidence as Regent may reasonably request, to establish that such taxes have been paid.

5. TREATMENT OF CONFIDENTIAL INFORMATION.

5.1 Ownership of Confidential Information . The Parties acknowledge that during the performance of this Agreement, each Party will have access to certain of the other Party’s Confidential Information or Confidential Information of third parties that the disclosing Party is required to maintain as confidential. Both Parties agree that all items of Confidential Information are proprietary to the disclosing Party or such third party, as applicable, and will remain the sole property of the disclosing Party or such third party.

5.2 Mutual Confidentiality Obligations . Each Party agrees as follows: (a) to use Confidential Information disclosed by the other Party only for the purposes described herein; (b) that such Party will not reproduce Confidential Information disclosed by the other Party, and will hold in confidence and protect such Confidential Information from dissemination to, and use by, any third party; (c) that neither Party will create any derivative work from Confidential Information disclosed to such Party by the other Party; (d) to restrict access to the Confidential Information disclosed by the other Party to such of its personnel, agents, and/or consultants, if any, who have a need to have access and who have been advised of and have agreed in writing to treat such information in accordance with the terms of this Agreement; and (e) to the extent practicable, return or destroy, all Confidential Information disclosed by the other Party

REV 110713-1 CONFIDENTIAL

that is in its possession upon termination or expiration of this Agreement. Notwithstanding the foregoing, Customer agrees that Regent may collect aggregated statistical data regarding Customer’s use of the Service (including without limitation anonymous data regarding actual and prospective students) and provide such aggregated statistical data to third parties. In no event shall Regent provide to third parties personally identifiable data regarding Customer or Customer’s Authorized Users.

5.3 Confidentiality Exceptions . Notwithstanding the foregoing, the provisions of Sections 5.1 and 5.2 will not apply to Confidential Information that (a) is publicly available or in the public domain at the time disclosed; (b) is or becomes publicly available or enters the public domain through no fault of the recipient; (c) is rightfully communicated to the recipient by persons not bound by confidentiality obligations with respect thereto; (d) is already in the recipient’s possession free of any confidentiality obligations with respect thereto at the time of disclosure; (e) is independently developed by the recipient; or (f) is approved for release or disclosure by the disclosing Party without restriction. Notwithstanding the foregoing, each Party may disclose Confidential Information to the limited extent required (x) in order to comply with the order of a court or other governmental body, or as otherwise necessary to comply with applicable law, provided that the Party making the disclosure pursuant to the order shall first have given written notice to the other Party and made a reasonable effort to obtain a protective order; or (y) to establish a Party’s rights under this Agreement, including to make such court filings as it may be required to do.

5.4 Limitation Period. The obligations set forth in this Section 5 shall survive the termination or expiration of this Agreement for a period of three (3) years.

6. REPRESENTATIONS AND WARRANTIES.

Each Party hereby represents and warrants (a) that it is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization; (b) that the execution and performance of this Agreement will not conflict with or violate any provision of any law having applicability to such Party; and (c) that this Agreement, when executed and delivered, will constitute a valid and binding obligation of such Party and will be enforceable against such Party in accordance with its terms.

Regent represents and warrants that it will provide the Regent Service and perform its other obligations under this Agreement in a professional and workmanlike manner substantially consistent with general industry standards.

Regent represents and warrants that the Regent software used to provide the Regent Service will function in accordance with the applicable specifications described in the Regent documentation.

Regent represents and warrants to Customer that its system does not infringe on the intellectual property rights of any third party.

7. DISCLAIMERS, EXCLUSIONS AND LIMITATIONS OF LIABILITY.

7.1 Internet Delays. REGENT'S SERVICES MAY BE SUBJECT TO LIMITATIONS, DELAYS, AND OTHER PROBLEMS INHERENT IN THE USE OF THE INTERNET AND ELECTRONIC COMMUNICATIONS. REGENT IS NOT RESPONSIBLE FOR ANY DELAYS, DELIVERY FAILURES, OR OTHER DAMAGE RESULTING FROM SUCH PROBLEMS.

7.2 Disclaimer. EXCEPT AS EXPRESSLY REPRESENTED OR WARRANTED IN SECTION 6 OR A PARTICULAR ORDER FORM, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE REGENT SERVICE, AND ALL SERVICES PERFORMED BY REGENT ARE PROVIDED “AS IS,” AND REGENT DISCLAIMS ANY AND ALL OTHER PROMISES, REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUIET ENJOYMENT, SYSTEM INTEGRATION AND/OR DATA ACCURACY. REGENT DOES NOT WARRANT THAT THE APPLICATION SERVICE OR ANY OTHER SERVICES PROVIDED BY REGENT WILL MEET CUSTOMER’S REQUIREMENTS OR THAT THE OPERATION OF THE APPLICATION SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT ALL ERRORS WILL BE CORRECTED.

7.3 Exclusions of Remedies; Limitation of Liability . EXCEPT IN CONNECTION WITH CUSTOMER’S VIOLATION OF ANY OF THE LICENSE TERMS SET FORTH IN THIS AGREEMENT (E.G., SECTIONS 2 AND 3), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, REGARDLESS OF THE NATURE OF THE CLAIM, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, COSTS OF DELAY, ANY FAILURE OF DELIVERY, BUSINESS INTERRUPTION, COSTS OF LOST OR DAMAGED DATA OR DOCUMENTATION, OR LIABILITIES TO THIRD PARTIES ARISING FROM ANY SOURCE, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION UPON DAMAGES AND CLAIMS IS INTENDED TO APPLY WITHOUT REGARD TO WHETHER OTHER PROVISIONS OF THIS AGREEMENT HAVE BEEN BREACHED OR HAVE PROVEN INEFFECTIVE. THE CUMULATIVE LIABILITY OF REGENT TO CUSTOMER FOR ALL CLAIMS ARISING FROM OR RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR ANY CAUSE OF ACTION SOUNDING IN CONTRACT, TORT, OR STRICT LIABILITY, WILL NOT EXCEED THE TOTAL AMOUNT OF ALL FEES PAID OR TO BE PAID TO REGENT BY CUSTOMER UNDER SECTION 4.1 DURING THE TWELVE (12)-MONTH PERIOD PRIOR TO THE ACT, OMISSION OR OCCURRENCE GIVING RISE TO SUCH LIABILITY. THIS LIMITATION OF LIABILITY IS INTENDED TO APPLY WITHOUT REGARD TO WHETHER OTHER PROVISIONS OF THIS AGREEMENT HAVE BEEN BREACHED OR HAVE PROVEN INEFFECTIVE THIS LIMITATION OF LIABILITY IS INTENDED TO APPLY WITHOUT REGARD TO WHETHER OTHER PROVISIONS OF THIS AGREEMENT HAVE BEEN BREACHED OR HAVE PROVEN INEFFECTIVE.

7.4 Essential Basis of the Agreement . Customer acknowledges and understands that the disclaimers, exclusions and limitations of liability set forth in this Section 7 form an essential basis of the agreement between the Parties, that the Parties have relied upon such disclaimers, exclusions and limitations of liability in negotiating the terms and conditions in this Agreement, and that absent such disclaimers, exclusions and limitations of liability, the terms and conditions of this Agreement would be substantially different.

8. INDEMNIFICATION.

8.1 Indemnification of Customer . Regent agrees to indemnify, defend and hold harmless Customer from and against any and all losses, liabilities, costs (including reasonable attorneys’ fees) or damages resulting from any claim by any third party (each a “Claim”) to the extent arising from: (a) the Regent Service infringes such third party’s valid U.S. patents issued as of the Effective Date, or infringes or misappropriates, as applicable, such third party’s copyrights or trade secret rights under applicable laws of any jurisdiction within the United States of America; (b) Regent’s or Regent Service’s violation of any HEA or applicable Third Party Servicer Regulation

REV 110713-1 CONFIDENTIAL

or other Regent Law; or (c) Regent’s gross negligence or willful misconduct, provided that Customer promptly notifies Regent in writing of the Claim, cooperates with Regent, and allows Regent sole authority to control the defense and settlement of such Claim; provided that Regent will not settle any Claim unless such settlement completely and forever releases Customer from all liability with respect to such Claim or unless Customer consents to such settlement, and further provided that Customer will have the right, at its option, and at its sole expense, to defend itself against any such Claim or to participate in the defense thereof by counsel of its own choice. If such a Claim is made or appears possible, Customer agrees to permit Regent, at Regent ’ s sole discretion, to enable it to continue to use the Regent Service or to modify or replace any such infringing material to make it non-infringing. If Regent determines that none of these alternatives is reasonably available, Customer shall, upon written request from Regent, cease use of, and, if applicable, return, such materials as are the subject of the infringement claim and Regent will refund to Customer any amounts paid in advance by Customer for the use of such materials. This Section 8.1 shall not apply if the alleged infringement arises, in whole or in part, from (i) modification of the Regent Service by Customer, or (ii) combination, operation or use of the Regent Service with other software, hardware or technology not provided by Regent, or (iii) related to the Customer Content (any of the foregoing circumstances under clauses (i), (ii), and (iii) a “ Customer Indemnity Responsibility ”).

8.2 Customer’s Indemnity Obligations. Customer agrees to hold, harmless, indemnify, and, at Regent’s option, defend Regent and its corporate affiliates, and each of its and their respective directors, officers, shareholders, employees, successors, assigns and agents (for this Section 8.2, collectively, “Regent”) from and against any Claim to the extent arising from (a) Customer’s gross negligence or willful misconduct; (b) a breach or alleged breach of this Agreement by Customer (including without limitation, any of its representations, warranties or obligations contained herein; or (c) a Customer Indemnity Responsibility, provided that Regent promptly notifies Customer in writing of the Claim, cooperates with Customer, and allows Customer sole authority to control the defense and settlement of such Claim; provided that Customer will not settle any Claim against Regent unless such settlement completely and forever releases Regent from all liability with respect to such Claim or unless Regent consents to such settlement, and further provided that Regent will have the right, at its option, to defend itself against any such Claim or to participate in the defense thereof by counsel of its own choice.

9. TERM AND TERMINATION.

9.1 Term. The term of this Agreement shall commence upon the Effective Date and unless earlier terminated in accordance with this Section 9, shall continue in full force and effect until expiration of the latest period set forth on an Order Form (the “Term”).

9.2 Termination for Breach. Either Party may, at its option, terminate this Agreement in the event of a material breach by the other Party. Such termination may be effected only through a written notice to the breaching Party, specifically identifying the breach or breaches on which such notice of termination is based. The breaching Party will have a right to cure such breach or breaches within thirty (30) days of receipt of such notice, and this Agreement will terminate in the event that such cure is not made within such thirty (30)-day period.

9.3 Termination Upon Bankruptcy or Insolvency. Either Party may, at its option, terminate this Agreement immediately upon written notice to the other Party, in the event (a) that the other Party becomes insolvent or unable to pay its debts when due; (b) the other Party files a petition in bankruptcy, reorganization or similar proceeding, or, if filed against, such petition is not removed within ninety (90) days after such filing; (c) the other Party discontinues it business; or (d) a receiver is appointed or there is an assignment for the benefit of such other Party’s creditors.

9.4 Effect of Termination . Upon any termination of this Agreement, Customer will (a) immediately discontinue all use of the Regent Service and any Regent Confidential Information; and (b) promptly pay to Regent all amounts due and payable under this Agreement. Within 72 hours after the effective date of any termination of this Agreement, Regent shall make available to Customer all Customer Content. After a thirty (30) day period, however, Regent shall have no obligation to maintain or provide any Customer Content to Customer. Data will be made available via file transfer and data extraction from existing data views of the Regent Services.

9.5 Survival . The provisions of Sections 2.4, 2.5, 3, 5, 7, 8, 9.4, 9.5, 9.6 and 11 will survive the termination of this Agreement.

9.6 Suspension of Service. If Customer fails to pay undisputed amounts in accordance with the terms and conditions hereof and the applicable Order Form, Regent shall have the right, in addition to any of its other rights or remedies, to suspend the Service to Subscriber, without liability to Customer until such amounts are paid in full.

10. COMPLIANCE WITH LAWS.

10.1 General . Regent will be responsible for Regent Laws. Without limiting the generality of the foregoing and subject to the other provisions of this Section 10, Regent Laws include HEA, FERPA, and applicable Third Party Servicer Regulation.

Customer will be responsible for Laws applicable to its business, laws applicable to its use of the Regent Services, HEA, and FERPA.

10.2 FERPA Specific Requirements. Regent acknowledges its and Customer’s obligations with respect to FERPA. Though Regent neither desires nor needs access to FERPA Records to perform the Regent Services, it acknowledges that Customer may elect to provide Regent access to FERPA Records. Regent covenants to Customer that, other than required disclosures to Customer or its Affiliates during the performance of Regent Services, it will not disclose, re-disclose, make available or distribute any FERPA Records without the prior written consent of Customer. Regent further covenants that it will ensure that any of its officers, employees, and agents that receive any FERPA Records will use the information only for the purposes for which the disclosure was made and in accordance with this section. Notwithstanding the foregoing, or any other provisions of this Agreement to the contrary, Regent acknowledges and agrees that any FERPA Records which it may have access to or possess by virtue of this Agreement, may be used only in connection with the performance of services and duties by it under this Agreement and may not be used for any other purpose, nor disclosed to any third party (except as otherwise permitted by this Agreement), without the prior written consent of Customer unless required by applicable Laws. If Regent receives a lawfully issued subpoena or court order for such FERPA Records, it shall notify Customer and allow Customer a reasonable amount of time to take such action as Customer shall deem appropriate or required by Laws. Regent acknowledges that Customer has notified Regent that FERPA generally requires that notice be provided to the student(s) whose FERPA Records are subject to the subpoena or court order before disclosure of the FERPA Records in compliance with the subpoena or court order. Regent’s use and maintenance of any personally identifiable student information remains subject to the direct control of Customer. Regent is familiar with, and will comply with in all material respects, all applicable laws and regulations pertaining to student educational records, personally identifiable student information, and privacy, including without limitation the Family Educational Rights and Privacy

REV 110713-1 CONFIDENTIAL

Act, 20 U.S.C. § 1232g and subsequent codes, and its implementing regulations at 34 C.F.R. Part 99. It promptly will notify Customer of any use or disclosure of personally identifiable student information inconsistent with this Agreement or applicable laws and regulations, including but not limited to any inadvertent or unauthorized use or disclosure of such information for any purpose other than Regent’s performance of the Services. It promptly will notify Customer in the event it receives notice of any investigation, inquiry or proceeding concerning privacy of student information received by it from Customer or pertaining to any students of Customer. It will require a representation, warranty and covenant similar to this section of any subcontractor, agent or third party vendor to which it provides any information protected by such laws and regulations prior to divulging to such subcontractor, agent or third party vendor any personally identifiable student information.

