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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended: JUNE 30, 1996
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Commission file number: 0-12751
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DeVRY INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-3150143
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE TOWER LANE, SUITE 1000, OAKBROOK TERRACE, ILLINOIS 60181
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number; including area code: (630) 571-7700
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Securities registered pursuant to section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE
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(Title of class)
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
SEPTEMBER 1, 1996 - $567,103,500
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State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The market value was computed using the
closing sale price of the common stock on the date indicated. Shares of
common stock held directly or controlled by each director and executive
officer have been excluded in that such persons may be deemed to be affiliates.
SEPTEMBER 1, 1996 - 16,623,212 shares of common stock, $0.01 par value
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Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents incorporated by reference and the Part of
the Form 10-K (e.g. Part I, Part II, etc.) into which the document is
incorporated:
Certain portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on November 19, 1996, are incorporated into
Part III of this Form 10-K to the extent stated herein.
Exhibit Index located on Pages 71-72 Total number of pages, 241
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DeVRY INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED JUNE 30, 1996
TABLE OF CONTENTS
PAGE #
PART I ------
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Item 1 - Business 3
Item 2 - Properties 29
Item 3 - Legal Proceedings 32
Item 4 - Submission of Matters to a Vote of Security Holders 33
- Executive Officers 34
PART II
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Item 5 - Market for Common Equity
and Related Stockholder Matters 37
Item 6 - Selected Financial Data 38
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 38
Item 8 - Financial Statements and Supplementary Data 47
Item 9 - Changes in and Disagreements with Accountants 64
PART III
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Item 10 - Directors and Executive Officers 65
Item 11 - Executive Compensation 65
Item 12 - Security Ownership of Beneficial Owners and Management 65
Item 13 - Certain Relationships and Transactions 65
PART IV
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Item 14 - Exhibits, Financial Statements and Reports on Form 8-K 66
- Financial Statements 66
- Financial Statement Schedules 66
- Exhibits 66
- Reports on Form 8-K 66
- Signatures 68-69
<PAGE>3
PART I
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ITEM 1 - BUSINESS
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DeVry Inc. (the "Company") is incorporated under the laws of the State of
Delaware. Founded in 1973, the Company acquired the DeVry Institutes ("Old
DeVry") in August 1987, which were then operating as an 85% owned
subsidiary of Bell & Howell Co. with the remaining 15% being held by public
stockholders. The Company, through its wholly-owned subsidiary, Keller
Graduate School of Management, Inc. (the "Operating Subsidiary"), owns and
operates the DeVry Institutes of Technology (the "DeVry Institutes") and
the Keller Graduate School of Management ("KGSM") which collectively form
one of the largest private, degree-granting, regionally accredited higher
education systems in North America, and Corporate Educational Services
("CES"), a provider of customized, on-site technical education and training
services to corporations and government agencies. The Company also owns
and operates the Becker CPA Review which prepares candidates to pass the
Certified Public Accountant ("CPA") and Certified Management Accountant
("CMA") professional certification examinations.
The DeVry Institutes were founded in 1931 by Dr. Herman DeVry and have
provided career-oriented technical education to high school graduates in
the United States and Canada for more than 60 years. The first DeVry
Institute was opened in Chicago in 1931 as an electronics school. By 1967,
the DeVry Institutes consisted of one school in Chicago and one in Toronto.
Today, the DeVry Institutes are located on ten campuses in the United
States and four campuses in Canada.
Originally offering only programs in electronics, DeVry introduced the
computer information systems curriculum in 1979. As the number of high
school graduates in the U.S. declined during the 1980s, the DeVry
Institutes expanded their program offerings and delivery schedule into the
evening hours to serve larger numbers of working adults. In the summer of
1986, a bachelor's degree program in business operations was introduced.
That fall, the DeVry Institutes introduced the telecommunications
management program, followed by the introduction of an accounting program
in the spring of 1988.
<PAGE>4
In 1991, the DeVry Institutes initiated a facility improvement and
expansion program to attract and retain an increased student enrollment.
The Atlanta DeVry Institute completed a renovation and expansion for the
fall 1992 term. In October 1992, the Lombard DeVry Institute was relocated
to a larger facility in Addison, Illinois. In October 1993, the Dallas
DeVry Institute was relocated to a larger facility in North Irving, Texas,
and the City of Industry DeVry Institute was relocated to a larger facility
in Pomona, California. The North York (Toronto), Ontario, Canada, DeVry
Institute expanded its capacity in the fall of 1992 and again in the fall
of 1993 by renovating and leasing additional space at its current location.
The Calgary, Alberta, Canada, DeVry Institute also expanded in the fall of
1993 by leasing additional space. In July 1994, a school was opened in
Scarborough (Toronto), Ontario, Canada, as a satellite branch of the school
in North York and in November 1994 a school was opened in Long Beach,
California. The Scarborough (Toronto), Canada, DeVry Institute was
expanded by the lease of additional space for the fall 1994 term and
expanded again by the lease of additional space for the summer 1995 term.
In June 1996, the Woodbridge, New Jersey, Institute was relocated to a new
and larger company-owned facility in North Brunswick, New Jersey, in
preparation for the summer term. In July 1996, a school was opened in
Mississagua (Toronto), Ontario, Canada, as a second satellite branch of the
school in North York (Toronto).
At the beginning of the spring 1996 semester, which is the final semester
in the Company's 1996 fiscal year, approximately 28,150 full and part-time
students were enrolled in the DeVry Institutes' diploma, associate and
bachelor's degree day and evening programs in electronics, electronics
engineering technology, computer information systems, accounting, business
operations, technical management and telecommunications management.
Cumulatively, total student enrollment for the three semesters of fiscal
1996 increased by 8.6% compared with fiscal 1995. In response to the
expansions and improvements initiated in the past several years, fiscal
1996 marks the fifth consecutive year that total cumulative enrollment has
increased from the prior year. The DeVry Institutes' operations accounted
for approximately 93% of the Company's revenues in 1996.
<PAGE>5
Classes began on July 15th for the summer 1996 semester. At the Atlanta
Institute, however, the class start was postponed until August 12th to
avoid interference with the summer Olympics activity. In this first
semester in the Company's 1997 fiscal year, a total of 27,600 students were
enrolled in the DeVry Institutes' programs, a 4.6% increase from the number
of students enrolled in the summer term last year. This was the
seventeenth consecutive term in which total enrollments exceeded the prior
year level. Historically, the summer semester has been the period of
lowest enrollment during the year.
After declining through much of the 1980's and stabilizing in the early
1990's, the number of high school graduates, which represents a substantial
portion of the DeVry Institutes' new student enrollment each year, is
projected by the U.S. Department of Education to increase without
interruption by more than 20% from a low of 2,482,000 in 1992 to over
3,000,000 by the year 2004. In addition, the Department of Education's
National Center for Education Statistics found that in 1994, 62% of high
school graduates (ages 16-24) went directly to college, up from 51% in
1975.
Recent data from the U.S. Department of Education also indicates that more
than one third of U.S. undergraduate students are 25 years of age or older
and that these older students will continue to be a significant portion of
college enrollments in the coming years. The Company estimates that
approximately 40% of the students enrolled at its DeVry Institutes are 25
years of age or older. To attract the growing number of adults returning
to college, the DeVry Institutes introduced a bachelor of science degree
completion program in technical management which focuses on business and
management skills vital to career advancement for students who already have
an associate degree. Over 20% of recent new students enrolled at the DeVry
Institutes had some prior college experience. Programs are also being
offered on weekends in some locations to serve the working adult. To
better serve the working adult student, DeVry is currently developing a
weekend Computer Information Systems curriculum with a shorter term length
and time to completion. While this program will be an intensive and
demanding experience for students, it will enable them to fulfill their
other responsibilities during the normal work week while still completing
this program in a relatively short period of time on weekends.
<PAGE>6
Each of the DeVry Institute programs is designed to integrate general
education and technology or business. DeVry's general education courses
develop skills and competencies that help graduates enhance both their
professional and personal capabilities. Laboratory courses throughout each
curriculum provide the opportunity to translate classroom learning into a
practical, hands-on experience that better prepares the student for the
workplace.
More than 80% of DeVry's U.S. Institute regular faculty hold advanced
academic degrees. The annual U.S. average DeVry faculty compensation is
practically identical to the $48,500 average salary of faculty members at
state-supported four year institutions, as reported in a recent study by
the College and University Personnel Association.
To facilitate student success, DeVry devotes significant amounts of
resources in the form of learning resource centers and academic support
services which can assist students in any phase of their educational
program. In addition, the DeVry Institutes encourage students to
participate in campus activities and offer a student success strategies
course aimed at preparing students to assume responsibility for their
learning and growth through practical strategies and methods for realizing
success.
KGSM was founded in 1973 to offer a practitioner-based graduate management
program leading to the Master of Business Administration ("MBA") degree.
In 1991 and 1993, respectively, KGSM introduced a Master of Project
Management ("MPM") and a Master of Human Resource Management ("MHRM")
degree program. In September 1995, KGSM began offering a Health Services
Management ("HSM") concentration within its MBA program. The HSM
concentration includes five health services management courses within the
16 course MBA curriculum. This program is being offered in response to the
growing demands of the health services industry professionals or
professionals in related fields such as the insurance or pharmaceutical
industries.
KGSM emphasizes a practitioner orientation, excellence in teaching and
service to working adults, offering classes in the evenings and on
weekends. From a base of six sites in Illinois and Wisconsin in 1987,
<PAGE>7
classes are now offered at nineteen locations nationwide. KGSM operates
five of its teaching sites on DeVry Institute campuses in Arizona,
California, Georgia and Missouri.
KGSM faculty members are practicing professionals who bring their expertise
to the classroom, emphasizing theory and practices that will best serve
students in their work as managers. Critical competencies in areas such as
business communications, technology, quality and international issues are
woven throughout the curricula. KGSM's curricula are regularly reviewed
for relevance to both students and employers through advisory councils
composed of representatives of distinction and achievement in business and
community affairs.
At the start of the June term, which falls primarily in the Company's 1997
fiscal year, enrollment at KGSM was 2,601, an increase of 462 students or
21.6% from the previous June. Historically, the summer term has been the
period of lowest enrollment during the year.
At the start of the summer 1996 semester, which is the first semester in
the Company's 1997 fiscal year, a combined total of approximately 30,201
full and part-time students were enrolled in the Company's DeVry and KGSM
educational programs, up 5.9% from a total of 28,513 full and part-time
students in the summer 1995 semester.
To serve what the Company believes is a large and growing need for employee
training, the Corporate Educational Services division was created in 1991.
This division offers customized professional services and training in
business, project management, electronics and telecommunications.
Conducted at customers' sites, CES programs emphasize the direct, practical
application of business concepts, techniques and skills. The operations of
CES have been aligned with KGSM, allowing CES to utilize the academic and
operational infrastructure of KGSM's national system and to better link its
clients to one of the largest applications-based education and training
organizations in North America. Corporate Educational Services draws on
the faculty, staff and curriculum resources of the DeVry and KGSM systems
as needed.
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In June 1996, the Company acquired the Becker CPA Review (Becker). Becker
is a leading international training firm preparing students to take the
national Certified Public Accountant (CPA) exam and Certified Management
Accountant (CMA) exam. Becker, which is headquartered in Los Angeles,
offers classes at approximately 135 locations in the United States and at
eight locations in the Middle East, Pacific Rim and Canada. Becker's
proprietary course materials and teaching methods result in pass rates on
the CPA exam for Becker students that are approximately double the national
average pass rate. More than one-third of all students passing the CPA
exam are Becker CPA Review alumni which now number over 200,000 since the
course was founded in 1957.
The amounts of revenue, earnings before interest and taxes and identifiable
assets of the Company's U.S. and foreign operations are included in Note 9
to the Consolidated Financial Statements, Operations by Geographic Area.
Competition
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The postsecondary education market, composed of approximately 7,000
universities, colleges and schools, is highly fragmented and competitive
with no single institution having a significant market share. The Company
believes that it is one of the largest private, degree-granting, regionally
accredited, higher education school systems in North America. The DeVry
Institutes compete with traditional publicly supported and independent two-
year and four-year colleges, other for-profit schools and alternatives to
higher education, such as employment and military service. Publicly
supported colleges may offer programs similar to those of the DeVry
Institutes at a lower tuition level due to government subsidies, government
and foundation grants, tax-deductible contributions and other financial
sources not available to for-profit schools. Tuition at independent not-
for-profit institutions is, on average, higher than the tuition at the
DeVry Institutes. Other for-profit schools offer programs that compete, to
a limited extent, with those of the DeVry Institutes. According to Company
surveys of prospective students, the most common alternative to attending a
DeVry Institute is attending a four-year college. Other frequently cited
alternatives are keeping or seeking a full-time job, attending another
career-oriented school or joining the military.
<PAGE>9
The DeVry Institutes believe their competitive strengths include career-
oriented curricula developed with regular structured employer input,
faculty with related industry experience, the demonstrated effectiveness of
their career services activities, their national brand name, market
presence and student recruitment organization, the accreditations granted
to the DeVry Institutes, authorization by various states to grant degrees,
modern facilities, well-equipped laboratories and a trimester schedule that
allows attendance year-round, thereby permitting earlier graduation. Only
a limited number of traditional colleges offer a bachelor's degree program
which can be completed in three years.
At the DeVry Institutes, classes are generally offered in morning,
afternoon or evening sessions which help students maintain a part-time job.
This availability of part-time employment and government-provided financial
aid partially offsets the competitive advantage of those schools with lower
tuition levels. Each curriculum is generally the same at all of the DeVry
Institutes, permitting students to transfer, if necessary, to another DeVry
Institute at a different location without interrupting their studies.
Institutions that participate in Title IV financial aid programs must now,
upon request, begin to disclose information about student completion rates
to current and prospective students. Completion rates at each of the U.S.
DeVry Institutes fall within the range of completion rates for selected
urban public colleges in the areas in which that DeVry Institute operates
as published by U.S. News and World Report, 1996 America's Best Colleges.
KGSM competes with other MBA programs offered in all markets in which it
has operations. In the Chicago area, there are over 20 MBA programs today.
Nationwide there are more than 700 graduate business programs. Competition
with KGSM's MHRM program varies by the market area in which it is offered
but is generally more moderate than competition for the MBA program. KGSM
is one of only a few schools in the country offering a master's degree in
project management but increasing interest in this field is beginning to
attract similar offerings.
KGSM differentiates itself in the marketplace by stressing a practitioner
approach to education, excellence in teaching by a faculty of practicing
professionals and a high level of service to the adult student. To help
<PAGE>10
its students master the skills they need to succeed on the job, KGSM
introduced an innovative teaching technique called System Supported
Teaching and Learning (SSTL)TM that incorporates frequent feedback and
mastery learning.
KGSM offers five 10-week terms each year. Courses meet once a week, either
in the evening or on Saturday. This schedule allows students with heavy
travel or other demands on their time to fit courses into their schedules.
In addition, in most markets KGSM is able to offer greater flexibility in
course scheduling, a greater choice of elective courses and a more
convenient location than its competitors. As the market for adult
education programs has expanded in recent years, other schools have
implemented multi-location evening programs. However, enrollments at KGSM
continue to increase, demonstrating the recognition it has earned as an
innovator in providing quality practical education.
With educational centers in seven states, KGSM also offers distributed
access points throughout the country to adults who may be transferred from
one part of the country to another by their employer or who capitalize upon
personal career opportunities in other locations.
Corporate Educational Services competes with individual consultants,
colleges, industry associations, other training companies and the internal
training departments of many large potential corporate customers and
government agencies. CES, utilizing KGSM's national system, and drawing on
the DeVry Institutes, differentiates itself in the marketplace through the
applied curriculum expertise of both KGSM and DeVry, particularly in the
areas of project management, electronics and telecommunications. Materials
are derived from the proven instructional success in these topics at the
DeVry Institutes and KGSM, modified as necessary using the academic
resources of both.
Becker competes with CPA exam preparation through self-study, with courses
offered by colleges and universities and with other training companies,
most of which operate on a local or regional basis, although at least one
training company competitor operates nationally. Courses offered by
competitors generally have a lower total course cost to help attract
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students. Becker differentiates itself from its competitors by providing
more classroom hours of instruction, extensive and constantly updated
review and practice test materials and experienced, qualified instructors
for each area of specialty included in the exam. The high success rate of
students who take the Becker review course and the numbers of students
enrolling after taking other review courses but not passing the CPA exam is
testimony to the quality and value of the Becker methodology.
Student Recruiting
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Students at the DeVry Institutes are recruited by admissions
representatives at on-campus admissions offices and by field student
recruiters. Field student recruiters are an important nationwide element
of the recruiting process because a significant portion of the DeVry
Institutes' students come from outside the immediate area in which the
DeVry Institute campus they attend is located. The percentage of
enrollment coming from these two recruiting sources varies campus by
campus, but is predicated largely on each school's location. Overall,
admissions representatives currently generate over 2/3 of the DeVry
Institutes' total enrollments. The DeVry Institutes employ approximately
350 admissions and field representatives throughout the United States and
Canada. In order to recruit students in certain states and Canadian
provinces, representatives must be licensed or authorized by the
appropriate regulatory agency. Regulations governing student participation
in federal financial assistance programs prohibit an institution from
paying a commission, bonus or incentive to the Company's student recruiters
based upon their success in securing enrollments. The Company believes
that its method of recruiter compensation complies with the regulations.
The admissions representatives are salaried, full-time company employees.
They are located at each DeVry campus and work with students who respond to
the Company's advertising or otherwise learn of the school. Admissions
representatives generally work with older students, many of them working
adults wanting to attend class in the evening, recently unemployed adults
seeking to improve their job skills as a way to re-enter the workforce and
<PAGE>12
students transferring to DeVry from nearby junior colleges. Each DeVry
Institute has entered into articulation agreements with nearby community
colleges to facilitate the enrollment of their students seeking to transfer
course credits into a DeVry program.
Field student recruiters meet individually with prospective students who
are contacted primarily through high school, club and youth group
presentations. These student recruiters visited over 10,000 high schools
in North America last year, making presentations on career choices and the
importance of a college education. Field recruiters also receive student
inquiries generated by direct mail and television advertising in the
particular recruiter's territory. Follow-up interview sessions with
prospective students are generally held in the student's home with the
student and his or her parents. The continued downsizing of the U.S.
military and recent base closings also presents recruiting opportunities.
Veterans with military-specific technical training are attracted to DeVry's
practical career-oriented education. Although a veteran may be recruited
at his mustering-out base, DeVry's locations across the U.S. are often near
the home area to which the veteran will relocate. Numerous new students
with V.A. benefits have enrolled at the DeVry Institutes over the past
several years. Field student recruiters are salaried, full-time company
employees who are trained by both field managers and headquarters-based
staff.
In support of its recruiting force, the DeVry Institutes advertise on
television and radio, in magazines and newspapers, and utilize
telemarketing and direct mail to reach prospective students. Prospective
students are also frequently referred by their employers, alumni or
currently enrolled students. In addition to the more traditional
recruiting methods, DeVry's new Internet site provides another avenue for
students to receive information and apply for admission.
To be admitted to a DeVry program, an applicant must be a high school
graduate, have a General Education Development (GED) certificate or hold a
degree from an accredited postsecondary institution. Applicants must also
meet minimum entrance examination scores which vary depending on the
program to which they are applying. In 1996, the DeVry Institutes
implemented a Computerized Placement Test designed in collaboration with
<PAGE>13
The College Board and Educational Testing Service. This exam helps DeVry
better serve the needs of its students by allowing DeVry to assess
students' achievement levels and developmental needs during the admission
process.
KGSM recruits students through direct mail, radio advertising,
telemarketing, print advertising and referrals from employers, alumni or
current students. KGSM employs on-campus admissions representatives at
each teaching center who meet with, counsel and evaluate admission
qualifications of prospective students. To be admitted to a KGSM program,
applicants must hold a baccalaureate degree from a regionally accredited
institution. Applicants must also achieve acceptable scores on either the
Graduate Management Admission Test (GMAT), the Graduate Record Examination
(GRE) or KGSM's alternative admission test.
Becker CPA Review markets its courses directly to potential students and to
some of their employers, e.g. Big Six accounting firms. Alumni referrals,
direct mail, print advertising and a network of on-campus recruiters at
colleges and universities across the country all generate the new students
who take the CPA or CMA review courses, which are offered twice each year.
Becker also enrolls many students who have previously completed a
competitor's course or a self-study program but were unable to pass the
exam.
Accreditation and Approvals
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Accreditation is a process for recognizing educational institutions and the
professional programs offered by those institutions for a level of quality
that entitles them to the confidence of the educational community and the
public they serve. In the United States, this recognition is extended
primarily through nongovernmental, voluntary, regional or specialized
accrediting associations. Accredited institutions are subject to periodic
review by accrediting bodies to ensure that these institutions maintain the
level of performance, evidence institutional and program improvement,
demonstrate integrity and fulfill requirements established by the
accrediting body.
<PAGE>14
Although regional accreditation in the United States is a voluntary process
designed to promote educational quality and improvement, it is an important
strength of the DeVry Institutes, providing significant advantages over
most other for-profit colleges. College and university administrators
depend on the accredited status of an institution in evaluating transfers
of credit and applications to graduate schools. Employers rely on the
accredited status of an institution when evaluating a candidate's
credentials, and parents and high school counselors look to accreditation
for assurance that an institution meets quality educational standards.
Moreover, accreditation is necessary for students to qualify for
eligibility for federal financial assistance. Also, most scholarship
commissions restrict their awards to students attending accredited
institutions.
DeVry Institutes and KGSM are accredited by the Commission on Institutions
of Higher Education of the North Central Association of Colleges and
Schools, the same accrediting agency that accredits other four-year
publicly supported and independent colleges and universities in the North
Central region. The DeVry Institutes and KGSM accreditations were last
reaffirmed by the North Central Commission in 1992 for the maximum ten year
period. An interim progress monitoring visit is scheduled for the DeVry
Institutes in May of 1997.
Accreditations of the DeVry Institutes and KGSM in the United States and of
the DeVry Institutes in Canada are as follows:
UNITED STATES CANADA
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Commission on Institutions of Ontario Association of Certified
Higher Education of the North Engineering Technicians and
Central Association of Colleges and Technologists (DeVry/Toronto area
Schools campuses' Electronics Engineering
Technology and Electronics
Technology Accreditation Commission Engineering Technician programs)
of the Accreditation Board for
Engineering and Technology (DeVry's Alberta Society of Engineering
Electronics Engineering Technology Technologists (DeVry/Calgary's
Bachelor of Science Degree program Electronics Engineering Technology
and, at the New Jersey campus, the and Electronics Engineering
Electronics Engineering Technology Technician programs)
Associate in Applied Science Degree
program.)
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<PAGE>15
In the United States, each DeVry Institute is approved to grant associate
and bachelor's degrees by the respective state where it is located. In New
Jersey, however, authorization is only at the associate degree level for
three programs - electronics engineering technology, computer information
systems and telecommunications management. Students at the DeVry
Institute, North Brunswick, are encouraged, upon completion of their
associate's degree, to transfer to other DeVry Institutes to complete
bachelor's degree requirements.
In June 1996, the New York Board of Regents Commission on Higher and
Professional Education voted to grant permission to establish a DeVry
Institute of Technology campus in the New York City area with authority to
grant certain bachelor and associate degrees. The Company has begun a
search for an appropriate facility for this campus.
Under current Canadian law, the Canadian DeVry Institutes are not permitted
to grant degrees. However, students at the Canadian Institutes are allowed
to transfer to DeVry Institutes in the U.S. to complete their degree
requirements. In 1995, the Alberta Department of Advanced Education, the
State of Arizona and the Commission on Institutions of Higher Education of
the North Central Association of Colleges and Schools approved the DeVry
Institute in Phoenix to offer its bachelor of science degree-completion
program on the Calgary campus. This allows students attending classes at
the Calgary campus to complete their degree studies without relocating to a
campus in the United States.
KGSM is authorized to operate and award degrees under authority of the
Illinois Board of Higher Education, Georgia Nonpublic Postsecondary
Education Commission, Wisconsin Educational Approval Board, Arizona State
Board for Private Postsecondary Education, Missouri Coordinating Board for
Higher Education and the California Council for Private Postsecondary and
Vocational Education. The Virginia Council of Higher Education has granted
conditional approval to KGSM to offer two of its master's degree programs.
<PAGE>16
State and Provincial Approval and Licensing
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Authorizations from state or provincial licensing agencies or ministries
are required to recruit students, operate the Company's schools and grant
degrees. Many states and provinces require for-profit postsecondary
education institutions to post surety bonds for licensure. The Company has
posted approximately $4 million of surety bonds with state and local
regulatory authorities and approximately $1 million (CDN) of surety bonds
with regulatory agencies in Canada and believes it is currently in
compliance with all state and provincial regulations. Certain states have
set standards of financial responsibility beyond those prescribed by
federal regulation. For example, fiscal tests adopted by the California
legislature (as discussed more fully below) and similar regulations adopted
or proposed by other state regulators may place the Company in future non-
compliance under certain state regulations. If the Company were unable to
meet these tests and could not otherwise demonstrate that it was
financially responsible, it could be required to cease operations in that
state. To date, the Company has successfully demonstrated its financial
responsibility where required.
In January 1991, the state of the California adopted legislation that
requires private, postsecondary education institutions to meet certain
fiscal tests in order to continue operating in the state. These fiscal
tests include three requirements; not having an operating loss in each of
an institution's two most recent fiscal years; having positive net worth in
its latest fiscal year; and maintaining a ratio of current assets to
current liabilities of 1.25:1 or greater. The Company has achieved two of
the required fiscal tests but has not maintained the ratio of current
assets to liabilities of 1.25:1 which the Company believes is an
inefficient use of its assets. At June 30, 1996, the Company had a ratio
of current assets to current liabilities of 1.17:1. The California Council
for Private Postsecondary and Vocational Education also has discretion
under this statute to allow an educational institution to continue
operating, even if it does not satisfy the financial tests, if the
institution can demonstrate that it has maintained sufficient financial
resources to sustain all of its promised educational services. At June 30,
1996, the Company believes that it has satisfactorily demonstrated its
financial strength and ability to continue to operate. California law also
requires an on-site visit to all postsecondary institutions having
<PAGE>17
accreditation from a regional accrediting association other than the
Western Association of Colleges and Schools. The California Council for
Private Postsecondary and Vocational Education conducted a visit of the
California campuses in August. Their report has not yet been issued.
Tuition and Fees
- ----------------
Effective with the spring 1996 term, the DeVry Institutes' tuition in the
United States for two semesters (one academic year) ranged from $6,580 to
$6,665, an increase of approximately 5.1% from last spring. Variations in
tuition depend on term of enrollment. Students enrolled on less than a
full time basis are charged somewhat lower tuition. For a student enrolled
in the DeVry Institute's 5 term electronics technician program, total
tuition cost would be $16,550. For a student enrolled in the 8 term
accounting program, total tuition cost would be $26,420. A national survey
of tuition released in the fall of 1995 by the College Board reported that
annual tuition and fee increases adopted by publicly supported and
independent four-year institutions averaged 6% for the 1995-96 academic
year. Tuition in Canada was increased to $6,020 (CDN) for the two semester
period, an increase of approximately 5.1% from last spring.
Effective with the September 1996 term, KGSM tuition per course (four
quarter credit hours) ranges from $905 to $1,110, depending on the state in
which the student is enrolled. This compares to tuition rates from $855 to
$1,050 last year.
In addition to the tuition amounts described above, students at the DeVry
Institutes and KGSM must purchase textbooks and supplies as part of their
educational program.
If a student leaves school prior to completing a term, federal, state and
provincial regulations and accreditation criteria permit the Company to
retain only a set percentage of the total tuition received from such
student, which varies with, but generally equals or exceeds, the percentage
of the term completed by such student. Amounts received by the Company in
excess of such set percentage of tuition are refunded to the student or the
appropriate funding source.
<PAGE>18
Financial Aid and Financing Student Education
- ---------------------------------------------
Students attending the DeVry Institutes finance their education through a
combination of family contributions, individual resources (including
earnings from full or part-time employment), financial aid (including
Company-provided financial aid) and tuition reimbursement from their
employers. The recent restoration of tax exemption for undergraduate
education employer tuition reimbursement will be of benefit to DeVry
students, mainly those working adults attending its part-time evening
programs, who receive partial or full tuition reimbursement.
The Company believes that approximately 79% of the U.S. DeVry Institutes'
students receive some government-sponsored financial aid and that a similar
percentage of the students attending the Canadian DeVry Institutes receive
some government-sponsored financial assistance. The Company believes that
between 10% and 15% of KGSM's students receive government-sponsored
financial aid. In addition, a substantial number of KGSM students receive
tuition reimbursement from their employers.
Students attending the Becker CPA or CMA review courses are not eligible
for financial aid but many of them receive part or full tuition
reimbursement from their employers.
The DeVry Institutes assist their undergraduate students in locating part-
time employment. Data from the National Center for Education Statistics
indicates that in 1993, almost half of all full-time college students
between the ages of 16 and 24 were employed. The Company believes that a
substantially greater percentage of its full-time students are employed to
help finance their costs of education. On the basis of a financial aid
application completed by the student and the student's family, the DeVry
Institutes develop an assistance package for students who require financial
aid. Government-sponsored financial aid is of great importance to the
Company because approximately 68% of the DeVry Institutes' U.S. tuition,
book and fee revenues collected in 1996 were dependent on some form of such
financial aid received by its students. In 1995, approximately 69% of
revenues collected were dependent on financial aid.
The government-provided financial aid and assistance programs in which many
of the Company's students participate are subject to political and
budgetary considerations. There is no assurance that government funding
<PAGE>19
for the financial aid programs in which the Company's students participate
will be maintained at current levels. A reduction in funding levels to
financial aid programs could result in lower enrollments or an increased
amount of Company-provided financial aid to its students. Budgetary
proposals currently circulating in this election year include President
Clinton's tax deduction of up to $10,000 per year for the cost of college
or vocational training, a $1,500 tax credit for full-time students and
increasing the maximum amount of the Pell Grant to $2,700 from its current
level of $2,470. Dole's tax cut proposals include a $500 per child per
year tax credit for funds deposited into an "IRA-like" account which can be
used for college or other post-secondary education costs.
Extensive and complex regulations in the U.S. and Canada govern all of the
government grant, loan and work programs in which the Company and its
students participate. Regulations and standards that an institution must
satisfy in order for its students to participate in federal financial
assistance programs include, among others, maximum student loan default
rates; limits on the proportion of an institution's revenue that can be
derived from federal aid programs; financial responsibility and
administrative capability requirements; and prohibition of certain types of
incentive payments to student recruiters. At June 30, 1996, the Company
achieved an operating profit, positive net worth, a "quick ratio" (cash
plus accounts receivable to all current liabilities) of more than 1:1 and
maintained the required cash reserve for the payment of refunds. This
fully satisfied the standards of financial responsibility established by
the U.S. Department of Education for participation in federal financial
assistance programs. Similarly, the Company fully satisfied the standards
of financial responsibility at June 30, 1995 and 1994. Failure to achieve
these standards or otherwise demonstrate, within the regulations, its
ability to continue to provide the educational services it offers could
result in the Company being required to post a surety bond to permit its
students to continue to participate in federal financial assistance
programs.
The Company maintains a staff at its Oakbrook Terrace headquarters to
review, interpret and establish procedures for compliance with these
regulations. Because financial assistance programs are required to be
administered in accordance with the standard of care and diligence of a
<PAGE>20
fiduciary, any regulatory violation could be the basis for the initiation
of a suspension, limitation or termination proceeding against the Company.
Changes in or new interpretations of applicable laws, rules or regulations
could have an adverse effect on the Company in the future.
In the United States, the Company has completed and submitted its required
audits of compliance with federal financial assistance programs for all
previous years and its independent accountants are currently conducting the
required audits of the one year period ending June 1996. In August, the
Department of Education undertook a site visit, as a part of its program of
periodic review of the administration of student financial assistance
programs, at the DeVry North Brunswick, New Jersey, campus. Although the
Company has no reason to believe that any proceeding against the Company is
presently contemplated, if such a proceeding were initiated against the
Company and resulted in a substantial curtailment of the Company's
participation in government grant or loan programs, the Company could be
adversely affected.
In Canada, DeVry's two Toronto-area schools were notified at the beginning
of September 1995 that the Ontario Ministry of Education and Training had
temporarily suspended the processing of new financial aid applications from
DeVry students pending review of inaccuracies found in applications filed
by some students.
The Ministry believed that some of DeVry's Toronto-area students applied
for and collected what may be excessive government-sponsored financial aid
by inappropriately reporting that they had zero income. A Ministry audit
of these applications, with DeVry's full cooperation, began in September
1995. In order to restore financial aid eligibility, the Company refunded
to the Ministry approximately CDN $1.6 million which the Company believes
is substantially all of the previous inappropriately disbursed financial
aid. In addition, the Company posted a letter of credit at the Ministry's
request against possible additional amounts that may have been
inappropriately disbursed. Effective with the spring term, which began in
March, the Ministry conditionally reinstated approval for the processing of
financial aid applications. Full unconditional reinstatement is subject to
the Ministry's completion of certain procedures regarding verification of
the Company's compliance with financial aid processing regulations.
<PAGE>21
The following is a description of the U.S. and Canadian financial aid
programs in which the Company's students participate.
United States Government Financial Aid Programs The following U.S.
Department of Education financial aid programs under Title IV of the Higher
Education Act are utilized by the Company's students in the United States:
(1) Federal Pell Grant ("Pell"), (2) Federal Supplemental Educational
Opportunity Grant ("SEOG"), (3) Federal Family Education Loan Program
("FFELP"), (4) Federal Perkins Direct Student Loan program ("Perkins"), (5)
Federal Work Study ("FWS") and (6) William D. Ford Federal Direct Student
Loan Program ("FDSL").
Grants are funds made available by the government to eligible students
who demonstrate financial need. Grants do not have to be repaid. The
Company's students are eligible to participate in the Pell and SEOG Grant
programs, which are programs for undergraduate students. Eligible
students receive a Pell grant ranging in amount from $400 to $2,470 per
year. SEOG is a supplement to the Pell grant, available to only the
neediest students because SEOG funds are limited in amount at each
institution based upon a federally determined formula. In addition to
these federal assistance funds, DeVry is required to make a 25%
institutional matching contribution of all SEOG funds disbursed. The
institutional matching contribution may be satisfied, in whole or in
part, by the DeVry scholarship funds, discussed separately in this
section, or by externally provided scholarship grants.
Loans Students at the DeVry Institutes participate in the Stafford and
PLUS programs within the FFELP and in the Perkins loan program. Stafford
loans may include an interest subsidy depending upon the financial need
of the student and loan repayment is scheduled to begin six months after
a student no longer attends school on at least a half-time basis. In
1996, over 80% of the financial aid received by students attending the
Company's U.S. DeVry Institutes was provided by federal student loans.
Students at KGSM participate in the FDSL.
In 1993, Congress passed legislation creating the new Direct Student Loan
Program. Under this program, students may complete all loan application
and processing steps at their educational institution. Besides the
<PAGE>22
benefit of one-stop processing, which can be done at the institution in
conjunction with the application for aid under other programs, this loan
program offers other benefits to student borrowers such as income-based
repayments, lower loan fees and lower loan interest rates. For the 1994-
95 school year, the DeVry DuPage Institute was one of only 104
institutions in the nation chosen by the Department of Education to pilot
the implementation. For the 1995-96 school year, four additional DeVry
Institutes and KGSM were chosen for participation. The U.S. Congress has
considered various proposals to eliminate this program or to cap loans
made under this program at some percentage of all federal student loans
until there is more experience with its success and realized cost
savings.
Work Study Work Study wages are 75% paid from federal funds and 25% from
qualified employer funds. Work opportunities, both on or off-campus,
under FWS are offered on a part-time basis by the U.S. DeVry Institutes
to undergraduate students who demonstrate financial need.
State Financial Aid Programs State grant assistance may be received by
eligible students attending DeVry Institutes in Arizona, California,
Georgia, Ohio and New Jersey.
Canadian Government Financial Aid Programs Canadian students, other than
students from Quebec, are eligible for loans under the Canada Student Loan
Plan, which is financed by the Canadian government but administered at the
provincial level. Canadian Student Loans are available to students who are
Canadian citizens or a permanent resident of Canada enrolled at approved
postsecondary institutions. Students from Quebec are eligible for loans
under the Quebec Student Loan Plan. The loans are interest-free while the
student is in school and repayment begins six months after the student
leaves school. All other forms of government financial aid in Canada, both
loans and grants, are financed and administered by the provinces.
"85/15 Rule" This U.S. Department of Education regulation affects only for-
profit postsecondary institutions, such as the Company. Under this rule,
students attending a for-profit institution that derives more than 85% of
its revenues from federal financial assistance programs in any year will
not be able to participate in these programs for the following year. This
<PAGE>23
rule, which was reported on for the first time for the Company's fiscal
1995, is commonly referred to as the "85/15 rule." In 1995, the U.S.
Institutes derived approximately 69% of their revenues from these defined
federal assistance programs. In 1996, the U.S. Institutes derived
approximately 68% of their revenues from these programs and no institute
within the DeVry system derived more than 78% of its revenues from these
programs. Each of the DeVry Institutes (except for the Long Beach,
California, Institute which currently operates as an additional location of
the Pomona, California, Institute) and KGSM are established as separate
institutions under the HEA provisions and must separately meet the criteria
for the "85/15 rule" and for loan default rates.
Company-Provided Financial Assistance The Company's EDUCARD Plan is
available to students attending the U.S. DeVry Institutes. The EDUCARD
Plan is an installment loan program designed to assist students unable to
completely cover educational costs with student and family contributions,
federal and state grants and loans. The installment loan feature of the
EDUCARD Plan is available to a student only after other student financial
assistance has been applied toward the payment of tuition, books and fees
and is available only for those purposes. Repayment of EDUCARD Plan
balances is worked out in accordance with the financial circumstances of
the particular student, but is typically on a monthly basis with all
balances required to be paid within 12 months following a students's
graduation or termination of study. The receivable balance related to
Company-provided financial aid at the U.S. DeVry Institutes at June 30,
1996, was approximately $10.8 million. Improved timeliness in financial
aid processing and the collection of student-owed balances, maintained this
receivable at approximately the same amount owed by students last year
under the EDUCARD Plan, although the number of enrolled students and
tuition revenues increased from last year. Amounts owed by students under
the EDUCARD Plan are subject to a monthly interest charge of 1% of the
average outstanding balance.
In addition to the student financial assistance provided by the EDUCARD
Plan, the DeVry Scholarship Competition annually offers merit-based
scholarships. The U.S. DeVry Institutes offered 30 full-tuition and 90
half-tuition scholarships to 1995/96 high school graduates. Each
scholarship covers the application fee and tuition for one of DeVry's
<PAGE>24
degree programs. The total value of these scholarships was over $2
million. Similar scholarship offers have been made to high school
graduates in previous years and are expected to be offered in the future.
To attract students who attend community or junior colleges, the U.S. DeVry
Institutes offered 36 half-tuition scholarships, valued at more than
$500,000, to students who graduated from an accredited community/junior
college in 1994 or later. In Canada, the DeVry Institutes offered 7 full-
tuition and 14 half-tuition scholarships valued at more than CDN $300,000
to high school graduates. The DeVry Institutes have also provided funds in
the form of institutional grants which help students most in need of
financial assistance.
Student Loan Defaults
- ---------------------
The Company believes that in 1996, federal student loans represented more
than 80% of the federal aid received by students at the U.S. DeVry
Institutes and 100% of the federal aid received by students at KGSM. For a
variety of reasons, high student loan default rates on federal student
loans are most often found in proprietary and minority institutions and
community colleges, all of which tend to have a higher percentage of low
income students enrolled than do four-year publicly supported and
independent colleges and universities. In 1989, the U.S. Department of
Education instituted strict regulations that penalize educational
institutions with high student loan default rates. These regulations were
further tightened by the 1992 Higher Education Reauthorization Act. Any
individual institution with a FFELP or FDSL cohort default rate exceeding
20% for the year is required to develop a default management plan in order
to reduce defaults, although the institution's operations and its students'
ability to utilize student loans are not restricted. Any individual
institution with a FFELP or FDSL cohort default rate of 25% or more for
three consecutive years is ineligible for participation in these loan
programs and cannot offer student loans administered by the U.S. Department
of Education for the fiscal year in which the ineligibility determination
is made and for the two succeeding fiscal years. In addition, effective
this fall is the added provision that students attending an institution
whose cohort default rate has exceeded 25% for three consecutive years will
be ineligible for Pell grants. Any institution with a FFELP or FDSL cohort
default rate of 40% or more in any year is subject to immediate limitation,
suspension or termination proceedings from all federal aid programs. No
<PAGE>25
DeVry Institute has ever had a FFELP or FDSL cohort default rate of 25% or
more for three consecutive years nor a cohort default rate of 40% or more
in any one year.
The Company carefully monitors its students' loan default rate. To help
reduce student loan default rates, the Department of Education requires
that all educational institutions wait 30 days before disbursing funds to
first-time, first-year undergraduates to prevent potential early-term
dropouts from defaulting on their loans. Students who leave school in the
early part of their educational program typically default on their loans at
a higher rate than those students who remain and complete the course.
Another significant factor in controlling student loan default rates is the
servicing and collection efforts by lenders and guaranty agencies. The
Company assists the efforts of these lenders and agencies by contacting its
students who are delinquent in their loan repayments and advising them of
their responsibilities and rights to deferments or collection forbearance
if they are eligible. According to preliminary reports by the U.S.
Department of Education, the Company's schools had FFELP student loan
default rates for 1994 (the latest year for which statistics are available)
ranging from 1.5% to 26.8%. The Company's preliminary system-wide FFELP
student loan default rate was reported at approximately 17.7%. The
reported rates for 1994 reflect the proportion of former students who were
due to begin repaying their loans during that year but who were in default
by the end of 1995. For 1993, the Company's system-wide FFELP cohort
default rate was 18.6%. Upon review of the calculations of these rates for
each Institute, the Company discovered numerous errors and exceptions. The
Company has filed an appeal with the Department of Education for the
recalculation of rates for both 1993 and 1994.
Only one DeVry Institute had a FFELP student loan default rate greater then
20% for 1994. That Institute, whose preliminary default rate was reported
at 26.8%, has initiated a default management plan and submitted it for
approval to the Department of Education. The Company believes that its
appeals should result in lower reported default rates and that the
Institutes can lower their default rates for future periods. Default rate
reduction initiatives are underway at each Institute. No DeVry Institute
is subject to any restrictions or termination under the student loan
program.
<PAGE>26
Students who attend the U.S. DeVry Institutes also participate in the
Federal Perkins loan program. This program provides low interest
educational loans to students who demonstrate exceptional need. Funding
for this program is provided, in part, by the Department of Education and,
in part, by the participating institution. As loans are repaid, the
principal and interest from these repayments is returned to the pool of
funds available for future loans to students at that institution. The
program, including the responsibility for collection of outstanding loans,
is administered by the institution. Any institution with a Perkins loan
cohort default rate exceeding 15% must establish a default reduction plan.
Any institution with a Perkins loan cohort default rate between 20% and 30%
will receive a reduced annual federal contribution to the program. If the
cohort default rate exceeds 30%, the institution will not receive any new
federal contribution to the program. However, new loans to eligible
students may continue to be made from the pool of funds created by monthly
repayments on previous loans. The DeVry Institutes reported Perkins loan
default rates for 1995 (the latest year for which statistics are available)
ranging from 15.6% to 34.0%. The U.S. DeVry Institutes system-wide Perkins
loan default rate was 25.9%. For 1994, the Perkins loan default rates
ranged from 10.8% to 27.0% and the U.S. DeVry Institutes system-wide
Perkins loan default rate was approximately 20.5%. A portion of the
increase in the 1995 default rates results from regulatory changes in the
default rate calculation which now includes as defaults some loans
previously considered to be not in default. For 1996, it is expected that
some of these calculation revisions will be rescinded. Student counseling
and additional collection efforts are being implemented to reduce these
default rates.
Career Services
- ---------------
The Company believes that the employment of its graduating students is
essential to its ability to attract new students. There were more than
45,600 graduates over the ten year period ending October 1995 who were
eligible for career services assistance (i.e. excluding graduates who
continued their education, students from foreign countries not legally
eligible to work in the U.S., etc.). Of the more than 43,000 graduates who
actively pursued employment or were already employed, 91.5% held positions
in their chosen fields within six months of graduation. Each Institute has
career services staff working with students in the areas of career choice
<PAGE>27
activity, resume preparation and job interviewing. The staff also
maintains contact with local and national employers to determine job
opportunities and arrange interviews.
The Company attempts to gather accurate data on the number of its graduates
employed in education related positions within six months following
graduation. To a large extent, the reliability of such data is dependent
on the information that graduates report to the Company.
Full and part-time U.S. degree and diploma program graduates for the three
classes which ended in calendar year 1995, and for the three classes which
ended in calendar year 1994, were employed in their chosen field within six
months of graduation, based on data reported to the DeVry Institutes, as
follows:
<TABLE>
THE U.S. DEVRY INSTITUTES' GRADUATE EMPLOYMENT STATISTICS
---------------------------------------------------------
<CAPTION>
Percent of
Graduates
Who
Number of Actively
Graduates Pursued
Who Number of and
Actively Graduates Obtained
Pursued Employed Employment
Employment in and Those Percent
Number or Were Education Who were Of Net
of Net Already Related Already Graduates
Graduates(1) Employed(2) Positions Employed(2) Employed(1)
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Calendar Year
1995 Graduating
Classes (2/95,
6/95, 10/95) 4,166 4,070 3,882 95.4% 93.2%
Calendar Year
1994 Graduating
Classes (2/94,
6/94, 10/94) 4,207 4,064 3,848 94.7% 91.5%
</TABLE>
- ----------------------------
(1)Net graduates exclude students continuing their education,
students from foreign countries who are legally ineligible to work in
the United States and students ineligible for employment because of
extreme circumstances.
(2)Does not include students who actively pursued employment for less
than 6 months and did not obtain employment.
<PAGE>28
The majority of employers of the DeVry Institutes' graduates are in the
electronics or information processing industries. Management believes that
no single employer has hired more than 5% of the DeVry Institutes'
graduates in recent years. Major employers of the DeVry Institutes'
graduates include the following companies: Andersen Consulting Group,
Applied Materials, AT&T, Cellular One, Eastman Kodak Co., EDS, General
Electric Company, IBM, INTEL, Motorola Inc. and Sprint.
KGSM maintains a career services office to assist current and past
graduates. This office offers a full range of services designed to enhance
each individual's career development skills and is available to graduates,
at no charge, on a lifetime basis.
Seasonality
- -----------
The Company's business is somewhat seasonal. Highest enrollment and
revenues at the DeVry Institutes and KGSM typically occur during the fall
back-to-school period which corresponds to the second and third quarters of
the Company's fiscal year. Slightly lower enrollment is experienced in the
spring and the lowest enrollment occurs during the summer months. Becker
experiences higher enrollments for its courses beginning in June and July
leading to the fall CPA exam.
Results of operations reflect this seasonal enrollment pattern and the
pattern of student recruiting activity costs that precede the start of
every term. Revenues, income before interest and taxes and net income by
quarter for each of the past two fiscal years are included in Note 10 to
the Company's consolidated financial statements.
Employees
- ---------
As of August 1996, the Company had approximately 2,900 full and part-time
employees. In addition, the DeVry Institutes employed over 1,000 students
as faculty assistants and in other part-time positions and used over 200
visiting instructors who teach on an as-needed, course-by- course basis,
primarily for evening courses. The majority of KGSM faculty members are
practicing business professionals who are engaged to teach on a course-by-
course basis. KGSM used over 300 such faculty members during the year.
None of the Company's employees is represented by a union. The Company
believes that relations with its employees are satisfactory.
<PAGE>29
Trademarks and Service Marks
- ----------------------------
The Company uses a number of trademarks including "DeVry Institute of
Technology", "Becker CPA Review" and variants thereof. All trademarks,
service marks and copyright registrations associated with the business are
registered in the name of the Company or one of its subsidiaries and expire
over various periods of time. The Company vigorously defends against
infringements of its trademarks, service marks and copyrights.
ITEM 2 - PROPERTIES
- --------------------
DeVry Institutes
- ----------------
The DeVry Institute campuses are located in both suburban communities and
urban neighborhoods. They are all easily accessible to major
thoroughfares. Each Institute campus includes teaching facilities,
admissions and administrative offices. Teaching facilities are housed in
modern, air-conditioned buildings that include classrooms, laboratories,
libraries, bookstores and student lounges. Electronics laboratories
include PC based instrumentation and microprocessor development/circuit
simulation systems along with traditional oscilloscopes, digital
multimeters, power supplies, signal generators and other equipment.
Computer laboratories include both stand alone and networked PC compatible
workstations that support all curricula areas. Resources available to
students include access to a central mainframe owned and operated by a
third party, UNIX and numerous software packages supporting a variety of
business, engineering and scientific applications. Connections to the
Internet and World Wide Web are included through the computer laboratories
as a part of the program curriculum. Telecommunications laboratories
provide central office simulation, PBX administration, inter-networking and
teaching LAN environments.
None of the five DeVry Institute campuses owned by the Company is subject
to a mortgage or other indebtedness.
In June 1996, the DeVry Technical Institute in Woodbridge, N.J., moved to a
new, 98,000 square foot company owned facility in North Brunswick, N.J., in
advance of the summer term class start.