10.3 Third-party Servicer Requirements. Regent specifically agrees to comply with the applicable statutory and regulatory provisions in accordance with the provisions of 34 C.F.R. §668.25(c)(1) and 34 C.F.R. §668.25 (c)(3), including (without limitation): Regent will abide by any special arrangements, agreements, limitations, suspensions, and terminations that apply to Customer; Regent will not receive or use Title IV student loan program funds; and Regent agrees to be jointly and severally liable with Customer for any violation of the requirements of the HEA and regulations to the extent attributable to Regent’s actions as a Third Party Servicer.

11. MISCELLANEOUS.

11.1 Entire Agreement . This Agreement sets forth the entire agreement and understanding between the Parties with respect to the subject matter of this Agreement and, supersedes and merges all prior oral and written agreements, discussions and understandings between the Parties with respect to the subject matter of this Agreement, and neither of the Parties will be bound by any conditions, inducements or representations other than as expressly provided for in this Agreement.

11.2 Independent Contractors . In making and performing this Agreement, Customer and Regent act and will act at all times as independent contractors, and, except as expressly set forth herein, nothing contained in this Agreement will be construed or implied to create an agency, partnership or employer and employee relationship between them. Except as expressly set forth herein, at no time will either Party make commitments or incur any charges or expenses for, or in the name of the other Party.

11.3 Notices . All notices required by or relating to this Agreement will be in writing and will be sent by means of overnight delivery, to the Parties at their respective addresses set forth in the preamble to this Agreement, or addressed to such other address as the receiving Party may have given by written notice in accordance with this provision.

11.4 Amendments; Modifications . This Agreement may not be amended or modified except in a writing duly executed by authorized representatives of both Parties.

11.5 Assignment; Delegation . Neither this Agreement nor any right or obligation hereunder may be assigned or otherwise transferred (whether voluntarily, by operation of law or otherwise), without the prior express written consent of the other party; provided, however, that either party may, without such consent, assign this Agreement and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its business or assets related to this Agreement, or in the event of its merger, consolidation, change in control or other similar transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment or transfer in violation of this Section will be null, void and of no effect.

11.6 No Third Party Beneficiaries . The Parties acknowledge that the covenants set forth in this Agreement are intended solely for the benefit of the Parties, their successors and permitted assigns. Nothing herein, whether express or implied, will confer upon any person or entity, other than the Parties, their successors and permitted assigns, any legal or equitable right whatsoever to enforce any provision of this Agreement.

11.7 Severability . If any provision of this Agreement is invalid or unenforceable for any reason in any jurisdiction, such provision will be construed to have been adjusted to the minimum extent necessary to cure such invalidity or unenforceability. The invalidity or unenforceability of one or more of the provisions contained in this Agreement will not have the effect of rendering any such provision invalid or unenforceable in any other case, circumstance or jurisdiction, or of rendering any other provisions of this Agreement invalid or unenforceable whatsoever.

11.8 Waiver . No waiver under this Agreement will be valid or binding unless set forth in writing and duly executed by the Party against whom enforcement of such waiver is sought. Any such waiver will constitute a waiver only with respect to the specific matter described therein and will in no way impair the rights of the Party granting such waiver in any other respect or at any other time. Any delay or forbearance by either Party in exercising any right hereunder will not be deemed a waiver of that right.

11.9 Force Majeure . Except with respect to payment obligations hereunder, if a Party is prevented or delayed in performance of its obligations hereunder as a result of circumstances beyond such Party’s reasonable control, including, by way of example, war, riot, fires, floods, epidemics, or failure of public utilities or public transportation systems, such failure or delay will not be deemed to constitute a material breach of this Agreement, but such obligation will remain in full force and effect, and will be performed or satisfied as soon as reasonably practicable after the termination of the relevant circumstances causing such failure or delay, provided that if such Party is prevented or delayed from performing for more than ninety (90) days, the other Party may terminate this Agreement upon thirty (30) days’ written notice.

11.10 U.S. Government End-Users . Each of the software components that constitute the Regent Service is a “ commercial item ” as that term is defined at 48 C.F.R. 2.101, consisting of “commercial computer software” and “commercial computer software documentation” as such terms are used in 48 C.F.R. 12.212. Consistent with 48 C.F.R. 12.212 and 48 C.F.R. 227.7202-1 through 227.7202-4, all U.S. Government end users acquire the Regent Service with only those rights set forth therein.

11.11 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed will be deemed to be an original and all of which when taken together will constitute one Agreement.

11.12 Governing Law . This Agreement will be governed by and construed in accordance with the laws of the State of New York without regard to its conflicts of law principles.

End of Terms

REV 110713-1 CONFIDENTIAL

MASTER SAAS AGREEMENT ADDENDUM

ORDER FORM

The following products and services are licensed under the terms and conditions specified in the Master SaaS Agreement (the “Agreement”) between Regent Education, Inc. and Bridgepoint Education Inc. , dated April 8, 2016, as well as the additional terms and conditions set forth in this Order Form:

PRODUCTS



Name	Product/Service Description	Term	# of End Users	List Price Per End User	Discount	Annual Cost	Total
Regent 8	Annual Subscription Fee	3.25 years	[***]	$[***]	[***]%	$[***]	$[***]
	Hosting Services Fees						$[***]
	Software Usage Fees						$[***]
	Implementation Services						$[***]
Regent Review	Annual Subscription Fee	4.5 years				$[***]	$[***]
Regent Review	Implementation Services					$[***]	$[***]
					Total Fees		$[***]

Pricing and Payment Terms

1. Regent 8 Product Pricing . Customer will pay Regent the following fees for the Regent 8 Product:

(i) Estimated Hosting Services and Software Usage fees of $[***] during the implementation of Regent 8. The Hosting Services and Software Usage fee period is estimated at fifteen (15) months. The transition to the Annual Regent 8 Subscription fee will occur upon formal go-live of the Regent 8 solution.

(ii) Annual Regent 8 Subscription fee of $[***] for the first [***] End Users processed using the Regent 8 Product, and $[***] for each additional End User processed in excess of the first [***] End Users.

(iii) Regent 8 Implementation Services fees will be provided on a time and materials basis and are estimated at $[***]. Associated activities, deliverables, rates, and estimated costs are documented in the Statement of Work accompanying this Order Form. All travel and travel related expenses associated with the implementation will be billed at cost. All fees will be billed in accordance with the terms of the Statement of Work.

2. Regent Review Product Pricing . Customer will pay Regent the following fees for the Regent Review Product:

(i) Annual Regent Review Subscription fee of $[***] for [***] End Users processed using the Regent Review Product.

(ii) Implementation fees for the Standard Regent Review and Standard Regent Review Smart-Forms, are waived for this order form. All travel and travel related expenses associated with the implementation will be billed at cost.

REV 110713-1 CONFIDENTIAL

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

3. Invoice Schedule . Subscription fees and Implementation Services owed under this Order Form for the first twelve (12) months following the last date set forth below (“Execution Date”) shall be invoiced by Regent in accordance with the terms above and the following invoice schedule and paid by Customer in accordance with the payment terms in the agreement. Prior to invoicing Customer for each annual subscription fee, Regent shall provide Customer with a calculation of the number of End Users processed in the Regent 8 Product during the previous subscription term. In the event that the number of End Users processed exceeds the Minimum Annual End Users in effect during the previous Period, Regent shall invoice Customer for such additional End Users processed at the Price Per End User in effect during the Previous Period.



	4/8/16	10/1/16	1/1/17	3/1/17	7/1/17	4/1/18	4/1/19	4/1/20	Total
Implementation Services*	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]
Hosting Services Fees	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]
Software Usage Fees	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]
Regent 8 Subscription Fee	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]
Regent Review Subscription Fee	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]
Total	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]	$[***]

Other Terms

1. The initial term of this Order Form is four and one half (4.5) years from the last date of signature below, with automatic renewal for successive one (1) year terms, at the then current pricing, unless either party provides written notice of its desire not to renew at least ninety (90) days prior to the expiration of the then-current term.

2. Hosting services to be provided per Exhibit A.

3. Regent 8 End Users are considered processed when any of the following occurs during the initial Post-deployment Period following the Execution Date, and each subsequent annual period thereafter during the term of this Order Form: (i) the End User is loaded into the system and matched to an Institutional Student Information Record (“ISIR”); (ii) the End User is issued an award through Regent 8; (iii) the End User has documents attached to their record in Regent 8; or (iv) Customer corresponds with the End User through the Regent 8.

4. Regent Review End Users are considered processed when any of the following occurs during the first 12 months following the Execution Date, and each subsequent annual period thereafter during the term of this Order Form: (i) the End User is loaded into the system and matched to an Institutional Student Information Record (“ISIR”); (ii) the End User has documents attached to their record in Regent Review; or (iii) Customer corresponds with the End User through Regent Review.

The Parties agree to the above terms and have executed this Order Form, effective as of the last date set forth below.



CLIENT: BRIDGEPOINT EDUCATION, INC.	REGENT EDUCATION, INC.
By (Signature): /s/ Andrew Clark	By (Signature): Randolph W Jones III
Name (Printed): Andrew Clark	Name (Printed): Randy Jones
Title: President and CEO	Title: CEO
Date: Apr 22, 2016	Date: Apr 22, 2016

REV 110713-1 CONFIDENTIAL

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

HOSTED SERVICES ADDENDUM

EXHIBIT A

SERVICE LEVEL AGREEMENT

1. DEFINITIONS

Certain capitalized terms, not otherwise defined in this Exhibit A, will have the meanings set forth in the Master Agreement. The following capitalized terms will have the definitions set forth below:

1.1 “System Uptime” will mean the total amount of time during any calendar quarter, measured in minutes, during which Customer has the ability to access the Regent Services as contemplated in this Hosted Services Addendum.

1.2 “ Scheduled Downtime ” will mean the total amount of time during any calendar quarter, measured in minutes, during which Customer is not able to access the Regent Services, as hosted by Regent, due to planned system maintenance performed by Regent, as set by communication. System maintenance shall include, but not be limited to, new version releases and operating system patching, as well as bug fixes.. New version releases typically occur quarterly, and are deployed to a customer-facing QA environment for customer acceptance testing and verification prior to release to the production environment. Operating system patching typically occurs on the second Tuesday of each month (QA environment) and the following weekend (production environment). Regent will exercise reasonable efforts to perform scheduled system maintenance between the hours of 10:00 PM and 7:00 AM Eastern Standard Time.

1.3 “ Unscheduled Downtime ” will mean the total amount of time during any calendar quarter, measured in minutes, during which the Customer is not able to access the Regent Services, other than Scheduled Downtime, as defined above.

1.4 “ System Availability ” will mean, with respect to any particular calendar quarter, the ratio obtained by subtracting Unscheduled Downtime during such quarter from the total time during such quarter, and thereafter dividing the difference so obtained by the total time during such quarter. Represented algebraically, System Availability for any particular calendar quarter is determined as follows:




		(Total Quarterly Time – Unscheduled Downtime)
	System Availability =	Total Quarterly Time

NOTE : “ Total Quarterly Time ” is deemed to include all minutes in the relevant calendar quarter; to the extent such minutes are included within the Term of this Agreement.

2. CUSTOMER REQUIREMENTS

2.1 Minimum System: The service standards set forth in this Exhibit A assume that Customer and its End Users have a modern web browser and reliable internet connection. If Customer and its End Users do not have a modern web browser and/or internet connectivity, then any such failure to access the Regent Services shall not be counted against the System Availability.

2.2 Additional Customer Obligations: Customer is responsible for maintenance and management of its computer network(s), servers, software, the Customer Web Site, and any equipment or services related to maintenance and management of the foregoing. Customer is responsible for correctly configuring its systems in accordance with any instructions provided by Regent, as may be necessary for provision of access to the features and functions of the Regent Services.

2.3 Reporting of Unscheduled Downtime: Customer must promptly notify Regent in the event Unscheduled Downtime occurs. Unscheduled Downtime will be deemed to begin when Regent receives accurate notification thereof from Customer, or when Regent first becomes aware of such Unscheduled Downtime, whichever first occurs.

2.4 Non-Performance by Customer: The obligations of Regent set forth in this Exhibit A will be excused to the extent any failures to meet such obligations result in whole or in part from Customer’s or its End Users’ failure(s) to meet the foregoing obligations.

3. PERFORMANCE

3.1 System Availability: Regent will undertake commercially reasonable measures to ensure that System Availability equals or exceeds [***]% during each calendar quarter (the “Service Standard”), provided that any Unscheduled Downtime occurring as a result of (i) Customer’s breach of any provision of this Agreement; (ii) non-compliance by Customer with any provision of this Schedule D; (iii) incompatibility of Customer’s equipment or software with the Licensed Technology; (iv) performance of Customer’s systems or the Customer website; or (v) force majeure, as defined in Section 11.9, of the Terms and Conditions portion of the Agreement, or (vi) any other circumstances that are not within Regent’s control, including, but not limited to, scheduled or unscheduled interruptions caused by third party service providers (e.g., third party networks, domain name registrars), outages on the part of internet service providers, etc., shall not be considered toward any reduction in System Availability measurements.

3.2 Bandwidth Availability: Regent monitors the aggregate packet loss and transmission latency within its LAN and WAN. Regent does not monitor the packet loss or transmission latency of specific customers. After discovering or being notified by Customer of packet loss in excess of one-half percent (0.5%), Regent will use commercially reasonable efforts to determine the source of such excess packet loss or latency and to correct such problem to the extent that the source of the problem is on the Regent Network.

3.3 Access to Support; Response Times: Customer may report Unscheduled Downtime at any time (“24x7x365”) in accordance with the Regent customer support process.

REV 110713-1 CONFIDENTIAL

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

4. SYSTEM MONITORING

4.1 Monitoring Software: Regent uses intrusion detection software, network monitoring software, log monitoring software, port scan detectors, and network sniffer detectors. These utilities help with the daily monitoring of servers. Some of the key usage and uptime metrics monitored on a continual basis include:


•	Server uptime


•	Windows Services running on the machine


•	Memory utilization / quota


•	CPU utilization /quota


•	Disk utilization / quota


•	Port availability


•	Health check pages


•	Uptime availability Reports

5. RECOVERY

5.1 Disaster Recovery: In the event of a disaster that impact the ongoing operation of one or more of Regent’s hosted applications (“the Application(s)”), this Disaster Recovery Plan (“the DR Plan”) defines the procedures that will be implemented to ensure complete and timely recovery. The objectives of the DR Plan are to recover quickly, minimize data loss, minimize customer impact, and restore confidence.