<PAGE>30
In July 1996, the Company began operation of a satellite campus in
Mississauga (Toronto), Ontario, Canada. Opened in 42,000 square feet of
space, this is the second satellite to the main campus operation in North
York (Toronto) and the fourth DeVry Institute in Canada.
The table below sets forth certain information regarding each of the
properties at which the DeVry Institutes conduct educational operations:
<TABLE>
DeVRY INSTITUTE CAMPUSES
---------------------------
<CAPTION>
Full and
Part-Time
Area Students
(Approximate Attending
Square Feet) Spring 1996 Ownership
------------ ----------- ---------
<S> <C> <C> <C>
Decatur (Atlanta), Georgia 107,500 2,766 Owned
Chicago, Illinois 104,850 2,924 Owned
Addison (Chicago), Illinois 91,600 3,137 Leased
Columbus, Ohio 106,480(1) 2,473 Owned
North Irving (Dallas), Texas 95,250 2,294 Leased
Kansas City, Missouri 74,500 1,902 Owned
Phoenix, Arizona 120,200 2,559 Owned
Pomona (Los Angeles), California 100,500 2,938 Leased
Long Beach (Los Angeles),
California 98,240 1,056 Leased
Woodbridge, New Jersey 97,470 2,423 Leased
Calgary, Alberta, Canada 42,900 1,389 Leased
North York (Toronto), Ontario,
Canada 51,690 1,499 Leased
Scarborough (Toronto), Ontario,
Canada 35,400 790 Leased
------
28,150
======
</TABLE>
- -------------------------------
(1) Includes 14,400 square feet of modular buildings.
The Company placed a deposit in escrow on a parcel of land in the San
Fernando Valley, California, for the construction of a third campus in the
Los Angeles area. Completion of the purchase is dependent upon, among
other things, obtaining zoning of the property for campus use.
In Alpharetta (Atlanta), Georgia, the Company is finalizing contracts with
a developer for the construction of a build to suit, leased campus in that
suburb. The facility, planned at 65,000 square feet, is expected to open
for classes in fiscal 1998.
<PAGE>31
The Company has begun a search for land in the San Francisco area for
construction of a campus to serve the Northern California area. In New
York, a search is underway for an existing building that can be renovated
to the Company's specifications for operation in the New York City area.
KGSM
- ----
KGSM centers include teaching facilities, admissions and administrative
offices. The centers are housed in modern, air conditioned buildings whose
locations were chosen for their convenience to students. Keller centers
range in size from approximately 3,600 to 9,000 square feet.
In the spring of 1996, Keller Graduate School of Management opened one new
center in Tysons Corner, Virginia (Washington, D.C. area).
The table below sets forth certain information regarding each of the
properties at which KGSM conducts educational operations:
<TABLE>
KGSM CENTERS
------------
<CAPTION>
Part-Time
Students
April 1996 Ownership
---------- ---------
<S> <C> <C>
Chicago, Illinois 310 Leased
Schaumburg, Illinois 372 Leased
Downers Grove, Illinois 390 Leased
Lincolnshire, Illinois 358 Leased
Orland Park, Illinois 162 Leased
Elgin, Illinois 147 Leased
Milwaukee, Wisconsin 220 Leased
Waukesha, Wisconsin 164 Leased
St. Louis, Missouri 85 Leased
Kansas City, Missouri (downtown) 161 Leased
Kansas City, Missouri 147 (1)
Phoenix, Arizona 140 (1)
Mesa, Arizona 169 Leased
Decatur, Georgia 190 (1)
Atlanta, Georgia 168 Leased
Pomona, California 128 (1)
Long Beach, California 91 (1)
Tysons Corner, Virginia 41 Leased
-----
3,443
=====
</TABLE>
- ------------------------
(1)Operates on a DeVry Institute campus.
<PAGE>32
In the fall of 1996, Keller opened a center at the Company's corporate
headquarters location in Oakbrook Terrace, Illinois. This is the seventh
center in the Chicagoland area and the nineteenth center in the system.
The downtown Chicago center will relocate to a new and larger facility in
the downtown Chicago area this fall to permit increased enrollment at this
location.
Becker
- ------
Becker CPA is headquartered in leased offices in Encino, California.
Classes are conducted in leased facilities, less than twenty of which are
leased on a full-time basis. The remainder of the classes are conducted in
facilities which are leased on an as used basis, allowing classes to be
expanded or relocated as enrollments require.
Corporate
- ---------
The Company's administrative offices are located in approximately 60,000
square feet of a leased facility in Oakbrook Terrace, Illinois. In
addition, the Company leases approximately 17,900 square feet of storage
and other miscellaneous use space at this facility.
Corporate Educational Services maintains its headquarters at the Company's
administrative offices in Oakbrook Terrace, Illinois.
The Company's leased facilities are occupied under leases whose remaining
terms range from one to 13 years. A majority of these leases can be
renewed for additional periods.
ITEM 3 -LEGAL PROCEEDINGS
- -------------------------
The Company is subject to occasional lawsuits, investigations and claims
arising out of the normal conduct of its business. Neither the Company nor
any of its subsidiaries is currently a party to any material legal action
except those described below.
In July 1996, the Company entered into an out-of-court settlement agreement
with the Internal Revenue Service (IRS) relative to the Statutory Notice of
Deficiency issued by the IRS against the Company for tax years 1988 through
1991. The claimed deficiencies related to the amortization of intangible
<PAGE>33
assets purchased during the acquisition of the DeVry Institutes in 1987
(Notes 1 and 3). All of these issues have been resolved as a result of the
settlement. The settlement amount is immaterial to the Company's financial
position, results of operations and liquidity.
During 1996, the Ontario Ministry of Education and Training temporarily
suspended and later conditionally reinstated the processing of financial
aid applications for students attending the Company's two Toronto-area
schools. Full unconditional reinstatement is subject to the Ministry's
completion of certain procedures regarding verification of the Company's
compliance with financial aid processing regulations.
In July 1996, the Company was served with a class action lawsuit in Canada
alleging misrepresentation about the quality of the DeVry Institutes'
educational programs. The Company believes that the claims in the lawsuit
are frivolous and without merit. In response to the lawsuit, the Company
has filed a Statement of Defense and intends vigorously to contest the
allegations.
Although the outcomes cannot be predicted with certainty, the Company
believes the resolution of these matters will not have a material effect on
the Company's financial position, results of operations or liquidity.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
There were no matters submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year.
<PAGE>34
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The name, age and current position
of each executive officer of the
Company are:
Name, Age and Office Business Experience
- -------------------- -------------------
Dennis J. Keller.............55 Mr. Keller co-founded KGSM in 1973.
From the inception of the company,
Chairman of the Board and Mr. Keller has been Chairman of the
Chief Executive Officer Board and Chief Executive Officer.
Mr. Keller is a graduate of Princeton
University and holds a Master of
Business Administration degree from
the University of Chicago.
Ronald L. Taylor.............52 Mr. Taylor co-founded KGSM in 1973 and
has been a director since its
Director, President and inception. In 1981, Mr. Taylor became
Chief Operating Officer President and Chief Operating
Officer. Mr. Taylor is a graduate of
Harvard University and holds a Master
of Business Administration degree from
Stanford University.
David C. MacFarlane..........52 Mr. MacFarlane joined KGSM in 1974.
During the past 20 years, he has
Senior Vice President served in a variety of
positions including Director of
Admissions, Dean of Admissions and
Dean of KGSM. Currently Mr.
MacFarlane has responsibility for
DeVry Institute regional student
recruiting and various administrative
functions.
Norman C. Metz...............48 Mr. Metz joined the Company in April
1983 as a Vice President. In 1986,
Senior Vice President Mr. Metz assumed responsibility for
operations of the DeVry Institutes. In
addition, Mr. Metz is responsible for
student recruiting in the admission
offices at the Institute locations.
<PAGE>35
Name, Age and Office Business Experience
- -------------------- -------------------
O. John Skubiak..............46 Mr. Skubiak has been with KGSM for
more than 18 years, progressing from
Senior Vice President admissions representative to Dean of
KGSM. In his current position as a
Senior Vice President of the Company,
Mr. Skubiak has responsibility for the
Company's marketing, other than sales,
and the operations of KGSM, Corporate
Educational Services and Becker CPA
Review.
Norman M. Levine...........53 Mr. Levine has been Controller of the
Company since 1987 and has been the
Vice President, Controller Chief Financial Officer since March 1989.
and Chief Financial Officer. From November 1982 to 1987, Mr. Levine was
Controller of the DeVry Institutes.
Marilynn J. Cason..........53 Ms. Cason joined the Company in
January 1989 with responsibility for
Vice President, General the Company's legal affairs and human
Counsel and Corporate resources. From 1976 to 1988, Ms.Cason
Secretary served in various legal roles as Vice
President of Johnson Products Company,
a manufacturer of cosmetics and toiletries.
George W. Fisher...........44 Mr. Fisher joined the Company as Vice
President Canadian Operations in
Vice President, February 1985. His responsibilities
Regional Operations currently include operations of several
of the U.S. and Canadian DeVry Institutes.
Patrick L. Mayers..........56 Dr. Mayers joined KGSM in 1978 as Dean
of Academic Affairs. Dr. Mayers, who
Vice President, Academic obtained his B.A., M.A., M.B.A. and
Affairs, KGSM Ph.D. Degrees from the University of
Chicago, was elected an officer of the
Company in 1987.
Gerald Murphy..............49 Mr. Murphy joined the Company in late
1995 as a Vice President with
Vice President, responsibility for the operation of
Regional Operations several of the U.S. and Canadian DeVry
Institutes. Prior to joining DeVry,
Mr. Murphy served as a Vice President
of Education Management Corp. and of the
Universal Technical Institute.
<PAGE>36
Name, Age and Office Business Experience
- -------------------- -------------------
James Otten................47 Dr. Otten joined the Company in late
1995 as a Vice President with
Vice President, responsibility for the operation of
Regional Operations several of the U.S. DeVry Institutes.
Prior to joining DeVry, Dr. Otten served
as President of the Katherine Gibbs School
in Boston and of the Brown Institute in
Minneapolis.
Sharon Thomas-Parrott......45 Ms. Thomas-Parrott joined the Company
in January 1982 after several years as
Vice President, Government an officer in the U.S. Department of
Relations Education's Office of Student
Financial Assistance. She served the
Company in several student finance
positions before being elected to her
current position which includes
responsibility for both student
finance and government relations.
Robert R. Roehrich.........49 Dr. Roehrich joined the Company in
June 1981 as Dean of Computer Science
Vice President, Academic at the Columbus DeVry Institute. In
Affairs March 1983, he became Vice
President, Accreditation, following
which he was elected Vice President,
Academic Affairs.
Kenneth Rutkowski..........49 Mr. Rutkowski joined the Company in
1985 as Director of Operations
Vice President, Operations and Administrative Services and was
Services and Administration promoted to his current position in
May 1991. His current responsibilities
include managing the Company's real
estate and various administrative
functions.
Vijay Shah.................45 Mr. Shah joined the Company in 1977
progressing from a representative in
Vice President, Admissions an admissions office to director of
admissions at a DeVry Institute. He
has been National Director of
Admissions since 1989 and was promoted
to his current position in August
1994.
Edward J. Steffes..........46 Mr. Steffes joined the Company in
September 1984 as director of
Vice President, Marketing marketing and was promoted to his
current position in December 1986.
<PAGE>37
PART II
ITEM 5 - MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
- ----------------------------------------------------------
(a) Market Information
------------------
The Company's common stock has been traded on the New York Stock Exchange
since November 14, 1995, under the symbol DV. Prior to that date, the
Company's common stock traded on The NASDAQ Stock Market.
The following table states the high and low quotation and sales price
information by quarter for the past two years as reported by NASDAQ and the
New York Stock Exchange. All quotation and sales price information has
been adjusted for the two-for-one stock split in the form of a 100% stock
dividend paid June 21, 1995, to shareholders of record on June 1, 1995.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1995
----------------- --------------------
HIGH LOW HIGH LOW
------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $25 3/4 $20 $14 1/2 $12 17/32
Second Quarter 28 1/8 22 15 1/2 12 7/8
Third Quarter 35 1/2 25 3/4 19 5/16 15 1/4
Fourth Quarter 45 7/8 33 21 1/2 18 1/4
------------------------------------------------------------------
</TABLE>
(b) Approximate Number of Security Holders
--------------------------------------
There were 337 holders of record of the Company's common stock as of August
8, 1996. The number of holders of record does not include beneficial
owners of its securities whose shares are held by various brokerage firms
and other financial institutions. The Company believes that there are over
8,000 beneficial holders of its common stock.
<PAGE>38
(c) Dividends
---------
The Company is a holding company and, as such, is dependent on the earnings
of the Operating Subsidiary and Becker for funds to pay cash dividends.
Cash flow from the Operating Subsidiary and Becker may be restricted by law
and is subject to some restrictions by covenants in the Operating
Subsidiary's debt agreement. The Company has not paid any dividends on its
common stock and expects for the foreseeable future to retain all of its
earnings from operations for use in the Company's business. From time to
time, the board of directors will review the Company's dividend policy.
Any payment of dividends will be at the discretion of the board of
directors and will be dependent on the earnings and financial requirements
of the Company and other factors as the board of directors deems relevant.
ITEM 6 - SELECTED FINANCIAL DATA
- --------------------------------
Selected financial data for the Company for the last five years is included
in the exhibit, Five-Year Summary - Operating, Financial and Other Data,
on page 67 of this report.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto appearing
elsewhere in this report. All references in the financial statements to
the number of shares outstanding and per share amounts have been restated
to reflect the two-for-one stock split effective June 21, 1995.
RESULTS OF OPERATIONS
- ---------------------
1996 vs. 1995
- -------------
Tuition revenues in 1996 increased by $29,077,000 or 14.0% from 1995. This
was the largest tuition revenue increase in the history of the Company and
is attributable to both higher student enrollment at the DeVry Institutes
and KGSM and to tuition increases implemented during the year.
<PAGE>39
Cumulatively, total student enrollment at the DeVry Institutes in the three
semesters of fiscal 1996 increased by 8.6% compared with fiscal 1995. This
was partly due to higher enrollments at the Long Beach, California, and
Scarborough (Toronto), Ontario, Canada, campuses, both of which opened in
the previous year, and partly due to increased enrollments at the
previously existing Institutes. This is the fifth consecutive year that
total cumulative enrollment at the DeVry Institutes has increased from the
previous year and the largest rise in any of those years. At KGSM,
cumulative total student enrollment for the five terms of fiscal 1996 grew
by 16.7% from 1995. The increase in enrollments was due to elevated
enrollments at the Pomona and Long Beach, California, centers, both of
which opened last year, the 1996 opening of a center in Tysons Corner,
Virginia (Washington, D.C. area), and continued growth in enrollments at
the previously existing centers. Tuition increases have historically been
implemented by the DeVry Institutes effective with the spring term and
effective with the fall term at KGSM. Tuition rates rose approximately 5%
at DeVry, which is just slightly below the rate of last year's increase and
below the average rate of tuition increases at other colleges and
universities. Tuition rates rose similarly at KGSM.
Other revenues are attributable primarily to sales of books and supplies to
students attending the Company's educational programs. Interest income on
short-term investments of cash balances in excess of those needed for daily
operations declined slightly from last year, as the higher level of
payments for taxes on income, payments and receivable increases associated
with financial aid processing at the Toronto-area campuses and completion
of the new DeVry Institute campus in North Brunswick, New Jersey, reduced
average investible balances during the year.
Cost of educational services include the cost of faculty and related staff,
which composed approximately 60% of this expense category. Also included
in this expense category are the costs of facilities, supplies, bookstore
sales, other student education-related support activities and the cost of
tuition refunds and uncollectible accounts. The cost of educational
services rose by 13.6% from last year. Costs associated with the new DeVry
<PAGE>40
Institutes and KGSM centers contributed to this increase along with higher
educational costs resulting from higher student enrollments at the existing
locations. Depreciation expense on the Company's continued investment in
facilities and equipment for its students increased by over $1 million from
last year. Tuition refund and uncollectible account expense increased in
the year partly because of higher enrollments and a larger tuition base at
DeVry and KGSM and partly because of the higher proportion of new DeVry
students this year as a result of growing new student enrollments. For the
year, new student enrollment at the DeVry Institutes increased by 10.5%
from last year. New students historically withdraw at higher rates than do
students in later terms.
Student services and administrative expense includes the costs of new
student recruiting, curriculum development and general administrative
costs. These expenses increased by 12.6% from last year. Marketing costs
have grown to support the new DeVry Institutes and KGSM locations and to
support the higher number of new students recruited at the existing
locations. General administrative expenses increased from last year partly
due to normal inflationary changes and partly because of efforts associated
with the Ontario Ministry of Education's suspension and subsequent
conditional reinstatement of financial aid eligibility for students
attending the Company's Toronto area campuses.
The Company's earnings from operations, before interest expense and taxes
on income, reached a record $33,761,000 for the year. This represents an
operating margin of 13.0%, up from 12.6% and 12.1% in each of the last two
years, respectively. Higher revenues and cost-containment measures
contributed to the improved margins.
Interest expense was reduced by $2,007,000 to $1,063,000 for the year. The
lower interest expense resulted from lower outstanding levels of debt
throughout most of the year and the absence of the non-recurring make-whole
premium payment made in 1995 when the Company voluntarily prepaid all of
its senior subordinated notes.
<PAGE>41
The effective tax rate represents the combination of U.S. federal and state
and Canadian federal and provincial income taxes on the Company's
operations in these jurisdictions.
1995 vs. 1994
- -------------
Tuition revenues in 1995 increased by $16,325,000 or 8.5% from 1994. The
rise is attributable to both higher student enrollment at DeVry and KGSM
and to tuition increases implemented during the year. Cumulatively, total
student enrollment at the DeVry Institutes in the three semesters of fiscal
1995 increased by 3.3% compared with fiscal 1994. This is the fourth
consecutive year that total cumulative enrollment has grown from the
previous year. At KGSM, cumulative total student enrollment for the five
terms of fiscal 1995 grew by 17.7% from 1994. Tuition increases have
historically been implemented by the DeVry Institutes in the spring term
and at KGSM in the fall. Tuition rates grew by more than 5% at DeVry, a
slightly lower percentage increase than was implemented in 1994. Tuition
rates were increased similarly at KGSM. Historically, the Company has been
able to pass along inflationary cost increases through higher tuition.
Other revenues are attributable primarily to sales of books and supplies to
students attending the Company's educational programs. Interest income on
short-term investments increased because of higher cash balances available
for investment throughout most of the year and because of higher prevailing
interest rates.
Costs of educational services include the cost of faculty and related
staff, which composed approximately 60% of this expense category. Also
included in this expense category are the costs of facilities, supplies,
bookstore sales, other student education-related support activities and
tuition refunds. The cost of educational services increased by 7.1% from
1994. Costs associated with rising student enrollment, such as additional
faculty and higher wages and benefits, were largely responsible for the
increase. The Company also continued its investment in growth with the
<PAGE>42
opening of new DeVry Institutes in Long Beach, California, and Scarborough
(Toronto), Ontario, Canada. During the year, KGSM opened two new centers
in California, operating in the DeVry Institute campuses in these
locations.
Partially offsetting these cost increases was a reduction in depreciation
expense on certain assets whose depreciable lives expired in the first
quarter. Tuition refund and bad debt expenses also declined, reflecting
educational program and student service quality initiatives that have
favorably affected the pattern of student retention, reducing refund
expense and uncollected account balances compared to prior periods.
Student services and administrative expense includes the costs of new
student recruiting, curriculum development and general administrative
costs. These expenses increased by 8.4% from last year. Marketing costs
grew at a somewhat faster rate than tuition revenue in support of the two
new DeVry campuses and two KGSM centers that opened during 1994. For the
year, new student enrollment at the DeVry Institutes increased by 7.6% from
1994.
The Company's earnings from operations, before interest expense and taxes
on income, reached a record $28,829,000 for the year. This represents an
operating margin of 12.6%, up from 12.1% last year and 11.7% the year
before. Higher revenues; improved educational program success, producing
greater student retention; and cost-containment measures contributed to the
improved margins even as expansion continued.
Interest expense was reduced by $1,545,000 to $3,070,000 for the year. The
lower interest expense resulted from scheduled principal payments and
voluntary prepayments of the Company's funded debt. In June, the Company
voluntarily prepaid all $7,870,000 of its 13% senior subordinated notes,
with a make-whole premium payment of $573,000 included in interest expense
in the Consolidated Statement of Income. In 1995, total funded debt was
reduced by $10,195,000.
<PAGE>43
Taxes on income were computed in accordance with Statement of Financial
Accounting Standards No. 109 (FAS 109), which the Company adopted in 1992.
The effective tax rate of 42.2% represents the combination of U.S. federal
and state and Canadian income taxes on the Company's operations.
Liquidity and Capital Resources
- -------------------------------
The Company's primary source of liquidity is the cash received from student
payments for tuition, fees and books. These payments include cash from
student and family resources, student and family educational loans and
other financial aid under various federal, state and provincial programs.
The pattern of cash receipts is somewhat seasonal throughout the year. The
level of accounts receivable from which cash payments are collected reaches
a peak immediately after the billing of tuition, fees and books at the
beginning of each DeVry Institute semester in July, November and March.
Collections of these receivables are heaviest at the start of each
semester. In the first two months of each semester, collections typically
exceed payments for operating expenses applicable to that period. Accounts
receivable reach their lowest level just prior to the start of the next
semester, dropping to their lowest point in the year at the end of June.
The end of June corresponds to both the end of the spring semester and to
the end of a financial aid year, at which time all financial aid for the
previous 12 months should have been disbursed to students' accounts. At
June 30, 1996, net accounts receivable were $9,684,000. The increase in
accounts receivable from last year results from the inclusion of a
$1,472,000 receivable of refundable income tax and from higher revenues and
number of students at the DeVry Institutes and KGSM during the year. The
increase in receivables is also attributable, in part, to the tuition
financing offered by DeVry Canada to those students at the Toronto area
campuses who were affected by the temporary suspension of financial aid.
In conjunction with the conditional reinstatement of financial aid
processing effective with the spring term, the Company returned to the
Ontario Ministry of Education and Training payments believed to have been
<PAGE>44
inappropriately disbursed to students. In addition, the Company posted a
letter of credit with the Ministry as security against possible additional
amounts that may have been inappropriately disbursed to students who
incorrectly completed their financial aid applications.
The Company estimates that historically nearly 70% of the DeVry Institutes'
tuition, bookstore and fee revenues are derived from some form of
government-provided financial aid to its students. These financial aid and
assistance programs, in which most of the Company's students participate,
are subject to political and budgetary considerations. There is no
assurance that such funding will be maintained at current levels.
Extensive and complex regulations in the U.S. and Canada govern all of the
government financial assistance programs in which the Company's students
participate. The Company's administration of these programs is
periodically reviewed by various regulatory agencies. Any regulatory
violation could be the basis for the initiation of a suspension, limitation
or termination proceeding against the Company.
Under the terms of the Company's participation in governmental financial
aid programs, certain cash received from the U.S. Department of Education
is maintained in restricted bank accounts. This cash becomes available for
general use by the Company only after student loans and grants have been
credited to the accounts of students and the cash is transferred to an
unrestricted operating cash account. The introduction of electronic fund
transfers for student loans and the direct loan program from the Department
of Education have generally accelerated the receipt and processing of these
payments by the DeVry Institutes and KGSM, contributing to the Company's
liquidity.
Cash payments for income taxes no longer benefit from the net operating
loss carryovers, which were fully utilized by the end of the first quarter
of fiscal 1996. While the increased payment of income taxes will affect the
Company's liquidity, the Company believes that its present cash resources
and cash flow from operations will be sufficient to meet its cash
requirements.
<PAGE>45
In July 1996, the Company entered into an out-of-court settlement agreement
with the Internal Revenue Service (IRS) relative to the Statutory Notice of
Deficiency issued by the IRS against the Company for tax years 1988 through
1991. The claimed deficiencies related to the amortization of intangible
assets purchased during the acquisition of the DeVry Institutes in 1987.
All of these issues have been resolved as a result of the settlement. The
settlement amount, which is expected to be paid in the first quarter of
fiscal 1997, is immaterial to the Company's financial position, results of
operations and liquidity.
Cash generated from operations in 1996 was $28,368,000, approximately the
same as in each of the last two years. The generation and use of cash
during the year reflects the seasonal operating patterns discussed above.
During some periods just prior to the start of a semester, cash balances
may be supplemented by temporary borrowings under the Company's revolving
line of credit. Cash generated from operations each year has been
sufficient to meet all of the Company's operating needs and capital
investment needs while reducing debt on a regular basis.
Capital expenditures were primarily for expansion and facility improvement,
replacement and upgrading of school laboratories and for teaching and
administrative equipment. Capital expenditures in 1996 were a record
$18,352,000. This spending reflects the Company's continued investment in
improved quality of educational offerings, facilities and programs and in
additional expenditures connected with the opening of new DeVry Institutes
in Scarborough, Ontario, Canada, and Long Beach, California, last year, and
the completion of construction of a DeVry Institute campus in North
Brunswick, New Jersey, to replace the present leased facility in
Woodbridge, New Jersey.
For 1997, total capital spending for existing operations is planned at
somewhat lower levels than during the past two years. Cash generated from
operations and existing cash resources have been sufficient to meet capital
requirements in the past and are anticipated to be sufficient to cover
expansion plans in the future.
<PAGE>46
In June 1996, the Company and its banks completed a renegotiation of its
1994 term loan agreement. The $85,000,000 bank facility remains an
unsecured revolving line of credit with a higher borrowing limit, longer
term and lower interest rates effective upon the achievement of certain
financial ratios. The revolving loan facility allows the Company to take
maximum advantage of its seasonally heavy cash flows to reduce debt while
also providing flexibility in providing funds for expansion as needed. At
June 30, 1996, approximately $63,000,000 of the revolving line had been
utilized in the form of borrowings and letters of credit. The terms of
this loan agreement reflect the Company's strong financial position.
In June 1996, the Company acquired certain tangible assets and tradenames
of the Becker CPA review for $18,458,000 in cash and acquired copyrights,
other intellectual property and publicity rights of the Becker CPA Review
for $17,935,000. Funds for the acquisition were provided by borrowings
under the Company's newly renegotiated revolving line of credit.
The Company's bank borrowings are at a floating interest rate subject to
adjustment at varying intervals at the Company's option. At the present
time, the Company does not have an interest rate swap or other forms of
protection against increases in the floating rate but has fixed the
interval of interest rate adjustment on approximately one-third of its year-
end borrowings for a one-year period. The Company periodically evaluates
its need for additional protection in light of projected interest expense
and borrowing levels.
The Company believes that current balances of unrestricted cash, cash
generated from operations and, if needed, the revolving loan facility will
be sufficient to fund its operations for the foreseeable future.
<PAGE>47
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Company and its subsidiaries are
included below on pages 48 through 63 of this report:
10K
Report Page
-----------
Consolidated Balance Sheets at
June 30, 1996 and 1995 48-49
Consolidated Statements of Income for the
years ended June 30, 1996, 1995 and 1994 50
Consolidated Statements of Cash Flows for
the years ended June 30, 1996, 1995 and 1994 51
Consolidated Statements of Shareholders'
Equity for the years ended June 30, 1996,
1995 and 1994 52
Notes to Consolidated Financial Statements 53-62
Report of Independent Accountants 63
<PAGE>48
<TABLE>
DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
June 30,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 29,948 $ 26,252
Restricted Cash 16,590 20,179
Accounts Receivable, Net 9,684 6,189
Inventories 3,290 3,553
Prepaid Expenses and Other 2,055 1,846
-------- --------
Total Current Assets 61,567 58,019
-------- --------
Land, Buildings and Equipment
Land 18,956 18,952
Buildings 50,570 39,399
Equipment 51,198 43,390
Construction In Progress - 1,337
-------- --------
120,724 103,078
Accumulated Depreciation (49,283) (42,820)
-------- --------
Land, Buildings and Equipment, Net 71,441 60,258
-------- --------
Other Assets
Intangible Assets, Net 37,709 2,022
Perkins Program Fund, Net 5,483 4,522
Other Assets 1,889 1,850
-------- --------
Total Other Assets 45,081 8,394
-------- --------
TOTAL ASSETS $178,089 $126,671
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>49
<TABLE>
DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
June 30,
1996 1995
---- ----
<S> <C> <C>
LIABILITIES
Current Liabilities
Accounts Payable $ 18,859 $ 14,957
Accrued Salaries, Wages & Benefits 14,735 12,369
Accrued Expenses 7,640 3,671
Advance Tuition Payments 7,617 13,982
Deferred Tuition Revenue 3,609 3,768
-------- --------
Total Current Liabilities 52,460 48,747
-------- --------
Other Liabilities
Revolving Loan 61,500 33,029
Deferred Income Tax Liability 2,207 2,318
Deferred Rent and Other 4,635 4,609
-------- --------
Total Other Liabilities 68,342 39,956
-------- --------
TOTAL LIABILITIES 120,802 88,703
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY
Common Stock, $0.01 par value, 20,000,000
Shares Authorized;16,621,852 and
16,613,492 Shares Issued and Outstanding
at June 30, 1996 and 1995, Respectively 166 166
Additional Paid-in Capital 36,694 36,610
Retained Earnings 19,987 742
Foreign Currency Translation Adjustment 440 450
-------- --------
TOTAL SHAREHOLDERS' EQUITY 57,287 37,968
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $178,089 $126,671
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>50
<TABLE>
DEVRY INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
<CAPTION>
For The Year Ended June 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Tuition $236,607 $207,530 $191,205
Other Educational 22,341 19,887 19,681
Interest 1,059 1,176 551
-------- -------- --------
Total Revenues 260,007 228,593 211,437
-------- -------- --------
COSTS AND EXPENSES:
Cost of Educational Services 155,254 136,721 127,673
Student Services and
Administrative Expense 70,992 63,043 58,146
Interest Expense 1,063 3,070 4,615
-------- -------- --------
Total Costs and Expenses 227,309 202,834 190,434
-------- -------- --------
Income Before Income Taxes 32,698 25,759 21,003
Income Tax Provision 13,453 10,863 8,778
-------- -------- --------
NET INCOME $ 19,245 $ 14,896 $ 12,225
======== ======== ========
EARNINGS PER COMMON SHARE $1.14 $0.89 $0.73
===== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>51
<TABLE>
DEVRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
For The Year Ended June 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $19,245 $14,896 $12,225
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 7,516 6,157 6,981
Amortization 63 63 346
Provision for Refunds and
Uncollectible Accounts 16,130 12,810 14,101
Deferred Income Tax (Provision) Benefit (456) 5,480 2,419
Loss (Gain)on Disposals of Land,
Buildings and Equipment 19 (7) 338
Changes in Assets and Liabilities:
Restricted Cash 3,589 (9,130) (1,447)
Accounts Receivable (18,645) (11,746) (14,125)
Inventories 263 (629) 34
Prepaid Expenses And Other (118) (128) 266
Perkins Program Fund Contribution
and Other (1,188) (1,649) 1,717
Accounts Payable 3,210 3,136 1,380
Accrued Salaries, Wages,
Expenses and Benefits 6,239 667 3,601
Advance Tuition Payments (7,340) 7,943 1,010
Deferred Tuition Revenue (159) 337 (441)
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 28,368 28,200 28,405
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (18,352) (14,551) (6,288)
Acquisition of Net Assets (Note 2):
Payment for Purchase of Operating
Assets, Net of Cash Acquired (16,930) - -
Payment for Purchase of
Intellectual Property (17,935) - -
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (53,217) (14,551) (6,288)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Exercise of Stock Options 84 47 6
Proceeds From Revolving Credit Facility 46,500 22,000 35,029
Repayments Under Revolving Credit Facility (18,029) (20,000) (4,000)
Repayments of Debt - (12,195) (43,517)
------- ------- -------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 28,555 (10,148) (12,482)
------- ------- -------
Effects of Exchange Rate Differences (10) 47 (275)
------- ------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,696 3,548 9,360
Cash and Cash Equivalents at Beginning
of Year 26,252 22,704 13,344
------- ------- -------
Cash and Cash Equivalents at End of Year $29,948 $26,252 $22,704
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid During the Year $ 1,429 $3,367 $4,606
Income Taxes Paid During the Year 13,902 7,080 4,607
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>52
<TABLE>
DEVRY INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in Thousands)
<CAPTION>
For The Year Ended June 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Common Stock
Beginning of year $ 166 $ 83 $ 83
Two-for-one stock split in the form of a
stock dividend - 83 -
------- ------- -------
End of year 166 83 83
======= ======= =======
Additional Paid-In Capital
Beginning of year 36,610 36,563 36,557
Shares issued for exercise of stock options 84 47 6
------- ------- -------
End of year 36,694 36,610 36,563
======= ======= =======
Retained Earnings (Accumulated Deficit)
Beginning of year 742 (14,071) (26,296)
Net income per accompanying statement 19,245 14,896 12,225
Two-for-one stock split in the form of a
stock dividend - (83) -
------- ------- -------
End of year 19,987 742 (14,071)
======= ======= =======
Foreign Currency Translation Adjustment
Beginning of year 450 403 678
Translation Adjustment (10) 47 (275)
------- ------- -------
End of year 440 450 403
======= ======= =======
TOTAL SHAREHOLDERS' EQUITY, END OF YEAR $57,287 $37,885 $22,978
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>53
DEVRY INC.
Notes to Consolidated Financial Statements
June 30, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
DeVry Inc. (the Company) is a holding company which, through its
wholly owned subsidiaries, operates a national system of degree-
granting, career-oriented higher-education schools and a leading
international training firm. Keller Graduate School of Management,
Inc. (KGSM), is one of the largest regionally accredited higher-
education systems in North America. Its DeVry Institutes award
associate and bachelor's degrees in electronics, computer information
systems, business operations, accounting, technical management and
telecommunications management. The DeVry Institutes are located on 10
campuses in the United States and four campuses in Canada. Keller
Graduate School (Keller) awards master's degrees in business
administration, human resource management and project management.
Keller classes are offered at 18 locations in Illinois, Wisconsin,
Missouri, Georgia, Arizona, California and Virginia. The Corporate
Educational Services division offers on-site management and
technical training programs for larger employers and government
agencies. Becker CPA Review (Becker CPA), acquired June 19, 1996
(Note 2), is the leading international training firm preparing
students to pass the Certified Public Accountant (CPA) examination .
Currently, the CPA exam review course is offered at approximately 135
locations in the United States and at eight international locations.
Becker CPA also offers a Certified Management Accountant (CMA)
examination review course in the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All intercompany balances
and transactions have been eliminated in consolidation. Becker CPA
accounts are consolidated based upon an April 30 fiscal year end,
which is its natural year end based on its business cycle. There
were no events ocurring during the intervening period before June 30,
that materially effected the financial position or results of
operations of the Company. Unless indicated, or the context requires
otherwise, references to years refer to the Company's fiscal years
then ended.
Cash and Cash Equivalents
Cash and cash equivalents include time deposits, commercial paper,
municipal bonds and bankers acceptances with maturities of three
months or less or that are highly liquid and readily convertible to a
known amount of cash. These investments are stated at cost, which
approximates market, due to their short duration or liquid nature. The
Company limits the amount of credit exposure with any one investment
instrument or with any one financial institution. The Company
evaluates the creditworthiness of the security issuers and financial
institutions with which it invests.
Financial Aid and Restricted Cash
The financial aid and assistance programs, in which most of the
Company's students participate, are subject to political and budgetary
considerations. There is no assurance that such funding will be
maintained at current levels. Extensive and complex regulations in
the U.S. and Canada govern all of the government financial assistance
programs in which the Company's students participate. The Company's
administration of these programs is periodically reviewed by various
regulatory agencies. Any regulatory violation could be the basis for
the initiation of a suspension, limitation or termination proceeding
against the Company.
A significant portion of revenues is provided by students who
participate in government financial aid and assistance programs.
Restricted cash represents amounts received from the U.S. government
under various student aid grant and loan programs. The cash is held
in separate bank accounts and does not become available for general
use by the Company until the financial aid is credited to the accounts
of students and the cash is transferred to an operating cash account.
<PAGE>54
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition
Tuition revenue and provisions for refunds and uncollectible accounts
are recognized ratably over each of the academic terms in a fiscal
year. The provisions for refunds and uncollectible accounts are
included in the cost of educational services in the Consolidated
Statements of Income. Related reserves are $6,603,000 and $5,368,000
at June 30, 1996 and 1995, respectively. Textbook sales and other
educational revenues are recognized when they occur. Revenue from
training services is recognized when the training is provided.
Inventories
Inventories consist mainly of textbooks, electronics kits and supplies
held for sale to students enrolled in KGSM's educational programs.
Inventories are valued at the lower of cost (first-in, first-out) or
market.
Land, Buildings and Equipment
Land, buildings and equipment are recorded at cost. Cost includes
additions and those improvements that increase the capacity or
lengthen the useful lives of the assets. Repairs and maintenance
costs are expensed as incurred. Interest is capitalized as a
component of cost on major projects during the construction period.
The amount of interest capitalized for the years ended June 30, 1996
and 1995, was $314,000 and $101,000, respectively. Assets under
construction are reflected in construction in progress until they are
ready for their intended use.
Depreciation is computed using the straight line method over
estimated service lives ranging from three to 31 years.
Intangible Assets
Intangible assets relate to the acquired business operations of the
DeVry Institutes and Becker CPA (Note 2). These assets consist of
the purchase prices allocated to the estimated fair value of certain
assets acquired (Note 3). Accumulated amortization is computed using
the straight line method over the assets' estimated useful lives of 25
to 40 years.
The Company expenses all marketing and new school opening costs as
incurred.
Perkins Program Fund
The Company makes contributions to the Perkins Student Loan Fund at a
rate equal to 33% of that contributed by the federal government. As
previous borrowers repay their Perkins loans, their payments are used
to fund new loans thus creating a permanent revolving loan fund. The
Company carries its investment in such contributions at original
values net of allowances for losses on loan collections of $1,547,000
and $1,275,000 at June 30, 1996 and 1995, respectively.
Fair Value of Financial Instruments
The carrying amount reported in the Consolidated Balance Sheets for
cash and cash equivalents, restricted cash, accounts receivable,
accounts payable, accrued expenses and advanced and deferred tuition
payments approximate fair value because of the immediate or short-term
maturity of these financial instruments. The carrying amount reported
for borrowings under the revolving loan agreement approximates fair
value because the underlying instruments are variable-rate notes.
<PAGE>55
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation
The financial position and results of operations of KGSM's Canadian
subsidiary are measured using the local currency as the functional
currency. Assets and liabilities of the foreign subsidiary are
translated to U.S. dollars using exchange rates in effect at the
balance sheet dates. Income and expense items are translated at
monthly average rates of exchange prevailing during the year. The
resultant translation adjustments are included in the component of
shareholders' equity designated as Foreign Currency Translation
Adjustment. Transaction gains or losses during the years ended June
30, 1996, 1995 and 1994, were insignificant.
Income Taxes
Income taxes are provided by applying statutory rates to income
recognized for financial statement purposes. Deferred income taxes are
provided for revenue and expense items that are recognized in
different accounting periods for financial reporting purposes than for
income tax purposes. Effects of statutory rate changes are recognized
for financial reporting purposes in the year in which enacted by law.
Stock Split
On May 17, 1995, the Company's board of directors authorized a
two-for-one stock split in the form of a 100% stock dividend payable
on June 21, 1995, to shareholders of record on June 1, 1995. The par
value of the additional shares arising from the split has been
reclassified from retained earnings to common stock. In addition, all
references in the financial statements to the number of shares
outstanding, per share amounts, stock option data and market prices of
the Company's common stock have been restated to reflect the stock
split.
Earnings Per Common Share
Earnings per common share are determined by dividing net earnings by
the weighted average number of common and common share equivalents
outstanding during the year after giving retroactive effect to the
stock split. Incentive stock options are included as common stock
equivalents using the treasury stock method. The number of shares
used in computing the net earnings per share was 16,830,000,
16,727,000 and 16,694,000 in 1996, 1995 and 1994, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the amounts of revenues
and expenses during the reported period. Actual results could differ
from those estimates.
<PAGE>56
NOTE 2: ACQUISITION
On June 19, 1996, a newly formed, wholly owned subsidiary of the
Company acquired substantially all of the tangible operating assets
and trademarks and assumed certain liabilities of Becker CPA for
$18,458,000 in cash. On this same date, another newly formed, wholly
owned subsidiary of the Company acquired certain copyrights, other
intellectual property and publicity rights of Becker CPA for
$17,935,000 in cash. Becker CPA is the leading international
training firm preparing students to pass the nationally administered
and centrally graded CPA exam, and it also offers a CMA exam review
course. Funding for the acquisitions was obtained through borrowings
under the Company's revolving credit facility (Note 5).
The acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the purchase prices were allocated to the
tangible and identifiable intangible assets acquired and liabilities
assumed based on their estimated fair values. The intangible assets
are being amortized using the straight line method over a 25-year
period for financial reporting purposes and are being deducted for tax
reporting purposes over shorter statutory lives.
The following unaudited pro forma financial information presents the
results of operations of the Company and the acquired Becker CPA
business as if the acquisitions had ocurred at the beginning of
each fiscal year. The pro forma information is based on historical
results of operations and does not necessarily reflect the actual
results that would have ocurred, nor is it necessarily indicitive of
future results of operations of the combined enterprises (dollars in
thousands except for per share amounts):
1996 1995
(Unaudited) (Unaudited)
----------- -----------
Net Sales $279,938 $248,386
Net Income 19,375 15,035
Earnings Per Common Share $1.15 $0.90
NOTE 3: INTANGIBLE ASSETS
Intangible assets that were not fully amortized at June 30 consist of
the following:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Trademarks $ 2,521,000 $2,521,000
Tradenames 17,465,000 -
Intellectual Property 17,425,000 -
Other 860,000 -
----------- ----------
38,271,000 2,521,000
Accumulated Amortization (562,000) (499,000)
----------- ----------
$37,709,000 $2,022,000
=========== ==========
</TABLE>
<PAGE>57
NOTE 4: INCOME TAXES
The components of income (loss) before income taxes are as follows:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
U.S. $35,645,000 $23,323,000 $18,220,000
Foreign (2,947,000) 2,436,000 2,783,000
----------- ----------- -----------
Total $32,698,000 $25,759,000 $21,003,000
=========== =========== ===========
</TABLE>
The net income tax provisions (benefits) related to the above results
are as follows:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
----------- ------------ ----------
<S> <C> <C> <C>
Current Tax Provision:
U.S. Federal $11,373,000 $ 3,141,000 $4,237,000
State and Local 2,400,000 897,000 596,000
Foreign (776,000) 1,345,000 1,526,000
----------- ----------- ----------
Total Current 12,997,000 5,383,000 6,359,000
Deferred Tax Provision:
U.S. Federal 381,000 4,578,000 2,039,000
State and Local 273,000 838,000 268,000
Foreign (198,000) 64,000 112,000
----------- ----------- ----------
Total Deferred 456,000 5,480,000 2,419,000
----------- ----------- ----------
Net Income Tax
Provision $13,453,000 $10,863,000 $8,778,000
=========== =========== ==========
</TABLE>
The income tax provisions differ from those computed using the
statutory rate as a result of the following items:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Expected Provision $11,444,000 35.0% $ 9,016,000 35.0% $7,351,000 35.0%
Higher Rates on (312,000)(1.0%) 323,000 1.3% 308,000 1.5%
Foreign Operations
State Income Taxes 1,767,000 5.4% 1,123,000 4.4% 875,000 4.1%
Other 554,000 1.7% 401,000 1.5% 244,000 1.2%
----------- ----------- ----------
Income Tax
Provision $13,453,000 41.1% $10,863,000 42.2% $8,778,000 41.8%
=========== =========== ==========
</TABLE>
<PAGE>58
NOTE 4: INCOME TAXES (continued)
Deferred income tax assets (liabilities) result primarily from the
recognition of the tax benefits of net operating loss carryforwards
and from temporary differences in the recognition of various expenses
for tax and financial statement purposes. These assets and
liabilities are composed of the following:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Loss Carryforwards $ - $ 829,000 $5,038,000
Employee Benefits 1,207,000 1,187,000 1,027,000
Tax Credits - 47,000 92,000
Rental and
Occupancy 762,000 787,000 609,000
Receivable Reserves
and Other 2,953,000 1,608,000 1,943,000
---------- ---------- ----------
Gross Deferred
Tax Assets 4,922,000 4,458,000 8,709,000
Depreciation and
Other (4,837,000) (5,014,000) (3,970,000)
Amortization (1,176,000) (991,000) (806,000)
---------- ---------- ----------
Gross Deferred Tax
Liabilities (6,013,000) (6,005,000) (4,776,000)
---------- ---------- ----------
Net Deferred Taxes ($1,091,000) ($1,547,000) $3,933,000
========== ========== ==========
</TABLE>
Based on the Company's history of operating earnings and its
expectations for the future, management believes that operating income
will more than likely be sufficient to recognize fully all deferred
tax assets.
Deferred income tax provisions (benefits) result primarily from
temporary differences in the recognition of various expenses for tax
and financial statement purposes. The sources and tax effects of
these differences are as follows:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
-------- ---------- ----------
<S> <C> <C> <C>
Realization of Operating Loss
Carryforwards $829,000 $4,220,000 $4,497,000
Excess (Tax) Book Depreciation
and Amortization (266,000) 87,000 (339,000)
Excess of Amounts Expensed for
(Book) Tax Purposes Over
Amounts Deductible for Book
(Tax) Purposes (159,000) 973,000 (1,739,000)
Other, Net 52,000 200,000 -
-------- ---------- ----------
Deferred Tax Provision $456,000 $5,480,000 $2,419,000
======== ========== ==========
</TABLE>
<PAGE>59
NOTE 5: REVOLVING LOAN AGREEMENT
All of the Company's borrowings and letters of credit under its
revolving loan agreement are through its operating subsidiary, KGSM.
This agreement consists of a revolving credit and letter of credit
facility, which is available to KGSM in an aggregate amount not to
exceed $85,000,000. This agreement was amended in June 1996 to permit
the acquisition of Becker CPA (Note 2), increase the borrowing limits,
extend its term and provide for reduced interest rates upon the
achievement of certain financial ratios. All borrowings and letters of
credit under the revolving loan agreement now mature in August 1999,
and there are no required installment payments. Outstanding borrowings
under the revolving loan agreeement are $61,500,000 and $33,029,000 at
June 30, 1996 and 1995, respectively. There is also a $1,460,000
letter of credit outstanding under this agreement at June 30, 1996.
Outstanding borrowings under the revolving loan agreement bear
interest, payable quarterly, at either the prime rate or a Eurodollar
rate plus 0.75%, at the option of KGSM. Upon achieving certain
financial ratios included in the June 1996 amendment, the interest
rate can be reduced to a Eurodollar rate plus 0.35%. The effective
interest rate on outstanding borrowings at June 30, 1996, was 6.84%.
Outstanding letters of credit under the revolving loan agreement are
charged an annual fee equal to 0.75% of the undrawn face amount of the
letter of credit , payable quarterly.
The bank financing agreement contains certain covenants that, among
other things, limit capital expenditure to $25,000,000 annually and
require maintenance of certain financial ratios as defined in the
agreement. None of these covenants negatively impacts the Company's
liquidity or capital resources.
In June 1995, the Company voluntarily prepaid the entire $7,870,000
remaining balance of its senior subordinated notes. On December 1,
1994 , in conjuntion with the scheduled principal payment on this
date, the Company made a voluntary prepayment of $775,000 These
senior subordinated notes bore interest at a rate of 13% per annum and
were subordinate to the revolving credit facility.
NOTE 6: EMPLOYEE BENEFIT PLANS
Profit Sharing Retirement Plan
All employees who meet certain eligibility requirements can
participate in KGSM's 401(k) Profit Sharing Retirement Plan. KGSM
contributes to the plan an amount equal to 1.5% of the total eligible
compensation of employees who make contributions under the plan.
KGSM's matching contributions under the plan were approximately
$765,000, $636,000 and $608,000 in 1996, 1995 and 1994, respectively.
In addition, the Company's board of directors may also make
discretionary contributions for the benefit of all eligible employees.
Provisions for discretionary contributions under the plan were
approximately $1,924,000, $1,566,000 and $1,413,000 in 1996, 1995 and
1994, respectively.
Employee Stock Purchase Plan
Effective August 1, 1993, the Company established the DeVry Inc.
Employee Stock Purchase Plan. The Plan stipulates that any eligible
employee may authorize the Company to withhold up to $25,000 of annual
earnings to purchase common stock of the Company on the open market at
100% of the prevailing market price. The Company pays all brokerage
commissions and administrative fees associated with the Plan. These
expenses were insignificant for the years ended June 30, 1996, 1995
and 1994.
<PAGE>60
NOTE 7: STOCK OPTION PLANS
The Company maintains three stock option plans: the Amended and
Restated Stock Incentive Plan, established in 1988, the 1991 Stock
Incentive Plan and the 1994 Stock Incentive Plan. Under these Plans,
directors, key executives and managerial employees are eligible to
receive incentive stock or nonqualified options to purchase shares of
the Company's common stock. The Amended and Restated Stock Incentive
Plan and the 1994 Stock Incentive Plan are administered by a Plan
Committee of the board of directors. Plan Committee members will be
granted automatic, nondiscretionary annual options. The 1991 Stock
Incentive Plan is administered by the board of directors. Options
under all three Plans are granted for terms of up to ten years and
vest over periods of one to five years. The option price under the
Plans is the fair market value of the shares on the date of the grant.
Share status of each of these plans at June 30, 1996, was as follows:
<TABLE>
<CAPTION>
Reserved for Available for
Authorized Issuance Future Grant
---------- ---------- -----------
<S> <C> <C> <C>
Stock Incentive Plan 200,000 184,600 3,400
1991 Stock Incentive Plan 200,000 199,040 61,100
1994 Stock Incentive Plan 400,000 398,000 358,000
</TABLE>
Activity during the three years ended June 30, 1996, with respect to
options under these plans, was as follows:
<TABLE>
<CAPTION>
Shares Option Prices
------- -------------
<S> <C> <C>
Under Option at June 30, 1993 122,000 $1.57 - 10.18
Options Exercised (1,800) 3.50
Options Canceled (2,000) 13.13
Options Granted 65,400 13.13 - 13.88
------- -------------
Under Option at June 30, 1994 183,600 1.57 - 13.88
Options Exercised (7,000) 3.50 - 13.13
Options Canceled (7,600) 3.50 - 13.13
Options Granted 142,500 12.94 - 14.75
------- -------------
Under Option at June 30, 1995 311,500 1.57 - 14.75
Options Exercised (8,360) 3.50 - 14.75
Options Canceled (10,550) 12.94 - 21.75
Options Granted 66,550 21.75 - 25.13
------- -------------
Under Option at June 30, 1996 359,140 1.57 - 25.13
------- -------------
Exercisable at June 30, 1996 151,040 $1.57 - 14.75
------- -------------
</TABLE>
<PAGE>61
NOTE 8: COMMITTMENTS AND CONTINGENCIES
KGSM and Becker CPA lease certain equipment and facilities under
non-cancelable operating leases, some of which contain renewal
options, escalation clauses and requirements to pay taxes,
insurance and maintenance costs. Future minimum rental commitments
for all non-cancelable operating leases having a remaining term in
excess of one year at June 30, 1996, are as follows:
Year Ended June 30, Amount
------------------ -----------
1997 $12,410,000
1998 11,740,000
1999 10,580,000
2000 9,480,000
2001 9,360,000
Thereafter $56,170,000
The Company recognizes rent expense on a straight-line basis over the
term of the lease, although the lease may include escalation clauses
that provide for lower rent payments at the start of the lease term
and higher lease payments at the end of the lease term.
Rent expenses for the years ended June 30, 1996, 1995 and 1994, were
$13,879,000, $12,553,000 and $9,611,000, respectively.
The Company is subject to occasional lawsuits, investigations and
claims arising out of the normal conduct of its business. Neither
the Company nor any of its subsidiaries is currently a party to any
material legal action except those described below.
In July 1996, the Company entered into an out-of-court settlement
agreement with the Internal Revenue Service (IRS) relative to the
Statutory Notice of Deficiency issued by the IRS against the Company
for tax years 1988 through 1991. The claimed deficiencies related to
the amortization of intangible assets purchased during the acquisition
of the DeVry Institutes in 1987 (Notes 1 and 3). All of these issues
have been resolved as a result of the settlement. The settlement
amount is immaterial to the Company's financial position, results of
operations and liquidity.
During 1996, the Ontario Ministry of Education and Training
temporarily suspended and conditionally reinstated the processing of
financial aid applications for students attending the Company's
Toronto-area schools. Full unconditional reinstatement is subject to
the Ministry's completion of certain procedures regarding verification
of the Company's compliance with financial aid processing regulations.
In July 1996, the Company was served with a class action lawsuit in
Canada alleging misrepresentation about the quality of the DeVry
Institutes' educational programs. The Company believes that the claims
in the lawsuit are frivolous and without merit. In response to the
lawsuit, the Company has filed a Statement of Defense and intends to
vigorously contest the allegations. Although the outcome cannot be
predicted with certainty, the Company believes the resolution of this
matter will not have material effect on the Company's financial position,
results of operations or liquidity.
<PAGE>62
NOTE 9: OPERATIONS BY GEOGRAPHIC AREA
The Company operates in a single industry segment as a provider of
educational services. The Company conducts its educational operations
in the United States and Canada. Revenues, income before interest and
taxes, and identifiable assets by geographic area are as follows:
<TABLE>
<CAPTION>
For the Year Ended June 30,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
U.S. $234,180,000 $205,424,000 $192,842,000
Foreign 25,827,000 23,169,000 18,595,000
Income Before Interest
and Taxes:
U.S. 36,708,000 26,393,000 22,835,000
Foreign (2,947,000) 2,436,000 2,783,000
Identifiable Assets:
U.S. 170,828,000 119,160,000 100,080,000
Foreign 7,261,000 7,511,000 6,718,000
</TABLE>
NOTE 10: QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized unaudited quarterly data for the years ended June 30, 1996
and 1995, are as follows (dollars in thousands, except for per share
amounts):
<TABLE>
<CAPTION>
1996 Quarter
-------------------------------------------------------- Total
First Second Third Fourth Year
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $59,839 $66,940 $68,412 $64,816 $260,007
Income Before
Interest and Taxes 7,382 9,336 8,822 8,221 33,761
Net Income 4,031 5,385 5,062 4,767 19,245
Earnings Per Common
Share 0.24 0.32 0.30 0.28 1.14
</TABLE>
<TABLE>
<CAPTION>
1995 Quarter
------------------------------------------------------- Total
First Second Third Fourth Year
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $51,955 $59,299 $59,739 $57,600 $228,593
Income Before
Interest and Taxes 5,770 8,198 7,652 7,209 28,829
Net Income 2,932 4,343 4,098 3,523 14,896
Earnings Per Common
Share 0.18 0.26 0.24 0.21 0.89
</TABLE>
<PAGE>63
Report of Independent Accountants
---------------------------------
To the Board of Directors
and Shareholders of DeVry Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) on page 66 present fairly, in all
material respects, the financial position of DeVry Inc. and its subsidiaries
at June 30, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended June 30, 1996,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Chicago, Illinois
August 6, 1996
<PAGE>64
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- ------------------------------------------------------------------------
There were no changes in or disagreements with accountants on accounting
and financial disclosure.
<PAGE>65
PART III
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
- ----------------------------------------------------------------------
Information regarding directors and nominees for directors of the Company
is included in the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on November 19, 1996, and is incorporated herein by
reference. Information regarding executive officers is included on pages
34 through 36 in Part I of this Form 10-K.
Information regarding compliance with Section 16(a) filings, if required,
will be included in the Proxy Statement for the Annual Meeting of
Stockholders to be held November 19, 1996, and is incorporated herein by
reference.
ITEM 11 - EXECUTIVE COMPENSATION
- --------------------------------
Information regarding compensation of executive officers of the Company is
included in the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on November 19, 1996, and is incorporated herein by
reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Information regarding security ownership of certain beneficial owners and
management is included in the definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on November 19, 1996, and is
incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ---------------------------------------------------------
Information regarding certain relationships and related transactions is
included in the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on November 19, 1996, and is incorporated herein by
reference.
<PAGE>66
PART IV
--------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) Financial Statements
The following financial statements of the Company and its subsidiaries
are included in Part II, Item 8, on pages 48 through 63 of this Form
10-K.
10K
Report Page
-----------
Consolidated Balance Sheets at
June 30, 1996 and 1995 48-49
Consolidated Statements of Income for the
years ended June 30, 1996, 1995 and 1994 50
Consolidated Statements of Cash Flows for
the years ended June 30, 1996, 1995 and 1994 51
Consolidated Statements of Shareholders'
Equity for the years ended June 30, 1996,
1995 and 1994 52
Notes to Consolidated Financial Statements 53-62
Report of Independent Accountants 63
(2) Supplemental Financial Statement Schedules
The following supplemental schedule of the Company and its
subsidiaries is included on page 70 of this Form 10-K.
10K
Report Page
II. - Valuation and Qualifying Accounts 70
Schedules other than the one listed above are omitted for the reason
that they are not required or are not applicable, or the required
information is shown on the financial statements or notes thereto.
(3) Exhibits
A complete listing of exhibits is included on pages 71 through 72 of
this Form 10-K.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
fourth quarter of its fiscal year ending June 30, 1996.
<PAGE>67
<TABLE>
FIVE-YEAR SUMMARY - OPERATING, FINANCIAL AND OTHER DATA
(Dollars in Thousands Except for Per Share Amounts)
<CAPTION>
YEAR ENDED JUNE 30, 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING:
Revenues $260,007 $228,593 $211,437 $191,915 $179,196
Depreciation 7,516 6,157 6,981 6,609 6,782
Amortization of Intangible Assets 63 63 346 190 410
Earnings Before Interest and Taxes (EBIT) 33,761 28,829 25,618 22,438 19,534
EBIT as a Percent of Revenues 13.0% 12.6% 12.1% 11.7% 10.9%
Interest Expense 1,063 3,070 4,615 6,849 9,661
Income before Cumulative Effect of Change in
Accounting Principle 19,245 14,896 12,225 9,431 5,889
Change from Prior Year in Income before Cumulative
Effect of Change in Accounting Principle 29.2% 21.8% 29.6% 60.1% NM
Net Income 19,245 14,896 12,225 9,431 21,687
Per Share:
Income before Cumulative Effect of Change in
Accounting Principle 1.14 0.89 0.73 0.57 0.36
Net Income 1.14 0.89 0.73 0.57 1.31
Shares Used in Calculating Per Share
Amounts (In Thousands) 16,830 16,727 16,694 16,631 16,668
FINANCIAL POSITION:
Cash and Cash Equivalents 29,948 26,252 22,704 13,344 16,015
Total Assets 178,089 126,671 106,798 99,210 110,769
Total Funded Debt 61,500 33,029 43,224 55,712 77,563
Total Shareholders' Equity 57,287 37,968 22,978 11,022 1,322
OTHER SELECTED DATA:
Cash Provided by Operating Activities 28,368 28,200 28,405 24,058 15,282
Capital Expenditures 18,352 14,551 6,288 5,147 3,892
Total Fall Term Student Enrollment 32,612 29,884 28,815 27,336 26,941
Shares Outstanding at Year-end
(in Thousands) 16,622 16,613 16,606 16,604 16,338
Closing Price of Common Stock
at Year-end 45 20 14 1/2 12 9/16 9
Price Earnings Ratio on Common Stock (1) 39 22 20 22 25
Number of Shareholders of Record 339 252 211 192 139
(1) Computed on trailing four quarters of fully diluted earnings before cumulative effect of accounting change.
</TABLE>
<PAGE>68
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DeVRY INC.
Date: September 23, 1996 By /s/Dennis J. Keller
Dennis J. Keller
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and dates indicated below.
Signature Title Date
- --------- ----- ----
/s/Dennis J. Keller
Dennis J. Keller Chairman, Chief Executive
Officer and Director 09/23/96
/S/Ronald L. Taylor
Ronald L. Taylor President, Chief Operating
Officer and Director 09/23/96
/s/Norman M. Levine
Norman M. Levine Vice President, Chief
Financial Officer, Controller
and Principal Accounting Officer 09/24/96
/s/David S. Brown
David S. Brown Director 09/17/96
/s/Ann I. Gannon
Ann I. Gannon Director 09/17/96
______________________
Robert E. King Director
/s/Thurston E. Manning
Thurston E. Manning Director 09/17/96
<PAGE>69
SIGNATURES (CONTINUED)
----------------------
Signature Title Date
- --------- ----- ----
/s/Robert C. McCormack
Robert C. McCormack Director 09/18/96
/s/Julie A. McGee
Julie A. McGee Director 09/17/96
/s/Hugo J. Melvoin
Hugo J. Melvoin Director 09/18/96
<PAGE>70
<TABLE>
DeVRY INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended June 30, 1996, 1995 and 1994
(Dollars in Thousands)
<CAPTION>
Balance at Charged to Charged to Balance at
Beginning Costs and Other Deductions End of
Description of Allowances and Reserves of Period Expenses Accounts (a) Period
- -------------------------------------- ---------- ---------- ---------- ---------- ----------
<S>
1996 <C> <C> <C> <C> <C>
Deducted from accounts receivable for
refunds and uncollectible accounts $5,368 $15,867 $ - $14,632 $6,603
Deducted from notes receivable for
uncollectible notes 24 - - 9 15
For loss on disposition of inventory 61 22 - 22 61
For loss on DeVry capital contributions
to Perkins loan program 1,275 272 - - 1,547
1995
Deducted from accounts receivable for
refunds and uncollectible accounts $6,121 $12,634 $ - $13,387 $5,368
Deducted from notes receivable for
uncollectible notes 29 5 - 10 24
For loss on disposition of inventory 62 15 - 16 61
For loss on DeVry capital contributions
to Perkins loan program 1,099 176 - - 1,275
1994
Deducted from accounts receivable for
refunds and uncollectible accounts $6,018 $14,252 $ - $14,149 $6,121
Deducted from notes receivable for
uncollectible notes 60 (15) - 16 29
For loss on disposition of inventory 41 40 - 19 62
For loss on DeVry capital contributions
to Perkins loan program 1,079 20 - - 1,099
</TABLE>
<PAGE>71
INDEX TO EXHIBITS
-----------------
Sequentially
Exhibit Numbered Incorporated by
Number Exhibit Page Reference to
- ------ ------- ------------ ---------------
2(a) Agreement regarding purchase of Exhibit 2 to the
Becker CPA assets dated as of Company's Form 8-K
June 19, 1996. filed July 3, 1996
3(a) Certificate of Amendment Exhibit 3(a) to the
of Restated Certificate of Company's Form 10-K
Incorporation of the Registrant for the year ended
June 30, 1995
3(b) Amended and Restated By-Laws Exhibit 3(d) to
of the Registrant Amendment #1 of the
Company's Form S- 1,
#33-40151 dated
May 21, 1991
4(a) Amended and Restated Financing Exhibit 4(a) to the
Agreement, dated as of January 14, Company's Form 10-K
1994, between Keller Graduate for the year ended
School of Management, Inc., certain June 30, 1994
financial institutions and
Continental Bank N.A.
4(b) First Amendment, dated as of Exhibit 4(b) to the
July 18, 1995, to Amended and Company's Form 10-K
Restated Financing Agreement for the year ended
between Keller Graduate School of June 30, 1995
Management, Inc., certain
financial institutions and Bank
of America Illinois
4(c) Amended and Restated Financing
Agreement, dated as of June 12, 1996,
between Keller Graduate School of
Management, Inc., certain financial
institutions and Bank of America
Illinois. 73-175
4(d) Note Agreement, dated as of November 15, Exhibit 4(l) to the
1987, by and among Keller Graduate School Company's Form S-1,
of Management, Inc., the Registrant and #33-40151 dated
certain financial institutions regarding April 24, 1991
the 13% Senior Subordinated Notes and
the 13% Convertible Senior Subordinated
Notes
4(e) First Amendment and Exchange Agreement, Exhibit 4(m) to the
dated as of August 1, 1990, by and among Company's Form S- 1,
Keller Graduate School of Management, #33-40151 dated
Inc., the Registrant and certain financial April 24, 1991
institutions regarding the Note Agreement
dated as of November 15, 1987
4(f) Second Amendment to Note Agreement, dated Exhibit 4(m) to the
as of May 30, 1991, by and among Keller Company's Form 10-K
Graduate School of Management, Inc., the for the year ended
Registrant and certain financial June 30, 1991
institutions regarding the Note Agreement
dated as of November 15, 1987
<PAGE>72
Sequentially
Exhibit Numbered Incorporated by
Number Exhibit Page Reference to
- ------ ------- ------------ ---------------
4(g) Instrument of Waiver and Consent dated Exhibit 4(r) to the
as of August 31, 1992, by and among Company's Form S-3
Keller Graduate School of Management, Inc., #33-58636, dated
the Registrant and certain financial February 22, 1993
institutions regarding the Note Agreement
dated as of November 15, 1987
10(a) Registrant's Amended and Restated Stock Exhibit 10(a) to the
Incentive Plan Company's Form S-3,
#33-58636 dated
February 22, 1993
10(b) Registrant's 1991 Stock Incentive Exhibit 10(b) to the
Plan Company's Form S- 1,
#33-40151 dated
April 24, 1991
10(c) Registrant's 1994 Stock Incentive Exhibit 10(c) to the
Plan Company's Form 10-K
for the year ended
June 30, 1994
10(d) DeVry Inc. Amended and Restated
Profit Sharing Retirement Plan
dated effective as of July 1, 1992 176-237
10(e) First Amendment to the DeVry Inc.
Amended and Restated Profit Sharing
Retirement Plan 238
10(f) Employee Stock Purchase Plan Exhibit 10(f) to the
Company's Form S-3,
#33-58636 dated
February 22, 1993
10(g) First Amendment to Employee Stock Exhibit 10(h) to the
Purchase Plan Company's Form 10-K
for the year ended
June 30, 1994
10(h) Form of Indemnification Agreement Exhibit 10(d) to the
between the Registrant and its Company's Form S- 1,
directors #33-40151 dated
April 24, 1991
10(i) Employment Agreement between the Exhibit 10(f) to the
Registrant and each of Dennis J. Company's Form 10-K
Keller and Ronald L. Taylor for the year ended
June 30, 1991
21 Subsidiaries of the Registrant 239
23 Consent of Price Waterhouse LLP, 240
independent accountants
27 Financial Data Schedule 241
<PAGE>73
EXHIBIT 4(c)
------------
AMENDED AND RESTATED FINANCING AGREEMENT
Dated as of June 12, 1996
between
KELLER GRADUATE SCHOOL OF
MANAGEMENT, INC.
as Borrower
CERTAIN FINANCIAL INSTITUTIONS
as Lenders
and
BANK OF AMERICA ILLINOIS,
as Agent
<PAGE>74
TABLE OF CONTENTS
-----------------
PARAGRAPH PAGE
- --------- ----
1. DEFINITIONS AND INTERPRETATION 1
2. LOANS AND LETTERS OF CREDIT. 13
(A) Revolving Loan 13
(B) Notice of Borrowing 14
(C) Loan Account 15
(D) Prepayments 15
(E) Voluntary Reduction or Termination of the
Revolving Maximum Loan Commitment 16
(F) Letters of Credit; Reimbursement Obligations 16
(G) Allocation 17
3. INTEREST ON THE LOANS. 17
(A) Rate of Interest 17
(B) Interest Payments and Computation 18
(C) Default Interest 19
(D) Conversion or Continuation 19
(E) Increased Costs; Legal Restrictions 20
(F) Amount of Eurodollar Rate Loans 22
(G) Determination of Eurodollar Interest Period 22
(H) Substituted Rate of Borrowing 22
(I) Required Termination and Prepayment 23
(J) Option of Borrower 24
(K) Compensation; Breakage Fees 24
(L) Eurodollar Rate Taxes; Indemnification 25
(M) Certain Indemnification 26
(N) Eurodollar Rate Loans After Default 26
(O) Affiliates Not Obligated 26
(P) Increased Capital 26
4. FEES AND CHARGES 27
(A) Non-Use Fees 27
(B) Agent's Fees 27
(C) Letter of Credit Fees 27
(D) Unpaid Charges 28
5. QUARTERLY ACCOUNTINGS BY AGENT. 28
6. RESERVED 28
7. RESERVED 28
<PAGE>75
8. PROCEEDS, PAYMENTS AND APPLICATION 28
(A) Application and Posting Time 28
(B) Order of Application; Invalidated Payments 29
(C) Sharing of Payments 29
9. AGENT AS BORROWER'S ATTORNEY 29
10. INSURANCE 30
11. REPORTING 30
(A) Quarterly Reports. 30
(B) Annual Reports 31
(C) Communication with Accountants; Other
Financial Information 32
(D) Reports to SEC 32
(E) Reports of Changes in Subsidiaries 32
(F) Notices Relating to Default 32
(G) Notice of Material Adverse Events 33
(H) Other Reports 33
12. WARRANTIES AND REPRESENTATIONS 33
(A) Corporate Existence 33
(B) Corporate Authority 33
(C) Binding Effect 34
(D) Financial Data 34
(E) Material Adverse Change 35
(F) Tax Liabilities 35
(G) Loans; Guaranties 35
(H) Margin Security 35
(I) Subsidiaries 36
(J) Litigation and Proceedings 36
(K) Other Agreements 36
(L) Employee Controversies 36
(M) Compliance with Laws and Regulations 36
(N) Patents, Trademarks and Licenses 37
(O) ERISA 38
(P) Use of Proceeds 38
(Q) Fiscal Year 38
(R) Compliance with Environmental and Safety Laws 38
(S) Survival of Warranties 39
13. GENERAL AFFIRMATIVE COVENANTS. 39
(A) Reimbursement of Loan Operating Costs 39
(B) Notice of Claims 40
(C) Conduct of Business 40
(D) Claims and Taxes 41
(E) ERISA 42
(F) Environmental and Safety Laws 42
(G) Books, Records and Inspections 43
14. GENERAL NEGATIVE COVENANTS 44
(A) Consolidations, Mergers and Asset Acquisitions 44
(B) Investments 45
(C) Distributions and Loans 46
(D) Transactions With Affiliates 47
(E) Asset Disposition, etc. 47
(F) Conditional Sales 48
(G) Encumbrances 48
<PAGE>76
(H) Indebtedness 48
(I) Guarantees 49
(J) Amendment of Certificate of Incorporation
or By-Laws. 49
(K) ERISA 49
(L) Transfer of DeVry Canada Stock 50
15. RESERVED 50
16. FINANCIAL COVENANTS 50
17. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS
AGREEMENT. 51
18. TERMINATION, ACCELERATION AND DEMAND 52
(A) Term 52
(B) Repayment and Acceleration of Loans 53
(C) Repayment and Acceleration of Interest and Fees 53
(D) Certain Obligations Payable on Demand; Waivers 53
19. EVENTS OF DEFAULT 53
20. LENDER'S RIGHTS AND REMEDIES 56
(A) Equitable Relief 56
(B) Cash Collateral for Letters of Credit 56
21. AGENT 57
(A) Actions; Indemnification 57
(B) Funding Reliance, etc. 58
(C) Exculpation 58
(D) Successor 58
(E) Loans by Agent 59
(F) Credit Decisions 59
(G) Copies, etc 59
22. MISCELLANEOUS 59
(A) Waivers, Amendments, etc 59
(B) Notices 60
(C) Costs and Expenses 61
(D) Indemnification 61
(E) Survival 63
(F) Severability 63
<PAGE>77
(G) Headings 63
(H) Counterparts, Effectiveness, etc 63
(I) Governing Law; Entire Agreement 63
(J) Successors and Assigns 63
(K) Assignments and Participations 64
(L) Other Transactions 68
(M) Waiver of Jury Trial 68
(N) Submission to Jurisdiction 68
(O) Restatement 69
<PAGE>78
References to Exhibits
Exhibit Paragraph
- ------- ---------
A Form of Revolving Note 2(A)
B Form of Notice of Borrowing 2(B)
C Form of Compliance Certificate 11(A)
D Form of Guaranty 1(A)
E Existing L/Cs 2(A)
F Other Indebtedness, Guaranties, 12(G)
G Subsidiaries 12(I)
H Litigation; Other Agreements 12(J); 12(K)
I ERISA 12(O)
J Investments 14(B)
K Liens, Claims, Security Interests, 14(G)
Encumbrances
L Form of Opinion of Special Counsel 17(A)
for Borrower
M Form of Assignment 22(K)
<PAGE>79
AMENDED AND RESTATED FINANCING AGREEMENT
This Amended and Restated Financing Agreement (this
"Agreement"), made as of June 12, 1996 (the "Restatement Date"),
by and between Keller Graduate School of Management, Inc., a
Delaware corporation ("Borrower"), various financial institutions
which are, or may become, parties hereto ("Lenders"), and Bank of
America Illinois, a banking association having its principal
office at 231 South LaSalle Street, Chicago, Illinois, as agent
for Lenders (in such capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrower has entered into an Amended and Restated
Financing Agreement made as of April 14, 1994 (as amended or
modified and in effect on the Restatement Date, the "Existing
Agreement") with the Lenders and the Agent;
WHEREAS, Borrower, the Agent and the Lenders desire to amend
and restate the Existing Agreement in its entirety in order to,
without limitation, (i) increase the aggregate amount of
Revolving Loans and Letters of Credit which may be outstanding
hereunder at any one time, (ii) to extend the Termination Date
and (iii) provide for the modification of certain of the
representations and warranties, covenants and other provisions
contained in the Existing Agreement;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit now or
hereafter made to or for the benefit of Borrower by Lenders, the
parties hereto agree to amend and restate the Existing Agreement
as follows:
1. DEFINITIONS AND INTERPRETATION.
(A) In this Agreement and the other Loan Documents, the
following terms have the respective meanings indicated, unless a
clear contrary intention appears:
"Affiliate," as applied to any Person, shall mean any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by", and "under common control
with"), as applied to any Person, means the possession, directly
or indirectly, of the power to vote ten percent (10%) or more of
the securities or other interests having voting power for the
election of directors of such Person or otherwise to direct or
cause the direction of the management policies of that Person,
<PAGE>80
whether through the ownership of voting securities, by contract
or otherwise. Without limiting the generality of the foregoing,
all of Borrower's officers, directors, Subsidiaries, joint
ventures and partnerships shall be deemed to be Borrower's
Affiliates for purposes of this Agreement.
"Agent" shall have the meaning set forth in the preamble
hereto.
"Agreement" shall have the meaning set forth in the preamble
hereto.
"Applicable L/C Fee" and "Applicable Non-Use Fee" shall
mean, and "Applicable Margin", as applied to Eurodollar Rate
Loans or Base Rate Loans, as the case may be, shall mean, the
percentage indicated in the table below opposite the then
applicable range of Debt Coverage Ratio values:
<TABLE>
<CAPTION>
Applicable Margin
Debt Coverage Applicable --------------------- Applicable
Ratio L/C Fee Eurodollar Base Rate Non-Use Fee
- ------------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
less than 0.5:1 0.35 0.35 % 0.00% 0.15 %
0.5:1 up to but 0.50 0.50 % 0.00% 0.20 %
not including
1.0:1
1.0:1 up to but 0.625 0.625% 0.00% 0.25 %
not including
1.5:1
1.5:1 up to but 0.75 0.75 % 0.00% 0.25 %
not including
2.0:1
2.0:1 up to but 1.25 1.25 % 0.00% 0.30 %
not including
3.0:1
equal to or 1.75 1.75 % 0.50% 0.375%
greater than
3.0:1
</TABLE>
provided, that any change in the Applicable Non-Use Fee, the
Applicable Margin and the Applicable L/C Fee because of a change
in the Debt Coverage Ratio as measured at the end of a Fiscal
Quarter shall become effective as of the first day of the second
succeeding Fiscal Quarter; provided, further, that with respect
to the Fiscal Quarters ending December 31, 1995, March 31, 1996
and June 30, 1996, the Debt Coverage Ratio shall be deemed to be
between 1.5:1 and 2.0:1.
"Assignable Commitments" shall have the meaning ascribed to
such term in Paragraph 22(K).
"Assignable Loans" shall have the meaning ascribed to such
term in Paragraph 22(K).
<PAGE>81
"Assignment" shall have the meaning ascribed to such term in
Paragraph 22(K)(b)(vi).
"Attorneys' Fees" shall mean the reasonable fees (and costs
and expenses related thereto) of the attorneys (and all
paralegals and other staff employed by such attorneys whose
services are regularly billed to such attorneys' clients)
employed by Agent or any Lender from time to time to (i) file a
petition, complaint, answer, motion or other pleading, or to take
any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) relating to the Obligations or any
security for the Obligations or relating to this Agreement or any
of the other Loan Documents; (ii) enforce any of Agent's or any
Lender's rights to collect any of the Obligations; or (iii) give
any advice with respect to any of the foregoing; provided that
documentation supporting such services in reasonable detail as
reasonably requested by Borrower shall be furnished to Borrower.
"BAI" shall mean Bank of America Illinois and any successor
thereto.
"Bankruptcy Code" shall mean Title 11 of the United States
Code (11 U.S.C., 101 et seq.).
"Base Rate" shall mean, for any day, a fluctuating rate per
annum (rounded upward to the next highest 1/8 of 1% if not
already an integral multiple of 1/8 of 1%) equal to the greater
of (i) the Reference Rate in effect on such day or (ii) the
Federal Funds Effective Rate in effect on such day. For purposes
of this Agreement, any change in the Base Rate due to a change in
the Reference Rate shall be effective on the date such change in
the Reference Rate is announced, and any change in the Base Rate
due to a change in the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Federal
Funds Effective Rate. If for any reason BAI shall have
determined (which determination shall be conclusive in the
absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the
inability or failure of BAI to obtain sufficient bids or
publication in accordance with the terms hereof, the Base Rate
shall be a fluctuating rate per annum equal to the Reference Rate
in effect from time to time until the circumstances giving rise
to such inability no longer exist.
"Base Rate Loans" shall mean those Loans outstanding which
bear interest at a rate based upon the Base Rate, as provided in
Paragraph 3(A).
"Becker Subsidiaries" shall mean, collectively, (i) DeVry
CPA Review Course, Inc., a Delaware corporation, to be renamed
<PAGE>82
"Becker CPA Review Corporation" following consummation of the
Becker Transaction, and (ii) DeVry Educational Development
Corporation, a Delaware corporation, to be renamed "Becker/DeVry
Educational Development Corporation" following consummation of
the Becker Transaction.
"Becker Transaction" shall mean, collectively, (i) the
acquisition by DeVry Educational Development Corporation of all
the trademarks, copyrights and certain other related intellectual
property relating to the Becker Subsidiaries, (ii) the
acquisition by DeVry CPA Review Course, Inc. of all the issued
and outstanding capital stock of The Becker CPA Review, Inc., a
Delaware corporation and (iii) the acquisition by DeVry of all
the issued and outstanding partnership interests of Becker CPA
Review Course Ltd., a California limited partnership, all as
contemplated by the Agreement Regarding Purchase of Partnership
Interests, among DeVry, the Becker Subsidiaries and other parties
thereto.
"Benefit Plan" shall mean any employee benefit plan which is
subject to the provisions of Title IV of ERISA and which is, or
was at any time, during the five preceding years, maintained for
employees of Borrower, any Subsidiary or any ERISA Affiliate,
other than a Multiemployer Plan.
"Borrower" shall have the meaning set forth in the preamble
hereto.
"Business Day" shall mean any day excluding (i) Saturday,
(ii) Sunday and (iii) any day which is a holiday under the laws
of the State of Illinois; and with respect to Eurodollar Rate
Loans, means such a day on which dealings are carried on in the
London Interbank Market.
"Canadian Letters of Credit" shall mean Letters of Credit
issued by the Agent for the account or benefit of DeVry Canada.
"Capital Expenditures" shall mean, for any period, (i) the
aggregate of all expenditures (when paid in cash or, if earlier,
accrued as liabilities), other than with respect to capitalized
leases, made by DeVry and its Subsidiaries during such period
that, in conformity with GAAP, are required to be included in the
property, plant, equipment or similar fixed facilities accounts
on the consolidated balance sheet of DeVry minus (ii) any such
expenditures referred to in clause (i) of this definition which
were made in connection with the maintenance, preservation,
replacement or restoration of assets to the extent such
expenditures were financed from insurance or other proceeds paid
on account of the loss of or damage to the assets being replaced
or restored or from awards of compensation arising from the
<PAGE>83
taking by condemnation or eminent domain of such assets being
replaced.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended.
"Conditions Precedent" shall have the meaning ascribed to
such term in Paragraph 17.
"Consolidated Net Income" shall mean, for any period, the
consolidated net income of DeVry and the Subsidiaries for such
period; provided, however, that any write-off or other charge
against income relating to (i) an intangible or other asset
excluded from the calculation of Consolidated Tangible Net Worth,
(ii) deferred financing costs in connection with indebtedness
hereunder and (iii) repurchase of interest rate protection
agreements, currency exchange agreements or similar agreements,
shall not be charged against consolidated net income for such
period.
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity (including, if applicable, the Exempt Entities)
the accounts of which, in accordance with GAAP consistently
applied, would be consolidated with those of DeVry in its
consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" shall mean, with respect
to DeVry and the Subsidiaries on a consolidated basis at any
date, stockholders' equity minus, without duplication, all items
which would properly be classified as intangible assets of DeVry
and its Subsidiaries under GAAP, including deferred charges such
as unamortized debt discount and expenses, organization costs and
research and development costs.
"Debt Coverage Ratio" shall mean the ratio, calculated as of
the last day of each Fiscal Quarter, of (i) the average daily
aggregate Indebtedness (excluding all Indebtedness to the extent
consisting of items described in clause (iii) of the definition
of "Indebtedness") of DeVry and its Subsidiaries for the then
ending Fiscal Quarter to (ii) the difference of (a) EBITDA for
the then ending and three immediately preceding Fiscal Quarters
less (b) $3,500,000.
"Default" shall mean any event which through the passage of
time or the giving of notice or both would mature into an Event
of Default.
"DeVry" shall mean DEVRY INC., a Delaware corporation.
<PAGE>84
"DeVry Canada" shall mean DeVry Canada Inc., a Canadian
corporation.
"EBIT" shall mean DeVry's Consolidated Net Income before
deducting interest expense (including, without limitation, any
imputed interest attributable to capitalized leases), Fee
Expenses and taxes.
"EBITDA" shall mean DeVry's Consolidated Net Income before
deducting interest expense (including, without limitation, any
imputed interest attributable to capitalized leases), Fee
Expenses, taxes, depreciation and amortization and other non-cash
charges.
"Eligible Assignee" shall mean any commercial bank.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974.
"ERISA Affiliate" shall mean (i) a corporation which is a
member of the same controlled group of corporations (within the
meaning of section 414(b) of the Internal Revenue Code) as
Borrower, DeVry or any Subsidiary; (ii) a trade or business which
is under common control (within the meaning of section 414(c) of
the Internal Revenue Code) with Borrower, DeVry or any
Subsidiary; and (iii) an organization which is a member of the
same affiliated service group (within the meaning of section
414(m) of the Internal Revenue Code) as Borrower, DeVry or any
Subsidiary, or corporation or trade or business described in
clause (i) or (ii) hereof.
"Eurodollar Interest Period" shall mean any interest period
applicable to a Eurodollar Rate Loan, as determined pursuant to
Paragraph 3(G).
"Eurodollar Interest Rate Determination Date" shall mean
each date on which the Eurodollar Rate is calculated for purposes
of determining the interest rate with respect to a Eurodollar
Interest Period, which date shall be the second Business Day
prior to the first day of the related Eurodollar Interest Period
for a Eurodollar Rate Loan.
"Eurodollar Rate" shall mean, for any Eurodollar Interest
Period, a per annum rate of interest obtained by dividing (i) the
rate of interest determined by the per annum rate at which
deposits in U.S. Dollars are offered by the principal office of
BAI in London to major banks in the London interbank market at
11:00 A.M. (London time) on the Eurodollar Interest Rate
Determination Date for a period equal to such Eurodollar Interest
Period and in an amount substantially equal to the amount of the
<PAGE>85
Eurodollar Rate Loan requested by Borrower, by (ii) a percentage
equal to 100% minus the Eurodollar Reserve Percentage for such
Eurodollar Interest Period.
"Eurodollar Rate Loans" shall mean those Loans outstanding
which bear interest at a rate based upon the Eurodollar Rate as
provided in Paragraph 3(A).
"Eurodollar Reserve Percentage" shall mean, for any
Eurodollar Interest Period, that percentage (expressed as a
decimal) which is in effect during such Eurodollar Interest
Period (or, if more than one such percentage shall be in effect
during such period, the daily average of such percentages for
those days during such period on which any such percentage shall
be in effect), as prescribed by the Board of Governors of the
Federal Reserve System for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal
Reserve System in Chicago, Illinois of that class of member banks
of which Agent is a member in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate
on Eurodollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United
States office of Agent to United States residents). The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" shall mean any of the events listed in
Paragraph 19.
"Exempt Entities" shall mean, collectively: (i) Becker
C.P.A. Review (Isreal) Limited, an Israeli corporation; (ii)
Newton Becker Limited, a Hong Kong corporation; (iii) DeVry
Institute of Technology, Inc., a Delaware corporation; (iv)
Missouri Institute of Technology, Inc., a Missouri corporation;
and (v) Provost & Associates, Inc., an Illinois corporation.
"Existing Agreement" shall have the meaning set forth in the
recitals hereto.
"Existing L/Cs" shall have the meaning ascribed to such term
in Paragraph 2(A).
"Federal Funds Effective Rate" shall mean, for any day, an
interest rate per annum equal to the weighted average of the
rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published for such day by the Federal Reserve Bank of New York,
<PAGE>86
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by BAI from three federal funds brokers of
recognized standing selected by it. In the case of a day which
is not a Business Day, the Federal Funds Effective Rate for such
day shall be the Federal Funds Effective Rate for the next
preceding Business Day.
"Fee Expenses" shall mean all commitment fees, Agent's fees
and letter of credit fees paid or owed by Borrower pursuant to
Paragraph 4.
"Financials" shall have the meaning ascribed to such term in
Paragraph 11(B).
"Fiscal Quarter" shall mean a calendar quarter.
"Fixed Charge Coverage Ratio" shall mean, for any period,
the ratio of DeVry's (i) EBIT, plus lease expense included in
determining net earnings (excluding, however, lease expenses for
student housing leases for terms of less than 18 months), plus
the aggregate cash proceeds of sales and other dispositions of
DeVry's or Subsidiaries' assets, plus federal income tax refunds
received by DeVry arising from losses of DeVry and its Affiliates
from prior periods to (ii) interest expense and Fee Expenses plus
lease expense included in determining net earnings (excluding,
however, lease expenses for student housing leases for terms of
less than 18 months).
"GAAP" shall have the meaning ascribed to such term in
Paragraph l(D).
"Governmental Authority" shall mean any nation or
government, any state, province or other political subdivision
thereto and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to such government, nation, state, province or political
subdivision thereof.
"Guaranty" shall mean a guaranty in substantially the form
of Exhibit D hereto.
"Indebtedness" shall mean all of Borrower's obligations and
liabilities to any Person, including all debts, claims and
indebtedness, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however
arising, whether under written or oral agreement, operation of
law, or otherwise. Indebtedness includes, without limitation,
(i) the Obligations; (ii) obligations and liabilities of any
<PAGE>87
Person secured by a lien, claim, encumbrance, or security
interest upon property owned by Borrower, even though Borrower
has not assumed or become liable for the payment therefor; and
(iii) obligations or liabilities created or arising under any
lease of real or personal property, or conditional sales contract
or other title retention agreement with respect to property used
and/or acquired by Borrower, even though the rights and remedies
of the lessor, seller and/or lender thereunder are limited to
repossession of such property.
"Indemnified Liabilities" shall have the meaning ascribed to
such term in Paragraph 22(D).
"Indemnified Parties" shall have the meaning ascribed to
such term in Paragraph 22(D).
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986.
"Investment" shall mean, with respect to any Person, (i) any
loan or advance made by such Person to another Person, (ii) any
purchase or other acquisition of any capital stock, obligations
or other securities of, or equity interest in, another Person
(including the acquisition of capital stock or other equity
interest in connection with the foundation of such Person), or
(iii) any capital contribution to or other investment in or
acquisition of any interest in another Person.
"L/C Documents" shall mean all Letters of Credit and all
applications, reimbursement agreements, security agreements,
certificates, written draws, agreements, documents,
correspondences and instruments in any way related to such
Letters of Credit.
"Lenders" shall have the meaning set forth in the preamble
hereto.
"Letter of Credit" shall mean the Existing L/C's and each
other letter of credit issued by Agent for the account of
Borrower or DeVry Canada hereunder.
"Loan Documents" shall mean all agreements, instruments and
documents, including security agreements, loan agreements
(including this Agreement and the L/C Documents) notes,
guarantees (including any Guaranty), mortgages, deeds of trust,
subordination agreements, pledges, powers of attorney, consents,
assignments, contracts, notices, leasehold mortgages, financing
statements and all other written matter whether heretofore, now
or hereafter executed by or on behalf of Borrower or any other
Person and delivered to Agent or any Lender pursuant to this
<PAGE>88
Agreement or in connection with the transactions related hereto
or contemplated hereby, together with all agreements and
documents executed and delivered in connection therewith.
"Loans" shall mean the Revolving Loan and each advance or
component thereof consisting of a Base Rate or a Eurodollar Rate
Loan.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in section 4001(a)(3) of ERISA which is, or was at any
time during the five preceding years, maintained for employees of
Borrower, DeVry, any Subsidiary or any ERISA Affiliate.
"Notice of Borrowing" shall have the meaning ascribed to
such term in Paragraph 2(B).
"Notice of Conversion or Continuation" shall have the
meaning ascribed to such term in Paragraph 3(D).
"Notice of Issuance" shall have the meaning ascribed to such
term in Paragraph 2(F).
"Obligations" shall mean and include all loans, advances,
debts, liabilities, obligations, covenants and duties owing by
Borrower to Agent or any Lender of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under or with respect to this
Agreement, any of the other Loan Documents or under any other
agreement, instrument or document, whether or not for the payment
of money, whether arising by reason of an extension of credit,
opening of a Letter of Credit, loan, guaranty, interest rate
protection agreement, currency exchange agreement,
indemnification or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or
contingent, due or to become due, arising before or after the
filing of a petition in bankruptcy by or on behalf of Borrower,
now existing or hereafter arising and however acquired any
reimbursement obligations, and any other liabilities hereafter
arising and owing to Agent in connection with the issuance of
Letters of Credit. The Obligations include all interest,
charges, expenses, fees, Attorneys' Fees and any other sums
chargeable to Borrower under this Agreement, any of the Loan
Documents or any other agreement with Agent or any Lender.
"Percentage" shall mean, as to any Lender, such Lender's
percentage set forth against its name on the signature pages
hereof or, if such Lender has executed an Assignment, its
percentage set forth therein or, if such Lender has executed more
than one Assignment, the most recent thereof.
<PAGE>89
"Person" shall mean and include any individual, sole
proprietorship, partnership, limited liability company, joint
venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether
national, federal, state, provincial county, city, municipal, or
otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan defined in
section 3(3) of ERISA other than a Multiemployer Plan or any
employee welfare benefit plan which is maintained pursuant to a
collective bargaining agreement to which two or more unrelated
employers contribute and in respect of which Borrower, DeVry or
and Subsidiary or any ERISA Affiliate is an "employer" as defined
in section 3(5) of ERISA.
"Quarterly Payment Date" shall mean each February 1, May 1,
August 1 and November 1, commencing August 1, 1996.
"Reference Rate" shall mean, at any time and from time to
time, the rate per annum then most recently announced by BAI at
its head office as its reference rate. The Reference Rate is not
necessarily intended to be the lowest rate of interest determined
by BAI in connection with extensions of credit.
"Register" shall have the meaning ascribed to such term in
Paragraph 22(K)(c).
"Required Lenders" shall mean Lenders whose aggregate
Percentages are at least sixty-six and two-thirds percent
(66-2/3%).
"Restatement Date" shall have the meaning set forth in the
preamble hereto.
"Revolving Loan" shall have the meaning ascribed to such
term in Paragraph 2(A).
"Revolving Loan Maximum Commitment" shall mean Eighty-Five
Million Dollars ($85,000,000).
"Semester" shall mean an academic period, consisting of
approximately seventeen (17) weeks, including any associated
administrative periods and holidays, as to which Borrower shall
have given Agent written notice reasonably promptly following
Borrower's announcement of the academic calendar which includes
such academic period. A Semester shall be deemed to begin on the
first day of classes in an academic period and end on the day
prior to the commencement of classes in the subsequent academic
period.
<PAGE>90
"Special Purpose Subsidiary" means any Subsidiary: (1) of
which Borrower owns, directly all of the issued and outstanding
voting stock, general partner's interests or other equity
interests having ordinary voting power to elect the board of
directors or other managers of such; (2) which has executed and
delivered to the Agent for the benefit of the Lenders a Guaranty;
and (3) which has been designated in writing by the Borrower to
the Agent and the Lenders as a "Special Purpose Subsidiary".
"Subsidiary" shall mean any corporation or other entity of
which more than fifty percent (50%) of the outstanding capital
stock or ownership interest having ordinary voting power to elect
a majority of the board of directors or other management body of
such corporation or other entity (irrespective of whether at the
time stock of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or
indirectly, owned by DeVry, including, without limitation,
Borrower; provided, that in no event shall "Subsidiary" include
the Exempt Entities.
"Termination Date" shall have the meaning ascribed to such
term in Paragraph 18(A).
(B) Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided
in this Agreement shall have such meanings when used in the other
Loan Documents including each Notice of Borrowing, Notice of
Continuation or Conversion and any other notice or communication
delivered from time to time in connection with this Agreement or
any other Loan Document.
(C) Interpretation. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice
versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;
(c) reference to any gender includes each other gender;
(d) reference to any agreement (including this Agreement
and the Schedules and Exhibits hereto), document or instrument
means such agreement, document or instrument as amended or
<PAGE>91
modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof and reference
to any promissory note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement
therefor;
(e) reference to any applicable law means such applicable
law as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time, including rules and
regulations promulgated thereunder;
(f) unless the context indicates otherwise, reference to
any Paragraph, Schedule or Exhibit means such Paragraph hereof or
Schedule or Exhibit hereto;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole
and not to any particular Paragraph or other provision hereof;
(h) "including" (and with correlative meaning "include")
means including without limiting the generality of any
description preceding such term; and
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but
excluding".
(D) Accounting Terms. For purposes of this Agreement and
the other Loan Documents, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in
conformity with generally accepted accounting principles
("GAAP"), from time to time in effect, unless a clear contrary
intention appears and, where appropriate, reference to DeVry
shall be deemed a reference to DeVry and its Subsidiaries on a
consolidated basis.
2. LOANS AND LETTERS OF CREDIT.
(A) Revolving Loan. Borrower acknowledges that set forth
on Exhibit E is a true and complete listing of all "Letters of
Credit" (as defined in the Existing Agreement); such Letters of
Credit being referred to herein as the "Existing L/C's." From
time to time before the Termination Date, each Lender severally
and for itself alone shall make advances (such advances of all
Lenders, in the aggregate, being hereinafter referred to as the
"Revolving Loan") to or for the benefit of Borrower on a
revolving credit basis in such Lender's Percentage of such
aggregate amounts as Borrower may from time to time request. The
aggregate outstanding principal amount of the Revolving Loan,
<PAGE>92
when added to the aggregate undrawn face amount of any
outstanding Letters of Credit (together with any reimbursement
obligations of Borrower with respect to such Letters of Credit),
may aggregate, but shall not exceed at any one time outstanding
the Revolving Loan Maximum Commitment then in effect. The
Revolving Loan shall be evidenced by a promissory note executed
by Borrower and made payable to the order of Agent in the form of
Exhibit A (the "Revolving Note") and, subject to the terms and
provisions of the Revolving Note and this Agreement, shall be due
and payable on the Termination Date, unless no principal balance
of the Revolving Loan is then outstanding.
(B) Notice of Borrowing. Whenever Borrower desires to
borrow under Paragraph 2(A), it shall deliver to Agent (who will
promptly inform Lenders of the substance thereof) a written
notice containing the original signature of an authorized officer
or employee of Borrower ("Notice of Borrowing") substantially in
the form of Exhibit B (i) no later than 10:00 a.m. (Chicago time)
on the proposed date of disbursement of such borrowing, in the
case of a borrowing of Base Rate Loans and (ii) no later than
10:00 a.m. (Chicago time) at least three (3) Business Days in
advance of the proposed date of disbursement of such borrowing,
in the case of a borrowing of Eurodollar Rate Loans. The Notice
of Borrowing shall specify (a) that such proposed borrowing is an
advance of the Revolving Loan, (b) the proposed date of
disbursement of such proposed borrowing, (c) the amount of such
proposed borrowing, (d) whether the proposed borrowing will be a
Base Rate Loan or Eurodollar Rate Loan and (e) in the case of a
Eurodollar Rate Loan, the requested Eurodollar Interest Period.
In lieu of delivering the above described Notice of Borrowing,
Borrower may give Agent (who will promptly inform Lenders of the
substance thereof) telephonic notice of the request within the
required time of any proposed borrowing under this Paragraph 2(B)
provided that such notice is confirmed in writing by delivery to
Agent promptly (but in no event later than the proposed date of
disbursement of such borrowing) of a Notice of Borrowing. In the
event such written confirmation is not delivered to Agent on or
before the proposed date of disbursement, no Lender shall have
any obligation to disburse such requested Loan. Subject to the
terms of this Agreement, each proposed borrowing shall be made on
the proposed date of disbursement of such borrowing. On such
date of disbursement, each Lender shall deposit with Agent same
day funds, at or before 12:00 noon (Chicago time), in an amount
equal to such Lender's Percentage of such borrowing, such deposit
to be made to such account as Agent shall specify from time to
time to Lenders. After timely receipt of such funds, Agent shall,
at or before 2:00 p.m. (Chicago time), make such funds available
to Borrower by depositing such funds in an account maintained by
Borrower with Agent for such purpose. No Lender's obligation to
make any Loan shall be affected by any other Lender's failure to
<PAGE>93
make any Loan. Prior to the initial advance of the Revolving
Loan after the Restatement Date, Borrower shall notify Agent in
writing of the names of the officers and employees authorized to
request borrowings on behalf of Borrower and shall provide Agent
with a specimen signature of each such officer. Agent and each
Lender shall be entitled to rely conclusively on such officers'
and employees' authority to request borrowings on behalf of
Borrower until Agent receives written notice to the contrary.