6. DATA INTEGRITY AND BACK-UP

6.1 Data Integrity: Customer data is stored in discrete schemas managed by RDBMS and separated through application security, separate username/password combinations, and separate files. The application enforces separate environments in which users are limited to the application for which they're authorized. Customer data is stored separately and accessed only by the application to which Customer-authorized users have access.

6.2 Back-Up and Retention of Customer Data: Regent performs back-up and archiving of Customer Data (as defined below) according to the schedule set forth in the table below:



Type of Back-Up	Description	When does back-up occur?
Daily Incremental Files	Transactional log files	Every fifteen minutes
Daily Full Back-Up	Customer Database Content	Daily, Stored for 7 Days
Weekly Full Back-Up	Customer Database Content	Weekly, Stored for 4 Weeks
Monthly Full Backup	Customer Database Content	Monthly, Stored for 12 Months

6.3 Definitions of Customer Data: For purposes of this Exhibit A of this Hosted Services Addendum, the term “ Customer Data ” shall mean one or more databases used by the services and or products listed in the current order forms.

6.4 Recovery of Archived Data: Regent will exercise commercially reasonable efforts to restore data files from archived copies as quickly as reasonably practicable, as necessary as a result of system failure or data corruption or losses. Customer acknowledges that the amount of time required to restore archived data files is dependent upon numerous factors, including, but not limited to, severity or the relevant data corruption or loss. Restore of data is by formal request and for usage only after all other solutions have been reviewed. Restores are frequently tested by restoring production databases to QA for testing activities.

7. REMEDIES

7.1 Credits Against Fees: In the event the System Availability does not satisfy the Service Standard, then Customer will be entitled to credits against its subsequent payment obligations according to the following:

For every [***]% that the System Availability is less than the Service Standard, a credit of [***]% of Customer quarterly fee will be credited to Customer account, for a maximum of [***]% of Customer quarterly fees.

Customer must submit full documentation by e-mail to Regent with the credit request. Documentation must show details of proof of downtime. These can be in any manner including Pings, trace routes, and third-party outage notifications for the past 90 days. E-mails without full details are not liable for a credit.

In accordance with Section 6.3 of the Agreement, Regent will not be liable for any lost revenues or other damages during down time.

The Customer ’ s rights under this Section 7.1 are Customer ’ s sole and exclusive remedy with respect to any Unscheduled Downtime or any failure by Regent to meet the Service Standard.

REV 110713-1 CONFIDENTIAL

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

SOURCE CODE ESCROW ADDENDUM

This SOURCE CODE ESCROW ADDENDUM (the “ Addendum ” ) is an addendum to, and is hereby incorporated into the agreement of even date herewith entitled Master SaaS Agreement, by and between Regent Education, Inc. (“Regent”) and the Customer, including all exhibits and addenda incorporated therein (collectively, the “Agreement”).

1. ADDITIONAL DEFINITIONS. Certain capitalized terms used in this Addendum, not otherwise defined above, shall have the meanings set forth or cross-referenced below. Capitalized terms used in this Addendum that are not otherwise defined in this Addendum have the meaning set forth in the Agreement.

1.1 “ Escrowed Source Code ” shall mean the Source Code of the proprietary Regent software used to provide the Regent Services ordered under the Agreement.

1.2 “ Release Condition ” shall mean any of the circumstances under which Customer shall have a right to receive a copy of the Escrowed Source Code, as contemplated in Section 2.1.

1.3 “ Source Code ” shall mean any code, scripts, algorithms or other instructions comprising computer software in human-readable, text-based form, designed to be interpreted in such form at the time of execution by a computer software interpreter or to be compiled and translated into machine-readable, binary object-code format for execution within operating system environments and/or targeted hardware platforms.

2. ESCROW OBLIGATION.

2.1 Initial Deposit with Escrow Agent. Within thirty (30) days after the Addendum Effective Date, Regent shall deliver (or has previously delivered) one (1) copy of the Escrowed Source Code to a commercial escrow agent (the “ Escrow Agent ”), and shall enter into a binding contractual arrangement with such Escrow Agent according to which the Escrow Agent agrees (i) to hold and safeguard such Escrowed Source Code during the term of this Addendum; and (ii) to release a copy of such Escrowed Source Code to Customer if and when a Release Condition occurs.

2.2 Release Conditions. Provided that Customer is in full compliance with the terms of the Agreement, including, without limitation, payment of all amounts due and payable under the Agreement, Customer shall have a right to receive from the Escrow Agent one (1) copy of the Escrowed Source Code solely in the event that (i) Regent winds up or ceases to do business generally; or (ii) Regent has filed, or has had filed against it, a proceeding in bankruptcy or any receivership of all or substantially all of Regent’s assets, which proceeding or receivership is not dismissed or removed within one hundred and twenty (120) days.

2.3 License. Subject to Customer ’ s compliance with the terms and conditions of this Agreement, upon the delivery to Customer of any Escrowed Source Code in accordance with this Agreement, and solely during the remaining period of the Term, Regent shall grant and hereby grants to Customer a limited, non-exclusive non-transferable, non-sublicenseable right and license to use the Escrowed Source Code solely for purposes of operating the compiled version of the Escrowed Source Code on the same basis Customer was receiving the Regent Services. For the avoidance of doubt, if Customer exercises its rights under this Section 2.3, then Regent’s obligations and liabilities under the Hosted Services Addendum (Service Level Agreement) shall terminate.

2.4 Usage Limitations. Customer shall not disclose or distribute the Escrowed Source Code, or any portion thereof, to any third party and shall keep the Escrowed Source Code as strictly confidential and subject to the highest protections that Customer uses for its own most valuable confidential information. For purposes of this Agreement the Escrowed Source Code shall be considered Regent’s Confidential Information. Notwithstanding any provision in this Agreement to the contrary, Customer shall not use the Escrowed Source Code for any additional functions or purposes beyond the scope of the license granted hereunder. Upon any release of Escrowed Source Code, Regent may, at its option, terminate any agreements or other escrow arrangements with the Escrow Agent, may refrain from further escrow of the Escrowed Source Code, and Customer will have no obligation to pay for services of the Escrow Agent subsequent to the then-current term of the Escrow Agent.

2.5 Reservation of Rights. Regent hereby expressly reserves all rights in and to the Escrowed Source Code not granted in this Addendum, and, as between Regent and Customer, Regent retains all right, title and interest in the Escrowed Source Code, subject to the express license granted herein.

2.6 Disclaimers and Limitations. ANY AND ALL ESCROWED SOURCE CODE PROVIDED TO CUSTOMER UNDER THIS AGREEMENT IS PROVIDED ON AN “AS IS” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY LAW, REGENT DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE ESCROWED SOURCE CODE, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, NON-INTERFERENCE, AND/OR DATA ACCURACY, AND CUSTOMER ACKNOWLEDGES THAT THIS ADDENDUM IS SUBJECT TO ALL DISCLAIMERS AND LIMITATIONS OR LIABILITY SET FORTH IN THE AGREEMENT.

3. COMPENSATION, EXPENSES.

Customer shall pay Regent $1,000 per year, on the Effective Date and each anniversary thereof, for all expenses incurred by Regent in delivering the Escrowed Source Code to the Escrow Agent and in payment for the services of the Escrow Agent, including any taxes or similar charges applicable thereto. Payment for escrow expenses shall be due and payable within thirty (30) days after the invoice date.

4. THIRD PARTY HOSTING.

In the event of a Source Code release, as described in Section 2.2, Customer may elect to enter into a hosting agreement with Regent’s hosting partner to continue providing hosting services.

5. TERM; TERMINATION

REV 110713-1 CONFIDENTIAL

5.1 Term. This Addendum shall commence on the date of execution by both Parties (the “ Addendum Effective Date ” ) and shall remain in effect until the earlier to occur of (i) expiration of the Term or termination of the Agreement; or (ii) termination in accordance with Section 4.3 of this Addendum.

5.2 Elective Termination by Customer. Customer may, at its option, terminate this Addendum upon ninety (90) days’ written notice to Regent.

5.3 Termination for Breach. Either Party may terminate this Addendum upon written notice in the event that the other Party materially breaches this Addendum and thereafter fails to cure such breach within thirty (30) days after receipt of written notice thereof. Without limiting the foregoing, Regent may immediately terminate this Addendum upon written notice in the event that Customer becomes insolvent or enters bankruptcy during the term of this Addendum.

5.4 Effect of Termination. Customer shall have no further rights under this Addendum upon termination hereof, notwithstanding any subsequent occurrence of an event otherwise constituting a Release Condition, and any license granted under Section 2.3 shall cease and terminate. Within thirty (30) days following termination of this Addendum, Customer will return or, at Regent’s option, destroy (and thereafter certify such destruction in writing) all tangible embodiments, in whole or in part, of any Escrowed Source Code remaining in Customer’s possession or control. After termination of this Addendum, Regent may refrain from further escrow of the Escrowed Source Code, and may require the Escrow Agent to return to Regent or destroy such Escrowed Source Code. The provisions of Sections 2.5, 2.6, 3 and this 5.4 will survive the termination of this Addendum.

The Parties agree to the above terms and have executed this Addendum as of the date(s) set forth below.



CUSTOMER: BRIDGEPOINT EDUCATION, INC.	REGENT EDUCATION, INC.
By (Signature): /s/ Andrew Clark	By (Signature): Randolph W Jones III
Name (Printed): Andrew Clark	Name (Printed): Randy Jones
Title: President and CEO	Title: Chairman, CEO
Date: Apr 22, 2016	Date: Apr 22, 2016

REV 110713-1 CONFIDENTIAL

Exhibit 10.4

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under C.F.R. § 200.84(b)(4) and 17 C.F.R. 24b-2

CAMPUS MANAGEMENT CORP.

CAMPUSNET ^® INFRASTRUCTURE AS A SERVICE (IaaS) AGREEMENT

This INFRASTRUCTURE AS A SERVICE AGREEMENT, the Exhibits hereto, and Addenda as mutually executed from time-to-time (collectively, the “Agreement”) is effective as of this __________ day of Jun 30, 2016 , 2016 (the “Effective Date”), between BRIDGEPOINT EDUCATION INC. , a Delaware corporation, having its principal place of business at 13500 Evening Creek Drive North, Suite 120, San Diego, California 92128 (hereinafter “Customer” or “BPI”), and CAMPUS MANAGEMENT CORP. , a Florida corporation, having its principal place of business at 5201 Congress Avenue, Boca Raton, Florida 33487 (hereinafter “CMC”).



BACKGROUND WHEREAS, CMC is engaged in part in the business of operating an infrastructure as a service business (“CMC IaaS”); WHEREAS, under a software license agreement with CMC (the “Master Agreement” or “Software License Agreement”), Customer has licensed certain software; and WHEREAS, CMC is willing to provide Customer with non-exclusive rights to deploy the approved software on the CMC IaaS in accordance with this Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. The general terms (“General Terms”) below apply to CMC IaaS. Specific terms and conditions that apply are contained in the applicable Exhibits. In the event of a conflict between the General Terms and any term contained in an Exhibit, and/or Addendum, the following shall be the order of precedence: the Addendum, the Exhibit and the General Terms. GENERAL TERMS 1. DEFINITIONS “Application(s)” means any web or other application Customer creates using the CMC IaaS including any source code written by Customer to be used with the CMC IaaS, or hosted on a Virtual Machine (as defined below). “CMC Content” means any Content (as defined below) that CMC or any of its affiliates make available in connection with the CMC IaaS (as defined below) to allow access to and use of the CMC IaaS. “CMC Infrastructure as a Service (IaaS)” means a managed or an unmanaged Virtual Server that is running on the Infrastructure. “Licensed CMC Software” means software licensed from CMC pursuant to a Master Agreement or Software License Agreement. “Data Center” means CMC’s secure and fault tolerant managed facility where CMC IaaS is physically located. “CMC Marks” means any trademark, service marks, service or trade names, logos and other designations of CMC and its affiliates that CMC may make available to Customer in connection with this Agreement.		“Content” means software (including machine images), data, text, audio, video, imagines or other content. “Customer Content” means Content that Customer or any User (as defined below) (a) runs on the CMC IaaS, (b) causes to interfere with the CMC IaaS, or (c) uploads to the CMC IaaS under Customer’s account or otherwise transfers, processes, uses or stores in connection with Customer’s account. “Documentation” means the developer guides, user guides and any other technical and operations manuals and specifications for the CMC IaaS provided by CMC. “Downtime” means unplanned service disruptions to the CMC IaaS. Downtime shall exclude service disruptions arising from Customer’s systems or service providers or service disruptions due to Customer’s own errors. CMC will pass through, on a proportionate basis, to Customer any credits received from its third party hosting provider as a result of the Downtime. “Infrastructure” means the datacenters, security devices, cables, routers, switches, hosts, computer nodes, physical servers, and other equipment CMC uses to host Virtual Servers (as defined below). “Login Credentials” mean any password, authentication keys or security credentials that enable Customer’s access to and management of the CMC IaaS. “Policies” means CMC’s written policies to the extent applicable (e.g., Acceptable Use Policy, E-mail and Anti-Spam Policies) all of which are posted on the CMC web site at http://www.campusmanagement.com/EN-US/aboutUs/Pages/CampusNet.aspx, as may be updated from time to time. “Production Environment” means the specific environments including hardware, software, and database instance, which are exclusively used as the single authoritative and live system Customer uses for transactional processing. Production Environment excludes any and all testing, training, and other non-live application or environments. “Third Party Content” means Content made available to Customer by any third party in conjunction with the CMC IaaS. “User” means any individual that directly or indirectly through another user (a) accesses or uses Customer Content; or (b) otherwise accesses or uses the CMC IaaS under Customer’s account.