Neither Agent nor any Lender shall have any duty to verify the
authenticity of the signature appearing on any written Notice of
Borrowing and, with respect to an oral request for a borrowing,
shall have no duty to verify the identity of any Person
representing himself or herself as one of the officers or
employees authorized to make such request on behalf of Borrower.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any notice referred to above which Agent
or such Lender believes in good faith to have been given by a
duly authorized officer or employee authorized to act on behalf
of Borrower or for otherwise acting in good faith under this
Paragraph 2(B) and, upon disbursement of Loans in accordance with
this Agreement pursuant to any such notice, Borrower shall have
effected a borrowing of loans hereunder. Any Notice of Borrowing
pursuant to this Paragraph 2(B) shall be irrevocable and Borrower
shall be bound to make a borrowing in accordance therewith.
(C) Loan Account. Agent shall maintain a loan account on
its books in which shall be recorded (i) all Loans made to
Borrower by Lenders pursuant to this Agreement, (ii) all payments
made by Borrower on all such Loans and (iii) all other
appropriate debits and credits as provided in this Agreement,
including those for all fees, charges, expenses and interest.
All entries in such loan account shall be made in accordance with
Agent's customary accounting practices as in effect from time to
time. Subject to the terms of Paragraph 5, Borrower promises to
pay the amount reflected as owing by it under such loan account
and all of its Obligations as such amounts become due or are
declared due pursuant to the terms of this Agreement or the other
Loan Documents.
(D) Prepayments. Borrower may, at any time, prepay any or
all of the outstanding principal portion of the Obligations in
increments of $500,000, without penalty or premium, other than
the payment of any amounts owing pursuant to Paragraph 3(E) or
3(K); provided, that any prepayment of all of the outstanding
principal portion of the Obligations need not be in an increment
of $500,000; provided, further, that on the Restatement Date the
Borrower may make a one-time prepayment of the Outstanding
Revolving Loans in any amount of up to $50,000. Each such
voluntary prepayment shall be applied as specified by Borrower to
Agent at the time of such prepayment or, if Borrower fails to so
<PAGE>94
specify the application thereof, as specified by the Agent to the
outstanding principal balance of the Revolving Loan.
(E) Voluntary Reduction or Termination of the Revolving
Maximum Loan Commitment. The Borrower may from time to time
prior to the Termination Date on at least five (5) Business Days'
prior written notice received by the Agent (which shall promptly
advise each Lender thereof) permanently reduce the amount of the
Revolving Loan Maximum Commitment (such reduction to be pro rata
among the Lenders according to their respective Percentages) to
an amount not less than the aggregate unpaid principal amount of
the Revolving Loan plus the aggregate undrawn face amount of all
outstanding Letters of Credit (together with any reimbursement
obligations of the Borrower with respect to such Letters of
Credit) then outstanding. Any such reduction shall be in an
aggregate amount of $1,000,000 or an integral multiple thereof.
Subject to the requirements of Paragraph 20(B), the Borrower may
at any time on like notice prior to the Termination Date
terminate the Revolving Loan Maximum Commitment upon payment in
full of the Revolving Loans and other obligations of the Borrower
hereunder pertaining to the Revolving Loans.
(F) Letters of Credit; Reimbursement Obligations. Whenever
Borrower desires a Letter of Credit, it shall deliver to Agent
(who will promptly inform Lenders of the substance thereof) a
written notice on an appropriate form of application and
containing the original signature of an authorized officer or
employee of Borrower ("Notice of Issuance") no later than 10:00
a.m. at least three (3) Business Days in the case of any Letter
of Credit other than a Canadian Letter of Credit and at least
five (5) Business Days in the case of any Canadian Letter of
Credit in advance of the proposed date of issuance. The Notice
of Issuance shall specify the amount, beneficiary and other
material terms of the proposed Letter of Credit. In lieu of
delivery of the above-described Notice of Issuance, Borrower may
give Agent (who will promptly inform Lenders of the substance
thereof) telephonic notice of the request within the required
time of any proposed Letter of Credit under this Paragraph 2(F)
provided that such notice is confirmed in writing by delivery to
Agent promptly (but in no event later than the proposed date of
issuance of such Letter of Credit). Subject to the terms of this
Agreement, Agent shall issue the requested Letter of Credit on
the proposed date of issuance. Effective immediately on such
issuance, and without any further or other act by Agent or any
Lender, each Lender will be deemed to have purchased a pro rata
undivided interest according to their respective Percentages in
all Agent's right, title and interest in, under and to such
Letter of Credit including any Canadian Letter of Credit,
including Agent's obligations thereunder and Borrower's
obligations to reimburse Agent with respect thereto, and each
<PAGE>95
Lender shall, to the extent of its respective Percentage, be
responsible to promptly reimburse Agent for any and all payments
made by Agent under such Letter of Credit not theretofore
reimbursed by Borrower as provided herein. Borrower hereby
agrees and acknowledges that any payments made by Agent to any
beneficiary of any such Letter of Credit shall constitute
advances of the Revolving Loan to Borrower and shall be
originally made as Base Rate Loans, which Loans are hereby
irrevocably authorized and directed by Borrower. Borrower's
obligation to repay Revolving Loans made in accordance with this
Paragraph 2(F) shall be unconditional regardless of (i) any lack
of validity or enforceability of any L/C Document; (ii) any
amendment or waiver of or consent to or departure from, any of
the terms of any L/C Document; (iii) the existence of any claim,
setoff, defense or other right which Borrower or any Affiliate of
Borrower may have at any time against any issuer or beneficiary
of any Letter of Credit; (iv) evidence that any L/C Document
proves to be forged, fraudulent, invalid or insufficient in any
respect or that any statement therein is untrue or inaccurate in
any respect, regardless of whether or how such facts or alleged
facts are brought to the attention of Agent; (v) payment by the
issuer of any Letter of Credit against presentation of a written
demand or certificate which does not comply with the terms of
such Letter of Credit, except to the extent of the Letter of
Credit issuer's gross negligence or willful misconduct with
respect to any of the foregoing or (vi) the fact that a Default
or an Event of Default has occurred or is continuing. The Agent
shall not have any obligation to inquire with respect to the
truthfulness or accuracy of any communication delivered by any
beneficiary of a Letter of Credit to Agent.
(G) Allocation. All payments by Borrower pursuant to this
Agreement or any other Loan Document, whether in respect of
principal of or interest on Loans, shall be made by Borrower to
Agent for the account of Lenders pro rata according to their
respective Percentages. The payment of all fees referred to in
Paragraph 4(A) shall be made by the Borrower to the Agent for the
account of the Lenders entitled thereto pro rata according to
their respective Percentages. The payment of all fees referred
to in Paragraph 4(B) shall be made to Agent for its own account.
All other amounts payable to Agent or any Lender under this
Agreement or any other Loan Document shall be paid to Agent for
the account of the Person entitled thereto.
3. INTEREST ON THE LOANS.
(A) Rate of Interest. All Loans shall be either Base Rate
Loans or Eurodollar Rate Loans. To the extent past due, all fees
described in Paragraph 4 and all other liquidated Obligations
shall constitute principal and shall bear interest hereunder. The
<PAGE>96
outstanding principal balance of all Obligations other than Loans
shall bear interest from the date such Obligations become past
due until paid in full at a per annum rate equal to the sum of
the Base Rate in effect from time to time plus one percent
(1.0%). Borrower shall determine whether the Loans shall bear
interest determined by reference to the Base Rate or the
Eurodollar Rate at the time a Notice of Borrowing is given by the
Borrower pursuant to Paragraph 2(B) or at the time a Notice of
Conversion or Continuation is given by Borrower pursuant to
Paragraph 3(D), as the case may be. To the extent any Loan is
outstanding with respect to which notice has not been delivered
to Agent in accordance with the terms of this Agreement
specifying the basis for determining the applicable rate of
interest, then that Loan shall be a Base Rate Loan and shall bear
interest at a rate determined by reference to the Base Rate. The
Loans shall bear interest, except as otherwise provided in
Paragraph 3(D), as follows:
(i) If a Base Rate Loan, then at a per annum rate equal to
the sum of the Base Rate plus the Applicable Margin in effect
from time to time; and
(ii) If a Eurodollar Rate Loan, then at a per annum rate
equal to the sum of the Eurodollar Rate for the applicable
Eurodollar Interest Period plus the Applicable Margin.
(B) Interest Payments and Computation. Interest accrued on
all Base Rate Loans and other Obligations outstanding in any
calendar quarter shall be payable, in arrears, on each Quarterly
Payment Date. Interest accrued on all Eurodollar Rate Loans
shall be payable, in arrears, on the last day of the applicable
Eurodollar Interest Period (and if such Interest Period exceeds
three months on the ninetieth day of such Interest Period).
Interest on all Eurodollar Rate Loans shall be computed on the
basis of a year of 360 days and on all Base Rate Loans shall be
computed on the basis of a year of 365 or, where applicable, 366
days and on all Loans shall be computed for the actual number of
days elapsed in the period during which interest accrues. In
computing interest on any Loan or principal portion of the
obligations, the date of the making of the Loan, the date on
which such other Obligations become past due or the first day of
a Eurodollar Interest Period, as the case may be, shall be
included and the date of payment or the expiration date of a
Eurodollar Interest Period, as the case may be, shall be
excluded; provided that if a repayment of any Loan or principal
portion of other obligations is received by Agent after 11:00
a.m. (Chicago time), then the date of payment shall be included
in computing interest on such Loan or principal portion of other
Obligations.
<PAGE>97
(C) Default Interest. Notwithstanding the rates of
interest specified in Paragraph 3(A), effective immediately upon
the occurrence of an Event of Default described in Paragraph
19(A), (D) (under clause (i) or clause (ii), but, in the latter
of which cases, only if an acceleration has occurred), (E), (G),
(H), (I), (J), (K) or (L) or an Event of Default by reason of
Borrower's breach of any covenant contained in Paragraph 16, and
for as long thereafter as any such Event of Default shall be
continuing, the principal balance of all Loans and other
obligations then outstanding shall bear interest at a rate which
is two percent (2%) per annum in excess of the rate of interest
otherwise payable under this Agreement.
(D) Conversion or Continuation. Borrower shall have the
option (i) to convert at any time all or any part of the
outstanding Base Rate Loans in a minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount from a
Base Rate Loan to a Eurodollar Rate Loan; (ii) to convert all or
any part of the outstanding Eurodollar Rate Loans in a minimum
amount of $500,000 and integral multiples of $500,000 in excess
of that amount from a Eurodollar Rate Loan to a Base Rate Loan on
the expiration date of a Eurodollar Interest Period applicable
thereto; or (iii) upon the expiration of any Eurodollar Interest
Period applicable to a Eurodollar Rate Loan, to continue all or
any portion of a Eurodollar Rate Loan in a minimum amount of
$500,000 and integral multiples of $500,000 in excess of that
amount as a Eurodollar Rate Loan, and the succeeding Eurodollar
Interest Period(s) of such continued Loan shall commence on the
expiration date of the Eurodollar Interest Period applicable
thereto; provided, that, except pursuant to Paragraph 3(N), no
outstanding Loan may be continued as, or be converted into, a
Eurodollar Rate Loan when any Event of Default or Default has
occurred and is continuing.
In the event Borrower shall elect to convert or continue a
Loan under this Paragraph 3(D), Borrower shall deliver to Agent
(who shall promptly inform Lenders of the substance thereof) a
written notice containing the original signature of an authorized
officer or employee of Borrower ("Notice of Conversion or
Continuation") (i) no later than 10:00 a.m. (Chicago time) at
least two (2) Business Days in advance of the proposed conversion
date in the case of a conversion to a Base Rate Loan, and (ii) no
later than at least three (3) Business Days in advance of the
proposed conversion or continuation date in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan. A
Notice of Conversion or Continuation shall specify (a) the
proposed conversion or continuation date (which shall be a
Business Day), (b) the amount of the Loans to be converted or
continued, (c) the nature of the proposed conversion or
continuation, and (d) in the case of a conversion to, or
<PAGE>98
continuation of, a Eurodollar Rate Loan, the requested Eurodollar
Interest Period. In lieu of delivering the above-described
Notice of Conversion or Continuation, Borrower may give Agent
(who shall promptly inform Lenders of the substance thereof)
telephonic notice within the required time of any proposed
conversion or continuation under this Paragraph 3(D) provided
that such notice is confirmed in writing by delivery to Agent
promptly (but in no event later than the proposed conversion or
continuation date) of a Notice of Conversion or Continuation. In
the event such written confirmation is not delivered to Agent on
or before the proposed date of disbursement, neither Agent nor
any Lender shall have any obligation to convert or continue such
requested Loan.
The officers and employees of Borrower authorized to request
a borrowing on behalf of Borrower pursuant to Paragraph 2(B)
shall also be authorized to request a conversion or continuation
hereunder on behalf of Borrower and Agent and each Lender shall
be entitled to rely conclusively on such officers' and employees'
authority until Agent is notified to the contrary in writing.
Neither Agent nor any Lender shall have any duty to verify the
authenticity of the signature appearing on any written Notice of
Conversion or Continuation and, with respect to an oral request
therefor, neither Agent nor any Lender shall have any duty to
verify the identity of any person representing himself or herself
as one of the officers or employees authorized to make such
request. Neither Agent nor any Lender shall incur any liability
to Borrower in acting upon any such notice referred to above
which Agent or such Lender believes in good faith to have been
given by a duly authorized officer or employee authorized to act
on behalf of Borrower or for otherwise acting in good faith under
this Paragraph 3(D) and, upon conversion or continuation by Agent
or such Lender in accordance with this Agreement pursuant to any
such notice, Borrower shall have effected the conversion or
continuation of Loans hereunder.
Any Notice of Conversion or Continuation for conversion to,
or continuation of, a Loan (or telephonic notice in lieu thereof)
shall be irrevocable and Borrower shall be bound to convert or
continue in accordance therewith.
(E) Increased Costs; Legal Restrictions. In the event that
(a) any law, treaty, rule, regulation, guideline or determination
of a court or Governmental Authority or any change therein or
interpretation or application thereof by a court or Governmental
Authority, enacted or announced after the date hereof (including
enactments of amendments to existing laws, treaties, rules,
regulations or guidelines), or (b) compliance by any Lender with
any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority or
<PAGE>99
quasi-governmental authority, enacted or announced after the date
hereof (including enactments of amendments to existing laws,
treaties, rules, regulations or guidelines):
(i) does or will subject any Lender (or its applicable
lending office or any Affiliate of such Lender) to any tax, duty
or other charge of any kind which such Lender reasonably
determines to be applicable to this Agreement, the Loans or the
Obligations, or changes the basis of taxation of payments to such
Lender of principal, fees, interest, or any other amount payable
hereunder (except for changes in the rate of taxes imposed on or
measured by the overall net income of such Lender by the United
States of America or any political subdivision or taxing
authority thereof or therein, or taxes on or measured by the
overall net income of any Affiliate of such Lender by any foreign
country or subdivision thereof in which that Affiliate is doing
business); or
(ii) does or will impose, modify, or hold applicable any
reserve, special deposit, compulsory loan, FDIC insurance,
capital allocation or similar requirement against assets held by,
or deposits or other liabilities in or for the account of,
advances or loans by, commitments made, or other credit extended
by, or any other acquisition of funds by, any Lender or any
applicable lending office of such Lender or any Affiliate of such
Lender; or
(iii) does or will impose on any Lender or any Affiliate of
such Lender any other condition materially more burdensome in
nature, extent or consequence than those in existence as of the
Restatement Date;
and the result of any of the foregoing is to increase the cost to
such Lender or any Affiliate of such Lender of making, renewing
or maintaining the Loans, or any commitment to make such Loans
or, in the case of such Affiliate, issuing or maintaining any
Canadian Letter of Credit; then, in any such case, Borrower shall
promptly pay to Agent for the account of such Lender or such
Affiliate, upon demand, such amount or amounts as may be
necessary to compensate such Lender or such Affiliate, for any
such additional cost incurred; provided, however, that Borrower
shall have no obligations to pay such Lender for any of the
foregoing increased costs to the extent they may relate to Base
Rate Loans to the extent that the reserve and FDIC insurance
requirements are reflected in such definition of "Base Rate" or
Eurodollar Rate Loans to the extent that the reserve requirements
are reflected in the definition of "Eurodollar Rate." Each
Lender and each Affiliate of any Lender shall deliver to the
Borrower a written statement of the losses or expenses sustained
<PAGE>100
or incurred, and any reasonable allocation made by such Lender or
such Affiliate of such losses and expenses shall be conclusive,
absent manifest error.
(F) Amount of Eurodollar Rate Loans. Each Eurodollar Rate
Loan shall be for a minimum amount of $500,000 and in integral
multiples of $500,000 in excess of that amount.
(G) Determination of Eurodollar Interest Period. By giving
notice as set forth in Paragraphs 2(B) or 3(D), Borrower shall
have the option, subject to the other provisions of this
Paragraph 3, to specify whether the Eurodollar Interest Period
commencing on any such date shall be a one-month, two-month,
three-month, six-month or, if in the reasonable judgment of Agent
determined to be available to Lenders, twelve-month period. The
determination of Eurodollar Interest Periods shall be subject to
the following provisions:
(i) In the case of immediately successive Eurodollar
Interest Periods, each successive Eurodollar Interest Period
shall commence on the day on which the next preceding Eurodollar
Interest Period expires.
(ii) If any Eurodollar Interest Period would otherwise
expire on a day which is not a Business Day, the Eurodollar
Interest Period shall be extended to expire on the next
succeeding Business Day; provided, that if any such Eurodollar
Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further
Business Day occurs in that month, that Eurodollar Interest
Period shall expire on the immediately preceding Business Day.
(iii) The Borrower may not select a Eurodollar Interest
Period for any Loan the last day of which shall occur later than
the Termination Date.
(iv) There shall be no more than five (5) Eurodollar
Interest Periods in effect at any one time.
(H) Substituted Rate of Borrowing. In the event that on
any Eurodollar Interest Rate Determination Date the Required
Lenders with respect to clause (i) hereof or any Lender with
respect to clause (ii) hereof shall have determined (which
determination shall be binding upon the parties hereto, absent
manifest error) that:
(i) by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market or affecting
the position of such Lender or any Affiliate of such Lender in
<PAGE>101
such market, adequate and fair means do not exist for
ascertaining the applicable interest rates by reference to which
the Eurodollar Rate then being determined is to be fixed; or
(ii) by reason of (a) any change after the Restatement Date
in any applicable law or governmental rule, regulation or order
(or any interpretation thereof and including the introduction of
any new law or governmental rule, regulation or order) or (b)
other circumstances affecting such Lender or any Affiliate of
such Lender or the interbank Eurodollar market or the position of
such Lender or any Affiliate of such Lender in such market (such
as, for example, but not limited to official reserve requirements
required by Regulation D of the Federal Reserve Act to the extent
not given effect in the Eurodollar Rate), the Eurodollar Rate
shall not represent the effective pricing to such Lender or such
Affiliate for U.S. Dollar deposits of comparable amounts for the
relevant period;
then, and in any such event, such Lender shall promptly (and in
any event as soon as possible after being notified of a
borrowing, conversion or continuation) give notice (by telephone
confirmed in writing) to Borrower of such determination. In each
such event, Borrower shall pay to Agent for the account of such
Lender, upon written demand thereof, such additional amounts (in
the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole
discretion shall reasonably determine) as shall be required to
cause such Lender to receive interest with respect to its
Eurodollar Rate Loans for the Eurodollar Interest Period then in
effect and for the Eurodollar Interest Period following that
Eurodollar Interest Rate Determination Date (such Interest
Periods being each an "Affected Interest Period") at a per annum
rate equal to the sum of one and one-eighth percent (1.125%) plus
the effective pricing to such Lender for U.S. Dollar deposits to
make or maintain its Eurodollar Rate Loans. A certificate as to
additional amount or amounts owed such Lender, showing in
reasonable detail the basis for the calculation thereof,
submitted in good faith to Borrower by such Lender shall, absent
manifest error, be presumptively correct and binding upon each of
the parties hereto.
(I) Required Termination and Prepayment. In the event that
on any date any Lender shall have reasonably determined (which
determination shall, absent manifest error, be final and
conclusive and binding upon each of the parties hereto) that the
making or continuation of its Eurodollar Rate Loans has become
unlawful by compliance by such Lender in good faith with any law,
governmental rule, regulation or order (whether or not having the
<PAGE>102
force of law and whether or not failure to comply therewith would
be unlawful), then, and in any such event, such Lender shall
promptly give notice (by telephone confirmed in writing) to
Borrower of that determination. The obligation of such Lender to
make or maintain its Eurodollar Rate Loans during any such period
shall be terminated at the earlier of the termination of the
Eurodollar Interest Period then in effect or when required by law
and Borrower shall, no later than the termination of the
Eurodollar Interest Period in effect at the time any such
determination pursuant to this Paragraph 3(I) is made or,
earlier, when required by law, repay Agent for the account of
such Lender the Eurodollar Rate Loans of such Lender, together
with all interest accrued thereon.
(J) Option of Borrower. In lieu of paying any Lender such
additional moneys as are required by Paragraph 3(H) or the
prepayment required by Paragraph 3(I), Borrower may, by giving
notice (by telephone confirmed promptly in writing) to Agent and
such Lender, require such Lender to make the Eurodollar Rate Loan
then being requested as a Base Rate Loan or to continue to
maintain the outstanding Base Rate Loan then the subject of a
Notice of Conversion or continuation as a Base Rate Loan or to
convert the Eurodollar Rate Loans then outstanding that are so
affected into Base Rate Loans at the end of the then current
Eurodollar Interest Period (or at such earlier time as repayment
is otherwise required) in the manner contemplated by Paragraph
3(D).
(K) Compensation; Breakage Fees. In addition to such
amounts as are required to be paid by Borrower pursuant to
Paragraphs 3(A) and 3(E), Borrower shall compensate each Lender
upon written request by such Lender (which request shall set
forth in reasonable detail the basis for requesting such
amounts), for all losses, expenses and liabilities, including any
loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender
to fund or maintain Eurodollar Rate Loans to Borrower which such
Lender may sustain (i) if for any reason a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor
in a Notice of Borrowing (including such Lender's failure to fund
its initial Loans hereunder by reason of any Conditions Precedent
having not been satisfied by the proposed date of disbursement
described in the Notice of Borrowing pertaining to such initial
Loans) or a Notice of Conversion or Continuation or in a
telephonic request for borrowing or conversion or continuation
(including such Lender's failure to fund, convert or continue a
Loan by reason of Borrower's failure to deliver to Agent on or
before the proposed date of disbursement, conversion or
continuation, as the case may be, a written confirmation of such
telephonic request for borrowing, conversion or continuation as
<PAGE>103
provided in Paragraphs 2(B) and 3(D), respectively) or a
successive Eurodollar Interest Period does not commence after
notice therefor is given pursuant to Paragraphs 2(B) or 3(D),
(ii) if any prepayment of any Eurodollar Rate Loan occurs for any
reason on a date which is not the last day of a Eurodollar
Interest Period, (iii) as a consequence of any required
conversion of a Eurodollar Rate Loan to a Base Rate Loan as a
result of any the events indicated in Paragraph 3(I), and (iv) as
a consequence of any other default by Borrower to repay
Eurodollar Rate Loans when required by the terms of this
Agreement.
(L) Eurodollar Rate Taxes; Indemnification. Borrower
agrees that:
(i) Borrower will pay, prior to the date on which penalties
attach thereto, all income, stamp and other taxes, levies, or
costs and charges whatsoever hereafter imposed, assessed, levied
or collected on or in respect of a Loan solely as a result of the
interest rate being determined by reference to the Eurodollar
Rate and/or the provisions of this Agreement relating to the
Eurodollar Rate and/or the recording, registration, notarization
or other formalization of any of the foregoing and/or any
payments of principal, interest or other amounts made on or in
respect of a Loan when the interest rate is determined by
reference to the Eurodollar Rate (all such taxes, levies, costs
and charges being herein collectively called "Eurodollar Rate
Taxes"); provided that Eurodollar Rate Taxes shall not include
taxes imposed on or measured by the overall net income of any
Lender by the United States of America or any political
subdivision or taxing authority thereof or therein, or taxes on
or measured by the overall net income of any Affiliate of any
Lender by any foreign country or subdivision thereof in which
that Affiliate is doing business. Borrower shall also pay such
additional amounts equal to increases in taxes payable by any
Lender described in the foregoing proviso which increases are
attributable to payments made by Borrower described in this
sentence and in the immediately preceding sentence of this
Paragraph 3(L)(i). Promptly after the date on which payment of
any such Eurodollar Rate Tax is due pursuant to applicable law,
the Borrower will, at the request of any Lender, furnish to such
Lender evidence, in form and substance satisfactory to such
Lender that Borrower has met its obligation under this Paragraph
3(L); and
(ii) Borrower will indemnify each Lender against, and
reimburse each Lender on demand for, any Eurodollar Rate Taxes,
as reasonably determined such by each Lender. Each Lender shall
<PAGE>104
provide the Borrower with appropriate receipts for any payments
or reimbursements made by Borrower pursuant to this clause (ii)
of Paragraph 3(L).
(M) Certain Indemnification. In the event that, as a
result of any law, rule, regulation or order (or any
interpretation thereof and including the introduction of any new
law or governmental rule, regulation or order) that becomes
effective after the Restatement Date, a determination is made by
any Lender or any Affiliate of any Lender in its sole discretion
or by any regulatory authority or entity that reserves must be
maintained with any Federal Reserve Bank of the United States or
any other regulatory authority or entity (domestic or foreign)
having jurisdiction over or with respect to such Lender or such
Affiliate in connection with any of the then outstanding
Eurodollar Rate Loans (including any applicable reserve
requirements against assets held by, or deposits in or for the
account of, or advances by any Lender and/or such Affiliate and
any applicable reserve requirements not given effect in any prior
determination of the Eurodollar Rate), then Borrower agrees to
indemnify such Lender and/or such Affiliate and to hold them
harmless with respect to the cost of such Lender's and/or such
Affiliate's obtaining and/or maintaining any such reserves. The
foregoing shall not cover or be applicable to any reserves
required to be maintained which are given effect in the
determination of the Eurodollar Rate.
(N) Eurodollar Rate Loans After Default. After the
occurrence of and during the continuance of an Event of Default,
Borrower may not elect to have a Loan be made or continued as, or
converted to, a Eurodollar Rate Loan after the expiration of any
Eurodollar Interest Period then in effect for that Loan. After
the occurrence of and during the continuance of a Default,
Borrower may not elect to have a Loan be made or continued as, or
converted to, a Eurodollar Rate Loan after the expiration of any
Eurodollar Interest Period in effect for that Loan, other than a
Eurodollar Rate Loan having a Eurodollar Interest Period of one
month.
(O) Affiliates Not Obligated. No Affiliate of any Lender
shall be deemed to be a party to this Agreement or shall have any
liability or obligation under this Agreement.
(P) Increased Capital. If either (i) the introduction of
or any change in or in the interpretation of any law or
regulation or (ii) compliance by any Lender with any guideline or
request from any central bank or other Governmental Authority
(whether or not having the force of law) affects or would affect
the amount of capital required or expected to be maintained by
such Lender or any corporation controlling such Lender and such
<PAGE>105
Lender reasonably determines that the amount of such capital is
increased by or based upon the existence of such Lender's
obligations under this Agreement and other commitments of this
type, then, upon demand by such Lender, Borrower shall
immediately pay to Agent for the account of such Lender, from
time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the
existence of Lender's obligations under this Agreement. A
certificate as to such amounts submitted to Borrower by such
Lender, shall, in the absence of manifest error, be conclusive
and binding for all purposes.
4. FEES AND CHARGES.
(A) Non-Use Fees. Borrower shall pay to Agent for the
account of each Lender pro rata according to their respective
Percentages a non-use fee equal to the Applicable Non-Use Fee
multiplied by the amount by which the Revolving Loan Maximum
Commitment exceeds the sum of the average daily aggregate
outstanding principal balance of the Revolving Loan plus the
average daily aggregate undrawn face amount of any outstanding
Letters of Credit for the period commencing on the Restatement
Date and ending on the Termination Date, which shall be payable,
in arrears, on each Quarterly Payment Date, and on the
Termination Date. Such commitment fees shall be computed based
upon a 360-day year and actual days elapsed.
(B) Agent's Fees. Borrower shall pay to Agent an agent's
fee of $50,000 per annum, payable quarterly in arrears on each
Quarterly Payment Date.
(C) Letter of Credit Fees. With respect to each Letter of
Credit, Borrower shall pay to Agent for the account of each
Lender a per annum fee in an amount equal to the Applicable L/C
Fee multiplied by the undrawn face amount of such Letter of
Credit; provided, however, that at all times during which the
principal balance of the obligations bears interest at the
post-default rate pursuant to Paragraph 3(C), Borrower shall pay
Agent for the account of each Lender a per annum fee in an amount
equal to three percent (3%) of the undrawn face amount of such
Letter of Credit. Such fee shall be payable, in arrears on each
Quarterly Payment Date for the period during which such Letter of
Credit is issued or outstanding (or portion thereof). Such fee
shall be computed based upon a 360-day year and the actual number
of days of the Fiscal Quarter for which such fee is payable. In
addition, with respect to each Letter of Credit Borrower shall
pay to Agent such fees as are charged by Agent in connection with
its issuance of such Letter of Credit, including its standard
<PAGE>106
fees for opening, amending and renewing letters of credit and all
other fees associated with issuing or servicing letters of
credit.
(D) Unpaid Charges. If Borrower fails to pay to any Lender
any interest, fees or other charges, or any part thereof, due
under this Agreement promptly when due after passage of any
applicable grace period the passage of which would give rise to
an Event of Default, such Lender may (but shall not be required
to) charge the same to Borrower's loan account with such Lender
as part of the Obligations, payable on demand.
5. QUARTERLY ACCOUNTINGS BY AGENT.
Agent will provide Borrower and each Lender, on a quarterly
basis, with a statement, with reasonable detail, of advances,
charges and payments made pursuant to this Agreement and the
Revolving Note. Such account rendered by Agent shall, absent
manifest error, be deemed binding and shall constitute an account
statement unless Borrower, in good faith, notifies Agent in
writing to the contrary within thirty (30) days after the date of
each account rendered.
6. RESERVED.
7. RESERVED.
8. PROCEEDS, PAYMENTS AND APPLICATION.
(A) Application and Posting Time. All payments received by
Agent will be applied to the Obligations as follows: (i) all cash
payments received by Agent, at Chicago, Illinois, including
payments made by wire transfer or otherwise made by immediately
available funds received by Agent in time for posting to the
account of Lenders on the date received, will be credited to
Borrower's loan account with each Lender immediately after
receipt thereof by Agent; (ii) all cash payments received by
Agent, at Chicago, Illinois, including payments made by wire
transfer or otherwise made by immediately available funds
received by Agent on any day after the cut-off time for posting
to the account of Lenders on the date so received, will be
credited to Borrower's loan account with each Lender on the next
succeeding Business Day; and (iii) all payments in the form of
checks and other instruments received by Agent, at Chicago,
Illinois will be credited (conditional upon final collection),
after allowing two (2) Business Days for collection, to
Borrower's loan account with each Lender. For purposes of this
Paragraph 8(A), the cut-off time for posting to the account of
Lenders shall be 11:00 a.m. (Chicago time).
<PAGE>107
(B) Order of Application; Invalidated Payments. Subject to
the application provisions contained in Paragraphs 2(D) and 2(G),
at all times prior to the occurrence of an Event of Default,
Lenders shall have the continuing and exclusive right to apply
all payments to any portion of the Obligations which are due and
payable at the time of such payment, and if no Obligations are
then due and payable, Lenders shall have the continuing and
exclusive right to apply any and all such payments to any portion
of the Obligations. After the occurrence of an Event of Default,
Lenders shall have the continuing and exclusive right to apply,
reverse and reapply any and all payments to any portion of the
Obligations. To the extent that Borrower makes a payment or
payments to Lenders which payment(s) or any part thereof is
subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause then, to the
extent of such payment received, the Obligations or part thereof
intended to be satisfied shall be revived and continue in full
force and effect, as if such payment had not been received by
Lenders.
(C) Sharing of Payments. Each Lender agrees that if it shall,
by exercising any right of set-off, counterclaim or otherwise,
obtain any payment or other recovery on account of any Loan or
Letter of Credit (excluding payments or fees received by any
Lender with respect to interest rate protection, currency
exchange or similar agreement) in excess of its pro rata share
(based on its Percentage) of all payments and other recoveries
obtained by all Lenders on account of principal of and interest
on the Loans or reimbursement or fees with respect to the Letters
of Credit then held by them, the Lender receiving such
proportionately greater payment shall purchase such
participations in the Loans and Letters of Credit held by the
other Lenders, and such other adjustments shall be made, as may
be required so that any such excess payment or recovery shall be
shared ratably among Lenders; provided, however, that nothing in
this Paragraph 8(C) shall impair the right of any Lender to
exercise any right of set off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of
indebtedness of Borrower owing such Lender other than with
respect to the Loans or Letters of Credit.
9. AGENT AS BORROWER'S ATTORNEY.
Borrower hereby appoints Agent, or any other Person whom
Agent may designate, as Borrower's attorney-in-fact, with power
at all times on or before the Termination Date and at all times
thereafter until such time as there shall exist no Obligations
outstanding, to do all things necessary during the occurrence and
<PAGE>108
continuation of an Event of Default to carry out the terms and
provisions of Section 20(B) of this Agreement (provided that
unless a delay in the taking of such action may, in Agent's or
Agent's counsel's opinion, jeopardize the repayment of the
Obligations or portion thereof or materially adversely affect the
business operations or prospects of Borrower, Agent shall notify
Borrower at least five (5) Business Days prior to Agent's taking
action under this sentence). Except as provided in the
immediately succeeding sentence, Borrower ratifies and approves
all acts of such attorney carried out in accordance with the
foregoing. Neither Agent nor the attorney will be liable for any
acts or omissions nor for any error of judgment or mistake of
fact or law in connection with any of the foregoing, except for
its acts of bad faith, willful misconduct or gross negligence.
This power, being coupled with an interest, is irrevocable at all
times on or before the Termination Date and at all times
thereafter until such time as there shall exist no Obligations
outstanding.
10. INSURANCE.
Borrower shall, at all times on or before the Termination
Date and at all times thereafter until such time as there shall
exist no Obligations outstanding, at its expense, insure, and
maintain insurance, on its tangible assets and real property
against loss or damage by fire, flood and earthquake and for
general liability, public liability, third party property damage
and such other additional types of coverages customarily obtained
by insureds in Borrower's industry. All such insurance shall be
in such amounts, with such deductibles, under such policies and
terms and issued by such insurers, as are customary for Persons
engaged in the Borrower's industry. In the event Agent requests,
pursuant to the immediately preceding sentence, insurance having
terms, deductibles, coverage or insurers which are different than
that which is then currently maintained by Borrower, then,
provided that Borrower at all times maintains insurance at least
as adequate as that which is then currently maintained by
Borrower, Borrower shall obtain such requested insurance within
thirty (30) days after such request. Borrower shall establish
adequate reserves on its books, in amounts in accordance with
GAAP, for all hazards and losses for which Borrower is
self-insured, underinsured or uninsured.
11. REPORTING.
(A) Quarterly Reports. As soon as available after the end
of each Fiscal Quarter of DeVry, but in no event later than
forty-five (45) days after the end of such Fiscal Quarter,
Borrower shall provide Agent (with a copy for each Lender) with
unaudited, consolidated and consolidating financial statements of
<PAGE>109
DeVry and its Consolidated Subsidiaries, for such Fiscal Quarter,
including statements of earnings, statements of cash flows and
balance sheets. All such financial statements shall be (i)
prepared on a basis consistent with such statements prepared in
prior periods (except by reason of changes in accounting
treatment which are permitted by GAAP) and with the annual
audited statements of DeVry delivered pursuant to Paragraph
11(B), (ii) prepared in accordance with GAAP (subject to normal
year-end adjustments and without footnotes), (iii) accompanied by
the financial statements for comparative periods of DeVry's
previous fiscal year, and (iv) accompanied by a compliance
certificate, substantially in the form of Exhibit C,
appropriately certified and signed by DeVry's Chairman, President
or Chief Financial Officer stating that such financial statements
fairly present the consolidated financial condition of DeVry, no
Default or Event of Default has occurred or exists, and that
DeVry has complied with the financial covenants contained in
Paragraph 16, setting forth the figures providing the basis for
such statement with respect to such financial covenants.
Borrower shall additionally deliver to Agent (with a copy
for each Lender), together with a certification by Borrower's
Chairman, President or Chief Financial Officer that the contents
of such are fairly presented: (a) concurrently with Borrower's
delivery thereof to the United States Department of Education,
copies of Borrower's audit reports and default reports prepared
pursuant to Title IV of the Higher Education Act of 1965; (b)
within sixty (60) days after the end of each Semester ending
after the Restatement Date, a statement disclosing the admission
level for new students and total enrollment of Borrower's
operations in the aggregate, by educational facility; and (c)
within forty-five (45) days after the end of each Fiscal Quarter
after the Restatement Date, statements of gross profit and loss
for each of Borrower's educational facilities.
(B) Annual Reports. Borrower shall provide Agent (with a
copy for each Lender) with annual audited consolidated and
unaudited consolidating financial statements of DeVry and its
Consolidated Subsidiaries, including statements of earnings,
statements of cash flows and balance sheets ("Financials"), as
soon as available and, in any event, within one hundred and
twenty (120) days after the end of each of DeVry's fiscal years,
which Financials (i) shall be prepared in accordance with GAAP
(except for any changes thereto), (ii) shall be accompanied by an
opinion, which is unqualified as to DeVry's going concern, of
Price Waterhouse, or such other certified public accountants
chosen by DeVry acceptable to the Agent, that such Financials
fairly present the financial position of the companies being
reported upon at the end of such fiscal year and the results of
their operations and changes in their financial position for such
<PAGE>110
year in conformity with GAAP consistently applied (except for
changes in GAAP with which such accountants concur and which are
disclosed in the notes to such Financials) and its examination of
such Financials has been made in accordance with generally
accepted auditing standards and included such tests of the
accounting records and other auditing procedures as considered
necessary in the circumstances, (iii) shall be delivered by such
accountants to Agent at the address stated in Paragraph 22(B)
concurrently with such accountants' delivery thereof to DeVry and
(iv) shall be accompanied by a certificate of such accountants
stating that, in making the examination necessary for the
issuance of the opinion referred to in clause (ii) of this
Paragraph 11(B), no knowledge was obtained of any Default or
Event of Default (or in the opinion of such accountants, a
Default or Event of Default has occurred and is continuing, and,
if such is the case, a statement as to the nature thereof) and
the independent review and opinion of such accountants of the
computation of financial covenants contained in Paragraph 16
hereof; provided, however, if the information set forth in any
financial statements of DeVry and its Consolidated Subsidiaries
is not sufficient in the opinion of Agent and Lenders to
determine Borrower's compliance with the covenants contained in
this Agreement, Borrower shall provide additional information as
and when requested by Agent on behalf of Lenders as shall be
necessary to permit such determination.
(C) Communication with Accountants; Other Financial
Information. Borrower and DeVry hereby authorize: (i) Agent to
communicate directly with their respective independent public
accountants, provided that Agent shall promptly inform Borrower
or DeVry of the substance thereof; and (ii) such independent
public accountants, upon Agent's request, to provide to Agent
copies of any financial statements, management reports and
workpapers contained in their files with respect to Borrower,
DeVry, the Consolidated Subsidiaries and their respective
businesses and financial affairs.
(D) Reports to SEC. Promptly upon the filing or making
thereof, Borrower shall provide to Agent (with a copy for each
Lender) copies of each filing and report made by Borrower, DeVry
or the Subsidiaries with or to any securities exchange or the
Securities and Exchange Commission.
(E) Reports of Changes in Subsidiaries. From time to time,
Borrower shall provide to Agent (with a copy for each Lender) a
written report of any change in the identity of the Subsidiaries,
promptly upon the occurrence of such change.
(F) Notices Relating to Default. Forthwith upon learning
of the occurrence of an Event of Default or a Default, Borrower
<PAGE>111
shall provide to Agent (with a copy for each Lender) written
notice thereof, describing the same and the steps being taken by
Borrower or DeVry with respect thereto.
(G) Notice of Material Adverse Events. Forthwith upon
learning of the occurrence of any change, event, action,
condition or effect which individually or in the aggregate either
(i) impairs the validity or enforceability of any of the Loan
Documents, or (ii) materially and adversely affects the
consolidated business, operations, licenses, prospects or
financial condition of DeVry and its Subsidiaries, taken as a
whole, or the ability of DeVry and its Subsidiaries to perform
their respective obligations under any of the Loan Documents,
Borrower shall provide to Agent (with a copy for each Lender)
written notice thereof, describing the same and the steps being
taken with respect thereto.
(H) Other Reports. In addition to the other reports and
statements described in this Paragraph 11, Borrower and DeVry
shall provide Agent with such other financial and other reports
and information as any Lender may from time to time reasonably
request through Agent including any monthly reporting which the
Agent may require from time to time.
12. WARRANTIES AND REPRESENTATIONS.
Each of the Borrower and DeVry represents and warrants to
Agent and Lenders that, as of the Restatement Date and such other
dates as are provided below:
(A) Corporate Existence. On the Restatement Date and,
subject to the exceptions set forth in Paragraph 14(A) below, on
each date hereafter on which Borrower requests Lenders to make a
Loan or Agent to issue a Letter of Credit hereunder, each of
Borrower, DeVry and each Subsidiary is a corporation duly
organized and in good standing under the laws of the jurisdiction
of its incorporation and each is duly qualified as a foreign
corporation and in good standing in all states where the nature
and extent of the business transacted by it or the ownership of
its assets makes such qualification necessary, except for those
jurisdictions in which the failure so to qualify would not have a
material adverse effect on the Borrower's, DeVry's and each
Subsidiary's financial condition, results of operations, business
or prospects.
(B) Corporate Authority. The execution and delivery by the
Borrower of this Agreement and by Borrower, DeVry and each
Subsidiary of the other Loan Documents to which Borrower, DeVry
or such Subsidiaries are parties and the performance of the
Borrower's obligations hereunder and their respective obligations
<PAGE>112
thereunder: (i) are within the Borrower's, DeVry's and such
Subsidiaries' corporate powers; (ii) are duly authorized by the
Borrower's, DeVry's and such Subsidiaries' respective Board of
Directors and, if necessary, the Borrower's, DeVry's and such
Subsidiaries' stockholders; (iii) are not in contravention of the
terms of the Borrower's, DeVry's and such Subsidiaries'
certificate of incorporation, by-laws or other organizational
documents, or of any indenture, agreement or undertaking to which
the Borrower, DeVry or any Subsidiary is a party or by which the
Borrower, DeVry or any Subsidiary or any of their respective
property is bound, the contravention of which would have a
material adverse effect on Borrower's, DeVry's or such
Subsidiaries' financial condition, results of operations,
business or prospects; (iv) do not require any governmental
consent, registration or approval which has not been previously
obtained; (v) do not contravene any governmental restriction
binding upon the Borrower, DeVry or any Subsidiary; and (vi) do
not, except as contemplated herein, result in the imposition of
any lien, charge, security interest or encumbrance upon any
property of the Borrower, DeVry or any Subsidiary under any
existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument to which the
Borrower, DeVry or any Subsidiary is a party or by which it or
any of its property may be bound or affected.
(C) Binding Effect. On the Restatement Date and on each
date hereafter on which Borrower requests Lenders to make a loan
or Agent to issue a Letter of Credit hereunder, this Agreement
and all of the other Loan Documents to which Borrower, DeVry or
any Subsidiary is a party are the legal, valid and binding
obligations of Borrower, DeVry and such Subsidiaries and are
enforceable against Borrower, DeVry and such Subsidiaries in
accordance with their respective terms, except as limited by
applicable bankruptcy, reorganization, insolvency or similar laws
affecting the enforceability of creditors' rights generally and
by general equitable principles.
(D) Financial Data. The historical consolidated financial
statements, with respect to DeVry, heretofore furnished and to be
furnished to Agent in accordance with Paragraph 11, are in
accordance with the consolidated books and records of DeVry,
fairly present the consolidated financial condition of DeVry at
the dates thereof and the results of operations for the periods
indicated (subject, in the case of unaudited interim financial
statements, to normal year end adjustments), and have been
prepared in conformity with GAAP consistently applied throughout
the periods reported (except for changes therein as noted in the
footnotes to such financial statements).
<PAGE>113
(E) Material Adverse Change. Since March 31, 1996, no
change, event, action, condition or effect has occurred which
individually or in the aggregate either (i) impairs the validity
or enforceability of any of the Loan Documents, or (ii)
materially and adversely affects the consolidated business,
operations, licenses, prospects or financial condition of DeVry
and its Subsidiaries, taken as a whole, or the ability of DeVry
and its Subsidiaries to perform their respective obligations
under any of the Loan Documents,
(F) Tax Liabilities. As of the Restatement Date and on
each date hereafter on which Borrower requests Lenders to make a
Loan or Agent to issue a Letter of Credit hereunder, Borrower and
DeVry have filed and caused each Subsidiary to file all federal,
state and local tax reports and returns required by any law or
regulation to be filed by it except for extensions duly obtained,
and has either duly paid all taxes, duties and charges indicated
due on the basis of such returns and reports, or will have made
adequate provision for the payment thereof, and the assessment of
any material amount of additional taxes in excess of those paid
and reported are not reasonably expected. As of the Restatement
Date and on each date hereafter on which Borrower requests
Lenders to make a Loan or Agent to issue a Letter of Credit
hereunder, the reserves for taxes reflected on the balance sheets
of Borrower, DeVry or any Subsidiary submitted to Agent in
accordance with the terms of Paragraph 11 are adequate in amount
for the payment of all liabilities for all taxes (whether or not
disputed) of such Person accrued through the date of such balance
sheet. As of the Restatement Date, there are no material
unresolved questions or claims concerning any tax liability of
Borrower, DeVry or any Subsidiary except for DeVry's consolidated
federal income tax returns for its taxable years ending June 30,
1988 through June 30, 1991 which are currently under examination
by the Internal Revenue Service.
(G) Loans; Guaranties. Except for the Obligations and as
disclosed on Exhibit F, as of the Restatement Date, Borrower,
DeVry and any Subsidiary have no Indebtedness for borrowed money
and have not guaranteed the obligations of any other Person.
(H) Margin Security. As of the Restatement Date and on
each date hereafter on which Borrower requests Lenders to make a
Loan or Agent to issue a Letter of Credit hereunder, neither
Borrower, DeVry nor any Subsidiary owns any margin security and
none of the loans advanced hereunder will be used for the purpose
of purchasing or carrying any margin securities or for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for any
other purpose not permitted by Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System.
<PAGE>114
(I) Subsidiaries. As of the Restatement Date, Exhibit G
sets forth a true and correct list of all Subsidiaries and the
Exempt Entities. As of the Restatement Date, the net worth of
the Exempt Entities does not exceed $500,000.
(J) Litigation and Proceedings. As of the Restatement Date
and on each date hereafter on which Borrower requests Lenders to
make a Loan or Agent to issue a Letter of Credit hereunder,
except as disclosed on Exhibit H, no litigation, investigation or
proceedings before any arbitrator or governmental tribunal,
injunctions, writs, restraining orders, judgments or decrees are
pending or outstanding against Borrower, DeVry or any Subsidiary
nor is there pending or, to the best of Borrower's knowledge
after diligent inquiry, threatened, any such action by or against
Borrower, DeVry or any Subsidiary except such actions which are
not, in the aggregate, materially adverse to Borrower's, DeVry's
or any Subsidiary's financial condition, results of operations,
prospects or business.
(K) Other Agreements. As of the Restatement Date and on
each date hereafter on which Borrower requests Lenders to make a
Loan or Agent to issue a Letter of Credit hereunder, except as
disclosed on Exhibit H, neither Borrower, DeVry nor any
Subsidiary is in default under any contract, lease or commitment
to which it is a party or by which it is bound which is material
to Borrower's, DeVry's or any Subsidiary's operations, prospects
or financial condition, which default either gives the other
party to such contract, lease or commitment the right to
terminate such contract, lease or commitment or a remedy which
would have a material adverse effect on Borrower's, DeVry's or
any Subsidiary's business operations, prospects or financial
condition. As of the Restatement Date and on each date hereafter
on which Borrower requests Lenders to make a Loan hereunder,
neither Borrower, DeVry nor any Subsidiary knows of any dispute
regarding any contract, lease or commitment which is materially
adverse to the continued financial success and well-being of the
Borrower, DeVry or any Subsidiary.
(L) Employee Controversies. As of the Restatement Date and
on each date hereafter on which Borrower requests Lenders to make
a Loan or Agent to issue a Letter of Credit hereunder, there are
no employee or labor controversies pending, other than employee
grievances arising in the ordinary course of business which are,
in the aggregate, materially adverse to the continued financial
success and well-being of Borrower, DeVry or any Subsidiary.