CampusNet IAAS Agreement Page 1 of 8 Confidential

TA-042516



“Virtual Servers” means one of any number of isolated server emulations running on a single physical servicer located on the Infrastructure. 2. USE OF THE CMC IAAS 2.1 Generally . Customer may access and use the CMC IaaS in accordance with this Agreement. Customer will adhere to all laws, rules and regulations applicable to its use of the CMC IaaS, including the Policies. The CMC IaaS is provided to Customer for its internal use and Customer shall not resell the CMC IaaS to any third party. 2.2 Third Party Content . Third Party Content, such as software applications provided by third parties, may be made available by other entities under separate terms and conditions. Customer is responsible to comply with applicable terms and conditions for Third Party Content. Customer’s use of any Third Party Content is at Customer’s sole risk. CMC is not responsible for providing support to Third Party Content. Customer understands that not all external Third Party Content may comply with CMC’s information security policies and Customer agrees to submit any new interface or connectivity requirement requests to CMC prior to installation into the Data Center. Third Party Content that does not comply with CMC’s information security policies will not be installed in the Data Center. 2.3 Facilities and Use of Customer Data . CMC will maintain appropriate administration, physical and technical safeguards that adhere to security standards that a reasonably prudent service provider in the same industry would provide under like circumstances to store and process Customer Data. CMC accesses and uses Customer Data only as necessary to provide the IaaS Service, perform or enforce contractual obligations or comply with applicable law. By using the CMC IaaS, Customer consents to the processing and storing of Customer Data. The parties agree that CMC is merely an information technology service provider. 3. CHANGES 3.1 To the CMC IaaS . Subject to Section 10.2(a)(ii), due to technology advancements and changes to Licensed CMC Software, CMC may change, discontinue or deprecate the CMC IaaS or change or remove features or functionality of the CMC IaaS from time to time. CMC will provide Customer with six (6) months prior notice of any material changes or discontinuance. 4. CMC OBLIGATIONS 4.1 Scope of Services . The CMC IaaS shall include: (i) the deployment and administration of server hardware and the licensed CMC software at the CMC hosting center; (ii) monitoring communication circuit that is reasonably within the control of CMC or CMC’s Internet service provider and hardware availability; (iii) installation of all updates, upgrades, releases, error corrections, and enhancements (except that configuration of new features exposed by such installation will require configuration by Customer or a separate Statement of Work) of the licensed CMC Software; and (iv) routine backups of software and data residing on the data repository location (“Data Repository Location”). This Agreement is strictly for the CMC IaaS described herein and does not grant a license to access or use the CMC software, which must be licensed by Customer under a separate Master Agreement or Software License Agreement, as applicable. The CMC IaaS shall be pursuant to the Service Level Agreement set forth in Exhibit C-4. CMC will not support environments that are not supported/certified by CMC product development or by third party vendors.		4.2 Standard of Performance . CMC agrees to provide the CMC IaaS to and for the benefit of Customer in accordance with the terms of this Agreement, including all Schedules and Exhibits hereto, and use industry practices and methods to avoid, prevent, and mitigate any material adverse effect on the IaaS or the continuity and quality of the services being provided to Customer. 4.3 Infrastructure . CMC shall (i) provide the Infrastructure to meet the functional and performance requirements based on the components defined in Exhibit A; (ii) be responsible for the day-to-day management and maintenance of the Infrastructure required to support the licensed CMC Software and Applications; (iii) monitor the Infrastructure for thresholds and availability 7x24x365; and (iv) administer all operating systems, database, networking, virtualization, including Citrix and VMware, required to operate CMC’s Licensed Software. CMC will be responsible for software licenses for Microsoft Windows Operating System, Microsoft SQL Server, and Citrix software (if applicable) for non-CMC licensed software. In the case that the Customer requires additional infrastructure/environments to support non-CMC licensed software, then Customer shall be responsible for such licenses. 4.4 Software Licenses . CMC will provide third party software licenses required to operate CMC’s Licensed Software. 4.5 Information Security . CMC will make commercially reasonable efforts to keep Customer’s Content and data appropriately secured against unauthorized access including: (i) CMC will maintain Internet firewalls to protect Customer’s Infrastructure and Applications from unwanted and inappropriate access; (ii) CMC requires that all Internet traffic to and from the Infrastructure use encrypted methods to protect the confidentiality of the data stored in the Customer’s Applications; (iii) CMC will provide a Virtual Private Network (VPN) router at the CMC primary datacenter using IPSec/3DES encryption technologies for connecting the networks between the Data Center and Customer’s premises. Customer must provide a Cisco compatible device on its premises and local IP network configuration that does not conflict with the Data Center private IP addressing. Alternatively, Customer may choose to install a point to point circuit from Customer’s premises network with an endpoint to the Data Center as the primary mode of connectivity. All related expenses and costs for the point to point circuit and the projected date of availability will be Customer’s responsibility; (iv) All systems and services in the Data Center are subject to vulnerability scanning to identify any information security risks that may be present and trigger remediation efforts; (v) CMC will provide, install and maintain active anti-virus services on all appropriate systems and services installed in the Data Center; (vi) CMC requires that all Internet facing application services use SSL communications for proper encryption of data transmitted between the Data Center and Customer; and

CampusNet IAAS Agreement Page 2 of 8 Confidential

TA-042516



(vii) CMC will maintain regular patch management practices so that newly released security patches are applied to servers supporting Customer’s Applications. 4.6 Data Backup . CMC shall perform a complete backup of the Data Repository Location each night using generally accepted backup procedures (“Backup Data”). The Backup Data shall be maintained at the CampusNet Services colocation center and shall be retained for up to seven (7) days before being destroyed; provided, weekly, CMC shall make a copy of the Backup Data and store it at an off-site storage location (“Off-site Center”). The Backup Data shall be retained at the Off-site Center for twelve (12) months before being destroyed. Upon Customer request and for no additional charge, so long as Customer is not in default of the Agreement, CMC shall provide a copy of the Backup Data on a monthly basis. For an additional charge, Customer may request a copy of the Backup Data on a more frequent basis. The CMC IaaS is operated in a manner designated to provide for high levels of system availability. This includes redundancy for all major system components, or where appropriate, equipment supported by manufacturers providing the CMC IaaS with 24/7/365 service. 4.7 Availability of Service . The CMC IaaS and all Customer Content shall be accessible to Customer’s authorized users 24 hours per day, 7 days a week, excluding scheduled times for maintenance and updates of CMC IaaS infrastructure software of which Customer will be notified in advance, and any Downtime due to Internet outages resulting from failures reasonably outside the control of CMC or CMC’s hosting provider, corruption of Internet route information within a tier 1 internet route server environment, major connectivity failures within or between major tier 1 providers or corruption of internet root level DNS services. In the event that, during any three (3) month period, the Customer Content experiences three or more episodes of Downtime with one or more episodes of Downtime lasting at least six (6) hours each and two (2) or more additional episodes of Downtime lasting at least three (3) hours each, Customer shall have the right to terminate this Agreement upon fifteen (15) days written notice from the last episode of Downtime, within 180 days following the written notice to CMC, without payment of any penalty, which termination right shall be Customer's sole and exclusive remedy for Downtime other than Downtime caused by CMC's willful misconduct. 4.8 Control of Services . CMC shall manage the CMC IaaS. CMC may, in its sole discretion (i) reengineer CMC network components and/or change locations where services are performed; (ii) perform its obligations through its subsidiaries or affiliates, or through the use of selected independent subcontractors; and (ii) modify and/or replace technology or service architectures relating to the services. Notwithstanding clause (ii) above, CMC shall be responsible for such other party’s performance of CMC obligations under CMC IaaS. 4.9 Personnel . CMC will dedicate personnel necessary to perform its responsibilities hereunder. CMC reserves the right to determine the personnel assigned to the CMC IaaS and to replace, rotate or reassign such personnel during the CMC IaaS Term (as defined in Section 10.1 below). 4.10 Services Outside Scope . Any custom services provided outside the scope set forth above shall be engaged under professional services, subject to CMC's requirements, including, without limitation, any billing, and technical requirements. Any changes in federal, state or local requirements, or any Customer specific requirements, including, without limitation, with respect to security or privacy, that result in CMC providing additional services or incurring		costs, shall be billed to and promptly paid by Customer. CMC reserves the right to refuse to provide certain services in the event Customer's requirements are not practicable or changes in law affect CMC’s performance of obligations hereunder. 4.11 Minimization of Planned Service Disruptions . Whenever conditions reasonably permit, the parties will mutually agree on the scope, timing, frequency and duration of any planned service disruptions or delays and will jointly attempt to minimize any unnecessary impact on Customer’s business operations. Routine daily maintenance will be accomplished whenever possible by scheduling between the hours of 10:00 p.m. and 8:00 a.m. Eastern Time. In addition, longer maintenance will be accomplished when possible on weekends between the hours of 6:00 p.m. ET Saturday and 8:00 a.m. ET Monday, unless CMC notifies Customer otherwise. CMC shall monitor the CMC IaaS Services 24/7/365. 4.12 Unplanned Service Disruptions . Downtime may occur from time-to-time. CMC will use commercially reasonable efforts to attempt to prevent Downtime that could impact Customer’s business operations to the extent such factors are within CMC's reasonable control; provided, Customer acknowledges that conditions of Customer and third parties may affect Customer's use of the CMC IaaS, for which CMC shall have no liability or obligations (by way of example and not limitation, Internet disruptions or third party software bugs), although CMC will attempt to coordinate with Customer as reasonably requested to assist to correct the Downtime to the extent practicable. 4.13 Disaster Recovery Plan . Throughout the CMC IaaS Term, CMC shall maintain a disaster recovery plan and the capacity to execute such plan. Upon request by Customer, which shall not be more frequently than annually, CMC shall provide Customer with an executive summary of CMC’s most current disaster recovery plan. 4.14 Disaster Recovery . If the Data Center is damaged, in whole or part, by fire or other casualty at any time during the Term of this Agreement, CMC will promptly and diligently seek to have such damage repaired. If the Data Center is damaged in such a way that prevents CMC from securely delivering its services defined hereunder within a reasonable amount of time, then CMC shall failover the Production Environment and licensed CMC software to CMC’s disaster recovery warm facility. In such event, CMC expects the recovery time to be no more than forty-eight (48) hours, and CMC’s disaster recovery warm facility will support Customer’s Infrastructure at sixty percent (60%) of the Production Environment’s normal operating capacity. 5. CUSTOMERS OBLIGATIONS 5.1 Technical Data and Information . Customer shall provide CMC with all technical data and all other information CMC may reasonably request from time to time to allow CMC to supply the CMC IaaS to Customer. All information Customer supplies will be complete, accurate and given in good faith. 5.2 Lawful Use . Customer will use the CMC IaaS for legitimate and lawful business purposes only. Any breach of this Section 5.2 will constitute a material breach of this Agreement and in addition to CMC’s termination rights set forth in Section 10.2(b) below, CMC may, at any time and at CMC’s sole option, suspend all or part of the CMC IaaS immediately and until the breach is remediated. 5.3 Content . Customer is solely responsible for the Customer Content that Customer, Users or

CampusNet IAAS Agreement Page 3 of 8 Confidential

TA-042516



subcontractors create, install, upload or transfer on, from or through the CMC IaaS. 5.4 Backups . Customer is solely responsible for backing up all Customer Content on the CMC IaaS to the Data Repository Location. Customer acknowledges and agrees to maintain outside the CMC IaaS a current backup copy of all Content stored in the CMC IaaS. 5.5 Software Updates . Customer acknowledges and agrees that from time to time CMC and third party providers will release critical patches or updates. Customer must agree to not unreasonably delay application of any software or hardware patches or updates identified by CMC as mandatory for use with the CMC IaaS. CMC may elect to discontinue service related to the applications or infrastructure with the identified vulnerability. 5.6 Digital Certificates . Customer agrees that it will provide 128bit, SSL Digital Certificates to support all internet facing services in support of Customer’s environment. 5.7 Customer Relationship Manager . Customer will appoint a relationship manager to manage the relationship established by this Agreement (“Customer Relationship Manager”) who will: (a) Coordinate and monitor Customer’s obligations under this Agreement, and serve as the primary liaison with the CMC relationship manager. (b) Provide communication on events and reporting problems with the CMC IaaS. (c) Provide CMC with an outage communications plan consisting of the name, telephone number including cell phone number, and email address of Customer personnel to be notified in the event of an outage. CMC shall contact Customer promptly regarding an outage or Downtime. 5.8 Connectivity . Customer agrees to provide the high-speed Internet and telecommunications connections and supporting equipment required by CMC to maintain connectivity between Customer’s remote location(s) and the CMC IaaS location. Customer will bear the costs of such connections and supporting equipment. CMC may assist Customer in defining such connectivity in which case Customer may, at CMC’s discretion, be billed for such professional services. 5.9 Software Licenses . CMC software and the CMC IaaS use many components of Microsoft products. At all times during the CMC IaaS Term, Customer is required to hold a basic Microsoft ^® Office license for each Customer computer that will be used on the CMC IaaS. To the extent applicable, Customer’s statement attesting to the existence of such valid license is attached as Exhibit C-2. 5.10 Print Drivers . CMC uses the Citrix universal print driver. Other printers may work, but Customer acknowledges that formatting and functionality may fail on any non-compliant printing standards or drivers. Customer may require assistance from its authorized printer vendor. 6. SECURITY AND DATA PRIVACY 6.1 Security . CMC IaaS provides Customer with certain software and functionality to help Customer protect Customer Content from unauthorized access. Customer shall properly configure and use the CMC IaaS so that it is suitable for Customer’s use. Customer is responsible for maintaining appropriate security and protection of Customer Content, which may include the use of encryption technology to protect Customer Content from unauthorized access. Customer is		responsible for providing any necessary notices to Users and obtaining any legally-required consents from Users concerning use of the CMC IaaS. Customer is solely responsible for complying with any laws or regulations that might apply to Customer Content. Login Credentials are for Customer’s internal use only. Customer is responsible for any use that occurs under Login Credentials. If Customer believes an unauthorized User has gained access to Login Credentials, Customer will notify CMC immediately. Neither CMC nor its affiliates are responsible for any unauthorized access to or use of Customer’s account. If CMC determines that there has been unauthorized access to, or use or disclosure of, Customer Content, CMC shall use commercially reasonable efforts to notify Customer, taking into account any applicable law, regulation, or governmental request. 6.2 Transfer of Data . Customer consents that CMC shall store Customer Content in the United States. CMC transfers Customer Data solely pursuant to CMC’s Backup Data obligations as set forth in Section 4.6 above. By uploading Customer Content into the CMC IaaS, Customer may transfer and access Customer Content from around the world, including to and from the United States. To the extent that Customer provides Customer Content in connection with CMC customer support, Customer consents that CMC may handle Customer Content in any country in which CMC or its affiliates maintain facilities. It is the responsibility of Customer to ensure that Customer complies with applicable law with respect to transferring data across geographical locations. 6.3 Compliance with Laws . CMC shall comply with all laws applicable to our provision of the CMC IaaS, including applicable security breach notification laws, but not including any laws applicable to Customer that are not generally applicable to information technology service providers. Customer shall comply with all laws applicable to Customer Data and Customer’s use of the CMC IaaS, including any laws applicable to Customer. 7. FEES, PAYMENT AND TAXES 7.1 General . The pricing for the CMC IaaS provided herein is set forth in Exhibit A . 7.2 Late Fees . Any amount invoiced under this Section 7 and not paid in full as required herein shall bear interest at the lesser of 1.5% per month or the highest rate allowed by applicable law, and shall be subject to reasonable costs and attorney's fees related to collection. Upon written notice, CMC reserves the right to suspend any or all services to delinquent accounts until such time as the account is brought current and Customer agrees to hold CMC harmless for any interruption of CMC IaaS arising from any payment delay. 7.3 Taxes . Customer will promptly pay, indemnify and hold CMC harmless from all taxes on the CMC IaaS, including transaction, local, value-added, sales and service taxes, other than taxes on the net income or profits of CMC. Subject to any applicable laws, the foregoing will not apply to the extent Customer is formed as a not-for-profit or publically funded state organization and promptly provides CMC an applicable tax exempt certificate. All prices quoted are net of taxes. 7.4 Disputed Invoice . Customer may withhold any invoiced line item amounts due hereunder if it, in good faith, disputes the item in a detailed writing within twenty (20) days of receipt of the invoice and promptly pays the undisputed amounts. CMC reserves the right to cease work without prejudice if undisputed amounts are not paid within thirty (30) days after the date of the invoice. CMC may allocate