(M) Compliance with Laws and Regulations. The execution
and delivery by Borrower of this Agreement and all of the other
Loan Documents to which Borrower, DeVry or any Subsidiary is a
party and the performance of the Borrower's, DeVry's or any
<PAGE>115
Subsidiary's obligations hereunder and thereunder is not in
contravention of any law or laws, the contravention of which
would materially adversely affect Borrower's, DeVry's or any
Subsidiary's financial condition, results of operations, business
or prospects. As of the Restatement Date and on each date
hereafter on which Borrower requests Lenders to make a Loan or
Agent to issue a Letter of Credit hereunder, Borrower, DeVry and
each Subsidiary is in compliance with all laws, orders,
regulations and ordinances of all federal, foreign, state and
local governmental authorities relating to the business
operations and the assets of Borrower, DeVry or such Subsidiary,
except for laws, orders, regulations and ordinances, the
violation of which would not have a material adverse effect on
Borrower's, DeVry's or such Subsidiary's financial condition,
prospects, results of operations or business. Without limiting
the generality of the foregoing and notwithstanding any
limitations contained therein as of the Restatement Date and on
each date hereafter on which Borrower requests Lenders to make a
Loan or Agent to issue a Letter of Credit hereunder, all of
Borrower's, DeVry's and each Subsidiary's operations are in
compliance with (i) all laws, regulations and standards, the
violation of which would terminate or materially impair
Borrower's, DeVry's or any Subsidiary's eligibility for
participation, if applicable, in student financial assistance
programs under Title IV of the Higher Education Act of 1965, 20
U.S.C., 1070 et seq., (ii) the federal Truth-in-Lending Act, 15
U.S.C., 1601 et seq., and all other consumer credit laws
applicable to Borrower, DeVry or any Subsidiary in connection
with the advancing of student loans, except for such laws and
regulations the violation of which, in the aggregate, will not
result in the assessment of penalties and damages claims against
Borrower, DeVry or any Subsidiary in excess of the greater of (a)
$5,000,000 or (b) 10% of Consolidated Tangible Net Worth, (iii)
all statutory and regulatory requirements for authorization to
provide post-secondary education in the jurisdictions in which
its educational facilities are located, and (iv) if applicable,
all requirements for continuing its accreditations from the North
Central Association of Schools and Colleges.
(N) Patents, Trademarks and Licenses. As of the
Restatement Date and on each date hereafter on which Borrower
requests Lenders to make a Loan or Agent or any Affiliate of any
Lender to issue a Letter of Credit hereunder, Borrower, DeVry or
any Subsidiary possesses adequate licenses, accreditations,
patents, patent applications, copyrights, copyright applications,
service marks, trademarks and trade names to conduct their
respective businesses. As of the Restatement Date and on each
date hereafter on which Borrower requests Lenders to make a Loan
or Agent to issue a Letter of Credit hereunder, except as
otherwise permitted by Paragraph 14(G), all such property and
<PAGE>116
interests in property are, and will continue to be, owned by
Borrower, DeVry or any Subsidiary, as the case may be, free and
clear of conflicting claims and uses of all other Persons.
(O) ERISA. Except as set forth on Exhibit I, neither
Borrower, DeVry, any Subsidiary nor any ERISA Affiliates maintain
any Benefit Plan or contribute to any Multiemployer Plan.
Borrower has given to Agent a summary plan description of each
Plan of Borrower, DeVry, each Subsidiary or each ERISA Affiliate
in existence as of the Restatement Date. Borrower has made
available to Agent copies of all Plans of Borrower, DeVry, each
Subsidiary and each ERISA Affiliate which are in existence as of
the Restatement Date. Each Plan of Borrower, DeVry, each
Subsidiary or each ERISA Affiliates, which is intended to be a
qualified plan under section 401(a) of the Internal Revenue Code
as currently in effect, has been determined by the Internal
Revenue Service to be qualified under section 401(a) of the
Internal Revenue Code, and the trust related thereto is exempt
from federal income tax under section 501(a) of the Internal
Revenue Code. Except as set forth on Exhibit I, neither
Borrower, DeVry, any Subsidiary nor any ERISA Affiliates have
breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any of their respective
Plans, which breach has given rise to, or which would in the
future give rise to, any material obligation to pay money.
Neither Borrower, DeVry, any Subsidiary nor any ERISA Affiliates
nor any fiduciary of or any trustee to any of their respective
Plans has engaged in a nonexempt "prohibited transaction"
described in section 406 of ERISA or section 4975 of the Internal
Revenue Code, which transaction have given rise to, or which
would in the future give rise to any material obligation to pay
money.
(P) Use of Proceeds. All advances of the Revolving Loan on
and after the Restatement Date have been and will be used by
Borrower in accordance with all corporate laws applicable to
Borrower (and in accordance with Borrower's Certificate of
Incorporation and By-Laws) and in a manner which is consistent
with all applicable laws and statutes, as in effect as of the
respective dates of such uses.
(Q) Fiscal Year. Each of Borrower and DeVry has
established for all purposes, including accounting purposes, a
fiscal year based upon a twelve-month period ending June 30.
(R) Compliance with Environmental and Safety Laws. As of
the Restatement Date and on each date hereafter on which Borrower
requests Lenders to make a Loan or Agent to issue a Letter of
Credit hereunder, (i) the operations of Borrower, DeVry, and each
Subsidiary comply in all material respects with all applicable
<PAGE>117
federal, state or local environmental statutes and regulations;
(ii) none of the operations of Borrower, DeVry or any Subsidiary
are subject to any judicial or administrative proceedings
alleging the violation of any federal, state or local
environmental, health or safety statute or regulation; (iii) none
of the operations of the Borrower, DeVry or any Subsidiary are
the subject of federal, state or local investigation evaluating
whether any remedial action is needed to respond to a release of
any hazardous or toxic waste, substance or constituent, or any
other substance into the environment, which remedial action may
materially adversely affect Borrower's, DeVry's or any
Subsidiary's business operations, prospects or financial
condition; (iv) none of Borrower, DeVry or the Subsidiaries have
filed any notice under any federal, state or local law indicating
past or present treatment, storage or disposal of a hazardous
waste or reporting a spill or release of a hazardous or toxic
waste, substance or constituent, or any other substance into the
environment; and (v) none of Borrower, DeVry and the Subsidiaries
have contingent liabilities in connection with any release of any
hazardous or toxic waste, substance or constituent or any other
substance into the environment, which materially and adversely
affects Borrower's business operations, prospects or financial
condition.
(S) Survival of Warranties. All representations and
warranties of Borrower contained in this Agreement and of
Borrower, DeVry and each Subsidiary in each of the other Loan
Documents to which Borrower, DeVry or a Subsidiary is a party
shall survive the execution and delivery of this Agreement or
such other Loan Documents, unless otherwise provided herein or
therein.
13. GENERAL AFFIRMATIVE COVENANTS.
Each of Borrower and DeVry covenants that, at all times on
or before the Termination Date and at all times thereafter until
such time as there shall exist no Obligations outstanding:
(A) Reimbursement of Loan Operating Costs. Borrower shall
pay to Agent, for Agent's account, within thirty (30) days of
Agent's demand therefor, any and all fees, costs and expenses
which Agent pays to a bank or other similar institution arising
out of or in connection with the forwarding by Lenders to
Borrower, or any other Person on Borrower's behalf, of proceeds
of Loans made by Lenders to Borrower pursuant to this Agreement.
Notwithstanding the foregoing, Borrower shall not be obligated to
reimburse Agent or any Lender for any fees, costs or expenses
incurred or paid by Agent or any Lender in connection with (a)
travel to and from any negotiations and other meetings with
participants or assignees of the obligations the primary purpose
<PAGE>118
of which is to discuss or resolve Agent or any Lender's and such
participants' or assignees' relative rights and duties with
respect to one another or such parties' collective position with
respect to issues relating to this Agreement or the other Loan
Documents, (b) communications, written or otherwise, with
participants and assignees of the Obligations, including, notices
and reports relating to Borrower, or (c) wire transfer expenses
to and from participants and assignees of the Obligations.
(B) Notice of Claims. Borrower shall notify Agent in
writing, promptly upon Borrower's learning thereof, of (i) any
pending or threatened litigation affecting Borrower, DeVry or any
Subsidiary, whether or not the claim is considered by Borrower to
be covered by insurance, involving in the aggregate in excess of
the greater of (a) $5,000,000 and (b) 10% of Consolidated
Tangible Net Worth or (ii) the institution of any administrative
or arbitration proceeding or investigation, or the receipt by
Borrower, DeVry or any Subsidiary of any notice or order from any
regulatory body or agency having jurisdiction over the Borrower,
which litigation, proceeding, investigation, notice or order,
might materially and adversely affect the operations, prospects,
financial condition or business of Borrower, DeVry or any
Subsidiary and involves in the aggregate in excess of 10% of
Consolidated Tangible Net Worth. Without limiting the generality
of the foregoing and notwithstanding any limitation therein,
Borrower shall notify Agent (who shall promptly advise Lenders of
the substance thereof), in writing, promptly upon Borrower's
learning thereof, of (a) any action, decision or recommendation
by a review committee or board of any educational accreditation
association to discontinue any educational accreditation of
Borrower, DeVry or any Subsidiary, (b) any notice from any state
educational licensing board of a state in which Borrower, DeVry
or any Subsidiary has a school of a denial to Borrower, DeVry or
any Subsidiary, as the case may be, of operating authority in
such state and (c) any proposed limitations, suspensions, fines,
penalties, terminations or findings of noncompliance by any
Governmental Authority or private guaranty agency with respect to
the eligibility of Borrower, DeVry or any Subsidiary to
participate in student financial assistance programs which, in
the case of (c) only, would have a material adverse effect on the
financial condition, results of operations or business of
Borrower, DeVry or any Subsidiary.
(C) Conduct of Business. Subject to the exceptions set
forth in Paragraph 14(A) below, each of Borrower and DeVry shall
maintain, and shall cause each of the Subsidiaries to maintain,
its legal existence and shall limit its operations to, the same
general line of business as that previously conducted by
Borrower, DeVry and any Subsidiary. Borrower shall maintain, and
cause DeVry and any Subsidiary to maintain, in full force and
<PAGE>119
effect (or shall renew prior to the termination or expiration of
any of the following) all licenses, accreditations, consents,
approvals, bonds, franchises, leases, patents, copyrights,
contracts, trademarks, trade names and other rights, the absence
of which would have a material and adverse effect on the
financial condition or business operations or prospects of
Borrower, DeVry or any Subsidiary. Without limiting the
generality of the foregoing and notwithstanding any limitation
contained therein, each of Borrower and DeVry shall maintain, and
shall cause each of the Subsidiaries to maintain, in full force
and effect, as applicable (i) its eligibility to participate in
all student financial assistance programs in which and to the
extent that it currently participates, except where the failure
to maintain such eligibility to participate in which would not
have a material adverse effect on the financial condition,
results of operations or business of Borrower, DeVry or any
Subsidiary, (ii) its accreditations from the North Central
Association of Schools and Colleges, and (iii) its licenses to
provide postsecondary education in all jurisdictions where it is
so licensed, except where the failure to maintain such licenses
would not have a material adverse effect on the financial
condition, results of operations or business of Borrower, DeVry
or any Subsidiary. Each of Borrower and DeVry shall comply, and
cause each Subsidiary to comply, with all applicable laws and
regulations of any federal, state or local governmental
authority, except for such laws and regulations the violation of
which would not have a material adverse effect on Borrower's,
DeVry's or such Subsidiary's financial condition, results of
operations or business. Without limiting the generality of the
foregoing and notwithstanding any limitations contained therein,
Borrower, DeVry and each Subsidiary shall comply with the
Truth-in-Lending Act, 15 U.S.C., 1601 et seq., all regulations
promulgated thereunder, and all other consumer credit laws
applicable to it in connection with the advancing of student
loans, except for such laws and regulations the violation of
which, in the aggregate, may not result in the assessment of
penalties and damages claims against Borrower, DeVry or the
respective Subsidiary, as the case may be, in excess of the
greater of (a) $5,000,000 or (b) 10% of Consolidated Tangible Net
Worth. Notwithstanding anything in this Paragraph 13(C) or
elsewhere in this Agreement to the contrary, in the event that
Borrower, DeVry or the respective Subsidiary, as the case may be,
shall have failed to comply with any covenant contained in this
Paragraph 13(C), other than those stated in the first sentence
hereof, it shall have thirty (30) days from the date of such
failure to cure such failure before such failure shall constitute
an Event of Default.
(D) Claims and Taxes. Each of Borrower and DeVry shall pay
or cause to be paid, and cause each Subsidiary to pay or cause to
<PAGE>120
be paid, all license fees, bonding premiums and related taxes and
charges, and shall pay, or cause to be paid, all of its real and
personal property taxes, assessments and charges and all of its
franchise, income, unemployment, use, excise, old age benefit,
withholding, sales and other taxes and other governmental charges
assessed against it, or payable by it, at such times and in such
manner as to prevent any penalty from accruing or any lien or
charge (other than liens for taxes not yet delinquent) from
attaching to its property for a period longer than five (5)
Business Days, provided that the Borrower, DeVry or the
respective Subsidiary, as the case may be, shall have the right
to contest in good faith, by an appropriate proceeding promptly
initiated and diligently conducted, the validity, amount or
imposition of any such tax, assessment or charge, and upon such
good faith contest to delay or refuse payment thereof, if
(i) Borrower, DeVry or any Subsidiary establishes adequate
reserves in accordance with GAAP to cover such contested taxes,
assessments or charges, and (ii) such contest does not have a
material adverse effect on the financial condition, results of
operations, business or prospects of Borrower, DeVry or any
Subsidiary or the ability of Borrower or DeVry to pay any of the
Obligations.
(E) ERISA. Each of Borrower and DeVry shall deliver, and
cause each Subsidiary to deliver, to Agent promptly upon becoming
aware of any "prohibited transaction," as such term is defined in
section 4975 of the Internal Revenue Code, in connection with any
Plan or any trust created thereunder, which has given rise to, or
which would in the future give rise to, any material obligation
of Borrower, DeVry any Subsidiary or any ERISA Affiliates to pay
money, a written notice specifying the nature thereof, what
action Borrower, DeVry, such Subsidiary or such ERISA Affiliate,
as applicable, has taken, and, when known, any action taken or
threatened by the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect thereto.
(F) Environmental and Safety Laws. Each of Borrower and
DeVry will conduct, and cause each Subsidiary to conduct, its
business so as to comply in all material respects with all
environmental, health and safety laws and regulations in all
jurisdictions in which it is or may at any time be doing
business, including the federal Resource Conservation and
Recovery Act, the federal Comprehensive Environmental Response,
Compensation and Liability Act, the federal Clean Water Act, the
federal Clean Air Act and the federal Occupational Safety and
Health Act; provided that nothing contained in this Paragraph
13(F) shall prevent Borrower, DeVry or any Subsidiary from
contesting, in good faith by appropriate legal proceedings, any
such law, regulation, interpretation thereof or application
thereof, provided, further, that each of Borrower and DeVry shall
<PAGE>121
comply, and cause any Subsidiary to comply, with the order of any
court or other governmental body of applicable jurisdiction
relating to such laws unless Borrower, DeVry or any Subsidiary
shall currently be prosecuting an appeal or proceedings for
review and shall have secured a stay of enforcement or execution
or other arrangement postponing enforcement or execution pending
such appeal or proceedings for review. If Borrower, DeVry or any
Subsidiary shall (a) receive notice that any violation of any
federal, state or local environmental, health or safety law or
regulation may have been committed or is about to be committed by
Borrower, DeVry or any Subsidiary, (b) receive notice that any
administrative or judicial complaint or order has been filed or
is about to be filed against Borrower, DeVry or any Subsidiary
alleging violations of any federal, state or local environmental
law or regulation or requiring Borrower to take any action in
connection with the release of any hazardous or toxic waste,
substance or constituent, or any other substance into the
environment, (c) receive any notice from a federal, state, or
local governmental agency or private party alleging that
Borrower, DeVry or any Subsidiary may be liable or responsible
for costs associated with a response to or cleanup of a release
of toxic waste, substance or constituent, or any other substance
into the environment or any damages caused thereby, (d) receive
any notice that Borrower, DeVry or any Subsidiary is subject to
federal, state or local investigation evaluating whether any
remedial action is needed to respond to the release of any
hazardous or toxic waste, substance or constituent, or any other
substance into the environment, or (e) receive any notice that
any properties or assets of Borrower, DeVry, or any Subsidiary
are subject to a lien in favor of any governmental entity for any
liability under federal, state or local environmental laws or
regulations or damages arising from or costs incurred by such
governmental entity in response to a release of a hazardous or
toxic waste, substance or constituent, or any other substance
into the environment, then each of Borrower and DeVry shall, and
shall cause such Subsidiary to, promptly provide Agent with a
copy of such notice, and in no event later than within fifteen
(15) days from receipt thereof by Borrower, DeVry or such
Subsidiary. Within fifteen (15) days of Borrower's, DeVry's or
any Subsidiary's having learned of the enactment or promulgation
of any federal, state or local environmental law/or regulation
pertaining specifically to Borrower, DeVry or any Subsidiary or
to Borrower's, DeVry's or such Subsidiary's industry which may
result in any material adverse change in the condition, financial
or otherwise, of Borrower, DeVry or such Subsidiary, each of
Borrower and DeVry shall, and shall cause such Subsidiary to,
provide Agent with notice thereof.
(G) Books, Records and Inspections. (a) Borrower and DeVry
will maintain, and cause each Subsidiary to maintain, complete
<PAGE>122
and accurate books and records; (b) permit, and cause each
Subsidiary to permit, access at reasonable times by the Agent,
and each Lender to its books and records; (c) permit, and cause
each Subsidiary to permit, the Agent, and each Lender to inspect
at reasonable times its properties and operations; and (d)
permit, and cause each Subsidiary to permit, the Agent, and each
Lender to discuss its business, operations and financial
condition with its officers.
14. GENERAL NEGATIVE COVENANTS.
Each of Borrower and DeVry covenants that, at all times on
or before the Termination Date and at all times thereafter until
such time as there shall exist no Obligations outstanding:
(A) Consolidations, Mergers and Asset Acquisitions.
Borrower and DeVry shall not, and shall not permit any Subsidiary
to, (i) liquidate or dissolve, consolidate with, or merge into or
with, any other Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division
thereof) or (ii) make any other material change in business
objectives, purposes, operations or prospects of the Borrower,
DeVry or any Subsidiary which adversely affects the repayment of
the Obligations; provided, that (a) DeVry and the Becker
Subsidiaries may undertake the Becker Transaction, (b) following
consummation of the Becker Transaction, The Becker CPA Review,
Inc. and Becker CPA Review Course Ltd., a California limited
partnership, may be liquidated and dissolved, (c) so long as both
immediately before and after giving effect thereto, no Default or
Event of Default shall exist, DeVry or any Subsidiary may make
additional acquisitions of all or substantially all of the assets
of any Person; provided, further, that the aggregate
consideration paid for the acquisitions permitted by the
foregoing clause (c) when added to the aggregate consideration
paid for Investments made pursuant to Paragraph 14(B)(vi) shall
not exceed $5,000,000 in total fair market value during the term
of this Agreement, and (d) Special Purpose Subsidiaries may
acquire assets of Borrower, DeVry and the Subsidiaries. For
purposes of determining whether a Default or Event of Default
exists with respect to the financial covenants set forth in
Paragraph 16 (both immediately before and after giving effect to
the foregoing actions) compliance with such covenants shall be
calculated as of the end of the most recently ended Fiscal
Quarter as if, without double-counting, all actions permitted by
the foregoing clause (c) and all other actions undertaken in
conformity with the provisos set forth in Paragraph 14(B)(vi),
14(C), 14(H) and 14(I) occurring since the end of most recently
ended Fiscal Quarter had occurred as of the last day of such
Fiscal Quarter.
<PAGE>123
(B) Investments. Borrower and DeVry shall not, and shall
not permit any Subsidiary to, make or permit to exist any
Investment in any Person; provided, however, that Borrower may
make any of the following Investments at such times when no
Default or Event of Default has occurred and to the extent such
would not otherwise result in the occurrence of an Event of
Default or Default and may permit to exist: (i) Investments in
short-term obligations issued by, or guaranteed by, the United
States Government and Investments in any tax-free municipal
bonds, (ii) Investments in negotiable certificates of deposit,
bankers' acceptances, eurodollar time deposits or money market
securities issued, or money market funds offered, by any Lender,
any Affiliate of any Lender, or by any bank or branch of a bank
having an office in New York City or Chicago and having capital
and surplus of at least $250,000,000 in the aggregate at all
times, (iii) Investments in commercial paper issued by any Lender
or in commercial paper rated Pl or Al by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively,
(iv) Investments existing as of the Restatement Date in amounts
and in such entities which are described on Exhibit J,
(v) additional Investments by Borrower in DeVry Canada or any
Special Purpose Subsidiary and additional Investments by DeVry in
Subsidiaries which are Subsidiaries on the Restatement Date,
(vi) so long as both immediately before and after giving effect
thereto, no Default or Event of Default shall exist, Investments
by DeVry in Subsidiaries which become Subsidiaries after the
Restatement Date, provided, that the aggregate consideration paid
for such Investments when added to the aggregate consideration
paid for any acquisitions made pursuant to Paragraph 14(A)(c)
shall not exceed $5,000,000 in total fair market value during the
term of this Agreement, (vii) additional Investments by DeVry in
an aggregate amount not to exceed $2,000,000 at any one time
outstanding, (viii) loans and advances permitted by Paragraph
14(C) below; and (ix) Investments in the Exempt Entities in an
aggregate amount at any one time outstanding of not greater than
$1,000,000; it being understood that any Investment made pursuant
to any of clauses (i) through (iii) of this Paragraph 14(B) shall
continue to be permitted pursuant to such clause throughout the
term of such Investment irrespective of whether such Investment
continues to meet the requirements of such clause throughout its
term, but only if the term of such Investment expires within one
(1) year from the date such Investment fails to meet such
requirements. For purposes of determining whether a Default or
Event of Default exists with respect to the financial covenants
set forth in Paragraph 16 (both immediately before and after
giving effect to the foregoing actions) compliance with such
covenants shall be calculated as of the end of the most recently
ended Fiscal Quarter as if, without double-counting, all such
actions and all other actions undertaken in conformity with the
provisos set forth in Paragraphs 14(A)(c), 14(C), 14(H) and 14(I)
<PAGE>124
occurring since the end of most recently ended Fiscal Quarter had
occurred as of the last day of such Fiscal Quarter.
(C) Distributions and Loans. Except for loans set forth on
Exhibit J hereto, Borrower and DeVry shall not, and shall not
permit any Subsidiary to, directly or indirectly, declare, pay or
make any dividend or distribution (in cash, property or
obligations) on any shares of any class of capital stock (now or
hereafter outstanding) of Borrower, DeVry or any Subsidiary or on
any warrants, options or other rights with respect to any shares
of any class of capital stock (now or hereafter outstanding) of
Borrower, DeVry or any Subsidiary (other than dividends or
distributions payable in its common stock or warrants to purchase
its common stock or splitups or reclassifications of its stock
into additional or other shares of its common stock) or apply, or
permit any Subsidiary to apply directly or indirectly, any funds,
property or assets to the redemption, retirement purchase or
other acquisition of any shares of any class of capital stock
(now or hereafter outstanding) of Borrower, any Subsidiary or any
option, warrant or other right to acquire shares of capital stock
of Borrower, any Subsidiary, or make, or permit any Subsidiary to
make, any loans, advances or other extensions of credit to any
Person; provided, that so long as both immediately before and
after giving effect thereto no Default or Event of Default shall
exist, (i) Borrower and DeVry may, and may permit any Subsidiary
to, directly or indirectly declare or pay cash dividends upon any
of Borrower's, DeVry's or any Subsidiary's stock, (ii) Borrower
may make loans to DeVry and any Special Purpose Subsidiary, and
DeVry may make loans to the Subsidiaries, (iii) Borrower, DeVry
or the Subsidiaries (other than Special Purpose Subsidiaries) may
make loans to their respective officers or employees, or pay any
management or similar fees, and (iv) Borrower, DeVry or the
Subsidiaries may redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of Borrower's, DeVry's or any
Subsidiary's capital stock or any warrants therefor; provided,
further, that (i) Borrower and DeVry shall not and shall not
permit DeVry or any Subsidiary to make cash payments of
director's fees in excess of $500,000, in the aggregate, during
any fiscal year and (ii) Borrower shall not make cash dividends
or make loans in an aggregate amount (for all such loans and
dividends, collectively) in excess of $1,000,000 during the term
of this Agreement to DeVry to fund, directly or indirectly, the
costs, expenses and indemnities in connection with any secondary
offerings of DeVry's capital stock. For purposes of determining
whether a Default or Event of Default exists with respect to the
financial covenants set forth in Paragraph 16 (both immediately
prior and after giving effect to the foregoing actions)
compliance with such covenants shall be calculated as of the end
of the most recently ended Fiscal Quarter as if, without double-
counting, all such actions and all other actions undertaken in
<PAGE>125
conformity with the provisos set forth in Paragraphs 14(A)(c),
14(B)(vi), 14(H) and 14(I) occurring since the end of most
recently ended Fiscal Quarter had occurred as of the last day of
such Fiscal Quarter.
(D) Transactions With Affiliates. Borrower and DeVry shall
not enter into, or be a party to any transaction with any of
their respective Affiliates or stockholders, except in the
ordinary course of business and pursuant to the reasonable
requirements of their respective businesses and upon fair and
reasonable terms no less favorable to Borrower or DeVry, as the
case may be, than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate or
stockholder. Without limiting the provisions of the immediately
preceding sentence, Borrower and DeVry shall not, and not permit
any Subsidiary, to make any loans or advances or other transfers
to its Affiliates. Nothing contained in this Paragraph 14(D)
shall be deemed to prohibit: (i) transactions expressly
permitted by Paragraph 14(B) or 14(C); (ii) transactions
consummated prior to the Restatement Date or pursuant to
agreements in existence at the Restatement Date; (iii) payments
to officers and directors pursuant to indemnities contained in
Borrower's, DeVry's or any Subsidiary's certificate of
incorporation, by-laws or other organizational documents or any
indemnity agreement to which Borrower, Devry or any Subsidiary is
a party.
(E) Asset Disposition, etc. Borrower and DeVry shall not,
and not permit any Subsidiary to, sell, assign, lease, transfer,
contribute, convey or otherwise dispose of, or grant options,
warrants or other rights with respect to, any of its assets to
any Person, except for:
(i) any sale, assignment, transfer, lease, contribution,
conveyance or other disposition made in the ordinary course of
its business; or
(ii) in the case of Borrower, any sale, assignment,
transfer, lease, contribution, conveyance or other disposition
made to a Special Purpose Subsidiary; or
(iii) in the case of DeVry or any Subsidiary (other than
Borrower), any sale assignment, transfer, lease, contribution,
conveyance or other disposition made to a Subsidiary which, if
not Borrower, shall have duly executed and delivered to the Agent
for the benefit of the Lenders a Guaranty; or
(iv) any licensing of intellectual property of DeVry or any
Subsidiary made pursuant to a licensing or royalty agreement;
<PAGE>126
provided, that: (a) if such licensing is to any Person other than
DeVry or its Subsidiaries it shall be made for fair
consideration; and (b) after giving effect to such licensing the
Borrower, DeVry and each Subsidiary shall be in compliance with
the provisions of Paragraph 13(c) above.
(F) Conditional Sales. Borrower shall not make a sale of
any of its assets to any customer on a bill-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or any
other repurchase or return basis nor shall Borrower provide any
services subject to rebate or return of any consideration
received by Borrower, except as otherwise required by law or as
is otherwise customarily provided by Borrower.
(G) Encumbrances. Except as set forth on Exhibit K,
Borrower and DeVry will not, and shall not permit any Subsidiary
to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien or other encumbrance of any
nature whatsoever on any of its assets, other than: (i) liens
securing the payment of taxes, either not yet delinquent or the
validity of which is being contested in good faith in accordance
with the provisions of Paragraph 13(D); (ii) deposits under
workmen's compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed
money) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of
business; (iii) liens which arise by operation of law; (iv)
zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of the real estate or interests
therein of Borrower or its Subsidiaries which do not have a
materially adverse effect on Borrower's or its Subsidiaries'
business operations, prospects or financial condition or the
value of the real estate or interests therein of Borrower or its
Subsidiaries; and (v) purchase money liens and security interests
granted in connection with the purchase of equipment or real
estate to secure purchase money Indebtedness permitted under
Paragraph 14(H).
(H) Indebtedness. Borrower and DeVry shall not, and shall
not permit any Subsidiary to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any
indebtedness for borrowed money or for the deferred purchase
price for the acquisition of property; provided, that so long as
both immediately prior and after giving effect thereto no Default
or Event of Default shall exist, Borrower may, and may permit
DeVry or any Subsidiary (other than a Special Purpose Subsidiary)
<PAGE>127
to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any indebtedness for borrowed
money or for the deferred purchase price for the acquisition of
property, except Indebtedness which by its terms is structurally
or contractually senior in right of payment, remedial rights or
otherwise to the Obligations; provided, further, that for
purposes of determining whether a Default or Event of Default
exists with respect to the financial covenants set forth in
Paragraph 16 (both immediately prior and after giving effect to
the foregoing actions) compliance with such covenants shall be
calculated as of the end of the most recently ended Fiscal
Quarter as if, without double-counting, all such actions and all
other actions undertaken in conformity with the provisos set
forth in Paragraphs 14(A)(c), 14(B)(vi), 14(C) and 14(I)
occurring since the end of most recently ended Fiscal Quarter had
occurred as of the last day of such Fiscal Quarter.
(I) Guarantees. Borrower and DeVry shall not, and shall
not permit any Subsidiary to, guaranty, endorse or otherwise in
any way become or be responsible for obligations of any other
Person; provided, that so long as both immediately prior and
after giving effect thereto no Default or Event of Default shall
exist, Borrower and DeVry may and may permit any Subsidiary
(other than a Special Purpose Subsidiary) to, guarantee, endorse
or otherwise in any way become or be responsible for obligations
of any other Person; provided, that for purposes of determining
whether a Default or Event of Default exists with respect to the
financial covenants set forth in Paragraph 16 (both immediately
prior and after giving effect to the foregoing actions)
compliance with such covenants shall be calculated as of the end
of the most recently ended Fiscal Quarter as if, without double-
counting, all such actions and all other actions undertaken in
conformity with the provisos set forth in Paragraphs 14(A)(c),
14(B)(vi), 14(C) and 14(H) occurring since the end of most
recently ended Fiscal Quarter had occurred as of the last day of
such Fiscal Quarter.
(J) Amendment of Certificate of Incorporation or By-Laws.
Provided that Borrower furnishes to Agent a copy of such
amendment, certified by the Secretary of State of Delaware,
within ten (10) days after the date such amendment is filed with
such Secretary of State, Borrower may amend its Certificate of
Incorporation so long as such amendment does not have a
materially adverse effect on Borrower's, DeVry's or any
Subsidiary's operations, prospects or financial condition.
(K) ERISA. Borrower shall not, and shall not permit DeVry
nor any of the Subsidiaries nor any of their respective ERISA
Affiliates to engage in any transaction in connection with which
Borrower or any Subsidiary or any of their respective ERISA
<PAGE>128
Affiliates could be subject to either a material civil penalty
assessed pursuant to section 502(i) of ERISA or material tax
imposed by section 4975 of the Internal Revenue Code.
(L) Transfer of DeVry Canada Stock. Borrower shall not
sell, transfer or otherwise dispose of the outstanding capital
stock of DeVry Canada. DeVry shall not sell, transfer or
otherwise dispose of the outstanding capital stock of the Becker
Subsidiaries.
15. RESERVED.
16. FINANCIAL COVENANTS.
(A) DeVry covenants that it shall, at all times after
the Restatement Date and so long as any of the Obligations are
outstanding:
(i) Maintain a Consolidated Tangible Net Worth for each
Fiscal Quarter commencing with the Fiscal Quarter ending June 30,
1996 equal to (a) $5,000,000 plus (b) an amount equal to the sum
of seventy-five percent (75%) of DeVry's Consolidated Net Income
(without reduction for any Fiscal Quarter where the Consolidated
Net Income is negative) for each of the Fiscal Quarters
subsequent to June 30, 1996;
(ii) Maintain a Fixed Charge Coverage Ratio for the four
consecutive Fiscal Quarter period ending June 30, 1996 and for
each succeeding four consecutive Fiscal Quarter period ending
thereafter which equals or exceeds 1.8:1; provided, that each
component of the definition of Fixed Charge Coverage Ratio shall
be calculated over the then applicable four consecutive Fiscal
Quarter period; and
(iii) Maintain a Debt Coverage Ratio for each Fiscal Quarter
ending during the period set forth below of not greater than the
ratio set forth below opposite such Fiscal Quarter:
Fiscal Quarters
ending between Ratio
June 30, 1996 and
June 29, 1997 3.50:1
June 30, 1997 and
June 29, 1998 3.25:1
June 30, 1998 and
the Termination Date 3.00:1
<PAGE>129
(B) DeVry covenants that, at all times after the
Restatement Date and for so long as any of the Obligations are
outstanding, DeVry shall not, and shall not permit its
Subsidiaries to, make Capital Expenditures in an aggregate
amount, on a consolidated basis, in excess of $25,000,000 in any
fiscal year of DeVry.
17. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT
(A) The effectiveness of this Agreement is expressly
conditioned upon the fulfillment of each of the following
conditions precedent ("Conditions Precedent") in a manner
reasonably satisfactory to Agent:
(i) No Default or Event of Default shall exist as of the
Restatement Date;
(ii) Borrower shall have delivered or Agent shall have otherwise
obtained:
(a) a Revolving Note in the form attached hereto as Exhibit A;
(b) a Guaranty duly executed by DeVry and each Subsidiary
(other than DeVry Canada);
(c) a copy of the current Certificate of Incorporation of
Borrower, DeVry and of each Subsidiary (other than DeVry Canada),
certified by the Secretary of State of its jurisdiction of
organization;
(d) certificate of good standing for the Borrower, DeVry and
each Subsidiary (other than DeVry Canada) from the Secretary of
State of Delaware and from each other state where the nature and
extent of the business transacted by it or the ownership of its
assets makes such qualification necessary, except for those
jurisdictions in which the failure so to qualify would not have a
material adverse effect on the Borrower's, DeVry's or the
respective Subsidiary's financial condition, results of
operations, business or prospects;
(e) the opinions of Mayer, Brown & Platt, counsel to
Borrower, DeVry and each Subsidiary (other than DeVry Canada),
and of Borrower's, DeVry's and each Subsidiary's (other than
DeVry Canada) general counsel, dated the Restatement Date,
substantially in the form of Exhibit L;
<PAGE>130
(f) the certificate of the Chairman and Chief operating
officer of Borrower dated the date hereof, certifying to the best
of their knowledge after diligent inquiry (A) to the truth and
accuracy, as of the Restatement Date, of the representations and
warranties of Borrower contained in this Agreement and (B) that
no Default or Event of Default shall exist as of the Restatement
Date;
(g) the Certificates of each of the Secretaries of
Borrower, DeVry and each Subsidiary (other than DeVry Canada)
certifying as to (1) the accuracy and the due adoption of its
Board of Directors' resolutions authorizing the Loan Documents,
(2) the names, incumbency and signatures of its officers and (3)
the accuracy and currency of a copy of its By-Laws; and
(h) such other documents as may be
reasonably required by Agent.
(B) RESERVED.
(C) Each advance of the Revolving Loan and issuance of any
Letter of Credit after the Restatement Date is expressly
conditioned upon the fulfillment of the following conditions
precedent in a manner reasonably satisfactory to Agent:
(i) No Default or Event of Default shall exist as of the
date of such advance or issuance of such Letter of Credit, as the
case may be; and
(ii) Borrower shall have delivered to Agent a Notice of
Borrowing with respect to such advance or a written notice
pursuant to Paragraph 2(B) with respect to such Letter of Credit,
as the case may be.
18. TERMINATION, ACCELERATION AND DEMAND.
(A) Term. This Agreement shall terminate on August 1, 1999
("Termination Date"), subject to the terms and provisions of
Paragraph 22(E) and of any other provisions of this Agreement or
any other Loan Document which specifically provide for the
continuation of obligations, duties, representations and
warranties beyond such termination. Upon the Termination Date,
all of Borrower's Obligations to Agent and each Lender, whether
or not incurred under this Agreement, or any amendment or
supplement thereto, under any Revolving Note, any other Loan
Document or otherwise, shall become immediately due and payable
without notice or demand.
<PAGE>131
(B) Repayment and Acceleration of Loans. That portion of
the Obligations evidenced by the Revolving Note shall be payable
in accordance with the terms set forth in such note,
respectively, unless and until there shall exist an Event of
Default under this Agreement or this Agreement shall be
terminated, in which case, such Obligations shall become
immediately due and payable pursuant to Paragraphs 18(A) or 19,
respectively.
(C) Repayment and Acceleration of Interest and Fees. That
portion of the Obligations constituting interest and fees shall
be payable in accordance with the terms set forth in Paragraphs 3
and 4, respectively, unless and until there shall exist an Event
of Default under this Agreement or this Agreement shall be
terminated, in which case such obligations shall become
immediately due and payable pursuant to Paragraph 18(A) or 19,
respectively.
(D) Certain Obligations Payable on Demand; Waivers. All
obligations, other than those referred to in Paragraphs 18(B) and
(C) above, and each portion thereof, shall be payable by Borrower
on demand at Agent's address set forth in Paragraph 22(B), unless
and until there shall exist an Event of Default or this Agreement
shall be terminated, in which case such obligations shall become
immediately due and payable pursuant to Paragraph 18(A) or 19,
respectively. With respect to all Obligations, Borrower waives
to the fullest extent permitted by law presentment and protest of
any instrument and notice thereof, notice of default and all
other notices to which Borrower might otherwise be entitled by
operation of law and recourse to security will not be required at
any time.
19. EVENTS OF DEFAULT.
Each of the following occurrences shall constitute an "Event
of Default" under this Agreement:
(A) Borrower shall fail to pay, when due, any of the
principal portion of the Obligations or, within five (5) days of
becoming due, any of the interest portion fees or other charges
constituting part of the Obligations or, within ten (10) days of
becoming due, any other Obligations; or
(B) Borrower, DeVry or any Subsidiary shall commit, or
there shall arise or exist, any material breach of any covenant
of this Agreement or any of the other Loan Documents, which
breach (other than a breach of Paragraph 14(A) or 14(L) which
shall constitute an immediate Event of Default) continues uncured
for thirty (30) days after the earlier of (i) actual knowledge
thereof by Borrower, DeVry or any Subsidiary, as the case may be,
<PAGE>132
or (ii) written notice thereof has been given by Agent or any
Lender to Borrower; or
(C) Any representation or warranty made by Borrower, DeVry
or any Subsidiary in this Agreement or any of the other Loan
Documents or in any certificate, document or financial or other
statement furnished at any time by Borrower, DeVry or any
Subsidiary, as the case may be, in writing pursuant hereto or
thereto, shall prove to have been untrue or misleading in any
material respect as of the date when made; or
(D) Borrower, DeVry or any guarantor of the Obligations
shall (i) default in any payment of principal or interest on any
of its indebtedness (excluding the Obligations), or in the
payment of any written contingent obligation in respect of the
indebtedness or obligations of any other Person when due (after
giving effect to any applicable grace period), whether by
acceleration or otherwise, and the aggregate principal amount of
such indebtedness or contingent obligation exceeds $2,500,000,
the grace period, if any, provided in the instrument or agreement
under which such indebtedness or contingent obligation was
created has expired and such default entitles the holder of such
indebtedness or contingent obligation to accelerate payment of
such indebtedness or contingent obligation, or (ii) default in
the observance or performance of any other agreement or condition
relating to any such indebtedness or contingent obligation or
contained in any instrument or agreement evidencing, securing or
relating to such indebtedness or contingent obligation, and the
grace period, if any, provided in such agreement, or instrument
has expired and such default entitles the holder of such
indebtedness or contingent obligation to accelerate payment of
such indebtedness or contingent obligation; or
(E) Borrower, DeVry or any Subsidiary shall make an
assignment for the benefit of creditors, call a meeting of its
creditors for the recomposition or readjustment of debts, or
commence any case, proceeding or other action (i) under any
existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or
its debts; or (ii) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets; or (iii) there shall be commenced
involuntarily against Borrower, DeVry or any Subsidiary any such
case, proceeding or other action and such case, proceeding or
other action is not dismissed before the earlier of thirty (30)
days from the commencement of such action or the entering of an
<PAGE>133
order of relief for such action; or (iv) there shall be commenced
against Borrower, DeVry or any Subsidiary any case, proceeding or
other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any
substantial part of its assets and such case, proceeding or other
action is not dismissed before the earlier of thirty (30) days
from the commencement thereof or the entry of an order of relief
for such action; or (v) Borrower, DeVry or any Subsidiary shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth above
in this Paragraph 19(E); or (vi) Borrower, DeVry or any
Subsidiary shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become
due; or
(F) Any of the acts or events described in Paragraph 19(G)
shall be commenced by or against, or occur with respect to, DeVry
Canada or any guarantor of the Obligations which has generated
annual revenues in excess of $4,000,000 in its most recently
ended fiscal year; or
(G) One or more judgments or decrees shall be entered
against Borrower, DeVry on any of their respective property or
assets, the portion of liability for which is not covered by
insurance and in the aggregate exceeds $2,500,000, and all such
judgments or decrees shall not have been vacated, satisfied,
discharged or stayed or bonded pending appeal within sixty (60)
days from the entry thereof; or
(H) DeVry or any other guarantor of the Obligations shall
fail in any material respect to perform or observe any term,
covenant or agreement in any Guaranty; or any Guaranty is for any
reason partially (including with respect to future advances) or
wholly revoked or invalidated or otherwise ceases to be in full
force and effect, or DeVry or any other such guarantor or any
other Person contests in any manner the validity or
enforceability thereof or denies that it has any further
liability or obligation thereunder; or
(I) (i) Dennis J. Keller and Ronald L. Taylor (either
individually or, upon death or disability, by their respective
estates, personal representatives or heirs) shall cease to
collectively own and control (on a fully-diluted basis and free
from any voting trusts or similar arrangements which restrict
their ability to vote) more than ten percent (10%) of the issued
and outstanding capital voting stock of DeVry, or (ii) DeVry
shall cease to own directly or indirectly all of the issued and
outstanding capital stock of Borrower and of the Becker
Subsidiaries; or
<PAGE>134
(J) Dennis J. Keller or Ronald L. Taylor shall at any time
for any reason other than death or disability, cease to serve as
senior officers of Borrower or shall cease to perform the duties
presently performed by them; or
(K) The U.S. Department of Education shall have, pursuant
to Subpart G of 34 C.F.R., Part 668, regarding Borrower's
eligibility to participate in federal student financial
assistance programs, notified Borrower of any suspension or
termination affecting such eligibility, the ineligibility to
participate in which would have a material adverse effect on
Borrower's financial condition, results of operations or
business, and such notification shall not have been withdrawn,
suspended or otherwise terminated within thirty (30) days from
such notification; or
(L) The default rate on Stafford loans, Perkins loans, or
the aggregate of all student loans made by Borrower to students
at Borrower's educational facilities in the aggregate shall
exceed twenty-five percent (25%) of the principal of all such
loans which have reached their repayment period.
Upon the occurrence of any Event of Default described above,
Agent may, and at the direction of the Required Lenders shall,
(i) by notice to Borrower, declare the obligations to be due and
payable forthwith, whereupon the same immediately become due and
payable; provided, however, that, upon the occurrence of an Event
of Default described in Paragraph 19(E), all obligations shall
automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived by Borrower to the fullest extent
permitted by law, (ii) terminate the Revolving Loan Maximum
Commitment or (iii) all Letters of Credit shall be deemed drawn
and shall be cash collateralized in accordance with Paragraphs
2(F) and 20(B).
20. LENDER'S RIGHTS AND REMEDIES.
(A) Equitable Relief. Borrower recognizes that in the
event Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy of
law may prove to be inadequate relief to Agent; therefore,
Borrower agrees that Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
(B) Cash Collateral for Letters of Credit. Upon the
occurrence of an Event of Default under Paragraph 19(E), upon the
request of Agent at any time after the occurrence of any other
Event of Default or upon termination of the Revolving Maximum
<PAGE>135
Loan Commitment, Borrower shall immediately deliver to Agent, for
the benefit of each issuer of a Letter of Credit then
outstanding, as cash collateral for Borrower's reimbursement
obligations to such issuers, cash in an amount equal to the then
undrawn face amount of such Letters of Credit plus the then
projected amount of all fees associated therewith for the
respective effective periods of such Letters of Credit calculated
on such undrawn face amount. Such cash collateral shall be
granted to Agent subject to agreements and instruments executed
by Borrower and in form and substance acceptable to Agent and
such issuers.
21. AGENT
(A) Actions; Indemnification. Each Lender authorizes Agent
to act on behalf of such Lender under this Agreement and any
other Loan Document and, in the absence of other written
instructions from Required Lenders received from time to time by
Agent, to exercise such powers hereunder and thereunder as are
specifically delegated to or required of Agent by the terms
hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender agrees (which
agreement shall survive any termination of this Agreement) to
indemnify Agent, pro rata according to such Lender's respective
Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or
asserted against Agent in any way relating to or arising out of
this Agreement and any other Loan Document, including the
reimbursement of Agent for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees) incurred by Agent
hereunder or in connection herewith or in enforcing the
Obligations of Borrower or any Person under this Agreement or any
other Loan Document, in all cases as to which Agent is not
reimbursed by Borrower, including the failure of Borrower to
reimburse Agent for any Letter of Credit; provided that no Lender
shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting
solely from Agent's gross negligence or wilful misconduct. Agent
shall not be required to take any action hereunder or under any
other Loan Document, or to prosecute or defend any suit in
respect of this Agreement or any other Loan Document, unless it
is indemnified to its satisfaction by Lenders against loss,
costs, liability and expense. If any indemnity in favor of Agent
shall become impaired, Agent may call for additional indemnity
and cease to do the acts indemnified against until such
additional indemnity is given.
<PAGE>136
(B) Funding Reliance, etc. Unless Agent shall have been
notified by telephone, confirmed in writing, by any Lender by
12:00 noon (Chicago time) on the day prior to a proposed date of
disbursement of a proposed borrowing that such Lender will not
make available the amount which would constitute its Percentage
of such borrowing on the date specified therefor, Agent may
assume that such Lender has made such amount available to Agent
and, in reliance upon such assumption, make available to Borrower
a corresponding amount. If such amount is made available by such
Lender to Agent on a date after the date of such borrowing, such
Lender shall pay to Agent on demand interest on such amount at
the Federal Funds Effective Rate for the number of days from the
date of such borrowing to the date on which such amount becomes
immediately available to Agent, together with such other
compensatory amounts as may be required to be paid by such Lender
to Agent pursuant to the Rules for Interbank Compensation of the
Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from
time to time. A statement of Agent submitted to any Lender with
respect to any amounts owing under this Paragraph 21(B) shall be
conclusive, in the absence of manifest error. If such amount is
not in fact made available to Agent by such Lender within three
(3) Business Days after the date of such borrowing, Agent shall
be entitled to recover such amount, with interest thereon at the
rate per annum then applicable to the Loans comprising such
borrowing, within three (3) Business Days after demand, from
Borrower.
(C) Exculpation. Neither Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for
any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith
or therewith, except for its own wilful misconduct or gross
negligence, nor shall they be responsible for any recitals or
warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or
any other Loan Document, nor for any inquiry regarding the
performance by Borrower of its Obligations hereunder or
thereunder. Agent shall be entitled to rely upon advice of
counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which it believes to be genuine
and to have been presented by a proper Person.
(D) Successor. Agent may resign as such at any time upon
at least ten (10) days' prior notice to Borrower and all Lenders,
such resignation not to be effective until a successor Agent is
in place. If Agent at any time shall resign, the Required
Lenders may appoint another Lender as a successor Agent which
shall thereupon become Agent hereunder. If no successor Agent
shall have been so appointed by the Required Lenders, and shall
<PAGE>137
have accepted such appointment, within thirty (30) days after the
retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be one of Lenders or a financial institution reasonably
acceptable to Borrower organized under the laws of the United
States and having a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall be
entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations under this Agreement.
(E) Loans by Agent. Agent shall have the same rights and
powers with respect to the Loans made by it or any of its
Affiliates as any Lender and may exercise the same as if it were
not Agent.
(F) Credit Decisions. Each Lender acknowledges that it
has, independently of Agent and each other Lender, and based on
the financial information of Borrower and such other documents,
information and investigations as it has deemed appropriate, made
its own credit decision to enter this Agreement and make Loans
hereunder. Each Lender also acknowledges that it will,
independently of Agent and each other Lender, and based on such
other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or
any other Loan Document.
(G) Copies, etc. Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be
given to Agent by Borrower pursuant to the terms of this
Agreement. Notwithstanding anything herein contained to the
contrary, all notices to and communications with Borrower under
this Agreement and the other Loan Documents shall be effected by
Lenders through Agent. Neither Agent nor any Lender will have
any obligation to distribute any information to other Lenders
except for information which was given to Agent or such Lender in
its capacity as Agent or Lender, as the case may be.
<PAGE>138
22. MISCELLANEOUS.
(A) Waivers, Amendments, etc. The provisions of this
Agreement and of each Loan Document may from time to time be
amended, modified or waived, if such amendment, modification or
waiver is in writing and consented to by Borrower and Required
Lenders; provided that no such amendment, modification or waiver:
(a) which would modify any requirement hereunder that any
particular action be taken by all Lenders or by the Required
Lenders shall be effective unless consented to by each Lender;
(b) which would modify this Paragraph 22(A), change the
definition of "Required Lenders", change any Percentage for any
Lender, reduce any fees (other than fees pursuant to Paragraph
4(B)), extend the Termination Date or subject any Lender to any
additional obligations shall be made without the consent of each
Lender;
(c) which would extend the due date for, or reduce the
amount of, any payment or prepayment of principal of or interest
on any Loan (or reduce the principal amount of or rate of
interest on any Loan) shall be made without the consent of the
holder of such Loan; or
(d) which would affect adversely the interests, rights or
obligations of Agent in its capacity as Agent hereunder shall be
made without consent of Agent.