CampusNet IAAS Agreement Page 4 of 8 Confidential

TA-042516



payments received to fees and expenses in its sole discretion and Customer’s communications on or with payments shall not be construed as a novation. 8. BILLING AND PAYMENT PROCEDURES 8.1 Payment Schedule . CMC will bill Customer as further described in Exhibit A . 8.2 Billing and Payment Dates . CMC will bill Customer monthly by the 10 ^th of the following month as set forth in Exhibit A . Customer shall pay CMC in full on or before the fifteenth (15 ^th ) day following the date of the invoice. If Customer falls into arrears on payments, CMC may require Customer to maintain a deposit as a condition to CMC continuing to provide the CMC IaaS. 8.3 Changes . Customer may request to expand the CMC IaaS by delivering a written request and entering into a mutually executed Addendum. 9. TEMPORARY SUSPENSION 9.1 Generally . CMC may suspend Customer’s right to access or use any portion of all of the CMC IaaS immediately upon notice to Customer if: (a) Customer’s use of the CMC IaaS (i) poses a security risk to the CMC IaaS or any third party; (ii) may adversely impact the CMC IaaS or the systems or Content of any other CMC customer; (iii) may subject CMC, its affiliates or any third party to liability; (iv) may be fraudulent; or (v) violates Policies; (b) Suspension is required pursuant to CMC’s receipt of a subpoena or other request by a law enforcement agency; or (c) Customer is in breach of this Agreement, including Customer is delinquent on its payment obligations (except for Section 7.4 above) for more than 30 days. 9.2 Effect of Suspension . If CMC suspends Customer’s right to access or use any portion or all of the CMC IaaS: (a) Customer is responsible for all fees and charges Customer has incurred through the date of suspension; (b) Customer remains responsible for any applicable fees and charges for any CMC IaaS to which Customer continues to have access, as well as applicable data storage fees and charges, and fees and charges for in-process tasks completed after the date of suspension; and (c) Customer will not receive any service credits under the Service Level Agreement for any period of suspension. CMC will not erase any Customer Content as a result of Customer’s suspension. CMC’s right to suspend Customer’s access to CMC IaaS is in addition to CMC’s right to terminate this Agreement pursuant to Section 10 below. 10. TERM AND TERMINATION 10.1 Term . The CMC IaaS will commence on the Commencement Date and will continue for the period specified in Exhibit A (“CMC IaaS Term”). 10.2 Termination . (a) Customer : Customer may terminate this Agreement:		(i) with cause in the event CMC materially breaches its obligations under the Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from Customer. (ii) early upon sixty (60) days written notice and payment of early termination fee as set forth in Exhibit A . (iii) pursuant to Section 4.7, Availability of Service, set forth above. (b) CMC . CMC may terminate this Agreement: (i) with cause in the event Customer materially breaches its obligations under the Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from CMC. (ii) immediately upon notice to Customer: (A) for cause, if any act or omission by Customer results in a suspension described in Section 9.1 above; (B) if CMC’s relationship with a third party who provides software or other technology CMC uses to provide the CMC IaaS expires, terminates or requires CMC to change the way it provides the software or other technology as part of the CMC IaaS; (C) if it is CMC’s good faith belief that providing the CMC IaaS service offering to the entire customer base creates a substantial economic or technical burden or material security risk for CMC; (D) in order to comply with the law or requests from governmental entities; or (E) if CMC determines that the use of the CMC IaaS has become impractical or unfeasible for any legal or regulatory reason. 10.3 Effect of Termination . Upon termination of the CMC IaaS for any reason, CMC will disable Customer’s access to the CMC IaaS and Customer shall promptly pay all amounts due. Each party shall promptly return or destroy any of the other party’s Content or Confidential Information (as defined below). CMC may erase Customer Content stored on the Infrastructure thirty (30) days after the date of termination. Customer will pay CMC its reasonable fees and expenses on a time and material basis if CMC assists Customer with the transition of Customer Content. 11 CONFIDENTIAL INFORMATION 11.1 Confidential Information . Neither party nor any third party acting on its behalf will for any reason at any time use or disclose any proprietary information of the other party, including, without limitation, relating to the processes, techniques, work practices, customers, prospective customers, suppliers, vendors, business practices, strategies, business plans, financial information, marketing, third party licenses, products, proprietary rights or trade secrets of the other party (collectively the “Confidential Information”). Each party shall use at least the same degree of care in safeguarding the other party’s Confidential Information as it uses in safeguarding its own Confidential Information, but not less than due diligence and care, to prevent the theft, disclosure, copying, reproduction, distribution and preparation of derivative works of the other party's Confidential Information. Either party may disclose Confidential Information to its employees, independent contractors and advisors that have a need to know in the course of their assigned duties and responsibilities in connection with the Agreement, provided such parties are bound by legally binding obligations to protect such Confidential Information in a manner consistent with the Agreement. 11.2 Exceptions . Confidential Information does not include (i) information already known or independently developed by the recipient without use or reliance on the other party’s Confidential Information, as evidenced by records, (ii)

CampusNet IAAS Agreement Page 5 of 8 Confidential

TA-042516



information in the public domain through no wrongful act of the recipient, or (iii) information received from a third party who was not under a duty of non-disclosure. 11.3 Disclosure Required by Law . If one party (the “Receiving Party”) is required by a lawful order from any court or agency of competent jurisdiction to disclose Confidential Information of the other party (“Disclosing Party”), the Receiving Party shall promptly notify the Disclosing Party of such order so that the Disclosing Party may take reasonable steps to limit further disclosure, including obtaining a protective order or other reasonable assurance that confidential treatment will be accorded to the Confidential Information. If, in the absence of a protective order, the Receiving Party is compelled as a matter of law to disclose Confidential Information, the Receiving Party will use reasonable efforts to disclose only the Confidential Information that is required by law to be disclosed. With respect to publically funded state institutions, CMC acknowledges that certain information and documents may be subject to public records laws, and Customer shall provide CMC an opportunity to review and object to disclosure (including obtaining a protective order) pursuant to state law. 11.4 Remedies . Confidential Information shall remain the sole property of the Disclosing Party or its respective licensor. In the event of a breach or threatened breach of this provision, the Disclosing Party shall be entitled to obtain preliminary injunctive relief, without posting bond, to prevent the use and disclosure of such Confidential Information, in addition to all other remedies available at law and in equity. 12. INTELLECTUAL PROPERTY 12.1 CMC Content; CMC IaaS; License Grant . CMC, its affiliates and licensors own and reserve all right, title and interest in and to the CMC IaaS and CMC Content, including all improvements, enhancements, modifications and derivatives works thereof. CMC shall have a royalty-free, worldwide, perpetual license to use or incorporate into the CMC IaaS and Documentation any suggestions, ideas, enhancement requests, feedback, recommendations or other information provided by Customer or its Users relating to the operation of the CMC IaaS or Documentation. CMC grants Customer a non-exclusive and non-transferable license to do the following: (i) access and use the CMC IaaS solely in accordance with this Agreement; and (ii) copy and use the CMC Content solely in connection with Customer’s permitted use of the CMC IaaS. 12.2 Restrictions . Customer shall not (and shall not permit any User, employee, contractor or other party to): (i) copy, modify, create a derivative work of, reverse engineer, decompile, translate, disassemble or otherwise attempt to extract the source code of the CMC IaaS or any component thereof; or (ii) resell or sublicense the CMC IaaS. 12.3 Customer Content . Customer or Customer’s licensor own all right, title and interest in and to Customer Content. Except as provided in this Section 12, CMC obtains no rights under this Agreement to Customer Content. Customer consents to CMC’s use of Customer Content to provide the CMC IaaS to Customer. CMC may disclose Customer Content to provide the CMC IaaS to Customer and User or comply with any request of a governmental or regulatory body. 12.4 Trademarks and Copyrights . Third parties retain trademark, copyright and other proprietary rights in and to Third Party Content. CMC retains all right, title and interest to CMC Marks.		13. WARRANTIES 13.1 CMC’s Limited Warranties . CMC represents, warrants and covenants that: (a) CMC has the authority to enter into this Agreement. (b) Neither it entering into nor its performance of this Agreement conflicts with or creates a breach of contract or obligation to which it is bound. (c) CMC shall perform the CMC IaaS in a professional and workmanlike manner. (d) CMC, in the operation of its business, shall remain at all times during the Agreement in compliance in all material respect with applicable federal, state and local laws, including, without limitation, all applicable U.S. Department of Education rules and regulations. 13.2 Customer’s Limited Warranties . Customer represents, warrants and covenants that: (a) Customer has authority to enter into and perform in accordance with the provisions of this Agreement. (b) Neither it entering into nor its performance of this Agreement conflicts with or creates a breach of contract or obligation to which it is bound. (c) No Customer Content on the CMC IaaS is illegal, defamatory, malicious, harmful or discriminatory based on race, sex, religion, nationality, disability, sexual orientation, or age. (d) Customer will not attempt to circumvent or disable any of the security-related, management or administrative features of the CMC IaaS. (e) Customer, in the operation of its business, shall remain at all times during the Agreement in compliance in all material respects with applicable federal, state and local laws, including, without limitation, all applicable U.S. Department of Education rules and regulations. 14. DISCLAIMER OF WARRANTIES. THE CMC IAAS IS PROVIDED “AS IS”. CMC AND ITS AFFILIATES AND LICENSORS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE REGARDING THE CMC IAAS OR THE THIRD PARTY CONTENT, INCLUDING ANY WARRANTY THAT THE CMC IAAS OR THIRD PARTY CONTENT WILL BE UNINTERRUPTED, ERROR FREE OR FREE OF HARMFUL COMPONENTS, OR THAT ANY CONTENT, INCLUDING CUSTOMER CONTENT OR THIRD PARTY CONTENT, WILL BE SECURE OR NOT OTHERWISE LOST OR DAMAGED. CUSTOMER ACKNOWLEDGES THAT CMC DOES NOT CONTROL OR MONITOR THE TRANSFER OF DATA OVER THE INTERNET, AND THAT INTERNET ACCESSIBILITY CARRIES WITH IT THE RISK THAT CUSTOMER’S PRIVACY, CONFIDENTIAL INFORMATION AND PROPERTY MAY BE LOST OR COMPROMISED. EXCEPT TO THE EXTENT PROHIBITED BY LAW, CMC, ITS AFFILIATES AND LICENSORS DISCLAIM ALL WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND ANY WARRANTIES ARISING FORM A COURSE OF DEALING, USAGE OR TRADE PRACTICE. 15. LIMITATION OF LIABILITY . EXCEPT FOR THE OBLIGATIONS HEREIN TO INDEMNIFY AGAINST THIRD

CampusNet IAAS Agreement Page 6 of 8 Confidential

TA-042516



PARTY CLAIMS OR BREACH OF INTELLECTUAL PROPERTY RIGHTS, IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING LOST SAVINGS, PROFIT OR BUSINESS INTERRUPTION EVEN IF NOTIFIED IN ADVANCE OF SUCH POSSIBILITY) ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT. IN ADDITION, EXCEPT WITH RESPECT TO A WILLFUL BREACH, BREACH OF INTELLECTUAL PROPERTY RIGHTS, OR OBLIGATIONS HEREIN TO INDEMNIFY AGAINST THIRD PARTY CLAIMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR DAMAGES IN EXCESS OF THE TOTAL AMOUNT PAID FOR CMC IAAS DURING THE TWELVE MONTH PERIOD IMMEDIATELY PRECEDING THE DATE ANY SUCH CAUSE OF ACTION AROSE. The foregoing limitation of liability shall not be construed as an express or implied waiver by a publically funded state institution of its governmental immunity or as an express or implied acceptance by the institution of liabilities arising as a result of actions which lie in tort or could lie in tort in excess of the liabilities allowed under applicable state law. 16. INDEMNIFICATION 16.1 Customer . Customer shall indemnify, defend and hold harmless CMC and its affiliates, and each of its respective officers, directors, employees, agents, independent contractors, successors and assigns from and against liability for any third party claims based on: (i) Customer’s use of the CMC IaaS or any Customer Content; (ii) Customer’s breach of this Agreement or violation of applicable law; (iii) the alleged infringement or misappropriation of third party rights by Customer Content or by the use, development, design, production, advertising or marketing of Customer Content; (iv) Customer’s relationship with third party software providers for software installed or stored in the CMC IaaS; or (v) Customer’s failure to use reasonable security precautions. Furthermore, if CMC or its affiliates are obligated to respond to a third party subpoena or other compulsory legal order or process described in this Section 16.1, Customer shall also reimburse CMC for reasonable attorneys’ fees and costs and shall pay CMC on a time and material basis for time and materials spent. 16.2 CMC . CMC shall indemnify, defend and hold harmless Customer and its affiliates, and each of its respective officers, directors, employees, agents, independent contractors, successors and assigns from and against liability for any third party claims based upon the CMC IaaS infringing or misappropriating any U.S. patent, copyright, or trademark of such third party. Notwithstanding the foregoing, in no event will CMC have any obligations or liability under this Section 16.2 arising from: (i) Customer’s use of CMC IaaS in a modified, unauthorized or unintended form; (ii) Customer’s violation of this Agreement; (iii) Customer’s use of the non-current versions of the CMC IaaS; or (iv) any Customer Content. 16.3 Process . The indemnified party shall promptly notify the indemnifying party of any claim subject to this Section 16, but the indemnified party’s failure to promptly notify the indemnifying party will only affect the indemnifying party’s obligations under this Section 16 to the extent that the indemnified party’s failure prejudices the indemnifying party’s ability to defend the claim. The indemnifying party may: (i) use counsel of its choice (subject to the indemnified party’s written consent); and (ii) settle the claim as the indemnifying party deems appropriate, provided that the indemnifying party		obtains the indemnified party’s prior written consent before entering into any settlement. The indemnified party may also assume control of the defense and settlement of the claim. Publically funded state institutions shall be liable for damages incurred by CMC, but shall not be required to also indemnify CMC to the extent applicable state laws expressly prohibit the institution from indemnifying CMC. 17. DISPUTES; CHOICE OF LAW 17.1 Dispute Resolution . The parties agree that prior to commencing any legal action, all disputes between them shall be submitted for informal resolution to their respective chief operating officers or his/her authorized designee with power to bind his/her respective company. The representatives shall meet within ten (10) days at a mutually agreeable location, but shall not be required to meet for more than two (2) business days; the timeline for performance of each party’s obligations hereunder shall be tolled proportionately until, in accordance with the foregoing, the dispute is resolved or the parties stop meeting without having resolved such dispute. Provided, the foregoing process shall not require a party to delay obtaining any injunctive relief or equitable remedies based on a claim arising from the other party’s breach of intellectual property, confidentiality or non-solicitation obligations. 17.2 Jurisdiction; Venue . The parties agree that no oral or written representation made during the course of any settlement discussions shall constitute a party admission. If the parties are still unable to reconcile their differences in accordance with the foregoing procedures, each party hereby agrees that any controversy or claim, whether based on contract, tort or other legal theory, arising out or relating to the Agreement, shall be maintained exclusively in the jurisdiction and venue of the courts sitting in and for Palm Beach County and the Southern District of Florida. The prevailing party shall be entitled to reimbursement of reasonable attorneys' fees and costs. The parties expressly waive right to trial by jury. The foregoing choice of venue shall not apply to publically funded state institutions to the extent applicable state laws expressly prohibit the institution from litigating outside of its home state. 17.3 Governing Law . The Agreement shall be governed by and construed in accordance with the substantive laws of Florida, without regard to conflict of laws principles. The parties expressly opt out of the application of the UN Convention on the International Sale of Goods. The foregoing choice of law shall not apply to publically funded state institutions to the extent applicable state laws expressly prohibit the institution from litigating under a foreign state law. 18. ASSIGNMENT . CMC hereby agrees it shall not withhold consent to Customer’s assignment of the Agreement, in its entirety, in connection with the sale or acquisition of Customer of all or substantially all of the business assets or voting control, provided Customer and the assignee have fulfilled the following conditions prior to the transfer: (i) Customer shall provide written notice to CMC of the proposed assignment at least thirty (30) days prior to the date of such transaction; (ii) the assignee shall assume all liabilities under the Agreement and be bound to the Agreement; and (iii) Customer and assignee (if assignee is a CMC customer) shall not be in material breach of any agreement with CMC at the time of the transaction. 19. NOTICES . Notices sent to either party shall be effective when delivered in person or transmitted by fax

CampusNet IAAS Agreement Page 7 of 8 Confidential

TA-042516



machine with printed confirmation page (if delivered after 5:00 p.m. recipient's local time, then effective the next business day), one (1) business day after being sent by overnight courier, or two (2) business days after being sent by first class mail postage prepaid to the address on the first page hereof or such other address as a party may give notice in the same manner set forth in this Section 19. 20. FORCE MAJEURE . Neither party shall be liable for any delay in performing its obligations under the Agreement, if such delay is caused by circumstances beyond the party’s reasonable control, including without limitation, any acts of God, war, terrorism, floods, windstorm, labor disputes, change in laws or regulations, public health risks or epidemics, or delay of essential materials or services. In the event a non-performance or a delay in performance of obligations under the Agreement is due to a force majeure event, the period of performance shall be extended by the delay due to such event and any additional time that the parties may mutually agree is necessary for the remobilization of personnel and resources. However, the party not affected by the force majeure shall have the right to terminate the Agreement without penalty if the party affected by the force majeure event is unable to resume full performance within thirty (30) days of occurrence of the event. 21. INDEPENDENT CONTRACTOR STATUS; COMPLIANCE WITH LAW . Each party and its personnel are independent contractors in relation to the other party with respect to all matters arising under the Agreement. Nothing herein shall be deemed to establish a partnership, joint venture, association or employment relationship between the parties. Each party shall remain responsible, and shall indemnify and hold harmless the other party, for the withholding and payment of all federal, state and local personal income, wage, earnings, occupation, social security, worker's compensation, unemployment, sickness and disability insurance taxes, payroll levies or employee benefit requirements (under ERISA, state law or otherwise) now existing or hereafter enacted and attributable to themselves and their respective personnel. Each party shall comply with all applicable federal and state laws, rules and regulations, in effect or hereafter established, applicable to discrimination and unfair employment practices. Publically funded state institutions shall be liable for damages incurred by CMC, but shall not be required to also indemnify CMC, to the extent applicable state laws expressly prohibit the institution from indemnifying CMC. 22. AUDIT; COOPERATION . CMC reserves the right to verify compliance with this Agreement. In the event of an audit, Customer shall provide information or other materials reasonably requested by CMC. CMC monitors the overall performance and stability of the CMC IaaS. Customer shall not block or interfere with this monitoring. In the event that CMC reasonably believes that a problem with the CMC IaaS may be attributable to Customer’s use or Customer’s Content, then Customer shall cooperate with CMC to identify the source of the problem. 23. EXPORT LAWS . Customer shall comply with all export and import laws and regulations of the United States and such other governments as are applicable. Customer hereby certifies that it will not directly or indirectly, export, re-export, or transship software or related information, or media in violation of United States laws and regulations. 24. U.S. GOVERNMENT LICENSING . With respect to the procurement of any CMC IaaS by or for the U.S. Government, any software provided in connection with the CMC IaaS is commercial computer software. To the extent		applicable, the use, duplication, or disclosure by the Government is subject to restrictions as set forth in the Agreement and are licensed with “Restricted Rights” as provided for in FAR 52.227-14, FAR 52.227-19(c), DFAR 252.227-7013, and other agency data rights provisions, as applicable. Customer is responsible for ensuring that copies are marked with a restricted rights notices and legends. CMC reserves all rights not expressly granted to Customer. 25. PROMOTIONAL MATERIALS . CMC may use Customer’s name and reference the existence of the Agreement and ancillary agreements (without referencing detailed terms and pricing) in marketing materials and presentations. 26. MISCELLANEOUS . This Agreement constitutes the entire and exclusive agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous communications, whether written or oral. The Agreement may be modified or amended only by the mutual written agreement of the parties. In the event of a conflict between the Agreement and any term contained in an Exhibit or an Addendum, the following shall be the order of precedence: the Addendum, the Exhibit, the General Terms. Any provision hereof found by a tribunal of competent jurisdiction to be illegal or unenforceable shall be automatically conformed to the minimum requirements of law and all other provisions shall remain in full force and effect. Waiver of any provision hereof in one instance shall not preclude enforcement thereof on future occasions. Headings are for reference purposes only and have no substantive effect. The provisions which by their nature should apply beyond their terms will remain in force after any termination or expiration of this Agreement. Copies of the Agreement and notices generated in accordance herewith shall be treated as original documents admissible into evidence, unless a document's authenticity is genuinely placed into question. The Agreement may be executed in counterparts, each of which shall be deemed an original and together shall be deemed the entire Agreement. AGREED AND ACCEPTED by the undersigned authorized representatives of the parties as of the date first set forth above. BRIDGEPOINT EDUCATION INC. By: /s/ Mike Stansbury Print: Mike Stansbury Title: Vice President IT Date: Jun 30, 2016 CAMPUS MANAGEMENT CORP. By: /s/ Anders Nessen Print: Anders Nessen Title: CFO Date: Jun 30, 2016

CampusNet IAAS Agreement Page 8 of 8 Confidential

TA-042516

EXHIBIT A

CAMPUSNET ^® IAAS TERM AND PRICING

CampusNet IaaS Term:

The initial term is five (5) years, commencing on July 1, 2016 (the “Commencement Date”), which Term shall automatically renew for successive periods of one (1) year each (each a “Renewal Term”), unless either party provides written notice of termination at least ninety (90) days prior to the end of the then-current term. If at such time Customer desires the Renewal Term to be on a month-to-month basis, the Monthly Fees will increase by 20% over the then current rates being offered to new CMC customers at that time.

Minimum Commitment:

Customer is agreeing to a minimum commitment of the following components and software licensing for the term of this Agreement:



COMPONENTS	QUANTITY	UNIT
COMPUTE	[***]	vCPU
STORAGE	[***]	Gigabytes (GB)
MEMORY	[***]	Gigabytes (GB) RAM
BANDWIDTH	[***]	Mbps Bandwidth (In/Out)
PUBLIC IPs	[***]	IP address
VPN ENDPOINTS	[***]	Tunnels



SOFTWARE NAME	LICENSE QUANTITY	UNIT
Citrix XenApp	[***]	Concurrent Users / CALs
Microsoft SQL Server	[***]	Server licenses
Microsoft Windows Server	[***]	Server licenses

Customer has the ability to fluctuate [***]% from the Minimum Commitment in either direction on a monthly basis without impacting the monthly pricing or the need to amend the IaaS agreement.

Minimum Commitment Pricing:



	SETUP FEE
TOTAL	$[ *** ]



	MONTHLY FEE
July 1, 2016 – December 30, 2016	$[***]
January 1, 2017 – June 30, 2021	$[***]

Customer shall pay the Setup Fee upon execution of this Agreement.

Customer shall pay the Monthly Fees in accordance with Section 8.

CampusNet IAAS Agreement Page 1 of 2 Confidential

TA-042516

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Termination Fee:

Should Customer terminate the CMC IaaS early for convenience pursuant to Section 10, Customer shall promptly pay a termination fee as follows:



Termination Period	Termination Fee
Year One	[*] percent ([]%) of the fees due for the first year, plus [] percent ([*]%) of the Monthly Fees due for years 2 through 5 under this Agreement.
Years 2-5	[*] ([*]) percent of the Monthly Fee due for remaining months under this Agreement.
Renewal Term	[*] percent ([*]%) of the fees due for the renewal year.

Downgrade Fee:

Should Customer downgrade services from the Minimum Commitment listed above for convenience, Customer shall promptly pay the following downgrade fee:



Downgrade Period	Downgrade Fee
Years 1-5, Renewal Term	[*] ([*]) percent of the Monthly Fee for the affected Service multiplied by the number of remaining months under this Agreement.

Discounts/Special Pricing:

The above discounts/special pricing are contingent upon timely payments and no default under this Agreement.

Virtual Private Network (VPN):

CMC will provide termination of an IPSec VPN tunnel into the third party VPN equipment delivered with the VPN set-up (“Ancillary Equipment”). Customer is hereby granted rights to use the Ancillary Equipment. To the extent available, CMC passes through all warranties and remedies provided by such third party equipment vendor. Customer will be responsible for management of its terminating VPN equipment at its location, including configuration and provisioning of suitable Internet access to its terminating equipment. CMC will remain responsible for configuration and provisioning of its equipment at its facility. CMC may provide remote assistance for the Ancillary Equipment, at cost, as requested by Customer.

Configuration:

CMC Configuration and Deployment Tasks:

CMC will, with Customer’s assistance, analyze Customer’s current workflow and customer inquiries in order to:


•	Procure the hardware and software required for running the CMC server and database


•	Set up the operating system and other required software on the servers


•	Set up CMC Applications


•	Set up and configure firewall protection


•	Set up data Back-ups


•	Designate emergency contacts at CMC and Customer site

Customer Configuration and Deployment Tasks:

Customer is responsible for the following preparations that will need to be made in accordance with the implementation schedule which will be defined after contract signature:


•	Customer will provide CMC’s staff with a list of any User Information that Customer wants stored in the database associated with the Applications.


•	Customer will implement and use the e-mail format and SMTP settings specified by CMC that Customer must use to ensure that all e-mails and data transmissions are received by CMC.


•	Customer must configure its computers, network router and firewall to allow data to flow between its system and the CMC Applications in a secure manner.


•	Customer will be responsible for configuring, monitoring and maintaining its computer and software systems including but not limited to system security, Local Area Network, network equipment, network and connections.

CampusNet IAAS Agreement Page 2 of 2 Confidential

TA-042516

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

EXHIBIT B

CAMPUSNET ^® IAAS MICROSOFT ^® LICENSE COMPLIANCE

The undersigned company, a corporation, whose primary place of business is 13500 Evening Creek Drive North, Suite 120, San Diego, California 92128 , acknowledges that Campus Management Corp. has advised it as to the following Microsoft License requirements:


1.	Software Licenses

CMC has informed Customer that its software relies on certain functional capabilities of Microsoft Word, Excel, and/or Outlook in order to accomplish various operating tasks. Customer attests that all Customer computers accessing the CMC IaaS have and will maintain current Microsoft licenses in compliance with Microsoft’s Licensing requirements as spelled out in its Software Use Rights.

Customer acknowledges that having three specific software licenses (Word, Excel, and Outlook), or Microsoft Office, for each desktop may fulfill compliance with Microsoft licensing requirements. Alternatively, the recommended option is for each Customer desktop to be licensed to use all Microsoft Office components.


2.	Software Support

Customer further acknowledges that CMC is not responsible for the operation or suitability of any Microsoft product for any business purpose, other than use with the CMC IaaS. Customer agrees that any technical support related to Microsoft products, but not directly related to CMC software, are not the responsibility of CMC.


3.	Software Version Functionality

CMC may periodically recommend newer versions of Microsoft products should Customer’s versions be so outdated as to impair functionality used in future versions of CMC IaaS. CMC will make reasonable efforts to insure that integrated functionality will be backward compatible with earlier versions of Office (Word, Excel, and Outlook) to the greatest extent possible.