No failure or delay on the part of Agent or any Lender in
exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude
any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on Borrower in any
case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by Agent or any Lender
under this Agreement or any other Loan Document shall, except as
may be otherwise stated in such waiver or approval, be applicable
to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
(B) Notices. All notices and other communications provided
to any party hereto under this Agreement or any other Loan
Document shall be in writing or by telex or by facsimile and
addressed or delivered to it at its address set forth on the
signature pages hereof or at such other address as may be
designated by such party from time to time in a notice complying
<PAGE>139
as to delivery with the terms of this Section to the other
parties. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received; any notice,
if transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes and
receipt confirmed in the case of facsimiles).
(C) Costs and Expenses. Borrower agrees to pay on demand
all expenses of Agent (including the reasonable fees and out-of
pocket expenses of counsel to Agent and of local counsel, if any,
who may be retained by counsel to Agent (in consultation with
Borrower)) in connection with
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other
Loan Document as may from time to time hereafter be required,
whether or not the transactions contemplated hereby are
consummated; and
(b) the consideration of legal questions relevant hereto
and thereto and the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations.
Borrower also agrees to reimburse Agent and each Lender upon
demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by Agent or such
Lender in enforcing the obligations of Borrower under this
Agreement or any other Loan Document. Such expenses of Agent,
each Lender (including the reasonable fees and expenses of
counsel) will be reflected in documentation in reasonable detail
furnished to Borrower.
(D) Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of
the Loans and other financial accommodations contemplated hereby,
Borrower hereby indemnifies, exonerates and holds Agent and each
Lender and each of its officers, directors, employees and agents
(the "Indemnified Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses actually incurred in
connection therewith (irrespective of whether such Indemnified
Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out
of, or relating to:
<PAGE>140
(a) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation, or proceeding related to
any acquisition or proposed acquisition by Borrower or any
Subsidiary of all or any portion of the stock or all or
substantially all the assets of any Person, whether or not Agent
or such Lender is party thereto; or
(d) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases
from, any real property owned or operated by the Borrower or any
of its Subsidiaries of any Hazardous Material (including any
losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under CERCLA, any so-called "Superfund" or
"Superlien" law, or any other federal, state, local or other
statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of
conduct concerning, any Hazardous Material), regardless of
whether caused by, or within the control of, Borrower or any of
its Subsidiaries, except for (i) any such Indemnified Liabilities
arising for the account of a particular Indemnified Party
(individually and not as a co-conspirator with Borrower or any of
its Affiliates) by reason of the relevant Indemnified Party's
gross negligence, bad faith, misuse of confidential information
or wilful misconduct (as determined by a judgment of a court of
competent jurisdiction in a final, nonappealable order), and (ii)
any settlement of any claim or action effected without Borrower's
written consent (provided such consent was not unreasonably
delayed or withheld) and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, Borrower hereby
agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Subject to applicable laws and
ethical rules (as to the interpretation of which the Indemnified
Parties may rely upon the advice of their respective counsel)
with respect to civil litigation or civil proceedings relating to
any Indemnified Liability, the Indemnified Parties will agree to
be represented by one law firm for any one jurisdiction, which
counsel shall be subject to Borrower's approval (and which
approval shall not be unreasonably withheld or delayed).
<PAGE>141
Borrower may participate in any defense with its own counsel, but
may not direct or control the defense of any Indemnified Party.
(E) Survival. The obligations of Borrower under Paragraphs
3(L), 3(M) and 22(C), and the obligations of Lenders under
Paragraph 21(A) shall in each case survive any termination of
this Agreement. The representations and warranties made by
Borrower in this Agreement and in each other Loan Document shall
survive the execution and delivery of this Agreement and each
such other Loan Document.
(F) Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such
other Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
(G) Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement
or such other Loan Document or any provisions hereof or thereof.
(H) Counterparts, Effectiveness, etc. This Agreement may
be executed by the parties hereto in several counterparts, each
of which shall be executed by Borrower and Agent and be deemed to
be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of Borrower and each
Lender (or notice thereof satisfactory to Agent) shall have been
received by Agent and notice thereof shall have been given by
Agent to Borrower and each Lender.
(I) Governing Law; Entire Agreement. This Agreement and
each other Loan Document shall each be deemed to be a contract
made under and governed by the internal laws of the State of
Illinois. This Agreement and the other Loan Documents constitute
the entire understanding among the parties hereto with respect to
the subject matter hereof and supersede any prior agreements,
written or oral, with respect thereto.
(J) Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns; provided that:
(a) Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of all
Lenders; and
<PAGE>142
(b) the rights of sale, assignment and transfer of Lenders
are subject to Paragraph 22(K).
(K) Assignments and Participations. Assignments by any
Lender of, and the granting of participations in, all or a
portion of its rights and obligations under this Agreement
(including all or a portion of its agreements hereunder
("Assignable Commitments"), its Loans and Letters of Credit made
or issued with respect hereto and owing to it ("Assignable
Loans")) shall be subject to the following terms and conditions:
(a) Each Lender may, upon the giving in writing to Agent of
at least five (5) prior Business Days' notice, assign to one or
more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of
its Assignable Commitments and Assignable Loans) subject only to
the conditions set forth in clause (b) below. Each assignee
under this clause (a) shall be approved by Agent and Borrower,
such approval by Borrower not to be unreasonably withheld.
(b) Any assignments made pursuant to this Paragraph 22(K)
shall comply with the following conditions:
(ii) each such assignment shall identify each of the
facilities being assigned, and while the percentages assigned may
vary by facility, as to each such facility such assignment shall
be of a constant, and not a varying, percentage of the aggregate
rights and assignable obligations of Lenders under this Agreement
and shall cover the same aggregate percentage of such Lenders'
Assignable Loans and Assignable Commitments;
(iii) the amount of the Assignable Commitment of the
assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment (as defined below)
with respect to such assignment) shall (except in the case of
assignments to other Lenders) not be less than $5,000,000 (and an
integral multiple of $1,000,000) or constitute the whole
Assignable Commitment of such Lender and all of such Lender's
Assignable Loans;
(iv) each such assignment shall be to an Eligible Assignee;
(v) no such assignment shall require Borrower to file a
registration statement with the Securities and Exchange
Commission or apply to qualify any Assignable Commitment,
<PAGE>143
Assignable Loan or interest in any Note, or any interest in any
thereof, under the "blue sky" or other securities law of any
jurisdiction;
(vi) except in the case of assignments to any other Lenders,
in no event shall any assigning Lender making an assignment
pursuant to clause (b) of this Paragraph 22(K) make any
assignments if after taking such assignment into effect such
Lender's Assignable Commitments would be less than $10,000,000,
unless such assignment is of all of such Assignable Commitments;
provided that upon any prepayment permitted under this Agreement
such amounts shall be reduced by the same percentage as such
prepayment bears to the assigning Lender's initial Assignable
Commitments;
(vii) the parties to each such assignment shall:
(A) execute and deliver to Agent, for its acceptance
and recording in the Register, an Assignment and Assumption
Agreement substantially in the form of Exhibit M (an
"Assignment"),
(B) pay to the Agent in immediately available funds a
processing and recordation fee of $3,000, and
(C) in the case of the assignee, if it is a
Non-United States Person, execute and deliver to the Agent either
(i) five Internal Revenue Service Forms 1001 or (ii) five
Internal Revenue Service Forms 4224 together with five Internal
Revenue Service Forms W-9, or any successor forms, as
appropriate, properly completed and claiming complete exemption
from withholding and deduction of United States Federal Taxes as
of the date of such Assignment;
(viii) such assignment will not result in the payment
offset by Borrower with respect to any then outstanding Loan;
(ix) Borrower would, under Paragraph 3(E), 3(H), 3(K), 3(L),
3(M) or 3(P) of this Agreement, be obligated to make any payment
to or for the account of any Assignee, Borrower shall only be
obligated to make such payment to the extent that it would have
been obliged to make such payment to the assigning Lender.
<PAGE>144
(c) Agent shall maintain at its address set forth on
the signature page hereto a copy of each Assignment
delivered to and accepted by it and a register for the
recordation of the names and addresses of Lenders and the
agreements of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). Upon such
execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment,
(i) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such
Assignment, have the rights and obligations of a Lender
hereunder, and all references to any Lender hereunder
or in any of the other Loan Documents shall include
such assignee, and
(ii) the assigning Lender thereunder shall,
to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment,
relinquish its rights and be released from its
unmatured obligations under this Agreement (and, in the
case of an Assignment covering all or the remaining
portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease
to be a party hereto); provided that any assigning
Lender shall retain any rights to indemnification which
accrued to it hereunder with respect to events prior to
the date of its Assignment to the assignee.
The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and Borrower, the
Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available
for inspection by Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon Agent's receipt of an Assignment executed by
an assigning Lender and an assignee representing that it is
an Eligible Assignee, Agent shall, if such Assignment has
been completed and is in substantially the form of Exhibit M
(and is accompanied by any Internal Revenue Service forms
required by clause (c)(vi)(C) of this Paragraph 22(K)), (i)
accept such Assignment, (ii) record the information
contained therein in the Register, and (iii) give prompt
notice thereof to Borrower. Any Eligible Assignee in
respect of which an Assignment is so recorded is herein
called an "Assignee".
<PAGE>145
(e) Any Lender may sell participations to one or more
participants in or to all or a portion of its rights and
obligations under this Agreement (including all or a portion
of its agreements hereunder and its Loans); provided that
(i) such Lender's obligations under this
Agreement shall remain unchanged,
(ii) such Lender shall remain solely
responsible to the other parties hereto for the
performance of such obligations,
(iii) such Lender shall remain the owner of
any such Loans made by such Lender for all purposes of
this Agreement,
(iv) Borrower, Agent and other Lenders shall
continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations
under this Agreement,
(v) participants shall be entitled to the
cost and yield protection provisions contained in
Paragraphs 3(E), 3(L), 3(M) and 3(P) of this Agreement;
provided that Borrower shall not be under any
obligation to pay to or for the account of any such
participant any greater amount than it would have been
obliged to pay to or for the account of Lender from
which it acquired its participation,
(vi) no participant (other than an Affiliate
of such Lender) shall have any right to require such
Lender to take or omit to take any action under this
Agreement or any Loan Document, except actions
extending any scheduled maturity of any Loan or the
Termination Date of any Commitment in which the
participant has a participation, reducing the interest
rate, fees or commissions on, any such Loans in which
such participation was sold or forgiving any principal
of or interest, fees or commissions payable on such
Loans, and
(vii) no participant may exercise any such
right of setoff except with the consent of Required
Lenders.
Each Lender agrees to incorporate the requirements set forth
in clauses (vi) and (vii) above into each participation
agreement which such Lender enters into with any
participant. Borrower-agrees that if amounts outstanding
under this Agreement are due and unpaid, or shall have been
<PAGE>146
declared or shall have become due and payable, each
participant shall, to the extent permitted by applicable
law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this
Agreement or such Note; provided that any participant
exercising such right shall be obligated to share with
Lenders, as if such participant were a "Lender" hereunder,
the amount of any such setoff; and provided, further, that
if all or any portion of such excess payment or other
recovery is thereafter recovered from the participant by or
on behalf of Borrower, the participant's obligation to share
such excess payment shall be rescinded and such payment
shall be returned to participant to the extent of such
recovery.
(g) Any Lender may, in connection with any assignment
or participation or proposed assignment or participation
pursuant to this Paragraph 22(K), disclose to the Assignee
or participant or proposed assignee or participant any
information relating to Borrower furnished to such Lender by
or on behalf of Borrower; provided that, prior to any such
disclosure, the Assignee or participant or proposed assignee
or participant shall agree to preserve the confidentiality
of any confidential information relating to Borrower
received by it from such Lender to the same extent as
Lenders hereunder.
(L) Other Transactions. Nothing contained herein shall
preclude Agent or any other Lender from engaging in any debt,
equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with Borrower or any
of its Affiliates in which Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
(M) Waiver of Jury Trial. AGENT, LENDERS AND BORROWER
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF AGENT, SUCH LENDERS, OR BORROWER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR AGENT AND SUCH LENDERS TO
ENTER INTO THIS AGREEMENT.
(N) Submission to Jurisdiction. Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any
Illinois State or Federal court sitting in Chicago, Illinois over
any action or proceeding arising out of or relating to this
<PAGE>147
Agreement or the Loan Documents, and Borrower hereby irrevocably
agrees that all claims in respect of such action or proceeding
may be heard and determined in such Illinois State or Federal
court. Borrower, on behalf of itself and each Subsidiary, hereby
irrevocably waives, to the fullest extent permitted by law, any
objection it may now or hereafter have to the laying of venue in
any such action or proceeding in any such court as well as any
right it may now or hereafter have, to remove any such action or
proceeding, once commenced, to another court on the grounds of
forum non conveniens or otherwise. Borrower agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
Borrower agrees not to institute any legal action or
proceeding against Agent or any Lender or the directors,
officers, employees, agents or property of any thereof, arising
out of or relating to this Agreement, in any court other than the
one hereinabove specified in this Paragraph 22(N). Nothing in
this Paragraph 22(N) shall affect the right of Agent or any
Lender to serve legal process in any other manner permitted by
law or affect the right of Agent or any Lender to bring any
action or proceeding against Borrower or its properties in the
courts of any other jurisdictions.
(O) Restatement. Borrower acknowledges that this Agreement
amends and restates in its entirety the Existing Agreement.
Borrower further acknowledges that all Revolving Loans (as such
term is defined in the Existing Agreement) currently outstanding
and all Existing L/C's shall upon satisfaction in full of all
Conditions Precedent be deemed to be Revolving Loans and Letters
of Credit hereunder.
<PAGE>148
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
KELLER GRADUATE SCHOOL OF
MANAGEMENT, INC.
By: /s/Ronald L. Taylor
Title: President
Address: One Tower Lane
Suite 1000
Oakbrook Terrace
Illinois 60181
Telecopy No.:(630)571-7700
Attention: Norman M. Levine
BANK OF AMERICA ILLINOIS,
as Agent
By: /s/David L. Graham
Title: Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopy No.: (312) 828-1974
Attention: David Graham
<PAGE>149
Percentage
- ----------
56.0173731% BANK OF AMERICA ILLINOIS,
as Lender
By: /s/Christine M. Tierney
Title: Senior Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopy No.: (312) 828-5120
Attention: David Stang
Domestic Office:
231 South LaSalle Street
Chicago, Illinois 60697
Eurodollar Office:
231 South LaSalle Street
Chicago, Illinois 60697
<PAGE>150
27.489141% THE NORTHERN TRUST COMPANY
By: /s/J. Graham Leonard
Title: Vice President
Address: 50 South LaSalle Street
Chicago, IL 60675
Telecopy No.: (312) 444-7028
Attention: J. Graham Leonard, Division I
Domestic Office:
50 South LaSalle Street
Chicago, IL 60675
Eurodollar Office:
50 South LaSalle Street
Chicago, IL 60675
<PAGE>151
16.4934851% HARRIS TRUST AND SAVINGS BANK
By: /s/R.L. Dell 'Artino
Title: Vice President
Address: 111 West Monroe Street
Chicago, IL 60690
Telecopy No.: (312) 461-2591
Attention: EMI/II
Domestic Office:
111 West Monroe Street
Chicago, IL 60690
Eurodollar Office:
111 West Monroe Street
Chicago, IL 60690
- -------
100.00%
<PAGE>152
ACCEPTANCE AND ACKNOWLEDGEMENT
DeVry, Inc. hereby acknowledges and agrees to make such
deliveries as are required by it and comply with the covenants
and other provisions applicable to it contained in this
Agreement.
DeVry, Inc.
By: /s/Ronald L. Taylor
Name: Ronald L. Taylor
Title: President
Notice Address:
DeVry Inc.
One Tower Lane, Suite 1000
Oakbrook Terrace, IL 60181
Attention: Ronald L. Taylor
Telephone: (630) 574-1919
Facsimile: (630) 574-1903
Copies of all notices
shall also be sent to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Attention: James B. Carlson
Telephone: (212) 506-2515
Facsimile: (212) 262-1910
<PAGE>153
EXHIBIT A
FORM OF REPLACEMENT GLOBAL REVOLVING NOTE
$85,000,000 June 12, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, KELLER GRADUATE SCHOOL
OF MANAGEMENT, INC., a Delaware corporation with its chief
executive office located at One Tower Lane, Suite 1000, Oakbrook
Terrace, IL 60181 ("Borrower"), promises to pay to the order of
BANK OF AMERICA ILLINOIS, as agent (in such capacity, "Agent")
for itself and the other financial institutions (individually,
"Lender," and collectively, "Lenders") which are, or may become,
parties to that certain Amended and Restated Financing Agreement
dated as of June 12, 1996 (the "Financing Agreement"), EIGHTY-
FIVE MILLION AND NO/100THS DOLLARS ($85,000,000) or such lesser
amount as may be outstanding hereunder from time to time. The
Revolving Loan evidenced by this Replacement Global Revolving
Note ("Revolving Note") shall be repaid in accordance with the
terms and provisions of the Financing Agreement.
This Revolving Note is issued pursuant to, and entitled to
the benefits of, the Financing Agreement, to which reference is
hereby made for a more complete statement of the terms and
conditions under which the Revolving Loan evidenced hereby is
made and is to be repaid, including a description of the terms
and conditions under which the Revolving Loan may or is required
to be prepaid and the unpaid aggregate principal balance of this
Revolving Note may or shall be accelerated and for a description
of the collateral security for this Revolving Note and the
respective rights of the parties therein. Capitalized terms used
herein without definition shall have the respective meanings set
forth in the Financing Agreement.
The Borrower also promises to pay interest on the unpaid
aggregate principal amount of the Revolving Loan in accordance
with the terms and provisions of the Financing Agreement from the
Restatement Date until the Revolving Loan shall have been paid in
full.
All payments of principal and interest in respect of this
Revolving Note shall be made to Agent for the benefit and account
of the Lenders in lawful money of the United States of America in
same day funds at Agent's principal office in Chicago, Illinois
or at such other place as shall be designated in writing by Agent
for such purpose in accordance with the terms of the Financing
Agreement.
<PAGE>154
This Revolving Note is a replacement for Borrower's
Replacement Global Revolving Note dated April 14, 1994 (the
"Prior Note") payable to the order of the Agent (f/k/a
Continental Bank N.A.) and evidences indebtedness evidenced
thereby and nothing herein contained or implied shall be
construed or deemed to render the Prior Note or the indebtedness
evidenced thereby paid or satisfied or any guaranty thereof or
collateral security therefor released, discharged or otherwise
prejudicially affected in any manner whatsoever.
The Financing Agreement and this Revolving Note shall be
governed by, and shall be construed and enforced in accordance
with, the laws of the State of Illinois, without regard to its
conflicts of laws rules.
The terms of this Revolving Note are subject to amendment
only in the manner set forth in the Financing Agreement.
The Borrower promises to pay all costs and expenses,
including reasonable attorneys' and legal assistants' fees, and
disbursements incurred in collection and enforcement of this
Revolving Note or any appeal of a judgment rendered hereon. The
Borrower and the endorsers of this Revolving Note hereby consent
to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment,
protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations
as a defense to any demands thereafter.
IN WITNESS HEREOF, the Borrower has caused this Revolving
Note to be executed and delivered by its duly authorized officer,
as to the day and year and at the place first above written.
KELLER GRADUATE SCHOOL OF
MANAGEMENT, INC.
By:
-------------------
Title:
Attest: ----------------
By:
---------------------------------
Secretary
<PAGE>155
GUARANTY
FOR VALUE RECEIVED and in consideration of any loan or
other financial accommodation heretofore or hereafter at any time
made or granted to Keller Graduate School of Management, Inc., a
Delaware corporation (hereinafter called the "Debtor"), by the
lenders who are or may become party to that certain Amended and
Restated Financing Agreement, dated as of June 12, 1996 (as from
time to time, in whole or in part, amended, modified,
supplemented, restated, refinanced, refunded or renewed, the
"Credit Agreement"), among the undersigned, the lenders who are
or from time to time become party thereto (the "Lenders"), and
Bank of America Illinois, as agent for the Lenders (the "Agent"),
the "undersigned" hereby unconditionally guarantees the full and
prompt payment when due, whether at stated maturity, by required
prepayment, declaration, demand, acceleration or otherwise
(including amounts that would become due but for the operation of
the automatic stay under section 362(a) of the Bankruptcy Code
(11 U.S.C., 362(a)), and at all times thereafter, of all
obligations of the Debtor to the Agent and the Lenders in their
respective capacities under the Credit Agreement, howsoever
created, arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or
to become due (all such obligations being hereinafter
collectively called "Liabilities"), and the undersigned further
agrees to pay all expenses (including attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in
endeavoring to collect the Liabilities, or any part thereof, and
in enforcing this guaranty.
1. The undersigned agrees that, in the event of the
dissolution or insolvency of the Debtor or the undersigned, or
the inability of the Debtor or the undersigned to pay its debts
as they mature, or an assignment by the Debtor or the undersigned
for the benefit of creditors, or the institution of any
proceeding by or against the Debtor or the undersigned alleging
that the Debtor or the undersigned is insolvent or unable to pay
its debts as they mature, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, the
undersigned will pay to the Agent for the benefit of the Lenders
forthwith the full amount which would be payable hereunder by the
undersigned if all Liabilities were then due and payable.
2. To secure all obligations of the undersigned hereunder,
the Agent for the benefit of the Lenders shall have a lien upon
and security interest in (and may, without demand or notice of
any kind, at any time and from time to time when any amount shall
<PAGE>156
be due and payable by the undersigned hereunder, appropriate and
apply toward the payment of such amount, in such order of
application as the Agent may elect) any and all balances,
credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys of or in the name of
the undersigned now or hereafter with the Agent or any Lender and
any and all property of every kind or description of or in the
name of the undersigned now or hereafter, for any reason or
purpose whatsoever, in the possession or control of, or in
transit to, the Agent or the Lenders or any agent or bailee for
the Agent or the Lenders.
3. This guaranty shall in all respects be a continuing,
absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, the
dissolution of the undersigned) until all of the Liabilities have
been paid in full, subject to discontinuance as to the
undersigned only upon receipt by the Agent of written notice from
the undersigned, or any person duly authorized and acting on
behalf of the undersigned, of the discontinuance hereof as to the
undersigned; provided, however, that no such notice of
discontinuance shall affect or impair any of the agreements and
obligations of the undersigned hereunder with respect to any and
all Liabilities existing prior to the time of receipt of such
notice by the Agent, any and all Liabilities created or acquired
thereafter pursuant to any previous commitments made by the Agent
or the Lenders, any and all extensions or renewals of any of the
foregoing, any and all interest on any of the foregoing, and any
and all expenses paid or incurred by the Agent and the Lenders in
endeavoring to collect any of the foregoing and in enforcing this
guaranty against the undersigned; and all of the agreements and
obligations of the undersigned under this guaranty shall,
notwithstanding any such notice of discontinuance, remain fully
in effect until all such Liabilities (including any extensions or
renewals of any thereof) and all such interest and expenses shall
have been paid in full.
4. The undersigned further agrees that, if at any time all or
any part of any payment theretofore applied by the Agent or the
Lenders to any of the Liabilities is or must be rescinded or
returned by the Agent or the Lenders for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or
reorganization of the Debtor), such Liabilities shall, for the
purposes of this guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Agent or the
Lenders, and this guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as
though such application by the Agent or the Lenders had not been
made.
<PAGE>157
5. The Agent may, from time to time, whether before or after
any discontinuance of this guaranty, at its sole discretion and
without notice to the undersigned, take any or all of the
following actions: (a) retain or obtain a security interest in
any property to secure any of the Liabilities or any obligation
hereunder, (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the
undersigned, with respect to any of the Liabilities, (c) extend
or renew for one or more periods (whether or not longer than the
original period), or alter or exchange, any of the Liabilities,
or release or compromise any obligation of the undersigned
hereunder or any obligation of any nature of any other obligor
with respect to any of the Liabilities, (d) release its security
interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the
Liabilities or any obligation hereunder, or extend or renew for
one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations
of any nature of any obligor with respect to any such property,
and (e) resort to the undersigned for payment of any of the
Liabilities, whether or not the Agent (i) shall have resorted to
any property securing any of the Liabilities or any obligation
hereunder or (ii) shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in preceding clauses
(i) and (ii) being hereby expressly waived by the undersigned).
6. Any amounts received by the Agent from whatsoever source
on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of
application, as the Agent may from time to time elect.
7. No payment made by or for the account of the undersigned
pursuant to this guaranty shall entitle the undersigned by
subrogation or otherwise to any payment by the Debtor or from or
out of any property of the Debtor and the undersigned shall not
exercise any right or remedy against the Debtor or any property
of the Debtor by reason of any performance by the undersigned of
this guaranty. The undersigned waives, to the fullest extent
permitted by law, all rights of the undersigned against the
Debtor, arising out of any payment by the undersigned under this
guaranty, whether arising by way of any subrogation,
contribution, reimbursement or otherwise and agrees that, to the
extent that any such rights may not be waived under applicable
law, it will contribute such rights to the Debtor as a capital
contribution concurrently with the arising of such rights.
8. The undersigned hereby expressly waives: (a) notice of
the acceptance by the Agent of this guaranty, (b) notice of the
<PAGE>158
existence or creation or non-payment of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protest
and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Liabilities
or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing.
9. The Lenders may, from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities or
any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such
Liabilities shall be and remain Liabilities for the purposes of
this guaranty, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any
interest therein shall, to the extent of the interest of such
assignee or transferee in the Liabilities, be entitled to the
benefits of this guaranty to the same extent as if such assignee
or transferee were a Lender; provided, however, that, unless the
assigning or transferring Lender shall otherwise consent in
writing, such Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce
this guaranty, for the benefit of the Lender, as to those of the
Liabilities which the Lender has not assigned or transferred.
10. The undersigned hereby warrants to the Agent and the
Lenders that the undersigned now has and will continue to have
independent means of obtaining information concerning the
affairs, financial condition and business of the Debtor. The
Agent and the Lenders shall not have any duty or responsibility
to provide the undersigned with any credit or other information
concerning the affairs, financial condition or business of the
Debtor which may come into the Agent's or any of the Lenders'
possession.
11. The undersigned hereby warrants and agrees that: (a) the
undersigned is a corporation duly existing and in good standing
under the laws of the state of its incorporation, and the
undersigned is duly qualified and in good standing and authorized
to do business in each jurisdiction where, because of the nature
of its activities or properties, such qualification is required,
(b) the undersigned has full corporate power and authority to
execute and deliver this guaranty, (c) the execution, delivery
and performance by the undersigned of this guaranty are within
the undersigned's corporate powers, have been duly authorized by
all necessary action, have received all necessary governmental
approval (if any shall be required) and do not and will not
contravene or conflict with any provision of law or of the
organizational documents of the undersigned or of any agreement
binding upon the undersigned, (d) this guaranty is the legal,
<PAGE>159
valid and binding obligation of the undersigned enforceable
against the undersigned in accordance with its terms, except as
enforceability may be limited by bankruptcy or other laws
relating to or affecting creditors' rights generally or by
equitable principles, and (e) this guaranty will directly or
indirectly benefit the undersigned.
12. No delay on the part of the Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent of any right or remedy shall
preclude other or further exercise thereof or the exercise of any
other right or remedy; nor shall any modification or waiver of
any of the provisions of this guaranty be binding upon the Agent
except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent for the benefit of the Lenders.
No action of the Agent permitted hereunder shall in any way
affect or impair the rights of the Agent and the obligations of
the undersigned under this guaranty. For the purposes of this
guaranty, Liabilities shall include all obligations of the Debtor
to the Agent and the Lenders, notwithstanding any right or power
of the Debtor or anyone else to assert any claim or defense as to
the invalidity or unenforceability of any such obligation, and no
such claim or defense shall affect or impair the obligations of
the undersigned hereunder. The obligations of the undersigned
under this guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of the
undersigned. The undersigned hereby acknowledges that there are
no conditions to the effectiveness of this guaranty.
13.
13. This guaranty shall be binding upon the undersigned, and
upon any successors and assigns of the undersigned; and to the
extent that the Debtor or any of the undersigned is either a
partnership or a corporation, all references herein to the Debtor
and to the undersigned, respectively, shall be deemed to include
any successor or successors, whether immediate or remote, to such
partnership or corporation. If more than one party shall execute
this guaranty, the term "undersigned," as used herein, shall mean
all parties executing this guaranty and each of them, and all
such parties shall be jointly and severally obligated hereunder.
14. THIS GUARANTY HAS BEEN DELIVERED AT CHICAGO, ILLINOIS, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
ITS PRINCIPLES OF CHOICE OF LAW. WHEREVER POSSIBLE EACH
PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS
TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS GUARANTY SHALL BE PROHIBITED BY OR INVALID
UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
<PAGE>160
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE
REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
GUARANTY.
15. The undersigned hereby irrevocably agrees that any legal
action or proceeding pertaining to this guaranty may be brought
in the courts of the State of Illinois, County of Cook, or of the
United States of America for the Northern District of Illinois.
The undersigned hereby irrevocably agrees that service of process
in such action or proceeding may be made either by mailing, by
registered or certified mail, postage prepaid, a copy of the
summons or complaint, or other legal process in such action or
proceeding to the undersigned at the address shown on the
signature page hereof. Service of process in any such action or
proceeding, effected as aforesaid, shall be effective upon
receipt by the undersigned and shall be deemed personal service
upon the undersigned and shall be legal and binding upon the
undersigned for all purposes. The undersigned hereby waives, to
the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue in any such action or
proceeding in any such court as well as any right it may now or
hereafter have to remove any such action or proceeding, once
commenced, to another court on the grounds of forum non
conveniens or otherwise.
16. The undersigned hereby expressly waives any right to a
trial by jury in any action or proceeding to enforce or defend
any rights (a) under this guaranty or under any amendment,
instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or (b) arising from
any banking relationship existing in connection with this
guaranty, and agrees that any such action or proceeding shall be
tried before a court and not before a jury.
* * * * *
<PAGE>161
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed as of this 12th day of June, 1996.
DEVRY EDUCATIONAL DEVELOPMENT
CORPORATION
By: /s/Ronald L. Taylor
Name: Ronald L. Taylor
Title: President
Address: One Tower Lane
Suite 1000
Oakbrook Terrace,
Illinois 60181
<PAGE>162
GUARANTY
FOR VALUE RECEIVED and in consideration of any loan or
other financial accommodation heretofore or hereafter at any time
made or granted to Keller Graduate School of Management, Inc., a
Delaware corporation (hereinafter called the "Debtor"), by the
lenders who are or may become party to that certain Amended and
Restated Financing Agreement, dated as of June 12, 1996 (as from
time to time, in whole or in part, amended, modified,
supplemented, restated, refinanced, refunded or renewed, the
"Credit Agreement"), among the undersigned, the lenders who are
or from time to time become party thereto (the "Lenders"), and
Bank of America Illinois, as agent for the Lenders (the "Agent"),
the "undersigned" hereby unconditionally guarantees the full and
prompt payment when due, whether at stated maturity, by required
prepayment, declaration, demand, acceleration or otherwise
(including amounts that would become due but for the operation of
the automatic stay under section 362(a) of the Bankruptcy Code
(11 U.S.C., 362(a)), and at all times thereafter, of all
obligations of the Debtor to the Agent and the Lenders in their
respective capacities under the Credit Agreement, howsoever
created, arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or
to become due (all such obligations being hereinafter
collectively called "Liabilities"), and the undersigned further
agrees to pay all expenses (including attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in
endeavoring to collect the Liabilities, or any part thereof, and
in enforcing this guaranty.
1. The undersigned agrees that, in the event of the
dissolution or insolvency of the Debtor or the undersigned, or
the inability of the Debtor or the undersigned to pay its debts
as they mature, or an assignment by the Debtor or the undersigned
for the benefit of creditors, or the institution of any
proceeding by or against the Debtor or the undersigned alleging
that the Debtor or the undersigned is insolvent or unable to pay
its debts as they mature, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, the
undersigned will pay to the Agent for the benefit of the Lenders
forthwith the full amount which would be payable hereunder by the
undersigned if all Liabilities were then due and payable.
2. To secure all obligations of the undersigned hereunder,
the Agent for the benefit of the Lenders shall have a lien upon
and security interest in (and may, without demand or notice of
any kind, at any time and from time to time when any amount shall
<PAGE>163
be due and payable by the undersigned hereunder, appropriate and
apply toward the payment of such amount, in such order of
application as the Agent may elect) any and all balances,
credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys of or in the name of
the undersigned now or hereafter with the Agent or any Lender and
any and all property of every kind or description of or in the
name of the undersigned now or hereafter, for any reason or
purpose whatsoever, in the possession or control of, or in
transit to, the Agent or the Lenders or any agent or bailee for
the Agent or the Lenders.
3. This guaranty shall in all respects be a continuing,
absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, the
dissolution of the undersigned) until all of the Liabilities have
been paid in full, subject to discontinuance as to the
undersigned only upon receipt by the Agent of written notice from
the undersigned, or any person duly authorized and acting on
behalf of the undersigned, of the discontinuance hereof as to the
undersigned; provided, however, that no such notice of
discontinuance shall affect or impair any of the agreements and
obligations of the undersigned hereunder with respect to any and
all Liabilities existing prior to the time of receipt of such
notice by the Agent, any and all Liabilities created or acquired
thereafter pursuant to any previous commitments made by the Agent
or the Lenders, any and all extensions or renewals of any of the
foregoing, any and all interest on any of the foregoing, and any
and all expenses paid or incurred by the Agent and the Lenders in
endeavoring to collect any of the foregoing and in enforcing this
guaranty against the undersigned; and all of the agreements and
obligations of the undersigned under this guaranty shall,
notwithstanding any such notice of discontinuance, remain fully
in effect until all such Liabilities (including any extensions or
renewals of any thereof) and all such interest and expenses shall
have been paid in full.
4. The undersigned further agrees that, if at any time all or
any part of any payment theretofore applied by the Agent or the
Lenders to any of the Liabilities is or must be rescinded or
returned by the Agent or the Lenders for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or
reorganization of the Debtor), such Liabilities shall, for the
purposes of this guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Agent or the
Lenders, and this guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as
though such application by the Agent or the Lenders had not been
made.
<PAGE>164
5. The Agent may, from time to time, whether before or after
any discontinuance of this guaranty, at its sole discretion and
without notice to the undersigned, take any or all of the
following actions: (a) retain or obtain a security interest in
any property to secure any of the Liabilities or any obligation
hereunder, (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the
undersigned, with respect to any of the Liabilities, (c) extend
or renew for one or more periods (whether or not longer than the
original period), or alter or exchange, any of the Liabilities,
or release or compromise any obligation of the undersigned
hereunder or any obligation of any nature of any other obligor
with respect to any of the Liabilities, (d) release its security
interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the
Liabilities or any obligation hereunder, or extend or renew for
one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations
of any nature of any obligor with respect to any such property,
and (e) resort to the undersigned for payment of any of the
Liabilities, whether or not the Agent (i) shall have resorted to
any property securing any of the Liabilities or any obligation
hereunder or (ii) shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in preceding clauses
(i) and (ii) being hereby expressly waived by the undersigned).
6. Any amounts received by the Agent from whatsoever source
on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of
application, as the Agent may from time to time elect.
7. No payment made by or for the account of the undersigned
pursuant to this guaranty shall entitle the undersigned by
subrogation or otherwise to any payment by the Debtor or from or
out of any property of the Debtor and the undersigned shall not
exercise any right or remedy against the Debtor or any property
of the Debtor by reason of any performance by the undersigned of
this guaranty. The undersigned waives, to the fullest extent
permitted by law, all rights of the undersigned against the
Debtor, arising out of any payment by the undersigned under this
guaranty, whether arising by way of any subrogation,
contribution, reimbursement or otherwise and agrees that, to the
extent that any such rights may not be waived under applicable
law, it will contribute such rights to the Debtor as a capital
contribution concurrently with the arising of such rights.
8. The undersigned hereby expressly waives: (a) notice of
the acceptance by the Agent of this guaranty, (b) notice of the
<PAGE>165
existence or creation or non-payment of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protest
and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Liabilities
or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing.
9. The Lenders may, from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities or
any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such
Liabilities shall be and remain Liabilities for the purposes of
this guaranty, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any
interest therein shall, to the extent of the interest of such
assignee or transferee in the Liabilities, be entitled to the
benefits of this guaranty to the same extent as if such assignee
or transferee were a Lender; provided, however, that, unless the
assigning or transferring Lender shall otherwise consent in
writing, such Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce
this guaranty, for the benefit of the Lender, as to those of the
Liabilities which the Lender has not assigned or transferred.
10. The undersigned hereby warrants to the Agent and the
Lenders that the undersigned now has and will continue to have
independent means of obtaining information concerning the
affairs, financial condition and business of the Debtor. The
Agent and the Lenders shall not have any duty or responsibility
to provide the undersigned with any credit or other information
concerning the affairs, financial condition or business of the
Debtor which may come into the Agent's or any of the Lenders'
possession.
11. The undersigned hereby warrants and agrees that: (a) the
undersigned is a corporation duly existing and in good standing
under the laws of the state of its incorporation, and the
undersigned is duly qualified and in good standing and authorized
to do business in each jurisdiction where, because of the nature
of its activities or properties, such qualification is required,
(b) the undersigned has full corporate power and authority to
execute and deliver this guaranty, (c) the execution, delivery
and performance by the undersigned of this guaranty are within
the undersigned's corporate powers, have been duly authorized by
all necessary action, have received all necessary governmental
approval (if any shall be required) and do not and will not
contravene or conflict with any provision of law or of the
organizational documents of the undersigned or of any agreement
binding upon the undersigned, (d) this guaranty is the legal,
<PAGE>166
valid and binding obligation of the undersigned enforceable
against the undersigned in accordance with its terms, except as
enforceability may be limited by bankruptcy or other laws
relating to or affecting creditors' rights generally or by
equitable principles, and (e) this guaranty will directly or
indirectly benefit the undersigned.
12. No delay on the part of the Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent of any right or remedy shall
preclude other or further exercise thereof or the exercise of any
other right or remedy; nor shall any modification or waiver of
any of the provisions of this guaranty be binding upon the Agent
except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent for the benefit of the Lenders.
No action of the Agent permitted hereunder shall in any way
affect or impair the rights of the Agent and the obligations of
the undersigned under this guaranty. For the purposes of this
guaranty, Liabilities shall include all obligations of the Debtor
to the Agent and the Lenders, notwithstanding any right or power
of the Debtor or anyone else to assert any claim or defense as to
the invalidity or unenforceability of any such obligation, and no
such claim or defense shall affect or impair the obligations of
the undersigned hereunder. The obligations of the undersigned
under this guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of the
undersigned. The undersigned hereby acknowledges that there are
no conditions to the effectiveness of this guaranty.
13.
13. This guaranty shall be binding upon the undersigned, and
upon any successors and assigns of the undersigned; and to the
extent that the Debtor or any of the undersigned is either a
partnership or a corporation, all references herein to the Debtor
and to the undersigned, respectively, shall be deemed to include
any successor or successors, whether immediate or remote, to such
partnership or corporation. If more than one party shall execute
this guaranty, the term "undersigned," as used herein, shall mean
all parties executing this guaranty and each of them, and all
such parties shall be jointly and severally obligated hereunder.
14. THIS GUARANTY HAS BEEN DELIVERED AT CHICAGO, ILLINOIS, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
ITS PRINCIPLES OF CHOICE OF LAW. WHEREVER POSSIBLE EACH
PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS
TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS GUARANTY SHALL BE PROHIBITED BY OR INVALID
UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
<PAGE>167
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE
REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
GUARANTY.
15. The undersigned hereby irrevocably agrees that any legal
action or proceeding pertaining to this guaranty may be brought
in the courts of the State of Illinois, County of Cook, or of the
United States of America for the Northern District of Illinois.
The undersigned hereby irrevocably agrees that service of process
in such action or proceeding may be made either by mailing, by
registered or certified mail, postage prepaid, a copy of the
summons or complaint, or other legal process in such action or
proceeding to the undersigned at the address shown on the
signature page hereof. Service of process in any such action or
proceeding, effected as aforesaid, shall be effective upon
receipt by the undersigned and shall be deemed personal service
upon the undersigned and shall be legal and binding upon the
undersigned for all purposes. The undersigned hereby waives, to
the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue in any such action or
proceeding in any such court as well as any right it may now or
hereafter have to remove any such action or proceeding, once
commenced, to another court on the grounds of forum non
conveniens or otherwise.
16. The undersigned hereby expressly waives any right to a
trial by jury in any action or proceeding to enforce or defend
any rights (a) under this guaranty or under any amendment,
instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or (b) arising from
any banking relationship existing in connection with this
guaranty, and agrees that any such action or proceeding shall be
tried before a court and not before a jury.
* * * * *
<PAGE>168
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed as of this 12th day of June, 1996.
DEVRY CPA REVIEW COURSE, INC.
By: /s/Ronald L. Taylor
Name: Ronald L. Taylor
Title: President
Address: One Tower Lane
Suite 1000
Oakbrook Terrace,
Illinois 60181
<PAGE>169
GUARANTY
FOR VALUE RECEIVED and in consideration of any loan or
other financial accommodation heretofore or hereafter at any time
made or granted to Keller Graduate School of Management, Inc., a
Delaware corporation (hereinafter called the "Debtor"), by the
lenders who are or may become party to that certain Amended and
Restated Financing Agreement, dated as of June 12, 1996 (as from
time to time, in whole or in part, amended, modified,
supplemented, restated, refinanced, refunded or renewed, the
"Credit Agreement"), among the undersigned, the lenders who are
or from time to time become party thereto (the "Lenders"), and
Bank of America Illinois, as agent for the Lenders (the "Agent"),
the "undersigned" hereby unconditionally guarantees the full and
prompt payment when due, whether at stated maturity, by required
prepayment, declaration, demand, acceleration or otherwise
(including amounts that would become due but for the operation of
the automatic stay under section 362(a) of the Bankruptcy Code
(11 U.S.C., 362(a)), and at all times thereafter, of all
obligations of the Debtor to the Agent and the Lenders in their
respective capacities under the Credit Agreement, howsoever
created, arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or
to become due (all such obligations being hereinafter
collectively called "Liabilities"), and the undersigned further
agrees to pay all expenses (including attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in
endeavoring to collect the Liabilities, or any part thereof, and
in enforcing this guaranty.
1. The undersigned agrees that, in the event of the
dissolution or insolvency of the Debtor or the undersigned, or
the inability of the Debtor or the undersigned to pay its debts
as they mature, or an assignment by the Debtor or the undersigned
for the benefit of creditors, or the institution of any
proceeding by or against the Debtor or the undersigned alleging
that the Debtor or the undersigned is insolvent or unable to pay
its debts as they mature, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, the
undersigned will pay to the Agent for the benefit of the Lenders
forthwith the full amount which would be payable hereunder by the
undersigned if all Liabilities were then due and payable.
2. To secure all obligations of the undersigned hereunder,
the Agent for the benefit of the Lenders shall have a lien upon
and security interest in (and may, without demand or notice of
any kind, at any time and from time to time when any amount shall
<PAGE>170
be due and payable by the undersigned hereunder, appropriate and
apply toward the payment of such amount, in such order of
application as the Agent may elect) any and all balances,
credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys of or in the name of
the undersigned now or hereafter with the Agent or any Lender and
any and all property of every kind or description of or in the
name of the undersigned now or hereafter, for any reason or
purpose whatsoever, in the possession or control of, or in
transit to, the Agent or the Lenders or any agent or bailee for
the Agent or the Lenders.
3. This guaranty shall in all respects be a continuing,
absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, the
dissolution of the undersigned) until all of the Liabilities have
been paid in full, subject to discontinuance as to the
undersigned only upon receipt by the Agent of written notice from
the undersigned, or any person duly authorized and acting on
behalf of the undersigned, of the discontinuance hereof as to the
undersigned; provided, however, that no such notice of
discontinuance shall affect or impair any of the agreements and
obligations of the undersigned hereunder with respect to any and
all Liabilities existing prior to the time of receipt of such
notice by the Agent, any and all Liabilities created or acquired
thereafter pursuant to any previous commitments made by the Agent
or the Lenders, any and all extensions or renewals of any of the
foregoing, any and all interest on any of the foregoing, and any
and all expenses paid or incurred by the Agent and the Lenders in
endeavoring to collect any of the foregoing and in enforcing this
guaranty against the undersigned; and all of the agreements and
obligations of the undersigned under this guaranty shall,
notwithstanding any such notice of discontinuance, remain fully
in effect until all such Liabilities (including any extensions or
renewals of any thereof) and all such interest and expenses shall
have been paid in full.
4. The undersigned further agrees that, if at any time all or
any part of any payment theretofore applied by the Agent or the
Lenders to any of the Liabilities is or must be rescinded or
returned by the Agent or the Lenders for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or
reorganization of the Debtor), such Liabilities shall, for the
purposes of this guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Agent or the
Lenders, and this guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as
though such application by the Agent or the Lenders had not been
made.
<PAGE>171
5. The Agent may, from time to time, whether before or after
any discontinuance of this guaranty, at its sole discretion and
without notice to the undersigned, take any or all of the
following actions: (a) retain or obtain a security interest in
any property to secure any of the Liabilities or any obligation
hereunder, (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the
undersigned, with respect to any of the Liabilities, (c) extend
or renew for one or more periods (whether or not longer than the
original period), or alter or exchange, any of the Liabilities,
or release or compromise any obligation of the undersigned
hereunder or any obligation of any nature of any other obligor
with respect to any of the Liabilities, (d) release its security
interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the
Liabilities or any obligation hereunder, or extend or renew for
one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations
of any nature of any obligor with respect to any such property,
and (e) resort to the undersigned for payment of any of the
Liabilities, whether or not the Agent (i) shall have resorted to
any property securing any of the Liabilities or any obligation
hereunder or (ii) shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in preceding clauses
(i) and (ii) being hereby expressly waived by the undersigned).
6. Any amounts received by the Agent from whatsoever source
on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of
application, as the Agent may from time to time elect.
7. No payment made by or for the account of the undersigned
pursuant to this guaranty shall entitle the undersigned by
subrogation or otherwise to any payment by the Debtor or from or
out of any property of the Debtor and the undersigned shall not
exercise any right or remedy against the Debtor or any property
of the Debtor by reason of any performance by the undersigned of
this guaranty. The undersigned waives, to the fullest extent
permitted by law, all rights of the undersigned against the
Debtor, arising out of any payment by the undersigned under this
guaranty, whether arising by way of any subrogation,
contribution, reimbursement or otherwise and agrees that, to the
extent that any such rights may not be waived under applicable
law, it will contribute such rights to the Debtor as a capital
contribution concurrently with the arising of such rights.
8. The undersigned hereby expressly waives: (a) notice of
the acceptance by the Agent of this guaranty, (b) notice of the
<PAGE>172
existence or creation or non-payment of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protest
and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Liabilities
or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing.
9. The Lenders may, from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities or
any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such
Liabilities shall be and remain Liabilities for the purposes of
this guaranty, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any
interest therein shall, to the extent of the interest of such
assignee or transferee in the Liabilities, be entitled to the
benefits of this guaranty to the same extent as if such assignee
or transferee were a Lender; provided, however, that, unless the
assigning or transferring Lender shall otherwise consent in
writing, such Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce
this guaranty, for the benefit of the Lender, as to those of the
Liabilities which the Lender has not assigned or transferred.
10. The undersigned hereby warrants to the Agent and the
Lenders that the undersigned now has and will continue to have
independent means of obtaining information concerning the
affairs, financial condition and business of the Debtor. The
Agent and the Lenders shall not have any duty or responsibility
to provide the undersigned with any credit or other information
concerning the affairs, financial condition or business of the
Debtor which may come into the Agent's or any of the Lenders'
possession.
11. The undersigned hereby warrants and agrees that: (a) the
undersigned is a corporation duly existing and in good standing
under the laws of the state of its incorporation, and the
undersigned is duly qualified and in good standing and authorized
to do business in each jurisdiction where, because of the nature
of its activities or properties, such qualification is required,
(b) the undersigned has full corporate power and authority to
execute and deliver this guaranty, (c) the execution, delivery
and performance by the undersigned of this guaranty are within
the undersigned's corporate powers, have been duly authorized by
all necessary action, have received all necessary governmental
approval (if any shall be required) and do not and will not
contravene or conflict with any provision of law or of the
organizational documents of the undersigned or of any agreement
binding upon the undersigned, (d) this guaranty is the legal,
<PAGE>173
valid and binding obligation of the undersigned enforceable
against the undersigned in accordance with its terms, except as
enforceability may be limited by bankruptcy or other laws
relating to or affecting creditors' rights generally or by
equitable principles, and (e) this guaranty will directly or
indirectly benefit the undersigned.
12. No delay on the part of the Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent of any right or remedy shall
preclude other or further exercise thereof or the exercise of any
other right or remedy; nor shall any modification or waiver of
any of the provisions of this guaranty be binding upon the Agent
except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent for the benefit of the Lenders.
No action of the Agent permitted hereunder shall in any way
affect or impair the rights of the Agent and the obligations of
the undersigned under this guaranty. For the purposes of this
guaranty, Liabilities shall include all obligations of the Debtor
to the Agent and the Lenders, notwithstanding any right or power
of the Debtor or anyone else to assert any claim or defense as to
the invalidity or unenforceability of any such obligation, and no
such claim or defense shall affect or impair the obligations of
the undersigned hereunder. The obligations of the undersigned
under this guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of the
undersigned. The undersigned hereby acknowledges that there are
no conditions to the effectiveness of this guaranty.