4.	Hold Harmless and Indemnity

Customer specifically agrees to hold harmless, indemnify, and defend, CMC, its officers, directors, employees, contractors, and sub-contractors from any license enforcement action(s), infringement suit(s), tort(s), demand(s), or judgment(s), including, without limitation, attorneys’ fees, expenses and all damages, resulting from Customer’s failure to maintain proper software licenses for each of its desktops, or use of unlicensed software on the CMC IaaS. Publically funded state institutions shall be liable for damages incurred by CMC, but shall not be required to also indemnify or hold harmless CMC to the extent applicable state laws expressly prohibit the institution from indemnifying CMC.

5. General

This Exhibit regarding Microsoft License Compliance incorporates by reference all of the terms and conditions set forth in the Agreement.

AGREED AND ACCEPTED by the undersigned duly authorized representative of Customer.



BRIDGEPOINT EDUCATION INC.	Campus Management
By: [s1] /s/ Mike Stansbury	By: [s3] /s/ Anders Nessen
Print: [p1] Mike Stansbury	Print: Anders Nessen
Title: [t1] Vice President IT	Title: CFO
Date: [d1] Jun 30, 2016	Date: Jun 30, 2016

CampusNet IAAS Agreement Exhibit B Page 1 of 1 Confidential

TA-042516

EXHIBIT C

CAMPUSNET ^® IAAS SERVICE LEVEL AGREEMENT

CMC provides this CMC IaaS Service Level Agreement (“SLA”) to the Production Environment included in this scope of this agreement identified in Exhibit A and subject to the terms and conditions below.

A. Monthly Service Level


1.	The Service Level is [***]%.


2.	The Monthly Uptime Percentage is calculated for a given calendar month using the following formula:



Monthly Uptime Percentage =
Total number of minutes in a given calendar month	minus	Total number of minutes of Downtime in a given calendar month
Total number of minutes in a given calendar month

B. Service Availability and Performance

CMC acknowledges that service availability and performance are critical. Customer may report service outages or performance issues via CMC’s ServiceDesk. Additionally, CMC will proactively monitor the overall health and availability of the service. Service availability and performance will be measured using user experience transactions “Transactions” conducted at 5 minute intervals (excluding non-business hours defined below) to validate availability (uptime) and performance (response time) for the following user functions:


a.	CMC and Customer will agree upon the appropriate response times prior to the production environment is built out in the CampusNet data center.


b.	CMC and Customer acknowledge that neither party currently has this monitoring capability deployed and CMC commits to having this within 6 months after the execution of this Agreement.


c.	CMC and Customer agree to review the performance metrics on a yearly basis to ensure the appropriate metrics are being tracked and provide an opportunity to update as mutually agreed upon.



Product	Transaction	Description	Response Time
CampusNexus CRM	Login to CRM	Login to CRM	TBD
	Load a lead record	Load a lead record after initial logon	TBD
	Run Default Advisor Filter	Run default advisor filter after initial logon	TBD
CampusNexus Student	Login to Student	Login to Student	TBD
	Load Student Master	Load a Student Master after initial logon	TBD
	View -> Student Accounts -> Ledger Card	View a student’s Ledger Card after initial logon	TBD
	View -> Academic Records -> Degree Progress Audit	View a Degree Progress Audit after initial logon	TBD
	Daily - > Academic Records -> Schedule Classes -> Filter Term	Bring up a class schedule in edit mode after initial logon	TBD


d.	If the performance SLA is not met and persists for longer than 15 minutes, Customer may deem that the event is materially impactful, and Customer can request the event be treated as an outage for the period of SLA non-compliance, and applicable service credits will apply.


e.	Based on technical changes within the supported Product, CMC will substitute the technology/method used to provide equivalent monitoring as required.

CampusNet IAAS Agreement Exhibit C Page 1 of 6 Confidential

TA-042516

[***] Confidential portions of this document have been redacted and filed separately with the Commission.


2.	External Web Response Time


a.	A list of URLs can be monitored to record average response time and mimic a real end-user experience.



Product	URL	Description	Response Time
CampusNexus CRM iServices	https://cloud339-web2.campusnet.net/HEFoundationiService/SISConnectorSvc.Asmx	Web service for the connector	TBD
CampusNexus CRM iServices	TBD	COF iServices	TBD
CampusVue Portal	https://cloud339-web1rockies.campusnet.net	Website for Rockies’ CampusVue Portal	TBD
	https://cloud339-web4ashford.campusnet.net	Website for Ashford’s CampusVue Portal	TBD
	Rockies & Ashford TBD	Student Portal logon as measured from within the local data center	TBD


a.	Monitoring of CRM websites will be contingent on the adoption of CRM 10.1 or higher


b.	URLs will be updated with production links once production is available


c.	Based on technical changes within the supported Product, substitute Web Response URLs (or the technical equivalent) may be monitored to as required.

C. Service Credits


1.	Should the Service Level fall below [***]% for a given month, CMC shall provide a Service Credit as noted in the chart below:



Monthly Uptime Percentage	Service Credit*
< [***]%	[***]%
< [***]%	[***]%
<[***]%	[***]%
In the unlikely event of an outage that is over [***] hours from the initial time of reporting and not successfully cutover to the secondary disaster recovery site.	[***]%

*Service Credit will be issued against the applicable month’s Subscription Fee paid by Customer for the Service.


2.	A Service Credit is Customer’s sole and exclusive remedy for any violation of this SLA.


3.	A Service Credit awarded in any calendar month shall not, under any circumstance, exceed Customer’s monthly Subscription Fee.

D. Claims


1.	In order to make a Claim, Customer must be in compliance with policies for acceptable use of the Service found in the Agreement.

In order to be eligible to submit a Claim with respect to any Incident, Customer must first have notified CMC support service of the Incident within five (5) business days following an Incident by calling 1-800-483-9106 or by e-mailing CMC Support at support@campusmgmt.com. Customer must provide all reasonable details regarding the Incident including but not limited to, detailed description of the Incident, the duration of the Incident, the number of affected users and the locations of such users and any attempts made by Customer to resolve the Incident.

Customer must submit the Claim to CMC support service by calling 1-800-483-9106 or e-mail at hostingclaims@campusmgmt.com and providing any additional evidence reasonably required by CMC to support the Claim (as set forth in Section C(2) above), by the end of the month following the month in which the Incident which is the subject of the Claim occurs (for example, Incident occurs on January 15 ^th , Customer provides Notice on January 20 ^th , Customer must provide sufficient evidence to support Claim by February 28 ^th ).

CampusNet IAAS Agreement Exhibit C Page 2 of 6 Confidential

TA-042516

[***] Confidential portions of this document have been redacted and filed separately with the Commission.


4.	CMC will use all information reasonably available to it to validate Claims and make a good faith judgment on whether the SLA and Service Levels apply to the Claim.


5.	CMC will use commercially reasonable efforts to process Claims within 30 days.

E. Exclusions


1.	Downtime does not include:

a. The period of time when the Service is not available as a result of Scheduled Downtime; or

b. Performance or availability issues that may affect the Service:

i. Due to factors outside CMC’s reasonable control;

ii. Related to add-on features for the Service, including, but not limited to Reporting Services;

iii. That resulted from Customer’s or third party hardware, software or services;

iv. That resulted from actions or inactions of Customer or third parties;


v.	That resulted from actions or inactions by Customer or Customer’s employees, agents, contractors, or vendors, or anyone gaining access to CMC’s network by means of Customer’s passwords or equipment.


vi.	That were caused by Customer’s use of the Service after CMC advised Customer to modify its use of the Service, if Customer did not modify its use as advised; or


viii.	Through Customer’s use of beta, trial offers, early access programs and/or demos (as determined by CMC).

F. General Support and Service Incident Response Targets:


1.	Standard Hours of CampusNet Support


a.	Normal Business Hours are defined as 8:00 AM Eastern Time to 8:00 PM Eastern Time, Monday through Friday and exclude public holidays and CMC observed holidays.


2.	Emergency Support


a.	Emergency support is provided 24x7x365 as defined in the Response Times


3.	Response Times

Response times listed below reflect targets and are not contractual obligations. Response time commitments do not promise a complete resolution within the stated time frames. Rather, the time commitment is intended to indicate the estimated target time interval in which the Client will be contacted by CMC after CMC initial triage and confirmation from the Client to verify the severity of the incident. All Severity One issues need to be submitted telephonically as well as through ServiceDsk.

Response Times – Normal Business Hours



Severity Level	Description – Normal Business Hours	Initial Response Time	Notification Schedule
1 – Critical	• Production Emergency o Inoperability of critical business functions with no reasonable workaround available o Significant data corruption with no reasonable workaround available o Significant financial impact with no reasonable workaround available • Reasonable workaround may not be possible. If it is then this should be downgraded to a Severity 2	15 Minutes	Every 60 minutes after triage via email or phone until resolution and via ServiceDesk incident management tool.

CampusNet IAAS Agreement Exhibit C Page 3 of 6 Confidential

TA-042516



Severity Level	Description – Normal Business Hours	Initial Response Time	Notification Schedule
2 – High	• Implementation Emergency o Impedes (does not allow the product to be installed and deployed) progress during the implementation phase of the project • Go-live o Is not impeding progress during implementation, but is required to be resolved prior to going into production • Any partial business down scenario or significant productivity impact to the customer • Reasonable workaround possible - WITHOUT requiring any significant effort on the customers part	1 Hours	Updates via ServiceDesk incident management tool.
3 – Medium	• A reasonable workaround is/may be available - product is functional and does not create bad data • Product is fully functional but the issue may create a negative impression on the quality and/or functional capabilities of the product • No business down scenario but productivity impact such as performance or process	12 Hours	Updates via ServiceDesk incident management tool.
4 – Low	• Usability and/or moderate functionality or low impact performance issues • Low impact and low frequency type issues	24 Hours	Updates via ServiceDesk incident management tool.

Response Times – After Hours Business Hours



Severity Level	Description – Normal Business Hours	Initial Response Time	Notification Schedule
“1” Critical	• Production Emergency o Inoperability of critical business functions with no reasonable workaround available o Significant data corruption with no reasonable workaround available o Significant financial impact with no reasonable workaround available Reasonable workaround may not be possible. If it is then this should be downgraded to a Severity 2	30 Minutes	Every 60 minutes after triage via email or phone until resolution and via ServiceDesk incident management tool.

CampusNet IAAS Agreement Exhibit C Page 4 of 6 Confidential

TA-042516



Severity Level	Description – Normal Business Hours	Initial Response Time	Notification Schedule
“2” High	• Implementation Emergency o Impedes (does not allow the product to be installed and deployed) progress during the implementation phase of the project • Go-live o Is not impeding progress during implementation, but is required to be resolved prior to going into production • Any partial business down scenario or significant productivity impact to the customer Reasonable workaround possible - WITHOUT requiring any significant effort on the customers part	Next business day as defined under Normal Business Hours	Updates via ServiceDesk incident management tool.
“3” Medium	• A reasonable workaround is/may be available - product is functional and does not create bad data • Product is fully functional but the issue may create a negative impression on the quality and/or functional capabilities of the product No business down scenario but productivity impact such as performance or process	Next business day as defined under Normal Business Hours	Updates via ServiceDesk incident management tool.
“4” Low	• Usability and/or moderate functionality or low impact performance issues • Low impact and low frequency type issues	Next business day as defined under Normal Business Hours	Updates via ServiceDesk incident management tool.

G. Definitions:


1.	“Agreement” means the CampusNet ^® IaaS Agreement that governs the Service.


2.	“Claim” means a claim submitted by Customer to CMC that a Service Level under this SLA has not been met and that a Service Credit may be due to Customer.


3.	“CMC” means Campus Management Corp.


4.	“Customer” means the person or organization that contracted for Services under the Agreement.


5.	“Downtime” means a period of time when Customers are unable to access the Service at the furthest point on CMC’s firewall facing the public Internet.


6.	“Exclusions” means the performance or availability issues that are noted in Section D.


7.	“Incident” means a set of circumstances resulting in an inability to meet a Service Level.


8.	“Notice” means that within five (5) business days following an Incident, Customer must notify Customer Support of the Incident.


9.	“Service” or “Services” means the infrastructure as a service provided to Customer pursuant to the Agreement.


10.	“Scheduled Downtime” means published maintenance windows or times where CMC notifies Customer of periods of Downtime for scheduled network, hardware, Service maintenance or Service upgrades at least twenty-four (24) hours prior to the commencement of such Downtime, except for unforeseen emergency maintenance that can be carried out during the next published maintenance window.


11.	“Service Credit” means the amount credited to Customer by CMC for a validated Claim.

CampusNet IAAS Agreement Exhibit C Page 5 of 6 Confidential

TA-042516


12.	“Service Level” means the percentage of Service availability for a given month that CMC agrees to provide Customer, which is measured by the Monthly Uptime Percentage.


13.	“Subscription Fee” means the monthly amount that Customer pays CMC for their subscription to the Service.

CampusNet IAAS Agreement Exhibit C Page 6 of 6 Confidential

TA-042516

EXHIBIT D

CAMPUSNET ^® ROLES AND RESPONSIBLITIES

CMC and Customer have identified and agreed upon the high-level roles and responsibilities that are necessary to provide the services outlined within this Agreement. This list is not meant to be all inclusive and CMC and Customer can make mutually agreeable changes in the future with a contract addendum.

A. CMC and Customer agree to adhere to the following Roles and Responsibilities as outlined below. If there is a conflict or dispute on a specific point, CMC and Customer agree to mutually resolve any immediate critical issues (as defined in Exhibit C, Section F of this Agreement). Thereafter, CMC and Customer can make modifications to the Roles and Responsibilities as needed.

[***]

CampusNet IAAS Agreement Exhibit D Page 1 of 8 Confidential

TA-042516

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

EXHIBIT E

CAMPUSNET ^® IAAS SECURITY

In addition to the default hardware provided and the security measures in place with the standard IaaS offering, CMC will provide Customer with the following:

A. Encryption Key Management


1.	CMC agrees to rotate the encryption keys for the data storage used by Customer every two years commencing on the Commencement Date.

B. Firewall (Perimeter)


1.	CMC agrees to a technology refresh of the existing perimeter firewalls to more current technology on or before June 30, 2017.

CampusNet IAAS Agreement Exhibit E Page 1 of 1 Confidential

TA-042516

Exhibit 10.5

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under C.F.R. § 200.84(b)(4) and 17 C.F.R. 24b-2

CAMPUSCARE ^® MAINTENANCE AND SUPPORT RENEWAL

RATE SCHEDULE AND TRAINING KEYS FOR CAMPUSCARE SERVICES

This document is made a part of the CampusCare Maintenance and Support Agreement, Master Agreement, Talisma Fundraising Software Maintenance Agreement or Talisma License and Services Agreement, as applicable , (the “Agreement”) between Campus Management Corp. and Customer dated 02/22/2005 .

The CampusCare Renewal executed by Customer on January 20, 2016, is hereby amended and restated as follows:

Customer : Bridgepoint Education, Inc.

Record Count/Users : [***] ASR, [***] CRM Users

Term : 2-Year Term through December 31, 2017

CampusCare Fees :



Licensed Program	CampusCare ^® Premium 2016 Fees	CampusCare ^® Premium 2017 Fees
CampusNexus ^® Student Portal Web Services	$[*] $[] $[**]	$[*] $[] $[**]
CampusNexus CRM	$[***]	$[***]
Less Discount	($[***])	($[***])
Total Annual CampusCare Renewal Fees	$[ *** ]	$[ *** ]
Annual TAM Fees*	$[ *** ]	$[ *** ]
Annual PSSC Fees*	$[ *** ]	$[ *** ]

*Professional Services are separate and distinct from CampusCare Services, and are subject to the terms and conditions of the PSA and relevant SOWs. See SOW No. 205435, SOW No. 206092, and SOW No. PSISVC-207385, for details. Customer hereby subscribes to the above SOWs through December 31, 2017.



CampusInsight Passes :	[***]
Keys :	[***]
Professional Services Hours* :	The CampusCare fees above include [* ] Professional Services hours to be used during the 2016 calendar year, and [* ] Professional Services hours to be used during the 2017 calendar year.
Payment :	Customer shall pay one payment of $[ *** ] due by November 27, 2015.

Discounts : The above discounts are contingent on timely payments and no default under the Agreement.

See the following page for terms and conditions.

CampusCare Renewal 2016 Page 1 of 1 Confidential

TA-061416

[***] Confidential portions of this document have been redacted and filed separately with the Commission.



BRIDGEPOINT EDUCATION INC.	CAMPUS MANAGEMENT CORP.
By: /s/ Mike Stansbury ]	By: /s/ Anders Nessen 3]
Print: Mike Stansbury	Print: Anders Nessen ]
Title: Vice President IT	Title: CFO
Date: Jun 30, 2016	Date: Jun 30, 2016

ADDITIONAL TERMS

CampusCare Services are subject to the terms and conditions in the Agreement and this CampusCare Renewal. The terms below shall continue in effect for each renewal term hereafter.

CampusCare Premium . CampusCare Premium features off-hour system upgrades for production environments and free emergency support, plus free passes to CampusInsight for CampusVue ^® Student or CampusNexus ^® Student customers.

CampusCare Premium is not available for CampusLink Web Services.

CampusCare Premium customers will receive 15% off Professional Services list T&M fees for SOWs and Change Orders signed during the renewal term. This excludes any Fixed Fee services, PSSCs, and CampusInsight training courses. This discount shall not be applied retroactively, and shall not be combined with other discounts. Customer must be in good standing at the time discount is applied.

CampusCare Premium customers will receive upgrades for up to 2 additional named non-production environments for CampusVue, Student and CampusNexus Student and database refreshes in conjunction with the upgrades. Upgrades shall be performed Monday – Friday (excluding holidays), 8 a.m. – 5 p.m. ET. Support for non-production environments is not included.

End User Support Coordinator . CMC and Customer shall mutually designate a person as Customer’s End User Support Coordinator (“EUSC”) to coordinate routine end-user support concerning the Licensed Program. End-users must refer all inquiries regarding the Licensed Program to the EUSC. After consultation with the end-user and determining that the inquiry involves a problem in the Licensed Program, the EUSC may contact CMC and request, and CMC shall provide, the CampusCare Services described in the Agreement.

Exclusions . Support covers production environments. Unless otherwise agreed to via a separate addendum, CampusCare Services excludes the following: (i) services and support to update and maintain non-production environments (such as testing and development environments); (ii) support of integrations, (iii) issues related to reconfiguration of the Licensed Program as a direct result of sizing/space related issues, restoring/re-installing/re-implementing production server components, restoring corrupt databases, performance of business functions such as creation/configuration of rules/teams/reports, or modification and/or manipulation of the Licensed Program including, but not limited to, stored procedures, predefined routines, installation of scripts, standard/custom reports, and data written to the Licensed Program from Third Parties Products, as applicable.

The annual CampusCare fee includes CMC’s provision of Releases to Talisma ^® CRM, CampusNexus ^® CRM, and Talisma ^® Fundraising, but installation and implementation of the Releases is not included as part of the annual fee, notwithstanding anything to the contrary in the Agreement and Exhibits thereto. The foregoing does not apply to Talisma ^® Fundraising sold in conjunction with CampusVue ^® Student.

With respect to Talisma CRM and CampusNexus CRM installation of Releases or upgrades, CMC highly recommends Customer engage CMC's professional services organization for assistance when installing Releases or upgrades for Talisma products. Any issues or problems arising out of Customer configuring and installing a Release or upgrade are not covered under CampusCare Services. If the software has been customized, the Release or upgrade may cause system failures. Any problems with customizations that Customer reports to CMC that are related to or caused by the Release or upgrade are not covered under CampusCare Services.

Customer acknowledges and agrees that any issues arising or related to work performed by Customer or any third parties is expressly not covered under the warranties, remedies and indemnity provisions under the license and service agreements. Any resources expended by CMC with respect to such issues, or discovered to be caused by such issues (for example, problem analyses, support, re-work, etc.), shall be billed to and paid by Customer at CMC’s standard hourly rates on a T&M basis commencing from the initial support request, and Customer shall promptly pay such support charges.

CampusCare Renewal 2016 Page 2 of 2 Confidential

TA-061416

Should CMC provide technical support in connection with problems that are beyond the scope of the CampusCare Services, that are not Errors in the Licensed Programs, or for any incremental services, then Customer shall pay for any such services on a T&M basis and may be contracted for separately.

Severity Level Descriptions . Severity Level Descriptions posted at http://www.campusmanagement.com/EN-US/aboutUs/Pages/Incident-Severity.aspx shall replace severity descriptions in the Agreement, and are subject to change.

Keys . Training keys are to be used exclusively for training through the Learning Center and CampusInsight User Conference pre-conference training.

Late Payment . Customer acknowledges and agrees that any delinquent payment owed to CMC, under this or any other agreement, may result in suspension of CampusCare Services and other services until all outstanding amounts due are paid in full.

Taxes . Customer shall promptly pay, indemnify and hold CMC harmless from all sales, use, gross receipts, GST, value-added, personal property or other tax or levy (including interest and penalties) imposed on the services and deliverables which have been or will be provided under any agreements, other than taxes on the net income or profits of CMC. Subject to any applicable laws, the foregoing shall not apply to the extent Customer is formed as a not for profit organization and promptly provides CMC an applicable tax exempt certificate. All prices quoted are net of taxes.

PRIVACY PROTECTION

Do not send unsolicited personally identifiable information (“PII”) to CMC, and in any event do not send PII to CMC except by secure transfer and in a manner officially authorized by CMC.

CampusCare Renewal 2016 Page 3 of 3 Confidential

TA-061416

Exhibit 10.6

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under C.F.R. § 200.84(b)(4) and 17 C.F.R. 24b-2

ADDENDUM TO THE CAMPUSCARE ^® SUPPORT AGREEMENT BETWEEN

CAMPUS MANAGEMENT CORP. AND

BRIDGEPOINT EDUCATION, INC.

Purpose of Addendum: Future Pricing

This Addendum, effective upon the mutual execution by the parties hereunder, is incorporated into and made a part of the CampusCare Support Agreement (the “CampusCare Agreement”) between Campus Management Corp . (“CMC”) and Bridgepoint Education, Inc. (“Customer”), dated as of February 15, 2005, as amended. All capitalized terms not otherwise defined herein shall have the meaning set forth in the CampusCare Agreement. The CampusCare Agreement shall be amended, as follows:


1.	Should Customer execute a full scope Infrastructure as a Service Agreement for its production environment (“IaaS Agreement”) by December 31, 2017, and for so long as it remains hosted with CMC on such IaaS Agreement, Customer shall receive CampusCare Premium support at the CampusCare Fees shown below, commencing 2018.



Licensed Program	CampusCare ^® Premium Fees
CampusNexus ^® Student Portal Web Services	$[*] $[] $[**]
CampusNexus CRM	$[***]
Less Prepayment Discount**	($[***])
Total Annual CampusCare Renewal Fees	$[ *** ]
Annual TAM Fees*	$[ *** ]
Annual PSSC Fees*	$[ *** ]

* TAM and PSSC : Professional Services are separate and distinct from CampusCare Services, and are subject to the terms and conditions of the PSA and relevant SOWs. See SOW No. 205435, SOW No. 206092, and SOW No. PSISVC-207385, for details.

* Professional Services Hours : The CampusCare fees above include [ *** ] Professional Services hours to be used during each calendar year.

** Prepayment Discount . Customer shall receive the Prepayment Discount if Customer pays the Annual CampusCare Renewal Fees, TAM Fees, and PSSC Fees by November 30 of the previous year.


2.	The above discount is further contingent on timely payments and no default under the CampusCare Agreement.

[Signature Page Follows]

Add CCare Page 1 of 2 Confidential

TA-061316

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

This Addendum is deemed effective upon acceptance at CMC’s principal offices. Except as expressly stated herein, all other terms of the CampusCare Agreement, as amended, remain unchanged and in full force and effect.



BRIDGEPOINT EDUCATION INC.	CAMPUS MANAGEMENT CORP.
By: /s/ Mike Stansbury ]	By: /s/ Anders Nessen 3]
Print: Mike Stansbury	Print: Anders Nessen ]
Title: Vice President IT	Title: CFO
Date: Jun 30, 2016	Date: Jun 30, 2016

Add CCare Page 2 of 2 Confidential

TA-061316

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Andrew S. Clark, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.;


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;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 2, 2016



		/s/ ANDREW S. CLARK
		Andrew S. Clark President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kevin Royal, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.;


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;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 2, 2016



		/s/ KEVIN ROYAL
		Kevin Royal Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended June 30, 2016 (the "Report") of Bridgepoint Education, Inc. (the "Company"), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2016



/s/ ANDREW S. CLARK
Andrew S. Clark President and Chief Executive Officer (Principal Executive Officer)

Dated: August 2, 2016



/s/ KEVIN ROYAL
Kevin Royal Chief Financial Officer (Principal Financial Officer)

This certification shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.

A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 99.1

Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934

Second quarter calendar year 2016

Pursuant to Section 13(r) of the Securities Exchange Act of 1934, we, Bridgepoint Education, Inc. (“Bridgepoint”), may be required to disclose in our annual and quarterly reports to the Securities and Exchange Commission (the “SEC”) whether we or any of our “affiliates” knowingly engaged in certain activities, transactions or dealings relating to Iran or with certain individuals or entities targeted by U.S. economic sanctions. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law. Because the SEC defines the term “affiliate” broadly, it includes any entity under common “control” with us (and the term “control” is also construed broadly by the SEC).

The description of the activities below has been provided to Bridgepoint by Warburg Pincus LLC (“WP”), affiliates of which (i) beneficially own more than 10% of our outstanding common stock and/or are members of our board of directors and (ii) beneficially own more than 10% of the equity interests of, and have the right to designate members of the board of directors of Santander Asset Management Investment Holdings Limited (“SAMIH”). SAMIH may therefore be deemed to be under common “control” with Bridgepoint; however, this statement is not meant to be an admission that common control exists.

The disclosure below relates solely to activities conducted by SAMIH and its affiliates. The disclosure does not relate to any activities conducted by Bridgepoint or by WP and does not involve our or WP’s management. Neither Bridgepoint nor WP has had any involvement in or control over the disclosed activities, and neither Bridgepoint nor WP has independently verified or participated in the preparation of the disclosure. Neither Bridgepoint nor WP is representing as to the accuracy or completeness of the disclosure nor do we or WP undertake any obligation to correct or update it.

Bridgepoint understands that one or more SEC-reporting affiliates of SAMIH intends to disclose in its next annual or quarterly SEC report that:

(a) Santander UK plc (“Santander UK”) holds two frozen savings accounts and two frozen current accounts for three customers resident in the United Kingdom (“UK”) who are currently designated by the United States (“US”) under the Specially Designated Global Terrorist (“SDGT”) sanctions program. The accounts held by each customer were blocked after the customer’s designation and have remained blocked and dormant through the first half of 2016. Revenue generated by Santander UK on these accounts in the first half of 2016 was £7.31 whilst net profits in the first half of 2016 were negligible relative to the overall profits of Banco Santander SA.

(b) An Iranian national, resident in the UK, who is currently designated by the US under the Iranian Financial Sanctions Regulations (“IFSR”) and the Weapons of Mass Destruction Proliferators Sanctions Regulations, held a mortgage with Santander UK that was issued prior to any such designation. The mortgage account was redeemed and closed on April 13, 2016. No further drawdown has been made (or would be allowed) under this mortgage although Santander UK continued to receive repayment instalments prior to redemption. In the first half of 2016, total revenue generated by Santander UK in connection with the mortgage was £434.64 whilst net profits were negligible relative to the overall profits of Banco Santander SA. Santander UK does not intend to enter into any new relationships with this customer, and any disbursements will only be made in accordance with applicable sanctions. The same Iranian national also held two investment accounts with Santander ISA Managers Limited. The funds within both accounts were invested in the same portfolio fund. The accounts remained frozen until the investments were closed on May 12, 2016 and checks issued to customer on May 13, 2016. Total revenue in the first half of 2016 generated by Santander UK in connection with the investment accounts was £7.60 whilst net profits in the first half of 2016 were negligible relative to the overall profits of Banco Santander SA.

(c) A UK national designated by the US under the SDGT sanctions program holds a Santander UK current account. The account remained in arrears through the first half of 2016 (£1,344.01 in debit) and is currently being managed by Santander UK Collections & Recoveries department.

(d) In addition, during the first half of 2016, Santander UK has identified an OFAC match on a power of attorney account. A party listed on the account is currently designated by the US under the SDGT and IFSR sanctions programs. During the first half of 2016, related revenue generated by Santander UK was £129.21 whilst net profits in the first half of 2016 were negligible relative to the overall profits of Banco Santander SA.