13.
13. This guaranty shall be binding upon the undersigned, and
upon any successors and assigns of the undersigned; and to the
extent that the Debtor or any of the undersigned is either a
partnership or a corporation, all references herein to the Debtor
and to the undersigned, respectively, shall be deemed to include
any successor or successors, whether immediate or remote, to such
partnership or corporation. If more than one party shall execute
this guaranty, the term "undersigned," as used herein, shall mean
all parties executing this guaranty and each of them, and all
such parties shall be jointly and severally obligated hereunder.
14. THIS GUARANTY HAS BEEN DELIVERED AT CHICAGO, ILLINOIS, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
ITS PRINCIPLES OF CHOICE OF LAW. WHEREVER POSSIBLE EACH
PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS
TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS GUARANTY SHALL BE PROHIBITED BY OR INVALID
UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
<PAGE>174
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE
REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
GUARANTY.
15. The undersigned hereby irrevocably agrees that any legal
action or proceeding pertaining to this guaranty may be brought
in the courts of the State of Illinois, County of Cook, or of the
United States of America for the Northern District of Illinois.
The undersigned hereby irrevocably agrees that service of process
in such action or proceeding may be made either by mailing, by
registered or certified mail, postage prepaid, a copy of the
summons or complaint, or other legal process in such action or
proceeding to the undersigned at the address shown on the
signature page hereof. Service of process in any such action or
proceeding, effected as aforesaid, shall be effective upon
receipt by the undersigned and shall be deemed personal service
upon the undersigned and shall be legal and binding upon the
undersigned for all purposes. The undersigned hereby waives, to
the fullest extent permitted by law, any objection it may now or
hereafter have to the laying of venue in any such action or
proceeding in any such court as well as any right it may now or
hereafter have to remove any such action or proceeding, once
commenced, to another court on the grounds of forum non
conveniens or otherwise.
16. The undersigned hereby expressly waives any right to a
trial by jury in any action or proceeding to enforce or defend
any rights (a) under this guaranty or under any amendment,
instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or (b) arising from
any banking relationship existing in connection with this
guaranty, and agrees that any such action or proceeding shall be
tried before a court and not before a jury.
* * * * *
<PAGE>175
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed as of this 12th day of June, 1996.
DEVRY INC.
By: /s/Ronald L. Taylor
Name: Ronald L. Taylor
Title: President
Address: One Tower Lane
Suite 1000
Oakbrook Terrace,
Illinois 60181
<PAGE>176
EXHIBIT 10(d)
-------------
DeVRY INC. PROFIT SHARING RETIREMENT PLAN
-----------------------------------------
(As Amended and Restated Effective as of July 1, 1992)
Mayer, Brown & Platt
Chicago
<PAGE>177
I, , Secretary of Keller
Graduate School of Management, Inc., hereby certify that the
attached document is a full, true and complete copy of DeVRY INC.
PROFIT SHARING RETIREMENT PLAN, as presently in effect.
Dated this day of , 1992.
----------------------
Secretary as Aforesaid
(SEAL)
<PAGE>178
TABLE OF CONTENTS
PAGE
----
SECTION 1 General 1
1.1. History, Purpose and Effective Date 1
1.2. Related Companies and Employers 1
1.3. Trust Agreement, Plan Administration 1
1.4. Plan Year 2
1.5. Valuation Date 2
1.6. Applicable Laws 2
1.7. Gender and Number 2
1.8. Notices 2
1.9. Form and Time of Elections 2
1.10. Evidence 2
1.11. Action by Employers 2
1.12. No Reversion to Employers 3
1.13. Plan Supplements 3
1.14. Defined Terms 3
SECTION 2 Participation in Plan 4
2.1. Eligibility for Participation 4
2.2. Inactive Participation 4
2.3. Plan Not Contract of Employment 4
2.4. Leased Employees 5
SECTION 3 Service 6
3.1. Year of Service 6
3.2. Hour of Service 6
3.3. One Year Break in Service 7
SECTION 4 Pre-Tax and Rollover Contributions 8
4.1. Amount of Pre-Tax Contributions 8
4.2. Payment of Pre-Tax Contributions 8
4.3. Variation, Discontinuance and Resumption of
Pre-Tax Contributions 8
4.4. Rollover Contributions and Transfers 8
4.5. Compensation 9
SECTION 5 Employer Contributions 10
5.1. Matching Contributions 10
5.2. Discretionary Profit Sharing Contributions 10
5.3. Limitations on Amount of Employer Contributions 10
5.4. Payment of Employer Contributions 10
<PAGE>179
SECTION 6 Investment of the Trust Fund 11
6.1. Investment Funds 11
6.2. Investment Fund Accounting 12
6.3. Investment Fund Elections 12
6.4. Transfers Between Investment Funds 12
SECTION 7 Plan Accounting 13
7.1. Participants' Accounts 13
7.2. Adjustment of Participants' Accounts 13
7.3. Allocation and Crediting of Contributions and
Forfeitures 15
7.4. Statement of Plan Interest 16
SECTION 8 Limitations on Compensation, Contributions
and Allocations 17
8.1. Reduction of Contribution Rates 17
8.2. Limitations on Annual Additions 17
8.3. Excess Annual Additions 18
8.4. Combined Plan Limitation 18
8.5. $7,000 Limitation 18
8.6. Code Section 401(k)(3) Testing 19
8.7. Correction Under Section 401(k) Test 21
8.8. Code Section 401(m)(2) Testing 21
8.9. Correction Under Section 401(m) Test 22
8.10. Multiple Use of Alternative Limitation 23
8.11. Highly Compensated 23
8.12. Plan Disaggregation 24
SECTION 9 Vesting and Termination Dates 25
9.1. Determination of Vested Interest 25
9.2. Accelerated Vesting 25
9.3. Termination Date 25
9.4. Distribution Only Upon Separation From Service 25
SECTION 10 Loans and Withdrawals of Contributions While
Employed 27
10.1. Loans to Participants 27
10.2. Withdrawals on Account of Hardship 29
10.3. Hardship Withdrawals 30
10.4. Withdrawals On or After Age 59-1/2 31
10.5. Form of Withdrawal 31
SECTION 11 Distributions 33
11.1. Distributions to Participants After Termination
of Employment 33
<PAGE>180
11.2. Direct Rollover 34
11.3. Distributions to Beneficiaries 34
11.4. Special Rules Governing Annuity Elections 35
11.5. Limits on Commencement and Duration of
Distributions 36
11.6. Beneficiary Designations 38
11.7. Facility of Payment 39
11.8. Interests Not Transferable 39
11.9. Absence of Guaranty 39
11.10. Missing Participants or Beneficiaries 40
11.11. Treatment of Nonvested and Partially Vested
Accounts 40
11.12. Application of Forfeitures 41
11.13. Form of Payment 41
11.14. Disability Distribution 41
SECTION 12 The Committee 42
12.1. Membership and Authority 42
12.2. Allocation and Delegation of Committee
Responsibilities and Powers 43
12.3. Uniform Rules 43
12.4. Information to be Furnished to Committee 43
12.5. Committee's Decision Final 43
12.6. Exercise of Committee's Duties 43
12.7. Remuneration and Expenses 44
12.8. Indemnification of the Committee 44
12.9. Resignation or Removal of Committee Member 44
12.10. Appointment of Successor Committee Members 44
SECTION 13 Amendment and Termination 45
13.1. Amendment 45
13.2. Termination 45
13.3. Merger and Consolidation of the Plan, Transfer
of Plan Assets 45
13.4. Distribution on Termination and Partial
Termination 46
13.5. Notice of Amendment, Termination or Partial
Termination 46
Appendix A - Defined Terms
Supplement A - Top Heavy
<PAGE>181
DeVRY INC. PROFIT SHARING RETIREMENT PLAN
-----------------------------------------
(As Amended and Restated Effective as of July 1, 1992)
SECTION 1
General
-------
1.1. History, Purpose and Effective Date. Effective
June 30, 1979, Keller Graduate School of Management, Inc., a
Delaware corporation (the "Company"), established the Keller
Graduate School of Management, Inc. Profit Sharing Plan (the
"Plan") so that it, and each Related Company (as defined in
subsection 1.2) which, with the consent of the Company, adopts
the Plan may assist their eligible employees in providing for
their future security. The Plan was amended and restated
effective as of July 1, 1987. Effective as of July 1, 1991, the
Plan was renamed the DeVRY Inc. Profit Sharing Retirement Plan.
The following provisions constitute an amendment, restatement and
continuation of the Plan as in effect immediately prior to July
1, 1992, the "Effective Date" of the Plan as set forth herein.
To the extent that any provisions of the Plan as set forth herein
specifically provide for an effective date prior to July 1, 1992,
such provisions shall constitute an amendment of the Plan as in
effect on such date. The Plan is intended to qualify as a profit
sharing plan under section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code").
1.2. Related Companies and Employers. The term "Related
Company" means any corporation or trade or business during any
period during which it is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in sections 414(b) and 414(c),
respectively, of the Code. The Company and each Related Company,
which, with the Company's consent, adopts the Plan are referred
to below collectively as the "Employers" and individually as an
"Employer".
1.3. Trust Agreement, Plan Administration. All contribu
tions made under the Plan will continue to be held, managed and
controlled by one or more trustees (the "Trustee") acting under a
Trust which forms a part of the Plan. The terms of the Trust as
in effect on the Effective Date are set forth in a Trust
Agreement known as DeVRY Inc. Profit Sharing Retirement Trust.
The authority to control and manage the operation and
administration of the Plan is vested in a committee (the
"Committee") which consists of one or more persons as described
in subsection 12.1. The members of the Committee shall be the
"named fiduciaries", as described in section 402 of the Employee
<PAGE>182
Retirement Income Security Act of 1974, as amended ("ERISA"),
with respect to their authority under the Plan. Except as
otherwise expressly provided in subsection 12.1, the Company
shall be the administrator of the Plan and shall have the rights,
duties and obligations of an "administrator" as that term is
defined in section 3(16)(A) of ERISA and of a "plan
administrator" as that term is defined in section 414(g) of the
Code.
1.4. Plan Year. The term "Plan Year" means the twelve-
consecutive-month period beginning on each July 1.
1.5. Valuation Date. Effective August 1, 1993, the term
"Valuation Date" means the last day of each calendar month. From
the period July 1, 1992 until July 31, 1993, the term "Valuation
Date" means the last day of each calendar quarter.
1.6. Applicable Laws. The Plan shall be construed and
administered in accordance with the internal laws of the State of
Illinois to the extent that such laws are not preempted by the
laws of the United States of America.
1.7. Gender and Number. Where the context admits, words
in any gender shall include any other gender, words in the
singular shall include the plural and the plural shall include
the singular.
1.8. Notices. Any notice or document required to be filed
with the Committee under the Plan will be properly filed if
delivered or mailed by registered mail, postage prepaid, to the
Committee, in care of the Company, at its principal executive
offices. Any notice required under the Plan may be waived by the
person entitled to notice.
1.9. Form and Time of Elections. Unless otherwise
specified herein, each election permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification or revocation thereof, shall be in
writing filed with the Committee at such times and in such form
as the Committee shall require.
1.10. Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
1.11. Action by Employers. Any action required or
permitted to be taken by any Employer which is a corporation
shall be by resolution of its Board of Directors, or by a duly
authorized person or persons. Any action required or permitted
<PAGE>183
to be taken by any Employer which is a partnership shall be by a
general partner of such partnership or by a duly authorized
person or persons.
1.12. No Reversion to Employers. No part of the corpus or
income of the Trust shall revert to any Employer or be used for,
or diverted to, purposes other than for the exclusive benefit of
Participants and other persons entitled to benefits under the
Plan, except as specifically provided in the Trust Agreement.
1.13. Plan Supplements. The provisions of the Plan as
applied to any Employer or any group of employees of any Employer
may, with the consent of the Company, be modified or supplemented
from time to time by the adoption of one or more Supplements.
Each Supplement shall form a part of the Plan as of the
Supplement's effective date. In the event of any inconsistency
between a Supplement and the Plan document, the terms of the
Supplement shall govern.
1.14. Defined Terms. Terms used frequently with the same
meaning are indicated by initial capital letters, and are defined
throughout the Plan. Appendix A contains an alphabetical listing
of all such terms and the subsections in which they are defined.
<PAGE>184
SECTION 2
Participation in Plan
---------------------
2.1. Eligibility for Participation. Subject to the
conditions and limitations of the Plan, each individual who was a
Participant in the Plan immediately prior to the Effective Date
will continue as such on and after that date, and each employee
of an Employer who was not a Participant in the Plan immediately
prior to the Effective Date will become a "Participant" in the
Plan on the first day of the first calendar quarter coincident
with or following the Effective Date on which he meets the
following requirements:
(a) he has completed one Year of Service (as defined in
subsection 3.1);
(b) he is not a member of a collective bargaining unit as
to which retirement benefits have been the subject of
good faith bargaining unless the Plan has been extended
to the collective bargaining unit under a currently
effective collective bargaining agreement; and
(c) for periods beginning on and after April 1, 1993,
he is not a temporary employee of an Employer (that is,
an employee who is not a regular full-time employee or
a regular part-time employee).
Notwithstanding the foregoing provisions of this subsection 2.1,
if an individual is employed or reemployed by an Employer on or
after the first calendar quarter coincident with or next
following the date on which he first meets the requirements of
paragraph (a) above, he shall become a Participant in the Plan
immediately upon meeting the requirements of paragraphs (b) and
(c) above if such individual has not incurred a One Year Break in
Service (described in subsection 3.3) or, if the individual has
incurred a One Year Break in Service, retroactive, from the first
day of the Plan Year during which he again completes a Year of
Service.
2.2. Inactive Participation. Once an eligible employee
becomes a Participant in the Plan, he will remain a Participant
as long as he continues to have an Account balance under the Plan
for all purposes under the Plan except the contribution
provisions of Sections 4 and 5 and, unless such Participant is an
employee of an Employer or a Related Company, the withdrawal and
loan provisions of Section 10.
<PAGE>185
2.3. Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the
Plan will not give any employee or Participant the right to be
retained in the employ of any Employer nor any right or claim to
any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.
2.4. Leased Employees. If a person satisfies the
requirements of section 414(n) of the Code and applicable
Treasury regulations for treatment as a "Leased Employee", such
Leased Employee shall not be eligible to participate in this Plan
or in any other plan maintained by an Employer or a Related
Company which is qualified under section 401(a) of the Code, but,
to the extent required by section 414(n) of the Code and
applicable Treasury regulations, such person shall be treated as
if the services performed by him in such capacity were performed
by him as an employee of a Related Company which has not adopted
the Plan; provided, however, that no such service shall be
credited:
(a) for any period during which not more than 20 percent of
the workforce of the Employers and the Related
Companies that is not Highly Compensated (as defined in
subsection 8.11) consists of Leased Employees and the
Leased Employee is a participant in a money purchase
pension plan maintained by the leasing organization
which (i) provides for a nonintegrated employer
contribution of at least 10 percent of compensation,
(ii) provides for full and immediate vesting, and (iii)
covers all employees of the leasing organization
(beginning with the date they become employees), other
than those employees excluded under section 414(n)(5)
of the Code; or
(b) for any other period unless the Leased Employee
provides satisfactory evidence to the Employer or
Related Company that he meets all of the conditions of
this subsection 2.4 and applicable law required for
treatment as a Leased Employee.
<PAGE>186
SECTION 3
Service
-------
3.1. Year of Service. The term "Year of Service" means,
with respect to any employee, any Plan Year during which he
completes at least 1,000 Hours of Service (as defined in
subsection 3.2), subject to the following:
(a) For purposes of subsection 2.1:
(i) the term Year of Service shall not include
any Plan Year commencing prior to the date on
which the employee first completes an Hour of
Service;
(ii) the 12-consecutive-month period commencing on
the date on which the employee first completes an
Hour of Service shall be deemed to be a Year of
Service if he completes at least 1,000 Hours of
Service during such 12-consecutive-month period.
(b) For purposes of Section 9, if an individual is employed
or reemployed by an Employer after incurring a One Year
Break in Service, his number of Years of Service
accrued prior to such break shall be counted only if
the individual completes a Year of Service following
the date of his employment or reemployment.
(c) For all purposes of the Plan, a Participant's number of
Years of Service accrued after five consecutive One
Year Breaks in Service shall be disregarded for
purposes of determining the nonforfeitable percentage
of his benefit under the Plan derived from Employer
contributions which accrued prior to such break.
Service shall include service with DeVRY Inc. and Bell & Howell
Company prior to August 7, 1987 for those individuals who were
employees of DeVRY Inc. on such date and eligible to participate
in the Bell & Howell Profit Sharing Retirement Plan.
3.2. Hour of Service. The term "Hour of Service" means,
with respect to any employee, each hour for which he is paid or
entitled to payment for the performance of duties for an Employer
or a Related Company or for which back pay, irrespective of
mitigation of damages, has been awarded to the employee or agreed
to by an Employer or a Related Company, subject to the following:
<PAGE>187
(a) An employee shall be credited with the number of
regularly scheduled working hours included in the time
period on the basis of which payment to the employee is
calculated for any period during which he performs no
duties for an Employer or a Related Company
(irrespective of whether the employment relationship
has terminated) by reason of a vacation, holiday,
illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence but for
which he is directly or indirectly paid or entitled to
payment by an Employer or a Related Company; provided,
however, that an employee shall not be credited with
more than 501 Hours of Service under this paragraph (a)
for any single continuous period during which he
performs no duties for an Employer or a Related
Company. Payments considered for purposes of the
foregoing sentence shall include payments unrelated to
the length of the period during which no duties are
performed but shall not include payments made solely as
reimbursement for medically-related expenses or solely
for the purpose of complying with applicable workmen's
compensation, unemployment compensation or disability
insurance laws.
(b) Solely for purposes of determining whether an employee
has incurred a One Year Break in Service, the employee
shall be credited, to the extent not otherwise credited
in accordance with the foregoing provisions of this
subsection 3.2, with 8 Hours of Service for each day
(up to a maximum of 40 Hours of Service for each
calendar week) for any period during which the employee
is absent from active employment with an Employer or
Related Company by reason of the employee's pregnancy,
the birth of a child of the employee, or the placement
of a child with the employee in connection with the
employee's adoption of such child, and, in each case,
the care of such child immediately after its birth or
placement; provided that in no event shall more than
501 Hours of Service be credited under this paragraph
(b). Hours of Service credited in accordance with the
foregoing sentence shall be credited for the Plan Year
during which the absence begins to the extent that such
crediting would prevent the employee from incurring a
One Year Break in Service during that year and, in each
other case, shall be credited in the immediately
following Plan Year.
3.3. One Year Break in Service. The term "One Year Break
in Service" means, with respect to any employee, any Plan Year
during which he completes fewer than 501 Hours of Service.
<PAGE>188
SECTION 4
Pre-Tax and Rollover Contributions
----------------------------------
4.1. Amount of Pre-Tax Contributions. Subject to the
limitations set forth in Section 8 and such additional rules as
the Committee may establish on a uniform and nondiscriminatory
basis, for any Plan Year a Participant may elect to have his
salary or wages reduced and a corresponding amount contributed on
his behalf to the Plan by his Employer as a "Pre-Tax
Contribution", which amount shall not be less than 2 percent nor
more than 15 percent of his Compensation (as defined in
subsection 4.5) for that year; provided, however, that for
periods ending before April 1, 1993, such amount shall not be
greater than 10 percent of his Compensation. Any election
pursuant to this subsection 4.1 shall be submitted to the
Committee in such form and at such time as the Committee may
require.
4.2. Payment of Pre-Tax Contributions. Pre-Tax
Contributions shall be made each payroll period, and shall be
paid to the Trustee by the Employer on the earliest date on which
such contributions can reasonably be segregated from the
Employer's general assets, but not later than the last day of the
month following the month of the payroll deduction.
4.3. Variation, Discontinuance and Resumption of Pre-Tax
Contributions. Subject to such rules and restrictions as the
Committee may establish on a uniform and nondiscriminatory basis,
a Participant may elect to change his Pre-Tax Contribution rate
(but not retroactively) within the range specified in subsection
4.1, to discontinue having contributions made for him at any pay
period or to have them resumed; provided, however, a Participant
who discontinues his Pre-Tax Contributions (including by reason
of any suspension required under paragraph 10.3(c)) may not
resume such contributions until the first day of the calendar
quarter coincident with or next following the 6-month period
beginning on the date that such contributions are discontinued.
4.4. Rollover Contributions and Transfers. Subject to the
terms of this subsection, effective as of January 1, 1991, a
Participant or an employee who meets the requirements of
subsection 2.1 other than paragraph (a) thereof may, with the
consent of the Committee:
(a) for years beginning on or after January 1, 1993,
contribute part or all of an eligible rollover
contribution (as defined in section 402 of the Code)
(also referred to as a "direct rollover"),
<PAGE>189
(b) for years ending before January 1, 1993,
contribute part or all of a qualified total
distribution (as defined in section 402(a)(5)(E) of the
Code), or
(c) for all years, make a rollover contribution (as
described in section 408(d)(3) of the Code) (a
"participant rollover") which, under the applicable
provisions of the Code, is permitted to be rolled over
to an eligible retirement plan provided that such
contribution must be paid over to the Trustee on or
before the sixtieth day after receipt by the
Participant or employee of the distribution.
In addition, a plan qualified under section 401(a) of the Code
and holding amounts for the benefit of a Participant or an
employee may, with such individual's consent, and the consent of
the Committee, transfer such amounts to the Plan; provided,
however, no amounts may be transferred pursuant to this
subsection 4.4 if such amounts are subject to the provisions of
section 401(a)(11) of the Code, and further provided no transfer
may be made of amounts unless the Plan is not required, pursuant
to Q&A-3(b) of Treas. Reg.,1.411(d)-4, to preserve any section
411(d)(6) protected benefits accrued under the transferor plan
with respect to such amounts. If an employee who is not
otherwise a Participant makes a rollover contribution to the
Plan, he shall be treated as a Participant only with respect to
the amounts so contributed or transferred until he has met all of
the requirements for Plan participation set forth in subsection
2.1.
4.5. Compensation. A Participant's "Compensation" shall
mean his total wages and other compensation as shown in Box 1 (or
predecessor or successor thereto) on any Form W-2 issued by an
Employer for that portion of the Plan Year during which he is
eligible to participate in the Plan, determined prior to any
reductions thereof made in accordance with the provisions of any
plan maintained by an Employer and intended to meet the
requirements of section 125 or 401(k) of the Code and excluding
noncash prizes, taxable relocation, taxable educational
assistance, severance and amounts realized from the exercise of
stock options, up to a maximum amount for the Plan Year of
$150,000 ($200,000 for Plan Years beginning prior to July 1,
1994) or such other amount as may be permitted for any year under
section 401(a)(17) of the Code, taking into account for purposes
of such limitation any proration required in situations where
"family members" (as defined in sections 401(a)(17) and 414(q)(6)
of the Code) and their Compensation must be aggregated, or where
Compensation is computed with respect to a period of less than a
<PAGE>190
full year (other than on account of mid-year commencement or
cessation of active participation in the Plan).
<PAGE>191
SECTION 5
Employer Contributions
----------------------
5.1. Matching Contributions. Subject to the conditions
and limitations of Section 8, each Employer shall make a
"Matching Contribution" to the Plan on behalf of each Participant
employed by such Employer who makes a Pre-Tax Contribution to the
Plan in an amount equal to one percent of such Participant's
Compensation for the month that any such Pre-Tax Contribution is
made.
5.2. Discretionary Profit Sharing Contributions. Subject
to the conditions and limitations of Section 8, each Employer
shall make a "Discretionary Profit Sharing Contribution" for a
Plan Year in the amount, if any, determined by such Employer in
its sole discretion. Any such contribution shall be allocated to
Participants' Accounts (defined in subsection 7.1) in accordance
with the provisions of subsection 7.3.
5.3. Limitations on Amount of Employer Contributions. In
no event shall the sum of the Discretionary Profit Sharing
Contribution and Matching Contribution made by an Employer for
any Plan Year exceed the limitations imposed by section 404 of
the Code on the maximum amount deductible on account thereof by
that Employer for that year.
5.4. Payment of Employer Contributions. Each Employer's
Discretionary Profit Sharing Contribution and Matching
Contribution under the Plan for any Plan Year shall be paid to
the Trustee, without interest, no later than the time prescribed
by law for filing the Employer's federal income tax return,
including any extensions thereof.
<PAGE>192
SECTION 6
Investment of the Trust Fund
----------------------------
6.1. Investment Funds. One or more "Investment Funds" may
be established under the Trust from time to time for the
investment of Participants' Accounts. As of July 1, 1994, the
Investment Funds are as follows:
(a) a "Value Equity Fund", which shall be invested and
reinvested in common or capital stocks of issuers other
than a Related Company (except that the Value Equity
Fund may be invested in common or capital stock of a
Related Company to the extent that any such stock is
held in a commingled fund), bonds, debentures, or
preferred stocks converted into such common or capital
stocks, and other similar types of investments;
(b) a "Growth Equity Fund", which shall be invested and
reinvested in common or capital stocks that are
expected to have high growth rates of issuers other
than a Related Company (except that the Growth Equity
Fund may be invested in common or capital stock of a
Related Company to the extent that any such stock is
held in a commingled fund), bonds, debentures, or
preferred stocks converted into such common or capital
stocks, and other similar types of investments;
(c) a "Fixed Income Fund", which shall be invested
primarily in intermediate-term bonds, and in part in
commercial mortgages, the income or return from which
is fixed, limited or determinable in advance by the
terms of a contract, document or instrument creating or
evidencing such property or interest in property, or by
the terms of the acquisition thereof;
(d) a "Balanced Fund", which shall be invested and
reinvested partly in common or capital stocks and
partly in bonds of issuers other than a Related Company
(except that the Balanced Fund may be invested in
Common Stocks or bonds of a Related Company to the
extent such stocks or bonds are held in a commingled
fund);
(e) a "Money Market Reserves Fund" which shall be invested
and reinvested in short term securities issued by the
U.S. Government;
<PAGE>193
(f) a "Stock Fund", which shall be invested by the Trustee
solely in qualifying employer securities of DeVRY Inc.
purchased by the Trustee on the open market; and
(g) a "Loan Fund", which shall consist only of promissory
notes evidencing loans to Participants in accordance
with subsection 10.1.
6.2. Investment Fund Accounting. The Committee shall
maintain or cause to be maintained separate subaccounts for each
Participant in each of the Investment Funds to separately reflect
his interests in each such Fund and the portion thereof that is
attributable to each of his Accounts.
6.3. Investment Fund Elections. At the time that a
Participant enrolls in the Plan and effective as of any January
1, April 1, July 1, or October 1 thereafter, each Participant may
specify the percentage of contributions and forfeitures (as
provided in subsection 11.11) subsequently credited to his
Accounts that are to be invested in each of the Investment Funds,
subject to such rules and limitations as the Committee may
determine. As of July 1, 1994, a Participant's investment
elections may be made in multiples of 5 percent (but no less than
10% to any one Investment Fund), provided, that allocations to
the Stock Fund shall not exceed 25% of contributions and
forfeitures. Separate elections with respect to different types
of contributions may not be made. During any period in which no
direction is on file with the Committee, contributions and
forfeitures credited to a Participant shall be invested in the
Money Market Reserves Fund. Any elections under this subsection
6.3 and subsection 6.4 shall be made at such times and in such
form as the Committee may require.
6.4. Transfers Between Investment Funds. Subject to the
provisions of subsection 6.3 and such administrative rules as may
be applicable to any Investment Fund, effective as of the first
day of any calendar quarter, a Participant may elect to transfer
the value of his Accounts held in any Investment Fund to any
other Investment Fund then made available to such Participant;
provided, however, no transfers may be made from another
Investment Fund to the Stock Fund and no amounts may be
transferred directly from the Fixed Income Fund to the Money
Market Reserves Fund; further provided, that such transfers shall
be subject to such rules and limitations as the Committee may
establish. Subject to the provisions of this subsection 6.4, as
of July 1, 1994, transfers may be made in multiples of 5 percent
(but no less than 10% may transferred to any one Investment
Fund).
<PAGE>194
SECTION 7
Plan Accounting
---------------
7.1. Participants' Accounts. The Committee shall maintain
(or cause to be maintained) the following "Accounts" in the name
of each Participant:
(a) a "Pre-Tax Account," which shall reflect Pre-Tax
Contributions, rollover contributions and transferred
amounts (other than after-tax amounts included in
paragraph (d) next below), if any, made by the
Participant or on his behalf and the income, losses,
appreciation and depreciation attributable thereto;
(b) a "Matching Account," which shall reflect Matching
Contributions, if any, made on his behalf and
forfeitures, if any, allocated to him in accordance
with subsection 7.3 and the income, losses,
appreciation and depreciation attributable thereto;
(c) a "Discretionary Account", which shall reflect
Discretionary Profit Sharing Contributions, if any, and
forfeitures, if any, allocated to him in accordance
with subsection 7.3, and the income, losses,
appreciation and depreciation attributable thereto; and
(d) an "After-Tax Transfer Account," which shall reflect
transferred amounts attributable to after tax-
contributions made by the Participant, if any, and the
income, losses, appreciation and depreciation
attributable thereto.
The Accounts provided for in this subsection 7.1 shall be for
accounting purposes only, and there shall be no segregation of
assets within the Investment Funds among the separate Accounts.
Reference to the "balance" in a Participant's Accounts means the
aggregate of the balances in the subaccounts maintained in the
Investment Funds attributable to these Accounts.
7.2. Adjustment of Participants' Accounts. As of each
Valuation Date prior to or coincident with his Distribution Date
(as described in subsection 11.1), the Accounts of a Participant
shall be adjusted in the following manner and order:
<PAGE>195
(a) first, the balances of the subaccounts of all such
Participants under each of the Investment Funds, other
than the Loan Fund, shall be adjusted upward or
downward, pro rata, according to the balances so that
the total of the balances equal the then Fair Market
Value (as defined below) of such Investment Fund;
(b) next, there shall be allocated and credited to each
Participant's Loan Fund subaccount and charged to the
Participant's subaccounts under the other Investment
Funds any loan made to such Participant and any
interest which has accrued thereon since the last
preceding Valuation Date in accordance with paragraph
10.1(b);
(c) next, there shall be charged to each Participant's Loan
Fund subaccount and credited to the Participant's
subaccounts under the other Investment Funds in
accordance with paragraph 10.1(e) any payments of
principal and interest received by the Trustee from
such Participant since the last preceding Valuation
Date;
(d) next, there shall be allocated and credited to each
such Participant's appropriate Account the
contributions and forfeitures, if any, that are to be
allocated and credited as of that date in accordance
with the provisions of subsection 7.3; and
(e) finally, there shall be charged to the proper
subaccount for each Account of each Participant under
each of the Investment Funds all payments, withdrawals,
distributions and quarterly transfers among Investment
Funds made to or on account of that Participant since
the last preceding Valuation Date that have not been
charged previously.
The "Fair Market Value" of an Investment Fund as at any date
means the then net worth of that Investment Fund, as determined
by the Trustee in accordance with the provisions of the Trust
and, to the extent held under that fund, exclusive of:
(i) Discretionary Profit Sharing Contributions,
if any, received by the Trustee for the period
elapsed since the close of the last preceding Plan
Year;
(ii) Pre-Tax and Matching Contributions, rollover
contributions and transferred amounts, if any,
<PAGE>196
received by the Trustee for the period elapsed
since the last preceding Valuation Date;
(iii) forfeitures, if any, arising under the Plan during
the period elapsed since the close of the last
preceding Plan Year; and
(iv) any payments of interest and repayments of
principal with respect to any loans under
subsection 10.1 received by the Trustee since the
last preceding Valuation Date.
7.3. Allocation and Crediting of Contributions and
Forfeitures. Subject to the provisions of Section 8,
contributions and forfeitures shall be allocated and credited as
follows:
(a) Pre-Tax Contributions, Matching Contributions, rollover
contributions and transferred amounts made by or on
behalf of a Participant for any month (or calendar
quarter for periods prior to August 1, 1993) shall be
credited to that Participant's appropriate Accounts as
of the Valuation Date coinciding with or next following
the last day of such month (or calendar quarter).
(b) As of the last day of each Plan Year, the Discretionary
Profit Sharing Contribution of each Employer for that
Plan Year and any forfeitures pursuant to subsection
11.11 attributable to prior Discretionary Profit
Sharing Contributions by an Employer shall be allocated
among and credited to the appropriate Accounts of
Participants who completed a Year of Service during
that Plan Year, excluding Participants who were not
employed by the Employer on the last day of the year,
but including Participants who were not employed by the
Employer on the last day of that year because of death,
retirement on or after age 62 or total and permanent
disability, pro rata, according to the proportion the
Participant's total units (described below) with
respect to such year bear to the total units awarded to
all Participants with respect to such year. For
purposes of this subsection 7.3, a Participant shall
receive one unit for each full $100 of Compensation
received by him during the year if he has completed
fewer than 10 Years of Service with the Employers and
Related Companies or two units for each full $100 of
Compensation received by him during the year if he has
completed ten or more Years of Service with the
Employers and Related Companies as of the last day of
the Plan Year.
<PAGE>197
(c) As of the last day of each Plan Year, any forfeitures
pursuant to section 11.11 attributable to prior
Matching Contributions by an Employer shall be
allocated among and credited to the appropriate
Accounts of Participants in the manner described in
paragraph (b) above; provided, however, only
Participants who made Pre-Tax Contributions during such
Plan Year shall be eligible for an allocation and for
purposes of determining the proportion of such a
Participant's total units, only Participants who made
Pre-Tax Contributions during such year shall be
included.
For purposes of this Section 7, Discretionary Profit Sharing
Contributions for any Plan Year shall be considered to have been
made on the last day of that year, regardless of when paid to the
Trustee.
7.4. Statement of Plan Interest. As soon as practicable
after the last day of each Plan Year, the Committee shall provide
each Participant with a statement reflecting the balances of his
Accounts.
<PAGE>198
SECTION 8
Limitations on Compensation, Contributions and Allocations
----------------------------------------------------------
8.1. Reduction of Contribution Rates. To conform the
operation of the Plan to sections 401(a)(4), 401(k)(3), 401(m),
402(g) and 415(c) of the Code, the Committee may unilaterally
modify or revoke any Pre-Tax Contribution election made by a
Participant pursuant to subsection 4.1, or may reduce (to zero if
necessary) the level of Matching Contributions to be made on
behalf of Highly Compensated Participants pursuant to subsection
5.1.
8.2. Limitations on Annual Addition. Notwithstanding any
other provisions of the Plan to the contrary, a Participant's
Annual Addition (as defined below) for any Plan Year shall not
exceed an amount equal to the lesser of:
(a) $30,000 (or, if greater, 1/4 of the dollar
limitation in effect under section 415(b)(1)(A) of the
Code); or
(b) 25 percent of the Participant's Section 415
Compensation (defined below) for that Plan Year ,
calculated as if each Section 415 Affiliate (defined
below) were a Related Company,
reduced by any Annual Addition for the Participant for the Plan
Year under any other defined contribution plan of an Employer or
a Related Company or Section 415 Affiliate, provided that, if any
other such plan has a similar provision, the reduction shall be
pro rata. The term "Annual Addition" means, with respect to any
Participant for any Plan Year the sum of all contributions
(excluding rollover contributions and transfers) and forfeitures
allocated to a Participant's Accounts under the Plan for such
year pursuant to subsection 7.3, regardless of whether any such
amounts (or portions thereof) are subsequently distributed in
accordance with subsections 8.5, 8.7, 8.9 or 8.10. The term
Annual Addition shall also include employer contributions
allocated for a Plan Year to any individual medical account (as
defined in section 415(l) of the Code) of a Participant and any
amount allocated for a Plan Year to the separate account of a
Participant for payment of post-retirement medical benefits under
a funded welfare benefit plan (as described in section 419A(d)(2)
of the Code), which is maintained by an Employer or a Related
Company or a Section 415 Affiliate. A Participant's "Section 415
Compensation" shall mean the Participant's Compensation
(determined without regard to the limitation under section
401(a)(17) of the Code), less any elective contributions made on
<PAGE>199
the Participant's behalf for the Plan Year to a plan sponsored by
an Employer or a Related Company that are not currently
includable in income pursuant to sections 125 or 402(a)(8) of the
Code. "Section 415 Affiliate" means any entity that would be a
Related Company if the ownership test of section 414 of the Code
were "more than 50 percent" rather than "at least 80 percent".
For purposes of applying the limitations of section 415 of the
Code, the limitation year shall be the Plan Year.
8.3. Excess Annual Additions. If, as a result of the
allocation of forfeitures, a reasonable error in estimating a
Participant's Compensation or such other mitigating circumstances
as the Commissioner of Internal Revenue shall prescribe, the
Annual Additions for a Participant for a Plan Year exceed the
limitations set forth in subsection 8.2, the excess amounts shall
be held in suspense as necessary, and credited to such
Participant's Account in the next following Plan Year in
accordance with Treas. Reg., 1.415-6(b)(6)(ii) after any Pre-Tax
Contributions are first returned. Any Pre-Tax Contributions
returned to the Participant in accordance with this subsection
8.3 shall be disregarded for purposes of subsections 8.5, 8.6,
8.9 and 8.10.
8.4. Combined Plan Limitation. If a Participant also
participates in any defined benefit plan (as defined in section
415(k) of the Code) maintained by an Employer or a Related
Company or Section 415 Affiliate, the aggregate benefits payable
to, or on account of, the Participant under such plan together
with this Plan shall be determined in a manner consistent with
section 415(e) of the Code. The benefit provided for the
Participant under the defined benefit plan shall be adjusted to
the extent necessary so that the sum of the "defined benefit
fraction" and the "defined contribution fraction" (as such terms
are defined in section 415(e) of the Code and applicable
regulations thereunder) calculated with regard to such
Participant does not exceed 1.0. For purposes of this subsection
8.4, all qualified defined benefit plans (whether or not
terminated) of the Employers, Related Companies and Section 415
Affiliates shall be treated as one defined benefit plan.
8.5. $7,000 Limitation. In no event shall the Pre-Tax
Contributions for a Participant under the Plan (together with
elective deferrals under any other cash-or-deferred arrangement
maintained by an Employer or a Related Company) for any taxable
year exceed $7,000 or such other amount as may be permitted under
section 402(g) of the Code. If during any taxable year a
Participant is also a participant in another cash or deferred
arrangement, and if his elective deferrals under such other
arrangement together with his Pre-Tax Contributions exceed the
maximum amount permitted for the Participant for that year under
<PAGE>200
section 402(g) of the Code, the Participant, not later than
March 1 following the close of such taxable year, may request the
Committee to direct the Trustee to distribute all or a portion of
such excess to him, with any allocable gains or losses for that
Plan Year (determined in accordance with any reasonable method
adopted by the Committee for that Plan Year that either (i)
conforms to the accounting provisions of Section 7 and is
consistently applied to the distribution of excess deferrals
under this subsection 8.5 and excess contributions under
subsections 8.7, 8.9 and 8.10 to all affected Participants, or
(ii) satisfies any alternative method set forth in applicable
Treasury regulations. Any such request shall be in writing and
shall include adequate proof of the existence of such excess, as
determined by the Committee in its sole discretion. If the
Committee is so notified, such excess amount shall be distributed
to the Participant no later than the April 15 following the close
of the Participant's taxable year. In addition, if the
applicable limitation for a Plan Year happens to be exceeded with
respect to this Plan alone, or this Plan and another plan or
plans of the Employers and Related Companies, the Committee shall
direct such excess Pre-Tax Contributions (with allocable gains or
losses) to be distributed to the Participant as soon as
practicable after the Committee is notified of the excess
deferrals by the Company, an Employer or the Participant, or
otherwise discovers the error (but no later than the April 15
following the close of the Participant's taxable year).
Notwithstanding the foregoing provisions of this subsection 8.5,
the dollar amount of any distribution due hereunder shall be
reduced by the dollar amount of any Pre-Tax Contributions
previously distributed to the same Participant pursuant to
subsection 8.7, provided, however, that for purposes of
subsections 8.2 and 8.6, the correction under this subsection 8.5
shall be deemed to have occurred before the correction under
subsection 8.7.
8.6. Code Section 401(k)(3) Testing. For any Plan Year,
the amount by which the average of the Deferral Percentages (as
defined below) of each eligible employee who is Highly Compen
sated (the "Highly Compensated Group Deferral Percentage")
exceeds the average of the Deferral Percentages of each eligible
employee who is not Highly Compensated (the "Non-Highly Compen
sated Group Deferral Percentage") shall be less than or equal to
either (i) a factor of 1.25 or (ii) both a factor of 2 and a
difference of 2. "Deferral Percentage" for any eligible employee
for a Plan Year shall be determined by dividing his Pre-Tax
Contributions for the year by his Compensation for the year,
subject to the following special rules:
(a) any employee eligible to participate in the Plan
at any time during a Plan Year in accordance with
<PAGE>201
subsection 2.1 (without regard to any suspension
imposed by any other provision hereunder) shall be
counted, whether or not any Pre-Tax Contributions are
made on his behalf for the year;
(b) the Deferral Percentage for any Highly Compensated
Participant who is eligible to participate in the Plan
and who is also eligible to make other elective
deferrals under one or more other cash or deferred
arrangements described in section 401(k) of the Code
maintained by an Employer or a Related Company for a
plan year that ends with or within the Plan Year (other
than a plan or arrangement subject to mandatory
disaggregation under applicable Treasury regulations),
shall be determined as if all such elective deferrals
were made on his behalf under the Plan;
(c) for purposes of determining the Deferral
Percentage of a Highly Compensated Participant who is a
5-percent owner (as defined in section 416(i)(1)(B) of
the Code) of an Employer or a Related Company or one of
the ten most highly-paid employees of all the Employers
and Related Companies, the Pre-Tax Contributions and
Compensation of such Participant shall include the Pre-
Tax Contributions and Compensation for the Plan Year of
his family members (as defined in section 414(q)(6) of
the Code), and any such family members shall be
disregarded as separate employees in determining the
Highly Compensated and Non-Highly Compensated Group
Deferral Percentages;
(d) excess Pre-Tax Contributions distributed to a
Participant under subsection 8.5 shall be counted in
determining such Participant's Deferral Percentage,
except in the case of a distribution to a non-Highly
Compensated Participant required to comply with section
401(a)(30) of the Code;
(e) if this Plan is aggregated with one or more other
plans for purposes of section 410(b) of the Code (other
than the average benefit percentage test), this
subsection 8.6 shall be applied as if all such plans
were a single plan; provided, however, that for Plan
Years beginning after 1989, such aggregated plans must
all have the same plan year; and
(f) all Participants who are members of a single
collective bargaining unit shall be tested separately
under this subsection 8.6.
<PAGE>202
Application of this subsection 8.6 shall be made in accordance
with section 401(k)(3) of the Code and applicable regulations
thereunder.
8.7. Correction Under Section 401(k) Test. In the event
that the Highly Compensated Group Deferral Percentage for any
Plan Year does not initially satisfy one of the tests referred to
in subsection 8.6, the Committee shall direct the Trustee to
distribute to Highly Compensated Participants enough of their Pre-
Tax Contributions under the leveling method described in
applicable Treasury regulations, with any allocable gains or
losses for such Plan Year determined in accordance with any
reasonable method adopted by the Committee for that Plan Year
that either (i) conforms to the accounting provisions of
Section 7 and is consistently applied to making corrective
distributions under this subsection 8.7 and subsections 8.5, 8.9
and 8.10 to all affected Participants or (ii) satisfies any
alternative method set forth in applicable Treasury regulations,
so that the Highly Compensated Group Deferral Percentage meets
one of the tests referred to in subsection 8.6. The amount to be
distributed to any Participant pursuant to this subsection 8.7
shall be reduced by the amount of any Pre-Tax Contributions
distributed to him for the taxable year ending with or within
such Plan Year pursuant to subsection 8.5. To the extent any
distribution of excess contributions is required pursuant to this
subsection 8.7 for any Plan Year, such distribution shall be made
after the close of the Plan Year in which the excess arose and in
no event later than the close of the Plan Year following such
Plan Year.
8.8. Code Section 401(m)(2) Testing. For any Plan Year,
the amount by which the average of the Contribution Percentages
(as defined below) of each eligible employee who is Highly
Compensated (the "Highly Compensated Group Contribution Per
centage") exceeds the average of the Contribution Percentages of
each eligible employee who is not Highly Compensated (the "Non-
Highly Compensated Group Contribution Percentage") shall be less
than or equal to either (i) a factor of 1.25 or (ii) both a
factor of 2 and a difference of 2. The "Contribution Percentage"
for any eligible employee for a Plan Year shall be determined by
dividing his Matching Contributions for the year by his
Compensation for the year, subject to the following special
rules:
(a) any employee eligible to participate in the Plan
at any time during a Plan Year in accordance with
subsection 2.1 (without regard to any suspension
imposed by any other provision hereunder) shall be
counted, whether or not any Matching Contributions are
made for him for the year;
<PAGE>203
(b) the Contribution Percentage for any Highly
Compensated Participant who is eligible to participate
in the Plan and who is also eligible to participate in
one or more other qualified plans maintained by an
Employer or a Related Company with a plan year that
ends with or within the Plan Year (other than a plan
subject to mandatory disaggregation under applicable
Treasury regulations) with after-tax or matching
contributions shall be determined as if all such
contributions were made under the Plan;
(c) for purposes of determining the Contribution
Percentage of a Highly Compensated Participant who is a
5-percent owner (as defined in section 416(i)(1)(B) of
the Code) of an Employer or a Related Company or one of
the ten most highly-paid employees of all the Employers
and Related Companies, the Matching Contributions and
Compensation of such Participant shall include the
Matching Contributions and Compensation for the Plan
Year of his family members (as defined in section
414(q)(6) of the Code), and any such family members
shall be disregarded as separate employees in
determining the Highly Compensated and Non-Highly
Compensated Group Contribution Percentages;
(d) if this Plan is aggregated with one or more other
plans for purposes of section 410(b) of the Code (other
than the average benefit percentage test), this
subsection 8.9 shall be applied as if all such plans
were a single plan; provided, however, that for Plan
Years beginning after 1989, such aggregated plans must
all have the same plan year; and
(e) all Participants who are members of a single
collective bargaining unit shall be tested separately
under this subsection 8.8.
Application of the provisions of this subsection 8.8 shall be
made in accordance with the requirements of section 401(m)(2) of
the Code and the regulations thereunder.
8.9. Correction Under Section 401(m) Test. In the event
that the Highly Compensated Group Contribution Percentage for any
Plan Year does not initially satisfy one of the tests referred to
in subsection 8.8, the Committee shall direct the Trustee to
distribute to Highly Compensated Participants enough of their
Matching Contributions under the leveling method described in
applicable Treasury regulations, with any allocable gains or
losses for such Plan Year determined in accordance with any
<PAGE>204
reasonable method adopted by the Committee for that Plan Year
that either (i) conforms to the accounting provisions of Section
7 and is consistently applied to making corrective distributions
under this subsection 8.9 and subsections 8.5, 8.7 and 8.10 to
all affected Participants or (ii) satisfies any alternative
method set forth in applicable Treasury regulations, so that the
Highly Compensated Group Contribution Percentage meets one of the
tests referred to in subsection 8.8. Notwithstanding the
foregoing provisions of this subsection 8.9, any such excess
Matching Contributions that are not yet vested in accordance with
subsection 9.1 shall be forfeited as of the end of the Plan Year
to which such corrective distributions relate (and treated in the
same manner as any other forfeiture under the Plan). The
Committee shall make any distribution required under this
subsection 8.9 for any Plan Year after the close of the Plan Year
in which such excess contributions were contributed and in no
event later than the close of the Plan Year following such Plan
Year.
8.10. Multiple Use of Alternative Limitation. Effective
for Plan Years beginning on or after January 1, 1989, notwith
standing any other provision of this Section 8, if the 1.25
factors referred to in subsections 8.6 and 8.8 are both exceeded
for a Plan Year, the leveling method of correction prescribed in
subsection 8.9 shall be continued until the aggregate limit set
forth in Treas. Reg., 1.401(m)-2(b)(3) is satisfied for such
Plan Year.
8.11. Highly Compensated. An employee or Participant shall
be "Highly Compensated" for any Plan Year if during that Plan
Year or the preceding Plan Year, he:
(a) was at any time a 5 percent owner of an Employer
or a Related Company;
(b) received Compensation in excess of $75,000
(indexed for cost-of-living adjustments under section
415(d) of the Code);
(c) received Compensation in excess of $50,000
(indexed for cost-of-living adjustments under section
415(d) of the Code), and was in the top-paid group of
employees (as defined below) for such year; or
(d) was at any time an officer and received
Compensation greater than 50 percent of the amount in
effect under section 415(b)(1)(A) of the Code for such
year, provided that the officers taken into account
under this paragraph (d) shall be limited to 50 or, if
<PAGE>205
less, the greater of 3 individuals or 10 percent of the
employees of all the Employers and Related Companies;
provided, however, that an employee in category (b), (c) or (d)
above for the current Plan Year who does not fall within at least
one such category for the preceding Plan Year shall not be
considered Highly Compensated for the current Plan Year unless he
is also among the 100 most highly-paid employees of all the
Employers and Related Companies for such current year. An
employee shall be considered to be in the "top-paid group" of
employees for any year if such employee is in the group
consisting of the top 20 percent of the active employees of all
the Employers and Related Companies when ranked on the basis of
Compensation paid during such year. In determining the total
number of active employees in a year, the following provisions
shall apply:
(i) the term "employee" shall include a leased
employee who is treated as an employee pursuant to the
provisions of section 414(n)(2) of the Code, other than
any individual who is covered by a safe-harbor plan
described in section 414(n)(5) of the Code; and
(ii) the following employees shall be disregarded:
employees who have not attained age 21 by the end of
the year; employees who by the end of the year have not
completed 6 months of service (including service in the
immediately preceding year); employees who normally
work fewer than 17-1/2 hours per week; employees who
normally work fewer than 6 months during any year; and
non-resident aliens with no U.S. source income.
8.12. Plan Disaggregation. Notwithstanding the foregoing
provisions of this Section 8, for Plan Years prior to 1992,
testing under subsections 8.6, 8.8 and 8.10 and correction under
subsections 8.7, 8.9 and 8.10 may be performed separately with
respect to different groups of eligible employees under the Plan
as determined by the Committee, provided that each such group
meets the requirements of applicable regulations under section
401(a)(4) of the Code.
<PAGE>206
SECTION 9
Vesting and Termination Dates
-----------------------------
9.1. Determination of Vested Interest. The interest of a
Participant in his Discretionary Account and Matching Account
shall become fully vested and nonforfeitable in accordance with
the following schedule:
Years of Service Vested Percentage
Fewer than 1 0
1 but fewer than 2 20
2 but fewer than 3 40
3 but fewer than 4 60
4 but fewer than 5 80
5 or more 100
A Participant shall at all times have a nonforfeitable interest
in his Pre-Tax Account and After-Tax Transfer Account.
9.2. Accelerated Vesting. Notwithstanding the foregoing
provisions of this Section 9, a Participant shall have a fully
vested, nonforfeitable interest in all his Accounts when he
attains age 62, dies or becomes permanently disabled while
employed by an Employer or a Related Company. In addition, in
the event of the Plan's termination (in accordance with
subsection 13.2) or partial termination (as determined under
applicable law and regulations) or the complete discontinuance of
Employer contributions to the Plan, each affected Participant
shall have a fully vested, nonforfeitable interest in all his
Accounts. For purposes of the Plan, a Participant will be
considered permanently disabled if, on account of physical or
mental disability, he no longer is capable of performing the
duties assigned to him by his Employer or of any other position
at the Employer for which the employee is reasonably qualified or
which condition constitutes total disability under the Federal
Social Security Act.
9.3. Termination Date. A Participant's "Termination Date"
shall be the date on which his employment with the Employers and
Related Companies terminates for any reason.
9.4. Distribution Only Upon Separation From Service.
Subject to subsection 11.14, notwithstanding any other provision
of the Plan to the contrary, a Participant may not commence
distribution of his Pre-Tax Account pursuant to Section 11, even
though his employment with the Employers and Related Companies
has terminated, unless or until he also has a "separation from
<PAGE>207
service" within the meaning of section 401(k)(2)(B) of the
Internal Revenue Code. The foregoing restriction shall not
apply, however, if the Participant's termination of employment
occurs in connection with the sale by an Employer to an unrelated
corporation of at least 85 percent of the assets of a trade or
business, or the sale of its interest in a subsidiary to an
unrelated entity, provided (a) the Participant remains employed
in such trade or business or by such subsidiary after the sale,
(b) the Employer continues to maintain the Plan after the sale,
(c) no transfer of the Participant's Accounts occurs or is
scheduled to occur after the sale pursuant to subsection 13.3 to
a plan of such subsidiary or of the purchaser of such assets (or
any entity affiliated therewith), and (d) the Participant
receives distribution of his Pre-Tax Account under the Plan in a
lump sum by the end of the second calendar year after the year in
which the sale occurs.
<PAGE>208
SECTION 10
Loans and Withdrawals of Contributions While Employed
-----------------------------------------------------
10.1. Loans to Participants. The Committee, upon written
request by a Participant who is an employee of an Employer or
Related Company, or who is otherwise required to be given the
opportunity to borrow under applicable regulations, in such form
as the Committee may require and accompanied by the application
fee established by the Committee, may authorize a loan to be made
to the Participant of up to one-half of the balance in his Pre-
Tax Account subject to the following:
(a) No loan shall be made to a Participant if,
immediately after such loan, the sum of the outstanding
balances (including principal and interest) of all
loans made to him under this Plan and under any other
qualified retirement plans maintained by the Related
Companies would exceed $50,000, reduced by the excess,
if any, of:
(i) the highest outstanding balance of
all loans to the Participant from the plans during
the one-year period ending on the day immediately
before the date on which the loan is made; over
(ii) the outstanding balance of loans from
the plans to the Participant on the date on which
such loan is made;
and no loan shall be made to a Participant if the
aggregate amount of that loan and the outstanding
balance of any other loans to the Participant from the
Plan would exceed one-half of the total vested balance
of the Participant's Accounts under the Plan as of the
date the loan is made.
(b) Each loan to a Participant shall be charged
against his Pre-Tax Account and the Investment Funds in
which his Pre-Tax Account is invested in accordance
with his election; provided, however, loans may not be
charged against the Stock Fund. If a Participant does
not elect the method of charging his Investment Funds,
the loan shall be charged against each Investment Fund
other than the Stock Fund in the same ratio as the
value of his interest in such Fund bears to the total
of his Pre-Tax Account excluding the Stock Fund.
<PAGE>209
(c) Each loan shall be evidenced by a written note
providing for:
(i) a reasonable repayment period of
not more than 5 years from the date of the loan
(or such longer period as the Committee may permit
for a loan used to acquire a dwelling which,
within a reasonable period of time, will be used
as the Participant's principal residence);
(ii) a reasonable rate of interest;
(iii) substantially equal payments
of principal and interest over the term of the
loan no less frequently than quarterly; and
(iv) such other terms and conditions as
the Committee shall determine.
(d) Promissory notes shall be held by the Trustee in
the Loan Fund.
(e) Payments of principal and interest to the Trustee
with respect to any loan to a Participant:
(i) shall reduce the outstanding
balance with respect to that loan;
(ii) shall reduce the balance of the
Loan Fund holding the promissory note reflecting
that loan;
(iii) shall be credited to the
Participant's Pre-Tax Account; and
(iv) shall be invested in the Investment
Funds (other than the Loan Fund) in accordance
with his most recent investment directions.
(f) A Participant's obligation to repay a loan (or
loans) from the Plan shall be secured by the
Participant's vested interest in the Plan.
(g) Generally, loan repayments will be made by payroll
deductions. However, during any period when payroll
deduction is not possible or is not permitted under
applicable law, repayment will be made by personal
check.
<PAGE>210
(h) The loan may be prepaid in full or in part at any
time without penalty, subject to such rules as the
Committee may establish with respect to the minimum
amount of any partial prepayment.
(i) Any loan to a Participant shall become immediately
due and payable upon his termination of employment with
the Employers and Related Companies if he does not
continue to be a party in interest to the Plan after
such termination, unless such Participant's Accounts
are scheduled to be transferred to a qualified plan of
an employer that is not a Related Company pursuant to
subsection 13.3. Notwithstanding any other provision
of the Plan to the contrary, if the outstanding balance
of principal and interest on any loan is not paid
within 30 days of the expiration of its term or upon
acceleration in accordance with the preceding sentence,
a default shall occur and the Trustee shall apply all
or a portion of the Participant's vested interest in
the Plan in satisfaction of such outstanding
obligation, but only to the extent such vested interest
(or portion thereof) is then distributable under
applicable provisions of the Code. If necessary to
satisfy the entire outstanding obligation, such
application of the Participant's vested interest may be
executed in a series of actions as amounts credited to
the Participant's Account become distributable.
(j) If distribution is to be made to a Beneficiary in
accordance with subsection 11.3, any outstanding
promissory note of the Participant shall be canceled
and the unpaid balance of the loan, together with any
accrued interest thereon, shall be treated as a
distribution to or on behalf of the Participant
immediately prior to commencement of distribution to
the Beneficiary.
(k) A Participant may have no more than two loans
outstanding at a time.
(l) The Committee shall establish uniform procedures
for applying for a loan, evaluating loan applications,
and setting reasonable rates of interest, which shall
be communicated to Participants in writing.
10.2. Withdrawals On Account of Hardship. In the event of
a Hardship (as defined in subsection 10.3), a Participant whose
Termination Date has not yet occurred may elect to withdraw all
or part of his interest in his Pre-Tax Account at intervals no
<PAGE>211
shorter than 12 months, as provided and in the order set forth
below:
(a) up to 100% of the portion of his Pre-Tax Account
attributable to rollover contributions;
(b) up to 100% of his Pre-Tax Contributions; and
(c) up to 100% of the earnings credited on his Pre-Tax
Contributions prior to January 1, 1989.
10.3. Hardship Withdrawals. A withdrawal will not be
considered to be made on account of "Hardship" unless the
following requirements are met:
(a) The withdrawal is requested because of an
immediate and heavy financial need of the Participant,
and will be so deemed if the Participant represents
that the withdrawal is made on account of:
(i) expenses for medical care described
in section 213(d) of the Code incurred by the
Participant, the Participant's spouse or any
dependent of the Participant (as defined in
section 152 of the Code) or necessary for such
persons to obtain such medical care;
(ii) the purchase (excluding mortgage
payments) of a principal residence of the
Participant;
(iii) payment of tuition and related
educational fees for the next 12 months of post-
secondary education for the Participant, or his
spouse, children or dependents;
(iv) the need to prevent the eviction of
the Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence; or
(v) any other circumstances of
immediate and heavy financial need identified as
such in revenue rulings, notices or other
documents of the Internal Revenue Service of
general applicability.
(b) The withdrawal must also be necessary to satisfy
the immediate and heavy financial need of the
Participant. It will be considered necessary if the
Committee determines that the amount of the withdrawal
does not exceed the amount required to relieve the
<PAGE>212
financial need (taking into account any applicable
income or penalty taxes resulting from the withdrawal)
and if the need cannot be satisfied from other sources
that are reasonably available to the Participant. In
making this determination, the Committee may reasonably
rely on the Participant's written representation that
the need cannot be relieved:
(i) through reimbursement or
compensation by insurance or otherwise;
(ii) by reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself give rise to an
immediate and heavy financial need;
(iii) by ceasing to make Pre-Tax
Contributions to the Plan (or any other plan of
the Employer permitting deferral of compensation);
or
(iv) by a loan pursuant to subsection
10.1 or by borrowing from commercial sources on
reasonable commercial terms.
(c) Notwithstanding any other provision of the Plan,
Pre-Tax and Matching Contributions by or on behalf of
the Participant shall be suspended as of the first day
of the pay period coincident with or next following the
date of the Hardship withdrawal and such contributions
may not be resumed until the first day of the calendar
quarter coincident with or next following the 6-month
period beginning on the date of such suspension. A
Participant shall not fail to be treated as an eligible
employee for purposes of subsections 8.6 and 8.8 merely
because of the application of this paragraph (c).
10.4. Withdrawals On or After Age 59-1/2. A Participant
whose Termination Date has not yet occurred may elect to withdraw
all or part of his interest in his Pre-Tax Account on or after
the date he attains age 59-1/2, at intervals no shorter than 12
months, as provided and in the order set forth below:
(a) up to 100% of his Pre-Tax Contributions;
(b) up to 100% of the earnings credited on his Pre-Tax
Contributions; and
(c) up to 100% of the portion of his Pre-Tax Account
attributable to rollover contributions.
<PAGE>213
10.5. Form of Withdrawal. For purposes of subsections 10.2
and 10.4, a Participant's Pre-Tax Account shall be valued as of
the Valuation Date immediately preceding the withdrawal.
Withdrawals from the Stock Fund shall be made in either cash or
shares of DeVRY Inc. common stock, as the Participant elects or,
if the Participant does not elect, withdrawals pursuant to
subsection 10.2 shall be made in cash and withdrawals pursuant to
subsection 10.4 shall be made in shares of DeVRY Inc. common
stock. For purposes of subsections 10.2 and 10.4, each
withdrawal by a Participant shall be charged against the
Investment Funds in which his Pre-Tax Account is invested in
accordance with his election. If a Participant does not elect
the method of charging his withdrawal, the withdrawal shall be
charged against the Investment Funds (other than the Stock Fund)
according to descending level of investment risk and the Stock
Fund shall be charged last.
<PAGE>214
SECTION 11
Distributions
-------------
11.1. Distributions to Participants After Termination of
Employment. If a Termination Date occurs with respect to a
Participant (for a reason other than his death), the vested
portions of his Accounts shall be distributed in accordance with
the following provisions of this subsection 11.1, subject to the
provisions of subsection 11.2 and subsection 11.5:
(a) If the value of the vested portions of the Parti
cipant's Accounts (including any loans outstanding on
his Termination Date) does not exceed $3,500,
determined as of the Valuation Date next following his
Termination Date such vested portions, less any
outstanding loan balance distributable in accordance
with subsection 10.1(i), shall be distributed to the
Participant as soon as practicable after the Valuation
Date next following his Termination Date, in a lump sum
payment.
(b) If the value of the vested portions of the Partici
pant's Accounts (including any loans outstanding on his
Termination Date) exceeds $3,500, determined as of the
Valuation Date next following his Termination Date,
such vested portions, less any outstanding loan balance
distributable in accordance with subsection 10.1(i),
shall be distributed (or shall begin to be distributed)
to the Participant on (or as soon as practicable after)
the Distribution Date he elects, by one of the
following methods chosen by the Participant:
(i) by payment in a lump sum, or
(ii) by payment in a series of
substantially equal annual or more frequent
installments for a period not exceeding 10 years,
or
(iii) by purchase from an insurance
company and distribution to him of an annuity
contract providing for periodic distributions to
him or to him and his Beneficiary for his life
(with or without a period certain) or their joint
lives, subject to the provisions of subsection
11.4;
<PAGE>215
provided, however, that if the value of the vested
portions of the Participant's Accounts is reduced to
less than $3,500 as of any Valuation Date prior to a
Distribution Date selected by the Participant, on
account of investment losses or payment to an alternate
payee pursuant to a qualified domestic relations order,
such reduced Account balance shall be distributed to
the Participant as soon as practicable after such
Valuation Date.
(c) "Distribution Date" shall mean the Valuation Date
as of which a payment in any form is made pursuant to
this Section 11; provided, however, that in the event
of an election of an annuity under paragraph (b)(iii)
above, the Distribution Date shall be no later than the
date payment is irrevocably made on behalf of the
Participant to the insurance company issuing the
annuity contract.
11.2. Direct Rollover. Effective January 1, 1993, if the
distributee of a distribution under paragraphs (a) or (b)(i) of
subsection 11.1 or any other eligible rollover distribution (as
defined in section 402 of the Code or related regulations or
notices) under the Plan:
(a) elects in such form and at such time as the
Committee may prescribe to have part or all of the
distribution paid directly to an eligible retirement
plan (as defined in section 401(a)(31)(D) of the Code),
and
(b) specifies an eligible retirement plan to which the
distribution is to be paid,
the distribution shall be made in the form of a direct trustee-to-
trustee rollover to the plan so specified.
11.3. Distributions to Beneficiaries. Subject to
subsection 11.2 and subsection 11.5, the following rules shall
apply if a Participant dies while any vested portions of his
Accounts remain undistributed:
(a) If the Participant dies before benefit payments to
him have commenced or an annuity contract has been
purchased, the vested balance of his Accounts less any
outstanding loan balance distributable in accordance
with paragraph 10.1(j), shall be distributed as soon as
practicable after the Valuation Date following the date
of his death, to his Beneficiary (as defined in
subsection 11.6) in a lump sum payment.
<PAGE>216
(b) If a Participant dies after benefit payments to
him have commenced, the vested balance, if any, of his
Accounts shall continue to be distributed to his
Beneficiary in accordance with the method of
distribution selected by the Participant; provided,
however, that the Beneficiary may elect to have such
vested balance paid in a lump sum payment as soon as
practicable after the Valuation Date next following the
Participant's death.
11.4. Special Rules Governing Annuity Elections. If a
married Participant elects distribution in the form of an annuity
pursuant to paragraph 11.1(b)(iii), the following rules shall
apply and shall supersede any other provision of the Plan to the
contrary:
(a) The vested portions of the Participant's Accounts,
less any outstanding loan balance distributable in
accordance with paragraph 10.1(i), shall be used to
purchase a nontransferable "Joint and Survivor Annuity"
(that is, an annuity payable for the life of the
Participant with a survivor annuity payable for the
life of his spouse which is not less than 50 percent of
the amount of the annuity payable during the joint
lives of the Participant and spouse), unless the
Participant elects another form of annuity and, if
applicable, a Beneficiary other than his spouse, with
the consent of his spouse to such form and Beneficiary,
during the 90-day period immediately preceding his
Distribution Date, which Distribution Date shall be no
earlier than 30 days after his receipt of a written
explanation from the Committee of the terms and
conditions of the Joint and Survivor Annuity and the
effect of an election of a different annuity form.
(b) No consent by the spouse to the election of a form
of annuity other than the Joint and Survivor Annuity
and, if applicable, Beneficiary other than the spouse
shall be effective unless it is in writing,
acknowledges the effect of such consent and is
witnessed by a notary public (unless the Committee
determines that there is no spouse, that the spouse
cannot be located or that consent may be waived because
of such other circumstances as regulations or rulings
under Code section 417 set forth).
(c) During the period between his election of an
annuity and his Distribution Date, no loan may be made
to a Participant pursuant to subsection 10.1, no amount
may be withdrawn by the Participant pursuant to
<PAGE>217
subsection 10.2 or 10.4 and no amount may be
distributed to the Participant pursuant to subsection
11.1, in any form other than a Joint and Survivor
Annuity, without the written consent of the spouse as
provided in paragraph (b) of this subsection 11.4.
(d) Subject to paragraph (e) below, if the Participant
dies during the period between his election of an
annuity and his Distribution Date, the vested portions
of his Accounts (less any amounts credited to the Loan
Fund, which shall be distributed in accordance with
paragraph 10.1(j)) shall be paid to his spouse in the
form of a life annuity as of the Valuation Date next
following the date the Participant would have attained
age 65 or, if the spouse so elects, as soon as
practicable after the Valuation Date next following his
death; provided, however, that a spouse to whom payment
is due under this paragraph (d) may elect to have such
vested portions, if any, distributed in the form of a
lump sum payment.
(e) The provisions of paragraph (d) above shall not
apply, and distribution upon the death of the
Participant shall be made in accordance with subsection
11.3, if the spouse consents to the designation of a
Beneficiary other than the spouse in accordance with
subsection 11.6 during the period between the
Participant's election of an annuity and his death, and
acknowledges that such consent to the Participant's
designation of such Beneficiary constitutes the
spouse's consent to the Participant's waiver of a
qualified preretirement survivor annuity payable to the
spouse in accordance with section 417 of the Code.
(f) A Participant may revoke his election pursuant to
this subsection 11.4, and may make a new election of
any form of distribution permitted under paragraph
11.1(b), at any time during the 90-day period
immediately preceding his Distribution Date; provided,
however, that if the effect of such revocation is to
select a distribution form other than a Joint and
Survivor Annuity, it shall be ineffective without the
written consent of his spouse in accordance with
paragraph (b) of this subsection 11.4 to the new form
of distribution and, if applicable, a Beneficiary other
than the spouse.
(g) A spouse's consent in accordance with paragraph
(b) of this subsection 11.4 shall be irrevocable.
<PAGE>218
11.5. Limits on Commencement and Duration of Distributions.
The following distribution rules shall be applied in accordance
with sections 401(a)(9) and 401(a)(14) of the Code and applicable
regulations thereunder, including the minimum distribution
incidental benefit requirement of Treas. Reg., 1.401(a)(9)-2,
and shall supersede any other provision of the Plan to the
contrary:
(a) Unless the Participant elects otherwise, in no
event shall distribution commence later than 60 days
after the close of the Plan Year in which the latest of
the following events occurs: the Participant's
attainment of age 65; the 10th anniversary of the year
in which the Participant began participating in the
Plan; or the Participant's Termination Date.
(b) Notwithstanding any other provision herein to the
contrary, distribution of the Participant's Accounts
shall commence by lump sum cash payment of his entire
Account balances on or before the Required Beginning
Date and each December 31 thereafter or, if the
Participant elects, by minimum annual distributions
based upon the Participant's life expectancy and
calculated in accordance with Treas. Reg.,
1.401(a)(9)-1 no later than his "Required Beginning
Date", that is, April 1 of the calendar year following
the calendar year in which he attains age 70-1/2,
unless the Participant attained age 70-1/2 prior to
January 1, 1988 (during a Plan Year when he was not a 5
percent or more owner, as described in Code section
416), in which case his Required Beginning Date will be
delayed until his Termination Date.
(c) The life expectancy of a Participant or a
Beneficiary will be determined in accordance with
Tables V and VI of Treas. Reg., 1.72-9, and shall not
be recalculated unless the Participant elects otherwise
prior to his Required Beginning Date.
(d) In the event of an annuity payment, distribution
payments shall be made over the life of the Participant
or over the lives of such Participant and his
Beneficiary (or over a period not extending beyond the
life expectancy of such Participant or the life
expectancy of such Participant and his Beneficiary).
(e) If a Participant dies after distribution of his
vested interest in the Plan has begun, the remaining
portion of such vested interest, if any, shall be
distributed to his Beneficiary at least as rapidly as
<PAGE>219
under the method of distribution used prior to the
Participant's death.
(f) If a Participant dies before distribution of his
vested interest in the Plan has begun, distribution of
such vested interest to his Beneficiary shall be
completed by December 31 of the calendar year in which
the fifth anniversary of the Participant's death
occurs; provided, however, that this five-year rule
shall not apply to a natural person designated as
Beneficiary by the Participant or under the specific
terms of the Plan, if
(i) such vested interest will be
distributed over the life of such designated
Beneficiary (or over a period not extending beyond
the life expectancy of such Beneficiary),
(ii) such distribution to the
Beneficiary begins not later than December 31 of
the calendar year following the calendar year in
which the Participant died or, if such Beneficiary
is the Participant's surviving spouse, not later
than December 31 of the calendar year following
the calendar year in which the Participant would
have attained age 70-1/2, and
(iii) the Beneficiary elects not to
have the five-year rule apply.
(g) If the Participant's surviving spouse is his
Beneficiary and such spouse dies before distribution to
such spouse begins, paragraph (f) shall be applied as
if the surviving spouse were the Participant.
(h) For purposes of paragraph (e) and (f),
distribution of a Participant's vested interest in the
Plan is considered to begin on his Required Beginning
Date; provided, however, that distribution irrevocably
begun in the form of an annuity shall be considered to
begin on the date it actually commences.
11.6. Beneficiary Designations. The term "Beneficiary"
shall mean the Participant's surviving spouse. However, if the
Participant is not married, or if the Participant is married but
his spouse consents to the designation of a person other than the
spouse, the term Beneficiary shall mean such person or persons as
the Participant designates to receive the vested portions of his
Accounts upon his death (or to be his co-annuitant beneficiary
under a term certain, in the event of distribution in the form of
<PAGE>220
an annuity contract). Such designation may be made, revoked or
changed (without the consent of any previously-designated
Beneficiary except his spouse) only by an instrument signed by
the Participant and received by the Committee prior to his death.
A spouse's consent to the designation of a Beneficiary other than
the spouse shall be in writing, shall acknowledge the effect of
such designation, shall be witnessed by a Plan representative or
a notary public and shall be effective only with respect to such
consenting spouse. In default of such designation, or at any
time when there is no surviving spouse and no surviving
Beneficiary designated by the Participant, his Beneficiary shall
be his surviving children (per stirpes) or, if he has no
children, the estate of the last to die of the Participant or his
designated Beneficiary. For purposes of the Plan, "spouse" means
the person to whom the Participant is legally married at the
relevant time. Notwithstanding the foregoing provisions of this
subsection 11.6, no spousal consent to the designation of a
person other than, or in addition to, the spouse as Beneficiary
shall be required if (i) the Participant and his spouse are
legally separated or the Participant has been abandoned (under
applicable state law) and the Participant has a court order to
that effect or (ii) it is established to the satisfaction of the
Committee that the spouse's consent cannot be obtained because
there is no spouse, because the spouse cannot be located or
because of such other circumstances as may be prescribed in
applicable Treasury regulations.
11.7. Facility of Payment. Notwithstanding the provisions
of this Section 11, if, in the Committee's opinion, a Participant
or Beneficiary is under a legal disability or is in any way
incapacitated so as to be unable to manage his financial affairs,
the Committee may direct the Trustee to make payment to a
relative or friend of such person for his benefit until claim is
made by a conservator or other person legally charged with the
care of his person or of his estate. Thereafter, any benefits
under the Plan to which such Participant or Beneficiary is
entitled shall be paid to such conservator or other person
legally charged with the care of his person or his estate.
11.8. Interests Not Transferable. The interests of a
Participant and other persons entitled to benefits under the Plan
are not subject to the claims of their creditors and may not be
voluntarily or involuntarily assigned, alienated or encumbered,
except in the case of a qualified domestic relations order which
relates to the provision of child support, alimony payments or
marital rights of a spouse, child or other dependent of a
Participant and which meets such requirements as may be imposed
by section 414(p) of the Code or regulations issued thereunder.
Notwithstanding any other provision of the Plan to the contrary,
such a domestic relations order may permit distribution of the
<PAGE>221
entire portion of the vested Account balance of a Participant
awarded to his alternate payee, in a lump sum payment as soon as
practicable after the Committee determines that such order is
qualified, without regard to whether the Participant would
himself be entitled under the terms of the Plan to withdraw or
receive a distribution of such vested amount at that time.
11.9. Absence of Guaranty. Neither the Committee, the
Trustee nor the Employers in any way guarantee the Trust Fund
from loss or depreciation. The Employers do not guarantee any
payment to any person. The liability of the Trustee to make any
payment is limited to the available assets of the Trust Fund.
11.10. Missing Participants or Beneficiaries. Each
Participant and each Beneficiary designated by the Participant
must file with the Committee from time to time in writing his
post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant or
Beneficiary at his last post office address filed with the
Committee or, in the case of a Participant, if no address is
filed with the Committee then at his last post office address as
shown on the Employers' records, will be binding on the
Participant and his Beneficiary for all purposes of the Plan.
Neither the Employers, the Committee nor the Trustee will be
required to search for or locate a Participant or Beneficiary.
11.11. Treatment of Nonvested and Partially Vested
Accounts. If a Termination Date occurs with respect to a
Participant who is not fully vested in his Accounts, the
following rules shall apply:
(a) The unvested portion of his Accounts shall be
forfeited as of the earlier of the date as of which the
vested portions of his Accounts are distributed to him
or the date the Participant incurs five consecutive One
Year Breaks in Service.
<PAGE>222
(b) If a Participant who received a distribution is
reemployed by an Employer or Related Company before he
incurs five consecutive One Year Breaks in Service, the
amount forfeited under paragraph (a) above shall be
restored (subject to the following provisions of this
paragraph (b)), without adjustment for earnings and
losses after the forfeiture, subject to the following:
(i) If the Participant received a
distribution of the vested portion of his Accounts
on account of his previous termination of
employment, the amount forfeited shall not be
restored unless the Participant repays to the
Trustee the full amount of such distribution
(without adjustment for any subsequent earnings or
losses thereon) before the earlier of the fifth
anniversary of his reemployment or the close of
five consecutive One Year Breaks in Service
commencing after the distribution, in which event
the amount forfeited shall be restored as soon as
practicable after the repayment.
(ii) The restoration shall be made first
from current forfeitures, if any, under the Plan
and then, if necessary, from a special Employer
contribution to the Plan.
(iii) A restoration shall not be
considered an Annual Addition for purposes of
subsection 8.2.
(iv) The amount restored shall be maintained
in separate subaccounts within the Participant's
Matching and Discretionary Accounts and his vested
interest in each subaccount shall be determined by
adding the amount of the prior distributions from
such Accounts to his separate subaccounts from
such Accounts to his separate subaccount balances
before applying the schedule set forth in
subsection 9.1 and then subtracting the amounts of
the prior distributions from the amounts derived
after application of such schedule.
(c) If the Participant is reemployed by an Employer or
Related Company after he incurs five consecutive One
Year Breaks in Service, such reemployment shall have no
effect on the forfeiture under paragraph (a) above.
11.12. Application of Forfeitures. Any forfeiture of
Discretionary Profit Sharing Contributions or Matching
Contributions and earnings thereon during a Plan Year pursuant to
<PAGE>223
subsection 11.11 shall be used first to restore any prior
forfeitures as required by subsection 11.11, and then shall be
allocated to Participants for the Plan Year in which such
forfeiture occurs in accordance with subsection 7.3 of the Plan.
11.13. Form of Payment. Payments shall be made in cash,
unless the Participant elects to have the portion of his Accounts
invested in the Stock Fund distributed in whole shares of DeVRY
Inc. common stock.
11.14. Disability Distribution. Notwithstanding any other
provision of the Plan to the contrary, a Participant who is
disabled, within the meaning of section 401(k)(2)(B) of the Code,
may elect immediate distribution of his Account balance without
regard to whether his Termination Date or separation from service
has occurred.
<PAGE>224
SECTION 12
The Committee
-------------
12.1. Membership and Authority. The Committee referred to
in subsection 1.3 shall consist of a committee of one or more
members appointed by the Company's Board of Directors. Except as
otherwise specifically provided in this Section 12, in
controlling and managing the operation and administration of the
Plan, the Committee shall act by a majority of its then members,
by meeting or by writing filed without meeting, and shall have
the following discretionary authority, powers, rights and duties
in addition to those vested in it elsewhere in the Plan or Trust:
(a) to adopt such rules of procedure and regulations
as, in its opinion, may be necessary for the proper and
efficient administration of the Plan and as are
consistent with the provisions of the Plan;
(b) to enforce the Plan in accordance with its terms
and with such applicable rules and regulations as may
be adopted by the Committee;
(c) to determine conclusively all questions arising
under the Plan, including the power to determine the
eligibility of employees and the rights of Participants
and other persons entitled to benefits under the Plan
and their respective benefits, and to remedy any
ambiguities, inconsistencies or omissions of whatever
kind;
(d) to maintain and keep adequate records concerning
the Plan and concerning its proceedings and acts in
such form and detail as the Committee may decide;
(e) to direct all payments of benefits under the Plan;
(f) to perform the functions of a "plan administrator"
as defined in section 414(g) of the Code, for purposes
of Section 7 and for purposes of establishing and
implementing procedures to determine the qualified
status of domestic relations orders (in accordance with
the requirements of section 414(p) of the Code) and to
administer distributions under such qualified orders;
(g) to employ agents, attorneys, accountants or other
persons (who may also be employed by or represent the
Employers) for such purposes as the Committee considers
necessary or desirable to discharge its duties; and
<PAGE>225
(h) to establish a claims procedure in accordance with
section 503 of ERISA.
The certificate of a majority of the members of the Committee
that the Committee has taken or authorized any action shall be
conclusive in favor of any person relying on the certificate.
12.2. Allocation and Delegation of Committee Responsi
bilities and Powers. In exercising its authority to control and
manage the operation and administration of the Plan, the
Committee may allocate all or any part of its responsibilities
and powers to any one or more of its members and may delegate all
or any part of its responsibilities and powers to any person or
persons selected by it. Any such allocation or delegation may be
revoked at any time. Any member or delegate exercising Committee
responsibilities and powers under this subsection shall
periodically report to the Committee on its exercise thereof and
the discharge of such responsibilities.
12.3. Uniform Rules. In managing the Plan, the Committee
shall uniformly apply rules and regulations adopted by it to all
persons similarly situated.
12.4. Information to be Furnished to Committee. The
Employers and Related Companies shall furnish the Committee such
data and information as may be required for it to discharge its
duties. The records of the Employers and Related Companies as to
an employee's or Participant's period of employment, termination
of employment and the reason therefor, leave of absence,
reemployment and compensation shall be conclusive on all persons
unless determined to be incorrect. Participants and other
persons entitled to benefits under the Plan must furnish to the
Committee such evidence, data or information as the Committee
considers desirable to carry out the Plan.
12.5. Committee's Decision Final. Any interpretation of
the Plan and any decision on any matter within the discretion of
the Committee made by the Committee shall be binding on all
persons. A misstatement or other mistake of fact shall be
corrected when it becomes known, and the Committee shall make
such adjustment on account thereof as it considers equitable and
practicable.
12.6. Exercise of Committee's Duties. Notwithstanding any
other provisions of the Plan, the Committee shall discharge its
duties hereunder solely in the interests of the Participants and
other persons entitled to benefits under the Plan, and:
<PAGE>226
(a) for the exclusive purpose of providing benefits to
Participants and other persons entitled to benefits
under the Plan; and
(b) with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man
acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a
like character and with like aims.
12.7. Remuneration and Expenses. No remuneration shall be
paid from the Plan to any Committee member as such. However, the
reasonable expenses (including the fees and expenses of persons
employed by it in accordance with paragraph 12.1(g)) of a
Committee member incurred in the performance of any Committee
function shall be reimbursed by the Employers.
12.8. Indemnification of the Committee. The Committee and
the individual members thereof shall be indemnified by the
Employers against any and all liabilities, losses, costs and
expenses (including legal fees and expenses) of whatsoever kind
and nature which may be imposed on, incurred by or asserted
against the Committee or its members by reason of the performance
of any Committee function if the Committee or such members did
not act dishonestly or in willful violation of the law or
regulation under which such liability, loss, cost or expense
arises.
12.9. Resignation or Removal of Committee Member. A
Committee member may resign at any time by giving ten days'
advance written notice to the Employers, the Trustee and the
other Committee members. The Company may remove any Committee
member by giving advance written notice to him, the Trustee and
the other Committee members.
12.10. Appointment of Successor Committee Members. The
Company's Board of Directors may fill any vacancy in the member
ship of the Committee and shall give prompt written notice
thereof to the other Committee members, the other Employers and
the Trustee. While there is a vacancy in the membership of the
Committee, the remaining Committee members shall have the same
powers as the full Committee until the vacancy is filled.
<PAGE>227
SECTION 13
Amendment and Termination
-------------------------
13.1. Amendment. While the Company expects to continue
the Plan, it necessarily reserves the right, subject to the
provisions of the Trust Agreement, to terminate the Plan or to
amend it from time to time, except that no amendment will reduce
a Participant's interest in the Plan to less than an amount equal
to the amount he would have been entitled to receive if he had
resigned from the employ of the Employers and the Related
Companies on the day of the amendment.
13.2. Termination. The Plan will terminate as to all of
the Employers on any day specified by the Company if advance
written notice of the termination is given to the other
Employers. Employees of any Employer shall cease active
participation in the Plan (and will be treated as inactive
Participants in accordance with subsection 2.2) on the first to
occur of the following:
(a) the date on which that Employer, by appropriate
action communicated in writing to the Company, ceases
to be a contributing sponsor of the Plan;
(b) the date that Employer is judicially declared bank
rupt or insolvent; or
(c) the dissolution, merger, consolidation, reorganiza
tion or sale of that Employer, or the sale by that
Employer of all or substantially all of its assets,
except that, subject to the provisions of subsection
13.3, with the consent of the Company, in any such
event arrangements may be made whereby the Plan will be
continued by any successor to that Employer or any
purchaser of all or substantially all of that
Employer's assets, in which case the successor or
purchaser will be substituted for the Employer under
the Plan.
13.3. Merger and Consolidation of the Plan, Transfer of
Plan Assets. The Committee in its discretion may direct the
Trustee to transfer all or a portion of the assets of this Plan
to another defined contribution plan of the Employers or Related
Companies which is qualified under section 401(a) of the Code or,
in the event of the sale of stock of an Employer or all or a
portion of the assets of an Employer, to a qualified plan of an
employer which is not a Related Company. In the case of any
merger or consolidation with, or transfer of assets and
liabilities to, any other plan, provision shall be made so that
each affected Participant in the Plan on the date thereof (if the
<PAGE>228
Plan, as applied to that Participant, then terminated) would
receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would
have been entitled to receive immediately prior to the merger,
consolidation or transfer if the Plan, as applied to him, had
then terminated.
13.4. Distribution on Termination and Partial Termination.
Upon termination or partial termination of the Plan, all benefits
under the Plan shall continue to be paid in accordance with
Sections 10 and 11 as such section may be amended from time to
time.
13.5. Notice of Amendment, Termination or Partial
Termination. Affected Participants will be notified of an
amendment, termination or partial termination of the Plan as
required by law.
<PAGE>229
APPENDIX A
DEFINED TERMS
7.1 - Accounts
7.1 - After-Tax Transfer Account
8.2 - Annual Additions
6.1 - Balanced Fund
11.6 - Beneficiary
1.1 - Code
1.3 - Committee
1.1 - Company
4.5 - Compensation
8.8 - Contribution Percentage
8.6 - Deferral Percentage
7.1 - Discretionary Account
5.1 - Discretionary Profit Sharing Contributions
11.1 - Distribution Date
1.1 - Effective Date
1.2 - Employer
7.2 - Fair Market Value
6.1 - Fixed Income Fund
6.1 - Growth Equity Fund
10.3 - Hardship
8.11 - Highly Compensated
8.8 - Highly Compensated Group Contribution Percentage
8.6 - Highly Compensated Group Deferral Percentage
3.2 - Hour of Service
6.1 - Investment Funds
11.4 - Joint and Survivor Annuity
2.4 - Leased Employee
6.1 - Loan Fund
7.1 - Matching Account
5.2 - Matching Contribution
6.1 - Money Market Reserves Fund
8.8 - Non-Highly Compensation Group
Contribution Percentage
8.6 - Non-Highly Compensated Group Deferral Percentage
3.3 - One Year Break in Service
2.1 - Participant
1.1 - Plan
1.4 - Plan Year
1.5 - Valuation Dates
6.1 - Value Equity Fund
7.1 - Pre-Tax Account
4.1 - Pre-Tax Contribution
1.2 - Related Company
11.5 - Required Beginning Date
8.2 - Section 415 Affiliate
8.2 - Section 415 Compensation
6.1 - Stock Fund
9.3 - Termination Date
1.3 - Trust Agreement
7.2 - Trust Fund
1.3 - Trustee
3.1 - Year of Service
<PAGE>230
SUPPLEMENT A
TO
DEVRY INC. PROFIT SHARING RETIREMENT PLAN
-----------------------------------------
(Top-Heavy Status)
Application A-1. This Supplement A to DeVRY
Inc. Profit Sharing Retirement Plan
(the "Plan") shall be applicable on
and after the date on which the
Plan becomes Top-Heavy (as
described in subsection A-4).
Definitions A-2. Unless the context clearly
implies or indicates the contrary,
a word, term or phrase used or
defined in the Plan is similarly
used or defined for purposes of
this Supplement A.
Affected A-3. For purposes of this
Participant Supplement A, the term "Affected
Participant" means each Participant
who is employed by an Employer or a
Related Company during any Plan
Year for which the Plan is Top-
Heavy; provided, however, the term
"Affected Participant" shall not
include any Participant who is
covered by a collective bargaining
agreement if retirement benefits
were the subject of good faith
bargaining between his Employer and
his collective bargaining
representative.
Top-Heavy A-4. The Plan shall be "Top-Heavy"
for any Plan Year if, as of the
Determination Date for that year
(as described in paragraph (a) next
below), the present value of the
benefits attributable to Key
Employees (as defined in subsection
A-5) under all Aggregation Plans
(as defined in subsection A-8)
exceeds 60 percent of the present
value of all benefits under such
plans. The foregoing determination
<PAGE>231
shall be made in accordance with
the provisions of section 416 of
the Code. Subject to the preceding
sentence:
(a) The Determination Date
with respect to any plan for
purposes of determining Top-
Heavy status for any plan year
of that plan shall be the last
day of the preceding plan year
or, in the case of the first
plan year of that plan, the
last day of that year. The
present value of benefits as
of any Determination Date
shall be determined as of the
accounting date or valuation
date coincident with or next
preceding the Determination
Date. If the plan years of
all Aggregation Plans do not
coincide, the Top-Heavy status
of the Plan on any
Determination Date shall be
determined by aggregating the
present value of Plan benefits
on that date with the present
value of the benefits under
each other Aggregation Plan
determined as of the
Determination Date of such
other Aggregation Plan which
occurs in the same calendar
year as the Plan's
Determination Date.
(b) Benefits under any plan
as of any Determination Date
shall include the amount of
any distributions from that
plan made during the plan year
which includes the
Determination Date (including
distributions under a
terminated plan which, if it
had not been terminated, would
have been required to be
included in an aggregation
group) or during any of the
<PAGE>232
preceding four plan years, but
shall not include any amounts
attributable to employee
contributions which are
deductible under section 219
of the Code, any amounts
attributable to employee-
initiated rollovers or
transfers made after
December 31, 1983 from a plan
maintained by an unrelated
employer, or, in case of a
defined contribution plan, any
amounts attributable to
contributions made after the
Determination Date unless such
contributions are required by
section 412 of the Code or are
made for the plan's first plan
year.
(c) Benefits attributable to
a participant shall include
benefits paid or payable to a
beneficiary of the
participant, but shall not
include benefits paid or
payable to any participant who
has not performed services for
an Employer or Related Company
during any of the five plan
years ending on the applicable
Determination Date; provided,
however, that if a participant
performs no services for five
years and then performs
services, the benefits
attributable to such
participant shall be included.
(d) The accrued benefit of
any participant who is a Non-
Key Employee with respect to a
plan but who was a Key
Employee with respect to such
plan for any prior plan year
shall not be taken into
account.
<PAGE>233
(e) The accrued benefit of a
Non-Key Employee shall be
determined under the method
which is used for accrual
purposes for all plans of the
Employer and Related
Companies; or, if there is not
such a method, as if the
benefit accrued not more
rapidly than the slowest
accrual rate permitted under
section 411(b)(1)(C) of the
Code.
(f) The present value of
benefits under all defined
benefit plans shall be
determined on the basis of a 6
percent per annum interest
factor and the 1984 Unisex
Pension Mortality Table, with
a one-year setback.
Key Employee A-5. The term "Key Employee" means
an employee or deceased employee
(or beneficiary of such deceased
employee) who is a Key Employee
within the meaning ascribed to that
term by section 416(i) of the Code.
Subject to the preceding sentence,
the term Key Employee includes any
employee or deceased employee (or
beneficiary of such deceased
employee) who at any time during
the plan year which includes the
Determination Date or during any of
the four preceding plan years was:
(a) an officer of any
Employer or Related Company
with Compensation in excess of
50 percent of the amount in
effect under section
415(b)(1)(A) of the Code for
the calendar year in which
that year ends; provided,
however, that the maximum
number of employees who shall
be considered Key Employees
<PAGE>234
under this paragraph (a) shall
be 50;
(b) one of the 10 employees
owning the largest interests
in any Employer or any Related
Company (disregarding any
ownership interest which is
less than 1/2 of one percent),
excluding any employee for any
plan year whose Compensation
did not exceed the applicable
amount in effect under section
415(c)(1)(A) of the Code for
the calendar year in which
that year ends;
(c) a 5 percent owner of any
Employer or of any Related
Company; or
(d) a 1 percent owner of any
Employer or any Related
Company having Compensation in
excess of $150,000.
Compensation A-6. The term "Compensation" for
purposes of this Supplement A
generally means compensation within
the meaning of section 415(c)(3) of
the Code for that year, not
exceeding $150,000 or such larger
amount as may be permitted for any
year under Code section 401(a)(17).
However, for Plan Years beginning
on or after January 1, 1989, solely
for purposes of determining who is
a Key Employee, the term
"Compensation" means compensation
as defined in Code section
414(q)(7).
Non-Key Employee A-7. The term "Non-Key Employee"
means any employee (or beneficiary
of a deceased employee) who is not
a Key Employee.
Aggregation Plan A-8. The term "Aggregation Plan"
means the Plan and each other
<PAGE>235
retirement plan (including any
terminated plan) maintained by an
Employer or Related Company which
is qualified under section 401(a)
of the Code and which:
(a) during the plan year
which includes the applicable
Determination Date, or during
any of the preceding four plan
years, includes a Key Employee
as a participant;
(b) during the plan year
which includes the applicable
Determination Date or, during
any of the preceding four plan
years, enables the Plan or any
plan in which a Key Employee
participates to meet the
requirements of section
401(a)(4) or 410 of the Code;
or
(c) at the election of the
Employer, would meet the
requirements of sections
401(a)(4) and 410 if it were
considered together with the
Plan and all other plans
described in paragraphs (a)
and (b) next above.
Required A-9. The term "Required Aggregation
Aggregation Plan" means a plan described in
Plan either paragraph (a) or (b) of
subsection A-8.
Permissive A-10. The term "Permissive
Aggregation Aggregation Plan" means a plan
Plan described in paragraph (c) of
subsection A-8.
Minimum A-11. For any Plan Year during
Contribution which the Plan is Top-Heavy, the
minimum amount of Employer
contributions and forfeitures,
excluding elective contributions as
<PAGE>236
defined in Code section 401(k) and
employer matching contributions as
defined in Code section 401(m),
allocated to the Accounts of each
Affected Participant who is
employed by an Employer or Related
Company on the last day of that
year (whether or not he has
completed 1,000 Hours of Service
during that year), who is a Non-Key
Employee and who is not entitled to
a minimum benefit for that year
under any defined benefit
Aggregation Plan which is top-heavy
shall, when expressed as a
percentage of the Affected
Participant's Compensation, be
equal to the lesser of:
(a) 3%; or
(b) the percentage at which
Employer contributions
(including Employer
contributions made pursuant to
a cash or deferred
arrangement) and forfeitures
are allocated to the Accounts
of the Key Employee for whom
such percentage is greatest.
For purposes of the preceding
sentence, compensation earned while
a member of a group of employees to
which the Plan has not been
extended shall be disregarded.
Paragraph (b) next above shall not
be applicable for any Plan Year if
the Plan enables a defined benefit
plan described in paragraph A-8(a)
or A-8(b) to meet the requirements
of section 401(a)(4) or 410 for
that year. Employer contributions
for any Plan Year during which the
Plan is Top-Heavy shall be
allocated first to non-Key
Employees until the requirements of
this subsection A-11 have been met
and, to the extent necessary to
comply with the provisions of this
subsection A-11, additional
<PAGE>237
contributions shall be required of
the Employers.
Aggregate A-12. For any Plan Year during
Benefit Limit which the Plan is Top-Heavy,
paragraphs (2)(B) and (3)(B) of
section 415(e) of the Code shall be
applied by substituting "1.0" for
"1.25".
<PAGE>238
EXHIBIT 10(e)
-------------
EXHIBIT A
FIRST AMENDMENT
TO
DeVRY INC. PROFIT SHARING RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF JULY 1, 1992)
WHEREAS, Keller Graduate School of Management, Inc. (the "Company")
maintains the DeVry Inc. Profit Sharing Retirement Plan (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, by virtue and in exercise of the amending authority
reserved to the Company under subsection 13.1 of the Plan, the Plan is hereby
amended in the following particulars:
1. Effective as of April 1, 1996, by substituting the phrase "shall
not be less than 1 percent nor more than 15 percent" for the phrase "shall not
be less than 2 percent nor more than 15 percent" where the latter phrase
appears in the first sentence of subsection 4.1 of the Plan.
2. Effective as of April 1, 1996, by deleting subsection 5.1 of the
Plan and substituting the following therefor:
"5.1. Matching Contributions. Subject to the conditions and
limitations of Section 8, with respect to any payroll period, each
Employer shall make a 'matching contribution' to the Plan on behalf
of each Participant employed by such Participant in an amount equal
to 1% of such Participant's Compensation for such payroll period if
the Participant's Pre-Tax Contributions are equal to 1 percent of
his Compensation for such period and in an amount equal to 1 1/2
percent of such Participant's Compensation for such payroll period
if the Participant's Pre-Tax Contributions are at least 2 percent
of his Compensation for such period."
3. Effective October 1, 1996, by deleting the second sentence of
subsection 6.3 of the Plan and substituting the following therefor:
"A Participant's investment elections shall be made in multiples
of 5 percent, [provided that allocations to the Stock Fund shall
not exceed 25% of contributions and forfeitures]."
4. Effective October 1, 1996, by deleting the last sentence of
subsection 6.4 of the Plan and substituting the following therefor:
"Subject to the provisions of this subsection 6.4, transfers among
Investment Funds shall be made in multiples of 5 percent."
<PAGE>239
EXHIBIT 21
----------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
DeVry Inc.:
Subsidiaries: Keller Graduate School of
Management, Inc.
DeVry Educational Development Corp.
Becker CPA Review Corp.
DeVry/Becker Educational
Development Corp.
Becker CPA Review, Inc. (1)
Newton Becker Limited (2), a Hong Kong
Corporation
Becker C.P.A. Review Limited (2), an Israeli
Corporation
Keller Graduate School of Management, Inc.:
Subsidiaries: DeVry Canada, Inc., a Canadian
corporation
DeVry Institute of Technology, Inc. a
Delaware corporation
Missouri Institute of Technology, Inc., a
Missouri corporation
Provost & Associates, Inc., an Illinois
corporation
_______________________________
1 Subsidiary of Becker CPA Review Corp.
2 Subsidiary of DeVry/Becker Educational Development Corp.
<PAGE>240
EXHIBIT 23
----------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the registration
statement on Form S-8 (No. 33-44563) of DeVry Inc. of our report dated
August 6, 1996 appearing on page of this Form 10-K.
Price Waterhouse LLP
Chicago, Illinois
September 24, 1996
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